The Real Deal May 2015 by The Real Deal

Retail world preps for Vegas

Private equity funds with the best returns

Chinese default rattles investors

p p4 To ing 15 nk 20 a sR rm

De Blasio’s love fest with advocates ends

Roth goes rogue

N EW YOR K R E A L E S TATE N E W S

www.TheRealDeal.com

Vol. 13 No. 5 May 2015 $3.00

BROKERAGES TAKE GLOVES OFF Rivalries between Manhattan’s residential ﬁrms get ugly as competition for top talent heats up p40

Tech startups with fat wallets

Solving the Rabsky riddle

Is Manhattan in hotel overload mode?

A ranking of the industry’s newbie tech ﬁrms that have raised the most venture capital cash p62

Firm head Simon Dushinsky is building more Brooklyn units than almost anyone, but ﬂies far under the radar p36

A comprehensive breakdown of the borough’s record hotel pipeline, which is sparking fears of oversaturation p60 ILLUSTRATION BY CHRIS MANFRE

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Photograph: Tex Jernigan

Contents M AY 2 0 1 5

NYC’s ‘new’ bidding wars

The honeymoon is over

Vegas bound for retail world

Clinching an apartment now is a different game than it was last year.

De Blasio’s once-chummy bond with preservationists is ofﬁcially over.

Retail players to descend on Sin City to cut deals — and party.

The annual ICSC retail conference hits Las Vegas this month.

28 At the Desk of: Belinda Schwartz The head of Herrick, Feinstein’s real estate practice on her ‘angry putty,’ getting a coveted key to the exec bathroom and her ‘piece’ of the Woolworth Building. Belinda Schwartz, chair of the ﬁrm’s real estate department.

their words... 32 InOff-the-cuff comments from

Sub Culture Every day 300,000 subway riders stream through

Sam Zell, Howard Lorber, and other real estate bigwigs.

‘Social’ monitor 34 The Must-see tweets, posts and shares; plus CEOs with feeds worth following.

The Rabsky riddle

Manhattan’s Fulton Center, their underground trek

Firm head Simon Dushinsky leads a spiritual Hasidic life, all while building more residential units than almost anyone else in Brooklyn.

now brightened by entertainment venues and daylight YLÅLJ[LK MYVT P[Z ZR`SP[ JHISL UL[ V]LYOLHK (U PU[LNYH[LK artwork by James Carpenter Design Associates, Grimshaw Architects, and Arup [OPZ THY]LS VM JVSSHIVYH[PVU PZ H UL^ IYPNO[ ZWV[ ILULH[O JP[` Z[YLL[Z Read more about it in Metals in Construction VUSPUL

40 Brokerage body blows Rivalries between Manhattan’s ﬁrms get ugly as competition for top talent heats up.

> > > 6 4 0 5 @ 6 9 .

42 Against a backdrop of scarce listings and rising prices, a look at which residential brokerages are on top and which ﬁrms are losing ground.

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

www.TheRealDeal.com March 2012 00

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

Contents continued 54 Show me the money Stacking up the performance of two of the most popular investment vehicles —REITs and private funds. Plus, private equity ﬁrms rejigger strategies.

Starwood’s Barry Sternlicht SL Green’s Marc Holliday

Boston Properties’ Owen Thomas

An overview of Long Island City

58 LIC minus the retail Despite residential boom in Queens nabe, area sees shopping drought.

60 Soft spot for hotel boom? Record room numbers, land prices and a strong dollar could spell trouble for hospitality sector.

World View

Real estate tech startups with big cash

One Chinese default...

A look at which NYC-focused ﬁrms have raised the most and whether there’s a venture bubble brewing.

20 Residential Market Report

Sends shockwaves through NYC real estate, inciting worry that other Chinese players may be vulnerable.

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

Japanese master muted The ﬁrst NYC building by awardwinning architect Tadao Ando is not his ﬁnest work, critic James Gardner says.

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

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

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

108 National Market Report

A rendering 152 Elizabeth St.; right, architect Tadao Ando.

Reports from around the country on signiﬁcant developments and trends.

152 Roth goes rogue

112 The Deal Sheet

The press-shy Vornado chief exchanges ﬁery, fun zingers with rivals.

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

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

146 Calendar of Events

Steven Roth

Check out this month’s activities.

golden perches 154 Goldberger’s The Pulitzer-prize winning critic

152

on battling with Shell Oil, buying at the Dakota and starchitecture.

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

We Heard A lighter look at industry buzz.

www.TheRealDeal.com March 2012 00

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THE REAL DEAL N E W YO R K R E A L E S TAT E N E W S

PUBLISHER Amir Korangy EDITOR-IN-CHIEF Stuart W. Elliott MANAGING EDITOR Jill Noonan DEPUTY MANAGING EDITOR Eileen AJ Connelly EDITORIAL DEVELOPMENT DIRECTOR Heather Grossmann MANAGING WEB EDITOR Hiten Samtani

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.

SOUTH FLORIDA MANAGING EDITOR Ina Cordle ART DIRECTORS Ronald Gross, Keziah Makoundou SENIOR REPORTER Adam Pincus REPORTERS Rich Bockmann, E.B. Solomont, Konrad Putzier CONTRIBUTORS C. J. Hughes, Jennifer White Karp

You need Rosewood Realty Group

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

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Rosewood Knows New York We are pleased to announce the following results for the year-to-date April 30th 2015, Rosewood has completed total sales of

$1,405,803,050 which include:

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, Frankie Grima, Justin O’Garrow DIRECTOR OF DIGITAL SALES Junaid Zahid

Brooklyn: Aggregate sales of

$615,370,050

64 Buildings / 2,536 Residential Units / 32 Commercial Units Manhattan: Aggregate sales of

$340,318,000

32 Buildings / 783 Residential Units / 31 Commercial Units Bronx: Aggregate sales of

$347,815,000

40 Buildings / 2,191 Residential Units / 73 Commercial Units Queens: Aggregate sales of

$102,300,000

DIGITAL SALES MANAGER Eric Reyes DIGITAL MARKETING ASSISTANT Yanlin Ma WEBMASTERS Nima Negahban, Andrew LoCascio ASSOCIATE WEB DEVELOPER Amir Ghaheri FINANCE DIRECTOR/HUMAN RESOURCES Kenneth Cyrus ACCOUNTING ASSOCIATE Karen Francis OFFICE MANAGER Virginia Durso CIRCULATION Paul Destanko DISTRIBUTION Mitchell Newman, Patricia Hofmann, Forero Express ATTORNEY Barry J. Friedberg, Trachtenberg Rodes & Friedberg LLP ACCOUNTANTS William T. McCallum, CPA, P.C., Christine Wang

8 Buildings / 350 Residential Units / 12 Commercial Units

14 May 2015 www.TheRealDeal.com

The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2015. To contact us, call 212-260-1332 or email news@therealdeal.com. Warning: It is illegal to photocopy or reproduce any part of The Real Deal without express written consent. For reprints and duplication rights, call 212260-1332. Principal ofﬁce: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly. Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.

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Developerus secretus ome of the biggest real estate players in New York ďŹ&#x201A;y so far under the radar that they might as well be in the witness protection program. Itâ&#x20AC;&#x2122;s almost an urban legend: The shadowy developer who builds whole chunks of the city but has never been seen in public. In this issue, we proďŹ le a classic example of this developerus secretus species, Simon Dushinsky of the Rabsky Group, who is one of the most proliďŹ c builders in Brooklyn, in a story starting on page 36. His ďŹ rm has no website. There are no known photos of him. And he has never talked to the press during his roughly 25-year career, which dates back to the early 1990s. Based in Williamsburg and part of the Hasidic community, he has projects including the massive 775-unit rental complex planned for the former PďŹ zer site in Bedford-Stuyvesant. Reportedly a zoning whiz, his ďŹ rm has beneďŹ tted from the dramatic run-up in Brooklyn property values and is now expanding to new neighborhoods, making it harder for the company to hide behind LLCs and tightlipped lawyers. He is hardly the ďŹ rst wildly successful developer in New York to hide in plain site. Until The Real Deal wrote about him in the mid aughts, hotel developer Sam Chang had barely a mention in the press, despite being solely responsible for more than half of all of the under-construction hotel units in Manhattan at the time (the pipeline was a lot smaller than it is today). And the infamous Ring Brothers â&#x20AC;&#x201D; Frank and Michael â&#x20AC;&#x201D; who inherited 15 Manhattan ofďŹ ce buildings worth $500 million from their father, but mysteriously and inexplicably left many of the prime sites vacant, were relative unknowns before being revealed in these pages several years ago. But my favorite example is developer Leonard Litwin of Glenwood Management, who is now 100 years old and who has been the largest political donor on the state level for the past 10 years. Despite his enormous inďŹ&#x201A;uence on the future of New York,

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the secretive billionaire who has been building since the 1950s has had virtually zero public presence for decades. This is despite the fact that his ďŹ rm has recently surfaced in connection with the criminal case against former state Assembly Speaker Sheldon Silver, whoâ&#x20AC;&#x2122;s accused of steering Glenwood and another developer to a law ďŹ rm that gave him a cut of their fees. (Glenwood has not been accused of wrongdoing.) The list goes on, with other huge players like investor David Werner (the biggest buyer of NYC real estate in 2014), and the heirs of property magnate Sol Goldman, who control his massive holdings. Someone really needs to get all these guys together â&#x20AC;&#x201D; maybe a dinner party with D.B. Cooper and J.D. Salinger at an unmarked speakeasy somewhere would be ďŹ tting (plus a reporter with a notebook in tow). Elsewhere in this issue, our main cover story is about a group that doesnâ&#x20AC;&#x2122;t typically shy away from the limelight â&#x20AC;&#x201D; namely, brokers. (There is a reason that there are so many reality shows about residential real estate.) We take our annual look at the biggest residential brokerages in Manhattan, plus the top mid-sized ďŹ rms and boutiques, in stories starting on page 42. Douglas Elliman led the pack when it came to the biggest ďŹ rms, while Sothebyâ&#x20AC;&#x2122;s dominated among mid-sized ďŹ rms, followed by hot tech upstart brokerage Compass, which has received tens of millions of dollars in venture capital funding. On the boutique list, superbroker Dolly Lenzâ&#x20AC;&#x2122;s ďŹ ve-person ďŹ rm took the top spot with the highest dollar volume of listings. The competition for market share amid high prices and still relatively low inventory (along with VC money changing the brokerage landscape) has led to some pretty epic rivalries among ďŹ rms. Check out our cover story on the biggest battles on page 40. Weâ&#x20AC;&#x2122;ve also got stories on the best performing private equity funds (page 54), a ranking of tech start-ups and how much theyâ&#x20AC;&#x2122;ve raised (page 62), a comprehensive look at hotel projects in the works in Manhattan (page 60) and a look at how Chinese players are going about partnering with New York City developers (page 100). Finally, get ready for TRDâ&#x20AC;&#x2122;s New Development Showcase & Forum on May 12 in Chelsea. Once again, we are bringing real estateâ&#x20AC;&#x2122;s top names together (those who arenâ&#x20AC;&#x2122;t press shy, anyway) for panel discussions on the industryâ&#x20AC;&#x2122;s biggest issues including Chinese investment, crowdfunding and the future of the luxury development market. For more info, check out therealdeal.com/forum. Enjoy the issue.

