Trd june issue

Page 1

22

NY developers look to Cuba

www.TheRealDeal.com

52

Ziel defends his monster land buy

66

Bubble trouble for NYC retail?

74

78

Stern vs. Bjarke in dueling books

N EW YO R K R E A L E S TATE N EW S

Ranking shared office space firms

Vol. 13 No. 6 June 2015 $3.00

THE HAMPTONS’

TOP

BROKERAGES Big money in the posh East End and which residential firms are doing the most business p48

EB-5 AT A CROSSROADS

Major changes are in store for the wildly popular visa-funding program p54

LITWIN IN THE DARK

Glenwood’s 100-year-old founder is at the center of a scandal, but does he even know? p36

BROOKLYN’S MILLIONAIRES’ ROW

The borough’s new condos are landing Manhattan-like prices, breaking $2,500 per foot p44 ILLUSTRATION BY CHRIS MANFRE

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Boston

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ASHKENAZY

ACQUISITION

Premier Manhattan

115 Seventh Avenue

Chelsea LOCATION Southeast corner of 17th Street & 7th Avenue in the heart of Chelsea SIZE ±41,354 Total SF nPPST DFMMBS

SUBWAY PROXIMITY within 1 block within 4 blocks within 4 blocks

*Divisions Considered

FRONTAGE ±50’ on 7th Avenue ±100’ on 17th Street

INFORMATION t TUPSZ SFUBJM nBHTIJQ PQQPSUVOJUZ JNNFEJBUFMZ BEKBDFOU UP #BSOFZ T /FX :PSL T 4' nBHTIJQ location • Located less than 1 block from Walker Tower, Chelsea’s most expensive residential tower

433 Fifth Avenue

Midtown LOCATION Fifth Avenue, between 38th & 39th Streets

SUBWAY PROXIMITY within 2 blocks

SIZE ±21,000 Total SF nPPST DFMMBS

FRONTAGE ±25’ of frontage on Fifth Avenue

within 3 blocks

INFORMATION • 1 block from Bryant Park, 4 blocks from the Empire State Building •Over 150,000 pedestrians pass this site daily. Daytime population exceeds 440,000 & over 3,000 apartments within 1/2 mile radius.

1424 Lexington Avenue

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

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

INFORMATION • Located in the Upper East Side’s Carnegie Hill neighborhood • One block from the 92nd Street Y

Limelight (656 Avenue of the Americas)

Chelsea

LOCATION Corner of 6th Avenue & 20th Street in the heart of the Ladies’ Mile

SIZE Ground: ±4,402 SF Restaurant: ±9,987 SF* *Includes ±2,320 SF outdoor patio

SUBWAY PROXIMITY within 3 blocks within 5 blocks

INFORMATION • Co-tenants Include: & Grimaldi’s BUFT UIJT JDPOJD TUS t 3FEFTJHOFE nPPS QMBUFT UIJT JDPOJD TUSVDUVSF SFQSFTFOUT B TQFDUBDVMBS PQQPSUVOJUZ UIBU XPVME be unachievable in an average building • Surrounded by exceptionally high-volume retail tenants including Bed Bath & Beyond, Marshalls, Trader Joes, Burlington Coat Factory and Home Depot

145 Greene Street

SoHo LOCATION Corner of Greene Street & Houston Street

SIZE Ground: Lower Level: Total:

±1,936 SF ±811 SF ±2,747 SF

FRONTAGE Over 124’ of frontage along Houston St. SUBWAY PROXIMITY within 2 blocks within 4 blocks

INFORMATION • Extraordinary frontage in SoHo • Neighboring retail includes: Chanel, Louis Vuitton, Club Monaco, Ralph Lauren, Burberry, Dior • At the cross-roads of SoHo, NYU, Greenwich Village, and NoHo

For Leasing Information Please Contact:

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

Retail Opportunities

ASHKENAZY

ACQUISITION

4250 Broadway @ 181st Street

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

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

*divisions considered

INFORMATION • Neighboring retail includes: Capital One,Duane Reade, McDonald’s, Foot Locker, Citi Bank, The Vitamin Shoppe • Located 1 block North of the GW Bridge Bus Terminal which serves over 4 Million passengers annually and is undergoing a $183.2 million renovation with an array of mSTU DMBTT SFUBJM BOE XJMM RVBESVQMF JO TJ[F UP 4'

1400 Fifth Avenue

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

SIZE Available ‘A’: ±3,295 SF* Available ‘B’: ±2,444 SF* Available ‘C’: ±636 SF* Total: ±6,375 SF

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

SUBWAY PROXIMITY within 1 block within 3 blocks within 4 blocks

*can be combined

INFORMATION • 13’ average ceiling heights t "U UIF CBTF PG )BSMFN T mSTU TVTUBJOBCMZ DPOTUSVDUFE DPOEPNJOJVN CVJMEJOH

Philip House (1311-1337 Lexington Avenue)

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

SIZE ±940 SF Ground

SUBWAY PROXIMITY within 2 blocks

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

156 Delancey Street

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

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

SUBWAY PROXIMITY within 1 block

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

241 Church Street (66 Leonard Street)

TriBeCa LOCATION Southeast Corner of Church Street & Leonard Street

SIZE Ground: Cellar: Sub-Cellar: Total:

±7,080 SF ±8,155 SF ±13,236 SF ±28,471 SF

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

INFORMATION • Located at the base of the premier residential building in TriBeCa and directly across the street GSPN -FPOBSE UIF MBSHFTU SFTJEFOUJBM EFWFMPQNFOU JO 5SJ#F$B VOJUT PWFS TUPSJFT

• Central, highly accessible location situated between Wall Street and the Financial District to the South and the West Village and SoHo to the North

Join our Leasing Team:

careers@aacrealty.com

HAYES DAVIDSON

212 877 4433 443GREENWICH.COM

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

:

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The Renovated Home THE DESIGN | RENOVATION AUTHORITYTM

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Photograph: Tex Jernigan

Contents J U N E

20

Half baths = big bucks

22

Investors look to Cuba

26

Jersey Strong

2 0 1 5

22

More NYC buyers pay for powder rooms, as developers take note.

While policy changes are still needed, real estate money prepares to pounce.

Two-plus years post Sandy, the Shore is finally on the mend.

Cuba is still untouched by developers.

28

At the desk of: Marty Burger The Silverstein Properties’ CEO on SoulCycle, negotiating deals while skiing and turning 50.

SIlverstein CEO Marty Burger.

30

Cushman, post DTZ buyout

Sub Culture

The $2B deal puts the firm on par with rival CBRE on revenue front.

36

Is Litwin in the dark? Glenwood’s 100-year-old founder may not even know about the scandal the firm is facing. 1 John Street in Brooklyn

44

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

Leonard Litwin

40 The timid giant

now brightened by entertainment venues and daylight

A look at Ivanhoe Cambridge, the biggest pension-fund buyer in NYC, and their office tower spending spree.

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44

Read more about it in Metals in Construction VUSPUL

Brooklyn reaches new heights A price-per-square-foot ranking of the borough’s swankiest new condos.

> > > 6 4 0 5 @ 6 9 .

48

A first-ever breakdown of which residential brokerages have the most listings on the East End.

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

www.TheRealDeal.com March 2012 00

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

Contents continued Ziel Feldman defends land buy The developer on why his massive $870M land purchase at the High Line was worth every last penny.

52 HFZ Capital’s Ziel Feldman

NYC industry players at the ICSC conference in Las Vegas.

54

Shaking up EB-5 The popular visafunding program is at a crossroads, with big changes coming down the pike.

56

Retail goes West Snapshots of NYC’s big retail players hobnobbing in Vegas.

A.M. Stern vs. Bjarke Ingels 74 Robert Dueling books provide window into the minds of two starchitects.

20

record turnout in Chelsea 76 TRD’s Photos of some of the 3,500 real

Residential Market Report

estate players who rubbed shoulders at The Real Deal’s biggest event yet.

World View While the world watched, One World Trade Center grew in both height and symbolism, its 1,776-foot

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

30

82

Commercial Market Report

Day in the Life: Shola Olatoye

A review of significant issues in Manhattan’s commercial sector.

The NYCHA chief on revamping a cash-strapped agency and taking over the world by 9 a.m.

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,

84

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

98

National Market Report

136 1

ensures that its safety is as substantial as its stature. Read more about it in Metals in Construction online.

Reports from around the country on significant developments and trends.

S Stoler’s mini media empire m The real estate exec has hit a milestone, taping 750 episodes of his local TV show. W W W . S I N Y. O R G

102

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

130

Calendar of Events

Michael Stoler

Check out this month’s activities.

138 10 12 June October 20152012 www.TheRealDeal.com www.TheRealDeal.com

The Closing: Jed Garfield The townhouse guru on his plans to join the CIA, bumming around Aspen and making a fortune.

136

We Heard A lighter look at industry buzz.

www.TheRealDeal.com March 2012 00

Visit our New York offices:

Manhattan • • • • • •

Loan Amounts up to $10,000,000 Down payments as low as 20% Investment Properties Eligible No Prepayment Penalty Interest Only Options 1-4 Units, Condos, & Second Homes

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

(646) 568-3600

Melville 560 Broadhollow Road Melville, NY 11747

(516) 430-5555 We know that finding the right loan to meet your needs is a critical part of your overall financial portfolio. That’s why we offer a wide array of jumbo products that few other lenders are able to provide. As your jumbo lender, we understand that the mortgage process needs to be smooth and easy when buying in the luxury market. Our exceptional customer service, coupled with the right loan program, will make buying your home a worry-free experience.

Copyright 2015 © The Federal Savings Bank All rights reserved | www.thefederalsavingsbank.com

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.

You need Rosewood Realty Group

ART DIRECTORS Ronald Gross, Keziah Makoundou SENIOR REPORTER/RESEARCH MANAGER Adam Pincus REPORTERS Rich Bockmann, E.B. Solomont CONTRIBUTORS C. J. Hughes, Jennifer White Karp ASSOCIATE WEB EDITOR Mark Maurer WEB PRODUCERS/WEB REPORTERS Tess Hofmann, Katherine Kallergis, Claire Moses, Sean Stewart-Muniz SOCIAL MEDIA EDITOR Kerry Barger PRODUCTION COORDINATOR Victoria Tuturice RESEARCHERS Kyna Doles, Will Parker CONTRIBUTING REPORTER Ariel Stulberg CONTRIBUTING DESIGNER Juan Zielaskowski

212.359.9900

www.rosewoodrealtygroup.com

Rosewood Knows New York

We are pleased to announce that for the year-to-date May 31st 2015, Rosewood has completed total sales of $1,822,113,050 which include: Manhattan: Aggregate sales of

$515,601,000

45 Buildings / 1,139 Residential Units / 47 Commercial Units Brooklyn: Aggregate sales of

$757,487,050

74 Buildings / 3,004 Residential Units / 40 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 WEBMASTERS Nima Negahban, Andrew LoCascio ASSOCIATE WEB DEVELOPER Amir Ghaheri FINANCE DIRECTOR/HUMAN RESOURCES Kenneth Cyrus

Bronx: Aggregate sales of

ACCOUNTING ASSOCIATE Karen Francis

$394,725,000

OFFICE MANAGER Virginia Durso

46 Buildings / 2,480 Residential Units / 76 Commercial Units Queens: Aggregate sales of

$129,800,000

9 Buildings / 444 Residential Units / 13 Commercial Units

CIRCULATION Paul Destanko DISTRIBUTION Mitchell Newman, Patricia Hofmann, Forero Express ATTORNEY Barry J. Friedberg, Trachtenberg Rodes & Friedberg LLP ACCOUNTANTS William T. McCallum, CPA, P.C., Christine Wang

Long Island: Aggregate sales of

$24,500,000

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

14 June 2015 www.TheRealDeal.com

The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2015. Call 212-2601332 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 212-260-1332. Principal office: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly. Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.

PENTHOUSE COLLECTION

INTRODUCING THE PENTHOUSE COLLECTION AT STELLA TOWER. Four exquisite residences set atop Stella Tower featuring some of the finest views in all of Manhattan. Penthouses priced from $10,125,000 Residences priced from $4,350,000 Exclusive Marketing and Sales by Douglas Elliman Development Marketing Vickey Barron & Michael Graves The complete offering terms are in an offering plan available from the sponsor. File No.CD13-0205. Sponsor: 435 West 50 Property Owner L.P. 5 East 17th Street, New York, NY 10003. Equal Housing Opportunity.

STELLATOWER .COM 212.265.4250 425 W 50 ST, NY NY 10019

EDITOR’S NOTE

6 rooms in 1

F

Work-life (im)balance

orget work-life balance. That supposes you have to choose between the two. The big players in New York City real estate work hard and play hard — often at the same time. It makes a lot of sense during the summer, when nothing beats being outside even as the office beckons, and also in this connected age, when work is never out of reach. My favorite (if slightly out-of-season) example in this issue comes from our “At the Desk of � feature. We sit down with Silverstein Properties CEO Marty Burger, who talks about how he doesn’t let his passion for skiing get in the way of the $10 billion in projects he oversees. He wears a bluetooth-wired helmet while tearing down the mountain, and is often “actively negotiating� while on skis. He’s even gotten a speeding ticket on the slopes, maybe while hashing out a particularly contentious deal. (See page 28.) Meanwhile, New York City Housing Authority Chair Shola Olatoye has her hands full overseeing the nation’s largest public housing system, with 11,000 employees, plus two kids and a newborn baby she delivered last month, right after we interviewed her for our “Day in the Life� feature (page 82). Olatoye jokes that “You can take over the world by 9 a.m.,� because by then, in addition to getting the kids off to school, she’ll have updated the mayor and been in touch with much of her staff. (Full disclosure: Her husband, the Wall Street Journal’s Matthew Strozier, is a former TRD editor, and drops off the kids some days, too.) The intersection of leisure and work is also present in this month’s main stories. For many New Yorkers, including plenty of real estate bigwigs, heading to the Hamptons each summer means rest and relaxation. Yet Hamptons real estate is big business itself. How big? For the first-time, The Real Deal tallied the total dollar volume of listings at the biggest brokerages, and found the top five residential firms have some $9.1 billion in listings. That’s a respectable number, considering the top five Manhattan

Silverstein CEO Marty Burger wears a bluetooth-wired helmet while tearing down the slopes, and is often “actively negotiating� while on skis.

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brokerages had roughly $12 billion in active listings during TRD’s most recent tally. (The fact that Manhattan is relatively starved for inventory might have something to do with the numbers being so close.) It’s no surprise then, given the size of the market, that Manhattan firms are looking to increase their Hamptons reach. (See page 48.) Speaking of work and (lots of) play, we’ve got a photo recap of last month’s massive ICSC retail conference in Sin City (page 62), and a round-up of TRD’s new development conference in Chelsea, which drew more than 3,500 (page 76). While many of you are frolicking in the waves this summer, we’ll be at work preparing our next big event, the first ever U.S. Real Estate Showcase in Shanghai, from September 10 to 12. The event will enable developers, brokers and others in the industry to build relationships in China, which is critical, since doing business in China, where a lot of today’s new money is coming from, is all about relationships. Check out TheRealDeal.com/Shanghai for details. In the meantime, read our story on the changes coming to the wildly popular EB-5 program, the conduit for much of the Chinese money arriving in New York (page 54). Also worth checking out is our ranking of Brooklyn’s most expensive new condo projects, in which we examine how prices are closing in on Manhattan levels, with the first developments breaking $2,500 per-square-foot (page 44). We’ve also got a piece that might have been titled, ‘Where in the world is Leonard Litwin?’ about what the legendary (and M.I.A.) 100-year-old developer does or doesn’t know about two statewide political scandals ensnaring his firm, Glenwood Management (page 36). Finally, The Real Deal will be hitting many of you where you both work and live for the first time. Along with this issue, you’ll find our inaugural New Jersey Market Report, which includes a ranking of the biggest developers in northern Jersey; a look inside the hipster takeover of Jersey City; the teardown trend in pricey suburbs; a look at the perennial real estate rivalry between New York and Joisey and more. There’s lots to feast on, whether you’re reading for work, pleasure, or can’t tell the difference between the two. Enjoy the issue!

969 Third Avenue @ 58th Street | New York, NY 10022 212.753.2039 | resourcefurniture.com /FX :PSL ] -PT "OHFMFT ] 4BO 'SBODJTDP ] 5PSPOUP ] 7BODPVWFS ] $BMHBSZ ] .POUSFBM ] .FYJDP $JUZ 16 June 2015 www.TheRealDeal.com

Stuart Elliott

A SMART ALTERNATIVE TO CONVENTIONAL FINANCING is a direct portfolio lender

Loans typically close in less than two weeks

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UNDENIABLY UNIQUE. UNMISTAKABLY TURNBERRY. NOW SELLING Residences available from $4 million. Appointments recommended 888-787-2106 info@turnberryoceanclub.com TURNBERRYOCEANCLUB.COM

WE ARE PLEDGED TO THE LETTER AND SPIRIT OF THE U.S. POLICY FOR 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, AMENTIES, FEATURES AND SPEFICIATIONS 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. MARKETING & BRANDING BY TURNBERRY AND BRIDGERCONWAY

RESIDENTIAL MARKET

Taking a powder (room)

For one-bedroom condo buyers, an extra half-bath becomes the must-have prize; developers take note

W

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Asbestos removal Lead paint testing & abatement Mold remediation

Hybrid Marketing | Exclusive & Off-Market Sales

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Map data ©2015 Google

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Another Property Sold By

Yona Edelkopf & Marcus Jecklin

580 Broadway, Suite 1107, New York, NY 10012 | (212) 226-9000 | www.epic-cr.com

20 June 2015 www.TheRealDeal.com

BY E.B. SOLOMONT hen CBSK Ironstate’s 29-story condominium at 301 East 50th Street hit the market last spring, one of the fastest-selling lines in the 57-unit tower was comprised of one-bedrooms with one-and-a-half baths. Demand for the condos, which started at $1.5 million, reflected buyers’ appetite for “affordable luxury,” as well as their craving for an extra half bathroom, a feature that is equal parts luxury and practical these days. In a market characterized by tighterthan-tight inventory and high prices, brokers said some buyers are willing to pay a premium for an extra half bathroom, particularly if they’re opting for a onebedroom because they can’t find — or are priced out of — larger units. Meanwhile, developers are delivering new condos with an extra bathroom, both for value-conscious buyers and buyers who expect the luxury of a powder room when shelling out big bucks for a Manhattan pad. David Gomez Pearlberg, an agent at Town Residential, said that in recent months, he’s seen an uptick in buyers priced out of two-bedrooms who are willing to consider one-bedrooms — as long as it comes with an extra half or full bathroom. “People who would have opted for the extra bedroom are rethinking and having to pull back a little bit, because of the reality of what prices are,” he said. “The one thing they don’t want to compromise on is the bath situation. They want to be able to have a separate guest bathroom.” Similarly, Rutenberg Realty’s Bogna Nasilowska is marketing a one-bedroom, two-bathroom duplex at 126-128 East 16th Street, which is asking $1.25 million. The 1,000-square-foot co-op has a large master bedroom that can be carved into two smaller bedrooms. “It attracts people who are priced out of true two-beds in a great location,” Nasilowska said. She described the master bedroom as “huge” and said, “I’ve seen twobedrooms with less square footage.” Still, a half bath isn’t a necessity for most, and most prewar units or one-bedrooms built in the ’50s, ’60s or ’70s simply don’t have them, said Paul Purcell, managing director of William Raveis NYC. “As for a two-bedroom,” he said, “the value absolutely increases when adding a half bath or a second full bath.” No one wants children or guests using an apartment’s single bathroom, he noted. “What would the increased value be? [I’m] not entirely sure. However, I can say the place would sell faster and have much more interest than with a single bath.” Overall, one-bedroom apartments accounted for 42 percent of sales in Manhattan during the first quarter, up from 40 percent market share a year earlier,

according to real estate appraisal firm Miller Samuel. The median price of onebedroom apartments was $750,000, up 2.9 percent year-over-year from $729,000. As the spring selling season kicked off, the longstanding inventory crunch seemed poised to ease somewhat: Manhattan condo inventory jumped 4 percent in April to 3,623 units — of which 930 units were newly listed that month, according to StreetEasy’s monthly condo price index. Meanwhile, condo prices were flat between March and April, the first time in more than two years that prices didn’t increase month to month. According to Gomez Pearlberg, given a one-bedroom in the $850,000 range, an extra half bath could add $50,000 to $75,000 to the price. At 540 West, a 110-unit condominium at 540 West 49th Street developed by Fortis Property Group and Wonder Works Construction Corp., a one-bed, one-bath unit is listed for $1.175 million. Meanwhile, a onebed, two-bath duplex is asking $1.75 million, up from its original price of $1.5 million, said Stephen McArdle, an agent at Halstead Property, who is marketing the apartment. “Clearly, developers are looking to maximize every square inch,” he said. “To have one-bedrooms, not at the standard 700 square feet, but 1,000 square feet or 1,100 square feet, and put in an extra half bath, it takes foresight that the larger, more luxurious one-bedroom would be really well received in the marketplace.” In the new development space, it’s increasingly common to see one-bedroom units that include one-and-a-half bathrooms. In addition to 301 East 50th Street, another example is Ziel Feldman’s HFZ Capital Group’s 505 West 19th Street, which currently has six one-bed, one-anda-half-bath units in contract, for prices between $2.1 million and $2.6 million, according to StreetEasy. On the leasing front, the Solow Building Company launched a 209-unit luxury rental tower, Two Sutton Place North at 1113 York Avenue, where one-bed, one-anda-half-bath units start at $3,960 a month. “It’s definitely a niche product and a luxury product,” said Jodi Stasse, managing director of new developments for Citi Habitats, which is marketing Two Sutton Place North. “People that are willing to pay for it really like it,” she said. The building is nearly 50 percent occupied, after leasing launched in December. But Stasse said renters aren’t always wiling to pay a premium for an extra half bath, whereas condo owners will pay up for that feature. “It creates flexibility in the space, which people investing $1 millionplus in New York City real estate are looking for,” Stasse said. “It lets you keep the master suite private.” TRD

NEW YORK CITY

As an entrepreneur I’ve got the best job in the world. Everyday I’m rewarded in so many ways for the work I do. And, I’m also a talent scout for other entrepreneurs who want that same reward. My vision was to create a culture where brokers are genuinely treated as my customers and are empowered to flourish as entrepreneurs. My mission is to give the broker every business tool they need. bro ok But, most importantly, to give them But the freedom to create, grow and prosper without limitations. When p we do this as a team the sky’s the limit for all of us.

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

William Raveis is a family business with family values. We are 3,600 agents and 110 offices strong. 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. 126 East 56th Street, Suite 1510

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raveis.com

Developers eye Cuba

While policy changes still needed, opportunities on the untouched-island are drawing interest

BY CLAIRE MOSES merican developers started dreaming about Cuba’s 2,300 miles of undeveloped coastline and its expansive beaches the moment President Barack Obama announced plans to normalize relations in December. But a lot must happen before those dreams can become reality. The State Department held its fourth round of talks to re-establish diplomatic relations with Cuba last month. If successful, it would be a step toward ending the U.S. embargo in place since 1962 — and toward opening the floodgates for development. The embargo is a key obstacle because it must be lifted by Congress. And the politics of lifting it will be difficult to conquer — especially with the 2016 Presidential election campaign already underway. It is also still unclear how foreign investment will be handled. Cuban law prohibits foreigners from owning land, which means that partnerships or other arrangements would likely be required before U.S.-backed development could move forward. Horacio LeDon, president of Douglas Elliman Development Marketing in Florida and California (and of Cuban descent himself), said that the law will be the biggest hurdle for Americans. “I would love to tell people ‘let’s go buy property,’” he said. “It’s just not legal.”

A

the future, said Tawan Davis, the chief investment officer for the firm, which has projects in New York, Washington, D.C. and Miami. Peebles isn’t eyeing a particular property or site, but is intrigued by the opportunities there.“It’ll be an emerging market in our own backyard with an infrastructure in dire need of redevelopment,” Davis said, drawing a comparison between the normalizing of relations between China and the U.S. in the 1970s. He predicted Cuba could be a similar “success story.” He said once the policy changes are made interested investors should plan on acting fast. “Cuba’s economic boom,” he said, “will happen more quickly than people expect.” Whatever the pace, LeDon said he expects to do a lot of business in his native land. “The market demand will be there immediately. It’ll be the place to be,” said Marc Magazine, executive managing director of hospitality for Savills Studley in Washington D.C. “The pricing will be fantastic.” There’s already plenty of interest in travel to Cuba. Obama eased some restrictions on visiting the island in December, and American travel there spiked immediately. Even though traveling for tourism purposes is still officially prohibited by U.S. law, the Associated Press reported a stunning

“Commercial real estate is going to be booming for many years. Cuba has been the forbidden fruit for 56 years. That’s a long time.” ANDRES BLANCO, SAVILLS STUDLEY LeDon, who has visited Cuba 17 times in the last two decades, said that private individuals and investors have reached out to him, including many based in New York. He tells those who can’t wait to get their hands on a piece of Cuban real estate that there is enough time and enough land for everyone. “You got more time than you could ever imagine,” he said. “The market won’t run away from you … you’ve got 2,000 miles of coastline that aren’t going anywhere any time soon.” Others are not as patient. In fact, some began inquiries immediately after Obama’s announcement. “Not a day went by that I didn’t receive a call,” said Andres Blanco, a Cuban-born vice president with commercial firm Savills Studley in Miami. The frenzy has since simmered down, but Blanco still gets weekly inquiries from investors interested in finding opportunities. The phone has also been ringing at the Peebles Corporation with investors interested in teaming up in Cuba in 22 June 2015 www.TheRealDeal.com

36 percent spike in American visitors in Cuba from Jan. 1 through early May. Those numbers are only likely to rise, as will the demand for high-quality hotels and resorts, industry insiders said. Right now, options are limited: There are a handful of resorts operated by foreign hospitality firms and a few Cuban-owned hotel chains, but many visitors opt for “casas particulares,” or in-home stays with Cuban families. In fact, there are more than 1,000 Cuban listings on Airbnb. But the accommodations there still fall short of what many American travelers are accustomed to. “It’s the hottest thing on hoteliers’ minds,” Magazine said. “There are some nice hotels in Cuba. But there are no American hotels.” Blanco said once the embargo is lifted he’ll be ready to do business as well. “Commercial real estate is going to be booming for many years,” he said. “Cuba has been the forbidden fruit for 56 years. That’s a long time.” TRD www.TheRealDeal.com March 2010

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E X C L U S I V E M A R K E T I N G A N D S A L E S A G E N T: S T R I B L I N G M A R K E T I N G A S S O C I AT E S I M A G E I S A N A R T I S T R E N D E R I N G F O R I L L U S T R AT I V E P U R P O S E S O N LY. T H E C O M P L E T E O F F E R I N G T E R M S A R E I N A N O F F E R I N G P L A N AVA I L A B L E F R O M S P O N S O R . F I L E N O . C D 1 4 - 0 0 7 6 . S P O N S O R : 2 0 6 - 2 1 0 W. 7 7 T H P R O P E R T Y O W N E R , L . L . C . , C / O T H E N A F TA L I G R O U P, 1 7 0 0 B R O A D W AY, 1 6 T H F L O O R , N E W Y O R K , N E W Y O R K 1 0 0 1 9 . E Q U A L H O U S I N G O P P O R T U N I T Y.

BY

THE

NUMBERS

Jersey Strong TTwo-plus wo-plus yyears ears a after fter g getting etting clobbered b uperstorm S andy, clobbered byy S Superstorm Sandy, the H the Hamptons amptons a alternative lternative LV ÀQDOO\ RQ WKH PHQG LV ÀQDOO\ RQ WKH PHQG

127 Miles of New Jersey shoreline. By

comparison the shoreline between Shinnecock Inlet, the traditional gateway to the Hamptons, and Montauk Point, stretches 62 miles.

1.9% Jump in home prices on the Shore in

2014, matching the figure for New Jersey overall, but far short of the rate for Manhattan, at 13 percent, and the Hamptons, at 31 percent.

329 The number of Jersey Shore houses

and condos priced over $1 million sold in 2014. That was 35 percent more than the 242 $1 million-plus sales in 2007. The Hamptons had 1,162 sales over $1 million last year. A Middletown listing for $14.7 million

T

he Hamptons aren’t the only summer game in town. Jeff Sutton, Joe Sitt and Stanley Chera are among the New York City real estate titans who call the Jersey Shore their (second or third) home. Their multimillion dollar properties, which are all located in the tony community of Deal (no pun intended), reflect the upswing in the residential market along the Jersey Shore. Nine years after the housing bust and two-and-a-half years after getting clobbered by Superstorm Sandy, the Shore’s real estate market is reviving, albeit slowly. Average home values in the coastal stretch from Sandy Hook to Cape May are up modestly, though prices remain well below pre-crash peak levels in most communities. But the volume of residential properties, especially at the top end, is setting records. Meanwhile, a great Docking a boat is cheaper than parking in Manhattan. white shark that’s being tracked by a research foundation was spotted off the Jersey Shore coast last month, spawning a spoof Twitter account and national attention. Below is a rundown of some of the latest real estate trends near the boardwalk-and-cotton-candy filled summer getaway. By Ariel Stulberg

NEW EXCLUSIVE LISTING

$579.9 million The total winnings at Atlantic City’s

remaining casinos in the first quarter. That’s a 5.9 percent gain from the $547.4 million last year, despite the shutdown of five major casinos, including the Trump Plaza and Revel. But it’s a far cry from the $950 million in the first quarter of 2009.

5% to 15% Estimated hit in value a Jersey Shore

home has taken if it has flooded in the past. Owners must also pay flood insurance, which in some cases has jumped to as much as $30,000 a year.

$838 million Amount awarded to 8,914

homeowners statewide for reconstruction, elevation and storm mitigation under New Jersey’s largest Sandy recovery program. Just over $480.6 million has been dispersed. Of that total, $283.4 million went to 4,663 homeowners in Ocean County, the hardest hit section of the Shore.

$145 Annual price per foot for a boat slip $14.7 million Price of the most expensive Jersey

Shore residential listing on Zillow, a nine-bed mansion in Middletown. That’s about one-tenth the $140 million asking price of the Hamptons’ priciest listing, an 11.2-acre estate in East Hampton Village with a 10,300-squarefoot Georgian Revival home.

125 feet Height of the drop of the new “Shore Shot” ride at the Casino Pier in Seaside Heights. It joins 2013’s “Super Storm” ride and 21 other rides (plus Go Karts) at the stillrecovering amusement area, which had 37 rides before Sandy.

$100,000 Season-long rental price for the most

expensive Jersey Shore listing on Zillow, for a five-bed beachfront house in Ventnor City. The priciest Hamptons rental was listed at $1.6 million.

177-179 EAST 73RD STREET | 40 FOOT BEAUX ARTS MANSION

at Navesink Marina in Sea Bright. For a 100-foot yacht, that comes to $14,500 a year. By comparison, Manhattan condo building 15 Renwick in the Hudson Square neighborhood, charges $1 million a year for one of its three parking spaces.

700 Distance in meters off Chadwick

Beach where Mary Lee, a 16-foot 3,456-pound great white shark equipped with a tracking device, was spotted in May. There have been 15 confirmed shark attacks along the Shore. The worst was in 1916, when four people were killed and one injured between July 1 and 12. The incidents inspired “Jaws.”

Sources: NJ.com, North Jersey.com, Shore News Today, DNAinfo.com and TRD reporting.

$50,000,000

NIKKI FIELD Associate Broker | 212.606.7669 | nikkifield.com PATRICIA A. WHEATLEY Associate Broker | 212.606.7613 The Field Team | Ranked #1 Sales Team 2014

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Sotheby’s International Realty and the Sotheby’s International Realty logo are registered (or unregistered) service marks used with permission. Operated by Sotheby’s International Realty, Inc.

26 June 2015 www.TheRealDeal.com

Photo courtesy of Interview Magazine

Gracious Living at AZURE

APARTMENT PHAB | 5 BED | 6 BATH | $12,750,000 Perched at the Pinnacle of the Azure, Penthouse AB offers its owner an exceptionally rare opportunity to create a customized, full floor, private residence boasting 360 degree views. At 5,308 interior sq ft and 644 sq ft of private outdoor space, this home boasts stunning 11’ floor-to-ceiling windows, grand terraces off the living room, and a separate family room.

Introducing the final release of luxury residences at AZURE

APARTMENT 33AB | 5 BED | 4 BATH | $4,950,000

APARTMENT 31B | 2 BED | 2 BATH | $1,775,000

Currently laid out as a 4 bedroom with two sprawling living spaces, the northern half of the 33rd floor offers its owner a rare opportunity to create a custom home with soaring 10’6” ceilings and breathtaking views. Our highest floor AB combination has three exposures with clear city skyline, bridge, East River, and park views.

Perched atop the 31st floor, this 1,205 sq ft residence showcases stellar views of the RFK Bridge, East River and GW Bridge with soaring floor-to-ceiling windows. This apartment is the epitome of luxury; with each bedroom boasting gorgeous views, an open chef’s kitchen, and high ceilings.

APARTMENT 30CD | 4 BED | 4 BATH | $5,000,000

APARTMENT 23A | 3 BED | 3 BATH | $2,450,000

Unit 30CD boasts nearly 3,000 sq ft, with a layout ideal for entertaining: an oversized chef’s kitchen flanked by two large great rooms, a private balcony, and floor-to-ceiling windows. Three open skyline exposures with views of NYC’s iconic buildings, the East River, and west toward Central Park. This home boasts spacious rooms, high ceilings, and abundant closet space.

Simply the best value on the Upper East Side! 23A is an 1818 sq ft unit with North and West exposures and floor-to-ceiling windows with cityscape views. An open chef’s kitchen, corner loft-like space, ample bedrooms and custom-built walk-in closets provide plenty of sunlight and space.

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REAL ESTATE

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. IF YOUR PROPERTY IS CURRENTLY LISTED WITH ANOTHER REAL ESTATE BROKER, PLEASE DISREGARD THIS OFFER. IT IS NOT OUR INTENTION TO SOLICIT THE OFFERINGS OF OTHER REAL ESTATE BROKERS. WE COOPERATE WITH THEM FULLY. EQUAL HOUSING OPPORTUNITY.

: F O SK E

D E H T T

A

MARTY BURGER

M

arty Burger is the CEO of mega development fi rm Silverstein Properties, the owner of most of the World Trade Center site. Burger was brought on in 2010 to serve as co-CEO, alongside company founder Larry Silverstein. Silverstein officially passed the baton last year, leaving Burger to oversee more than $10 billion in projects, including one in China and one in Israel. The 49-year-old industry veteran grew up on Long Island and did his undergrad at the University of Pennsylvania Wharton School of Business. He worked at the Blackstone Group, Goldman Sachs, and the Related Companies and founded his own company, the nowdefunct Artisan Real Estate Ventures, before joining Silverstein. Since coming aboard, Burger has traveled to Shenzhen 24 times to work on a 5 million-square-foot mixed-use project named Qianhai. In New York, from his 38th-fl oor offi ce at 7 World Trade Center, he can keep tabs on several of his biggest Manhattan towers, including the luxury hotel-condo 30 Park Place and 2 World Trade Center, the empty site that Silverstein is reportedly talking to Rupert Murdoch about codeveloping for the media giant. By Claire Moses

SOULCYCLE

VAIL SIGN

PICTURE WITH WIFE

Burger starts his day at 6 a.m.

Burger with his wife, Allison, whom

Burger leads an annual ski trip to

with an hour-long spin class

he married in 2013 at a country club

Vail, Colorado, for about 120 industry

at SoulCycle on East 83rd

in upstate New York. The couple

executives. Cantor Fitzgerald’s Michael

Street. “I used to be a

lives on the Upper East Side. She

May, JLL’s Alex Chudnoff, Corigin

beanpole,” he said. “Your

has a 13-year-old son from a previous

CEO Ryan Freedman and President

metabolism slows and you

marriage, while Burger has two

Ed Baquero are among the regulars.

have to do these things.”

teenage sons from his first marriage.

Though more “a bonding experience” than work, it often leads to deals. “The top of Vail Mountain,” Burger said, “that’s my happy place.”

Unless he’s traveling, he’s on his stationary bike six or seven

LAS VEGAS

mornings a week.

While working at Related, Burger lived

SILVER STALLIONS

in Sin City part time for six years in the

Each year, top Silverstein executives create a video for the company’s

early 2000s. He helped develop

holiday party. Burger played Liberace in one. In another, under the

more than 5 million

band name “Silver Stallions,” he, Janno Lieber, president of World

square feet for the

Trade Center properties; Roger Silverstein, Larry’s son and vice

and

president of leasing and Sandy

brought 2,000

Jacolow, chief information

company

SUBWAY SIGNS

apartments

to

officer

performed

Starship’s “We Built this

Burger had this painting commissioned as a reminder of his “six

market. During the week

years of hard work” in developing the Time Warner Center while at

he lived at the Four Seasons, but he

City.” Last year, Burger

Related. “It seemed impossible at the time,” he said, noting that the

commuted home to New York every

and his deal team spoofed

project was a game-changer for the city.

weekend.

MUHAMMAD ALI’S BOXING GLOVES Burger received the gloves, which were once owned by Muhammad

PHOTO WITH MICKEY MOUSE Late last year, Silverstein opened a Four Seasons hotel at Disney World

“The Book of Mormon.”

SKI SPEEDING TICKET Burger was pulled over and ticketed

Ali and bear the boxing legend’s autograph, as a gift from his friend

in Orlando. At the groundbreaking,

while skiing down an easy trail called

Bernie Yuman, Ali’s manager. As a kid, Burger’s grandmother, who

Burger posed with Mickey Mouse,

Flapjack in Vail earlier this year. He

West End Avenue, took him

while Larry Silverstein looked on.

framed the ticket as a keepsake. And

watch boxing matches.

Burger said it wasn’t a run-of-the-

the warning hasn’t stopped him

“She’d sneak in

mill groundbreaking. “Disney took

from wearing a Bluetooth-wired

lived at 66th Street and to CBS studios to

somehow,” he

over and made it a production.”

helmet while tearing down the mountain.

recalled.

BOBBLEHEAD Victor Bucchere of CBRE Global Investors had this bobblehead of Burger made after the CEO secured financing for 30 Park Place in 2013. “I don’t think it

In fact, he said he’s often

“actively

negotiating,” while on skis.

looks like me,” Burger said. 28 June 2015 www.TheRealDeal.com

PHOTOGRAPH OF MARTY BURGER FOR THE REAL DEAL BY TOBIAS TRUVILLION

REAL ESTATE INSIGHT PRESENTED by

Q: What is your favorite part about the development process? A: 7KH SURFHVV RI VHOHFWLQJ WKH PDWHULDOV DQG ÀQLVKHV , DP D VWLFNOHU IRU SHUIHFWLRQ VR ZH WUDYHO WR ,WDO\ WR KDQG VHOHFW LQWHULRU PDWHULDOV ÀQLVKHV DQG FXVWRPL]H WKH FDELQHWU\ Upscale European design, innovative technology, and top -of-the-line appliances is what our customers have come WR H[SHFW , DSSUHFLDWH WKRVH ZKR DSSUHFLDWH WKH HIIRUW DQG WLPH ZH SXW LQWR RXU EXLOGLQJV VR , DOZD\V JR WKH H[WUD PLOH

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THE INSIDER: UGO COLOMBO Miami’s premier luxury developer and Founder of CMC Group— responsible for iconic properties including Bristol Tower, Santa Maria, Grovenor House & Epic Residences & Hotel—shares some insight on his approach to design.

7+( .,7&+(16 $7 (3,& Feature dark wood Snaidero cabinetry

Q: Favorite Brickell eatery? A: Zuma. Not just because it is located in one of my GHYHORSPHQWV (3,& 5HVLGHQFHV +RWHO ,W UHDOO\ KDV VRPH RI WKH EHVW VXVKL , KDYH HYHU WDVWHG

Maybe it’s my Italian blood, but I prefer to take painstaking measures that ensure every project detail IDOOV LQWR SODFH , EHOLHYH WKDW P\ ZRUN LV D UHà HFWLRQ of my values, so I get very involved in the entire development process and rarely take a back seat. I am committed to seeing a well-thought-out vision executed through quality design. My ultimate goal with any project is to build timeless, livable works of art.

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-- UGO COLOMBO, FOUNDER OF CMC GROUP

Q: What do you think sets your buildings apart from other developments? A: Our commitment to quality & innovation. We take our time on each project, paying attention to every single GHWDLO IURP WKH ÀQLVKHV WR WKH WHFKQRORJ\ $WWHQWLRQ WR the smallest details has become CMC Group’s mark of distinction. Buyers recognize that our projects are built to last.

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Post-buyout Cushman to be largest NYC firm The $2B deal puts brokerage on par with rival CBRE on revenue front BY ADAM PINCUS hen Brett White’s DTZ completes its $2 billion acquisition of the giant global firm Cushman & Wakefield later this year, the newly combined New York office will displace CBRE as the largest commercial brokerage in the city. CBRE has been the recognized top firm in the city for years, both in the number of brokers and salespersons, and in revenue. There are 416 licensed brokers and salespersons in CBRE’s three New York City offices, according to figures from the state Department of State’s licensing division. That is far fewer than the 555 agents at the four firms — Cushman, Massey Knakal Realty Services, DTZ and Cassidy Turley — that will be combined under the Cushman & Wakefield name. (Cushman bought

W

30 June 2015 www.TheRealDeal.com

Massey Knakal on Dec. 31, the same day DTZ closed its buyout of Cassidy Turley.) Of course, that figure may change in the future. Shortly after buying out Cassidy Turley, DTZ parent TPG Capital laid off 45 employees nationally, including at least nine New York brokers. Still, a better marker for success in the brokerage world is revenue, and reported figures show that the combined firm is on par with CBRE locally. For the entire tri-state area (the only figures available) CBRE had an estimated $500 million in 2014, compared with the combined Cushman firm’s roughly $490 million. That latter figure is based on reported figures of $350 million for Cushman, $70 million for Massey Knakal, $50 million for Cassidy Turley and $15 million for DTZ. One thing is certain, blending the four

firms’ personnel, commission structure and office culture into one will not be easy. “The more people you are bringing together, the more complicated it is,” said Constantine Korologos, managing director for the real estate advisory firm Situs, who is not involved in the deal. “The biggest challenge is the culture of the organizations and which culture will take the lead.” While the global and national leadership of the combined Cushman firm is set, little on the regional level has been decided, insiders said. However, as The Real Deal reported last month, one important position was announced: DTZ CEO White said Cushman Tri-State President Ron Lo Russo will keep the top job locally. That decision, made public at a large meeting for current Cushman employees

at the New York Hilton Midtown, was a surprise to some. In fact, later that day, at a much smaller gathering of DTZ employees, sources said Joseph Stettinius, the top DTZ executive for the Americas, told the group he did not know if the decision had been finalized as to who would run the local office. The head of the local DTZ office is veteran broker Peter Hennessy, who Lo Russo beat out for the top regional post. Lo Russo, a former Vornado Realty Trust leasing executive who has two years under his belt as president of the regional Cushman office, was not the only candidate considered, sources said. Several insiders said that before the Cushman deal was announced, top producers like CBRE Vice Chairmen Patrick Continued on page 126

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In their words...

The funniest and most insightful comments on real estate

“I have been treated like a dog.”

Architect Santiago Calatrava, on the criticism he’s A faced over huge cost overruns for the $4 billion PATH hub at the World Trade Center.

“All of it.”

“Ain’t nothing going on but the rent.” State Assembly Housing Committee chair Keith Wright, quoting Gwen Guthrie’s 1986 R&B hit, at an Albany presser announcing the assembly’s passage of legislation strengthening rent regulations.

“That is a broker’s dream, when you get a customer who’s lost two apartments, they will virtually pay anything for the third. They’re trigger happy, they’re scared and they don’t want to be No. 3.” Barbara Corcoran, in reference to Bloomberg TV host Olivia Stearns, who was outbid on two Manhattan apartments. 32 June 2015 www.TheRealDeal.com

WeWork co-founder Miguel McKelvey, jokingly, when asked at Capital’s TAMI Talks how much office space the company is looking to take in the city.

“Change usually happens when there’s pain. And in real estate, there’s not a lot of pain.” “I want to be Robert Jared Kushner, on why the industry is slow to innovate.

“Reminders of the power of the law are all around us. And I don’t just mean the power that I have as U.S. Attorney to subpoena and wiretap all of you, although I do have that power.” U.S. Attorney Preet Bharara, during a commencement address at Pace University Law School.

“It was a devastating tax to me that made no sense.” Craig Newman, citing the roughly $20,000 a year he paid in commercial-rent tax as a big factor in closing his Penn Station bookstore, Penn Books.

Moses with a Jane Jacobs kind of twist.” MaryAnne Gilmartin at the Honest Buildings Real Estate Innovation Summit, when asked if she wants to make an impact on the city similar to Robert Moses.

“He may have realized that the most powerful people in New York City are mostly not the elected officials but the people who own the land.” Political consultant Hank Sheinkopf, on Eliot Spitzer’s moves to expand the real estate empire inherited from his father. Sources: New York Daily News, Bloomberg TV, TWC News, Twitter, Wall Street Journal and TRD reporting.

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Barnett aims for $4.4B Nordstrom Tower sellout Developer could reel in an average of $7,000 per square foot for tallest of the supertalls

BY E.B. SOLOMONT he Nordstrom Tower, Gary Barnett’s condo tower at 217 West 57th Street, which could become the tallest building in New York City, is on track to break another record if the developer comes close to his projected $4.4 billion sellout. Extell Development anticipates $4 billion worth of apartment sales, according to the Wall Street Journal, which dug up Extell’s regulatory filings on the Tel Aviv Stock Exchange, where it sold $300 million worth of bonds. If the developer achieves this goal, it would comfortably eclipse the $2.8 billion sellout forecast at Vornado’s 220 Central Park South, and double the projected $2 billion sellout of Extell’s own One57, located just half a block away. The remaining portion of the total would come from selling the base of the tower to Nordstrom for $400 million. Barnett has been on the defensive in recent months as sales slowed at One57. But sources said his low cost basis at the Nordstrom Tower is a boon to the project, which is expected to generate $2 billion in profit, compared with One57’s profit of $1 billion, according to the regulatory filings. And while Extell only owns 12 percent of One57 — Abu Dhabi–based Aabar Investments and Tasameem Real Estate Company are ma-

T

jor investors — it owns 87 perSources speculated that cent of the planed 1.2 millionsome floors would have two square-foot Nordstrom Tower. condos each, measuring around 3,700 square feet, A back-of-the-napkin calculation: A $4 billion sellout with full-floor units higher up. for the 233-unit project means Leonard Steinberg, president of Compass, noted that many that the average price will be just north of $17 million. super-wealthy buyers “love a Sources who have seen Exlarge apartment with full sertell’s plans for the tower say it vices all on one floor.” If that’s true, it’s likely that has large floor plates, around 7,400 square feet. The buildNordstrom Tower will join the ing’s 1,775-foot height, the sub$100 million penthouse club. “Based on the numbers, [Barject of recent speculation, will nett] should have no problem also set it apart, allowing the top floors 360-degree views. achieving $120 million, $130 Extell is likely to price The most recent rendering million and up,” said a source who reviewed Extell’s plans. units at Nordstrom Tower us- of Extell’s Nordstrom Tower. ing comps from One57, sourc- Below: Gary Barnett There are several penthouses said, where the sales averes asking $100 million and up age is $6,772 per square foot, in Manhattan, including one according to StreetEasy. The at Vornado’s 220 Central Park $100.5 million penthouse sold South that is rumored to ask up for around $9,200 per square to $175 million. To date, Vornafoot in January. do has not listed its four priciest Assuming floor plates of units. 7,400 square feet, and an averIndustry leaders said 220 age of $7,000 per square foot, Central Park South’s prices full-floor units could go for around $50 mil- will impact nearby developments, includlion, calculated Jonathan Miller, president ing Nordstrom Tower. of real estate appraisal firm Miller Samuel. Of course, a lot depends on where the

market stands. Overall, the luxury market was a bit soft during the first quarter, according to Miller Samuel data. The median price dropped 10.6 percent to $5.1 million, and the absorption rate — defined as how many months it would take to sell all for-sale properties — climbed 42.4 percent to 17.8 months. Andrew Gerringer, managing director of new business development at the Marketing Directors, said developing an ultra-luxury condo in the Midtown corridor seems to him “a bit of a risky proposition given today’s market.” However, Extell’s cost basis in the project is relatively low, since the developer began assembling the site in 2005. “Most likely, he bought the land somewhere in the $300 to $400 range,” said a source familiar with the plans. With land prices more than double that now, the source said Barnett’s “cost basis is about $450 to $500 less than anybody else’s.” This gives Extell wiggle room on pricing and lets Barnett undercut his competitors if the market turns. “Gary is very much a value player,” said real estate attorney Ed Mermelstein. “He’s going to do well simply for the fact that he bought right, he builds well and he’s got a great product.” TRD

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Is Litwin in the dark?

Glenwood’s 100-year-old founder may not even know about the scandal his own firm is facing BY MARK MAURER ince January, Glenwood Management has been ensnared in scandals involving two of the state’s top politicians. Though not charged with any wrongdoing, the firm has been thrust into a glaring spotlight. Yet sources say the company’s 100-year-old founder and chairman, Leonard Litwin, remains in the shadows. Litwin, who founded Glenwood in 1961, no longer comes into the firm’s main Long Island office and has very little knowledge about the corruption cases, according to sources familiar with the situation. Executives at Glenwood have avoided discussing matters with him, so as to not upset him, sources said. While Litwin and Glenwood — which owns 26 Manhattan buildings with roughly 8,700 residential units — have been the most prolific donors to politicians in New York State for more than a decade, until recently they’ve made their mark quietly. More than two-dozen LLCs affiliated with Glenwood and Litwin made the donations, though Litwin did not control the entities alone. Source said others at Glenwood make donations on his behalf. The firm’s low profile, however, changed when it became clear that Glenwood was “Developer 1” in two blockbuster federal criminal complaints. Those complaints have, of course, taken down two of the state’s most powerful politicians: Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos, who both resigned their leadership positions after coming under fire. In a nutshell, prosecutors outlined complicated schemes in which both politicians used their powerful roles as ATMs. Silver is accused of directing Glenwood to hire a real estate law firm run by a former aide, which then paid him handsomely for doing no work, while Skelos is charged with directing the developer to pay his son’s title insurance company $20,000 for work it did not do. The developer allegedly complied with those requests in both cases. The complaint does not say what Glenwood was promised in exchange for hiring the law firm. It notes that, prior to being asked in 2012 to sign a retainer agreement, Glenwood did not know that Silver was getting 25 percent of all of the fees he directed to the firm. But the firm was lobbying for legislation, including 421a tax breaks — a major financial boon to developers. While sources say Litwin stopped working in 2013, many of the events outlined in the Skelos complaint involving Glenwood occurred between 2010 and 2012. For example, court documents note that Litwin and Glenwood general counsel Charles Dorego attended a REBNY event in 2011 and met with Gov. Andrew Cuomo and others prior to the vote on the Rent Act of 2011.

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36 June 2015 www.TheRealDeal.com

But Litwin has since stepped back. “It’s become increasingly apparent that Mr. Litwin is not as out and about as in the past,” said developer Jeff Levine, who partnered with Glenwood on projects in the early 2000s.

with prosecutors in the cases against Silver and Skelos. But some sources told TRD that despite the fact that Glenwood has not been charged with any wrongdoing, they expect a changing

The agreement has not been publicly released, the Times said. Dorego’s lawyer, Kevin Downey of Williams & Connolly, did not return calls seeking comment. But as one lobbyist told Capital New York: “If Dorego is involved, then you can bet more trees are going to fall.” In the meantime, if the cases proceed to trial, Glenwood’s purported role will likely be laid bare. “It’s not like Glenwood was wearing a white hat in a room full of black hats,” Kaehny said. “The whole real estate industry was actively lobbying for 421a and rentregulation issues.” Real estate players who talked to TRD said Dorego is well known and respected by his peers, and that he’s a regular at industry events. Leonard Boxer, who heads law firm Stroock & Stroock & Lavan’s real estate practice, worked with Dorego at the law firm for about 14 years. “Charlie was very congenial and smart when he worked for us,” Boxer said. “He was very close with people at Glenwood and that led to his next opportunity” as the firm’s general counsel. At the same time, the Times quoted an anonymous real estate executive as saying, “Charlie likes access. He likes to talk about access to politicians.”

Saving cash

Top left, Glenwood founder Leonard Litwin; top right, Glenwood’s Charles Dorego; middle, Glenwood’s Gary Jacob. Bottom, Litwin, center, with daughter Carole Litwin Pittelman, right, and an unidentified woman on the far left.

Changing of the guard Until June 2013, Litwin showed up at Glenwood’s New Hyde Park headquarters at least four days a week, sources said. But he’s since retreated to his Suffolk County home. (The home is not located in the Hamptons, in contrast to many top New York City real estate figures.) His wife Ruth, who reportedly suffered from Alzheimer’s disease, died in August. The state of his health is unclear. “Old age is old age,” said a source close to Litwin. The Litwin family also owns Woodbourne Cultural Nurseries in Melville, Long Island, though it’s unclear if Litwin, who according to Forbes had a net worth of $1.1 billion as of 2008, goes there either. The firm is now being run by Litwin’s daughter Carole Litwin Pittelman, the company president, along with Jacob and Dorego. Dorego has reportedly been cooperating

of the guard at the firm, with longtime executives exiting. The question is whether that will happen before or after Litwin’s death. “It’s hard to see how Charles Dorego could continue to function in his current job in New York, with everyone in the world thinking he was wearing a wire,” said John Kaehny, executive director of Reinvent Albany, a group that advocates for more government transparency. Nevertheless, sources told TRD that Glenwood’s leadership has surprisingly carried on business as usual and held no companywide meetings to discuss the Silver and Skelos cases. Glenwood referred requests for comment on the two cases to the firm’s attorneys, Alan Levine and William Schwartz of Cooley, who declined to comment on the matters. Meanwhile, according to the New York Times, in exchange for his cooperation since April, federal prosecutors granted Dorego a “non-prosecution agreement.”

Of Glenwood’s 26 New York properties, about a third received tax breaks and special financing under the 421a program, according to news reports and public records. On four Manhattan rental buildings alone — the 173-unit Liberty Plaza in Lower Manhattan, the 466-unit Paramount Tower on East 39th Street, the 272-unit Brittany on the Upper East Side and the 230-unit Hampton Court in Harlem — Glenwood has saved more than $181 million in property taxes, according to the New York Daily News. Suri Kasirer, a top real estate lobbyist who has not worked for Glenwood, said the 421a program fuels New York’s economic engine. “Extending 421a does at least two things,” said Kasirer, a top real estate lobbyist. “It ensures continued robust development and the ability to build affordable housing to meet the needs of all of the city’s residents.” Housing advocates dispute that, saying that the abatement is nothing but a giveaway to developers and that they would not stop constructing housing without it. Mayor Bill de Blasio has called for overhauling the program, but aims to keep it in an altered form as part of his plans to build more affordable housing. At the moment, Glenwood executives are focused on developing two Manhattan properties, Jacob told TRD last month: A 48-story, 257-unit rental building at 175 West 60th Street and a 19-story, 15-unit condo building at 60 East 86th Street are under construction. The latter building is being designed by architect Thomas Juul-Hansen and is not an official Glenwood project, Jacob said. He, Litwin and Howard Swarzman, one of Continued on page 126

www.TheRealDeal.com January 2014 35

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SOCIAL MONITOR TWEET FIGHT

NEW YORK YIMBY AND CITY LAB WRITER DUKE IT OUT ON SUPERTALLS CASTING SHADOWS ON CENTRAL PARK.

REAL ESTATE PROS MARK MEMORIAL DAY

Um...

New York YIMBY @newyorkyimby By that logic, getting rid of NYC would cause summer temps to drop 5-10 degrees on Manhattan, cooler temps/ open air for everyone!!!

Sarah Goodyear @buttermilk1 @newyorkyimby Forget the temperature. Do you really think shadows in the park are a non-issue?

@buttermilk1 Look at Bryant Park, Madison Square Park, Hudson River Park, East River Park... even Central Park! they ALL have shadows!!!

@buttermilk1 net contribution from trees in parks = VAST % of shadows, if you are serious about shadows being a problem then cut them down

@mtsw @newyorkyimby Casting huge shadow on nonreplaceable sunlight-dependent public amenity to add 100 or so housing units is huge loss of wealth

@newyorkyimby @mtsw then why do existing buildings have right to cast shadows while new ones do not?

JASON HABER

@jasonhaber

Midtown East co-op board allegedly asked to interview buyer’s child THEREALDEAL.COM

SOME OF OUR FAVORITE COMMENTS FROM THIS POST: Michael Martin: The first indication that someone has no business being on a Condo/Co-op/ HOA board is that they want to be on a Condo/Coop/HOA board. They are invariably the worst sorts of people: maladjusted, malcontented busybodies.

Susan Little: This is a surprise to no one working in the NY market. You realize they interview DOGS right? Jackie Roc Murphy: Always go condo

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38 June 2015 www.TheRealDeal.com

PROFILE

The quiet giant

Why Ivanhoe Cambridge, biggest pension-fund buyer in NYC, is spending billions of dollars on Manhattan office towers

BY KONRAD PUTZIER bout two months ago, on a Sunday evening on a rural road in Quebec, Manuel Delisle lost his temper in a road rage incident. The other driver, Karine Cyr, later claimed that Delisle had cut her off and was driving erratically. So Cyr and her husband followed Delisle down a dead-end road. What happened next was captured on video. The 37-year-old Delisle, who worked as a tree pruner for the City of Montreal, walked up to Cyr’s parked car and pointed a roaring chainsaw at the driver’s window, making threatening gestures for about 30 seconds before walking away. The video, which Cyr took with her cellphone, made Delisle a social media sensation in Canada. It also, in all likelihood, made him the first investor in a New York trophy skyscraper to be arrested for a road-rage incident involving a chainsaw in Quebec. That’s because like anyone who is employed in Quebec, a share of his wages was going into a pension fund and distributed to various investment arms, including Ivanhoe Cambridge, which handles the fund’s real estate investments. That means Delisle holds a microscopic financial stake in the office tower 3 Bryant Park, which Ivanhoe Cambridge bought for $2.2 billion in February in partnership with Callahan Capital Properties. Delisle’s involvement is a small part of a giant cloud of mystery that surrounds Ivanhoe Cambridge’s activities in New York. Over the past five years, the firm has invested more than $3.8 billion in Manhattan properties, according to Real Capital Analytics — more than real estate giants like Related Companies, Brookfield Properties or American Realty Capital. No other pension fund manager has spent nearly as much. And yet, little is known about the firm behind these deals. While Related’s Stephen Ross, Extell’s Gary Barnett or Witkoff Group’s Steve Witkoff are local celebrities, regularly donning the covers of business publications, few here could point out Ivanhoe Cambridge’s CEO Daniel Fournier in a crowd. In fact, few even know what kind of company it is or where it gets its money. The firm seems to like it that way. The company declined to make any of its executives available for interviews, as did its lawyers and its investment partner, Callahan. The most a Google search reveals is brief news reports on its deals and a few related press releases. Yet in many ways, the Canadian behemoth exemplifies the globalized age of New York real estate. Its troubles during the financial crisis and the lessons it took away say a lot

A

40 June 2015 www.TheRealDeal.com

about why Manhattan trophy properties have become such popular investments. “You hear about them going into deals, but you don’t hear about them exiting,” said Ron Solarz, executive managing director at East-

iere Trans-Quebec or SITQ, partnered with SL Green Realty to buy 1515 Broadway. In the following years, it bought about $1 billion worth of New York multifamily properties in a joint

Ivanhoe Cambridge dropped $2.2 billion on 3 Bryant Park in February.

Company CEO Daniel Fournier

and its skill in closing complex transactions as crucial to Ivanhoe Cambridge’s goal of building a U.S. office portfolio. Investing in New York is attractive for a massive pension fund like Ivanhoe Cambridge because it allows it to park large sums of money in a single asset. “The challenge that any large Canadian pension plan has is really getting its hands on enough real estate,” said John Andrew, a professor at Queen’s University’s School of Urban and Regional Planning in Ontario. He explained that Ivanhoe has huge inflows of cash and a clear target for how much real estate to invest in. The easiest way to meet that target is to go big. “It’s too cumbersome to mess around with the little stuff, so they are only interested in large buildings and portfolios,” he added. That’s why Ivanhoe Cambridge goes big on markets where it can invest billions of dollars in a single property, like Manhattan. The same rule of thumb applies to other pension funds. But while some of them have spent large amounts in Manhattan, none have spent as much on aggregate as Ivanhoe Cambridge. The Montreal-based firm invested $3.8 billion over the past five years, while Ontario’s OMERS invested $2.67 billion and New York’s TIAA-CREF invested $2.6 billion during that same time.

The trauma of 2008

Last year, the company bought a stake in 330 Hudson Street.

ern Consolidated. “My sense is they are very shrewd investors with a long-term horizon.”

Big buys only Ask brokers about what makes Ivanhoe Cambridge unique, and almost all of them point to its seemingly limitless funds. “They are just this massive company that can write these incredible checks,” said Solarz. The company is flush with cash because it’s the real estate subsidiary of Quebec’s public pension-fund manager, La Caisse de Depot et Placement du Quebec (the Caisse for short), which pools the money from about 30 public pension and insurance funds. In Quebec, as in the rest of Canada, public pension plans are mandatory for all workers. The Caisse’s assets total $200 billion, making it the second largest Canadian pension program, behind the Canada Pension Plan, with $226.8 billion, according to research organization Sovereign Wealth Fund Institute. Ivanhoe Cambridge’s assets alone total $35 billion, according to its website. Despite its size, the fund has only a limited presence in major real estate markets and doesn’t have an office in New York. Instead, it has relied on joint-venture partners for local expertise. In 2007, Ivanhoe Cambridge’s predecessor, Societe Immobil-

venture with Ofer Yardeni’s Stonehenge Partners, including 100 East 20th Street and 330 East 63rd Street. Most recently, its partner of choice has been Callahan, the Chicago-based private equity real estate firm. The two firms signed a partnership agreement in December 2012. In October 2013, they bought a stake in 1211 Sixth Avenue for $892 million. In June 2014, they bought a stake in Beacon Capital Partners’ 330 Hudson Street, before making their biggest splash to date in 2015 with the purchase of 3 Bryant Park. And more money could be on the way. An Ivanhoe Cambridge spokesperson said the Caisse recently increased its real estate investment target, and that New York continues to be an appealing destination. “We believe that the economic fundamentals are very positive for long-term investment in high-quality office properties in New York,” he said. Ivanhoe Cambridge did not disclose details of the partnership, but according to sources, Callahan handles much of the operations while Ivanhoe provides the financial firepower. The spokesperson cited Callahan’s expertise in finding the right investment opportunities, its asset management experience

A look at the pension fund’s recent history offers some key clues to its current market behavior. While it may seem like a fantasy in the U.S. given the political gridlock here, Canada mandates that all workers in the country contribute to a public retirement system, the Canada Pension Plan. Francophone Quebec, always prone to separatist tendencies, was the only province to opt out of the federal plan when it was established in 1965. Instead, it launched its own version, the Quebec Pension Plan, to be managed by the Caisse. In 1984, the Caisse founded its first real estate subsidiary, SITQ, which soon began investing in real estate abroad. Then in 1990, the Caisse acquired the Ivanhoe Corporation, a private shopping center owner. It ran the two subsidiaries separately until 2011 when they were merged under the name Ivanhoe Cambridge. Until then, the Caisse invested in Manhattan real estate through SITQ. The Caisse, always proud of being distinct from the federal Canadian pension system, often pursued different investment strategies. In 2008, this almost proved fatal. “They were doing the same things the U.S. investment banks were doing,” said Alan White, a professor at the University of Toronto’s Rotman School of Management. “The Caisse was always very aggressive in its investment strategies and took on a lot of derivative positions. They were very successful, until the financial crisis.” For firms like Ivanhoe Cambridge, the asset-backed securities that were so popular in the early 2000s likely appeared to be Continued on page 126

www.TheRealDeal.com January 2014 35

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FOREIGN INVESTMENT

Who’s bankrolling the boom? Domestic lenders take back seat to foreign financiers at NYC’s tallest towers

W

BY KONRAD PUTZIER hen Gary Barnett’s Extell Development began building One57 in 2011, he secured a $700 million construction loan from a syndicate led by Bank of America. In hindsight, the financing deal seems like the end of an era. In the years since, there’s been a seismic shift in the financing of new residential construction in Manhattan, particularly at the very top of the market. Just as wealthy foreign residential buyers are parking

Bank: the Jean Nouvel-designed MoMA Tower at 53 West 53rd Street, which is being developed by Hines, and 125 Greenwich Street, which is being jointly developed by Michael Shvo, Howard Lorber’s New Valley Group and Bizzi + Partners. In addition, the Bank of China is financing Vornado Realty Trust’s under-construction 220 Central Park South, with senior and mezzanine loans totaling more than $1 billion. Extell’s Nordstrom Tower at 225 West 57th Street and JDS Development and Property Markets Group’s 111 West

Financing condo construction is undoubtedly attractive to hedge funds because of the high returns their investors expect. The fund’s 432 Park loan to Macklowe and co-developer CIM has an interest rate of around 10 percent, according to sources. The rates on loans for 520 Park and 30 Park Place are not far behind. Unlike most banks, hedge funds are under pressure to regularly produce double-digit returns, which limits them to riskier real estate loans. A spokesperson for the

THE SE SEVEN TALLEST BUILDINGS GOING UP IN MANHATTAN — AND THEIR LENDERS Developer

Height (in feet)

225 West 57th Street (Nordstrom Tower)

Extell Development

1,775

N/A

N/A

111 West 57th Street

JDS/Property Markets Group

1,421

N/A

N/A

Macklowe/CIM Group

1,396

Children's Investment Fund

$400 million

Hines

1,050

United Overseas Bank, others s

$860 million

951

Bank of China

$1.05 billion

937

Children's Investment Fund

Address

432 Park Avenue 53 West 53rd Street (MoMA Tower) r) 220 Central Park South h

Vornado Vornad a Realty Trust ad

30 Park Place e 125 Greenwich ch h St.

Silverstein Silv Properties Architect Jean Nouvel and his MoMA Tower.

SHVO/Bizzi S SH & Partners

841

Lender

Loan Amount

$660 million

United Overseas Bank, others s

Developer D De Dev e elo ev ell per eloper perr Ha H Harry a arrrry rrryy Ma M Macklowe ackl cklow ck klow k we w e a his his luxury luxu ux ry tow ttower ow wer e at a and 432 432 2P Pa Park ark k Ave A Avenue. nue.

$170 million

Source: Loan amount and lenders from news reports, NYC Department of Finance mortgage filings and public company financial documents. Includes only residential towers under construction or in pre-construction.

their cash in New York City apartments, foreign lenders are also looking to get their capital into the Manhattan market. And developers have seized on that eagerness: At least five of the seven tallest luxury condo towers under construction, or in the pre-development phase, are financed by a senior construction loan from a foreign lender, according to a review of public documents and news reports conducted by The Real Deal. Domestic banks “have become a little more restrictive, they don’t really compete with overseas banks,” said Kevin Swill, chief operating officer of the Carlton Group, a real estate investment banking firm that has arranged financing for a number of projects. “The market is definitely very competitive, but the competition right now is coming from these overseas institutions.”

A new lending era Traditionally, syndicates led by domestic banks such as Wells Fargo and Bank of America financed Manhattan’s major residential construction projects. In recent years, however, more unconventional lenders, many of them foreign, have stepped into the fray. Through an affiliate named Talos Capital Limited, the Children’s Investment Fund, a U.K.-based hedge fund that donates a large share of its profits to its eponymous charity, is financing two of Manhattan’s seven tallest residential towers. The fund ponied up $400 million for Harry Macklowe’s 432 Park Avenue and $600 million for Silverstein Properties’ Robert A.M. Stern-designed condo and hotel at 30 Park Place. (That’s in addition to a $450 million construction loan at the Zeckendorf ’s 520 Park, not one of the tallest, but still a high-profile Manhattan condo tower.) Meanwhile, the construction loans at two of the other tallest towers are coming from Singapore’s United Overseas 42 June 2015 www.TheRealDeal.com

57th Street, the tallest and second-tallest planned towers in the city, don’t appear to have construction loans in place yet.

A fund with a mission The Children’s Investment Fund is the most active — and most unconventional — backer of Manhattan’s supertall luxury towers, with $1.7 billion committed to Manhattan condo developers since 2011. Since launching in 2004, the fund has donated more than $1.9 billion to the Children’s Investment Fund Foundation, which fights childhood malnutrition and disease in developing countries and is run by fund founder Christopher Hohn’s ex-wife, Jamie Cooper-Hohn. Initially, the fund was contractually obligated to donate a large chunk of its profits to the foundation. But the couple split in 2012, and since 2014, the fund hasn’t been required to do so. Still, Hohn remains a foundation trustee and, according to the Daily Telegraph, is expected to remain a major donor. The Children’s Investment Fund’s philanthropic agenda, of course, stands in sharp contrast to the swanky residential projects that it’s bankrolling in New York, which will be occupied by the über-wealthy. Despite its exposure to the vulnerable ultra-luxury market, experts don’t expect the fund to get burned. “The construction lending market has been extremely disciplined,” said Shawn Rosenthal, executive vice president in CBRE’s debt and finance group. “I don’t think the Children’s Fund is lending on risky projects. They have modest leverage and a fair level of interest rates.” The Children’s Fund made its first widely publicized foray into Manhattan’s luxury condo market in 2011, when it lent Macklowe and CIM Group $250 million for their conversion of 737 Park Avenue.

Children’s Investment Fund declined to comment. Michael Barker, an attorney at Fried Frank who has represented the fund in its Manhattan financing deals, would only cite the attractiveness of the New York market.

Getting money out Other foreign construction lenders are satisfied with far lower returns than the Children’s Investment Fund. For example, the Bank of China’s $600 million senior construction loan to Vornado for 220 Central Park South comes with a floating interest rate of 2.92 percent, according to Vornado’s most recent public financial statement. The bank, which could not be reached for comment, also issued the real estate investment trust a mezzanine loan for the project with an even lower interest rate of 2.5 percent. Vornado declined to comment, but sources said the loans are most likely cheaper because they are secured against the REIT’s sizable balance sheet. Lenders like the Bank of China are drawn to construction financing in Manhattan not because of high returns, but because it’s perceived as safe. “International banks look for lower yields on their loans,” said Swill, whose firm has arranged financing for 432 Park and 125 Greenwich. “They have so much capital that they need to deploy and they really want to get the money out.” Sources say this influx of foreign capital has also created more competition among lenders, making construction financing cheaper for developers. Ayush Kapahi of the real estate capital advisory firm HKS Capital Partners said the firm is “doing deals in exactly the same [interest rate] range” as the Bank of China’s loans for 220 Central Park South. Continued on page 118

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NEW DEVELOPMENT

BROOKLYN’S GOLDEN HOUR Borough’s new condos hit $2,500 per square foot marker — and are going up from there

B

BY TESS HOFMANN rooklyn developers are increasingly smashing through a price threshold previously seen only in Manhattan: $2,000 per square foot. The trend reflects a unique confluence of market realities, namely the borough’s booming popularity and the move toward developments aimed only at the über-wealthy across the East River in Manhattan. Those price increases are being egged on by the fact that Brooklyn builders are able to offer more impressive amenities, higher-end finishes and top-notch views at prices that rival far more ordinary options on the other side of the Brooklyn Bridge. “You can get the best apartment in Brooklyn and feel amazing about the purchase, or you can get an average apartment in Manhattan,” said Jared Della Valle, president of Alloy Development, the developer of 1 John Street in Dumbo. “I think that’s a psychological opportunity.” This month, The Real Deal ranked newly built or recently converted Brooklyn residential projects with active sponsor listings by average asking price per square foot, excluding buildings with too few active listings (which would have skewed the averages) and those where square footage information was unavailable. Of the top 10 projects included, four average more than $1,500 a foot, according to the ranking, which was based on listings pulled from StreetEasy and analyzed by TRD. The survey also found nine condo units asking in excess of $2,000 per square foot and two units — one at Pierhouse and the other at 388 Bridge Street — exceeding $2,500. Meanwhile, on the closed sale front, the borough has already seen the $2,000-per-foot line crossed. In March, a 700-square-foot condo at the Bennett House in Park Slope, a conversion of a 1920s building, sold for $1.4 million, or $2,029 a foot. Alloy’s 1 John Street, where the average listing price is now $1,983 per foot, took the top spot for priciest building.

44 June 2015 www.TheRealDeal.com

The most expensive listing there, one of six penthouses, is on the market for $2,408 per foot. The 42-unit building sits at the edge of Brooklyn Bridge Park — in the northernmost area — and features kitchens with double islands and bathrooms with stone mosaic floors and freestanding soaking tubs. Every apartment has oversized windows with Manhattan views. Della Valle said the quality of the units at 1 John Street, his fourth Dumbo project, is higher than those he built at 459 West 18th Street along the High Line in 2010. Pierhouse — which is being built by Toll Brothers City Living and Starwood Capital Group — has the second highest average listing prices per square foot in the borough, according to TRD’s analysis. The building provides a clear example of the differences between Brooklyn and Manhattan. For an average $1,965 a foot, Pierhouse buyers get a waterfront location in Brooklyn Bridge Park, with head-on views of Lower Manhattan, 18-foothigh living room ceilings and access to a rooftop swimming pool and bar. For the same price in Manhattan, a buyer can

People buy into the fact that Brooklyn is $2,500 per square foot in prime, prime, prime locations more than they do that Tribeca is $5,000 per square foot.” JARED DELLA VALLE, ALLOY DEVELOPMENT still get high-end finishes but would get ordinary ceiling heights, second-rate views, standard layouts, and only obligatory amenities crammed into smaller spaces, sources said. Sources say since many of today’s projects were penciled out a few years back when Brooklyn land costs were a bit

lower, developers have more financial flexibility to go over the top with designs and finishes — and then ramp up prices.

No compromises Like Della Valle, developers building in Brooklyn are increasingly deciding to go all-out, often guided by new development marketing firms that convince them that Brooklyn buyers are also willing to spend more than they have in the past. “The housing stock that was being built seven years ago was for the first-time homebuyer,” said Stephen Kliegerman, president of Halstead Property Development Marketing, which is selling several Brooklyn projects including 388 Bridge and 51 Jay. “Now the housing stock that’s being built is for folks who might be on their second or third purchase.” Nava Companies founding partners David Ruff and Stewart Osborne weren’t expecting to break $1,200 to $1,300 a foot when they started 210 Pacific Street in 2011. So they initially opted for more basic finishes. Those finishes were, however, ultimately upgraded. “Through conversations with the brokers, we realized that the product we initially intended to bring to the market would bear out a lower PPSF than the one we ultimately decided to bring to market,” said Ruff. “We upgraded a number of things based on the demand we saw.” They listed the units in the environmentally sustainable building — which includes a rooftop solar hot water heater and electric car charging — for an average of $1,676 per foot, placing the building third on TRD’s ranking. The duo launched sales in January and have just two remaining units, including the penthouse, which hit the market in late April for $5.5 million, or $1,991 per foot. Not far away in Brooklyn Heights, developer David Ennis said he would have been happy to break $1,000 a square foot when his company, the Daten Group, began planning its 14unit condo at 72 Poplar Street back in 2011. A three-bedroom penthouse at the project, a conversion of a former police horse

NEW DEVELOPMENT

Brooklyn’s priciest new development projects by average PPSF Developer

Neighborhood

No. of Units

Average PPSF

Alloy Development

Dumbo

42

$1,983

T Toll Brothers City Living/Starwood Capital Group

Dumbo

108

Nava Companies

Cobble Hill

8

Dumbo

74

Address 1 John St.

388 Bridge St.

Stahl Organization

Downtown Brooklyn

378

$1,965 $1,676 $1,546 $1,492

138 Pierrepont St. (Brooklyn Trust Company Building)

Stahl Organization

Brooklyn Heights

12

$1,434

72 Poplar St.

Daten Group

Brooklyn Heights

14

173 Amity St.

Lonicera Partners

Cobble Hill

8

Flank and The Carlyle Group

Boerum Hill

128

Mona Gora and Golden Lioness

Williamsburg

63

$1,426 $1,348 $1,335 $1,318

90 Furman St. (Pierhouse) 210 Pacific St. 51 Jay St.

S Slate Property Group/Adam America Real Estate

265 State St. (The Boerum) 338 Berry St. (The Williamsberry)

1 John Street

Source: TRD analysis of StreetEasy data. Includes all new development buildings and conversions in Brooklyn that had active sponsor listings last month. All units labeled as active by StreetEasy were tallied, including those that were in-contract. Excludes buildings with too few active listings and where square foot information was unavailable.

stable that includes an adjoining townhouse, is now in contract for north of $1,900 per foot. (TRD included in-contract units labeled as “active” in StreetEasy.) “That we’re even discussing $2,000 a foot [now] is phenomenal,” he said. The overall average in the building was $1,426 per foot, which put the project at No. 7 on the ranking. In response to prodding from the marketing team at Douglas Elliman, Ennis decided to dial up the style and quality of his project. “At $2,000 in Brooklyn there will still be that expectation that you get everything,” Ennis said. For example, the townhouse will have a heated and cooled garage, radiant-heated floors and three levels of outdoor space. As a result: There’s no compromise. In Manhattan, $2,000 is now a compromised number in the same way that $1,200 was a few years ago, Ennis said. In other words, buyers in Manhattan are not getting top-notch new developments at that price today.

Price hiking At $2,530, the most expensive single unit on the market by price per square foot is a penthouse at the Stahl Organization’s 388 Bridge Street in Downtown Brooklyn that’s asking nearly $6 million. The 53-story condo-rental hybrid had an average asking price of $1,492 per foot for its active listings, putting it at No.

5 on the ranking. The priciest units have panoramic views of the Manhattan skyline and New York Harbor. Roger Fortune, Stahl’s vice president, said that $6 million is a great deal for the penthouse — “less than half the price of comparable Manhattan apartments” — considering the fact that it is the tallest condo in Brooklyn and comes with an impressive amenities package, including a 536-square-foot private terrace. Though achievable asking prices have skyrocketed in the past four years, they’re not letting up. It’s now common for Brooklyn developers to increase condo prices after sales launch. “On a couple units we had multiple bids, and so we increased the prices when we were going through that process,” Ruff said of 210 Pacific. “It’s been very fluid and we’re kind of weekly monitoring where we think the market is.” Some developers say they could easily hike prices, but have decided to get out closer to their original projections, while letting buyers feel good about the value they’re getting. Architecture and development firm Flank launched sales at its 128-unit condo the Boerum at 265 State Street in Boerum Hill in December, and is in-contract on 95 units, according to StreetEasy. Flank co-founder Mick Walsdorf said the firm could charge more than the average $1,335 per foot the units are listed for in the building. But, he said, the company, which has increased prices marginally since launching sales, is

happy with the quick absorption. The project clocked in at No. 9 on the ranking. Walsdorf said he believes prices could be increased by $50 to $75 per square foot across the board without hurting absorption rates, while his colleague estimated that number at $100 more per foot.