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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

Bidding wars bloom with spring ’s return Buyers get aggressive amid tight inventory BY E.B. SOLOMONT he oldest house in Chelsea is a Federal-style home at 404 West 20th Street, which dates back 180 years. It hit the market this spring, asking $6.5 million. The house found a buyer within a week. The seller received 10 bids, including one that was $1 million over the asking price, said Elizabeth Ann Stribling-Kivlan, president of Stribling, which had the listing. The rapid sale reﬂects a new wave of bidding wars over residential real estate in Manhattan. It’s not just one- and two-bedroom apartments, said Stribling-Kivlan, the residential market’s usual battleground. Instead, she sees heightened competition in different segments of the market, including townhouses like the one in Chelsea. “The townhouse market is incredibly in vogue right now,” she said. In the current market, buyers, even those engaged in bidding wars, are value oriented, in contrast to last year’s frenzied buying, she said. “People want what they want,

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dropped 15 days to 100 days, a reflection of the fast pace of Manhattan’s sales market. Brokers said while business slowed perceptibly during the winter, the spring market shot out of the gate. And buyers are more aggressive than last year. Haber recently sold a one-bedroom at 115 East 87th Street for over $1 million, a premium over the asking price of $899,000. The apartment was part of an estate sale and hadn’t been updated since the 1970s. “It was pretty dreary,” said Haber, who spent $2,000 to paint the walls, touch up the floors and stage the unit. Seventy people showed up to the first open house and he received 12 bids, including four all-cash offers and only one mortgage contingency. “We had someone there who refused to leave, who had a checkbook on them,” he recalled. “I was like, ‘It’s not a rental. You can’t leave a deposit here.’” Rutenberg Realty’s Jennifer Breu said she’s seen an uptick in overall business, and bidding wars in neighborhoods like Hud-

“Buyers deﬁnitely have more gumption today than they did a year ago.” JASON HABER, WARBURG REALTY

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but they don’t want to overpay,” she added. Not long ago, buyers would “pay anything for anything,” she said. “Now, it still needs to be well priced.” To suggest that bidding wars are back, of course, is to imply that they disappeared at some point. In fact, Warburg’s Jason Haber said the fall and winter months just tamped down aggressive bids. “There were only so many buyers willing to set their hair on fire to get certain apartments,” he said. Now “the kerosene seems to have spread.” Veteran agent Reba Miller said a $10.5 million penthouse at Dutch developer Kroonenberg Groep’s Huys, at 404 Park Avenue South, had a sudden uptick in traffic this spring; the sale closed at the end of March after the unit spent more than a year on the market, according to listings website StreetEasy. “It’s the first time I’ve seen a bidding war on … brand new construction,” said Miller, who was not involved in the deal. “All of a sudden, the spring clock clicked on and we’re seeing bidding wars. People are coming out of hibernation.” Overall, listing inventory rose 5 percent year over year, to 5,234 units during the first quarter, according to real estate appraisal firm Miller Samuel. But that’s still far below the 10-year average, and resale inventory edged up just 0.8 percent year over year. Meanwhile, the number of days on market, or average number of days to sell an apartment that closed during the quarter,

son Heights and Inwood. “Many people are coming to open houses having lost two previous bidding wars.” But a byproduct of the fast-and-furious bidding is that she’s also seeing buyers walk away from deals. Breu said she recently represented a client who was No. 2 in a bidding war for a $395,000 one-bedroom on Bennett Avenue; her client bought the apartment when the winning bidder walked away. “Maybe a detail comes up that makes them realize they bid too quickly,” she said. Unlike Stribling-Kivlan, Haber thinks buyers these days are more willing to pay up, since they’re frustrated with the market’s lack of inventory. He’s seeing no mortgage contingencies in bidding wars, as well. “Buyers deﬁnitely have more gumption today than they did a year ago.” When it comes to spurned buyers, a growing number are opting to buy an apartment before they even list their current home — provided they can swing it ﬁnancially. “If you see something on Sunday, you’ve got to think it will be gone by Monday,” said Zack Elias, listings manager and associate broker at DJK Residential, who personally purchased a two-bedroom in Washington Heights before listing his one-bedroom on the Upper West Side. “It’s certainly less stressful,” he said. “Some buyers think, ‘I keep losing bids. I’d rather have the comfort of not being in limbo.’” TRD

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Preservationists hear little that pleases from de Blasio Since taking ofﬁce, mayor has backed away from embracing historic preservation issues BY CLAIRE MOSES ill de Blasio can be “very eloquent” on preservation issues. Or at least he was as public advocate. But since he took over City Hall, preservationists like New York Landmarks Conservancy President Peg Breen have noticed, “It’s clearly not one of his major topics.” In February 2010, when a group of about 40 preservationists met the then-public advocate at the Upper West Side co-op of Arlene Simon (then president of Landmark West), de Blasio hit all the right notes. “People were very impressed with his willingness to talk about preservation issues,” recalled Kate Wood, the group’s current president. As mayor, however, Breen said, “He’s more or less silent on it.” What’s more, his administration has made some moves that generated dismay. Most notably, shortly after de Blasio appointed Meenakshi Srinivasan as the

For example, the Chester Court Historic District in Brooklyn was designated within two months, which she claimed is a record. On the agenda, and worrying to activists, is a proposed new zoning plan that would alter the city’s contextual zoning districts. The proposal would allow developers to build higher density projects, which could help reach the main goals of the mayor’s affordable housing plan: Creating and preserving 200,000 units in 10 years. “We are pushing now for changes to the zoning code that would remove barriers that constrain housing production and raise costs, encourage better quality buildings that contribute to the fabric of neighborhoods and promote senior housing,” Planning Chair Carl Weisbrod wrote in an op-ed in March. Contextual districts were created in the 1980s , when Weisbrod ran the Department of City Planning, to limit tall buildings on side streets in an effort to preserve neighborhood

“De Blasio’s plan would remove all those contextual zones and [provide an] incentive for developers to tear down existing buildings and replace them with bulkier buildings.” PETER BRAY, PARK SLOPE CIVIC COUNCIL chair of the city Landmarks Preservation Commission, she proposed to “de-calendar” almost 100 sites and neighborhoods waiting for historic designation, including some that had languished for decades. “We wanted to address the issue of backlog,” Srinivasan told The Real Deal, a situation both sides said needed to be addressed. After opposition from preservationists, the commissioner, a trained architect who previously served as chair of the city Board of Standards and Appeals, withdrew the plan and asked for input from the community on how to address the matter. “She got off on shaky footing,” said Peter Bray, a Park Slope Civic Council trustee. The commission set a deadline of May 1 for input on how to solve the backlog issue. While the preservationist community is disappointed, de Blasio’s administration claims progress. So far, it has designated 1,754 buildings and sites since taking office, according to Landmarks spokesperson Damaris Olivo. This was “more than each of the five previous fiscal years,” Olivo claimed, adding that the agency hopes to designate 2,000 buildings and sites by June 30. The city also initiated a potential historic district in Harlem, she said. Separate from the backlog issue, Srinivasan also instituted reforms designed to expedite designations of sites and buildings faster than her predecessors. 22 May 2015 www.TheRealDeal.com

character. The Upper East Side, the Upper West Side, parts of Downtown Manhattan and all of Brownstone Brooklyn fall under this designation. Some contextual districts overlap with historic districts. “De Blasio’s plan would remove all those contextual zones,” Bray charged. Doing so would provide “incentive for developers to tear down existing buildings and replace them with bulkier buildings.” The city claims the zoning changes, which would add ﬁve feet to the maximum height of new buildings and permit higher density construction, will better promote the creation of affordable housing. But while the city claims that the new zoning code would allow higher ceilings, elevated ground ﬂoor apartments and taller windows, and therefore more attractive buildings, activists are unconvinced. The proposed zoning rules could also pressure Landmarks into allowing buildings that wouldn’t usually pass the commission in districts where contextual and historic districts overlap, for fear of being seen as obstructionist, Breen said. The preservationists’ worries are far from the optimistic feelings they had after leaving that meeting with the public advocate years ago. He appeared to be “a big friend” of preservation, Bray said. “There’s been no evidence since he has become mayor that this is a priority of this administration.” TRD www.TheRealDeal.com March 2010

THE MOST SPECTACULAR HOMES ALL SHARE THE SAME ADDRESS.

INTRODUCING THE 2015 ISSUE OF

REAL ESTATE MARKET REPORT

The Evolution of South Floridaâ&#x20AC;&#x2122;s Real Estate Market: How the Game has Changed The South Florida real estate market conversation now takes place

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Miami | Single-Family Home Market

2010

2011

2012

2013

2014

$14,486,000

$15,184,000

$18,274,000

2014

$17,120,000

2013

N/A

2012

Avg. Home Price Trendline h

2011

$6,817,000

2010

$6,628,000

2014

$5,923,000

2013

$6,750,000

2012

Avg. Home Price Trendline h

2011

Avg. Home Price Trendline h

2010

$6,435,000

Average Home Price

$1,883,000

Average Home Price

$1,871,000

Average Home Price

$1,849,000

$10M+ Transactions

$1,878,000

$5M to $10M Transactions

$1,856,000

$1M to $5M Transactions

YOUR TOP RESOURCE FOR SOUTH FLORIDA REAL ESTATE. PLEASE VISIT ONESOTHEBYSREALT Y.COM/TRENDS TO ACCESS THE FULL REPORT. Statistics provided by Integra Realty Resources â&#x20AC;&#x201C; Miami\Palm Beach. The information contained herein is deemed accurate but not guaranteed.