Price projections While condo prices in the city’s hippest borough have risen substantially, on the whole they are still a long way off from mirroring the overall Manhattan market. In Manhattan, only a handful of new development buildings now have price-per-square foot averages under $2,000, and those at the very top, like Macklowe Properties’ and CIM Group’s 432 Park, are listing units for averages topping $7,500 a foot. Walsdorf said he expects $1,400 to be the new entry point for condo development in prime Brooklyn neighborhoods — and to go up from there. That’s not to say that there aren’t projects outside of prime Brooklyn neighborhoods with lower price points. According to TRD’s research, 875 Saint Marks Avenue in Crown Heights has an average asking price of $533,000, or $654 per foot. Continued on page 122

The p priciest new development listings in Brooklyn by PPSF Address/Unit

Developer

Neighborhood

Price

PPSF

The Stahl Organization

Downtown Brooklyn

$5.9 million

$2,530

Toll Brothers City Living/Starwood Capital Group

Dumbo

$10.5 million

The Stahl Organization

Downtown Brooklyn

$3.3 million

1 John St., #PHE

Alloy Development

Dumbo

$8.8 million

1 John St., #PHA

Alloy Development

Dumbo

$7 million

1 John St., #PHC

Alloy Development

Dumbo

$5.7 million

1 John St., #10B

Alloy Development

Dumbo

$5.2 million

The Stahl Organization

Downtown Brooklyn

$2.9 million

Alloy Development

Dumbo

$5 million

Nava Companies

Cobble Hill

$5.5 million

Alloy Development

Dumbo

$4.9 million

Slate Property Group/Adam America Real Estate

Dumbo

$5.2 million

Toll Brothers City Living/Starwood Capital Group

Dumbo

$4.9 million

90 Furman St. (Pierhouse), #N506

Toll Brothers City Living/Starwood Capital Group

Dumbo

$2.6 million

90 Furman St. (Pierhouse), #N212

Toll Brothers City Living/Starwood Capital Group

Dumbo

$5.8 million

$2,505 $2,415 $2,408 $2,342 $2,205 $2,102 $2,037 $2,008 $1,991 $1,958 $1,933 $1,900 $1,892 $1,882

388 Bridge St., #PH53A 90 Furman St. (Pierhouse), #N1007 388 Bridge St., #PH51F

388 Bridge St., #PH51B 1 John St., #7B 210 Pacific St., #PH 1 John St., #4B 51 Jay St., #PHF 90 Furman St. (Pierhouse), #N804

388 Bridge Street

Source: TRD analysis of StreetEasy data. Includes all new development buildings and conversions in Brooklyn that had active sponsor listings last month. All units labeled as active by StreetEasy were tallied, including those that were in-contract.

www.TheRealDeal.com June 2015 45

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RESIDENTIAL

THE HAMPTONS’

BIGGEST BROKERAGES

The firms doing the most business on the East End as market uncertainty looms

M

BY C. J. HUGHES

emorial Day Weekend marked the official opening bell for the Hamptons season. And while most of those flooding into the East End were thinking about which beaches and restaurants to hit, residential brokers were more focused on capturing business. That’s especially true because while prices and sales volume were up in the first quarter on the East End over last year, they were down compared to the fourth quarter. “Everybody seems to be taking a little bit of a breather,” said Paul Brennan, the Hamptons manager for Douglas Elliman. That goes for the brokerages, too. Unlike in 2014, when almost every major brokerage had beefed up its sales force, some of the top firms this year have slightly slimmer operations. That trend even held

48 June 2015 www.TheRealDeal.com

true at some big firms like the Corcoran Group and Brown Harris Stevens, according to this year’s ranking of top East End firms by The Real Deal. But this year, TRD’s annual survey has a

tally, which only included firms with $100 million or more in listings, covered only exclusive and co-exclusive single-family home listings in the Hamptons, Shelter Island and the North Fork.

Together, the top five firms have $9.1 billion in active listings, compared to the bottom six firms on TRD’s list, which have a combined $1.3 billion. new twist: For the first time, it also evaluated firms by dollar volume of listings, based on data from the Hamptons Real Estate Online database and with confidential listings provided by most of firms. The

The Corcoran Group took the top spot with $2.43 billion in active listings. Elliman was a close second with $2.24 billion. Those two mega firms were followed by Sotheby’s International Realty with $2.19

billion; Saunders & Associates with $1.3 billion; and BHS with $943 million. While comparable listings statistics don’t exist for 2014, these numbers offer the first glimpse at the level of business the biggest firms are doing in the notoriously secretive Hamptons market. The figures also show how much market share is concentrated in the hands of just a few big players. “This market is opaque,” said Anthony DeVivio, the Hamptons manager for Halstead Property, adding that a lack of a Multiple Listing Service makes it hard to know precisely what each firm is marketing. DeVivio noted that the East End is riddled with quiet listings that don’t turn up anywhere, as well as open listings which allow a broker to market a property but not as an exclusive.

ILLUSTRATION FOR THE REAL DEAL BY CHRIS MANFRE

RESIDENTIAL

Assessing the ranks In the first quarter of the year, the Hamptons market appeared robust when compared with a year prior. The average sale price on the South Fork, which stretches from Westhampton Beach to Montauk, was $1.76 million, up from $1.71 million in the year-ago quarter, according to the latest Elliman market report. Similarly, the median sale price, $921,000, was higher than the $880,000 price of a year ago, the report said. But both of those first-quarter figures were down from the fourth quarter — a potentially troubling sign. And that dip was particularly worrisome, brokers say, as year-end bonuses are usually spent in the first quarter, though severe winter weather may have also played a part. Brennan noted that when secondquarter sales figures are released next month, that slowdown would be even more apparent. Judi Desiderio, the founder and president of Town & Country, No. 7 on the ranking with $352 million in listings, warned, however, that talk about a cooling market can be a self-fulfilling prophecy. “Right now the chatter is about a

correction, and once the correction chatter starts, there is a little bit of a pullback,” she said. With sluggishness in the market headed into the peak season, it’s not surprisingly that some firms slimmed down their ranks. Corcoran, which has 10 offices, saw its count dip to 335 from 342 last year and BHS

But Brennan said headcount tallies are overrated because many agents don’t carry much weight and can also cost a firm up to $3,000 a year in licensing and other fees. In fact, 20 percent of agents at any firm do 80 percent of the work, he said. Nonetheless, several firms — Elliman, Saunders, Sotheby’s, and Halstead —

“We are tied at the hip to New York, because that’s where we’re getting 90 percent of our buyers from. But it operates differently, because these are discretionary purchases, even for the people with the big bucks.” ANTHONY DEVIVIO, HALSTEAD PROPERTY logged 131 agents, down from 138. Aspasia Comnas, who manages BHS’ seven Hamptons offices, said, however, that she’s in the midst of hiring and hopes to have a head count of 140 before the season really kicks in.

FIRM

added agents. Elliman, which has nine East End offices, saw its agent tally jump to 396 from 370. Meanwhile, Saunders & Associates, which launched in 2008, saw an almost 25 percent increase in agent totals, jumping

to 166, from 128, according to firm founder Andrew Saunders. Saunders said he’s recruited more than two dozen agents in the last year, and noted that the company’s ban on managers brokering deals has appealed to a lot of agents. He also adamantly denied rumors that he was planning on selling his firm. In April, insiders said Compass was in talks to acquire the firm and last month several sources said that Corcoran parent NRT was doing the same. “We are having no conversations regarding selling this company,” he told TRD last month. “This is an engineered strategy by our competitors to create a level of uncertainty.” One thing that is certain is that the company is expanding. Last month it opened its third office, in a 5,200-square-foot onetime gas station in East Hampton. Saunders, who said he buys rather than leases office spaces, noted that he does what it takes to ensure that his agents are comfortable and that nobody has to “sit on window ledges.” Meanwhile, Halstead, which has just two offices in the Hamptons, saw its agent count jump to 41 agents from 36. However, Halstead’s DeVivio said he’s currently looking

$ VOLUME OF LISTINGS

NO. OF LISTINGS

NO. OF AGENTS

$2.43 billion

635

335

Douglas Elliman

$2.24 billion

749

396

Sotheby’s International Realty

$2.19 billion

253

113

Saunders & Associates

$1.30 billion

310

166

Brown Harris Stevens

$943 million

312

131

$366 million

23

8

Town & Country Real Estate

$352 million

185

145

Norma Reynolds Sotheby’s International Realty

$202 million

74

Daniel Gale Sotheby’s International Realty

$147 million

115

51

Nest Seekers International

$132 million

74

96

$113 million

51

41

Corcoran Group

Elliman’s Paul Brennan

Andrew Saunders

Bespoke Real Estate

Halstead Property

Town & Country’s Judi Desiderio

Peter Turino of BHS

20

Source: Dollar volume of listings based on data from Hamptons Real Estate Online and confidential listings provided by most of firms. Only firms with $100 million or more in listings were included. Tallies included exclusive and co-exclusive single-family homes listings in the Hamptons, Shelter Island and the North Fork. Condos, land and commercial property listings were excluded as were open listings. Agent numbers are from the firms’ websites and from company officials as of late last month. Figures do not include managers or administrative personnel. 8 Mitchell Dune is listed with Town & Country for $9.9 million.

to expand by acquiring a smaller local firm. “It would give is instantaneous presence in their market right away,” he said. For its part, Sotheby’s — which has four offices and is under the umbrella of a corporate parent — also boosted its heft. It increased its ranks to 113 agents from 101. (It is not affiliated with the franchised Sotheby’s outlets on the East End.)

88 Sunset Beach Road in North Haven is on the market for $1.9 million with Saunders & Associates.

Sotheby’s growth can be explained in part by extra bodies filling its new Sag Harbor office at 35 Main Street, the former site of the Sag Harbor Express newspaper. (The newspaper moved upstairs.) The new 18-person office, which opened last month, replaces a small satellite office the firm had in the village. It’s not surprising to see residential

150 Madison Street in Sag Harbor is on the market for $4.3 million with Sotheby’s.

brokerages beefing up their presence in Sag Harbor. The town’s profile has been rising in recent years. It’s now home to several new and high-end condo projects, including the Watchcase Factory, a longderelict industrial site that Cape Advisors has turned into 64 penthouses, lofts and townhouse homes. Available units at the property, which is being marketed by

Corcoran Sunshine Marketing Group, currently range from $2.1 million to $10.2 million. Nearby, there’s also Harbor’s Edge, at 21 West Water Street, a 15-unit project that claims to have the Hamptons’ only rooftop pool. That property, developed by Water Street Development, is being marketed by Halstead Property Development Marketing. www.TheRealDeal.com June 2015 49

RESIDENTIAL Available units there ranging from $2.7 million to $6.3 million. Brokers say Sag Harbor is a safe bet for those projects — especially because it draws visiting boaters who like low-maintenance pied-à-terres. “People want new product, they want ease, they don’t want to do a lot of work,” said John Gicking, the manager of the Sotheby’s East Hampton office.

Listings leaders Just how dominant the top five brokerage firms on the list are is pretty astonishing. Together, the top five firms have $9.1 billion in active listings, compared to the bottom six firms on TRD’s list, which have a combined $1.31 billion. BHS scored the priciest listing: The $140 million 90 Briar Patch Road in East Hampton, an 11.2-acre estate on Georgica Pond that’s owned by Chris Whittle, who founded the Avenues private schools in Chelsea. The listing came on the market in November with Peter Turino, the president of BHS’s Hamptons operation. For its part, Corcoran’s $2.43 billion in listings was spread over 635 properties and included some of the East End’s priciest estates such as 51 Halsey Lane, a 1919 estate in Water Mill, which is asking $85 million and being co-listed with Sotheby’s. Interestingly, Elliman’s slightly lower $2.24 billion in dollar volume was spread over more properties, 749 to be exact, suggesting that its average listing price is lower. Elliman disputed its figures, saying

with a pool and guesthouse, for about $2 million. In late May, it went into contract after nine months of marketing, according to Saunders, who did not disclose the sale price. Brokers say that they’ve seen weakness with trophy properties of $10 million and up, with homes sitting longer than they have in the recent past. According to HREO, there were 379 listings of $10 million or more for sale in mid-May. For example, 344 Little Noyac Path in Water Mill, which goes by the name Longview, has been kicking around for several years. The north-of-the-highway

On a more ominous note, he added that the Hamptons is usually a bellwether that tends to sputter a couple years before Manhattan does.

High-end holdouts If trophy homes are struggling, Bespoke Real Estate, a boutique firm that launched last summer to focus exclusively on the $10 million-and-up sector, doesn’t seem to have gotten the memo. The firm — which was founded last summer by ex-Corcoran agents and brothers Zach and Cody Vichinsky — has a shocking $366 million in listings at just 23 properties,

Brokers say that they’ve seen weakness with trophy properties of $10 million and up, with those homes sitting longer than they have in the past. home, which has a pool and tennis court, is on the market for $10 million with Sotheby’s after being listed at $14.5 million in July 2013, according to listings website StreetEasy. “The inventory of these types of homes is the largest I have seen in a while,” said DeVivio of Halstead, which ranked No. 11 with $113 million in listings. And these $10 million-plus homes don’t always sell after price chops. DeVivio said that older homes are particularly harder

26 Actors Colony Road in North Haven is listed with Elliman for $47.5 million and is owned by actor Richard Gere.

putting it at No. 6 on the ranking. Even more impressive, perhaps, is that the firm only has eight agents. Its properties include a three-home compound that developer Jay Bialsky is currently constructing on Parsonage Lane in Sagaponack, at about $60 million. The Vichniskys did not respond to requests for comment. Not far behind was the 145-agent Town & Country, with 185 listings valued at $352 million. The eight-office firm is holding

Laser focus Focusing on a niche may avoid the ups and downs of hirings and firings, according to some specialized firms. Norma Reynolds Sotheby’s International Realty, a Sotheby’s franchise that focuses solely on the area west of the Shinnecock Canal, including Westhampton and Quogue, had 74 listings at $202 million. And its roster of 20 agents, in a single office, is virtually unchanged from 2014, said Vicky Reynolds, its broker/owner. “Nobody really ever leaves,” Reynolds said. Westchester families are buying in her corner, she said, noting they are attracted to the area because of the relatively short drive. Also, “people are now looking at Westhampton Beach because they want to get to the beach quickly” and it’s usually no more than a 10-minute ride away, she said. And parts of the area can seem steeply discounted: a renovated four-bedroom 1950s ranch in Remsenburg that Norma Reynolds listed in May came on the market for $849,000. Meanwhile, Daniel Gale Sotheby’s International Realty, another Sotheby’s franchise, ranked No. 9 with $147 million and 115 listings. It focuses on the North Fork and has no plans to expand geographically. Like the South Fork, the North Fork is also seeing weakness in the market. The average North Fork sale price in the first quarter was $673,000, according to Elliman’s latest market report. That was down significantly from $812,000 in the year-ago quarter. Carol Tintle, a senior vice president of the

51 Halsey Lane in Water Miller is listed for $85 million with Corcoran and Sotheby’s.

At $140 million, 90 Briar Patch Road in East Hampton is the priciest Hamptons listing. It’s on the market with BHS.

it has $2.78 billion in listings at 1,059 properties. However, it didn’t provide a list to back that up by press time. Among Elliman’s priciest listings: A 12-bedroom compound on six-plus acres at 26 Actors Colony Road in North Haven, owned by the actor Richard Gere. The property was listed for $47.5 million with Elliman’s Brennan. But according to Brennan, it’s the lowerend properties (not the celebrity-worthy homes) that are driving the market now. Saunders agreed, adding that $2 million and under “is where the action is.” He said 70 percent of all trades in 2014 were in the $1.5 million-and-under bracket. Last month, the firm was listing a 3,000-square-foot new-construction home at 7 Corwin Road in Sag Harbor, 50 June 2015 www.TheRealDeal.com

to sell. “The younger buyers, they want the kind of bathroom they had when they stayed at the Four Seasons in Bali,” he said. “There is no doubt that ‘new’ is king,” he added, noting that it commands up to a 20 percent premium. While ultra-expensive properties seem to be finding buyers quickly in New York City, the Hamptons market functions differently, brokers said. For one, there’s not as much foreign capital flooding in. But more fundamentally, it’s a second-home market. “We are tied at the hip to New York, because that’s where we’re getting 90 percent of our buyers from,” DeVivio said. “But it operates differently, because these are discretionary purchases, even for the people with the big bucks.”

steady on the headcount front — down just a hair from 147 last year. Meanwhile Nest Seekers International, which opened in the Hamptons in 2012, had 74 listings at $132 million. The firm’s agent count dropped to 96 from 106 last year, but Geoff Gifkins, the manager of the firm’s five Hamptons offices, said the firm has made a lot of progress. Last fall, Nest Seekers relocated its Westhampton Beach office from a secondfloor berth on Main Street to a ground-floor storefront; it also grew to 20 agents from 8, Gifkins said. He’s now looking to expand Nest Seekers’ Bridgehampton office. Growth has also been helped by technology, he explained; a smart phone app that allows buyers to more easily search for properties unveiled last year has boosted business.

firm, said the winter weather had a lot to do with the slowdown. “It snowed so often, we couldn’t even get to homes to show them until they were plowed out,” she said. “But we’re catching up.” In the steady-growth market of the 1990s, Tintle would tell sellers that by waiting a year, they could fetch higher prices. Today, there’s less certainty about that kind of future, she said. Her firm had 51 agents in four offices, versus last year’s 48. What’s surprising, said Elliman’s Brennan, is that on paper, the economy is sound — low unemployment, a booming stock market and strong corporate profits. That, he said, gives him more confidence. “There are no dark clouds looming on the horizon,” Brennan said, “so it would seem that things would have to pick up.” TRD

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PR O F I L E

Ziel Feldman: It was worth every penny The developer on why his massive $870M land purchase in Chelsea is going to pay off

Ziel Feldman believes the features of his site justify the eyebrow-raising price he paid.

BY KONRAD PUTZIER he first thing you see when you walk into the swanky lobby of HFZ Capital Group’s Midtown office is a sad-looking rhinoceros suspended from a crane. Standing shoulder high on a coffee table in the middle of a swanky lobby, the crane is a sculpture by Italian artist Stefano Bombardieri. According to HFZ’s President Ziel Feldman, the art is a metaphor for harnessing power. And considering recent events, it seems it also has another message: This is a company that’s going after the big game. Feldman’s other metaphorical rhino is 518 West 18th Street. Early last month, HFZ paid a staggering $870 million for the 36,000-square-foot development site straddling the High Line in one of the most expensive land deals ever recorded in the city. Without laying a single brick, HFZ has already spent around $1,100 per hypothetical square foot on its planned condo project. In order to make a profit, it will have to sell out two very large buildings at very high persquare-foot prices. And the amount that Feldman shelled out for the site seemed to confirm growing fears that land prices have gotten out of hand. Even developers who are generally bullish on the High Line appeared slightly taken aback by the price HFZ paid. “Can you think of any other site that sold for $1,000 a foot? I can’t either,” said Cary Tamarkin, an architect and developer who is building two condo projects near the High Line. “I am very cautious. People call me every day [with offers of land]. They say it’s a little expensive at $1,000 per foot and they say that’s the rate these days,” he added. “And I

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say, name me some people that have paid that much.” Still, Tamarkin said 518 West 18th Street could be worth its steep price. “I can tell

Feldman expects sale prices to average between $3,800 and $4,000 per square foot, despite the fact that nearby condos don’t come close to that. you the site is one of the few sites that could conceivably do very well even with that kind of money.” For his part, Feldman argued that he got the site for a bargain, especially compared to sites that have traded for similar amounts. “Although the total volume is a record because it’s a 36,000-foot site, the cost per foot was far less than more inferior sites,” he said. “What we believe we got is something that’s extraordinarily well priced for the total package.”

The whole package Currently a trapezoid-shaped field of sand and gravel, 518 West 18th Street is squeezed between 17th and 18th streets, the High Line and the West Side Highway. If all goes according to plan, the site will soon be home to two buildings of 300 and 400 feet tall designed by Danish starchitect Bjarke Ingels. Feldman said they have not yet settled on a design, but the zoning allows for a total of 850,000 gross square feet. HFZ has secured $1 billion from lenders

— including Black Rock, JP Morgan and SL Green Realty — which is covering the acquisition as well as pre-development costs. The construction loan will come later. Planning is still in its early stages, but most of the site will be condos, Feldman told The Real Deal, noting that it will also include at least 25,000 square feet of retail. He is also toying with the idea of bringing in a high-end, 50- to 125-key hotel. The hotel adds another interesting wrinkle into the financial mix because hospitality space generally sells for less than condos around the High Line. For example, the Soori High Line recently sold for around $2,000 per square foot, while nearby condos sell for $2,400 per square foot and up. But Feldman argued that a well-known hotel could create a brand that pushes up sales prices for the buildings’ condos. The condos will average between 1,500 and 2,000 square feet with asking prices

can’t offer — will justify the price, both for the condos and for the land. “The challenge is finding things that have a reasonable amount of certainty to be successful,” Feldman said last month at TRD’s New Development Showcase & Forum. Evidently, he thinks 518 West 18th Street fits the bill.

A ‘3’ in front In addition to the $1,100 per buildable square foot that HFZ paid for the site, Feldman told TRD that construction will cost another $600 to $700 per square foot. Offsetting the costs, he said, is a tax abatement for up to $60 million through a brownfields program. The previous owner completed all required environmental cleaning, meaning HFZ can avoid costly delays. After factoring in interest payments and other expenses, the total project cost could be around or slightly above $2,000 per square foot. That’s significantly less than the roughly

“Although the total volume is a record because it’s a 36,000-foot site, the cost per foot was far less than more inferior sites. What we believe we got is something that’s extraordinarily well priced for the total package.” ZIEL FELDMAN, HFZ CAPITAL GROUP between $4 million and $8 million — steep prices per square foot even for the High Line. But Feldman argues that unobstructed water views — something nearby competitors

$3,000 per square foot some of the ultrahigh towers around 57th Street need to break even. But while luxury condos at 57th Street Continued on page 118

www.TheRealDeal.com January 2014 35

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FOREIGN INVESTMENT

Shaking up EB-5

The popular visa-funding program is at a crossroads, with extensive changes coming down the pike

BY E.B. SOLOMONT uring the dark days of the credit crisis, New York developers discovered something of a silver bullet in a littleknown U.S. immigration program. Now wildly popular and well-publicized, the EB-5 program offers a green card and potential citizenship to foreign investors in exchange for economic investment in the U.S. In New York, developers have used the program to finance high-profile projects like the Hudson Yards redevelopment and 701 Seventh Avenue, where developer Steve Witkoff and others are building a 39-story, mixedused tower to be anchored by Ian Schrager’s Marriott Edition hotel. But after reeling in developers with the promise of cheap — and seemingly endless — capital, sources said the EB-5 visa program is now at a crossroads. “We had this boom period, and that corresponded with the rise of Chinese investment,” said attorney Joel Rothstein, a partner in Paul Hastings’ real estate and structured finance department. “Now, we’ve reached the balloon-bursting point in some respects.” Last year, for the first time since its inception in the 1990s, the EB-5 program allocated 10,000 visas, the maximum allowed. And interest is only rising: Investors filed 10,928 EB-5 applications with the U.S. government in fiscal year 2014, up from 6,346 a year prior and just 1,258 in 2008. While numbers are hard to come by, more than $3.7 billion in EB-5 money has flowed into several dozen New York City projects over the past several years, according to an analysis by The Real Deal, using publicly available information as well as data compiled for an

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academic paper by a New York University professor. Ironically, unprecedented demand for EB-5, particularly among Chinese investors seeking U.S. citizenship, has saddled the process with delays and increased competition to attract investors, which has turned some developers off to the program (see related story on page 56). But on May 1, the federal government imposed a waiting list for EB-5 investors from China seeking green cards. While the waiting list could dampen investor interest in the long term, the immediate impact has been loan terms that some say are riskier for developers. On top of that, China’s economic slowdown and the government’s crackdown on corruption could “absolutely” impact investment in EB5, said Nick Mastroianni II, CEO of the U.S. Immigration Fund, a Miami-based regional center that specializes in EB-5 fundraising and has worked with major New York developers. “The government has changed its philosophy a few times over the last five, six years and every time they do it effects the market,” he said during a panel discussion at TRD’s New Development Showcase & Forum last month. Meanwhile, the program is up for Congressional renewal in September, placing more pressure on developers to squeeze as much funding as possible out of EB-5 now, since no one knows if, or how, the program will be modified in the fall. In particular, Congress could change the rules pertaining to where projects may be built. Current rules say developments supported by EB-5 capital must be in areas

with high unemployment. In New York City, developers have worked around that and managed to build in wealthy areas by cobbling together census tracts. But that practice could be curtailed. “The reality is, as we get closer to August and September, the fundraising will kind of trickle down,” said Mark Edelstein, chair of the real estate finance practice at the law firm Morrison Foerster. “If you’re starting now with a new deal, it’s dicey,” he said. “We’ve been telling clients, ‘If you can’t get into the market by July 1, just wait.’”

No panacea, but close To date, the Related Companies has been one of the biggest beneficiaries of EB-5 in New York and nationally. The company has raised more than $800 million from approximately 1,600 investors and controls one-third of the EB-5 market nationwide. Related raised a record $600 million

Related continues to be bullish on EB-5’s future. “We find this program to be a tremendous program for the U.S., in terms of job creation and in terms of allowing investments to proceed at a pace that they wouldn’t otherwise be able to,” said CEO Jeff Blau during a forum in April hosted by the China General Chamber of Commerce at business news and data firm Bloomberg headquarters. But speaking alongside Blau at the event, Extell Development’s Gary Barnett — who raised $75 million in 2011 for the International Gem Tower, a commercial condo at 50 West 47th Street — offered a more tepid assessment of the program. “It’s not quite as simple as it seems,” he said. Investors’ “primary focus is to be able to get legal residency in the U.S., but they absolutely want to get paid back … I’m concerned that there will be some stories where people don’t get paid back.”

“If you’re starting now with a new deal, it’s dicey. We’ve been telling clients, ‘If you can’t get into the market by July 1, just wait.’” MARK EDELSTEIN, MORRISON FOERSTER for its Hudson Yards project alone: That translates roughly to 1,200 investors chipping in $500,000 each (the minimum amount required by each investor). It’s unclear exactly how many jobs will ultimately be created, but the EB-5 program requires each investor to create 10 permanent jobs.

While Barnett didn’t elaborate on why, investors could easily lose their cash if the market turns or if a development falls through. Generally speaking, EB-5 loans have fiveyear terms, since it takes that long for investors to wend their way through the immigration process. Also, depending on the project’s www.TheRealDeal.com January 2014 35

FOREIGN INVESTMENT capital stack, the developer may need to pay the senior lender first. Investors are only paid after their permanent green card is approved, said EB-5 attorney Kate Kalmykov of Greenberg Traurig. “But,” she added, “the law specifies that the amount of repayment cannot be guaranteed.”

Uncertain capital for cheap A small program at first, EB-5 investment took off in 2009 when other lenders pulled back amid the financial downturn. At this point, the program has gained so much popularity that some say it’s becoming a victim of its own success. There are now more investors who want to get in on the action than there are opportunities, creating aggressive competition and frustration. Many have rushed to file paperwork for their visas, since green cards are processed on a first-come, first-served basis. As a funding vehicle, EB-5 has always been a double-edged sword. On the one hand, developers pay much lower interest rates than they would on a conventional loan. On the other, raising money can be arduous and riddled with bureaucracy, uncertainty and expenses like paying immigration agents and so-called regional centers, which spearhead fundraising operations. Some big developers have created their own regional centers to funnel investments to their projects. Others use designated regional centers to raise money. In recent years, such centers have become a booming cottage industry. Yet, noted Morrison Foerster’s Edelstein, “There is no regional center that will guarantee how successful the raise is.” He added: “There are all sorts of stories about [trying to] raise $80 million and only being able to raise $50 million.” Even the terms of EB-5 loans , five years or more, can turn out to be a positive or a negative, depending on how the cards fall in the market and on a project’s construction schedule. Asaf Shuster, vice president of business development for Victor Group, said most developers don’t need the loan for five years. “You need it for two and a half, maybe three,” said Shuster. On the flip side, he pointed out, the fiveyear term can be a safety net for a developer whose project is delayed, since they’re locked into low interest rates. Shuster’s firm has raised $22 million from EB-5 investors for the Charles, a condo building on First Avenue at 73rd Street, where a unit is now in contract for $37.9 million. (The developer also obtained a $157 million construction loan.) The Victor Group is now raising $90 million for a condominium project at 821 Fifth Avenue.

EB-5 in overdrive Despite EB-5’s uncertain future, demand from both investors and developers has not slowed. The reason? While capital is readily available, especially to New York developers, EB-5 money is far cheaper than what traditional banks offer. Sources said that for large-scale construction projects in New York, developers might pay 10 to 15 percent interest on a 74 April 2014 www.TheRealDeal.com

What you don’t know about EB-5 IT’S NOT JUST INVESTORS WHO GET GREEN CARDS. In exchange for a required $500,000 cash infusion into a U.S. project, approved investors also get green cards for their immediate family members. All family members, regardless of how many there are, count toward the annual 10,000-visa cap for the entire program. EB-5 IS NOT THE ONLY CASH-FOR-VISA PROGRAM. One of the least expensive programs is in Greece, where the investment requirement is just over $277,000. Australia has a fast-track program offering a visa within 12 months. Price tag: Nearly $12 million. CHINA’S RISING MIDDLE CLASS IS BIG ON EB-5. Chinese investors are typically new millionaires or part of the rising middle class. Some took advantage of China’s property boom of the last decade by refinancing homes and deploying capital into NYC real estate. ULTRA-RICH NOT INTERESTED. Billionaires often want nothing to do with EB-5 because U.S. citizenship would require them to pay taxes on their global income. No thanks. INVESTORS HAVE A STRONG CHANCE OF APPROVAL . The 2014 approval rate for EB-5 applications was 80.2 percent, according to the trade group Invest in the USA. There was also a backlog of 12,453 EB-5 applications, representing $6.2 billion worth of investments. THE UNDER-25 CROWD IS LEADING THE WAY. The average age of an EB-5 investor is younger than you may think: 24. That’s because many want green cards so they can study at U.S. schools. EB-5 BROKERAGE IS A COTTAGE INDUSTRY. Overseas “migration agents” who line up investors are paid fees based upon the amount raised. REGIONAL CENTERS ARE NOT CHEAP TO START UP. The cost of setting up a regional center, which raises EB-5-funding, is between $100,000 and $200,000. But if the center raises $200 million for a project, they could earn a fee of 4 percent, or $8 million. INVESTORS ARE ROLLING THE DICE ON CASINOS. EB-5 requires each investor to create 10 permanent jobs. As big job creators, hotels and casinos are the most popular investments.

mezzanine loan — the layer of capital between the senior debt and developers’ equity — but only 6 to 8 percent on an EB-5 loan. Justin Gardinier, a managing director and chief operating officer at the financial services firm Greystone, said that despite the availability of capital, there’s ample room for EB-5 in the market. Even if a developer obtains a construction loan, non-recourse financing — in which the loan is secured by collateral but the borrower is not personally liable — typically tops out at 65 to 70 percent of a project’s capital stack, he said. “Any higher than that, you’re stepping into a higher rate or you’re providing some level of recourse,” he said. That’s where EB-5 comes into play, said Gardinier, who joined Greystone in February to build up the firm’s EB-5 business. He said developers are using EB-5 dollars to offset the equity they otherwise would need to chip in to cover the balance of the construction costs. “EB-5 is used to simply enhance the overall returns to the developer and reduce exposure,” he said. Theoretically, a developer who needs to put in 35 percent equity could tap EB-5 to lessen their loan and still retain ownership of the whole project, he said. Steve Polivy, head of the real estate group at the law firm Akerman, said the current EB-5 market favors large projects, as well as projects that, for one reason or another, have difficulty attracting a conventional loan. “The [New York] Wheel was financed with EB-5 funding because no one knows how to analyze that project for conventional bank financing,” said Polivy, whose firm represented Plaza Capital in the Staten Island project’s fundraising. Empire Outlets, the neighborhood’s mall, “was financed with EB-5 because at the time we were looking to start construction, we didn’t have all of the leasing commitments a conventional lender would be looking to see.”

Assessing risk The biggest issue developers have is just how long the process can take. And in recent months, it’s taken even longer than usual for developers to get their hands on funds because of the logjam of applications and concerns about potential changes to the law. The delays have altered the way loans are structured. Typically, investor funds have been placed in escrow as a safeguard to both the developer and investor, and released once the EB-5 application was approved. Now, some loans have “early release” provisions, meaning the developer can access the capital before the investor’s application is approved. “It’s one thing for the money to sit in escrow for six months. It’s another if it’s sitting in escrow not doing anything for 18 months,” said Julia Park, managing director of the Manhattan-based Advantage America New York Regional Center, explaining the reason for early release. But removing the money exposes both sides to risk. “Developers may have access to the money earlier, but they have to provide assurances that the money can be refunded,” Paul Hastings’ Rothstein said. For example, the government could reject

an investor’s application — some investors are rejected if they cannot document a lawful source of the funds. If that happens, the developer must return the money, and may face an 11th-hour funding shortfall. “The bank never calls and says, ‘Our source of funds for the money was an investor and the investor had a change in circumstances and you need to give the money back,’” said Polivy. Tawan Davis, president and chief operating officer of the Peebles Corporation, argued that although EB-5 financing was attractive during the credit crunch, it’s no longer economically compelling. “It’s not free money,” said Davis. He said Peebles, which has $3.5 billion worth of active developments nationally, considered EB-5 financing for all of its projects over the past three years — rejecting it every time. In the past year in particular, Davis said he’s seen EB-5 interest rates and fees creep up. Plus, he said, traditional lenders who wouldn’t cover more than 50 percent of a project’s cost during the recession are now willing to cover up to 60 percent or 70 percent. Most EB-5 lenders won’t go higher. “If you add in the fees and you add that to the interest rate, the cost of capital for an EB-5 loan becomes more or less the same as a more traditional bank loan,” he said. “It’s actually more economical many times, and we have a better certainty of executing [development plans] with traditional financing.” To that end, Davis said EB-5 doesn’t have the certainty of traditional institutional lenders. “I can’t show up to the groundbreaking without the certainty that on a $400 million project, my debt financing is in place,” he said. For a project of that size, he said you’re talking about several hundred investors. “Many times, it’s just too big of an ask,” he said.

Change underfoot The EB-5 community expects changes to the program in September, when EB-5 comes up for renewal. For example, some believe the minimum investment of $500,000 could be raised to $800,000. Lily Guo, president of the Flushingbased American Regional Center for Entrepreneurs, predicted that delays and heightened competition would inflate costs for developers in the long-term. Approved in 2013, the American Regional Center has worked on lining up investors for six projects to date, including the Oosten in Williamsburg. With hundreds of regional centers to choose from, Guo said investors may start shopping around for more competitive returns. Typically, EB-5 investors receive 0.5 percent interest on their investment, according to attorney Gary Friedland, who co-authored a paper on EB-5 financing with a New York University professor. Greenberg Traurig’s Kalmykov said she’s seeing deals get done with higher interest rates, a function of a more sophisticated market. “It has become a cottage industry,” she said, “where brokers take significant fees for raising funds.” But Guo said she is seeing investors hungry for more. “We have seen investors saying, ‘It’s not worth it. I’m not happy with the return just for a green card.’” TRD www.TheRealDeal.com June 2015 55

FOREIGN INVESTMENT

THE‘WILD WEST’ OF FINANCE

l C

The underbelly of EB-5, including long delays and alleged fraud

BY E.B. SOLOMONT hinese developer XIN Development made headlines last year when it landed a $165 million loan from Fortress Investment Group to build its South Williamsburg condominium, the Oosten. Now, the developer is looking for another $50 million via the much-ballyhooed EB-5 program. The immediate obstacle? Lining up 100 individuals who want to help fund the project. Under the EB-5 program, foreign investors are granted a green card in exchange for a $500,000 investment in a U.S.-based venture that creates at least 10 jobs. But despite

l

eligible projects,” said Justin Gardinier, a managing director at Greystone, who is establishing a new EB-5 platform for the Manhattan-based financial services firm.

Controversial start From its inception, EB-5 generated backlash. A 2013 routine audit by the Department of Homeland Security’s office of the Inspector General concluded that the U.S. government was “unable to demonstrate” the economic benefits of EB-5 investment. As recently as last month, University of Chicago Law School professor Eric Posner lam-

enormous popularity among investors and the real estate developers tapping into the cash, the program is a lengthy, labor-intensive and complex process, even in best-case scenarios. basted the program in an article published by Slate. Voicing the views of many critics, Posner And the delays are getting worse. said of EB-5: “It’s the worst combination of bad economics, political cronyism and unfairness.” “There really are hoops to jump through because it is a government program,” said Julia One of the biggest complaints about EB-5 is that it offers wealthy foreigners the chance Park, managing director of the Manhattan-based Advantage America New York Regional to buy U.S. citizenship, but Posner also argues that the cost of entry is far too low. Center, which acts as an intermediary between developers and investors. “Among other things, it’s almost impossible to figure out whether a specific investment The program is also battling a multi-layered public perception problem, with generates jobs rather than reshuffles them from one place to another,” he wrote. “There have critics saying it allows wealthy foreigners to buy their way into the country and that also been examples of outright fraud and political cronyism.” it breeds fraud. Critics say the program can be dodgy, citing some less-than-honest promoters who used Despite the program’s shortcomings, demand has been surging over the past few the program to defraud investors. years, particularly among Chinese investors. But that surge has further bogged down U.S. Simon Henry, a co-founder of the Chinese property website Juwai. immigration officials, who are processing thousands more visa petitions than they used to. com, which is headquartered in Shanghai, said EB-5 investment had “quite The processing time for I-526 petitions — the first hurdle in the long process of obtaining a bad reputation” in China until about a year ago. Early on, the quality of a green card through EB-5 — is currently 14 months, up from roughly six months in 2011. projects and caliber of developers seeking EB-5 funding was lacking, he said. “A lot of And the delays are set to grow: On May 1, the U.S. Citizenship and Immigration Services Chinese got burned pretty badly,” he said. While that has changed, EB-5’s cottage industry (USCIS), the federal agency that oversees the program, imposed a Chinese “retrogression,” has retained dubious elements. or wait list, for Chinese investors seeking EB-5 Joel Rothstein, an EB-5 attorney at the visas, meaning that anyone who applies now law firm Paul Hastings who splits his time “The developer doesn’t want to get caught up in a automatically takes a spot at the end of the line. between Los Angeles and Beijing, said he’s scandal with a bad fundraiser. Who are you getting The wait list was put in place because the seen countless EB-5 events and presentations into bed with? It’s a huge issue with the banks.” EB-5 program dictates that no more than 7 in hotel lobbies in China. Joel Rothstein, Paul Hastings percent of visas can be allocated to investors “There are all these agents and promoters out from a single country. Until now, the program there earning fees to rope in investors and that was underutilized; if investors from other part has a little bit of sleaze to it,” he said. While “It’s almost impossible to figure out whether a countries didn’t use their alloted visas, the visas those agents are generally not affiliated with specific investment generates jobs rather than were offered to Chinese investors. established New York City developers, those reshuffles them. … There have also been examples “At this point, the U.S. government is not developers often have to deal with the fallout of outright fraud and political cronyism.” processing any visas for people who haven’t of overall negative perceptions of the program. initiated the process two years ago,” said Heidi On the domestic side, regional centers Eric Posner, University of Chicago Lerner, chief economist at Savills Studley’s funnel deals to developers — for a fee. There New York office, who published a white paper are currently more than 640 regional centers “Are there fraudulent programs? Of course, in March on EB-5’s impact on real estate. throughout the U.S., including 62 in New York. because people are involved and when people Even if the backlog doesn’t depress demand In addition, nationwide there are another 340 are involved, fraud gets involved. That’s — and many say it won’t, because investors’ applications pending. top priority is obtaining a green card — the And yet, there are only a few dozen regional no different from any other financing.” extra wait will be passed on to developers. And centers a developer would want to do business Julia Park, Advantage America New York there’s a good chance some will balk at longer with, said Rothstein. Regional Center Continued on page 124 loan terms. “It reduces the overall universe of 56 June 2015 www.TheRealDeal.com

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FOREIGN INVESTMENT

Who’s using EB-5?

From the Staten Island Ferris wheel to Hudson Yards, some big projects tapping funds

I

BY E.B. SOLOMONT nvestors have poured more than $3.7 billion into several dozen projects around New York City via the EB-5 program since 2009. And while the industry lacks a comprehensive database, The Real Deal zeroed in on some of the city’s largest and most notable projects to date, using data culled by researchers at New York

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project for conventional bank financing,” said Steven Polivy of Akerman.

• The Lightstone Group is one of several

• Durst’s residential project at 625 West 57th

big developers in New York City to form an in-house regional Street, the Bjarke Ingels-designed pyramid center to raise EB-5 money. It building, solicited $180 million from gathered $60 million from 120 360 EB-5 investors. The EB-5 University and referenced in a report by investors for its 429-unit component is 26 percent of Professor Jeanne Calderon and attorney luxury rental at the capital stack for the Gary Friedland. Here’s a look. Liberty Gardens in $685 million development. Carroll Gardens. Liberty Gardens in Brooklyn Company head Douglas Durst • At Extell’s 555 Tenth • EB-5 investors chipped in $200 million Other developers or a whopping 42 percent — one of the biggest EB-5 Avenue, the developer got a $325 million senior loan with regional centers? Related, Silverstein, Extell and contributions percentage-wise in NYC — for Acadia to cover 71 percent of the project’s cost. But rather hotel building firm the Lam Group. Realty Trust’s 1.8 million-square-foot City Point project, than putting up the rest of the equity on its own, it tapped EB-5 investors to throw in $100 million more, • Forest City Ratner raised $577 a mixed-use development in Downtown Brooklyn. and put in only $30 million itself. That practice is million in EB-5 funding to jump• Related Companies raised a record becoming common among developers citywide. start construction of its long$600 million, for it’s massive 28-acre, stalled Atlantic Yards, which 17.4 million-square-foot mixed mega • Large-scale EB-5 projects are on the rise: Silverstein was quickly renamed Pacific Park development at Hudson Yards on the Properties started raising $250 million for its Four Brooklyn when Chinese developer Far West Side of Manhattan. Seasons Hotel at 30 Park Place in 2013. It’s already Greenland Group acquired a 70 The company has raised reached the project’s fundraising goal. percent stake in the project. more than $800 million in EB-5 money in total and • Plaza Capital’s New York Wheel may be the only Ferris • The Brooklyn Navy Yard is one of the few controls EB-5 projects owned by a city. The project wheel to raise EB-5 funds, and it did so Related’s Jeff Blau one-third attracted $247 million from EB-5 investo the tune of $150 million from 300 of the EB-5 market nationwide. tors in four tranches. The money will go to investors. A lawyer for the developer told TRD that the project tapped EB-5 because it had diffi culty attracting a conventional loan. “No one knows how to analyze that

•

Even the NYC subway system got an EB-5 boost, when vendor Transit Wireless raised $75 million to bring

expand Steiner Studios, the production set used by movies such as “The Wolf of Wall Street” and TV shows including “Girls.” TRD

Developer Doug Steiner

TOP 10 NYC PROJECTS BY EB-5 FUNDS RAISED

Source: NYU report and TRD research.

BROOKLYN NAVY YARD AND STEINER STUDIOS $247 million

555 TENTH AVENUE $100 million

625 WEST 57TH STREET $180 million

HUDSON YARDS $600 million

101 TRIBECA $175 million

ATLANTIC YARDS $577 million

1

2

FOUR SEASONS HOTEL $250 million

3

4

5

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58 June 2015 www.TheRealDeal.com

NEW YORK WHEEL $150 million

CITY POINT $200 million

701 SEVENTH AVENUE $200 million

7

8

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FOREIGN INVESTMENT

Who’s next? By E.B. Solomont

A

ttorney Kate Kalmykov flew to China every other month last year to drum up EB-5 business. This year, her travel schedule includes new stops in countries including Vietnam, Brazil, Mexico and Dubai. “Vietnam is probably in the same place [economically] that China was 10 years ago. There’s a class of people that has rapidly gained wealth,” said Kalmykov, who works at Greenberg Traurig. As most in the real estate world know, Chinese investors have gobbled up the vast majority of visas through EB-5 — the muchhyped program that grants foreign investors green cards in exchange for a $500,000 investment in a U.S.-based venture that creates at least 10 jobs. But because no single country is allowed more than 7 percent of the EB-5 visas, Chinese applicants are now being waitlisted for the program for the first time (see related story on page 56). That’s opening the door for other foreign investors — who are now being wooed by deal-makers in New York who are wary of losing Chinese money. Last year, EB-5 investors pumped $2.5 billion into projects in the U.S., according

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to Invest in the USA, the trade group for the EB-5 industry. Of 10,692 EB-5 applications filed in 2014, Chinese investors accounted for 9,128, or 85 percent. The next highest was South Korea, with just 225 investors, or 2 percent. New countries are, however, beginning to step up. While still low, the number of investors from the United Arab Emirates, Nigeria, Russia, India and Vietnam has shown significant gains, according to data from the U.S. Department of State. For example, the UAE had 121 investors in 2014, up from just two in 2013, and Vietnam had 121 investors compared with 46 the prior year. Meanwhile, Russia had 100, up from 70, and Nigeria had 50, more than double the 23 investors who applied for EB-5 visas in 2013. The ebb and flow of EB-5’s popularity often coincides with political and economic conditions around the world. In 2011, for example, there was a spike in EB-5 applications from Iranian investors that coincided with the Arab Spring. Egypt, too, has shown renewed interest in EB-5 since 2012, and last year saw 37 investors file EB-5 petitions.

With Chinese investors forced to wait in line, other countries are getting into the EB-5 fray Kalmykov said interest from Brazil is tied to instability there, namely a sluggish economy, austerity measures and a bribery scandal involving the state-owned oil company. “People are nervous about their future, their business future and their security,” she said. Scott Bettridge, a Miami-based attorney with Akerman, said emerging markets “are becoming a hotbed for EB-5.” He said investors from Brazil and Venezuela, in particular, are poised to join Chinese investors at the forefront of the EB-5 program since their countries don’t have treaties of commerce with the U.S. Given those circumstances, their citizens cannot come to the U.S. on other types of investor visas. Attorney Mark Edelstein, chair of Morrison Foerster’s real estate finance and distressed real estate practices, said investors from Korea and India are also poised to make their mark. “A lot of developers and regional centers are running down to Latin America now,” he said. “China could shut off its spigot at any minute.” Tawan Davis, chief investment officer at the Peebles Corporation, the Manhattan- and Coral Gables, Fla.-based development firm, said the EB-5 program needs to attract investors beyond China to retain broad bipartisan support in Congress.

“China’s continued investment is a good thing; but I think for the program to be sustained, it has to be about other parts of the world [as well],” he said. “Otherwise the political backlash will be severe.” But Kalmykov said it’s unlikely that Chinese investors will lose interest in EB-5. “They’re all trying to file right now and secure their place in line before the backlog balloons further,” she said. Mona Shah, an EB-5 attorney and principal of the Manhattan-based Mona Shah & Associates, said she, too, doesn’t think Chinese investors will be replaced at the top of the EB-5 heap. “Their goals are different,” she said, of how Chinese investors view the program. For example, South American investors turn to EB-5 because they want to emigrate to the U.S., whereas Chinese investors primarily want green cards so their children can attend school in the U.S., she said during The Real Deal’s New Development Showcase & Forum last month. Because not all Chinese investors are looking to uproot their lives and relocate to the U.S., their investment decisions are notoriously fast. Meanwhile, she said, “The rest of the world is still relatively new and still learning.” TRD

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RETAIL CONVENTION

Snapshots from Vegas

ICSC racks up big turnout, new scions and how to beat ‘schmoozing fatigue’

M

Al, Jason and Jody Laboz

ore than 36,000 dealmakers flocked to the International Council of Shopping Centers’ annual global retail trade convention RECon Las Vegas last month, marking the highest attendance figures seen since 2008, as a fresh crop of retail real estate players emerged on the scene. Among the movers and shakers were scions of influential retail real estate families, who showed up to the Las Vegas Strip to schmooze and get deals started. At the event, The Real Deal caught up with Stanley Chera, son of Haim Chera, both of Crown Acquisitions, which owns stakes in major Fifth and Madison avenue properties as well as in Soho and Brooklyn; cousins Jack and Jack Laboz (who share the same first name), sons of brothers Albert and Jason Laboz of United American Land, which has major retail holdings in Lower Manhattan and Brooklyn; and Michael Lewis-Goldman, son of Jane Goldman, who leads Solil Management. The legendary firm owns several billion dollars worth of commercial and residential properties amassed by Jane’s father Sol Goldman. Other sons in the business who registered as attendees were Joseph Sutton, son of Wharton Properties founder Jeff Sutton; Steven GurneyGoldman, son of Allan Goldman of Solil Management and Jack Sitt, son of Joseph Sitt, CEO of Thor Equities. New York brokers said the halls — and parties — looked more crowded this year. “There is no trepidation,” said Joanne Podell, vice chairman at Cushman & Wakefield. She predicted that retail rents would remain stable in Manhattan, except in some corridors such as the Financial District, where they could jump. Inside the convention’s walls, there were changes. There was more action in the South Hall, where more retailers than landlords were concentrated, “leading me to believe that more street deals through brokers were being done, versus deals for shopping centers with developers,” said Robin Abrams, executive vice president at Lansco. Each market comes with its own challenges.

Ariel Schuster showing a photo of his daughter and his show t-shirt, right.

Gary Trock, Stephanie Peña and Scott Panzer

In foreground, Evan Rafinia, Ivan Hakimian and Brandon Hakimi

Jason Pruger

David Firestein, Chase Welles and Geoffrey Bailey

Alex Adjmi, Jared Epstein and Joanne Podell

Chris Schlank and Joseph Jacobson

tktktkk

Jonathan Mechanic and David Kaplan Ilan Bracha Haim Binstock

Continued on page 64

Faith Hope Consolo Craig Price and Jason Muss

Jimmy Kuhn

TRD’s Amir Korangy.

The convention floor

Grant Stanley and Michael Lewis-Goldman

Brian Feil

David Behin and Steven Vegh

James Wacht, Peter Braus and Richard Kave

tktktk Jacqueline Klinger and Jordan Cohn

62 June 2015 www.TheRealDeal.com

Jack and Jack Laboz

PHOTOGRAPHS FOR THE REAL DEAL BY ADAM PINCUS

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RETAIL CONVENTION Mitchell Rechler and Belinda Schwartz

Continued from page 62

other firms are trying to make their presence felt, for example on Madison Avenue. “It’s all about menswear looking on Madison,” said Faith Hope Consolo, chair of retail leasing and sales at Douglas Elliman. Christopher Conlon, who runs leasing at Acadia Realty Trust, said the hot retail market in Brooklyn remains something of a mystery to foreign retailers seeking to gain a foothold in the borough. “Brooklyn is being discussed in conference rooms around the world. Real estate executives are being told to get a store in there,” Conlon said. Deal making in Vegas took place in a wide array of settings. One could encounter a top executive, barechested and sunburned, talking with investors by the pool. The next day, he might be in casual wear at the Cushman & Wakefield party and then the next morning, sporting a sharp suit. But all the schmoozing — the walking, the cheekkissing and back-slapping, the dinners and the endless partying — can take a toll. As New York players run into each other again and again, the conversation can hit a wall. RKF broker Ariel Schuster captured the mood on a t-shirt, providing answers to the reflex questions fired off by distracted and exhausted brokers: “Where are you staying?” “When are you leaving?” “How’s the show?” The t-shirt simply read: Wynn Leaving Wednesday Great Show By Adam Pincus

The Marquee nightclub

Tess Jacoby, Haim Chera, Joshua Strauss and Stanley Chera

Robert Bonicoro

A view of Cushman’s booth on the convention floor

Christopher Petracca, Ryan Serhant, Tommy Bennetter and Zach Beloff Adelaide Polsinelli and Connie Alimena

Izak Senbahar

tktktkk

Robert Futterman and David Edelstein

Poo side Pool Poolside ide att the he e Four Fou Sea Seasons e sons

Paul Massey John Santora and Bradley Mendelson

Pamela Haber, Patricia Garcia and Taryn Talmadge

Ed Hogan

Steven Baker and Gary Trock

TRD’s Amir Korangy.

Amira Yunis

Nat Rockett and William Friedland

David Green and Joanne Podell

Brett B Bret t Weinblatt

James Downey

Annette Graumann and Chase Welles

64 June 2015 www.TheRealDeal.com

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Lisa Rosenthal and Robin Abrams

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RETAIL

Rising retail leasing market sparks concerns about froth

Headline-grabbing deals may be overshadowing signs of overreach; vacancies rising in some prime and pricey neighborhoods in Manhattan BY RICH BOCKMANN ttention-grabbing deals for large retail spaces are distracting from awareness of the fact that pockets of vacancies in some areas of the city may indicate that rents have topped out, and could be heading for a correction. Among the recent leases making waves were a 20,000-square-foot deal Sephora inked on Lower Fifth Avenue and Foot Locker’s 36,000-square-foot lease south of the Times Square bow tie. And the talk of the town in the Meatpacking District — aside from the opening of the Whitney Museum — continues to be the $250 million, 70,000 square-foot lease tenant-of-themoment Restoration Hardware signed in October. “Big deals are happening,” Lee & Associates’ Peter Braus said late last month during a retail forum at CBRE’s Richard Hodos TF Cornerstone’s 90 Gansevoort Street, where asking rents for the three retail spaces are $200 per square foot. “Madison is hot again; the Financial District is super-hot; Brooklyn’s having a moment, I think. And it seems like every major … shopping corridor is seeing activity.” Yet, Braus continued, vacancies in certain submarkets are up, and rents are at unthinkable highs almost across the board. Many are starting to discuss the possibility that prices are too high. “There is concern that there may be a bit of a bubble,” Michael Hirschfeld, co-head of JLL’s National Retail Tenant Services Group, told The Real Deal. “Rents have escalated to the point where there are concerns about whether or not they’re sustainable. There’s supposed to be a correlation between rents and the opportunity for retail sales.” Rising rents are a reflection of money flooding into the retail sector, creating competition that is driving purchase prices to new Lee & Associates’ Peter Braus highs. Earlier this year, for example, fashion conglomerate Inditex, the parent company of Zara, paid $284 million for a retail condo on Broadway in Soho, and Savanna bought a

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66 June 2015 www.TheRealDeal.com

Meatpacking retail property at 10th Avenue and 14th Street for $86 million. The higher prices are, in turn, pushing capitalization rates lower. As a result, investors are seeking higher rents to justify the inflated purchase prices. Cap rates, which measure an investor’s return on investment, averaged 3.64 percent on retail purchases in the first quarter of the year, according to Cushman & Wakefield. Asking rents have climbed in all but one of Manhattan’s main shopping corridors: Bleecker Street in the West Village. Still, rents on the most prized strips — Upper Fifth Avenue, Times Square and Madison Avenue — grew by only modest amounts, under 5 percent, since early 2014, according to the most recent report by the Real Estate Board of New York. Retail experts say they’re starting to see pushback from tenants balking at high asking prices, and nowhere is the conversation more focused than in Soho, where ground-floor asking prices are pushing $1,000 per square foot and above. However, on the six-block stretch of Broadway more than 20 percent of the storefronts are available for either lease or sublease, according to a review of Agorify data by TRD. And retail specialists who work Soho say tenants are choosing to move to less expensive strips that were once considered less desirable, like Broome Street, where chronic congestion and less foot traffic would have previously outweighed lower prices. “Tenants were always concerned about the Holland Tunnel traffic,” said Beth Rosen of RKF, adding that the street has finally

On the left: Savanna’s $86 million purchase of a Meatpacking District retail property at 10th Avenue and 14th Street is the sort of deal that is driving leasing prices higher. Vacancies are rising on Broadway in Soho, right, and some brokers blame the $1,000-plus-a-foot asking rents.

Restoration Hardware’s $250 million, 15-year lease at Aurora Capital Associates and William Gottlieb Real Estate’s 9-19 Ninth Avenue is still the talk of the town, months after it was announced.

40th Street calling themselves ‘Times Square South’ and adding large sign packages.” The question for prime areas may come down to which tenants can afford the highest rents. Richard Hodos, vice chairman at CBRE, said those with higher margins that can

“There’s supposed to be a correlation between rents and the opportunity for retail sales.” MICHAEL HIRSCHFELD, JLL reached the critical mass needed to be a viable option for tenants priced out of prime spots. “I think that the trend I’m seeing is tenants want to be in Soho,” she added. “People are getting creative and finding other streets.” Times Square’s bow tie is another area where high rents have pushed tenants out beyond the neighborhood’s normal boundaries. “In Times Square, the bow tie has been stretched,” said JLL’s Craig Slosberg. “I’ve seen spaces as far south as 39th Street and

afford to pay 16-to-22 percent occupancy costs — the total of rents, taxes and other costs — can probably continue to justify paying top dollar, while those in the 8-to-12 percent range will probably get squeezed out. He said he sees a correction coming, not in the form of tenants shutting their doors, but of asking rents gradually coming back down to earth. “I see more of a softer landing than a bubble bursting. It might be painful for some

owners,” he said. “Sometimes it’s like ripping off a Band-Aid all at once, rather than a slow rip. I think it might be more of a slow rip.” Still, that leaves the question: With investors paying ever-greater sums for properties in the hottest areas, which landlords are set up to absorb a correction, and which will be left feeling the pain? Jared Epstein of Aurora Capital Associates, which owns a number of retail properties in Soho and the Meatpacking District, said a climate of high rents pushed by compressed cap rates is normally a recipe for disaster. He predicted the coming fallout will separate the inexperienced investors and developers from those on the top of their game. “They know that retailers will continue to thrive in Soho, the Meatpacking District and along Fifth Avenue, even with surging rents. In these neighborhoods, on a few very select streets, retail sales volumes and branding value continue to justify the rents,” he said. “Top retail investors and developers have a big edge and will continue to flourish, even when the tide turns.” TRD

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URBAN OUTLETTERS

Off-price stores proliferate as major retailers seek to draw bargain-hungry shoppers

A rendering of the Empire Outlets mall under construction in St. George, Staten Island.

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BY RICH BOCKMANN or years, the city’s department stores — not to mention their landlords — have watched New Yorkers and tourists alike climb into buses, cars and trains and travel outside the five boroughs to outlet malls in the suburbs. Now they’re working to keep those customers closer. Top retailers like Nordstrom, Saks Fifth Avenue, Bloomingdale’s and Macy’s are launching or expanding off-price locations in the city, and an entire outlet mall is being built in St. George on the northern tip of Staten Island to lure bargain-hunting shoppers. It’s a trend, industry experts said, that follows a confluence of events, including a void left in the market by a string of retailer bankruptcies, changing consumer tastes and a bit of fortuitous timing. The city has long offered off-price options, ranging from the stalwart Century 21 to the now-defunct Loehmann’s, Daffy’s, Syms and Filene’s Basement. While the latter chains started shutting their doors in 2010, hurt in part by competition from fast-fashion retailers like H&M and Zara, the new crop of apparel destinations is also emphasizing offprice offerings. “Retail’s full of copycats,” said Jason Pruger of Newmark Grubb Knight Frank. “They’re expanding the brand with lower-priced alternatives,” he said. “It’s really about pushing the brand and expanding the brand to a different demographic.”

New shoppers Off-price stores claim to offer discounts by as much as 80 percent by offering merchandise culled from clearance racks, purchased from suppliers with excess inventory or by selling lower-priced lines made especially for the outlet stores. “There are only so many opportunities to put in a full-line, full-price store,” said Geoff Bailey of the Shopping Centers Group. “The demographics have to be off the charts.” Operating costs are far lower at off-price stores. Where the full-line stores typically seek enough profit to support prominent locations in, say, Herald Square or Fifth 68 June 2015 www.TheRealDeal.com

Avenue, the off-price stores can seek out rent bargains in less desirable spots, like basements or upper floors, with smaller footprints. Two of the best examples are Union Square, where Burlington Coat Factory has great visibility on the upper

that shuttered, and also want to compete in a market with the fast-fashion retailers that are dominating the space. Zara opened its first Manhattan store in 1989 and H&M followed a decade later when it opened a flagship on Fifth Avenue in 2000. By 2009, the two brands had grown to more than 20

floors at 4 Union Square West (ironically, a former Filene’s location) and Nordstrom Rack, one of the pioneers in the latest wave of off-price department stores, which opened

stores in the city. While the outlet retailers coming to New York City, which seek footprints around 30,000 square feet, may be a

From left: Faith Hope Consolo of Douglas Elliman, Karen Bellantoni of RKF, Jason Pruger of Newmark Grubb Knight Frank and Geoff Bailey of SCG.

a location in the basement at 60 East 14th Street in 2010. Industry experts said these retailers can maintain their profit margins by taking less-desirable space and spending less on build outs. Early last year, the Wall Street Journal reported that Hudson’s Bay, the parent company of Saks Fifth Avenue and Saks Off Fifth, said it would deliberately make its stores look “unkempt.” “Our outlet stores look too much like department stores,” said Hudson’s Bay CEO Richard Baker. “Nordstrom Rack is a mess, and customers love it.” The low-profile design not only saves on build out, but it signals to the shopper what kind of store they’re entering. “They don’t want to confuse the shopper,” said Faith Hope Consolo, chair of Douglas Elliman’s retail group. “They want to make it approachable.” That approachability, Consolo said, is key to the retailers’ success, as they position themselves in today’s market, where shoppers are more willing to visit stores at the high- and lowends of the spectrum and in between. “Today’s shopper shops everything,” Consolo said. These stores are looking to fill the void left by the ones

boon to the brokers who land their business, they can affect perceptions of a particular neighborhood. Karen Bellantoni of RKF pointed to the corner of 72nd Street and Broadway on the Upper West Side, where Bloomingdales’ off-price concept will be replacing an Urban Outfitters. She said that while it’s good for the brokers involved in the deal, siting an outlet store in a relatively upper-class neighborhood can send “mixed messages” about what kind of shopping destination it is. “They’re good for us, because outlets are doing big deals,” she said. But “they’re redefining what was a solid Upper West Side location.”

Radius restrictions Outlet stores have a long history in malls outside of the city, and their landlords have prized, and protected, their dominance. Most outlet malls have a “radius clause” in their leases that discourages tenants from opening competing stores within a certain distance, typically by requiring that tenants Continued on page 120

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‘Super liens’ present perils

Condo, co-op buyers face tougher standards, higher rates BY KENNETH HARNEY ould some of the nearly 67 million Americans who live in communities governed by homeowner associations — condominiums, cooperatives and others — face much tougher underwriting and higher interest rates when they apply for a mortgage? That is the looming threat from the mortgage industry in areas where state laws give community associations “super-priority” liens on dwellings whose owners have not paid their assessments. Super-priority liens give a community association the power to initiate foreclosures and get first crack at the proceeds from the sale of a delinquent dwelling unit, ahead of the traditional first-lien position held by the mortgage lender. Twenty-two states plus the District of Columbia currently have authority for super liens on their books, and all 50 states recognize homeowner association liens. Homeowner associations argue that, like property taxes for local governments, assessments or dues on units fund the essential operations. They are crucial to maintain the buildings, common areas, recreation centers and other amenities. When unit owners fail to make the payments, the rest of the owners must make up the shortfall, often through higher assessments.

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member associations and managers nationwide, lenders “dragged their feet on foreclosures for years, delaying the process that would give them legal and financial responsibility” to pay assessments on properties they essentially owned. To ensure that boards get to collect unpaid assessments, some state legislatures have given them the right to initiate foreclosures, after giving notice to lenders and loan servicers. Typically there is a limit on the amounts they can collect from the sale proceeds, say six to nine months of assessments. Mortgage lenders and servicers say they are sympathetic to associations’ need to collect delinquent assessments, but not at the price of their own collateral interests in mortgaged homes. Last fall, the Nevada Supreme Court ruled that when owners’ associations foreclose on delinquent units after providing notice and giving mortgage holders the opportunity to pay the delinquent assessments, the lender’s lien can be wiped out. For example, if the amount of back assessments owed is $6,000, but the first mortgage on the property is in the hundreds of thousands of dollars, the house might be sold at foreclosure to a bargain-hunting buyer for the assessment amount plus fees, leaving the lender with huge losses.

Mortgage lenders and servicers are sympathetic to boards’ need to collect delinquent assessments, but not at the price of their own collateral interests. When large numbers of unit owners default on their mortgages and stop paying their assessments, the financial stress on an association’s finances can become extreme. Marilyn Brainard, former president of her association’s board in a community outside Reno, Nevada, said in the wake of the housing bust and recession, many communities in Nevada were forced to hit remaining owners with large special assessments, as well as postpone essential maintenance work on elevators, roofs and key facilities. “It was very hard, very painful, especially in communities where many of the residents were seniors living on fixed incomes,” said Brainard, who served on a statewide commission overseeing community associations. Numerous communities were pushed to the brink of insolvency, common areas deteriorated, and property values of homes plummeted. The situation in Nevada, Florida and other states that suffered deeply after the bust was compounded, community association leaders say, by the unwillingness of lenders and investors who owned the mortgages on defaulting units to step in and pay assessments, once it became clear that borrowers had moved out. Worse yet, according to the Community Associations Institute, which represents 33,000

72 June 2015 www.TheRealDeal.com

That is unacceptable to the giants of the mortgage market, Fannie Mae and Freddie Mac, and to their conservator, the Federal Housing Finance Agency, which is contesting such foreclosures through litigation. In testimony before the Nevada state legislature, FHFA’s general counsel, Alfred Pollard, also warned that if lenders’ collateral rights can be “extinguished” by associations, consumers “may face challenges in securing a loan to buy a unit or refinance.” David Stevens, president and CEO of the Mortgage Bankers Association, was more explicit in an interview: In states with super liens that can wipe out lenders’ and investors interests, he said, buyers could face higher loan fees, heftier down payments and time-consuming examinations of community association finances. Some lenders have said they may reconsider whether to do business in communities affected by super liens. Bottom line: This is likely to be fought out in courts and legislatures, but could start affecting mortgage terms and availability in some areas, if lenders judge the risks too high. Ken Harney is a syndicated columnist.

4<C2?;:2;A /?623@ Times Square billboards appear safe Reports of the demise of Times Square’s iconic billboards are greatly exaggerated. Capital New York raised the issue, citing a provision of the MAP-21 transportation spending law, passed in 2012, which added New York City thoroughfares like Broadway and Seventh Avenue to the National Highway System. That made New York eligible for more Times Square will keep its billboards. federal funding, but also brought those arteries under the purview of the Highway Beautification Act of 1965, which limits the size of adjacent billboards to 1,200 square feet, far smaller than many of those in Times Square. The Atlantic’s Citylab website, however, quashed those fears, with the news site reporting that federal and city officials called the provision an oversight, and said they’re working on a fix that will leave the billboards intact without requiring the city to pay a fine.

Grand Central area rezoning deal reached The mayor and City Council reached a deal to rezone the “Vanderbilt corridor,” a five-block stretch of east Midtown around Grand Central Station, clearing the way for SL Green’s One Vanderbilt office tower. The agreement allows for much taller buildings in the area, in exchange for developer contributions to public improvement projects nearby, Crain’s reported. All A rendering shows One Vanderbilt’s building projects will still proximity to Grand Central Station. require special permits and be subject to full public review. SL Green Realty Corp. will be able to proceed with its 1,501-foot-tall tower, after agreeing to pay $220 million for improvements to the Grand Central Terminal subway stop including a three-story transit hall at the base of One Vanderbilt, better access to the 43rd Street transit hall and better connections to the Long Island Railroad and the Lexington Avenue subway lines. The deal represents a victory for Mayor Bill de Blasio’s effort to rezone much of east Midtown.

City ups MTA contribution, MTA wants more The city plans to increase funding for the MTA, but agency officials want even more than expected. Mayor Bill de Blasio’s proposed 2016 budget includes raising the city’s contribution to the MTA budget, to $125 million per year from $100 million. The agency, which also receives federal and state money, requested that amount to help close a $14 billion hole in its budget. But, according to the New York Times, three days before the budget The MTA wants even more funding from the city. proposal was released, MTA Chairman Thomas Prendergast wrote the city a letter increasing the request to $300 million per year. The MTA is in the midst of a five-year, $32 billion system modernization project and received a smaller-thanhoped-for increase in state budget funding. The city budget must be passed in time for the new fiscal year that starts July 1.

Waterfront Commission preserved New Jersey Governor Chris Christie vetoed a bill that would have abolished the Waterfront Commission of New York, an interstate agency created by the U.S. Congress in 1953 to fight corruption at the port. The bill, backed by the International Longshoremen’s Association, unanimously passed both houses of the New Jersey Legislature. Supporters argued the agency overreached its authority by involving itself deeply in the shipping industry beyond the immediate area of the port, Capital New York reported. Christie, in a statement, expressed support for modernizing the commission, but said it wasn’t appropriate for one state to unilaterally close the Congressionallymandated bi-state agency. Agency opponents said they’d continue their fight at the national level. Compiled by Ariel Stulberg

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Beyond blueprints New tomes, by Bjarke Ingels and Robert A.M. Stern, highlight the starchitects’ very different approaches

S

BY EILEEN AJ CONNELLY ometimes, you can judge books by their covers. Two recent tomes from architects enjoying a moment in the New York sun show, from their very book jackets, the contrasts between them and their work. “Hot to Cold,” by Danish star Bjarke Ingels, is a rainbowhued exploration of recent work by the firm that bears his initials, BIG, including the Durst “pyramid” at 625 West 57th Street and his “Dry Line,” the U-shaped flood mitigation project he envisions for Manhattan.

Left: Bjarke Ingels and right, Robert A.M. Stern

In contrast, “Robert A.M. Stern Architects: Buildings and Projects 2010-2014” wears a sedate Federal blue cover bearing a small photograph of an entryway that reflects

the classically inspired designs the New York-based elder statesman is known for, including 30 Park Place and the Abington House on the High Line. Yet even though the two books highlight the disparities, they also showcase a similar thoughtfulness and careful approach the two firms take to their works around the world, as they design projects intended to fit into their surroundings, reflecting a sense of the culture and space they inhabit. “Hot to Cold” spans the globe with an approach that incorporates the temperature of the locations into the order they are arranged. “We have organized this book according to climate, like an odyssey across the globe from one of the hottest places on the planet, the Arabian desert, to one of the coldest, the Finnish tundra,” Ingels explains in his introduction. Each of the 57 projects depicted is used to explain his philosophy of incorporating the surrounding environment into his designs. It starts with the proposal for a “Middle Eastern Media HQ” presumably a new headquarters for Al

Jazeera, in Doha, Qatar. The structure, dubbed the “Magic Carpet,” is designed to mimic the rugs and tapestries used by the residents of the Middle East to shade outdoor spaces and make them habitable in the extreme heat. The flowing design evokes Ingels’ signature even to an untrained eye, with a vast canopy that appears to hang between two towers. The pages that follow show various elevations and interior renderings of the buildings, demonstrating how the buildings’ inhabitants would use it, and offer a narrative of the thinking behind the design elements. In the section on the 57th Street pyramid, which Ingels calls the “Courtscraper,” (a combination of “courtyard” and “skyscraper”) the reader is treated to a brief description of the architect’s first meeting with Douglas Durst, which took place at a sustainable design conference in Copenhagen, Denmark, where the developer was speaking. “I was very impressed with Durst’s smart, funny and surprisingly humble presentation of all the efforts put into making the buildings as sustainable as possible. But somehow, it seemed like purely technical upgrades, as if the actual design of the buildings was just business as usual, and then builders and engineers would install sophisticated environmental machinery,” Ingels wrote. He wanted to ask if they considered using the intended function of the building to inform the design. His question came out, “Why do all of your buildings look like buildings?” Continued on page 122

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NEW DEVELOPMENT SHOWCASE

TRD Forum draws biggest turnout ever More than 3,500 real estate players rub shoulders at industry mega-event TRD’s Stuart Elliott Elli tt

O

ver 3,500 real estate players gathered at The Real Deal’s New Development Showcase & Forum to exchange ideas and soak up wisdom from big-name panelists on the topics of foreign investment in New York City, the future of crowdfunding, and the luxury market. The city’s biggest developers, brokers and architects rubbed shoulders at the Metropolitan Pavilion in Chelsea with budding agents and real estate tech entrepreneurs as they browsed booths promoting the latest new developments in New York, Miami and beyond. At VR Global’s display, attendees used Oculus Rift technology to check out luxury apartments from across the world as “Million Dollar Listing” broker and virtual reality enthusiast Ryan Serhant looked on. Nearby, his co-stars Luis Ortiz and Fredrik Eklund posed for pictures with fans. Foreign investment panelist and Sotheby’s International Realty agent Nikki Field warned brokers who aren’t finding a way to tap into the Asian market that they’re missing a career opportunity. But those that do will have to get used to a new level of wooing. “Like in ‘Mad Men’ with their martinis at lunch,” she said. “We’re back to that.” Meanwhile, on the MDLNY panel, Eklund said he’s been high kicking since he was a young boy in Sweden, and believes that every broker should have a signature to set themselves apart from the crowd. Speaking of signatures, Ortiz revealed the secret to one of his most important selling tools: his impenetrable hairdo. “Just blow dry, spray and done!” By Tess Hoffman

From left: Izak Senbahar, Adrienne Albert, Ziel Feldman, and Joe Moinian

TRD’s Amir Korangy

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A vvi view iew wo off tth the he p pa packed ac ck cke ked ed audience au aud a udien ud die ienc iien enc en e n nc nce ce

A view of the audience

From left: Mike Fruman, Jordan Slotopolsky and Jason Katz

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From left: Dorothy Somekh, Alan Miller and Robin Schneiderman From left: Ashley Southard, Gian Luigi Buitoni and Charisse White

Fredrik Eklund

Architect Gene Kaufman

Joe Moinian

Izak Senbahar

Rodrigo Nino

Ziel el Feldman Fe dman Fel

Fun facts from the event

The crowd guzzled 1,700 bottles of water and cans of soda and gobbled up 1,000 sandwiches. Attendees also took home about 800 copies of TRD and 1,500 tote bags and sent out 200 tweets with the #TRDForum hashtag.

From left: John Liang, Nicholas Mastroianni, Mona Shah, Jeffrey Dvorett, and Nikki Field.

From left: Stephanie Vorhees, Jessica Musilli, Sarah Collins, Maggie Gascott and Elizabeth Soleimani

Nikki Field

Bruno Ricciotti B

The Marketing Directors’ Adrienne Albert

LLuis Ortiz Ryan Serhant

From left: Marty Burger, Dan Miller, Allen Shayanfekr, Rodrigo Nino and TRD’s Hiten Samtani

76 June 2015 www.TheRealDeal.com

Xinyuan Real Estate’s John Liang

PHOTOGRAPHS FOR THE REAL DEAL BY KARA STEWART

NYC’s office sharing (co)stars

WeWork and Regus dominate the market but others are also in expansion mode

The recreation room at WeWork’s space at 175 Varick Street in Soho contrasts with the offerings from other shared office providers, right. From top: Corporate Suites’ co-working space at 2 Park Avenue, a workstation at a Regus site, and the roof deck at Jay Suites’ 34th Street location.

BY JANNA HERRON n New York City’s shared-office world, there is WeWork and Regus, and then there is everybody else. That’s according to The Real Deal’s ranking this month of the largest shared-office players in Manhattan, Brooklyn and Queens. The two companies represent the two different wings of the shared office space world: the traditional executive-suite model that Regus specializes in, and the newer, hip WeWork-style co-working spaces that cater to freelancers and creative types. And while the WeWorks of the world clearly have the momentum, both office-sharing models are expanding. The companies on TRD’s ranking operate over 4.7 million square feet of space at 126 locations, ranging from sites at iconic office towers like the Empire State Building to converted industrial spaces. WeWork, which launched in 2010 and is said to have a market valuation of $5 billion (see related story on page 86), took the top spot with 1.85 million square feet at 21 locations. The company has, of course, made a huge splash in the industry during its short lifespan. Regus, a public company launched in 1989 and based in Luxembourg, came in at No. 2. The firm, which has locations in 900 cities in 120 countries, quietly doubled its New York footprint in the last five years. It now has 1.47 million square feet at 48 locations, with four more on the way, including 23,000 square feet in Chelsea that it leased last month. While most of its spaces are in Midtown or Downtown, Regus is also expanding to

I

78 June 2015 www.TheRealDeal.com

Harlem, said Maria Paitchel, regional vice president overseeing the company’s New York market. Jay Suites, Virgo Business Centers, and Corporate Suites rounded out the top five,

but had far smaller footprints than WeWork and Regus. Nonetheless, many of the sharedspace providers have either recently opened new locations or are prepping spots for debut this year. And despite the influx of new spaces

The largest shared office providers in NYC NAME

TOTAL SQ. FOOTAGE

WeWork*

1.85 million

21

Regus

1.47 million

48

Jay Suites

228,000

7

192,000

6

Corporate Suites

169,155

9

PowerSpace

153,000

4

Emerge212

120,000

3

106,000

2

Alley NYC

92,000

3

The Yard

80,000

4

ServCorp

62,715

4

59,345

3

Cowork.rs

57,774

2

Micro Office Solutions

35,300

6

Grind

22,374

2

12,700

2

Virgo Business Centers

Select Office Suites

Tech Space

Projective Space

Andrew Neumann WeWork

Joe Scharf Virgo CEO

Hayim Grant Corporate Suites

James Kleeman Emerge 212

NO. OF LOCATIONS

Source note: Data was gathered from CompStak, CoStar, company-provided estimates and TRD research. Rankings include co-working spaces with at least two locations and at least one location based in Manhattan. Data also includes new offices that are expected to open, but had not opened as of May 18. *Data includes an estimate based on the building’s size at 154 Grand Street.

coming on the market, the industry does not appear to be concerned about oversaturation in the sector. Hayim Grant, the president of Corporate Suites, which has nine locations, all in Manhattan, said demand is growing in the sector, because the spaces provide “flexibility and little capital investment” for those who sign leases. “The facilities are larger and nicer than anything a small company can lease on their own,” said Grant, whose firm has roughly 169,000 square feet. Plus, the growth of the industry has dispelled the idea that only makeshift operations need to share office space. “The stigma that a company is not established in this kind of space is gone,” he said.

The WeWork Effect While Regus has long dominated in this industry, in the last five years, WeWork has shaken up the status quo. The company is opening new (and big) spaces at a rapid clip. It also reportedly raised $362 million in venture capital from deep-pocketed investors like JPMorgan and billiondollar real estate mogul and publisher Mort Zuckerman. Company co-founder Adam Neumann has said he wants WeWork to be a place where start-ups and entrepreneurs collaborate on new business ideas, rather than just share reception areas and kitchens. While WeWork declined to comment, the company has been generating buzz for a while, perhaps because of its free beer, Continued on page 120

www.TheRealDeal.com January 2014 35

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CORCORAN.COM’S RANKING AMONG THE MOST VISITED REAL ESTATE BROKERAGE WEBSITES IN NEW YORK

The Corcoran Group is a licensed real estate broker located at 660 Madison Ave, NY, NY 10065. *Source: Hitwise 2014 data comparing corcoran.com to competitor websites.

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REIT executives rake it in

NYC-focused trusts reward top management for past year’s successes BY REY MASHAYEKHI rom SL Green securing TD Bank as anchor tenant at its planned One Vanderbilt office tower to Vornado Realty Trust using the proceeds from its $605 million sale of 1740 Broadway to acquire the St. Regis Hotel’s retail condo, 2014 was an active, and lucrative, year for the city’s largest real estate investment trusts chair — and their top brass was rewarded handsomely in return. The top executives at three of New York’s most prominent commercial REITs — SL Green, Vornado and Boston Properties — saw total compensation jump almost 14 percent year-over-year in 2014, according to filings with the Securities and Exchange

F N

SL Green Realty

ew York’s largest office landlord also paid out the largest executive compensation packages in 2014. Holliday took home nearly $16.4 million in 2014, up 29 percent from $12.7 million in 2013. The company’s president, Andrew Mathias, earned just under $11 million last year, an 18.4 percent increase from $9.3 million in 2013, while Chairman Stephen Green’s total compensation of $5.4 million represented a 0.9 percent drop from the previous year. All three saw the bulk of their earnings from stock awards, which are in part tied to goals laid out in the company’s 2011 performance plan. Such awards constituted almost $14.2 million, or 86 percent, of Holliday’s compensation, as well as $10.2 million, or 93 percent, of Mathias’ earnings

Vornado Realty Trust

V

ornado Chairman and CEO Steven Roth pocketed $9.8 million in total compensation in 2014, a 34 percent jump from the $7.3 million he took home the prior year, the company disclosed. David Greenbaum, president of the REIT’s New York division, saw his pay jump 22 percent, to $5.4 million, last year. Roth’s base salary of $1 million in 2014 remained unchanged, despite the Vornado founder having succeeded Michael Fascitelli as CEO in April 2013. Roth did, however, receive a $1 million bonus last year that may be related to the CEO role — his 2013 bonus was just $20,900. Yet both he and Greenbaum also took home the bulk of their earnings in the form of stock and performance-based awards.