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Avg. Home Price Trendline h

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2012

2013

2014 $10,975,000

2010

$12,050,000

2014

$27,000,000

2013

$11,500,000

2012

N/A

2011

Avg. Home Price Trendline h

2010

$6,371,000

2014

Avg. Home Price Trendline h

2013

$6,080,000

2012

$6,042,000

2011

$1,673,000

2010

$6,634,000

Average Home Price

$6,538,000

Average Home Price

$1,827,000

Average Home Price

$1,705,000

$10M+ Transactions

$1,699,000

$5M to $10M Transactions

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THE

NUMBERS

one57

Retail’s turn at the tables

50,700 The number of RECon attendees in

22,103 Conventions held in Las Vegas in

2007, the most ever. Over 34,000 are expected to attend this year, up from 33,000 last year, and the most since 48,044 attended in 2008.

2014. The average visitor’s gambling budget per trip last year: $530.

1,900 Number New York retail pros who made the trip last year. They represented more than 500 New York City brokerages, property owners, lenders and retailers and developers.

20 Number of Papa

he center of gravity for New York’s retail real estate professionals will shift for a few days this month, when thousands decamp from Manhattan and head to Las Vegas. They’ll join retail-focused pros from around the world for the annual RECon, the enormous industry convention hosted by the International Council of Shopping Centers. The four-day affair is ﬁlled with networking opportunities, educational programs and parties — lots of parties. A few years back, these were gala events that might feature feather-clad dancers and other over-the-top accoutrement typical of Sin City. Since the bust, the parties have lost a little of that Vegas pizzazz, but they still offer valuable face time with potential clients and others. And often, really good food. Attendance at the gathering dropped off after the economy tanked, but has been climbing back the last few years. Below, a breakdown of the event, which runs from May 17–20 at the Las Vegas Convention Center and Westgate Las Vegas Resort & Casino. By Eileen AJ Connelly and Jennifer White Karp

David Kriss of Kriss & Feuerstein, left, Thomas Gammino of Massey Knakal, Morris Bailey of Thor Equities and David Schechtman, then at Eastern Consolidated, at the 2014 Massey Knakal/Fidelity National Title party.

Johns Pizza restaurant franchises owned by keynote speaker Peyton Manning. Better known as the quarterback of the Denver Broncos, Manning also owns 15 NFL records and one Super Bowl ring.

50 Golf courses in the Las Vegas area to choose from for those who’d rather skip the speeches and hit the links. One is right on the Strip, at the Wynn.

2,500 miles Distance traveled by New York real estate players when they decamp for Las Vegas. The Wynn Las Vegas, a popular hotel for New York dealmakers, is 1.5 miles from the convention center (and 1.6 miles from the Cosmopolitan, where Newmark Grubb Knight Frank hosts its huge bash).

55 Number of New York–based Cushman & Wakeﬁeld pros registered at press time, the most of any city ﬁrm. Still, that’s shy of the combined 64 people C&W and recently purchased Massey Knakal sent in 2014. Midtown-based Newmark Grubb Knight Frank led the NYC pack with 50 people last year, but had just 10 registered at press time.

60 Approximate number of parties that brokerages, developers and others are expected to throw during the four-day see-and-be-seen event. Attendees had more than two dozen fêtes to choose from on 2014’s ﬁrst night alone, including at least eight thrown by NYC companies, including Midtown-based brokerages RKF and Eastdil Secured.

3.2 million The square footage of the Las Vegas Convention Center, which has 2 million square feet of exhibit space. More than 1,000 ISCS exhibitors will set up across three massive halls.

$1,000 Price per foot MAC Cosmetics paid for a 15-year lease inked at RECon 2014 for 1,600 square feet at the Feil Organization’s 853 Broadway on Union Square South, a record rent for the area. Feil will be one of at least 15 NYC landlords exhibiting this year.

$75,680 Approximate cost (by TRD’s estimate) to send the 32 people from NYC that RKF had registered by press time, including $18,240 in registration fees ($570 per person), $43,840 for four nights at a typical hotel ($293 per night) and $13,600 for airfare ($425 each). Add $2,240 ($70 each) for rides to and from the airport.

$22 Admission price to Elvis: The Exhibition, the ﬁrst permanent presentation of hundreds of the King’s artifacts outside of Graceland. Conventioneers can get married at the Elvis Wedding Chapel for $225.

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26 May 2015 www.TheRealDeal.com

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ALTHOUGH ALL INFORMATION REGARDING PROPERTY FOR SALE, RENTAL OR FINANCING IS FROM SOURCES DEEMED RELIABLE SUCH INFORMATION HAS NOT BEEN VERIFIED, AND NO EXPRESS REPRESENTATION IS MADE NOR IS ANY TO BE IMPLIED AS TO THE ACCURACY THEREOF, AND IT IS SUBMITTED SUBJECT TO ERRORS, OMISSIONS, CHANGE OF PRICE, RENTAL OR OTHER CONDITIONS, PRIOR SALE, LEASE OR FINANCING, OR WITHDRAWAL WITHOUT NOTICE.

: F O SK E

D E H T T

BELINDA SCHWARTZ elinda Schwartz heads up the 50-member real estate practice at the prestigious law firm Herrick, Feinstein. She started at Herrick 17 years ago as a partner and was named chair of the department in January 2014. The promotion made her one of the few women in the country heading up a commercial real estate law practice. She was first exposed to the world of real estate and development when she was a summer intern at real estate firm Philips

PHOTO WITH HUSBAND

ANGER PUTTY “I rarely lose my temper,”

EMPIRE STATE BUILDING CLOCK

of 36 years in the 1990s.

Schwartz said. But on one

The clock was a present when Schwartz made partner at Wien

Victor, a psychiatrist, is the

of the rare days that she did,

& Malkin, where she worked on

medical director of the Jed

about 10 years ago, a former

leasing and ﬁnancing deals for

Foundation, an organization

colleague gave this gag gift to

the Empire State Building.

working to prevent suicide

her. Schwartz insists it doesn’t

The law ﬁrm is led by Peter

among college students. The

get much use.

Malkin, whose family owns a large stake in the iconic

They have two sons, ages 24 and 28.

tower. The clock reminds

PARTNER’S BATHROOM KEY UPPER WEST SIDE Schwartz has never lived anywhere other than the Upper West Side. She is currently at 91st Street and West End, blocks from her childhood apartment. a

granola,

totaled more than $1 billion. By Claire Moses

Schwartz with her husband

two married when Schwartz was a student at Barnard College.

“I’m

International during the summer between graduating college and starting law school at New York University. Among Schwartz’ notable deals was the $68 million sale of the top 30 ﬂoors of the Woolworth Building. She also represented the HK Organization and Brickman Group in their purchase of the Chocolate Factory Lofts in Brooklyn for $68 million in August, one of a series of deals Schwartz handled last year that

crunchy,

Birkenstock-wearing Upper West Sider,” she said. On the weekends, she added, “all I want

her that “there’s no better

In 1991, Schwartz became partner at her former law ﬁrm,

place than New York” to be a

Wien & Malkin. While not the ﬁrst

real estate lawyer.

female partner at the ﬁrm, she was the only one at that time.

PHOTO AT THE 9/11 MUSEUM

This key to the “Executive W.C.” was also a gag gift

A group of Herrick lawyers

and doesn’t have any teeth.

were given a private tour

Fellow attorney Howard

of the facility, well before it

Peskoe gave it to her.

opened. “It was unbelievable,”

to do is walk on Broadway.”

Schwartz said. “So poignant.” Schwartz also recalled the

WOOLWORTH BUILDING SPIRE

CHINESE OPERA DOLL

morning of Sept. 11, 2001: She was representing the buyer of a

Herrick, Feinstein represented the owners of the

The newest item in Schwartz’s

massive multi-state garden apartment complex portfolio. The papers

Woolworth Building, a joint venture between

office, which she received

were signed and lying on desks at Thacher Profﬁtt & Wood, which was

Cammeby’s International and the Witkoff

a few minutes before TRD

located in the World Trade Center. The displaced lawyers camped out

Group, in the sale of the top 30 ﬂoors of

interviewed her, is a doll

in Herrick’s ofﬁces for months following the attacks.

the Lower Manhattan landmark in

from China, a present from

2012. Schwartz has a piece of the

a “prominent investment

spire, which was removed when

group” that’s looking for

the buyer, Alchemy Properties,

development deals in the

started its renovation to turn

city. Schwartz regularly

the ofﬁce space into condos.

deals

with

foreign

She keeps it on the windowsill.

investors looking to buy and

It is much lighter than it

develop buildings in New

looks, since it’s made of

York. “I think it’s amazing,”

tin and is hollow on the

she said. “I did not have any Chinese clients two or three

inside.

years ago.”

28 May 2015 www.TheRealDeal.com

ISRAELI CHARITY BOX Schwartz, an observant Jew, attends services most Saturday mornings and hosts weekly Shabbat dinners. She doesn’t use her phone until after sundown on Saturday. When she turns it back on, it “freaks out” because of the all the new messages. On her desk, she has a charity box, a traditional vessel in which she deposits small change for donations. It was a gift from a client she met with in Israel.

PHOTOGRAPH OF BELINDA SCHWARTZ FOR THE REAL DEAL BY MAX DWORKIN

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COMMERCIAL MA R K E T

Available space bulges on Sohoâ&#x20AC;&#x2122;s Broadway Asking rents hit $1,000 per foot or more for prime spots; landlords seem ready to deal BY ADAM PINCUS he east and west sides of Broadway in Soho house about 120 storefronts. Some have premier tenants like Prada, Hugo Boss and Uniqlo, but last month about two dozen had space available for lease. Thatâ&#x20AC;&#x2122;s more than 20 percent of the units, a level that is giving

tenant brokers negotiating leverage. It marks a change from a few years back, when landlords held all the cards. And thereâ&#x20AC;&#x2122;s been no major deal announced on the stretch since last fall. Using data from leasing site Agorafy and industry sources, The Real Deal counted 27 available spaces along six blocks, including

six asking $1,000 per square foot or more on the ground ďŹ&#x201A;oor. Those include a portion of Jeff Suttonâ&#x20AC;&#x2122;s 530 Broadway, which would be vacated by the current tenant, Eastern Mountain Sports; 503 Broadway, a large space being marketed by Cushman & WakeďŹ eld; and 577 Broadway, a smaller space from Cushman.

Brokers are talking about how much space is available and how expensive it is, said Ross Kaplan, senior managing director at Newmark Grubb Knight Frank. Tenants are starting to pull back, said Robin Abrams, an executive vice president at Lansco. It is â&#x20AC;&#x153;likely rents will come down a bit, based on the competition for

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landlords to lock in good tenants at top rents.â&#x20AC;? Alexander Hill, managing partner at retail brokerage Murro Hill, said most tenants â&#x20AC;&#x153;cannot justify these rents with their sales.â&#x20AC;? â&#x20AC;&#x153;The few tenants paying recordbreaking rents are one-of-a-kind and planting their corporate ďŹ&#x201A;ags internationally with strong marketing budgets.â&#x20AC;? Asking prices surged in 2013, after Prada resigned its groundďŹ&#x201A;oor lease at 575 Broadway, at the corner of Prince Street, with landlord Peter Brant, paying a record $1,025 per square foot. The average asking rent for the overall Soho market in the 2015 ďŹ rst quarter was $519 per foot, up just $2 per foot from the fourth quarter of 2014, Cushman ďŹ gures showed. But itâ&#x20AC;&#x2122;s up 65 percent since 2012â&#x20AC;&#x2122;s fourth quarter, before the Prada deal, when Soho asking rents averaged $314 per foot. Cushman had Sohoâ&#x20AC;&#x2122;s overall availability rate at 16.4 percent. â&#x20AC;&#x153;Space is available on Broadway, but a large amount of it can be attributed to a ďŹ shing expedition by tenants hoping to sublease for huge proďŹ ts, or landlords looking to boost their cash ďŹ&#x201A;ows with the rocket fuel of a huge rent from a new tenant,â&#x20AC;? said Jared Epstein, a vice president at Aurora Capital Associates, which holds stakes in seven Broadway properties, including 529, 543 and 568 Broadway. One tenant representative broker, who asked not to be identiďŹ ed so as not to jeopardize relationships, said â&#x20AC;&#x153;the new message is: Donâ&#x20AC;&#x2122;t let the high rents scare you. We are in a dealmaking mood.â&#x20AC;? Landlords remain optimistic. Madison Capital is set to pay about $400 million for roughly 30,000 square feet of retail space from publisher Scholastic, for 549-555 and 557-559 Broadway. Sources expect a ground ďŹ&#x201A;oor ask of about $1,000 per foot. The company declined to comment. Auroraâ&#x20AC;&#x2122;s Epstein said activity is rising at 543 Broadway, where they are asking $700 per square foot for the ground floor. â&#x20AC;&#x153;For about a year our retail condo at 543 Broadway was available for sublease and there was no action,â&#x20AC;? Epstein said. â&#x20AC;&#x153;Recently the amount of interest from tenants for a direct deal has been overwhelming.â&#x20AC;? TRD

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In their words...

The funniest and most insightful comments on real estate

“I sold an apartment to a famous person [at One Beacon Court] for $20 million. He now has it on the market for $85 million — I hate that!” Vorn Vornado Realty Trust CEO Steven Roth speaking on a panel last month, where he seemed to be referring to disgraced hedge funder Steven Cohen.

“We have way too many REITs.” Billionaire investor Sam Zell, speaking at NYU’s REIT symposium.

“What a crock. Of course the rent laws are going to be renewed. Who does Andrew think he is kidding?” Mike McKee of Tenants PAC, on Gov. Cuomo’s vague comments about the June deadline for state action on rent regulation.

“We held out an olive branch ... but it was met with deafening silence.” Alan Lebensfeld, attorney for Joseph Safdieh, on his client’s attempt to resolve a dispute with General Growth Properties and Thor Equities “amicably” at ﬁrst before ﬁling suit.

“If you really wanna know who lives there, just give the doorman $50.”

“I think this is actually a typical real estate story. There’s a lot of bloodletting behind the scenes.” Charles Bagli, New York Times reporter, discussing his coverage of real estate scion and accused murderer Bob Durst and the HBO documentary “The Jinx,” which refocused attention on Durst’s saga.

“I just paid off my student loans … My friends tell me I should get two PhDs, and then I’d be the Noah’s Ark “We have no partners. Partners of degrees.”

“This may be out of order, but you don’t take 38th Street to 41st [on] First Avenue because that’s really where the white people reside.”

SHoP principal Vishaan Chakrabarti, on his two bachelor’s degrees and two master’s degrees.

Attorney Adam Leitman Bailey, who is representing minority owners in an eminent domain suit, argued in a hearing.

Douglas Elliman Chairman Howard Lorber at an event last month, referring to the New York Times series on foreign billionaires who use secretive LLCs to purchase apartments at the Time Warner Center.

32 May 2015 www.TheRealDeal.com

are for dancing.”

Richard Nicotra, who with his wife Lois owns Staten Island’s largest privately held real estate empire, on how they divvy up the titles of chief executive, president and chairman between just the two of them.

Sources: Capital New York, Crain’s, Twitter and TRD reporting.

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SOCIAL MEDIA MONITOR

NICK DEROSA

RICCARDO RAVASINI

BJARKE INGELS

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@rickyrava

@bjarkeingels

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REAL ESTATE EXECUTIVES TO FOLLOW ON TWITTER: @DottieHerman Dottie Herman Sellers: When you price your home you’re sending a message to the market. Price it right and generate a frenzy. #realestate #tips #EORE

The New York City Council proposal would require commercial buildings to preserve energy when unoccupied --- and the Real Estate Board of New York isn’t too happy about it.

SOME OF OUR FAVORITE COMMENTS FROM THIS POST:

Asit Parikh: What’s wrong with energy conservation?

@NickRomito Nick Romito I’ve seen 3 Blackberries in less than 30 mins, I fear the train I’m on may be taking me to the twilight zone. Or it’s just full of Canadians.

Brian Nieves: ...wouldn’t shutting the lights off decrease your operating expenses, increasing your NOI and ultimately your asset valuation?

@DavidMaundrell David Maundrell I don’t know why I bother reading these market reports in NYC. Tell us something we don’t know! @jonathanmiller Jonathan Miller I just gave speech for an hour on the housing market and thankfully was able to use an insightful quote from Beavis and Butthead.

José Ramón Sosa: Common sense must prevail.

REBNY to battle “lights out” bill Wednesday New York City’s lights might shine a bit less bright if a City Council bill to limit nighttime illumination in large, commercial buildings passes. THEREALDEAL.COM

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34 May 2015 www.TheRealDeal.com

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PROFILE

The Rabsky riddle Firm head Simon Dushinsky leads a spiritual Hasidic life while building massive developments in Brooklyn and Queens BY MARK MAURER s the face of Brooklyn rapidly changes, the face of one of its most prolific developers remains shrouded in shadows. Real estate professionals have long relied upon LLCs and tight-lipped lawyers to shield them from public view. But few are as inconspicuous as Simon Dushinsky, who runs the Williamsburg-based Rabsky Group with his partner, Isaac Rabinowitz. The duo, who melded their names to come up with the Rabsky Group moniker, run their mini development empire out of a 10-person office at 505 Flushing Avenue. They have never talked to the press, and photos of them are all but impossible to come by. Yet the company has nearly 1,850 units in the pipeline in Brooklyn, making it one of the most active developers in the borough, and almost 400 more to boot in Queens, according to applications filed with the city. At the moment, the firm’s two biggest projects are a 398-unit Bushwick rental building, which is part of Read Property Group’s 10-building Rheingold Brewery redevelopment, and a proposed 777-unit rental complex on the former Pfizer site at the edge of Bedford-Stuyvesant. Despite the substantial mark Dushinsky is making in Brooklyn, he is virtually unknown in the real estate world on the other side of the East River. “It’s a very insular community over in Brooklyn,” said the Marketing Directors’ Andrew Gerringer, who said he has struggled to get Dushinsky on the phone for more than a year. “Most people in Manhattan real estate do not know him.” (Incidentally, The Real Deal tried Dushinsky more than a dozen times and made attempts to contact him through numerous third parties, to no avail.) Developers and brokers who have met and worked with Dushinsky, the dealmaker behind the firm, describe him as shrewd, hands-on and well respected. They also immediately note that he is adamant about his privacy, and rarely discusses his personal life. “Simon and his partner are modest and low-key in everything that they do,” said David Korn, president of Fiddler Realty, which handled leasing for the 188-unit Leonard Pointe rental that Rabsky opened late last year, among other rental buildings. “They don’t boast about themselves. Simon feels he doesn’t gain anything from it.” Simon Dushinsky stands in sharp contrast to the corporate developer types like the Related Companies or Silverstein Properties, with their sleek offices and sophisticated

36 May 2015 www.TheRealDeal.com

public relations operations. His ofﬁce sits on the ground ﬂoor of a seven-story condo building that he developed for the Hasidic community, to which he belongs. Rabsky has no website detailing its portfolio of buildings and under-construction projects, and not a single photo of Dushinsky exists online. According to sources close to him, Dushinsky is in his mid-40s, was born and raised in Israel and lives in the Vizhnitz Hasidic community in Williamsburg. He is married

in synagogue all day.” And yet, his projects are popping up in a spate of new neighborhoods in the city’s hottest borough. Architect Karl Fischer — who has designed a number of Rabsky’s projects since 2002, when they teamed up on the $40 million, six-building Park Plaza condo complex for Hasidic residents — said Dushinsky is the dealmaker of the Rabsky duo. Rabinowitz, he said, is more focused on the creative process, often looking at architectural

Eran Chen’s architecture ﬁrm ODA New York and opting for a more innovative design. Rabsky’s proposed building at 10 Montieth Street is expected to feature a 25,000-squarefoot zigzagging landscaped roof for biking, running and gardening. Chen said Dushinsky is a “progressive thinker” who is seeking to attract a new generation of young renters to Bushwick, a neighborhood historically lacking in recreational space. “We consider ourselves experts in zoning

RABSKY’S PROJECTS IN THE PIPELINE ADDRESS

BOROUGH

UNITS

TYPE

249 and 334 Wallabout St.

Brooklyn

777

Rental

10 Montieth St.

Brooklyn

398

Rental

44-41 Purves St.

Queens

284

Rental

80 Evergreen Ave.

Brooklyn

220

Rental

755 Kent Ave.

Brooklyn

177

Rental

115 Stanwix St.

Brooklyn

130

Rental

581 Fourth Ave.

Brooklyn

129

Rental

74 Wallabout St.

Brooklyn

120

Rental

42-20 27th St.