T

Commission submitted last month. The three firms’ CEOs alone took home combined pay hikes of more than 25 percent, and SL Green’s Marc Holliday made the New York Times/Equilar 200 Highest-Paid CEO Rankings list this year, at number 119. (Douglas Elliman Chairman Howard Lorber, the CEO of Vector Group, also made the list, at No. 23, taking home $28.6 million. Vector is Elliman’s parent company, but is not a REIT.) While the steep pay hikes for top executives at these publicly traded companies is notable, it isn’t arbitrary. From performance incentives to stock awards, there are a variety of factors that played into the size of the compensation package doled out by each REIT.

SL Green CEO Marc Holliday and Chairman Stephen Green. Right: One Vanderbilt was approved by the city.

and $4.5 million, or 83 percent, of Green’s pay. SL Green said in its SEC filing that the company “achieved maximum performance” by returning more than $2.6 billion to stockholders over the past three years. In addition, the board’s compensation committee granted additional shares to

Similar to SL Green and other REITs, Vornado uses an executive compensation structure determined by both “the company’s performance during the year and a review of the prevailing competitive market for executive talent,” its filing said. Vornado noted that no executive receives a base salary over $1 million, and the REIT requires that 50 percent of stock grants to senior management be in performance-based equity awards. The firm gauged its performance using total return to shareholders, a measure that includes stock gains and dividends of 36.4 percent in 2014, which outperformed its key benchmark, the Morgan Stanley REIT Index. Roth also led the firm through the sale of more than $900 million in non-core assets and $850 million in acquisitions in New York City.

Boston Properties

he Boston-based REIT, which holds 11.6 million square feet of property in New York City including a majority stake in the GM Building at 767 Fifth Avenue, awarded CEO Owen Thomas $8.3 million in 2014. Thomas, who became CEO in April 2013, made roughly $5.6 million the previous year, and his $8.3 million in total compensation represented a 10 percent increase over his 2013 salary on an annualized basis, according to the company’s filing. President Douglas Linde also saw a 10 percent jump in his total compensation last year, to $6.8 million.

80 June 2015 www.TheRealDeal.com

Boston Properties CEO Owen Thomas

the executives “in recognition of our strong continued stock price appreciation.” SL Green shares rose 29.4 percent in 2014, topping the 11.4 percent gain for the Standard & Poor’s 500. The REIT, which held 43.6 million square feet of property in Manhattan as of

March 31, did exceptionally well according to the criteria it set out for 2014. For example, it exceeded “maximum” performance levels by signing more than 2 million square feet of Manhattan leases, exceeding 96 percent same-store Manhattan portfolio occupancy and surpassing $400 million in office property acquisitions. The company pointed to its performance under Holliday’s stewardship over 10 years in justifying the lofty executive pay, noting that SL Green’s enterprise value — broadly defined as its market capitalization when factoring in debt, preferred shares and cash on hand — has grown 574 percent, to $22.4 billion, since Holliday took over in January 2004. The company also cited Holliday’s leadership as “critical to the successful operation of our business.”

The St. Regis Hotel retail condo, one of Vornado CEO Steven Roth’s (right) biggest 2014 deals.

Vornado maintained that its compensation program helped its long-term performance, noting that its 10-year total shareholder return of 131.1 percent through 2014 outperformed both the Morgan Stanley REIT Index’s 122.2 percent return and the S&P 500’s 109.5 percent return in the same period.

Vornado also cited an annual short-term incentive program for top executives tied to comparable FFO, or funds from operations, a key measure of profitability in the REIT industry. Vornado’s comparable FFO stood at more than $980 million in 2014, up 9.3 percent from $897 million in 2013.

Boston Properties also pointed to its “strong 2014 performance” in analyzing the compensation packages: The REIT exceeded corporate goals for diluted funds from operations by booking $5.38 per share, while also surpassing $1 billion in property sales and leasing more than 6 million square feet. In addition, the REIT’s compensation committee considered $1.5 billion of new developments that are currently 86 percent leased, as well as another $2.1 billion in development underway, in evaluating executive performance last year. Boston Properties also noted that its shares outperformed the S&P 500, the MSCI REIT

Index and other industry indices over the last year, five- and 10-year periods. Long-term incentive stock awards represented 67 percent of Thomas’ compensation in 2014, while cash bonuses were 24 percent. For the rest of the company’s executive officers, long-term incentive equity awards comprised just over 63 percent of total compensation, with cash bonuses representing 25 percent. Boston Properties said in its proxy statement that it believes its compensation policies “are generally intended to encourage executives to focus on achieving long-term objectives.” TRD www.TheRealDeal.com January 2014 35

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DAY IN THE LIFE OF:

Shola Olatoye The NYCHA CEO on revamping a cash-strapped agency, watching ‘Scandal’ and taking over the world by 9 a.m.

S

hola Olatoye is the CEO and chair of the New York City Housing Authority where she oversees 178,000 apartments, 11,000 employees and a roughly $3 billion budget. Last month, Mayor Bill de Blasio and the 40-year-old Olatoye — who worked at the national nonprofit affordable housing organization Enterprise Community Partners, HSBC Bank and real estate consultant HR&A Advisors — announced a sweeping 10-year plan to address the authority’s dire finances and crumbling housing stock. “The current system is broken and the status quo is not working,” Olatoye said. The so-called NextGeneration program hopes to generate $500 million through leasing NYCHA land to private developers to build more affordable housing. It’s also hoping to create an overall surplus of $200 million-plus by cutting costs and targeting new revenue streams. That’s a tall task given the $2.5 billion operating deficit it’s facing over the next decade. But Olatoye — who was pregnant at the time of this interview and gave birth right before press time — projects an air of confidence.

5:00 a.m. I’m used to waking up this early. During my pregnancy, though, I’ve been waking up around 6. I check my phones, social media and email to make sure I’m up to speed. On a recent morning, for example, there were reports of a manhole fire in one of NYCHA’s 334 developments.

5:30 a.m. Even though it’s still dark, I am typically in Central Park running at this hour about four times a week. I run the sixmile loop with friends. I was training to run my first full marathon — I’ve done multiple 82 June 2015 www.TheRealDeal.com

half marathons and I was a sprinter in high school — but had to stop when I found out I was pregnant.

6:30 a.m. After I’m showered and have made my coffee — or during my pregnancy, my tea — it’s time to start making lunch for my two boys: Alexander, 9, and Rowan, 7. That’s a laborious task. It’s always a guess as to what they want. 7:15 a.m. I wake up the kids and then it’s a mad dash for about 45 minutes. It includes everything from finding homework to getting dressed to making sure musical instruments are packed. 8:00 a.m. If it’s my day to drop off, we’re out of the house by now and we hop in a cab to drop the boys at school, about six blocks west from where we live in Harlem. 8:30 a.m. If it’s my husband’s turn to drop the kids off, I’ll be at a breakfast meeting Downtown. I joke with my friends that you can take over the world by 9 o’clock, because by now, I’ve been in touch with many different people across the city. I’ll have emailed the mayor and updated him on the latest news.

connect better with staffers. There are some employees who have worked for NYCHA for four decades and have never been on the 12th floor of 250 Broadway [where the executive offices are located]. We need to make a culture change at the agency.

make sure I’m home for dinner at 7:15 p.m. with my husband and kids. I enjoy cooking and during the week mostly whip up easy American fare. I am the cook in the house. The rule is that if you cook, you don’t have to do dishes.

12 p.m. When I don’t have a lunch meeting and I have some time to sit down to eat, I like going to Ecco, an old Italian place on Chambers Street. When you walk in, it’s as if you’re entering New York City in 1975: white tablecloths and waiters with black vests. And they have excellent bruschetta.

7:00 p.m. On Friday nights, we go out to eat at our local Italian restaurant in East Harlem.

1:00 p.m. If I have to grab a quick lunch, I usually stop by Fresh&Co or Le Pain Quotidien to grab a Cobb salad. I usually run into half the city administration. You want to get your business done? Go there. 2:00 p.m. I often head to City Hall in the afternoon. There are meetings with the mayor or deputy mayor Alicia Glen on a weekly basis. And no matter what time, if the mayor calls for a meeting, I immediately go. 3:00 p.m. There’s usually a 15-minute

9:15 a.m. I am in my office and sit down

break during which I grab a cup of tea — black English Breakfast with milk and honey — until I go back into several meetings.

behind my desk, although that is not where I spend most of my time. I divide my time between meeting with members of the department, external stakeholders and my colleagues in City Hall. Most of my recent meetings have been about our NextGeneration NYCHA plan.

4:00 p.m. I meet a lot of staffers and residents out in the field. Last year, I visited 90 NYCHA developments. The visits help me understand the authority better. About 30 percent of the staff also lives in the developments.

11:00 a.m. I instituted a new program, called “Coffee with the Chair,” in an effort to

6:00 p.m. I make an effort to leave the office around the same time every day, to

8:30 p.m. The kids are now in bed. I say hello to my husband, Wall Street Journal online real estate editor Matthew Strozier [a former editor at The Real Deal], and I sign back on to do work or hop on a call. 9:00 p.m. If it’s Thursday night and I can stay awake, I am going to watch “Scandal” on ABC. It’s the only place where you can watch people behaving badly in fantastic fashion. 10:00 p.m. I devote two nights a week to late-night commitments. Those range from community meetings to benefits. Some nights, I go to multiple events. On those nights, I can be all over the city. 10:30 p.m. I try to get to bed and read something completely unrelated to public housing. I’m a big fan of female Nigerian writers coming out of Britain and Nigeria. Most recently, though, I’ve been reading a children’s book from the 1980s, named “The Adventures of Shola.” I’m reading it with my oldest son. The book is about a little white dog named Shola, who has all these little adventures and thinks that she is really a lion, so she engages with the world as a lion. It’s actually quite fitting. By Claire Moses

PHOTOGRAPH OF SHOLA OLATOYE FOR THE REAL DEAL BY MAX DWORKIN

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NEIGHBORHOOD DIVE

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BY KERRY MURTHA espite a long subway ride for many of its residents, Inwood, on the northernmost tip of Manhattan, is becoming fashionable. The enclave is bordered by the Harlem River to the north and east and the Hudson River to the west, and extends southward to Fort Tryon Park and Dyckman Street. Rents are about a third of the borough’s average, offering an affordable option for those priced out of trendier parts of the city. The bustling community is a bastion of history, culture and parkland, with a housing stock consisting mostly of co-ops in prewar buildings. There’s been only one condo development, a 12-unit complex at 175 Payson Avenue, in recent years. Prices are creeping upward due to the high demand and scarce inventory, but that has not stopped the droves of young professional and creative types from flocking here. New retail, restaurants and a burgeoning nightlife are coming on the heels of the residential boom.

Bits of History

THE FINAL FRONTIER: INWOOD New eateries, rising prices and a Starbucks point to transformation TOP DEVELOPMENTS

and ground-floor commercial space. Landlords have been trading multifamily The Stack, at 4857 Broadway, is the city’s first buildings in Inwood rapidly in the last few modular building. Made of 56 prefabricated years, but so far that hasn’t resulted in any containers shipped from Pennsylvania, the prominent gut rehabs or conversions, structure was erected in only 19 days. The two despite rising rental and sale prices in the seven-story towers with one unified facade house 22 rental units, with studios starting at neighborhood. $1,755, one-bedrooms at $2,400, twoBut one location, at 9-11 bedrooms at $2,850 and threeCooper Street, which bedrooms at $3,990. A number sold for $2.5 million of apartments are also below in January, will see market rate. The Stack significant changes. City was developed by Jeffrey Department of Buildings Brown and Kimberly data shows that the new Frank and designed by owner, Shared Equities GLUCK+. Leasing began Co., has filed applications a year ago. for a seven-story, mixedAfter undergoing a $22 use building measuring million overhaul by the 19,824 square feet city, 552-556 Academy designed by Studio BLS Street reopened in late Architects. The existing 2014. New amenities three-story townhouse, A rendering of The Stack at 4857 Broadway include a rooftop garden which was plagued with complaints related to operating as an illegal and a community room. The Department SRO in years past, according to city records, of Housing Preservation and Development was approved for demolition in March. Shared is accepting applications for 40 units, some Equities said the building will house 24 one- of which will start as low as $720 a month. and two-bedroom rentals, with a rooftop deck The building, which is now owned by the

Retail Scene The Dyckman Farmhouse

The Dyckman Farmhouse, at Broadway and West 204th Street, is the last of its kind in Manhattan. It dates back to 1784 and opened as a museum in 1916.

Retail rents have risen to more than $100 a square foot, with some spaces carrying an asking price of $120 a square foot, a nearly 30 percent increase in the past two years. The neighborhood’s first Starbucks opened in January on the corner of Dyckman Street and Broadway, the main commercial strip. It’s provided a catalyst for change, according to brokers, piquing the interest of other national retail chains that are now looking to call Inwood home.

The Cloisters

Notable Residents: • Kareem Abdul-Jabbar, NBA Hall of Famer • Brian Lehrer, WNYC radio host The Cloisters, a branch of the Metropolitan Museum of Art, is located in Fort Tryon Park. It houses an extensive collection of art, architecture and artifacts from Medieval Europe.

• Henry Stern, former NYC Parks Commissioner

Most Expensive Recent Sales:

Least Expensive Recent Sales:

113 Post Avenue, six-story 52-unit multifamily, sold for $8.7 million

571 Academy Street, #2G, 788-sq-ft condo, sold for $230,000

70 Post Avenue, five-story

571 Academy Street,#2H,

40-unit multifamily sold for $6.1 million

1,000-sq-ft, 2-bdr condo, sold for $441,500

59 Nagle Avenue, five-story

137 Nagle Avenue, five-story, 26 unit multifamily, sold for $1.2 million

26-unit multifamily, sold for $4 million 84 June 2015 www.TheRealDeal.com

A Commercial Broker’s Take “For all the new retail and restaurant activity, Inwood has maintained an old neighborhood feel. The mom-and-pop shops co-exist with the newer restaurants and bars.” Aaron Jungreis, Rosewood Realty Group

A Residential Broker’s Take “Landlords are getting hip to the potential for rent hikes and they are buckling down on prospective tenants. Whereas they may have in the past been renting to struggling artists, now they are requiring things like a 700 credit rating.” Makeba Lloyd, MNS Real Estate Impact

nonprofit Community League of the Heights, was evacuated in 2011 for cracks throughout the structure as well as for a sagging roof and floors. Muscota Marsh is a new park that gives Inwood residents more access to the Harlem River. The parkland, located at Indian Road and West 218th Street, sits on a one-acre parcel on the river and features walkways, gravel paths and a wildlife observation deck, as well as kayaking and canoeing. Muscota Marsh, which opened last year, was created by Columbia University in conjunction with the Parks Department. The university agreed to aid in its creation as part of a deal that allowed Columbia to build the nearby $30 million Campbell Sports Center. Muscota Marsh

Price Trends

$300,000

Average price of a one-bedroom co-op, up 15% from $260,000 last year

50%

Increase in past year in average price of a two-bedroom co-op, to $600,000 from $400,000

29%

Jump in average price of a one-bedroom rental, to $1,800, from $1,400 last year

$2,300

Average price of a two-bedroom rental, up 15% from $2,000 last year

$2,948

Gap between average price of a two-bedroom rental in Inwood and in all of Manhattan, at $5,248

On the Market

Demographic Changes from 2000 to 2010: Population: 38,824, down 0.8% from 2010, down 7.7% from 2000 Median Income: $41,514, up 1% from 2010, up 40% from 2000 White Collar: 65.9% Blue Collar: 34.1%

631 Academy Street

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SMART AGENTS KNOW Real Estate Photography Matters.

WH AT TH E Y ’ R E READING NOW

Real estate pros share picks for books about national cultures, irrational decision making and effective habits Where do you look for insight and inspiration? To find out, The Real Deal asks leaders in the industry what they’re reading

Aleksandra Scepanovic Managing Director, Ideal Properties Group What are you reading right now, or what did you finish most recently? I just finished “Stuff Hipsters Hate� by Brenna Ehrlich and Andrea Bartz, and now I’m reading “The Culture Code� by Clotaire Rapaille. What spurred you to read “The Culture Code?� I am always on a quest to gain deeper insight into what makes us do what we do. Rapaille’s idea of cultural codes particular to specific nations is an intriguing one, especially to a reader coming from Eastern Europe and doing business in NYC.

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Has anything else you read in it stuck with you? Would you recommend it? The part where Rapaille compares American culture to adolescence particularly resonated. He proposes that American culture exhibits “many of the traits consistent with adolescence: intense focus on the ‘now,’ dramatic mood swings, a constant need for exploration and challenge to authority, a fascination with extremes, openness to change and reinvention, and a strong belief that mistakes warrant second chances.� In that one paragraph, I could very easily see my family members, friends, partners, team members and clients. American culture — and its differences from the world I’ve known growing up — never ceases to amaze me.

Doug Williford Director of Sales, Warburg Realty What are you reading right now? I’m currently reading “Sway: The Irresistible Pull of Irrational Behavior� by Ori Brafman and Rom Brafman. It’s a bit nerdy, but it’s a great look at how, even when intelligent, rational people are armed with complete information, we will rely on emotion or random choices to make decisions. It affects everything from where to eat lunch to how to invest our money (or buy real estate).

What spurred you to read this book? I’m usually a fiction reader, but I’m fascinated by human behavior and what drives and motivates us. Has anything in it stuck with you? In real estate purchases, we see buyers who are very specific about their price and their list of “must haves.� They do all of their homework and run all of their comps, only to see them fly out the window the second they see the view from the terrace or step into the perfect gourmet kitchen. Our rational side does the research, but our irrational side often makes the decision. It can only benefit us — and our customers — to understand this disconnect.

Michael Weiser President, GFI Realty What are you reading right now? I’m reading “What the Most Successful People Do Before Breakfast� by Laura Vanderkam. What spurred you to read that book? I saw a pop up ad on-line for it. Has anything in it stuck with you? Do not start your day by responding to emails. We all wake up and our minds start making to-do lists for the day. Very often we will have new ideas we would like to attempt to launch. If you wake up, grab your smart phone and start reading emails that came in while you were sleeping, you will no doubt be spending quite some time reading and, of course (because we are all human), responding. By the time you are done, you have lost the edge and the day has started. Not only has a fair amount of time elapsed, but you are now in work mode or possibly defense mode. Instead, grab your smart phone and send emails to your team members and associates with your ideas, suggestions, initiatives and to-do lists (play some offense and try and score some points). This may take you a few minutes, but no need to worry. When you are done, those emails you haven’t read and replied to will still be there waiting for your reply. While you are now responding and dealing with someone else’s needs, others are working on yours. Compiled by Ariel Stulberg www.TheRealDeal.com March 2010

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1974: CRIME RAMPANT IN WEST SIDE SROS

wo murders in early June brought new attention to the high crime rate in West Side single-room occupancy hotels, 41 years ago this month. One was in the West Side Towers, a 584-room SRO at 235 West 75th Street, at Broadway, which police said was a hotbed for crime in the area. The issue of crime in SROs was pressing at the time, as the city teetered on bankruptcy and formerly grand apartment buildings were cut up into small rooms let to poor New Yorkers. The new mayoral administration of Abraham Beame said it was continuing the work of the previous mayor, John Lindsay, who launched an SRO task force to address probMayor Abraham Beame lems with such buildings. But one critic said, with the government turnover, “everything dropped dead momentarily.” Police records showed more than 60 major crimes had been committed within the three buildings that made up the West Side Towers, from Jan. 1 through the start of June that year. Advocates sought to convert the West Side Towers and other SROs to housing for the elderly and to tighten oversight. Instead, the buildings were sold to a developer several years later and converted to 220 rental units with a new name: The Astor. In December 2013, developer HFZ Capital Group purchased the Astor for $119 million, and has since converted it to condominiums. Last month, there were 20 apartment units listed for sale on StreetEasy with an average price of more than $2,300 per foot.

W

1945: CITY NEEDS 50K MID-PRICED APARTMENTS

eeks after the end of World War II in Europe, a city official estimated that New York needed at least 50,000 moderately priced apartments in order to alleviate an acute housing crisis, 70 years ago this month. The city sought apartments that would rent for between $35 and $65 per month. Joseph Platzker, an assistant commissioner for housing who led the city’s Vacancy Listing Bureau, told a group of bankers that the fastest way to fill the need was to rehabilitate aging apartments, considering the shortage of construction Bushwick in the 1940s materials. Later that month, Platzker identified 15 neighborhoods in Manhattan, Brooklyn and Queens where the existing housing stock could be modernized, including Greenwich Village, West Harlem, Williamsburg, Bushwick, Long Island City and Jamaica.

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1904: SYNDICATION BACKLASH

he lead developers of a hotel project on a prime Midtown parcel at 529 Fifth Avenue and the corner of 44th Street bought out a series of smaller co-investors in a sign of the limits of syndication, 111 years ago this month. A group of investors led by Century Realty paid approximately $1 million in 1902 for the parcel across the street from Delmonico’s Restaurant, in a deal syndicated to an undisclosed number of participants. But just two years later, Century Realty, whose primary investor was from Vermont, bought out the smaller investors, in what was considered at the time a sign that large and complex projects such as this were ill-suited for syndication, because many parties needed to be included in the decision-making process. The hotel ultimately was never built. Another example of the failure of syndication at the A postcard of the parcel intended for a time was in a neighborhood now known as Lincoln hotel at Fifth Avenue and 44th Street. Square. There, a group purchased parcels on the west side of Broadway, between 61st and 62nd streets, but the project dissolved amid a series of lawsuits, and the property was eventually auctioned at a loss. One skeptic said that for small buildings or for a quick flip, a syndication was useful. But large development syndicates “usually contain one practical real estate element and several capitalists. The latter generally cause the trouble.” Compiled by Adam Pincus

ARCHITECTURE REVIEW

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JA M E S G A R D N E R

Rewriting history in the West Village

With 150 Charles, CookFox gives the block a residential past it never really had

I

t is almost hard to imagine that the firm of CookFox, which gave the world One Bryant Park, could have produced a building like 150 Charles Street, whose aesthetics are so vastly different. One Bryant Park is, of course, that towering, gleaming white monument to Deconstructivist asymmetry that sits on the northwest corner of 42nd Street and Sixth Avenue. The 150 Charles Street development is a hybrid building that is largely new, but incorporates a preexistent structure, the long-abandoned Whitehall Storage Building, a gargantuan warehouse that stretches for much of the block between Washington and West streets and was created mostly out of brick and glass, but with some concrete as well. And although it surely stands as a large visual intrusion upon the ecosystem that is the West Village, its architects have deployed all their skills to incorporate it respectfully into its built environment. That, however, has not stopped local activists from protesting this intrusion on what was called the largest undeveloped property in the West Village. An 11-minute video was posted on YouTube to oppose the project. Its title, “The Rape of the West Village,” denotes the spirit of the piece. And yet, buyers flooded into the salesroom. As the project gets set to open, it is sold out. When the developers, the Witkoff Group, put the project on the market more than two years ago, prices started at $3.95 million for twobedrooms, and rose all the way up to the $34 million for one of the penthouse apartments. (That’s roughly $7,000 per square foot, which by this point in the luxury market cycle may seem almost a bargain.) To say that Richard Cook, the architect, has been sensitive to the preexisting context would not be entirely accurate. His work surely looks sensitive, but the context in which he placed his building was very different from what was. This part of the city was arguably one of the most charmless in Manhattan. While it is technically part of the West Village, that name seems to suggest quaint 19th century houses draped in ivy. But the realities were very different. This was storage warehouse country, and the storage warehouse, with some exceptions, is one of the dreariest building typologies this side of an airport hangar. Occasionally it tries to get fancy, but this leads to even drearier results. In 2005, neighborhood preservationists won what seemed like a rare and important victory, when the city council approved a law to “downzone” the Far West Village, thus effectively preventing the construction of out-of-scale new developments in

90 June 2015 www.TheRealDeal.com

from West Street. Unfortunately for the advocates of this law, the two exceptions to the zoning change were the site of the former Superior Ink factory (which has now been converted to pricey, celebrityattracting condos) and the Whitehall Storage Building. Whitehall Storage, as originally built, was not outlandishly bad, only

A.M. Stern), Cook created a new, greatly improved past. Abolishing the drab, midcentury concrete trim, he has extended its brick facing throughout the façade, while preserving and even enhancing the mullions that define the windows along Charles Street. In any case, the present development has preserved the footprint of the older

The nearly complete 150 Charles Street. Insets: architect Richard Cook, left, and developer Steve Witkoff.

excessively banal. Its three-story bulk — without the new addition of a recessed penthouse — was confected of brick and broad mullioned windows, with bizarrely unappealing concrete surrounds. This was and remains the base of the new development, which Cook has tastefully and tactfully redesigned. In the process, the unsuspecting pedestrian may be inclined to think that Cook deserves credit for respectfully preserving what is already there. In fact, confronted with an unusable past (to invoke a phrase dear to Robert

building, which occupied almost threequarters of the block, but not the ends of the block along West Street at one end and Washington Street at the other. The planning of 150 Charles Street has conscientiously retained the street wall — usually a good thing — in contrast to the general thrust of modernist buildings, which seem to want to disrupt the street wall so that their towers can rise up in relative isolation. A case in point being

Richard Meyer’s 165 Charles Street across the street, as well as his two nearby towers at 173 and 176 Perry Street. That tendency has bedeviled, and weakened, many a New York City street. To maintain the liveliness of the street, or more precisely to invest with liveliness a street that for generations was entirely lacking in pedestrian traffic, Cook has created what he calls “individual” residential entries at several points along Charles Street, thus creating a neighborhood feeling that seems historical, even though it is a largely new development in these parts. As for the rest of the development, it rises above that mid-century footprint in a complicated, but harmoniously unified group of forms, specifically two towers, largely covered in brick cladding in the center of the block that are joined by a steel-clad interstitial area that, because it recalls the mullions used throughout on the windows, feels as historicist as the rest of the development. Toward the west, these towers are abutted by smaller, but similarly articulated buildings that come up to their knees, so to speak. Rising to about eight stories, they descend in a step-wise progression as they approach West Street. The one vaguely modernist interlude is the design of the penthouses, which are more emphatically articulated with glass and steel. At various points, at least according to the renderings, trees and foliage are essential to the design, and are intended to occupy each of the staggered terraces facing west, as well as the penthouses. But this would not be the first time that CookFox Architects have integrated greenery into their design, only to find that it is unenforceable, presumably through the non-compliance of the owners of the units. For instance, on last view, there was no greenery along the façade of the Lucida, at the corner of Lexington Avenue and 85th Street, even though that was one of the main aesthetic terms of that development. The building that Richard Cook designed that comes closest to 150 Charles Street is the Caroline at 700 Sixth Avenue at the corner of 23rd Street, which is similarly conceived in contextualist red-brick, with a somewhat historicist articulation of the surface. Both that development and the present one are a far cry from the Deconstructivist massing of One Bryant Park, but the treatment of the details on Charles Street may prove to be more refined than that of either of those earlier works. TRD

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Q&A

Scandal and renewal Viewpoints diverge on the impact of the shakeup in Albany and proposed revisions to major real estate-related legislation

BY ARIEL STULBERG eal estate issues took center stage in the corruption scandals that toppled the leadership of the State Assembly and Senate at a time when vital legislation is on the agenda. Last month, Senate Majority Leader Dean Skelos was forced to give up his powerful post after his arrest on federal corruption charges related to his dealings with real estate interests, including Glenwood Management and Tishman Speyer. That came just months after Assembly Speaker Sheldon Silver suffered a similar fate. Meanwhile, Mayor Bill de Blasio unveiled a series of proposals to reform the 421a tax abatement program and rent regulations, both of which face an imminent deadline for renewal or expiration. The Real Deal talked to leaders from various sides of the industry, including the development, law, academia and public policy sectors, to gauge the industry’s views on how the scandals will impact negotiations on those laws and others. Our panelists largely believe the turmoil in Albany will pass, like other corruption scandals before this one, without leaving a major mark on the industry. “I don’t think the recent events in Albany will impact the real estate industry or negotiations on important matters such as rent regulation,” said Frank Ricci, director of government affairs for the Rent Stabilization Association, which represents landlords.

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David Kramer

Principal, Hudson Companies As we all now know, several real estate firms, including Glenwood Management and Tishman Speyer, played roles in the charges pending against the Sheldon Silver and Dean Skelos. Are there concerns in the industry that other real estate players are going to get swept into the investigations? I haven’t lost any sleep. Aren’t the primary charges related to asbestos litigation, title insurance and storm water management? Will the real estate industry need to recalibrate its lobbying efforts and rethink the way it does business? How hamstrung do you think Albany is in connection with passing real estate-related issues given the latest corruption scandals? It’s not as though Albany was particularly competent prior to the recent scandals in connection with real estate-related issues. I thought their overzealous extension of the General Exclusion Area all the way to East New York was pretty irresponsible in 2007. But there’s definitely an anti-real estate vernacular developing that’s a concern. If you paid attention to the recent special election for the 43rd Assembly district [in Brooklyn], there were lots of references to greedy real estate developers. Mayor de Blasio has called for significant changes to the soon-to-expire 421a program, including eliminating subsidies for condos, reducing the subsidies per 92 June 2015 www.TheRealDeal.com

unit and requiring a higher portion of affordable units in qualifying projects. What do you think of those proposals? I think the mayor’s 421a plan is incredibly smart. I probably couldn’t have come up with such a thoughtful plan myself if I were in charge, something I rarely cop to. I feel like they shut out the noise from the 421a haters and the building trades and came up with a proposal that will increase the production of affordable housing and not screw developers along the way. My only concern is that given that it’s a very sensible proposal and it’s coming from the mayor, that might mean two strikes against it already. Like de Blasio, tenant advocates argue that the city is becoming unaffordable for even middle-income families. What role, if any, do you think the government should play in assuring that developers don’t exclusively build housing for multimillionaires? Plenty of developers, such as Hudson, aren’t in the business of building housing for multi-millionaires. That just means your break-even costs are astronomically high ... But the factors that dictate a high break-even basis — land costs and hard costs — are largely out of government’s sphere of influence. The idea of a pied-à-terre tax for New York City has been touted as a way to ensure that foreign investors, who buy real estate to park their cash, would also provide some support for city services. Do you think that’s a good idea? It’s an absurd idea. Just wait for there to be a real estate slow-down, and we’ll

“These are big issues with major implications for owners, residents and the budgets of the city and state. I believe the elected officials understand the impact of these laws and the role they play.” Several said the alleged corruption will likely result in more attention to the issues, though. “It’s clear that bright lights are shining on Albany, and many eyes will be scrutinizing and searching for sweeteners in upcoming real estate-related legislation,” said Michael McMahon of Herrick, Feinstein. On de Blasio’s proposals, opinions varied more widely. While Ricci was mostly critical, David Kramer, principal at Hudson Companies, expressed broad support for the mayor’s ideas. “ I think the mayor’s 421a plan is incredibly smart,” he said. “I feel like they shut out the noise from the 421a haters and the building trades and came up with a proposal that will increase the production of affordable housing and not screw developers along the way.” Some of our experts expressed sympathy for de Blasio’s ends, if not for his specific proposals, with some preferring less radical or more market-friendly approaches. Where everyone agreed was their disdain for a pied-à-terre tax. “It is a terrible idea,” said Stuart Saft, partner and chairman of Holland & Knight’s New York real estate practice group. “Why are we punishing people who are bringing money and jobs to our city?” For more on what’s right and what’s wrong with real estate policy and politics in our city and state, we turn to the experts.

start debating how we can attract foreign investment. As part of his goal for building and preserving 200,000 units of affordable housing, the mayor has proposed zoning changes that would allow for taller buildings in certain areas. This proposal has upset preservationists. What are your thoughts? Here’s a perfect example of how the vilification of real estate development is making it hard for the mayor to achieve his affordable housing goals. This particular proposal is a thoughtful, modest corrective to a problem that has plagued contextual zoning for a while now, which is that the existing height limits sometimes conflict with irregularly shaped sites and inclusionary zoning bonuses. It’s not going to make dramatically taller buildings. But it’s a tough environment out there; folks don’t like height, they don’t like change, they challenge the affordability of the affordable units and this can be intimidating to elected officials. The mayor also caused some concern with his move to mandate affordable housing whenever a zoning change is required for a new development. Do you think this plan will work, or are you concerned it will hamper new development? I think it’s another good idea. The best time to create more affordability is when you’re undertaking a rezoning and handing a windfall to the existing owners. So instead of it being a home run for them, it’ll be a triple. What’s the best or worst thing that govern-

ment has done for real estate recently? I’m optimistic that City Hall’s announcement of investing $120 million in the Department of Buildings will improve the department. We’ve endured a lot of pain for many, many years.

Stuart Saft

Partner and chairman of New York Real Estate Practice Group, Holland & Knight The industry had a fairly positive view of Gov. Andrew Cuomo when he was first elected, and donated over $2 million to his reelection campaign. What’s your take on his performance on real estate-related issues now? I think the governor has done an excellent job of building the state’s infrastructure while supporting businesses that produce jobs and [benefit] the working poor, which necessitates balancing the needs of a state that has been losing businesses and middle income taxpayers to lower-cost states for several decades. What impact will de Blasio’s tenant protection and rent regulation proposals have on the industry? The mayor’s plans are thoughtful, but in a city of almost 9 million people, with 3.1 million units of housing, much of it in disrepair, adding or saving 200,000 units of housing over 10 years is not enough. What legislative changes do you think should be made to rent regulation, if any?

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Q&A Part of the problem with the rental laws is that it bases the subsidy on longevity rather than on a tenants’ need for the subsidy. It seems to me that rent for stabilized and controlled housing should be pegged to an individual’s ability to pay, rather than how long they have lived in the apartment. What role, if any, do you think the government should play in assuring that developers don’t exclusively build housing for multi-millionaires? The city has become unaffordable for many reasons and it is unfair to just blame the real estate industry and to expect that the real estate industry can make the city affordable or that it can develop affordable housing on its own. There is so little affordable housing because city policies make it so expensive to build and operate housing, including but not limited to the real property tax. Do you think a pied-à-terre tax is a good idea and do you see it regaining traction? It is a terrible idea, because it would create a disincentive for part-time residents to invest in New York. Why are we punishing people who are bringing money and jobs to our city? Every time someone buys an apartment that they do not plan on using for their permanent home, they are bringing large sums of money into the city economy, they are paying real estate taxes, which fund the city, and the building has to be fully staffed and supplied as if the owners were living there full time, so it is adding to the employment and income of the city. ... Moreover, if anyone thinks that, with high land costs and construction costs, affordable housing could be built in those locations, they are wrong.

Frank Ricci

Director of Government Affairs, Rent Stabilization Association What impact, if any, do you think the leadership shakeup in Albany will have on the real estate industry, and on rent regulation renewal? I don’t think the recent events in Albany will impact the real estate industry or negotiations on important matters such as rent regulation. These are big issues with major implications for owners, residents, and the budget of the city and state. I believe the elected officials understand the impact of these laws and the role they play. Mayor de Blasio recently called for a major expansion of tenant protections as part of the renewal of rent regulations, including ending vacancy decontrol. What impact would his proposals have? All of Mayor de Blasio’s proposals would have a devastating impact on housing, 94 June 2015 www.TheRealDeal.com

owners and tenants. Capital investment would come to a halt and New York City’s aging housing stock would suffer. Rent stabilized housing in New York City produced $19 billion dollars in economic activity in 2014, including 153,000 jobs in locally based businesses. Half of this housing is owned by small business owners utilizing other small neighborhood businesses. This housing also generated nearly $3 billion in city taxes to fund municipal services ... Why would anyone want to strangle this industry by cutting off the rental income it needs to meet ever-increasing operating costs and the constant improvements required by a housing stock that is generally more than 70 years old? What changes do you think should be made to rent regulation, if any? The laws should be amended to return the decontrol levels to the pre-2011 level of $2,000 per month for a vacant apartment. The current vacancy rate for apartments renting at $2,000 per month is over 5 percent. There is no housing emergency at that level. Beyond rent regulation, which real estate related issues are, or should be, on the agenda in Albany right now? The legislature should be taking up the entire real property tax system in New York City. There’s a lot of discussion on tax caps outside of New York City but no discussion about the city’s system. What are the most pressing real estate issues for the federal government? Funding of section certificates and allowing localities more flexibility in administering Section 8.

Barry Hersh

Associate professor, New York University Schack Institute of Real Estate What impact do you think the leadership shake-up will have on the industry? The leadership turmoil in Albany results in unchartered territory for all, especially for the real estate lobby. Its hope and perhaps the most likely outcome for the most contentious issues, such as rent regulation as well as 421a, may well be a simple extension. The governor’s hand is very strong, as both laws will expire and no change will become law without his support, [which has been] made even stronger as he is now the most experienced leader. What’s your take on Gov. Cuomo’s performance on real estate-related issues? In 2014, both houses of the legislature voted for a short-term extension of the

sun-setting Brownfield Tax Credit program … Gov. Cuomo vetoed the extension, and instead negotiated a long term, and I and many others would say, improved Brownfield program. It is possible that the governor could seek comparable programmatic reforms in expiring housing programs. Housing is a much higher profile issue, for numerous elected officials improving housing affordability is their top priority, yet there are areas where changes might be obtainable. For example, stringent restrictions on subleasing, such as Airbnb, would be favorable to apartment and hotel owners yet also gain support from strong tenant advocates.

Sherwin Belkin

Founding Partner, Belkin Burden Wenig & Goldman What impact, if any, do you think the leadership shake-up in Albany will have on the real estate industry? A legislative session about major real estate issues such as the expiration of rent regulation and the 421a tax abatement program is always a time of great uncertainty. Certainly, these recent events have only served to create an even higher sense of uncertainty as the leadership of the parties — and therefore of each house — now rests with members that are new to the leadership role in this process. Will the real estate industry need to recalibrate its lobbying efforts? Ultimately, the real estate industry is central to the well being and fiscal strength of New York City and the state. Despite these unfortunate events, these are major issues that will need to be addressed. What’s your take on Gov. Cuomo’s performance on real estate-related issues now? Many of my clients that own rent-regulated properties are disappointed. The tenant protection unit that the governor created has run roughshod on many owners by threatening penalties in proceedings that seem to be tainted by significant lapses in due process. In addition, the governor’s Division of Housing promulgated more than two dozen changes to the rent stabilization code — now being challenged by a lawsuit on which my firm is co-counsel. What legislative changes do you think should be made to rent regulation, if any? The amendments to the rent stabilization code make it incredibly difficult to simply say what the legal rent of any apartment is. This was addressed in 1997 by the creation of a ‘four-year rule’ that was intended to eliminate the need to retain ancient documents and make the calculation of legal rents easily understandable for both owners and tenants. Unfortunately,

the code amendments and certain court rulings have created endless exceptions to the rule. If there was a clear restatement of the four-year rule, so it was not subject to endless exceptions, this would create the certainty that both owners and tenants need in being able to determine legal rents.