Queens

TBA

26 West St.

Brooklyn

Rental

406 Manhattan Ave.

Brooklyn

Rental

25 Kent Ave.

Brooklyn

n/a

Ofﬁce

Source: Data from applications ﬁled with the New York City Department of Buildings and the City’s Department of City Planning. Includes proposed projects and projects at varying stages of construction. Rabsky is partnering with other ﬁrms on two of the projects.

with seven children, has a long black beard and payos, and wears a traditional frock coat, sources told TRD. And rather than power-breakfasting or lunching at the Four Seasons like many Manhattan real estate players do, he integrates daily prayer into his schedule, sometimes attending synagogue before work and Talmudic study sessions at the private school Yeshiva Tzemach

plans and suggesting design ideas. Dushinsky, he said, usually calls him with the block and lot numbers of a site he’s eyeing, and says, “ ‘Tell me what I can do on this site.’ ” Their conversations are tinged with humor and often take place at the architect’s ofﬁce, and can last for hours, with Dushinsky quick to crack a joke, Fischer said. “He questions architects quite a lot, about

“If you saw him on the street, you would never know he is one of the top real estate developers in the city. He looks like he would be in synagogue all day.” DAVID JUNIK, PINNACLE REALTY Tzadik Viznitz in the evening. “If you saw him on the street, you would never know he is one of the top real estate developers in the city,” said David Junik, partner at Pinnacle Realty, which brokered Rabsky’s $32.2 million purchase of 44-41 Purves Street in Queens in 2013. “He looks like he would be

how to squeeze the most out of his projects,” said Fischer, noting that Dushinsky pushes him to maximize the ﬂoor area ratio as much as possible. But Fischer is not the only architect Rabsky has tapped. At the Rheingold Brewery site and another in Long Island City, Rabsky is working with

and were blown away by his vast knowledge of zoning and building code regulations,” said Chen.

Beyond Hasidic developments The Rabsky Group launched in the early 1990s and started out developing condos for the Hasidic community. A deal with the Chetrit Group strengthened Rabsky’s foothold in the broader Williamsburg market. In 2002, the Chetrit Group acquired more than a dozen industrial buildings in the neighborhood at a bankruptcy auction, according to court ﬁlings. Sources told TRD that Rabsky, which was more familiar with the neighborhood than Chetrit, might have been a silent partner at some of those buildings. While that could not be conﬁrmed, and Chetrit could not be reached for comment, Rabsky paid $4 million for a 50 percent stake in six of the buildings in 2007, property records show. Dushinsky developed one of the properties into the 113-unit rental, the Driggs, in 2011. He sold off or redeveloped the other buildings into rentals. Continued on page 130

&XVKPDQ :DNHĂ&#x20AC; HOG is NYCâ&#x20AC;&#x2122;s

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CUSHMAN & WAKEFIELD, INC. Marcus & Millichap

3,668 1,106

Besen & Associates, Inc.

826

GFI Capital Resources Group, Inc.

719

Eastern Consolidated

718

Rosewood Realty Group

455

Capin & Associates

372

Douglas Elliman

346

Newmark Grubb Knight Frank

327

CBRE

319

Eastdil Secured

235

The Corcoran Group

231

Greiner-Maltz Company, Inc.

175

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169

Itzhaki Properties

165

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157

Lee Odell Real Estate, Inc.

149

Ariel Property Advisors

146

Sholom & Zuckerbrot Realty, LLC

Jones Lang LaSalle

Friedman-Roth Realty Services, LLC

Weissman Realty Group, LLC

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Total Transaction Volume (Brokers on Chart) Based on # of Transactions (All Sales $500,000 and Over)

nyinvestmentsales.com

10,848

RESIDENTIAL BROKERAGE

Brokerages TAKE GLOVES OFF

Rivalries between Manhattan’s residential ﬁrms get ugly as battle for top talent heats up

BY E.B. SOLOMONT he judge in the case was incredulous, and at a March 30 hearing, she said as much. “Corcoran, the biggest real estate broker in the state of New York, is coming to me and saying that ‘we need protection from this new start-up company?’ ” Indeed it was. As The Real Deal has reported, the ﬁrm sued the upstart brokerage Compass for “brazenly” stealing roughly 60 agents and managers. In turn, Compass claimed that Corcoran was harassing and intimidating former agents. Judge Saliann Scarpulla, of the New York State Supreme Court, isn’t the only one hearing a case involving two New York City residential brokerages. It’s one of several lawsuits wending its way through

40 May 2015 www.TheRealDeal.com

the New York State court system. Amid unprecedented competition in the residential real estate world, the battling between ﬁrms has reached epic proportions as ﬁrms attempt to beat each other out for top talent.

Leslie J. Garﬁeld, who noted the obvious irony of suing employees who can legally quit at any time: “We work in a business where people work at will.” While the residential brokerage world has always been dotted with friendly ri-

“You have to try to prevent poaching or people will continue to see you as a target. Whether you win or not, you need to put up a defense.” TERRENCE OVED, OVED & OVED “It seems like the world is becoming more litigious on the brokerage side, not even the business of brokerage, but in running and operating brokerage businesses,” said Jed Garﬁeld, president of

valries, these new cases are anything but good-natured. In many instances they’ve turned into bitter and unrelenting feuds in which spurned ﬁrms are seeking recourse in the form of restraining orders and punitive

damages. Sources say that this new wave of litigation is being driven by the rush of capital backing relatively new brokerages, which has created a heightened sense of free agency among brokers. “The truth of the matter is, it’s a free market,” said Terrence Oved, an attorney at Oved & Oved, who has done work for residential ﬁrms. “Unless someone is bound contractually, they’re allowed to go where they want to go.”

Testing non-competes Increasingly, as they look to minimize the damage incurred when an agent or executive leaves, companies — including Town Residential, Citi Habitats and Corcoran — are testing whether noncompete agreements are truly enforceable. ILLUSTRATION FOR THE REAL DEAL BY CHRIS MANFRE

RESIDENTIAL BROKERAGE “I’m ﬁne with the competition for 1099s,” said Town CEO Andrew Heiberger, referring to agents’ independent contractor status. But he said the blatant and frequent

said. “This is a time when people are asking, ‘What’s best for me?’ Your business is your business as an agent.”

poaching of salaried employees and executives has “gone too far.” He said he’s working to institute ethical recruitment standards in the industry, though he declined to discuss specifics. Eric Barron, CEO of Keller Williams NYC, which recruited nearly 200 new agents over the past 12 months, said the “highly competitive” environment is behind many of these broker moves. Persistently low inventory, he said, has put pressure on firms to hire top-producing agents. “Firms understand that margins are low and expenses are high,” Barron said. Meanwhile, he added: “Agents, for the first time in a long time, are lifting their heads up and saying, ‘OK, I actually have choices.’ ” Some industry veterans echoed the idea that the influx of cash backing newer companies has upped the ante. For example, tech-focused start-up Compass has raised north of $70 million in venture funding from a largely untapped investor pool, while William Raveis NYC has the backing of a parent company that sold $8 billion in real estate last year. And Town, which launched in 2010, is backed by equity partner Joseph Sitt of Thor Equities. “All of them are investing in trying to get their New York City brand going, and that means that they’re willing to offer agents big stuff,” said Warburg Realty President Fred Peters. According to Oved, a firm that pays a signing bonus to a top producer may put “golden handcuffs” on the agent by requiring them to stay with the company for a certain amount of time or pay back the bonus. Compass, in particular, isn’t just wining and dining the agents it’s trying to recruit. The two-year-old firm, which has a valuation of $360 million, has offered equity stakes to lure top brokers to the start-up. Compass offered Leonard Steinberg, now company president, a reported $2 million salary and, sources said, a $2 million signing bonus when he left Douglas Elliman in 2014. More recently, in the case of Corcoran’s former Soho sales manager, Gene Martinez, Compass offered an array of bonuses and stock options. According to court documents, which TRD reviewed before they were sealed, Compass offered Martinez a base salary of $400,000 (higher than his $350,000 salary at Corcoran), plus a $120,000 signing bonus, an individual bonus of up to $175,000 and the option to purchase nearly 60,000 shares of the company’s common stock at the “fair market value.” Compass CEO Robert Reffkin declined to comment for this story. But in a recent interview with TRD, he defended the company’s hiring of agents from other firms and insisted that it was beneficial for the industry. “Agents are reevaluating their worth,” he

Nobody’s immune With so many new firms on the residential scene, and so much at stake financially, no firm has been immune to losing agents. Elliman, for example, lost Steinberg to Compass, but then gained Lauren Muss from Corcoran. Meanwhile, Corcoran snagged Cathy Franklin from Brown Harris Stevens, but then Brown Harris lost Kyle Blackmon to Compass and subsequently hired 10 agents from Warburg. Warburg later lost its star agent Richard Steinberg to Elliman. The rampant poaching, which industry veterans say is at an all-time high, has hardened firms against each other, prompting some to take the gloves off. Hall Willkie, president of Brown Harris Stevens, for example, didn’t hold back in November when Blackmon resigned. Rather than the standard milquetoast public statement wishing Blackmon luck and praising his work at the firm, Willkie took a jab at his former agent, whose 2012 sale of an $88 million penthouse at 15 Central Park West shattered records and made headlines for the firm. “Kyle has made the decision that the

Elliman is also involved in a battle with William Raveis. Last month the two firms went head to head, with CEO Bill Raveis telling TRD in an interview that Elliman had blocked all emails coming from his agents in what he called a “baby tantrum.” William Raveis launched a New York City office last year, headed by industry veterans Kathy Braddock and Paul Purcell, a former Elliman president. According to Raveis, Elliman began blocking emails after his firm hired a dozen agents from Elliman in Westchester. Sources at Elliman, meanwhile, speculated that Raveis emails were landing in spam folders after the brokerage sent a mass email to New York City agents in an attempt to poach them. Raveis acknowledged that it sent a mass email, but said it was simply market information that was widely distributed.

Stakes getting higher The Corcoran-Compass face-off — which involves the defection of former Corcoran sales manager Patrick Brennan, the longtime sales team led by Debra LaChance and top agent Lindsay Barton Barrett — is, however, the ugliest. After Corcoran ﬁled a lawsuit alleging that Compass “brazenly” poached agents, Compass accused Corcoran of embark-

While the residential world has always been dotted with friendly rivalries, these new cases have turned into bitter feuds in which firms are seeking restraining orders and punitive damages. equity proposition offered to him trumps a singular focus on brokerage,” Willkie said in a statement at the time. Meanwhile, a memo that was circulated at Brown Harris Stevens notified staff that the value of Blackmon’s equity in his new firm “will be dependent on the success of Urban Compass’ founders implementing their vision of selling their company for substantially more than many industry experts believe is possible — especially considering their recent switch to a traditional brokerage model.” There’s also no love lost these days between Town and Elliman, which hired Town’s former new development head Reid Price in 2013 and its former marketing executive Nicole Oge in 2014. Town sued both Price and Oge, alleging they breached non-competes with the firm. These days, there’s a “lockout” preventing Town agents from moving to Elliman until at least November 2015, brokers told TRD. (The firms both declined to comment, and it’s unclear how such a lockout would even be legally implemented.)

ing on a smear campaign against former agents and managers in an attempt to retaliate and scare off others considering a move to Compass. If so, Oved said that’s a strategy unto itself. “At the end of the day, you have to try to prevent poaching or people will continue to see you as a target,” he said. “Whether you win or not, you need to put up a defense and let people know you’re going to defend yourself,” said Oved, adding that some ﬁrms go to court simply to create a headache for their opponent. “Even if there’s no legal leg to stand on, they know the competition doesn’t want to go to court,” he added. The stakes are deﬁnitely getting loftier in an already high-stakes game. Leonard Steinberg, for example, closed sales and signed contracts for over $500 million in 2013, the year before he and business partner Hervé Senequier jumped ship to Compass after 13 years at Elliman. Early on, the duo brought $200 million in

listings to Compass. Meanwhile, Blackmon was Brown Harris Stevens’ No. 1 broker in 2012. As of May 2014, he had $135.8 million in listings, according to TRD’s most recent agent ranking. Beyond the dollar volume of their listings, many top brokers are brands unto themselves and take teams with them when they move. And sources say that in Steinberg’s case, his move emboldened other agents to follow. Warburg’s Jay Glazer and Town’s Tinnie Chan Sassano joined Compass weeks after Steinberg shocked the industry with the announcement that he would join the upstart. Of course, the departure of top agents and managers also threatens to expose firms’ hard-won proprietary information and trade secrets. In August, Citi Habitats filed a lawsuit that accused Compass of hacking into its proprietary listings database and using the data to recruit agents and build its business. In a similar vein, Corcoran argued in its lawsuit against Compass that Martinez was privy to confidential information, including “unannounced products or services, sales data, client lists, agent splits, agent production, confidential client information, nonpublic financial information, and significant projects.” On those grounds, Corcoran asked the court for a restraining order to prevent Martinez from working for Compass. While the judge granted a restraining order preventing former Corcoran agents from accessing Corcoran’s listings database, she said there wasn’t a “chance in hell” that she would issue a restraining order for Martinez.

New alliances Ironically enough, as firms face these headwinds, some CEOs of the city’s largest brokerages are now quietly joining forces to discuss what to do about the rampant raiding of each other’s companies. “It doesn’t look good when there are this many lawsuits,” said one brokerage head, who noted that litigation can be uncomfortable when firms co-broker deals. To that end, some firms have instituted more restrictive non-compete agreements. “Brokerages are pushing the envelope in terms of how broad and burdensome the restrictions can be,” said attorney Mauro Viskovic, who has worked with firms to craft longer agreements, or agreements that are broader in reach. In addition, he said, “They are being required more often by brokerage firms.” Of course, not everyone agrees that the best strategy is to enforce non-competes. “If you want to leave me, you should be able to leave me,” said Elizabeth Ann Stribling-Kivlan, president of Stribling. “I don’t want to make you a prisoner.” TRD www.TheRealDeal.com May 2015 41

TOP RESIDENTIAL FIRMS 2015

With scarce listings and rising prices, a look at which of Manhattan’s ELJJHVW ÀUPV DUH RQ WRS DQG ZKLFK DUH ORVLQJ JURXQG

By E.B. Solomont ight inventory. Rising prices. Luxe new developments. And competition—fierce competition. Against that backdrop, Manhattan’s largest brokerages carved out a bigger piece of the pie for themselves this year, The Real Deal’s annual ranking of the borough’s biggest residential real estate firms shows. Although some firms saw their total number of listings drop, nearly all of the largest brokerages saw the dollar volume of their Manhattan exclusives inch higher, according to TRD’s ranking, which is based on a snapshot of data pulled from On-Line Residential on March 29. That reflects the leg up that larger firms have in landing pricey listings and new development deals. The dollar volume boost is also the result of the overall price appreciation in the market, which, while starting to level out, is certainly not over. As it did last year, Elliman ranked at the top of TRD’s list for both number of agents and dollar volume of listings. The firm, headed by Dottie Herman and Howard Lorber, had a 17 percent increase in listings dollar volume from last year. (The firm’s total listings value was $4.2 billion, up from $3.6 billion.) Meanwhile, its top rival, the Corcoran Group, ranked second with $3.6 billion in listings.

42 May 2015 www.TheRealDeal.com

The five biggest firms, by number of agents, were Elliman, Corcoran, Halstead Property, Citi Habitats and Town Residential. As a group, Manhattan’s 12 biggest firms — only the borough’s largest brokerage by number of agents make the ranking — had a total of $12.8 billion in exclusive Manhattan sales listings, up marginally from $12.7 billion in 2014. But that was far higher than the $8.5 billion logged in 2013. And listings figures may start increasing soon with tight inventory poised to ease in the coming months. Brokerages citywide are eager to pounce on that new supply. “[Brokers] are itching, especially for their buyers, for [properties] to hit that they can chase and get,” said Stefani Markowitz, president of Rutenberg Realty. “People are really hopeful that there will be this new surge of inventory and that the late spring will be really busy.”

Recruitment envy This year’s ranking saw a cluster of significant changes. For starters, Stribling & Associates, which fell off the ranking last year, regained a spot at the table this year, after adding 25 more agents. On the flip side, Sotheby’s International Realty fell off the ranking because its headcount dropped. (The firm, however, had a massive

$1.4 billion in listings and had the highest dollar volume — by far — on TRD’s mid-sized ranking and blew away a number of firms on this ranking to boot.) Some smaller firms on the Big 12 saw significant growth: percentage-wise, Bond New York saw the biggest change in its listings volume, with $74 million in listings, up 222 percent. Nest Seekers International, meanwhile, had $347.1 million, up 112 percent. But when it comes to Manhattan manpower, Elliman reigns supreme. The brokerage had 1,977 agents as of March 29, a nearly 15 percent jump from last year. For many firms, wooing agents has become something of a blood sport, with longtime brokers and top producers defecting to rival companies like never before, several brokerage heads noted (see related story on page 40). “Margins are low and expenses are high, and let’s be honest, there’s not a lot of inventory,” said Eric Barron, CEO of Keller Williams NYC, who noted that the recruitment environment has picked up “1,000 percent” over the last 12 months. “It has become highly competitive,” he said. Keller Williams was one of three firms to see huge gains in agent count, along with Town and Nest Seekers. Keller Williams added nearly 200 agents, bringing its total

TOP RESIDENTIAL FIRMS 2015

NUMBER OF MANHATTAN AGENTS Rank Rank 2015 2014

Firm

Douglas Elliman

Corcoran Group

Halstead Property

Citi Habitats

Town Residential

Charles Rutenberg

Keller Williams NYC

Bond New York

Brown Harris Stevens

n/a

Dottie Herman’s Elliman dominated the ranking.

Nest Seekers International Bellmarc Stribling & Associates

2015

2014

% Change

1,977 1,158 814 745 577 544 535 507 496 352 295 281

1,725

15%

1,191

-3%

721

13%

703

472

22%

489

11%

343

56%

450

13%

431

15%

---

519

-43%

256

10%

Source note: Data was gathered from OLR on March 29. Rankings include Manhattan-based brokerages and agents and only active Manhattan residential listings updated within 360 days. Multi-family properties and listings in contract or that had pending offers were excluded. Firms that primarily represent one building were excluded. In addition, firms that are primarily involved in new development marketing or mostly have listings in a new development building that they originally marketed or where they have a connection with the developer were excluded. Primary rankings are based on number of Manhattan agents; firms on that list are then ranked by other factors. Nest Seekers’ 2014 agent total was removed because of a discrepancy in the numbers. Percent changes are based on figures before rounding.

Manhattan headcount up to 535 agents. Town’s headcount grew to 577 agents, from 472. Barron said his four-year-old ﬁrm has steadily matured, leading to last year’s growth spurt, which included a doubling of the company’s management team. Meanwhile, Corcoran — which had 1,158 agents — saw a nearly 3 percent drop in agent headcount from 2014 to 2015, following a string of high-proﬁle defections, including top brokers Robby Browne and Maria Pashby to Brown Harris Stevens, Lauren Muss to Elliman and others. Corcoran declined to comment for this article. But during an interview with TRD in March, CEO Pam Liebman said: “We’re never happy to lose somebody, but we’re also not in a bidding war for agents.”

Brown Harris Stevens, meanwhile, saw its agent count jump by 15 percent to 496 amid an “explosive recruitment” period, said President Hall Willkie. Despite last year’s defection of top agent Kyle Blackmon to Compass — which

Manhattan luxury inventory rose 14 percent to 1,575 units during the first quarter, according to appraisal firm Miller Samuel. was included in the mid-sized ranking — Willkie said the firm’s growth coincides with an expansion of the firm’s main office and forthcoming Downtown office.

“Competition is stiff amongst agents and clients, and amongst firms to attract and retain productive people,” he said. While many other firms are basking in stronger showings, one firm that is badly struggling is the Bellmarc Group. The firm’s headcount dwindled to 295 agents, a 43 percent drop. That drop, which knocked the firm off of the top five by size, coincided with the company’s split from franchiser Coldwell Banker. It also came amid infighting between company founder Neil Binder and his partners. Those partners, Anthony DeGrotta and Larry Friedman, accused Binder of embezzling funds from the company. Within a span of several weeks in October, for instance, 15 Bellmarc agents jumped ship to Halstead, and 10 decamped

TOTAL MANHATTAN LISTINGS Rank Rank 2015 2014

Firm

Douglas Elliman

Corcoran Group

Halstead Property

Brown Harris Stevens

n/a

Stribling & Associates

Town Residential

Keller Williams NYC

Nest Seekers International al

9 (tie)

Citi Habitats

9 (tie)

Charles Rutenberg

Bellmarc

Bond New York

Eddie Shapiro’s Nest Seekers had the biggest jump in listings.