Michael McMahon

Government relations partner, Herrick, Feinstein; Staten Island district attorney candidate Will the real estate industry need to recalibrate its lobbying efforts? I don’t think the industry needs to rethink the way it does business, and I don’t think Albany will be hamstrung when it comes to issues that can’t be avoided or sidestepped, such as the expiration of 421a. But it’s clear that bright lights are shining on Albany, and many eyes will be scrutinizing and searching for sweeteners in upcoming real estate-related legislation. What do you think of the mayor’s proposals for changes to the 421a program? And what changes do you think the program needs before it is renewed? I don’t think it makes sense to eliminate the abatement for condo ownership completely. The better approach would be to have price caps or income caps on condo developments that would allow the middle class to still enjoy the benefits of ownership. Do you think the mayor’s move to mandate affordable housing whenever a zoning change is required will work? The difficulty in the mayor’s proposal can be seen in buildings built under the current 421a program, which have ‘poor doors’ or unequal access for the residents of the building. Sometimes, imposing affordability in certain neighborhoods doesn’t make sense. In other neighborhoods, it’s the right thing to do. What are some of the issues that have fallen off the radar that you would like to see de Blasio and the city take up? The city has an excess of land zoned for manufacturing uses, including places like Long Island City, the Garment District, Staten Island and around Madison Square Park. The city should stop calling these manufacturing zones and start calling them ‘maker zones.’ This would recognize the city’s shift from heavy manufacturing to what we have today — a growing economy of small and midsized companies that create everything from software to independent films. We need to encourage these businesses, which are suitable in a neighborhood zoned for both living and working. TRD www.TheRealDeal.com July 2013 65

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Real estate news in the Sunshine State TheRealDeal.com /miami

REPORT

Paraiso Bay restaurant reveal Related Group unveiled designs for a planned Michael Schwartz-helmed restaurant at its Paraiso Bay development in Miami’s Edgewater neighborhood. Meyer Davis Studio, a New York City-

When completed late next year, the Paraiso Bay Restaurant and Beach Club will have a “lofty,� industrial look with high ceilings, an open kitchen and bar, said Gray Davis, co-founder of Meyer Davis. The second floor will feature a

Paraiso Bay Restaurant and Beach Club rendering. Left, Gray Davis and Will Meyer.

based design boutique, was tapped to create the two-story restaurant and beach club, which will feature whitepainted walls, wooden trusses, leather chairs, concrete tile floors and marble bars against a backdrop of Biscayne Bay.

private club, with an outdoor patio and pool. When completed late next year, Paraiso Bay will have four towers, with 1400 residences, a bayfront park and marina.

Sapir $40M Surfside buy A publicly traded Israeli company with major holdings in New York is making its first foray into South Florida with plans to build an ultra-high-end, 80-room hotel, beach club and condos. Israel-based ASRR Capital, controlled by Alex Sapir and Rotem Rosen, in a joint venture with the Istanbul-based Suzer Group, inked a deal to pay $40 million for an oceanfront building at 8955 Collins Avenue in an off-market transaction, Rosen said. The deal with the building’s 41 condo owners and the condo board includes the nearly one-acre property on the ocean, next to the Surf Club Four Seasons Hotel & Private Residences, as well as a property on the west side of Collins Avenue. The purchase was slated to close in mid-June. In Manhattan, the Sapir Organization owns 6.5 million square feet of real estate, including the New York headquarters for Coca Cola, Sony, Credit Suisse, William Morris and the Metropolitan Transpor-

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Above, 8955 Collins Avenue. Inset: Alex Sapir.

tation Authority. Sapir also owns 260 Madison Avenue and 261 Madison Avenue, and is partners in Zuma restaurant. “Practically, we view Miami as a continuation of New York,� Rosen said. “We are planning to do more things over there in the future.�

Shore Club hits snag Despite three hearings before the Miami Beach Historic Preservation Board, Ziel Feldman’s New York-based HFZ Capital Group was unable to win approval to demolish a large portion of of the Cromwell Hotel, as part of the Renderings of the rejected Shore Club plans

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construction of a luxury condo-hotel complex anchored by the iconic Shore Club hotel at 1901 Collins Avenue. The board gave HFZ until mid-July to submit a new demolition proposal, but allowed the firm to pursue plans for renovating the Shore Club itself. Final approval of the full project, which calls for converting the existing 309-room hotel into 85 condo units and 100 hotel rooms will have to wait. The project is one of the biggest in South Beach and has pitted preservationists and residents of the neighboring Setai Resort & Residences against HFZ. Compiled by Ina Cordle

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

Phoenix residents are flocking to new housing in the center parts of the city, rather than the suburbs.

New Orleans Brad Pitt and Angelina Jolie listed their 7,654-square-foot, five-bedroom home in the French Quarter for $6.5 million. The extensively renovated 1830s mansion, with some of the work done by Pitt himself, comes complete with Venetian plaster walls, pool, guesthouse, elevator and parking for two cars.

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.

PHOENIX

I

nterest in high-density urban housing in Phoenix’s center has exploded in the past year. New construction on infill sites and the replacement of old houses with new ones has driven prices in the most desirable central districts up by as much as 36 percent, with smaller but still impressive rises nearby, the Arizona Republic reported. Meanwhile, demand for

MILWAUKEE Industrial properties in rust belt cities like Milwaukee are suddenly in demand.

National investors are pumping cash into Milwaukee’s industrial property market. Amazon.com and U-Haul are among the firms that recently inked large property deals in the area, along with real estate firms like New York’s Ashley Capital, an industrial property investor and developer. Vacancies are down to 4.86 percent, from 6.45 percent a year ago and 9.75 percent in 2008, BizTimes Milwaukee reported. Rents jumped 10 percent over the past two years, with further growth expected. The activity reflects a shift by U.S. firms into secondary and tertiary markets in response to the flood of international investment driving up prices in the nation’s largest cities.

Las Vegas homes in quieter, more peripheral areas has softened. The shift has been fueled in part by young families seeking the best school districts, and by retirees and second-home buyers looking for convenient access to urban amenities, freeways, and the desert. It also reflects a nationwide trend of moving closer to city centers in lieu of the suburbs.

property market may come as a surprise. Baltimore leads the nation in house flipping profitability. A study by research firm RealtyTrac found that resellers in Baltimore earned an eye-popping 94 percent return on investment on a total of 258 transactions in the first quarter of 2015. Other markets hard-hit by the bust, including South Florida, Detroit and Tuscon, were also near the top of the list for returns on flipped properties. Nationally, flip transactions made up 4 percent of all single-family home sales, down from 6.7 percent a year earlier, with activity concentrated in markets like those above that combine available inventory, affordability and demand.

SAN FRANCISCO High-end properties in San Francisco are increasingly being sold off-market.

After the recent unrest in Baltimore focused negative attention on Maryland’s largest city, its burgeoning 98 June 2015 www.TheRealDeal.com

Chicago “The Internship” star Vince Vaughn again dropped the price on his five-bedroom penthouse in the storied Palmolive Building on Lake Michigan’s Gold Coast. The 12,000-square-foot triplex, which once housed Hugh Hefner’s Playboy office, now lists for $13.9 million, down from its original price of $24.7 million.

Washington, D.C.

BALTIMORE Baltimore is one of the most profitable cities for flipping.

Controversial boxing champ Floyd Mayweather, Jr. bought a 3,142-square-foot two-bedroom penthouse apartment on the 55th floor of the Palms Place Hotel and Spa overlooking the Las Vegas Strip for $1.81 million. The unit features a telescoping glass wall in the living/game room and an infinity-edge spa extending off the balcony.

Off-market sales now make up over a quarter of San Francisco residential transactions. More sellers than ever, especially at the high end of the market, are choosing not to list their properties on the Multiple Listing Service, seeking privacy and less personal involvement in the sales process. Off-market “pocket” listings aren’t new, but their use sharply increased in recent years, to the point of creating “a second market,” according to the San Francisco Chronicle. The strength of San Francisco’s residential market has ensured that many off-market sellers have nonetheless been able to close at market or near-market prices. Compiled by Ariel Stulberg

Former “Meet the Press” moderator David Gregory listed his fivebedroom, six-bath home in Wesley Heights for $2.5 million. The 5,200-square-foot estate features vaulted ceilings, a twosided gas fireplace, flagstone patio, child’s playhouse, and kitchen designed by Fabiola Martens with quartz countertops and Porcelanosa flooring.

It’s More than Just Your Home, It’s Your Legacy. South Florida’s Last Private Island

Privacy Born of Open Air, Sea & Sky. Vast residences starting at $2 Million Penthouses ranging from $4.9 Million to $12 Million Please visit us at mypriveisland.com or call us at 866.387.9926 NOW UNDER CONSTRUCTION. Site Address: 5000 Island Estates Drive, Aventura, FL 33160 ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, MAKE REFERENCE TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE. OBTAIN THE PROPERTY REPORT REQUIRED BY FEDERAL LAW AND READ IT BEFORE SIGNING ANYTHING. NO FEDERAL AGENCY HAS JUDGED THE MERITS OR VALUE, IF ANY, OF THIS PROPERTY. All artist’s or architectural conceptual renderings, plans, prices, specifications, terms, features, dimensions, amenities, existing or future views and photos depicted or otherwise described herein are based upon preliminary development plans, and all and are subject to architectural revisions and other changes, without notice, in the manner provided in the purchase agreement or other information and the offering circular and may not be relied upon. All features listed for the residences are representative only, and the Developer reserves the right, without notice to or approval by the Buyer, to make changes or substitutions of equal or better quality for any features, materials and equipment which are included with the unit. This advertisement does not constitute an offer to sell or a solicitation of an offer to buy a unit in the 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 any required registration therein. We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing 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, sex, religion, handicap, familial status or national origin.

Advertising & Interactive by

Miami

SCORECARD

Median apartment rents Uptown experienced the steepest year-over-year rise this April, with Central Harlem ranking high in new residential development. Also topping lists was Penn Plaza/Garment District, which led all neighborhoods in retail lease transactions in April 2015. Hotel performance, however, has recently turned down.

RESIDENTIAL MANHATTAN DEVELOPMENT

“More major developers will start coming to Central Harlem.” JEFF KRANTZ, HALSTEAD PROPERTY

Top nabes for new building plans (# of buildings) May 1, 2014 - April 30, 2015

9

Central Harlem

9

Tribeca

Tribeca, Central Harlem and the Financial District each had applications for nine new buildings, while Chelsea led with 11 from April 30, 2014 to May 1, 2015. (Note: Only buildings with at least 15 units were counted.)

9

FiDi

11

Chelsea

Source: TRD analysis of DOB permit applications

Number of new building plans, by project size May 1, 2014 - April 30, 2015

The bulk of Manhattan’s new building applications over the past year were for projects with fewer than 100 units. (Note: Only buildings with at least 15 units were counted.)

70 60 50

70 7

40

26

30 20 10 0

6 Between 15-99 units

Source: TRD analysis of DOB permit applications

100-399 units

400-999 units

1 1,000+ units

Number of units per building

UPTOWN ON THE UP

MANHATTAN RENTALS

M BY WILL PARKER

edian apartment rents for Uptown properties rose sharply over the last year, and developers filed plans for more new residential developments in Central Harlem than most other neighborhoods. A Douglas Elliman report found Uptown rents were 12.5 percent higher in April than a year earlier, reaching a median of $2,250 per month. Over the same period, Central Harlem saw as many new building applications as Tribeca and FiDi, Department of Buildings data showed. (Chelsea finished first overall.) Jeff Krantz of Halstead Property predicted the trend Uptown will continue, and draw bigger names. “Once major developers start seeing our comps come out in Central Harlem, I don’t think it will be long before they start coming too.” Soho also gained in April. Doorman-building studio apartment rents there shot up to an average of nearly $5,800 a month, almost $2,000 more than the next most expensive market for these units, Tribeca, a report from MNS showed. “These units are more rare in Soho,” said Elliman’s Noam Gottlieb. “When they do come up, they command a premium.” The price reflects Soho’s loft-style studios’ size, he added. For the borough as a whole, average rent changes over the last year were relatively measured, rising slightly in all categories except three-bedrooms, where April rents fell to $8,440 from $8,747 year-over-year, the Elliman report showed. TRD

“[Soho studios] are more rare and command a premium.”

NOAM GOTTLIEB, DOUGLAS ELLIMAN

Priciest neighborhoods for doorman studio rentals $3,222

Chelsea East Village

$3,315

Tribeca

$3,888 $5,795

Soho $0

$1, 000

$2, 000

$3, 000

$4, 000

$5, 000

$6, 000

Source: MNS; averages are for April

Median rental price by location (and year-over-year change) Increases from May 1, 2014 to April 30, 2015

Uptown

$2,250

East Side

$3,150

West Side

$3,425

Downtown

+12.5 % +5.2 % +0.6 % +3.3 %

$3,609 $0 $500 $1, 000 $1, 500 $2, 000 $2, 500

$3, 000 $3, 500 $4, 000

Source: Douglas Elliman

COMMERCIAL MANHATTAN HOTEL MARKET Q1 2015 Manhattan hotel metrics (and year-over-year change) 75.2% Occupancy rate

$204.18 Average daily rate

$153.63 Revenue per room

-0.2% -4.1% -4.3% Source: STR

Manhattan January and February combined hotel revenue

2014 (with Super Bowl ) 2015 (without Super Bowl)

Super Bowl XLVIII was a boon to city hotels in the first two months $970M 7 of 2014. This year, according to STR data, revenues dropped, $918M 9 with this winter’s recurring inclement $890M $930M $960M $980M weather also dragging down gains. Source: TRD analysis of STR data

“Foreign capital is still looking at hotels as a long term hold.” BRADLEY BURWELL, CBRE

100 June 2015 www.TheRealDeal.com

HOTEL NUMBERS FALL IN Q1

T

BY WILL PARKER hree major hotel performance indicators fell in the first quarter, a recent report from hotel research firm STR showed. The occupancy rate, average daily rate, and revenue per available room all dropped from the first quarter of 2014. Additionally, room supply rose 3.1 percent, outpacing market demand. The declines were no surprise, because last year’s Super Bowl produced numbers difficult to match. STR forecast a continued fall in occupancy rates through 2016. Bradley Burwell, CBRE vice president and hotel sales specialist, said although there might be some short-term slippage in hospitality numbers, many hotel investors are playing the long game. “You still have a significant amount of foreign capital pouring into the city and looking at hotels as a long-term hold.” Meanwhile, retail leasing in April was strong in two key markets. Penn Plaza/Garment District and Soho registered the most deals, a TRD analysis of CoStar data showed. The biggest Penn Plaza transaction was a 34,000-square-foot deal for the Foot Locker shoe store at 112 West 34th Street. “The whole 34th Street corridor is filling in with good tenants,” said Cushman & Wakefield’s Joanne Podell, who repped the landlord, Empire State Realty Trust, on the Foot Locker deal. TRD

MANHATTAN RETAIL LEASING Top neighborhoods for new leases signed in April 2015 Lower East Side

5 leases

Greenwich Village

5 leases 8 leases

East Village

11 leases

Soho Penn Plaza/ Garment District

13 leases 0

2

4

6

8

10

12

14

Source: TRD analysis of leases reported to CoStar Group

Manhattan’s most active landlord-rep brokerages in April

10 total leases

4 total leases

Largest deal: CVS Pharmacy 318 West 39th St. , 22,000 sf

Largest deal: Foot Locker 112 West 34th St., 34,000 sf

Newmark Grubb Knight Frank had the most 4 total Manhattan retail lease leases transactions Largest deal: reported to N/A 401 Broadway CoStar in April of 2015. 3,150 sf

Source: TRD analysis of leases reported to CoStar Group

“The whole 34th Street corridor is filling in with good tenants.” JOANNE PODELL, CUSHMAN & WAKEFIELD

REAL ESTATE CROWDFUNDING PLATFORM FOR CHINESE INVESTORS

AMERICAN REGIONAL CENTER FOR ENTREPRENEURS WE SPONSOR PROJECTS IN METRO NEW YORK CITY

718-878-3378

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 4/14/15 to 5/15/15. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

919 Third Ave

254,556

Bloomberg LP / Craig Reicher and Howard Fiddle, CBRE

SL Green Realty / Peter Turchin, Gregg Rothkin, James Ackerson, Edward Goldman, CBRE

The firm signed a 15-year lease for eight floors of the building.

SuperPier West 15th St

250,000

Google / n/a

n/a / n/a

The tech company signed a lease.

855 Sixth Ave

147,000

Nike / n/a

Durst Organization / n/a

The company signed an 11-year lease.

315 West 36th St

136,118

WeWork / n/a, Hays Realty Services

SL Green Realty / n/a, in-house

The shared office space provider signed a 15-year lease.

1301 Sixth Ave

107,215

Norton Rose Fulbright / Moshe Sukenik, Chris Mongeluzo and Lee Brodsky, Newmark Grubb Knight Frank

Paramount Group / Andrew Sachs, Timothy Gibson, Bill Levitsky, Ben Shapiro, Newmark Grubb Knight Frank

The international law firm signed a lease to move one avenue west.

2322 Third Ave

100,000

City of New York / Robert Giglio and Ellen Israel, Cushman & Wakefield and JRT Realty

Jack Resnick & Sons / Dennis Brady and Brett Greenberg, Jack Resnick & Sons

City of New York renewed its lease for the entire building.

95 Morton St

95,000

PayPal / Frederick Fackelmayer, Sacha Zarba, Jeff Black, Ben Friedland and Michael Hirsch, CBRE

Brickman Associates / Paul Kotcher, Brickman Associates

The company signed a lease.

511 Barry St (Bronx)

84,400

Plated / Barry Cohorsky and James Hanson, NAI Hanson

Baldor Specialty Foods / John Reinertsen and Timothy Sheehan, CBRE

The ingredients delivery service signed a five-year lease.

590 Madison Ave

72,327

Aspen Insurance / Harly Stevens, Michael Geoghegan, Chris Mansfield and Jim Robbins, CBRE

State Teachers Retirement System of Ohio / Jeffrey Sussman, Edward J. Minskoff Properties

The insurance company signed a 15-year renewal and expansion lease.

350 West 50th St

68,000

Rubenstein Associates / David Goldstein, Savills Studley

New York REIT / Matt Coudert, George Comfort & Sons

The public relations firm signed a lease.

475 Fifth Ave

32,000

Pinterest / Sacha Zarba, CBRE

TIAA-CREF / Frank Doyle, Doug Neye, Cynthia Wasserberger, JLL

The social media company signed a lease for its first New York City office.

55 Broadway

30,000

Cowork|rs / n/a

Harbor Group International / n/a

The shared office space provider signed a 13-year lease.

51 Astor Place

25,401

IBM / n/a

Edward J. Minskoff / Paul Glickman, JLL

IBM now takes up 143,836 square feet in the building.

330 Fifth Ave

25,000

Woori Bank / Soon H. Rhee and Norman Bobrow, First New York Realty Brokers

Shulsky Properties / n/a

The bank signed a lease to move to Koreatown.

180 Maiden Lane

25,000

Holborn Corporation / Richard Levine, CBRE

Murray Hill Properties/ Tara Stacom, Robb Lowe, Frank Cento, Justin Royce, Jesse Rubens, Rick Doolittle and James Tamborlane, Cushman & Wakefield and Murray Hill Properties

The firm signed a 15-year lease.

112 West 20th St

23,000

Regus / Dan Suozzi and Jim Wenk, JLL

Kaufman Organization / Steven Kaufman, Barbara Raskob and Yvonne Chang, Kaufman Organization

The global office-sharing company signed a 10-year lease.

462 Seventh Ave

19,500

Vocativ / Stuart Romanoff, Cushman & Wakefield

Kaufman Organization / Steven Kaufman, Barbara Raskob and Yvonne Chang, Kaufman Organization

The digital media company is expanding its headquarters.

60 Madison Ave

18,783

Eyeview / Anthony Sciacca, Newmark Grubb Knight Frank

Moinian Group / Jonathan Fanuzzi, Daniel Kollar and Harley Dalton, JLL

The tech start-up signed a lease.

800 Third Ave

16,546

Scott-Macon / Benjamin Blumenthal and Norman Bobrow, Norman Bobrow & Company

Richard Teichman / Richard Brickell, Joseph P. Day Realty

The bank signed a 15-year renewal and expansion lease.

685 Third Ave

13,683

Chang Hwa Commercial Bank / Soon H. Rhee and Norman Bobrow, First New York Realty Brokers

TIAA-CREF / Don Kollar, JLL

The Taiwan-based bank signed a 15-year renewal lease.

11 East 26th St

12,083

Persado / Elliot Warren, Kaufman Organization

East Twenty Sixth Associates / James Buslik, Adams & Company

The tech company signed a 12-year lease.

116 Nassau St

11,365

Park Row South Nassau Street, LLC / John Kourtis, NY Citi Group Realty

Abacus Federal Savings Bank / n/a, Coldwell Banker Commercial Alliance

The company leased the entire 8th floor.

3 Park Ave

10,000

Assouline / Kelly Supple, Rutenberg Realty

Cohen Brothers Realty / Marc Horowitz, Cohen Brothers Realty

The publisher signed a lease.

111 Broadway

9,304

NYC Charter School Center / Jason Schwartzenberg and Michael Berman, JLL

Trinity Centre / VaShawn Cooper, Capital Properties

The non-profit signed a lease for another 10 years in the building.

19 Union Square West

9,233

Urban Compass / n/a

n/a / John Gols, Gregg Schenker, Earle Altman, Steven Hornstock, Jason Kreisberg and Charles Conwell, ABS Partners Real Estate

The company signed a three-year and two-month sublease for the entire 10th floor.

115 West 18th St

8,600

Metropolitan Pavilion / n/a, Abraham & Martin

Wasserstein Enterprises / Andrew Udis, ABS Partners Real Estate

The company signed an eight-year and four-month lease for part of the 8th floor.

321 West 44th St

8,508

Tag Wall / Alexander Chudnoff and Brittany Wunsch, JLL

Jowa Holdings / Howard Hersch and Justin Haber, JLL

The architectural wall manufacturer signed a 10-year lease.

116 Nassau St

8,436

New York City Anti-Violence Project / Carri Lyon, Cushman & Wakefield

Abacus Federal Savings Bank / Gregory Gang, CBC Alliance

The non-profit signed a long-term lease.

40 East 52nd St

7,808

Madison Marquette / Jonathan Schilder and Jordan Weiss, DTZ

Rudin Management / Robert Steinman, Rudin Management

The real estate firm signed a lease.

102 June 2015 www.TheRealDeal.com

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Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

767 Third Ave

7,450

Brafman & Associates, P.C. / n/a

n/a / n/a

The criminal defense attorney signed a three-year renewal lease.

767 Third Ave

7,450

BRP Development Corporation / n/a

n/a / n/a

The real estate firm signed a five-year lease.

135 East 57th St

7,255

Algomi Corporation / Eric Ferrielle and Robert Tunis, Colliers International

Cohen Brothers Realty / Marc Horowitz, Cohen Brothers Realty

The company signed a 10-year lease.

1539 Covert St (Queens)

7,200

Queens Brewery / Jacques Wadler and Vincent Lopez, Kalmon Dolgin Affiliates

Covert Holdings LLC / Joel Kohn and Avrum Lieber, Kalmon Dolgin Affiliates

The brewery signed a lease.

1 Bryant Park

7,168

Melkonian Capital Management / Robert Lowe and Nicky Dysenchuk, Cushman & Wakefield

Marathon Asset Management / Alexander Chudnoff and Dan Turkewitz, JLL

The investment advisory firm signed a lease to relocate from 1120 Avenue of the Americas.

65-35 Queens Blvd (Queens)

5,503

ResCare Workforce Services / Josh Kleinberg, CBRE

n/a / Craig Berman and Ryan Herzich, Joseph P. Day Realty Services

The tenant signed a lease.

530 Seventh Ave

5,100

Trixxi Clothing Company / Bob Savitt, Brian Neugeboren and Nicole Goetz, Savitt Partners

n/a / n/a

The clothing company signed an extension lease.

44 Wall St

4,924

EAA Portfolio Advisors / n/a, DTZ

44 Wall Owner, LLC / Gregg Schenker, Keith Lipstein, Jason Kreisberg and Joe D’Apice, ABS Partners Real Estate

The company signed a three-year and one-month lease.

40 East 52nd St

4,575

Eric Mower + Associates / Jonathan Schilder and Bryan Boisi, DTZ

Rudin Management / Robert Steinman, Rudin Management

The advertising agency signed a lease.

628 Broadway

4,500

Take Two Interactive Software / n/a, ABS Partners Real Estate

628 Broadway, LLC / James Caseley, Alan S. Cohen, Ian Weiss and J. Strizzi, ABS Partners Real Estate

The company signed a four-year lease for the entire fourth floor.

110 William St

4,475

Smarsh, Inc. / Kyle Ciminelli and Alex Leopold, Newmark Grubb Knight Frank

Savanna / Hal Stein, Todd Stracci and Travis Wilson, Newmark Grubb Knight Frank

The tech company signed a seven-year lease.

767 Third Ave

4,420

Project TriForce / n/a

n/a / n/a

The company, which specializes in high-end video game replicas, signed a seven-year lease.

1001 Avenue of the Americas

4,308

Richmond Events / n/a, Kaufman Organization

n/a / James Caseley, Jonathan Cohen, T. Schwartz, Gregg Schenker, Earle Altman and Steven Hornstock, ABS Partners Real Estate

The company signed a five-year and two-month lease for part of the 15th floor.

530 Seventh Ave

3,600

Quicksilver / Bob Savitt, Brian Neugeboren and Nicole Goetz, Savitt Partners

n/a / n/a

The clothing company signed an extension lease.

104 June 2015 www.TheRealDeal.com

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THOMAS GUSS TG@NYR.COM NEW YORK RESIDENCE INC. ONSITE OFFICE:

33 WEST 56TH ST.

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Sponsor: MCP SO Strategic 56 LLP, c/o Green Investments, 160 Varick Street, 2nd Floor, New York, NY 10013. This is for informational purposes only. The complete offering terms are in an Offering Plan available from the sponsor. File No. CD07-0132. This is not an offer to sell condominium units in any jurisdiction which requires prior registration and in which the Condominium is not registered. We are pledged to the letter and spirit of US 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.

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

7 West 51st St

3,200

Comprehensive Urology of New York / Stanley Piesh, Prime Manhattan Realty

n/a / Josh Augenbaum, Augenbaum Realty

The medical office signed a lease.

915 Broadway

3,189

DV01, Inc. / n/a, ABS Partners Real Estate

n/a / James Caseley, Carol Sacks, Gregg Schenker, Steven Hornstock and Alex Kaskel, ABS Partners Real Estate

The company signed a two-year lease.

580 Broadway

3,000

Instacart / n/a, TheSquareFoot

Broad Prince Realty / n/a, in-house

The grocery delivery start-up signed a lease.

1270 Broadway

2,946

S&C International / Ken Lerner, Okada & Company

CAN Cornerstone / JC Park, n/a

The fashion tenant signed a lease.

20 West 22nd St

2,596

Myriad Creative / n/a, ABS Partners Real Estate

20 West 22nd Street Associates, LLC / Jason Fein, Robert Finkelstein, Gregg Schenker, Earle Altman and Steven Hornstock, ABS Partners Real Estate

The company signed a one-year and five-month lease.

140 West 57th St

2,552

Block, Inc. / Ken Lerner, Okada & Company

Feil Organization / Kevin Driscoll, Feil Organization

The fashion tenant signed a lease.

401 Broadway

2,349

Wordsearch Communications / n/a, ABS Partners Real Estate

n/a / James Caseley, Alan S. Cohen and Jonathan Cohen, ABS Partners Real Estate

The company signed a three-year lease.

857 Union St (Brooklyn)

2,100

Warren Lewis Sotheby’s International Realty / Jeffrey Kessler, Warren Lewis Sotheby’s International Realty

DB & L 859 Realty LLC / Peter Levitan and Garry Steinberg, Lee & Associates NYC

The Brooklyn residential real estate firm signed a lease to relocate its office.

32 Broadway

2,000

Richard Kuick & Associates / Steven Jacobson, Hopkinson Associates

n/a / n/a

The law firm signed a lease.

210 11th Ave

1,892

Stella McCartney America / n/a, ABS Partners Real Estate

n/a / Audrey Novoa, Joseph LaRosa and Gregg Schenker, ABS Partners Real Estate

The company signed a four-year and 11-month lease, bringing its total square footage in the building to 8,718 square feet.

530 Seventh Ave

1,800

Jacobson Group / Bob Savitt, Brian Neugeboren and Nicole Goetz, Savitt Partners

n/a / n/a

The clothing company signed an extension lease.

915 Broadway

1,714

The People’s Operator / n/a

n/a / James Caseley, Carol Sacks, Gregg Schenker, Steven Hornstock and Alex Kaskel, ABS Partners Real Estate

The company signed a three-year and one-month lease.

54 West 21st St

1,545

Bowles, Liberman & Newman LLC / n/a

n/a / n/a

The law firm signed a lease.

411 Fifth Ave

1,517

Beauty Solutions / David Levy, Adams & Company

411 Fifth Avenue Associates / David Levy, Adams & Company

The company signed a lease.

124 West 36th St

1,500

Natalia Ashikhmina / Hiro Iwata, Okada & Company

Italmode Inc. / Hiro Iwata, Okada & Company

The fashion tenant signed a lease.

365 Seventh Ave

1,500

Mystery Room / David Ho and Francis Leung, Okada & Company

n/a / David Ho and Francis Leung, Okada & Company

The entertainment company signed a lease.

60 East 42nd St

1,500

M&A Advisor Network / John Brod and Ian Weiss, ABS Partners Real Estate

Empire State Realty Trust / n/a, Newmark Grubb Knight Frank

The company signed a one-year lease for space on the 16th floor.

411 Fifth Ave

1,485

Mantero of America / David Levy, Adams & Company

411 Fifth Avenue Associates / David Levy, Adams & Company

The company signed a lease.

411 Fifth Ave

1,474

Sunflower Jewelry / David Levy, Adams & Company

411 Fifth Avenue Associates / David Levy, Adams & Company

The company signed a lease.

252 West 38th St

1,400

Jacobson Capital Services / Ken Lerner, Okada & Company

n/a / Carlos Silberman, Falcon Properties

The fashion tenant signed a lease.

210 11th Ave

1,395

Vick Corporate Art Advisors / n/a, ABS Partners Real Estate

n/a / Audrey Novoa, Joseph LaRosa and Gregg Schenker, ABS Partners Real Estate

The company signed a two-year lease.

252 West 38th St

1,200

Murano System / Ben Mayell, Okada & Company

n/a / Carlos Silberman, Falcon Properties

The fashion tenant signed a lease.

109 West 27th St

1,100

Nellie Partow LLC / Ioannis Kourtis, NY Citi Group Realty

Sylvia Gloria Braun Trust / Ioannis Kourtis, NY Citi Group Realty

The company signed a four-year lease.

147 West 35th St

800

VHTD Foundation / Ken Lerner, Okada & Company

n/a / Carlos Silberman, Falcon Properties

The not-for-profit company signed a lease.

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

1320 Bowery Street (Brooklyn)

50,000

Smorgasburg / n/a

n/a / n/a

The tenant signed a lease.

90 Fulton Street (Brooklyn)

40,000

Forever 21 / n/a

Crown Acquisitions / n/a

The retail chain signed a lease.

350 West 50th Street

35,000

David Barton Gym / n/a

New York REIT / Matt Coudert, George Comfort & Sons

The gym signed a lease.

112 West 34th Street

34,200

Foot Locker / Rob Martin, JLL

Empire State Realty Trust / Fred Posniak, Empire State Realty Trust and Joanne Podell and Ian Lerner, Cushman & Wakefield

The athletic shoe chain signed a lease.

196 Orchard Street

30,000

Equinox / John Mears, Equinox

Magnum Real Estate and Real Estate Equities / Richard Skulnik, Ripco Real Estate

The high-end fitness center signed a lease.

125 Park Avenue

17,000

Blink Fitness / Jeff Roseman, Marc Frankel and Ben Birnbaum, Newmark Grubb Knight Frank

SL Green Realty / n/a

The gym signed a lease.

106 June 2015 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

200 Vesey Street

15,407

Bliss Spa / Joe Genovesi and John Hart, Savills Studley

Brookfield Office Properties / John Wheeler, Clayton Kline, Michael Berman, Paul Glickman, Dave Cheiken and Paul Massey, Jr., JLL and Brookfield Office Properties

The spa signed a 10-year lease.

42-19 Bell Boulevard (Queens)

12,750

Evergreen Adult Daycare / Nancy Yeu, JC Cornerstone Realty & Management

Paulipark Associates / Noel Caban, Winick Realty Group

The retailer signed a lease.

666 Greenwich Street

12,000

Brooklyn Fare / n/a

Rockrose Development / n/a

The high-end supermarket signed a lease for its second Manhattan location.

73 Empire Boulevard (Brooklyn)

9,900

Dollar Tree / Richard Senior, Ripco Real Estate

CS Management / Andrew Clemens, Ripco Real Estate

The retail chain signed a lease.

680 Madison Avenue

7,000

Brioni / n/a

n/a / n/a

The men’s luxury fashion brand signed a lease.

22-26 129th Street (Queens)

6,000

Sinoelite Corporation / Jacques Wadler and Vincent Lopez, Kalmon Dolgin Affiliates

Nidarial Associates, Inc. / Jacques Wadler and Vincent Lopez, Kalmon Dolgin Affiliates

The vitamins and baby accessories wholesaler signed a lease.

310 East 44th Street

4,900

MKT Werks Inc. / Young Byunn, Winick Realty Group

Beaux Arts Realty and The Brodsky Organization / Steven E. Baker and Charles Rapuano, Winick Realty Group

The retailer signed a lease.

360 Furman Street (Brooklyn)

4,500

Abhaya Yoga / n/a

n/a / n/a

The yoga studio signed a lease.

75 Greene Street

4,300

Versace / Marc Simon, Issacs and Company

Alberto Makali / Katherine O’Tootle and Stephen Tarter, CBC Alliance

The luxury fashion brand signed a lease.

247 West 54th Street

4,000

Screen Actors Guild Foundation / Amy Lawrence, Denham Wolf Real Estate Services

Boston Properties / n/a, Boston Properties

The non-profit signed a 20-year lease for community facility space.

1071 Sixth Avenue

3,889

Pret A Manger / Ariel Schuster, Jackie Totolo and Michael Paster, RKF

Ten Seventy One Associates / David Levy, Adams & Company

The coffee and to-go food spot signed a 15-year lease.

458 Fulton Street (Brooklyn)

3,500

Journeys / Adam Zeiberg, True Realty

Crown Acquisitions / Isaac Mograby, Crown Retail Services

The footwear chain signed a new 10-year lease for 3,500 sf on grade.

35 West 36th Street

3,195

PYA Importer / Darrell Handler and Peter Newman, Handler Real Estate Organization

Hidrock Realty / Robert Kaplan, Hidrock Realty

The apparel and furnishings retailer signed a 10-year lease.

270 Madison Avenue

3,050

Drybar / Navin Bhutani and Steven Greenberg, Greenberg Group

270 Madison Avenue Associates, LLC and Independence 270 Madison, LLC / John Brod, Mark Tergesen and Dean Valentino, ABS Partners Real Estate

The salon signed a 14-year-8-month lease for ground floor space.

915 Broadway

2,800

Bandier / n/a, ABS Partners Real Estate

n/a / Robert Kempner, Mark Tergesen, James Caseley, Alex Kaskel, John Brod, Jennifer Bernstein, Gregg Schenker, Steven Hornstock and Earle Altman, ABS Partners Real Estate

The clothing company signed a ground-floor, monthly lease.

79-01 Linden Boulevard (Queens)

2,700

Vision Works / Richard Senior and Isaac Shabot, Ripco Real Estate

JSB Realty No. 2 LLC / Richard Senior and Isaac Shabot, Ripco Real Estate

The optical chain signed another 10 year lease.

5510-5520 Broadway (Bronx)

1,900

Vision Works / Richard Senior and Isaac Shabot, Ripco Real Estate

Equity One / Richard Senior and Isaac Shabot, Ripco Real Estate

The optical chain signed another 10 year lease.

440 Bergen Street (Brooklyn)

1,800

Wasan / n/a

n/a / Colby Swartz and Dino Mouzakitis, Suzuki Capital

The Japanese restaurant is expanding to Brooklyn.

27 West Fordham Road (Bronx)

1,700

Annete Fashion Inc. / n/a

33 W. Fordham LLC / Rick Stassa, Friedland Realty Advisors

The clothing store signed a lease.

62 Wooster Street

1,654

Byredo Wooster / Nick Cowan, Issacs and Company

62 Wooster LLC / Aaron S. Fishbein and Joshua Siegelman, Winick Realty Group

The retailer signed a lease.

1450 Myrtle Avenue (Brooklyn)

1,480

T-Mobile / Andrew Clemens and Benjamin Weiner, Ripco Real Estate

Silvershore Properties / Andrew Clemens and Benjamin Weiner, Ripco Real Estate

The cellular company signed a 10-year lease.

1504 Second Avenue

1,400

Metropolitan Graphic Art Gallery / Josh Singer and Vik Lulla, Heller Organization

Friedland Properties / Aaron Prince, Friedland Properties

The custom framing shop signed a lease.

123 Lafayette Street

1,356

Love Hate Social Club / Taryn Talmadge, Robert K. Futterman & Associates

Stellar Management / Andrew Stern, Stellar Management

The high-end tattoo parlor signed a lease.

829 SIxth Avenue

1,250

Ren Friendly Trading Inc. / David Ho and Francis Leung, Okada & Company

n/a / David Ho and Francis Leung, Okada & Company

The wholesale company took retail space.

58 West Eighth Street

1,200

S & E Crepes / Yi Lu, Nest Seekers International

n/a / Roberto Camacho and William Abramson, Buchbinder & Warren

The crepes restaurant opened its second location in the city.

494 Eighth Avenue

1,100

By Suzette / David Tordjman, Norman Bobrow & Company

n/a / Brad Cohen and Jon Kamali, Eastern Consolidated

The French crepes chain signed a lease.

1867 Second Avenue

1,000

Perk Kafe / Joshua Kaufman and Joshua Gettler, New Street Realty Advisors

Orgin Associates / Joshua Kaufman and Joshua Gettler, New Street Realty Advisors

The coffee shop signed a lease for a location in the Upper East Side.

839 Prospect Avenue (Brooklyn)

1,000

Subway / Robin Herko and David Scotto, Friedland Realty Advisors

Franciacorta Properties / Robin Herko and David Scotto, Friedland Realty Advisors

The fast food chain signed a lease.

4036 Broadway

800

DSS Wireless / Michael Gleicher and Zach Diamond, Winick Realty Group

Woodrow Court Inc. / Michael Gleicher and Zach Diamond, Winick Realty Group

The wireless dealer signed a lease.

251 West 81st Street

800

Harmony by Karate / Tom Brady and Salvator Falcone, Town Residential

n/a / Steve Rappaport and Jeff Bak, Sinvin Real Estate

The karate studio signed a lease.

926 Second Avenue

700

Great Value Convenience / Albert Manopla, Kassin Sabbagh Realty

N. Chi & Co. LLC / Jeff Yi, Halstead Property

Former Subway sandwich place.

14 Wall Street

538

Starbucks / n/a

Alex Rovt / n/a

The coffee chain will open its first express-format store.

4197 Broadway

537

Boost Mobile / Hal Shapiro, Winick Realty Group

Stellar West 178 / Hal Shapiro, Winick Realty Group

The retailer signed a lease.

108 June 2015 www.TheRealDeal.com

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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.

Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

1701 Broadway

450

Concept Five LLC / Alexander Robles, Prime Manhattan

Brittania 54th Corp. / Patty Holmstrom and Jeeun Elizabeth Kim, Winick Realty Group

The retailer signed a lease.

922 Madison Ave

288

DJULA Jewelry / Fritz Kemerling and Joe Mastromonaco, Dartmouth Company

Friedland Properties / Aaron Prince, Friedland Properties

The tenant signed a 10-year lease for its first U.S. location.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

230 Park Avenue

34 stories, 1,400,000 sf

RXR Realty / n/a

Monday Properties, Invesco and South Korea’s National Pension Service / Darcy Stacom and William Shanahan, CBRE

The Helmsley Building sold for $1.2 billion.

40 Riverside Boulevard

33 stories, 140,000 sf

GID Development / n/a, n/a

Extell Development and Carlyle Group / Andrew Scandalios and Jeffrey Julien, HFF

The building sold for $410.8 million. GID Development purchased one of five buildings in the eight-acre project.