2015

2014

% Change

993 760 375 362 147 113 97 93 46 46 40 32

954

830

-8%

387

-3%

356

126

17%

140

-19%

21%

37%

-44%

-4%

-51%

3% www.TheRealDeal.com May 2015 43

TOP RESIDENTIAL FIRMS 2015 A Halstead listing at 1965 Broadway is asking $42 million.

A Keller Williams listing at 230 West 56th Street is on the market for $9 million.

Corcoran’s priciest listing is asking $60 million at 20 West 53rd Street.

to City Connections. Binder, who has adamantly denied the allegations, did not respond to requests for comment.

Nonetheless, the number of listings was down at six companies, including Corcoran, which saw an 8 percent drop to 760 exclusives. Citi Habitats, Rutenberg, Bellmarc and Town also saw drops, partially due to the inventory shortage. “It’s a market-wide, systemic issue right now,” said Andrew Heiberger, Town’s CEO. “The flip side of having low inventory is you’re selling your listings.”

Inventory influx? After record low inventory levels during the last few years, many brokerages are finally seeing signs of hope this spring. There were just over 5,200 apartments available for sale in Manhattan during the first quarter, up 5 percent, according to real estate appraisal firm Miller Samuel. That increase made a difference on the ground. In terms of numbers of properties being marketed, Elliman also led the pack with 993 listings, up more than 4 percent year over year. Three other firms experienced a surge in their number of listings, although the overall number of properties they’re marketing pales in comparison to the mega firms. Nest Seekers saw listings jump 37 percent to 93; Keller Williams saw listings increase 21 percent to 97, and Stribling logged a 17 percent jump to 147. “Even though inventory is tight, you are starting to see a little bit more activity in the market,” said Elizabeth Ann Stribling-Kivlan, president of Stribling & Associates, which ranked No. 12 with 281 agents. “People are listing [their apartments] because they’re finding places to go; there are new developments that have started to close.”

“Margins are low and expenses are high, and let’s be honest, there’s not a lot of inventory. It has become highly competitive.” ERIC BARRON, KELLER WILLIAMS NYC That seemed to check out in many cases, according to TRD’s ranking of closed sales (see related story on page 51). A number of firms, for example, saw a higher dollar volume of closed sales for the 12-month stretch ending in late March than their current listing dollar volume. Still, the average number of listings per agent dropped nearly across the board, suggesting that a smaller number of agents have the lion’s share of listings. At Bond, only 4 percent of agents have active listings, the lowest percentage of any ﬁrm on the ranking. Bond did not respond to multiple emails. On the other side of

the spectrum, Brown Harris Stevens had a higher ratio or agents with listings, at 33 percent, than any of its rivals. “Everyone is ﬁghting for that exclusive,” said Markowitz of Rutenberg, whose agents had 46 exclusives, down 4 percent.

Pushing up prices But even as Manhattan brokerages duke it out for a finite number of for-sale properties, the emphasis on luxury — as well as overall rising prices — boosted the dollar value of listings among the top firms this year, just as it has in recent years. “The luxury market has impacted all of us,” Halstead CEO Diane Ramirez said. “We just listed a beautiful apartment, well over $10 million, on the Upper West Side, [and] we had an overask, accepted offer within one day,” she said, noting that the condo at 535 West End Avenue sold for $11.95 million. In fact, the median listing price was up at 11 of the 12 biggest firms, according to TRD’s analysis. (Bellmarc was the exception, with an 11 percent drop to $620,000.) In a major coup, Stribling had the highest median price, $2.9 million, up 54 percent from last year, followed by $2.6 million at Brown Harris Stevens, historically the leader in this category, according to TRD’s analysis. “You’re seeing a real increase in what people are willing to spend for something,” said Stribling-Kivlan. “The market is bearing higher prices, whether it’s the new development

TOTAL $ VOLUME, MANHATTAN LISTINGS Rank Rank 2015RANK 2014

Firm

2015

2014 Net Change % Change

Douglas Elliman

$4.2 billion

$3.6 billion

$597 million*

17%

Corcoran Group

$3.6 billion

$3.4 billion

$180.6 million*

Brown Harris Stevens

$2.3 billion

$2.1 billion

$172.1 million*

Halstead Property

$711 million

$666 million

$45 million

n/a

Stribling & Associates

$692.7 million $551.8 million

$140.9 million

26%

Town Residential

$437.2 million

$356 million

$81.2 million

23%

Nest Seekers Intl.

$347.1 million

$164 million

$183.1 million

112%

Keller Williams NYC

$164.7 million

$109 million

$55.7 million

51%

Charles Rutenberg

$96.9 million

$92 million

$4.9 million

Citi Habitats

$76.4 million

$112 million

-$35.6 million

-32%

Bond New York

$74 million

$23 million

$51 million

222%

Bellmarc

$41.7 million

$95 million

-$53.3 million

-56%

Pam Liebman’s Corcoran amassed billions in listings.

*Net change ﬁgures for Elliman, Corcoran and BHS are based on 2014 and 2015 listing dollar volume before rounding.

44 May 2015 www.TheRealDeal.com

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TOP RESIDENTIAL FIRMS 2015

AVERAGE LISTINGS PER MANHATTAN AGENT Rank Rank 2015 2014

Firm

Brown Harris Stevens

Corcoran Group

n/a

Douglas Elliman

Halstead Property

Town Residential

Nest Seekers Intl.

Keller Williams NYC

Bellmarc

Charles Rutenberg

Citi Habitats

Bond New York

Stribling & Associates

arena or even in the regular, everyday New York co-op and condo market.” Stribling also claimed the biggest median price gain, followed by Town, Citi Habitats and then Nest Seekers. In general, Nest Seekers has benefitted from pricey listings being marketed by agent Ryan Serhant, a star of Bravo’s “Million Dollar Listing New York.” Overall, the dollar value of exclusive listings rose at 10 of the 12 firms, fueled by higher prices and the onslaught of luxury condos. In fact, the luxury sector represented 30 percent of Manhattan listings during the first quarter, according to Miller Samuel. And overall, luxury inventory rose 14.5 percent to 1,575 units during the first quarter. But while there are a number of stratospherically priced penthouses, the median luxury sales price registered in the first quarter actually decreased to $5.1 million from $5.7 million the year before.

Hall Willkie’s BHS had the most listings per agent.

2015

2014

% Change

0.74 0.67 0.52 0.50 0.46 0.20 0.19 0.18 0.12 0.08 0.07 0.06

0.83

-11%

0.70

-4%

0.48

0.55

-9%

0.54

-14%

0.30

-34%

0.17

13%

0.23

-21%

0.16

-24%

0.10

-17%

0.12

-45%

0.07

-10%

Jonathan Miller, president of Miller Samuel, said the slide simply reﬂects a shift in product mix. There were “lots of closings of high-end sales a year ago, like those at One57,” he said.

“People are listing [their apartments] because they’re ﬁnding places to go; there are new developments that have started to close.” ELIZABETH ANN STRIBLING-KIVLAN, STRIBLING & ASSOCIATES Agents are, not surprisingly, migrating to where the money is.

Corcoran had 45 agents with listings priced at $10 million or more, up 50 percent from 2014, while most firms on the ranking were also up in the category. New-construction condos are, of course, also a huge battleground and driver of listings. “We’re in a very competitive business,” said Heiberger, who noted that snagging new development deals requires approval from many parties, from the developer to the lender. “You have to win everybody over.” The 5 percent inventory jump Miller Samuel found was driven by new development. The number of those properties on the market rose 22 percent in the first quarter compared to last year. And brokerages are seizing on that. Elliman’s 17 percent listings jump, for example, came amid the firm’s aggressive push into new development sales. In 2014, Macklowe Properties tapped the firm to market and sell one of the highest-profile buildings in the city: 432 Continued on page 134

MEDIAN LISTING PRICE FOR PROPERTIES Rank Rank 2015RANK 2014

Firm

n/a

Stribling & Associates

Brown Harris Stevens

Corcoran Group Elizabeth Ann Stribling-Kivlan’s ﬁrm led the pack in median listing price.

Douglas Elliman

Nest Seekers International rnational

Town Residential

g Charles Rutenberg

Halstead Property

Keller Williams NYC YC

Citi Habitats

Bond New York

Bellmarc

46 May 2015 www.TheRealDeal.com

Andrew Heiberger’s Town saw a big jump in median listing price.

2015

2014

% Change

$2.99 million $2.6 million $2.22 million $1.99 million $1.93 million $1.6 million $1.15 million $990,000 $980,000 $877,500 $814,500 $620,000

$1.95 million

54%

$2.3 million

13%

$1.99 million

11%

$1.75 million

14%

$1.29 million

50%

$1.05 million

53%

$849,000

35%

$965,000

$885,000

11%

$575,000

53%

$549,000

48%

$699,000

-11%

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TOP RESIDENTIAL FIRMS 2015

Market makers take the ‘middle’

Sotheby’s and Compass upend firm ranking, adding competition to already tight playing field BY E.B. SOLOMONT ore nimble than industry heavyweights, but packing more punch than many smaller firms, the mid-sized brokerages on this year’s ranking acted as change agents in the industry. Like last year, the lineup of mid-sized Manhattan residential brokerages experienced a massive shift this year. The change-up came as well-established firms saw their fortunes turn and as newcomers changed the landscape of the Manhattan market. The ranking is The Real Deal’s third annual survey of Manhattan’s mid-sized firms and only includes companies with 50-plus agents that didn’t make the biggest firms list. This ranking is done by dollar volume of active listings, which were collected by TRD from listings provider On-Line Residential on March 29 as part of a one-day snapshot. This year, the top two firms — Sotheby’s International Realty and Compass (formerly known as Urban Compass) — prompted a recalibration of the middle segment of the market. Those companies were followed by CORE, Warburg Realty and BLU Realty. The tony Sotheby’s, which dropped off TRD’s list of largest

Sotheby’s $82 million listing at One Beacon Court.