1407 Broadway

42 stories, 1,100,000 sf

Shorenstein Realty Services / Eric Anton, Andrew Scandalios and David Fowler, HFF

Lightstone Group / Woody Heller and Will Silverman, Savills Studley

The office building’s ground lease sold for $330 million.

184 Kent Avenue (Brooklyn)

6 stories, 338 units

Kushner Companies and LIVWRK and Rockpoint Group / n/a, n/a

n/a / n/a

The building was sold for $275 million.

123 William Street

26 stories, 545,000 sf

n/a / n/a

n/a / n/a

The building sold $253 million.

32 Old Slip

36 stories, 1,200,000 sf

Melohn Properties / n/a, n/a

RXR Realty / n/a

An interest for the land underneath 32 Old Slip sold for $197.5 million.

250 North 10th Street (Brooklyn)

6 stories, 150,000 sf

n/a / n/a

n/a / n/a

The building was sold for $169 million.

301 East 21st Street

17 stories, 185,000 sf

Akelius Real Estate Management / n/a, n/a

Tausik family / n/a

The building sold for $168 million.

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To view more deals visit our website: www.TheRealDeal.com 110 June 2015 www.TheRealDeal.com

CONNECTICUT

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NEW JERSEY

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Our Greenwich EXPANSION

125 MASON STREET BETWEEN EAST ELM & LEWIS STREETS Our new state-of-the-art office building encompasses nearly 10,000 square feet complete with 3 floors, 5 conference rooms, a library, private offices and a superb training facility. Known as the innovative leader in the Tri-State area, Halstead is committed to providing the highest level of service from our experienced Realtors and esteemed Executive Team. Diane M. Ramirez

Chief Executive Officer, Halstead Property

Joann P. Erb

Director of Sales, Greenwich

For more information, please call 203.869.8100.

Connect with us at halstead.com/social Halstead Property, LLC We are pledged to the letter and spirit of 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. All information is from sources deemed reliable but is subject to errors, omissions, changes in price, prior sale or withdrawal without notice. No representation is made as to the accuracy of any description. All measurements and square footages are approximate and all information should be confirmed by customer. All rights to content, photographs and graphics reserved to Broker.

Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

200 Lafayette Street

7 stories, 10 commercial units, 80,000 sf

LaSalle Investment Management / n/a, n/a

General Growth Properties / n/a, Darcy Stacom and William Shanahan, CBRE

The five-story office condo sold for $125 million.

234 West 39th Street

10 stories, 210,000 sf

Waterman Interests and USAA Real Estate / n/a, n/a

n/a / n/a, Eastdil Secured

The pair of Garment District buildings sold for $118 million.

240 West 40th Street

12 stories, 160,000 sf

Olmstead Properties and Jonathan Rose Companies / Richard Baxter and Stephen Shapiro, JLL

AEW Capital Management and DTZ / Richard Baxter and Stephen Shapiro, JLL

The 12-story Garment District building sold for $85 million.

5 East 59th Street

9 stories, commercial units, 50,000 sf

GreenOak Real Estate and Capstone Equities / n/a, n/a

Groupo Victor Malzoni / n/a

The former home of Hugh Hefner’s Playboy Club sold for $85 million.

1749 Grand Concourse (Bronx)

13 stories, 278 residential units, 1 commercial unit, 423,000 sf

Brooklyn-based investor / Steven Vegh, Westwood Realty Associates

Azure Partners / Steven Vegh, Westwood Realty Associates

The seven-story rental building sold for $50 million.

805 Saint Mark’s Avenue (Brooklyn)

6 stories, 172,000 sf

Akelius Real Estate Management / Billy Billitzer, Rosewood Realty Group

Burke Leighton Asset Management / Aaron Jungreis, Rosewood Realty Group

The rental building sold for $44 million.

1369 Broadway

6 stories, 11 commercial units, 40,000 sf

Moshe Piller / Moshe Majeski, Moshe Group

Sitt Asset Management and Sutton Equity / Moshe Majeski, Moshe Group

The building sold for $38.9 million.

29 Putnam Avenue (Brooklyn)

4 stories, 20 residential units, 104,365 sf

Lori Casey, EastCoast MIG / Stephen Palmese, Cushman & Wakefield

Bernard Miller, Pkwy Realty Associates / Stephen Palmese, Cushman & Wakefield

The rent-stabilized Washington Flats portfolio sold for $38 million.

10 Vermilyea Avenue

5 stories, 21 residential units, 1,700 units

Treetop / n/a, n/a

Normandy Real Estate Partners and Westbrook Partners / n/a

The building sold for $38 million.

425 East 53rd Street

5 stories, 5 commercial units, 34,000 sf

Ruder Finn / Karen Kemp and Stephen Geller, Corcoran Group

n/a / Anthony Finno, Marcus & Millichap

The public relations firm purchased the building for $31 million.

148 Rivington Street

6 stories, 4 commercial units, 50,000 sf

n/a / n/a

Streit’s Matzo Factory / n/a, Cogswell Realty

The building sold for $30.5 million.

440 West 41st Street

14 stories, 114 residential units, 6 commercial units, 55,000 sf

Sholom Jacobs / n/a, n/a

U.S. Suite / n/a

The building sold for $28 million.

297 Third Avenue

3 stories, 4 commercial units, 46,000 sf

SMA Equities / George Niblock, Friedman-Roth Realty Services

J&T Animals Inc. and Fan & Associates and Alphas Holding Corporation / Nadeem Haque and Kevin Nguyen, Friedman-Roth Realty Services

The firm purchased the three properties for $27.8 million.

204 West 108th Street

6 stories, 48 residential units, 42,186 sf

n/a / n/a

n/a / Hall Oster and Teddy Galligan, Cushman & Wakefield

The building sold for $27.5 million.

333 Johnson Avenue (Brooklyn)

2 stories, 1 commercial unit, 160,000 sf

Richard Bart Realty / Sydney Blumstein, Corcoran Group

Normandy Real Estate Partners and Royalton Capital and Sciame Development / Dan Marks, Ofer Cohen, Melissa Warren, Peter Matheos and Michael Hernandez, TerraCRG

The industrial building sold for $26.7 million.

12 East 44th Street

7 stories, 2 commercial units, 23,800 sf

First Pioneer Properties / n/a, n/a

Tristar Group / n/a

The building sold for $26.5 million.

3621 Broadway

6 stories, 46 residential units, 8 commercial units, 65,050 sf

Galil Management / Peter Vanderpool and Lazer Sternhell, Cignature Realty Associates

Sugar Hill Capital Partners / Peter Vanderpool and Lazer Sternhell, Cignature Realty Associates

The mixed-use building sold for $25.5 million.

150 Ludlow Street

6 stories, 52 residential units, 35,000 sf

Akelius Real Estate Management / Billy Billitzer, Rosewood Realty Group

Marolda Properties / David Scheer, Rosewood Realty Group

The three-building rental complex sold for $24 million.

710 East 138th Street (Bronx)

5 stories, 19 residential units, 4 commercial units, 137,745 sf

710 East 138th St LLC / Amit Doshi, Besen & Associates

710 East 138th St Property LLC / Lynda Blumberg and Amit Doshi, Besen & Associates

This Bronx (Westbrook/Normandy) portfolio sold for $22.8 million.

21-21 44th Drive (Queens)

2 stories, 1 commercial unit, 86,712 sf

n/a / n/a

n/a / n/a

The building sold for $21.8 million.

1004 Second Avenue

5 stories, 25 residential units, 2 commercial units, 3,000 sf

JTRE Holdings / Jack Terzi, JTRE Holdings

JM Properties of New York / Clint Olsen, Cushman & Wakefield

The building sold for $20 million.

4321 Broadway

6 stories, 69 residential units, 5 commercial units, 54,000 sf

Lincoln Prospect Associates / Aaron Jungreis, Rosewood Realty Group

4321 Broadway Residences LLC / Michael Guttman, Rosewood Realty Group

The six-story walk-up sold for $18.7 million.

70-72 Reade Street

7 stories, 8 residential units, 2 commercial units, 32,000 sf

Jeffery Siegel, ML7 / Robert Khodadadian, Skyline Properties

MacKenzie Door Company / Brian Segall and Chris Masi, RKF

The New Jersey-based office landlord bought the pair of commercial condos for $18 million.

1045 Union Street (Brooklyn)

5 stories, 32 residential units, 5 commercial units, 34,910 sf

Private investor / Ryan Perkoski, Rosewood Realty Group

ZT 1045 Union LLC / David Scheer, Rosewood Realty Group

The five-story walk-up sold for $14.5 million and includes 32 apartments and three commercial units.

15-21 Crooke Avenue (Brooklyn)

6 stories, 54 residential units, 52,944 sf

n/a / n/a

n/a / n/a

The building sold for $14.3 million.

2463 Valentine Avenue (Bronx)

5 stories, 26 residential units, 4 commercial units, 42,270 sf

2463 Valentine Ave Property, LLC / Lynda Blumberg, Besen & Associates

2463 Valentine Ave LLC / Amit Doshi, Besen & Associates

The two-building package sold for $13.5 million.

210 Rivington Street

6 stories, 20 residential units, 3 commercial units, 14,096 sf

n/a / Jim Mann, Friedman-Roth Realty Services

n/a / George Niblock, Friedman-Roth Realty Services

The mixed-use building sold for $12.5 million.

192 Bedford Avenue (Brooklyn)

2 stories, 2 residential units, 1 commercial unit, 4,000 sf

RedSky Capital / n/a, n/a

n/a / Brendan Maddigan, Cushman & Wakefield

The building was sold for $12.3 million.

189-10 37th Avenue (Queens)

2 stories, 16 residential units, 53,810 sf

RockFarmer Capital / Phil Goldstein, Westwood Realty Associates

Embee Realty Company / Phil Goldstein, Westwood Realty Associates

The firm bought three Tudor-style apartment buildings for $11.7 million.

243-245 Ocean Parkway (Brooklyn)

4 stories, 32 residential units

BCB Property Management / Erik Yankelovich, GFI Realty Services

Jonas Equities / Erik Yankelovich, GFI Realty Services

The buildings were purchased for $10.3 million.

412 Greenwich Street

1 commercial unit, 3,890 sf

n/a / Jonathan Butwin, Town Commercial

Taconic Investment Partners / Jonathan Butwin, Town Commercial

The retail condominium unit sold for $9.4 million.

140 Wadsworth Avenue

6 stories, 36 residential units, 1 commercial unit, 39,578 sf

Crest Realties / Peter Vanderpool and Lazer Sternhell, Cignature Realty Associates

Local family estate / Peter Vanderpool and Lazer Sternhell, Cignature Realty Associates

The six-story elevator building sold for $9 million.

1145 Broadway

5 stories, 6 commercial units, 6,285 sf

Pan Brothers Associates / n/a, n/a

Richmond Properties / Michael Wahba, Salt Equities

The building sold for $8.9 million.

845 Manhattan Avenue (Brooklyn)

4 stories, 2 residential units, 2 commercial units, 7,495 sf

555 Gates LLC / Bijan Djafari, Rosewood Realty Group

845 Manhattan Ave LLC / Mike Kerwin, Rosewood Realty Group

The four-story walk-up building sold for $8.8 million.

112 June 2015 www.TheRealDeal.com

Finding the right home starts with finding the right home loan. With a Citibank mortgage, your clients will receive exceptional benefits: Jumbo loan sizes up to $8 million On-Time Closing Guarantee* so your clients can be confident their loan will close on time Lower rates with Citibank Relationship Pricing Special non-warrantable condo programs to meet your clients’ needs

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Terms, conditions, and fees for accounts, products, programs, and services are subject to change. This is not a commitment to lend. Certain restrictions may apply on all programs. * If your client is purchasing a home, we guarantee to close by the date specified in their 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 your client’s purchase contract. If your client’s loan fails to close on time due to a delay by Citibank, 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 your client receiving 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 your client’s closing is delayed due to the 3-business-day waiting period.) © 2015 Citibank, N. A. Equal Housing Lender, Member FDIC. NMLS# 412915. Citi, Citibank, Arc Design and Citi with Arc Design are registered service marks of Citigroup Inc.

Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

656 Saint Nicholas Avenue

6 stories, 30 residential units, 20,640 sf

656 Saint Nicholas Residences LLC / Peter Vanderpool and Lazer Sternhell, Cignature Realty Associates

656 St. Nick LLC / Peter Vanderpool and Lazer Sternhell, Cignature Realty Associates

The six-story elevator building sold for $8.1 million.

31-37 Debevoise Street (Brooklyn)

2 units, 48,804 sf

n/a / Yona Edelkopf, Epic Commercial Realty

n/a / Marcus Jecklin, Epic Commercial Realty

The property sold for $8 million.

53 West 8th Street

5 stories, 15 residential units, 1 commercial unit, 9,325 sf

Undisclosed / Ishan Chhabra, Besen & Associates

Return to Home, LLC / Amit Doshi, Besen & Associates

This West Village property sold for $6.7 million.

632 Ocean Parkway (Brooklyn)

4 stories, 31 residential units, 2,800 sf

Private buyer / Erik Yankelovich, GFI Realty Services

Private family / Erik Yankelovich, GFI Realty Services

The property sold for $6.4 million, and features 31 residential units and more than 28,000 square feet of air rights.

3556 Broadway

2 stories, 1 commercial unit, 9,680 sf

CRP I LLC / Michael Guttman, Rosewood Realty Group

2431 Grand Concourse LLC / Jonathan Birnbaum, Rosewood Realty Group

The two-story commercial building sold for $6.1 million.

199 Audubon Avenue

5 stories, 21 residential units, 5 commercial units, 20,170 sf

199 Audubon Ave LLC / Shallini Mehra, Besen & Associates

525 West 175th St LLC / Amit Doshi, Besen & Associates

The Washington Heights property sold for $5.7 million.

947 East 94th Street (Brooklyn)

4 stories, 40 residential units, 36,480 sf

Private investor / Michael Guttman and Yehuda Wolfset, Rosewood Realty Group

BSP East 94 LLC / Aaron Jungreis, Rosewood Realty Group

The four-story walk-up sold for $5.6 million.

126 Herkimer Street (Brooklyn)

4 stories, 12 residential units, 10,508 sf

Private investor / Michael Guttman, Rosewood Realty Group

126 Herkimer St LLC / Aaron Jungreis, Rosewood Realty Group

The four-story walk-up sold for $4.3 million.

207 West 79th Street

5 stories, 35 residential units, 3 commercial units, 114,437 sf

Anbau Enterprises / n/a, n/a

n/a / n/a

The building sold for $3.9 million.

270 Manhattan Avenue (Brooklyn)

2 stories, 2 residential units, 10,000 sf

n/a / n/a

Cushman & Wakefield / Brendan Maddigan and James Nelson, Cushman & Wakefield

The property sold for $3.6 million.

91 North 4th Street (Brooklyn)

3 stories, 6 residential units

n/a / Yona Edelkopf, Epic Commercial Realty

n/a / Yona Edelkopf, Epic Commercial Realty

The property sold for $3.5 million.

82 Oak Street (Brooklyn)

2 stories, 1 commercial unit, 5,000 sf

82 Oak St LLC / Robert Klein, Kalmon Dolgin Affiliates

Private equity / Jeff Unger, Kalmon Dolgin Affiliates

The warehouse sold for $3.1 million.

198 Kearney Avenue (Bronx)

2 buildings, 11 residential units, 14,320 sf

Kearney M LLC / Amit Doshi, Besen & Associates

undisclosed / Greg Corbin and Miguel Jauregui, Besen & Associates

These Silver Beach properties sold for $2.9 million.

54-01 Northern Boulevard (Queens)

1 story, 4 commercial units, 9,500 sf

Daniel Group / Anand Melwani, ARM Real Estate Group

5401 Nb LLC / Anand Melwani, ARM Real Estate Group

The building sold for $2.8 million.

1417-1427 Myrtle Avenue (Brooklyn)

1 story, 6 commercial units, 6,800 sf

n/a / n/a

Cushman & Wakefield / Michael Amirkhanian, Cushman & Wakefield

The five-unit retail property sold for $2.8 million.

3425-3431 Baychester Avenue (Bronx)

1 story, 7 commercial units, 14,400 sf

WR Acquisition / n/a, n/a

BLS Automotive Ltd. / n/a

The company purchased the property for $2.5 million.

578 Fifth Avenue (Brooklyn)

2 stories, 2 commercial units, 7,500 sf

n/a / n/a

n/a / Aaron Warkov, Cushman & Wakefield

The development side was sold for $2.5 million.

798 Knickerbocker Avenue (Brooklyn)

3 stories, 5 residential units

n/a / n/a

n/a / Matthew Cosentino and Eric Satanovsky, TerraCRG

The building sold for $2.2 million.

253 Stanhope Street (Brooklyn)

3 stories, 6 residential units

n/a / n/a

n/a / Matthew Cosentino and Eric Satanovsky, TerraCRG

The building sold for $2.1 million.

38-40 Hill Street (Brooklyn)

3 stories, 12 residential units, 9,240 sf

n/a / n/a

n/a / Ed Gevinski and Thomas Donovan, Cushman & Wakefield

The apartment building was sold for $1.8 million.

16 East 12th Street

1 residential unit, 1,905 sf

Private investor / Aaron Jungreis, Rosewood Realty Group

private investor / Michael Guttman, Rosewood Realty Group

The commercial condo sold for $1.65 million.

208 Starr Street (Brooklyn)

2 stories, 4 residential units

n/a / n/a

n/a / Matthew Cosentino and Eric Satanovsky, TerraCRG

The building sold for $1.5 million.

621 Nostrand Avenue (Brooklyn)

4 stories, 7 residential units, 4 commercial units, 8,150 sf

Ink Property Group / Daniel Hakimian, Highcap Group

n/a / Daniel Hakimian, Highcap Group

The firm purchased the four-story walk-up for $1.4 million in an all-cash transaction.

2993 Fulton Street (Brooklyn)

3 stories, 5 residential units, 2 commercial units

n/a / Marcus Jecklin, Epic Commercial Realty

n/a / Marcus Jecklin, Epic Commercial Realty

The property sold for $1.33 million.

733 Bushwick Avenue (Brooklyn)

3 stories, 5 residential units

Silvershore Properties / n/a, n/a

n/a / n/a

The five-unit walk-up residential building sold for $1.15 million.

5134-5136 35th Street

5,000 sf

n/a / Ruben de Kast Martinez, DY Realty

n/a / David Chkheidze, Cushman & Wakefield

The development site sold for $990,000.

260 West 132nd St

3 stories, 2 residential units, 3,400 sf

1010 Assets, Inc. / Marco Aguabella, Aguabella Partners LLC

Soul Savings Station Church / Aguabella Partners LLC

The property sold for $877,000.

230 Saratoga Ave (Brooklyn)

3 residential units, 1 commercial unit

Silvershore Properties / David Shorenstein and Jason Silverstein, n/a

n/a / n/a

The three-unit walk-up residential building includes one retail store and sold for $750,000.

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

32 Old Slip

1,161,400

RXR Realty / Rael Gervis, Meridian Capital Group

GE Capital / n/a

The $325 million five-year loan was provided by GE Capital.

233 Broadway

n/a

Witkoff Group and Cammeby’s International / n/a

Blackstone / n/a

A $320 million loan was arranged.

757 Third Avenue

503,000

Bentall Kennedy / n/a

New York Life Real Estate Investors / n/a

A $250 million loan was arranged.

525 West 52nd Street

466,000

Taconic Investment Partners / n/a

Wells Fargo Bank and New York State Housing Finance Agency / n/a

A $200 million loan was arranged.

18 India Street (Greenpoint)

652,049

RedSky Capital and JZ Capital Partners / n/a

CIT Real Estate Finance / n/a

A $57.5 million loan was arranged to refinance the building.

176-60 Union Turnpike (Queens)

118,186

Prestige Properties & Development / n/a

Metlife / n/a

A $50 million loan was arranged.

114 June 2015 www.TheRealDeal.com

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Financing continued Address

Size

Borrower / Representative

Lender / Representative

Notes

175 Franklin St

n/a

Bahram Benaresh / Jonathan Aghravi, Eastern Consolidated

Industrial and Commercial Bank of China / n/a

A $10.3 million bridge loan was arranged.

Other Deals Sutton, Gen Growth pay record $1.8B for Crown Building

GID Development buys part of Extell, Carlyle Group’s Riverside Center for $410.8 million

Jeff Sutton and General Growth Properties paid an all-time price per-square-foot record when they bought the Crown Building from Spitzer Enterprises for $1.78 billion. The deal marks the highest price per-foot ever paid for an entire office building. At 390,000 square feet, the total breaks down to $4,564 per square foot. Spitzer Enterprises and partner the Winter family entered into contract to sell the property to Sutton and GGP late last year. In the meantime, developers Michael Jeff Sutton Shvo and Vladislav Doronin agreed to buy the non-retail portion of the building for $500 million. The landmarked property sits at 730 Fifth Avenue at the corner of 57th Street, and houses luxury retailers including Bulgari and K. Mikimoto & Co. Last year, former Gov. Eliot Spitzer took over the family firm following his father’s death. (The deal was announced after the deadline for the Deal Sheet.)

Extell Development and the Carlyle Group sold a portion of their Riverside Center project on the Far West Side for $410.8 million to James Linsley’s GID Development Group, according to property records filed with the city. GID purchased 40 Riverside Boulevard, one of five buildings in the 8-acre project. Riverside Center stretches from 59th Street to 61st Street along Riverside Boulevard, and is slated to include 2,500 residential units, 140,000 square feet of retail space, an elementary school, a 250-room hotel and a public plaza. GID entered into contract for the property last year. HFF’s Andrew Scandalios and Gary Barnett Jeffrey Julien represented the sellers. Christian de Portzamparc is serving as the project’s architect. This is GID’s only project in New York City. Its other developments are located in Houston, Atlanta, Seattle and Denver.

Office-supplies giant W.B. Mason takes 173,000 square feet in Bronx

Forever 21 coming back to Downtown Brooklyn

W.B. Mason, the largest privately-held U.S. seller of office supplies, is opening its first distribution center in the city. The Brockton, Massachusetts-based company inked a 10-year lease for a total of 173,000 square feet on the W.B. Mason inked a 10-year lease on Commerce Ave. site of a one-story Bronx warehouse. The lease, which comes with a five-year option, covers a 107,000-square-foot space inside the property at 1150-1170 Commerce Avenue and 66,000 square feet of off-street parking and loading zone. The building is located in the Castle Hill neighborhood, in the Bronx’s South Central section. Upper East Side-based investment firm BNS Real Estate owns the roughly 160,000-square-foot building, which is also occupied by water-jug manufacturer D.S. Waters. Industrial Acoustics Company, which makes soundcontrol products, formerly leased the space that W.B. Mason will soon fill. A Pinnacle Realty team led by James Tack and Fred Stein represented the tenant and the landlord. (The deal was announced after the deadline for the Deal Sheet.)

Forever 21 signed a 40,000-square-foot lease at 490 Fulton Street in Downtown Brooklyn, with the retailer returning to the neighborhood it left in 2007. The clothing store will open its F21 Red store concept at the five-story building by the end of the year. The Forever 21 deal is one of three Downtown Brooklyn retail leases that Crown Acquisitions signed in the past few months, according to the Wall 490 Fulton St Street Journal. JP Morgan Chase is also relocating operations to 490 Fulton Street after putting the former Dime Savings Bank of New York building, at 9 DeKalb Avenue, on the market last year. Long Island University dorms occupy the building’s upper floors. Michael Townsend, of Townsend & Associates, represented Forever 21. Forever 21 closed down its previous Downtown Brooklyn location, at the site of the City Point mixed-use development, in 2007.

Foot Locker signs lease for megastore at 8 Times Square

Norton Rose Fulbright hops to Paramount’s 1301 Sixth Avenue

Foot Locker has leased 36,000 square feet for a new megastore in Times Square. The athletic footwear retailer will open up shop at Himmel + Meringoff and the Swig Company’s 1460 Broadway near West 41st St, also known as 8 Times Square, according to the New York Post. Foot Locker will take up three floors. Starbucks, salad chain Chop’t and Godiva Chocolate are currently located at the building. Their leases, however, are all set to expire on Dec. 31, the newspaper Foot Locker at 8 Times Square reported. Asking rent, as well as the 4,500-square-foot LED exterior screen, total $12 million a year. It’s unclear, however, how much Foot Locker will pay, the Post reported. CBRE’s Eric Gelber represented Foot Locker. Farrell Virga and Jason Vacker repped the owners in-house. (The deal was announced after the deadline for the Deal Sheet.)

International law firm Norton Rose Fulbright is moving one block west to Paramount Group’s 1301 Sixth Ave, having signed a lease for 107,000 square feet. It will take up part of the 28th floor and the 29th through 31st floors, the New York Post reported. The firm’s current digs, at Kushner Companies’ 666 Fifth Ave, are located just one block away between 52nd and 53rd streets. The move will take place at the end of 2016. Newmark Grubb Knight Frank represented both sides in the deal, with Moshe Sukenik, Chris Mongeluzo and Lee Brodsky representing Norton Rose Fulbright, and 1301 Sixth Avenue Andrew Sachs, Timothy Gibson, Bill Levitsky and Ben Shapiro representing Paramount. Accounting giant CohnReznick signed a major lease in the building earlier this year. Law firm Smith, Gambrell & Russell took 30,000 square feet, also last year. Office rents along Sixth Avenue range from $60 to $100 per square foot.

RXR gets $785M loan for Helmsley Building buy RXR Realty financed its purchase of the Helmsley Building at 230 Park Avenue by closing a $785 million acquisition loan from American International Group. Meridian Capital Group negotiated the seven-year loan, which will fund Long Island-based RXR’s acquisition of the landmark office tower located just north of Grand Central Terminal. RXR closed the $1.2 billion deal for the 34-story, 1.4 million-square-foot office tower last month, acquiring the property from a partnership between Monday Properties, Invesco and South Korea’s National Pension Service. The Helmsley Building is 94 Scott Rechler percent occupied, according to the New York Observer, with a tenant base that includes publishing company Reed Elsevier and private equity firm Clarion Partners. RXR chair and CEO Scott Rechler said the company plans to upgrade the property with new retail and office space in order to boost its value. (The deal was announced after the deadline for the Deal Sheet.)

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To view more deals visit our website: www.TheRealDeal.com 116 June 2015 www.TheRealDeal.com

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Bankrolling from page 42 “The interest rate is a function of the magnitude of the

At 220 Central Park South, the Bank of China’s loans

borrower in terms of real estate holdings,” Kapahi said.

cover a much higher share of the project’s total cost,

developers much-needed

“Pricing can be as cheap as what Vornado is borrowing and

around two-thirds. But last month, Vornado announced

flexibility.

sometimes even cheaper. You can’t imagine.”

that it has already sold $1.1 billion worth of condos in the

Perhaps most important-

building, meaning the bank can consider its $1.05 billion

ly, these alternative lenders

loans repaid.

offered developers funds at

High risk, high return So are foreign financiers inflating the next lending bubble?

There is no doubt that condo construction lending is

to sources. This can offer

a time when large domestic

Most experts don’t think so.

risky and some developers may well default. But experts say

banks were still recov-

In 2008, many lenders got burned because their loans

that lenders, both domestic and foreign, are becoming more

ering from the finan-

cautious as the luxury market slows.

cial crisis and adjusting

sometimes covered as much as 80 percent of a construction project’s cost, leaving them vulnerable when

“The Children’s Fund on a new loan today would be just

to new regulatory re-

property values plummeted. But

as conservative” as domestic lenders, CBRE’s Rosenthal said.

quirements. That goes

in the current lending cycle, this doesn’t appear to be the case. At 432 Park, CIM has

a long way in explain-

Developers rejoice

ing why so many of today’s high-profile

For developers, the influx of foreign lenders is a boon.

Vornado’s Steven Roth is developing 220 Central Park South.

towers are bankrolled by these lenders.

raised 60 percent of the proj-

Not only do foreign lenders often offer lower rates, but

Harry Macklowe is the quintessential example. The

ect’s cost in equity. Since se-

they also tend to provide simpler loan structures. Domes-

developer and CIM secured their construction loan for 432

nior lenders get paid first in the

tic banks typically lower their risk on major construction

Park in 2012, a mere four years after Macklowe’s spectacular

event of a default, the build-

loans by bringing on other lenders in a syndicate. Involving

multibillion-dollar default.

ing’s value would have

multiple parties, of course, can complicate things when

to drop dramatical-

loans need to be renegotiated.

ly for the fund to Developer Michael Shvo is building 125 Greenwich Street.

lose money.

Foreign lenders see that the “residential market is booming,” said the Carlton Group’s Swill.

In contrast, the Bank of China and the Children’s Investment Fund keep entire loans on their books, according

“It’s still the safest of all real estate markets when it comes to new development,” he said. TRD

Ziel Feldman from page 42 regularly sell for $7,000 per square

According to Jonathan Miller, pres-

foot, recorded prices at the High Line

ident of appraisal firm Miller Samuel,

have been far lower.

the building’s expected average ask of

For example, sales at 505 West 19th

U.S. REAL ESTATE

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Street — a smaller HFZ condo devel-

$4,000 is also the average for ultrahigh-end apartments citywide.

opment nearing completion a block

Feldman’s second bet is that buyers

north — have averaged $2,800 per

will care more about an apartment’s to-

square foot, according to Feldman.

tal price than the price per square foot —

Listings website StreetEasy puts the

hence the decision to keep units small.

average asking price of deals under

“The challenge is whether the per-

contract somewhat lower, at $2,340.

foot issue is going to be something

And the nearby 100 11th Avenue, the

investors will be willing to pay for,”

high-profile condo tower designed by

said Miller. He explained that units

Jean Nouvel, has averaged $2,050 per

at that size and price are hard to find

square foot since 2014.

in Manhattan.

If HFZ’s new megaproject, which

By building small, expensive apart-

could have 300 units, were to sell out

ments by the High Line, Feldman is

at those prices, its profit margin would

heading into uncharted waters. If he’s

be razor thin.

right, he will make a lot of money. If

Feldman, however, expects sales prices to average between $3,800 and

not, he will likely still make money — just not as much.

$4,000 per square foot, arguing that

“I would move down there, as an

his new buildings are not comparable

empty nester,” said Feldman, an Upper

to anything in the vicinity. The two

East Side resident. “But to give up Cen-

towers, which will be 28 and 38 stories,

tral Park, it has to be very special.” TRD

will be taller than nearby buildings. Moreover, he expects that the water views will drive up prices. “Show me comps anywhere in the area that are over 140 feet [high] and don’t achieve anything with a big three in front of it,” he challenged. Feldman is betting that demand will grow as more supply comes on the market. His calculation might not be far-fetched.

118 June 2015 www.TheRealDeal.com

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 identified the brokerage that Jordan Sachs runs. The firm’s name is Bold New York.

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Office sharing

from page 78

stocked refrigerators, Foosball and Connect Four games that it provides. Commercial real estate players say the company has changed the office sharing game. “Executive suites were never geared toward creative

“We’re not a trendy company. We like to keep it meat and Scharf said the company’s next move is to buy its own building and cut out the middleman.

tenants, but that started to change when Midtown South

“We’ll be sticking with core properties in Manhattan,”

became very trendy,” said Jeff Nissani of Marcus & Millichap,

he said. “Nothing trendy, nothing side-street. Just corner

who has represented several shared office providers in lease

offices on major avenues.”

transactions. “WeWork became the dominator and took the business model to the next level.” That domination is clear from the quick pace of its expansion. In December, WeWork inked a 125,000-square-foot

performs before making further expansion plans for New York.

potatoes,” Scharf said.

Carving out niches On the opposite end of the spectrum, some newer co-working providers are differentiating themselves by going after more targeted markets. There’s NeueHouse at 110 East 25th Street, which has a “different bent,” said Himmel, who is also the landlord

Old dog, new tricks

for the space.

While some companies are sticking to their executive-suite

“They have more an artistic space,” she said. The com-

model, others are looking to tap into the trendier side of the

pany, which did not qualify for TRD’s ranking because it

market or find a middle ground.

only has one location, offers amenities like a recording and

lease at 205 East 42nd Street. In February, it signed a

Corporate Suites, which has been in business since 1998,

240,000-square-foot lease at 85 Broad Street. In March, it

just opened a new 25,000-square-foot space at 2 Park Av-

broadcast studio and a screening room. Others include In Good Company, which caters to fe-

inked an 180,000-square-foot deal at 1460 Broadway, and in

enue in tech-popular Midtown South. Grant said the inte-

male entrepreneurs; Emerge212, a subsidiary of mega

April it took 136,000 square feet at 315 West 36th Street. In

rior has modern, industrial feel with high ceilings, and can

landlord and investor SL Green Realty; and Launchpads

addition, the firm reportedly has several hundred thousand

accommodate 40 people. In addition, the firm has tweeted

in St. George on Staten Island.

square feet in the pipeline at the Brooklyn Navy Yard.

mentions of its meditation room and a recreation space,

“We have a lot more variety in company cultures and

The 1460 Broadway deal is WeWork’s first foray into Times

along with photos of happy hours hosted at several locations.

the operators are taking their own spin,” said James Klee-

Square. “They have a fantastic business plan implementing

“Some of what we’re doing will appeal to the tech start-

man, director of Emerge212, which has three Manhattan

a cool space for entrepreneurs,” said Leslie Himmel, whose

ups,” Grant said. “But a lawyer or hedge fund would still be

firm Himmel + Meringoff is the landlord there and at another

comfortable doing business there, versus a fraternity-type

WeWork space.

build-out that our competitors are doing.”

And the company does not appear to be slowing down.

Servcorp, a 37-year-old Australia-based provider that

locations and is ranked No. 7, with 120,000 square feet.

Is it sustainable? For the time being, the shared-office sector is surging in

Last year, WeWork told Forbes it plans to expand to 60

entered the NYC market in 2010, is outfitting its fourth Man-

locations worldwide by the end of 2015. It now has about 45

hattan location, on the 85th floor of One World Trade Center.

While local figures are not available, nationally the

locations in 15 cities, including Seattle, San Francisco, London

In addition to the firm’s signature professional office suites

number of people who use shared-office space — whether

and Tel Aviv. Soon to come are Miami and Portland, Oregon.

and meeting rooms, the 34,775-square-foot office will also

co-working or executive-suite style — is expected to grow

have a co-sharing workspace, dubbed the “space station.”

fivefold to 1 million by 2018, according to the Global Work-

It recently announced another potentially game-changing business: WeLive, a shared-living concept for the same entrepreneurs it serves on the office side. At the top of Rudin Management’s 110 Wall Street, the company is reportedly planning to add micro apartments

The space station, which is under construction, will feature hardwood floors in a herringbone pattern to mimic the founder’s living room. There will be a few glassed-in conference rooms and a keg of beer every day at 5 p.m.

New York and nationally.

space Association, a trade group for shared office space providers and related businesses. The co-working business model favored by WeWork was virtually non-existent in 2008. Last year, there were nearly 6,000 locations worldwide, according to online trade pub-

with shared kitchens and communal amenities like herb

The pilot program is also being implemented in Lon-

gardens and lounges. Some reports say the Brooklyn Navy

don and Tokyo. But Marcus Moufarrige, Servecorp’s chief

Yard is also slated to be a WeLive location.

operating officer, said that the program is not a response

Still, to protect against having too much space in a down

to WeWork. Instead, he said, it’s designed to prompt more

market, Virgo’s Scharf said his firm only leases space during

of the company’s virtual office clients (those who only use

down markets.

At least some of the company’s competitors say the attention WeWork has generated is a good thing.

lication Deskmag.com.

“WeWork has made a big splash recently and that has

the building’s address and phone service), into taking ac-

The company took its Empire State Building office in

been good for the industry,” said Joseph Scharf, CEO of Virgo

tual space. Right now, only 12 percent to 15 percent of the

2004, at what he said was a post-9/11 rate. In 2009, fol-

Business Centers, which has been around since the late 1990s

company’s 40,000 virtual clients make that switch.

lowing the Lehman Brothers collapse, he locked in 40,000

and sticks to a more conventional executive-suite model. Last year, Virgo opened a roughly 41,000-square-foot flagship space at 1345 Avenue of Americas, bringing its total to 192,000 square feet.

Outlets

“Which is okay, but not fantastic,” Moufarrige said. “So, I think we can cover that gap in the market for premium-end clients with the space stations.” That said, Servcorp is waiting to see how One World Trade

square feet at 575 Lexington Avenue. “Things can get bad very quickly,” Scharf said, noting that shared office clients have shorter contracts, so they can respond rapidly to changing times. TRD

from page 68

add the sales from any competing location when calculating their own gross profit. This drives up the percentage paid in rent to the outlet’s landlord. Woodbury Common Premium Outlets in Central Valley, New York, for example, has a 60-mile radius where tenants are restricted from opening competing locations. That radius stretches to cover New York City, including the Empire Outlets under construction on Staten Island. In 2010, an appeals court in New Jersey upheld Woodbury’s clause when the developer of a competing outlet mall in the Garden State brought the matter to court. “A radius clause, which is commonly used in leases in the outlet center industry, protects landlord’s market trade area from competition, the landlord’s interest in 120 June 2015 www.TheRealDeal.com

percentage rent and the exclusivity of the landlord’s mix,” read the ruling. With about one-third of Empire Outlets leased so far, there are a few stores signed on that are also represented at Woodbury Common, including the Gap Factory Store, Columbia Sportswear, G.H. Bass & Co. and Banana Republic Factory Store. The Empire Outlets’ radius is 10 miles, which would cover large parts of Brooklyn, Manhattan up to Midtown and most of Staten Island. “Our primary trade area is roughly 10 miles in a geographical sense because we are an island … we want to protect the geographical radius,” said James Prendamano of Cassandra Properties, which is handling leasing at the mall. Prendamano added that the developers see the project as

catering mainly to the 55 million-plus tourists who visit the city. Empire Outlets is being built adjacent to the terminal for the Staten Island Ferry, a popular tourist attraction. Joseph Ferrara of BFC Partners, the developer, said the fact that the mall, which is slated to open next year, is coming online at a time when outlets are opening across the city is purely coincidental. BFC won the right to develop the property in 2012, after the city offered up the land through a request for proposals. He said he hopes to capture the interest of the tourists who are required to disembark from the ferry after their free ride past the Statue of Liberty, but now have little to do but get right on the next boat and return to Manhattan. Throughout the day “you’ve got thousands and thousands of people with nothing to do but wait,” he said. TRD

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Brooklyn

from page 45

The up-and-coming Crown Heights — along with Prospect-

“I think the likelihood that Brooklyn will catch up to

“A lot of Tribeca and West Village buyers with families

Lefferts Gardens, Clinton Hill, and Bedford-Stuyvesant —

Manhattan is higher than Manhattan continuing to escalate

want that extra bedroom or two bedrooms and see a val-

is one of the only Brooklyn neighborhoods left that has an

at the pace it had. And I think our buyers believe that too,”

ue proposition in an $1,800, or even $2,000, square foot

easy commute into Manhattan and where developers are

Della Valle said. “People buy into the fact that Brooklyn is

unit with the amenities that we provide that would really

constructing condos in this price range. Not surprisingly,

$2,500 per square foot in prime, prime, prime locations

be out of reach in Tribeca,” Ruff said.

the demand is enormous, sources said.

more than they do that Tribeca is $5,000 per square foot,”

The most bullish believe that in prime Brooklyn —

What’s more, some developers are making personal investments in Brooklyn by choosing the borough as

he added.

generally considered Dumbo, Brooklyn Heights, Boerum Hill, Cobble Hill and Williamsburg — prices are headed for an average of $2,000 a foot. “I know there are sporadic deals at $2,000 a foot, but I’m talking about pushing to an average of $2,000 a foot,” Kliegerman said. “The stretch from $1,500 a square foot to $2,000 a square foot is still quite significant.” Daten’s Ennis said, however, that he’s wary of $2,000 a foot becoming the average in Brooklyn, except for very special units. “In 2015, our new thought process is breaking $1,500 a foot,” he said. His firm’s next project will be a condo building in Prospect Heights

their home.

The most bullish believe that in prime Brooklyn — generally considered Dumbo, Brooklyn Heights, Boerum Hill, Cobble Hill and Williamsburg — prices are headed for an average of $2,000 a foot.

that will aim for this price range.

Nava’s Osborne, who has lived in Brooklyn for 18 years, said it’s an easy decision. “For us, the quality of life question is not a question, it’s just an obvious thing,” he said. Della Valle lives in at 185 Plymouth Street, a former Brillo warehouse in Dumbo that Alloy converted, while the firm’s CEO, Katherine McConvey, purchased a Dumbo townhouse the company also developed. But lest these Brooklyn developers get too big for their britches, sources say the borough is still no threat to Manhattan’s dominance of the ultra-high-end market. “Manhattan has for many, many years on Central Park achieved prices that rival any city

While rising Manhattan prices have led to concerns about the pool of global buyers drying up, sources

Ruff also drew a comparison to trendy Tribeca, where

in the world. Brooklyn hasn’t done that,” Kliegerman said.

say the Brooklyn buyer pool is deep, with increasing numbers

the top of the market for family-sized apartments in new

“Could it get there one day? Yes. Do I see it happening in

of New Yorkers, West Coast transplants, and foreigners

buildings hits $6,000 a foot, with many falling in the

the near future? No I don’t. And that’s not a bad thing.

seeking it out as their first choice.

$2,000-to-$3,000 range.

There’s only one Central Park. It’s still in Manhattan.” TRD

Bjarke vs Stern from page 74

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From that moment, “three years of conversation followed,” and eventually, Durst sent him a note regarding “a small project in Hell’s Kitchen.” The drawings of the unique building’s conceptualization are fascinating. “What happens when you combine the density of the Manhattan skyscraper with the communal space of the Copenhagen courtyard?” Ingels asks, then proceeds to illustrate. He envisions the central space to serve a similar function for the inhabitants of the building as Central Park does for Manhattan on the whole, and notes that the courtyard’s dimensions mimic the park’s, “just 13,000 times smaller.” The approach taken by Stern’s firm is, on the surface at least, as different as the buildings that result. “Our search continues for an architecture that succeeds by virtue of its ability to connect; to be inventive yet somehow familiar; to be present but not obtrusive; to be the setting, and not the performance, in the drama of daily life,” Stern writes in the introduction. The book, seventh in a series highlighting the firm’s work, also serves to highlight its international expansion, featuring works from a French villa to a residential complex in Astana, Kazakhstan. And while Stern’s residential work gets the most attention locally, the book also includes a number of the firm’s academic buildings and the George W. Bush

Presidential Center in Dallas. Each entry in the oversized book features sumptuous photos and renderings, with various views of the projects’ exteriors and interiors. They are accompanied by only short explanations of the designs, leaving the images to largely speak for themselves, visually inviting the reader into the spaces. One striking entry is “Heart of Lake,” a massive residential complex in Xiamen, China, an historic port, where construction started in 2012. The buildings, which vary from highrise apartment towers to individual townhouses, are clad with local yellow granite and surrounded by walkways and a park. The designs at once evoke a European style and a Chinese spirit, with archways, tile work and rooflines that give the development a distinctly Asian feel. A dozen New York projects are also included in the book, including 520 Park Avenue, the latest project Stern is handling for Zeckendorf Development, for whom the firm designed the smashingly successful 15 Central Park West. In addition to the now-familiar skyline rendering of the tower, several pages of interior designs treat the eye to the luxurious project in the works. “Hot to Cold” is published by Taschen Books. “Buildings and Projects” is published by the Monacelli Press. TRD

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EB-5

from page 56

“The developer doesn’t want to get caught up in a scandal with a bad fundraiser,� he said. “Who are you getting into bed with? It’s a huge issue with the banks. EB-5 is the wild west of finance,� he said. Rothstein added that banks still don’t like to participate in deals with EB-5 money. “They do deals notwithstanding EB-5, not because of it,� he said. In 2014, a scandal in Chicago fueled critics of the program after authorities charged EB-5 promoter Anshoo Sethi with fraudulently raising $160 million from investors. According to the indictment, Sethi provided phony documentation to investors that suggested the project had backing from the U.S. government and certain major developers. He also allegedly spent most of the $11 million in fees he collected from hundreds of investors. Ultimately, Sethi settled with the SEC and was fined several million dollars. Most recently, the EB-5 program came under fire amid allegations that the former director of USCIS influenced immigrants’ petitions at the behest of influential Democrats. A March report by Homeland Security concluded that former Director Alejandro Mayorkas accelerated the approval of EB-5 applications as a favor to Anthony Rodham, brother of presidential candidate Hillary Rodham Clinton and chief of global EB-5 investor relations and government affairs for the Philadelphia-based Global City Regional Center, as well as former Pennsylvania Gov. Ed Rendell, Senate Majority Leader Harry Reid and Virginia Gov. Terry McAuliffe. Park, of the Advantage America Regional Center,

fraud. Instead, she said high-profile incidents have become politicized and have been seized on by critics of the program. “Is there fraud? Yes. Are there fraudulent programs? Of course, because people are involved and when people are involved, fraud gets involved,� she said. “That’s no different from any other financing. I don’t think EB-5 is special in that way.�

Ayush Kapahi, a principal at HKS Capital Partners, said EB-5 is compelling because the cost of capital is so low, but he said it’s a long road. “Look, I think the nicest way to put it is, if you have the patience, you could pursue EB-5 capital for your project and pay significantly less,â€? he said. But the process “inevitably leaves all fundamentals of business and real estate aside because it has to go through the government.â€? Allegations of fraud have spurred increased regulatory oversight, both in China and the U.S. In 2011, the Chinese government imposed regulations on marketers of EB-5 projects. “The Chinese are doing a little more due diligence,â€? said attorney Mona Shah, principal at Mona Shah & Associates in New York, speaking at The Real Deal’s New Development Showcase and Forum last month. “They will not rely on the American counterpart going across ‌ they want to come over here and visit [the project] themselves.â€? The Securities and Exchange Commission, too, is cracking down on EB-5, in the wake of both the indictment in Chicago and the latest Inspector General’s report. Kate Kalmykov, an EB-5 attorney at Greenberg

examinations of the broker-dealers who source investors and the soundness of regional centers, reflects the evolution of EB-5 as a market. “It was in its infancy until 2009, 2010,� she said. “As it’s grown and developed, many billions have been raised. There has to be more compliance.� Currently, regional centers are required to file annual compliance reports. This past fall, Kalmykov said the immigration agency indicated it would begin conducting site visits to see how investor funds were being used. “They haven’t done that yet, to my knowledge,� she said. Of course USCIS can shut down a regional center if it doesn’t file the right forms, or if it fails to “promote economic growth as required,� according to the agency’s website. As of May 7, it terminated 29 regional centers, including the Buffalo Regional Center, the only terminated center in New York. But it’s notoriously difficult to pin down the efficacy of a regional center. “USCIS is not transparent, and generally makes very little information or data available for public release,� wrote Jeanne Calderon, a professor at NYU, and attorney Gary Friedland, in their recent paper, “A Roadmap to the Use of EB-5 Capital: An Alternative Financing Tool for Commercial Real Estate Projects.� Further, there are “few requirements or standards� placed upon regional centers. And those centers and owners, the report said, are not required to possess any special qualification, education or experience. “Many Regional Centers,� the paper states, “have not sponsored even a single project resulting in a successful

dismissed the notion that EB-5 is saddled by widespread

Traurig, said the beefed-up SEC oversight, including closer

EB-5 capital raise.� TRD

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Commercial market

from page 30

Murphy and John Nugent were considered for a top managerial job. Murphy has history with White: In 2002, when White was building up CBRE in the U.S., he hired Mary Ann Tighe and Murphy from the dominant regional firm ESG/Insignia in a multimillion-dollar poach. A year later CBRE bought ESG/ Insignia, and cemented CBRE as the leading firm in the city. Murphy went from being a top producer to a manager of the New Jersey office, which he built into a regional powerhouse, before returning to a brokerage in Manhattan in 2007. But despite Murphy’s credentials and history with

Ivanahoe

White, DTZ leadership decided to stick with Lo Russo. Nonetheless, some industry insiders speculated that a top management opportunity for a senior producer like Murphy could open up in the future. DTZ and Murphy declined to comment. Cushman referred calls to DTZ. Nugent did not immediately return a call for comment. In addition to the leadership, the new firm needs to nail down where its global and national offices will be located. DTZ has a headquarters in Chicago, and Cushman in New York, while White lives in California. Right now, New York is

a leading contender for the global office, and is certainly going to be the headquarters for the Americas, one insider told TRD. Meanwhile, the personal nature of the brokerage business is coming forward, as agents try to get a feel for how things will pan out at the combined firm. “They just want to see how it will play out,” said one broker at DTZ, who was not authorized to discuss the deal. He said senior brokers at Cushman wanted to reach out to their counterparts at DTZ-Cassidy Turley, because now they will shift from competitors to colleagues. “It’s very tough at a brokerage. They are just trying to reconnect.” TRD

real estate strategy. Although the Ivanhoe Cambridge spokesperson claimed all the losses on paper were recouped since 2008 and that the firm continues to seek out opportunistic and value-add investments with returns north of 10 percent, experts say the firm likely became more cautious. “I suspect they’ve been asked to cut back on the aggressive strategies,” said University of Toronto’s White. That seems to offer the best explanation of why Ivanhoe

Class A office buildings in Manhattan are widely considered the safest asset class in the safest real estate market in North America. Paying $2.2 billion for 3 Bryant Park sounds steep and will not likely lead to sky-high returns, but it’s also unlikely to lead to catastrophic losses of the kind the Caisse incurred in 2008. For Manuel Delisle, this should be a small comfort. He may lose his job and is facing jail time, but at least he can

Cambridge is so keen on Manhattan trophy properties.

rest assured that his retirement savings are in safe hands. TRD

from page 40

ideal investments. They offered the opportunity to spend large sums of money on an ostensibly stable asset class (real estate), with little management effort. But when the U.S. mortgage bubble burst, that bet backfired. In 2008 alone, the Caisse incurred staggering losses of $38 billion — a negative return of 26 percent — according to a report in the Globe and Mail at the time. In contrast, other Canadian pension funds reported average losses of only 18.5 percent. That historic loss likely shaped the Caisse’s current

Litwin

THE

HAMPTONS

MARKET REPORT

from page 36

Litwin’s grandsons, are partnering to construct condos there — a departure from Glenwood’s rental-heavy portfolio. Although Litwin is an investor, he is not actively involved in the development of

Democratic Committee and Manhattan borough president candidates Melinda Katz and Gale Brewer, according to the New York State Board of Elections. In the real estate industry’s eyes, Litwin

the condos. “The site was too small for a normal rental project, and too good to pass up,” Jacob said. The firm is steadily taking on new projects without Litwin at the helm, including Hawthorn Park, a 54-story, 338-unit rental tower at 160 West 62nd Street, which opened last year.

has always been an icon. In 2012, the industry’s largest trade group, the Real Estate Board of New York, named Litwin its first honorary chairman. And those feelings don’t seem to have subsided in the midst of the scandals. Many real estate players including Levine, Newmark Grubb Knight Frank chairman Jeffrey Gural and Robert Knakal, who earlier this year sold his company to Cushman & Wakefield, said Litwin remains revered. “Mr. Litwin is an icon in the industry and one of the preeminent developers in the world,” Knakal said. But Blair Horner, legislative director at NYPIRG, said he wasn’t surprised that a major New York developer was entangled in the scandal. “From a Glenwood perspective, given they’re a major player, the fact that their name came up [in two federal complaints] didn’t surprise me,” he said. Horner, however, said that the case paints the firm in a new light. “What surprised me is that they’re allegedly deep into illegal schemes,” he said, noting the departure from Glenwood’s industry reputation. “The state’s system of influence peddling is designed for the highest rollers,” Horner said, “and Glenwood is a high roller.” TRD

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126 June 2015 www.TheRealDeal.com

In last year’s New York gubernatorial election, LLCs tied to Glenwood outspent all other donors, according to data from the good government nonprofit New York Public Interest Research Group. In 2013, Glenwood and its affiliates were the second-biggest political donor to state-level candidates, NYPIRG data showed. In the complaint against Silver, prosecutors peg contributions from “Developer 1” to candidates for state office and state political committees at more than $10 million between 2005 and about 2014. Meanwhile, a report from good government group Common Cause/New York found that since 2005, Glenwood and related LLCs donated a total of $12.8 million to state politicians, including $1.2 million to Cuomo. Since June 2013, Litwin himself made contributions to the Suffolk County

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The American Institute of Architects, N.Y. Chapter, hosts a panel, “Securing Cultural Commissions: Trends, Opportunities, and Strategies,” on the state of the cultural development sector and approaches for winning business within it. Featured speakers include Candace Damon of HR&A Advisors and Joy Bailey Bryant of Lord Cultural Resources. 5:30 p.m. Center for Architecture, 536 LaGuardia Place. Fee: Free for members, $25 for non-members. Information and registration: www.aiany.org.

4

The New York School of Interior Design presents “Dialogues on Design,” the first in the school’s new series of conversations on interior design, landscape design, and architecture. Luxury interior designer Geoffrey Bradfield and garden antiques expert Barbara Israel will discuss their work as well as current trends in the design space. 4:30 p.m. at NYSID campus, 170 E 70th Street. Fee: $300 for the series. Information and registration: www.nysid.edu.

4

Real Estate Weekly presents its Young Leaders’ Forum, a day of presentations and panel discussions for newly minted real estate professionals, featuring a variety of industry heavy hitters. Helena Durst and David Neil of the Durst Organization will give the afternoon keynote. 8 a.m. to 5 p.m. at the Digital Sandbox, 55 Broad Street. Fee: $449; $159 for Columbia students and alumni. Information and registration: www.rewyoungleadersforum.com.

8

Chashama, the arts non-profit founded by Anita Durst, holds its 20th Anniversary Gala to honor its trustees and raise money for its Bronx Artist Housing Initiative. The event, held at the former at the former Condé Nast offices, features live performances and interactive art exhibits. 6 p.m. to 9 p.m. with dancing to follow, 4 Times Square. Fee: Several donation options starting at $750. Information and registration: www.chashama.org.

9

The National Association of Real Estate Investment Trusts holds its annual “REITWeek 2015” investor conference. The event, which last year drew almost 2, 000 investors, will feature over 100 company exhibits as well as panel discussions on various aspects of the REIT industry. 8 a.m. to 5 p.m. New York Hilton Midtown at 1335 Sixth Avenue. Event continues June 10 and 11. Information and registration: www.reit.com.

10

The Real Estate Investors Association of NYC hosts a talk for investors, “How to Find An Apartment Deal.” Featured speaker Chris Urso of Elite Apartment Coaching and URS Capital Partners, will discuss the current market and deal sourcing tips. 6 p.m. Wyndham Hotel, 345 W 35th Street. Fee: For members, $15 in advance or $20 at the door, for non-members, $30 in advance or $40 at the door. Information and registration: www.reianyc.com.

CALENDAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

11

Professional Women in Construction holds its Salute to Women of Achievement luncheon honoring Denise Berger of the Port Authority, Ellen Chasanoff of HNTB Corporation, Martine Duphrezin of RCGA Architects and Catherine Rinaldi of MetroNorth. 11:30 a.m.. Yale Club, 50 Vanderbilt Avenue. Fee: $200 for members; $300 for non-members. Information and registration: www.pwcusa.org.

12

The American Society of Interior Designers, N.Y. Chapter, holds “Live From New York: Design 2015,” an educational summit for designers. Courses will cover a wide variety of topics including workflow, client relations, lighting, materials and social media strategy. 9 a.m. to 6 p.m. A&D Building, 150 East 58th Street. Fee: $125 for members; $150 for non-members. Information and registration: www.asidnymetro.org.

16

TerraCRG presents its “Only Brooklyn Real Estate Summit.” The conference will bring together the city’s top investors, developers and property owners to discuss Brooklyn real estate trends. Keynote speakers include MaryAnne Gilmartin, CEO of Forest City Ratner Companies, and former Gov. Eliot Spitzer of Spitzer Enterprises. 8 a.m. to 5 p.m. Brooklyn Academy of Music, 30 Lafayette Avenue, Brooklyn. Fee: $375. Information and registration: www.terracrg.com.

16

The Asian Real Estate Professional Association hosts a distinguished speaker event featuring developer Young Woo, founder and principal of Young Woo and Associates. He’ll discuss his career and outline his company’s current projects. 6 p.m. at the offices of Herrick, Feinstein, 2 Park Avenue. Fee: Free for members; $30 for non-members. Information and registration: www.arepainc.org.

21 22 23 24 25

18

The Mortgage Bankers Association of New York hosts the “New York Real Estate Strategic Lending Summit,” featuring speakers, panel discussions and seminars on all aspects of New York mortgage lending, from appraisal to regulation to cyber-security. 7:30 a.m. to 5 p.m. Millennium Broadway Hotel at 145 W 44th Street. Fee: $145 for members; $195 for non-members. Information and registration: www.mbany.org.

26 27 28 29 30

28

The Historic Districts Council holds it’s annual “Grassroots and Preservation Party 2015,” honoring the outstanding neighborhood preservation campaigns of the past year. Honorees include Steven Barrison of the Bay Improvement Group, City Councilman Daniel Garodnick, and the Brownstoner’s Suzanne Spellen. 6:30 p.m. Museum of the City of New York at 1220 Fifth Avenue. Fee: $20 for members; $30 for non-members. Information and registration: www.hdc.org.

31 130 June 2015 www.TheRealDeal.com

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RE:CAP

A roundup of real estate-related happenings last month COMPILED BY ANN IMPERATORE

LUXE The cover of the latest Elliman Magazine features side boob. Gawker teases NYT columnist Frank Bruni for being a sucker for dishing out $1.5M for his sad UWS apartment.

Brooklyn Magazine trashes Ginia Bellafante’s NYT column about the recent special election in Crown Heights as an example of “why wealthy writers for the Times shouldn’t be the ones writing about gentrification.”

Using art to brand and sell units gets a “lift” at Kaufman Organization’s three Madison Square properties, where glass panels at the rear of each elevator cab showcase custom artwork by artist Skott Marsi.

Forbes study about De Blasio’s proposed 1 percent ‘Mansion Tax’ on NYC homes above $1.75M concludes it will adversely affect realtors by reducing the total number of NYC RE transactions.

She’s no Rihanna, but that dress! Ivanka and Jared grace the Met Gala with their sexiness.

Anthropologist Wednesday Martin moves into a condo at 900 Park Avenue, writes a book exposing the “separate tribe of New York City” — Upper East Side housewives.

Fame Game: Caroline Grange, agent at Nestseekers, also stars in the eighth season of over-the-top “Swedish Hollywood Wives.” Famed grocer Wegmans is finally coming to NYC!

Picasso’s “Le Tricorne,” a longtime fixture at the Four Seasons restaurant before Aby Rosen evicted it, is unfurled at its new home, the New-York Historical Society.

WSJ publishes Leonard Steinberg’s Instagram photo of Staple Street, where he’s listing a $30M PH at Seven Harrison.

Robert Redford and Wim Wenders, among others, team up to create a 3D documentary, “Cathedrals of Culture,” which highlights the architecture of six iconic buildings.

WIN

FAIL

Speaking of hair: Williamsburg luxe rental 1N4th’s open house invite reveals a developer’s idea of marketing to hipsters: purple hair.

According to Trulia, NYC’s luxury homeowners’ maintenance fees are almost 2.5 times the national median. Let’s hope Zillow’s subsidiary is more accurate than the parent company’s “Zestimates.”

A rare Amazonian flannel moth caterpillar is given the nickname “Donald Trump caterpillar” because of its resemblance to his wayward hair.

Speaking of graphics targeting hipsters: Bushwick Notebook, a quarterly print magazine about life in the nabe, launches with THIS photo.

Refinery recommends 13 books you must read before moving to NYC, including classics like “The Great Gatsby,” “The Bell Jar”and newly popular reads like “The Goldfinch.”

…. but sadly, In-NOut Burger remains resolute about staying away from NYC.

After reading Elite Daily’s compilation of how far $1,500 in rent goes in other global locales, we would consider leaving NYC and moving to Johannesburg, if it wasn’t quite so crime-ridden.

UPTOP launches. Considered the “Tinder of real estate,” the app lets you search, apply and sign rental leases on a smartphone without a broker.

The New Yorker’s “Talk of the Town” highlights a LES 1BR for $1,795 per month featuring an “old-world style” shower in the kitchen (!) and a bedroom “that won’t fit more than a bed.”

Sweet real estate buzz: LIC affordable rental complex will have a rooftop urban farm with 13,000 honey bees who live there RENT-FREE! #QueensBees

Apartment Therapy compiles the “Best of the Worst Real Estate Euphemisms,” including gems like: “Full of character = There’s a toilet in the kitchen.”

Spotted on poles lining First Avenue on the UES, even though it is illegal in NYC to rent an apartment for less than 30 days. The RE brokerage community weighs in on the flick in the NYT. “Upsetting, yes. But unfortunately not so very far off the mark.”

LOW RENT 132 June 2015 www.TheRealDeal.com

UWS Citibikes! The DOT presents 39 locations proposed for 59th to 110th streets to CB7 at a meeting that is surprisingly lacking in opposition.

“5 Flights Up,” a flick about an aging couple selling the Brooklyn apartment they bought 40 years ago (before the hipster invasion) features Cynthia Nixon as a desperate real estate agent who gets screwed on the deal. Firesale: Time Out New York curates a pictorial slideshow of iconic NYC fire escapes before they become extinct.

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COMINGS & GOINGS Morgans Hotel CEO Jason Kalisman resigns

Movers and shakers

ason Kalisman, the interim CEO of Morgans Hotel Group, resigned last month. Kalisman, who took over Morgans following Michael Gross’ resignation in August 2013, became a director of the company in 2011 and chairman in 2013, after his investment firm, OTK Associates, took control of the board when its slate of nominees won a surprise victory in the company’s 2013 annual meeting. He remains a member of the board. Vector Group CEO and Douglas Elliman Chairman Howard Lorber was named chairman. Lorber joined the board in March. Vector owns about 7 percent of Morgans shares, according to a recent filing with the Securities and Exchange Commission. During his tenure, Kalisman attempted to push Ron Jason Howard Lorber Kalisman Burkle, who owned Morgans’ debt and preferred shares, out of the group. Burkle and OTK ended up in a legal battle, settled last year, over Morgans allegedly backing out of a debt swap deal in 2013. Kalisman also waged an unsuccessful fight to retain management control of the Mondrian Soho following its sale to Alex Sapir in March for $205 million. Richard Szymanski, Morgans’ chief financial officer, is acting as principal executive officer while the board continues its search for a CEO. Morgans Hotel Group operates the Hudson Hotel and the Royalton in New York, the Delano in South Beach, and other hotels. By Christopher Cameron

EVO Real Estate group named Todd Korren principal and chief operating officer, overseeing the brokerage division. He most recently served as executive managing director at Massey Knakal. Previously, he was a principal and director of leasing at Savanna. He also held senior positions at Swig Equities, Rockrose Development Corp. and Todd Korren The Witkoff Group. Gail Mitchell Donovan joined Eastern Consolidated as new chief marketing officer. Donovan was part of the founding team at Ariel Property Advisors, where she managed the communications department. Eastern Consolidated also added Scott Burk, formerly a managing director at CPEX Real Estate, as a director in its investment sales team. Burk, a Gail Donovan commercial real estate attorney, formerly worked at Thompson Hine and Paul Hastings, Janofsky and Walker. Global engineering and construction firm AECOM Technology Corp. added Chris Ward, former Port Authority executive director, as senior vice president for business development in the New York Region and on the East Coast. After leaving the PA in 2011, he worked for the Spanish construction firm Dragados USA. New York Life Real Estate Investors hired Paul Behar as senior director and head of business development. He was formerly a senior vice president at Hunt Companies. Chris Ward Himmel + Meringoff promoted Jason Vacker to executive vice president in charge of leasing the firm’s entire commercial office portfolio. Vacker, who joined the firm in 2008, was previously a commercial leasing broker with Newmark & Company. Cresa Corporate Real Estate added two vice presidents, Jonathan Buksbaum, formerly of DTZ, who joined its brokerage team and W. Clayton Trauernicht, formerly of Winged Foot media, who will work on advertising and media. Jason Vacker Jones Lang Lasalle added Natalie Touzet as a vice president, overseeing client relationships and strategic partnerships and financial analysis of overseas investments. She previously worked as an investment manager with Catalonia Trade & Invest. International law firm Reed Smith named Jody Saltzman as partner. She was formerly a partner at Crowell & Moring, and was joined by long-time associate Sahra Dalfen, a corporate transactional attorney.

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Invesco’s Todd Bassen to join WeWork

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ot on the heels of raising $355 million in venture capital, WeWork last month made its biggest hire to date: Todd Bassen, the head of New York acquisitions for Invesco, is joining the shared office space provider as co-head of real estate. He will be working alongside the company’s head of real estate, Mark Lapidus, according to sources. Bassen was expected to spend a month or so tying up about $600 million worth of deals at Invesco before moving over, sources said. The hire is a major coup for WeWork, and marks another step in its evolution from startup to real estate giant. After its latest funding round in December 2014, the company is now valued at a whopping $5 billion. Investors in the company include Boston Properties’ chair Mort Zuckerman, Goldman Sachs Group and Harvard Management Company. Since joining Invesco from Vornado Realty Trust in 2010, Bassen oversaw a veritable buying spree. In 2013 alone, the investment firm bought the rental building Mercedes House at 550 West 54th Street for $170 million and dished out $240 million for a stake in the former Jehovah’s Witnesses’ Dumbo complex, now known as Dumbo Heights. In November 2014, the firm paid $175 million for a stake in the Factory Building at 30Todd Bassen 30 47th Avenue in Long Island City. Invesco sold its stake in the Helmsley Building at 230 Park Avenue to RXR Realty last month in a deal that values the office tower at $1.2 billion. Bassen is the latest in a long line of commercial real estate executives that have ditched established firms for tech startups. The list includes Nick Romito, formerly of Murray Hill Properties and now of VTS, Michael Mandel, formerly of Grubb & Ellis and now of CompStak and Brandon Weber, formerly of CBRE and now of Hightower. By Adam Pincus and Konrad Putzier

CORE’s Postilio, Conlon decamp to Elliman

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op CORE brokers Tom Postilio and Mickey Conlon decamped last month to Douglas Elliman. The duo are known for their appearances on HGTV’s reality show “Selling New York.” Postilio, one of CORE’s founding agents, and Conlon, who joined the firm in 2011, have sold more than $1.5 billion worth of residential real estate to date, Elliman said. They were CORE’s top-producing team in 2013. Beyond their roles on TV, Postilio and Conlon are also known for having celebrity clients, including Barry Manilow, Joan Collins, Michael Feinstein, Liza Minnelli, David Sanborn and others. Both got their starts in the arts. Postilio was a professional singer and Conlon was a Broadway producer. Postilio and Conlon said Elliman’s alliance with Knight Frank was among the reasons for their move. “We are eager to expand our business,” Postilio said in a statement. While Postilio and Conlon jumped to the biggest residential brokerage in the city, CORE’s star is rising. In October, megadeveloper the Related Companies bought a 50 percent stake in CORE and the firm has been adding agents and snagging more exclusive listings: CORE had 119 agents as of March 29, according to The Real Deal’s annual brokerage To Postilio, Tom Posti Po st lio sti o, left, left eft,, and and n Mickey M key Co Mi Mic Conlo Conlon. nlon nlo n. ranking, which is based on data from On-Line Residential. n. CORE also snagged $277.5 million worth of sales exclusives, up year over year from $156.9 million, according to TRD research. And, the firm ranked No. 8 on TRD’s ranking by closed sales, with $434.6 million of closed sales for the 12 months ended March 31. “We wish Tom the best in his personal and professional endeavors,” Doug Heddings, CORE’s executive vice president-director of sales, said in a statement. By E.B. Solomont 134 June 2015 www.TheRealDeal.com

Also on the move BLU Realty Group tapped Amala Redd, former director of new projects at Town Residential, as director of new development sales and marketing ... Marsi Gardiner and Susan Silverman joined Brown Harris Stevens as licensed associate real estate brokers ... Modern Spaces added two brokers, Violet (Boe) Boerescu and Shawn Williams ... RAND Engineering & Architecture named Jeffrey Stein, former senior director of advertising sales and marketing for Habitat magazine, as its new business development manager.

In memoriam Laura Finamore, 47, a senior account director at Cushman & Wakefield, died last month in the Amtrak train derailment in Philadelphia. The Queens native is survived by her parents, three brothers and seven nieces and nephews. Compiled by Ariel Stulberg Laura Finamore

@Marketing: A picture is worth 1,000 ads WE H E A RD

Tech-savvy sellers seek showcases of their properties on brokers’ Instagram feeds

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ew York apartment sellers are starting to demand more than the usual when it comes to marketing: They want assurances that their homes will be showcased on widely followed Instagram feeds. Tech-savvy brokers have long used the photo-sharing social network as a light-hearted, modern supplement to more traditional forms of advertising. But in recent months, more clients have started to specifically ask for the social media boost. “It was almost like a joke, but not really,” said Ryan Serhant of Nest Seekers International, describing a recent sales contract that called for a dedicated Instagram post advertising the property. The “Million Dollar Listing New York,” star said the pact even called for a second solo post on his feed, which has more than 270,000 followers, if the property wasn’t sold in 30 days. And it’s not just TV stars. Oren Alexander of Douglas Elliman also codifies social

media promotion in his marketing plans, though not F m lleft, Fro From eft,, Elliman’s eft Elli Elli lliman man n’ss Tal an and dO Oren ren e A Al Alexander, lexa lexa x nde nderr, r, in n an Ins Instagram nsstag gram am quite with the same specificity. “We make sure the clients pos post st of of a $59 $ 9 million $5 mill i ion on n to ttownhouse w ousse on wnh on 8 81st 1st St Stree Street. reet. ree t t. realize how many followers we have, and the quality of the followers we have, [including] developers and top agents from around the world,” he said. Serhant recently posted The reason he gave is simple: Social this image from a $3.6 media is the most effective tool in his million Tribeca apartment. marketing arsenal. While he doesn’t offer specific terms for posting, “I do see it going there,” he said. Alexander has about 18,000 followers. Another prolific Instagrammer, Compass President Leonard Steinberg, agreed, but also emphasized a downside. “It definitively works,” he said, but added that sellers are wary that his social media activity might do more to promote Steinberg himself than it does to sell their properties. To counteract that impression, he de-emphasizes the more personal types of posts that most users, his listings, and on real estate in general. along with Serhant, favor. His Instagram feed, “I don’t get that many likes,” Steinberg said, “but I get @theleonardsteinbergteam, a business account with calls for appointments, which is sometimes even better.” 28,700 followers, rather than a personal one — focuses on By Ariel Stulberg

The deals of summer W hen the boys of summer are on the field, the New York real estate industry is playing ball. Pros from across the commercial and residential side of the business rub shoulders at Yankee Stadium and Citi Field during baseball season, taking in games, forging relationships, and occasionally, when the action is at an ebb, talking deals and market conditions. “Sports are a universal language. Everyone gets it. And that allows you to loosen up,” said David Maundrell, president of aptandlofts.com and a lifelong Mets fan. Michael Rudin, vice president at Rudin Management Company, also a Mets fan, said his firm regularly hosts parties in luxury suites at Citi Field for brokers, investors, clients, and tenants. “It’s a great way to get out of the office, get to know people and talk about something other than business,” he said. “Business does get done there, all the time,” said Benjamin Levine, a Yankees supporter and vice president of Douglaston Development. But, he noted, it depends on the state of the game. “If it’s bases loaded, two outs, not a lot

Real estate pros take (a bit of) business out to the ballgame

comes to crossing business with the national pastime. “When I started out, I was 24, single, trying to relate to these older, established, married men,” said Maundrell. “The common ground I ended up finding with them was sports.” Dealmaking also depends on the market itself. With inventories low and prices skyhigh, there may be fewer bits of business to discuss. Describing a relaxed, relationship-building outing he recently had with a colleague, Mets fan Ronald Bonelli, managing partner at Bondee Properties, said, “If the economy wasn’t what it is, we’d have been talking about Rudin Management vice president Michael Rudin gets a greeting from Mets outfielder Curtis transactions.” Granderson at Citi Field. And no matter what the topic, a loud crack of of people in our industry want to talk about market rents the bat and a long fly ball will halt any conversation, Maundrell and competitive sales,” he said. said. “You stop mid-sentence, jump up and start cheering.” In fact, camaraderie can be the top priority when it By Ariel Stulberg

Michael Stoler’s mini media empire

Madison Realty executive marks 750 television shows since 2001 Michael Stoler recently reached a milestone: 750 television shows.

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ou may not see Michael Stoler if you watch prime time TV, but the real estate executive has something of a one-man mini media empire. Stoler, who in the past wrote a regular column for The Real Deal, hosts two real estate-focused shows on public access CUNY-TV: “The Stoler Report: New York’s Business Report” and “Building New York: New York Stories.”

136 June 2015 www.TheRealDeal.com

The shows are rebroadcast on dozens of local stations across the region, and will soon extend to Philadelphia. He’s also served as the real estate reporter for 1010WINS since 2007, and airs a weekly piece on its sister station, CBS Newsradio 880, as well. And last month, Stoler hit a media milestone: 750 episodes of the two shows combined. The success of “The Stoler Report” has even bred a namesake app, which enables 7,000 users in 54 countries around the world to stream that program on their devices. Stoler, a managing director at Madison Realty Capital, first dipped his toe into media in 2001 when he began doing a weekly radio broadcast on the former WPAT 930 AM from Shallots Restaurant on Madison Avenue. The slot was not exactly prime time: Wednesday from 11 p.m. to midnight. So Stoler, at the time working for First American Title Insurance Company, would have dinner with his guests each week, before broadcasting the show live.

“By that time, most of my guests were drunk,” Stoler recalled in an interview. That proved, however, to be a good way to get the conversation going once they were on air. In the 14 years since, he’s had more than 1,500 real estate and business guests (mostly sober these days) talking about everything from market trends to current events to life stories. The bare bones set is far from glamorous and the discussion is often on the wonkier side. But real estate players praise him and his show, which is generally friendly to the industry. Stoler “has acted as the glue for putting everybody together in the industry, between the lending institutions and the developers and the [property] owners,” Red Apple Group and Gristedes Foods head John Catsimatidis told The Real Deal. “I’ve done business with people who I’ve met through the show or its cocktail parties.” For his part, Stoler said he’d like to do the shows for as long as he’s able, but admitted that with his day job at Madison Realty, it takes up “more than 100 percent” of his time. “I make as much time as I have to,” he said. “When you do 95 to 100 shows a year, there’s no time off.” By Rey Mashayekhi

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THE CLOSING

WITH JED GARFIELD

Jed Garfield is the owner of Leslie J. Garfield Real Estate, the residential townhouse-focused brokerage founded by his father in 1972. Garfield has personally sold more than 600 townhouses — some more than once — during his 30-year real estate career in New York. His conquests have included the record-setting sales of the Duke Semans Mansion at 1009 Fifth Avenue for $40 million in 2006 and the Japanese embassy at 11-13 East 62nd Street for $21 million in 1999. Born and raised in Manhattan, Garfield started in real estate as a leasing agent at Grubb & Ellis, but joined the family business in 1990. In 2003, he bought the brokerage from his father, who is now in his 80s and is still working at the firm. NAME: JED HERBERT GARFIELD

BORN: SEPTEMBER 29, 1963 HOMETOWN: NEW YORK CITY MARITAL STATUS: MARRIED Have you ever live outside of NYC? I spent a couple of years ski-bumming in Colorado. What was that like? I loved it. I worked as a busboy at a hotspot called Gordon’s High Altitude. It was the spot in Aspen [with customers like] Arnold Schwarzenegger in his prime with Maria Shriver, Don Johnson and Melanie Griffith. I also worked construction. I started working for a builder who had just finished an 8,000-square-foot spec house on Snowmass, but he didn’t put in a Jacuzzi. On my first day, he said, ‘Here’s a pick and a shovel.’ It was backbreaking work. What prompted you to go to Colorado? After college, I worked in commercial leasing. When I started, my boss said, ‘Do you know where the World 138 June 2015 www.TheRealDeal.com

Trade Center is? Go canvas it.’ I went to the top floor and knocked on every door. I made a couple of small deals. Then I broke up with a girl. So I was unhappy in my work, my love life had just disappeared and I was like, ‘I’m going to go ski.’ What made you come back from Aspen? I got a little tired of the skiing and a little tired of Aspen. It was an intellectual void. People were like, ‘Oh we got another six inches of snow and there’s a kegger tonight.’ I applied to the [School of International and Public Affairs at Columbia University for a master’s degree] and my father said, ‘If that’s what you want to do, fine, I’ll pay for it, but I’d like you to work here in your free time.’ What did you study? I studied economics and wanted to join the CIA. I took the CIA test, had an interview on campus and then never heard from them again. So you ended up working for your dad? I’d grown up around real estate. Leslie worked six days a week. On Saturdays, I’d go with him to show houses and to galleries. … Leslie said two things, which I’ve always taken with me. He said, ‘Don’t ever get into the office after I do and don’t ever lie to a customer.’ He used to have index cards with every single house in NYC. I’d come in the morning and he’d say, ‘Canvas these guys.’ What’s the biggest deal you’ve done? The sale of 1009 Fifth for $40 million. I sold it to [the late] Tamir Sapir, who was in the building for 10 minutes. I will never forget when his legal counsel called me just before Christmas. He said, ‘I have a Christmas present for you. Tamir is prepared to pay the asking price. Just make the deal.’ What’s the key to keeping wealthy clients happy? There is an expectation about your availability. You can’t respond with, ‘This isn’t really a great time.’ You get paid six- and seven-figure fees and in return for that, you are available. All the time. Do you feel like you make enough money? I don’t think anybody feels they make enough by the time they’re at closing. ... But yeah, I make enough. I make a fortune every year. Will you encourage your sons [ages 14 and 11] to join the business? If they want to. It’s genuinely a great job. … The

downsides are that it’s brutal. It’s a world of lying, cheating and stealing. Anyone who tells you differently is just lying, cheating and stealing. What’s your craziest client story? I had a great customer named Ted Ammon. He was ultimately murdered by his wife’s boyfriend in 2001. But [when I met him], he and his then-wife, Generosa, lived in a house at 17 East 92nd. I knocked on their door one day, and Generosa said, ‘Yes, we’re thinking of selling.’ I kept calling, and one day she said to call Ted at the office. I must have called 50 times between 8 a.m. and 5:30 p.m. [That night], my cell phone rings. It was Ted. I’d never met this guy. He said, ‘I thought we were going [to make a deal through] Douglas Elliman or Stribling, but they’re insisting on 6 percent. Would you do it for 4.5?’ I said, ‘Sure, great. Done.’ I subsequently sold them four other properties, worth $50 to $60 million … [Years later] I get a call one morning from his lawyer who said, ‘Jed, you’re going to see something in the paper and I don’t want you to talk to anybody.’ The front page of the Times read, ‘Financier murdered in East Hampton.’ Where do you live? We live in a townhouse at 510 East 89th Street. We [also] own a country house in Sandisfield, Mass. What are your hobbies? I collect prints, like my father. I love to read. I ski almost every weekend during the winter. I love to play golf. I play alone if I can. I like the tranquility. Do you have any regrets? If I could do it again, I would marry earlier and have more kids. I like my life. I went to Dalton, I didn’t graduate at the top of my class, but I made some really good friends. Did I want to go to Skidmore? No, but it was the only place I got in. But things work out for the best. My roommate is a guy I talk to every week. Do you have any vices or bad habits? When I was younger, I had a plethora of bad habits. As an adult, I find my life just runs better when I don’t drink to excess, when I don’t do any drugs. For the most part, I like to get home at 7 p.m., hang out with the kids, eat dinner, watch Jeopardy. I like that life. It’s not glamorous but it’s mine. By E.B. Solomont PHOTOGRAPH FOR THE REAL DEAL BY ERIN PATRICE O’BRIEN www.TheRealDeal.com July 2006 00

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