71 Franklin St. is listed for $65 million with Compass.

Manhattan firms, had a massive $1.4 billion worth of sales listings — up from $1.3 billion a year earlier. While the firm outperformed a number of brokerages on the biggest firms list, and had hundreds of millions of dollars more in listings than its mid-sized counterparts, it landed on the mid-sized list after seeing its agent count drop more than 15.5 percent, to 231 this year. The firm’s priciest listing, marketed by veteran high-end broker Serena Boardman, is a 9,000-square-foot duplex at One Beacon Court; that penthouse is on the market for $82 million. Boardman also has the listing for a duplex at the Pierre Hotel, at 795 Fifth Avenue, that’s asking $70 million. Meanwhile, agent Nikki Field is marketing a $66 million penthouse at Jared Kushner’s Puck Penthouses, at 293 Lafayette Street. Nabbing the No. 2 spot, Compass — which is backed by more than $70 million in venture funding — cracked TRD’s ranking for the first time this year. It had 168 agents and racked up $486.7 million worth of listings, including 71 Franklin Street, a mansion that’s asking $65 million. Top broker Leonard Steinberg, who is also Compass’ president, has that listing as well as one for a $46 million townhouse at 2 North Moore Street in Tribeca. Of course, Compass made waves when it hired Steinberg from Douglas Elliman in 2014, and it has continued to turn heads with other high-profile hires, including Kyle Blackmon from Brown Harris Stevens, Roy Kim from Extell Development and Eugene Litvak from Citi Habitats. The firm lured more than 50 hires from the Corcoran Group alone, including managers Gene Martinez and Patrick Brennan, along with agents Lindsay Barton Barrett, Debra LaChance and others. CEO Robert Reffkin said Compass jumped into the market in 2013 determined to upend the status quo by offering new technology for its agents.

A $66 million unit at the Puck Penthouses, being listed by Sotheby’s.

Continued on page 128

TOP MANHATTAN MID-SIZED FIRMS Rank 2015

Rank 2014

Firm

n/a

Sotheby's International Realty

n/a

No. of Listings No. of Agents N 2015 2015

$ Value of Listings 2015

$ Value of Listings 2014

% Change in $ Volume

158

231

$1.4 billion

$1.3 billion

Compass

168

$486.7 million

n/a

CORE

119

$277.5 million

$156.9 million

77%

Warburg Realty

141

$262.5 million

$166 million

58%

BLU Realty

$80.1 million

$91.3 million

-12%

Fenwick Keats

$46.3 million

$38.2 million

21%

n/a

Fox Residential Group roup

$36.7 million

$43.9 million

-16%

Spire Group

131

$21.1 million

$9.7 million

118%

n/a

Elegran

$20.9 million

n/a

KIAN Realty

222

$20.8 million

$22.4 million

-7%

City Connections

113

$14.6 million

$9.3 million

57%

271

$10.9 million

$32.1 million

-66%

Sotheby’s Nikki Field

Compass’ Robert Reffkin

Oxford Property Group

CORE’s Shaun Osher

Source note: Data was gathered from OLR on March 29. Rankings include Manhattan-based brokerages and agents with active Manhattan residential listings updated within 360 days. Multi-family properties and listings in contract or that had pending offers were excluded. Firms that primarily represent one building were excluded. In addition, ﬁrms that are primarily involved in new development marketing or mostly have listings in a new development building that they originally marketed or where they have a connection with the developer were excluded. Firms with 50 or more agents that didn’t make the biggest ﬁrms list were eligible.

48 May 2015 www.TheRealDeal.com

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TOP RESIDENTIAL FIRMS 2015

Small, but mighty Top boutique firms notch nearly $900M in listings, but some saw volume slip on a lack of inventory BY E.B. SOLOMONT ig-ticket properties bolstered the brokerages that led this year’s annual ranking of boutique Manhattan firms, thanks to a booming luxury market. But the lack of available inventory was a very real issue for the majority of the companies on the list, and some firms saw their listings volume slip once they closed on mega deals. Power broker Dolly Lenz, who topped the ranking, lived up to her reputation with a whopping $324.4 million worth of exclusive listings, up from $156.9 million in 2014, according to The Real Deal’s data, which was culled from On-Line Residential on March 29 in a one-day snapshot. Firms with between two and 49 agents in OLR qualified. Her firm, Dolly Lenz Real Estate, which has five agents, is currently marketing a $75 million penthouse at the RitzCarlton in Battery Park City, which Lenz snagged from Nest Seekers International’s Ryan Serhant. Previously, the two-unit combination was marketed as three units asking a combined $118 million. Lenz also has the listing for the $72 million penthouse at One Madison and a $53 million pad at 2 East 67th Street. It’s worth noting that Lenz’s massive dollar volume of listings is on par with the far larger firms toward the top of the mid-sized list (see related story on page 48). A representative for Lenz, however, said because the firm does not use OLR, the figures are inaccurate and should be even higher. Collectively, the top nine boutiques had 103 listings worth $878.2 million, a roughly 10 percent jump from 2014’s ranking. That jump corresponded with price increases in the luxury market, where the majority of these boutique firms compete.

A$ $75 75 5 mil millio million illio iion triplex trip iplex ip lex th h San he San Remo Sa Remo em listed liste li sted ed att the with A wit wi with Adam d dam Mod M Mo Modlin. odli dlin. dlin n.

Engel & Völkers has two listings in the Plaza’s Private Residence totaling $57 million. A $75 million penthouse at the Ritz-Carlton in Battery Park City listed by Dolly Lenz.

According to real estate appraisal firm Miller Samuel, the average sales price in the luxury market was $7.3 million during the first quarter — down slightly from $7.4 million last year, but still far higher than the $5.1 million in 2013’s first quarter. But not all of the featured firms saw an uptick in the dollar volume of listings, and smaller firms are notoriously susceptible to the market’s ebbs and flows, since a listing or two can change a firm’s status dramatically. This year’s No. 2 firm, the Modlin Group, clocked in with 10 agents and $102.5 million worth of listings. In a telling sign for boutique companies in general, the firm jumped two spots in the ranking, despite seeing its listing dollar volume dip from last year’s $115.3 million. But brokerage founder Adam Modlin said the numbers don’t reflect three big-ticket properties listed after March 29. Those three properties, which include actress Demi Moore’s $75 million triplex at the San Remo, “will go on the market for over $125 million,” he said. This year, Modlin anticipates seeing the firm’s business double. He said the company’s niche extends beyond brokerage and dovetails into acting as an advisor for clients. “Clients don’t need a broker to just open the door,” he said. Meanwhile, townhouse specialist Leslie J. Garfield took the No. 3 spot. The firm had $89.7 million worth of listings, a significant drop from $126.2 million last year. However, company president Jed Garfield said the firm recently closed on several large deals that weren’t factored in the tally, including the sale of 1143 Fifth Avenue for $32.5 million. “Our value proposition is that we know a specific market. We know who is buying and selling,” said Garfield, who added that he considers the biggest firms to be his primary competition. “There are so many companies that are all things to all people,” Garfield said. “It’s probably one of the reasons we’ve been doing better the last few years. We stick to one thing.” Meanwhile, European high-end brokerage Engel & Völkers, which launched a Manhattan office in 2014, debuted on the list this year at No. 4 with 17 listings asking a combined $87.7 million. Continued on page 132

TOP MANHATTAN BOUTIQUE FIRMS Rank 2015

Rank 2014

No. of Listings No. of Agents 2015 2 2015

Firm

Dolly Lenz Real Estate te

$ Value of Listings 2015

$ Value of Listings 2014

% Change in $ Volume

$324.4 million

$156.9 million

107%

Dolly Lenz

The Modlin Group

$102.5 million

$115.3 million

-11%

Leslie J. Garﬁeld & Co.

$89.7 million

$126.2 million

-29%

n/a

Engel & Völkers

$87.7 million

n/a

---

New York Residence

$75.5 million

$120.4 million

-37%

Peter McCuen & Associates es

$64.8 million

$79.5 million

-18%

Domus Realty

$53.4 million

$82.5 million

-35%

n/a

Platinum Properties

$41.3 million

$51.5 million

-20%

n/a

Peter Ashe Real Estate

$38.9 million

n/a

---

Adam Modlin

Eng Engel gel & V Völkers’ ölk kers ers’’ S Stuart tua art r S Sie Siegel g ge gel

Source note: Data was gathered from OLR listing portal on March 29. Rankings include Manhattan-based brokerages and agents with active Manhattan residential listings updated within the last 360 days. Multi-family properties and listings in contract or that had pending offers were excluded. Firms that primarily represent one building were excluded. In addition, firms that are primarily involved in new development marketing or mostly have listings in a new development building that they originally marketed or where they have a connection to the developer were excluded. “Boutique” was defined as firms with between two and 49 agents.

50 May 2015 www.TheRealDeal.com

TOP RESIDENTIAL FIRMS 2015

Done deals don’t lie

dollar volume of closed sales. However, a number of smaller ﬁrms — including some that didn’t make the cut on this year’s listings rankings, such as Kleier Residential — had far stronger numbers on the more crucial closed-sales front.

deals, bigger prices A ranking of Manhattan brokerages by closed sales shows Fewer In a year that saw buyers close on record-breaking deals — such as the $100.5 million condo at Extell Development’s the top firms sold more than $4B each in past year One57 and the $80 million co-op at 834 Fifth Avenue — BY E.B. SOLOMONT istings go up and listings go down. But done deals don’t lie. This year, The Real Deal’s annual brokerage ranking includes a list of New York’s residential firms based on their volume of closed sales. Like TRD’s other lists, the ranking relies on data pulled from On-Line Residential, and it includes closed transactions in Manhattan for which the firm held the exclusive sales listing during the 12 months that ended on March 31. Not surprisingly, industry heavyweights Douglas Elliman and the Corcoran Group trounced the competition when it came to the sheer dollar volume of deals. The two firms were nearly neck and neck, with Elliman closing a staggering $4.34 billion and Corcoran locking up $4.29 billion. Both of those totals were far higher than the tallies the two firms saw the last time TRD did this ranking in 2013. In that survey — which was based on closed deals in 2012 above $1 million — Corcoran came out on top, with $3.1 billion, while Elliman closed $2.4 billion. But this year’s higher numbers likely reflect the fact that the latest figures include closed sales at all price points and that the market is stronger, particularly for luxury properties.

“In a good market, when you’re selling high-end real estate, sales volume will be higher,” said Elliman CEO Dottie Herman, citing record-breaking sales prices in Manhattan over the past year. “You can only sell them if there’s demand, and there’s still a demand,” she added, of the city’s luxury properties.

Collectively, the top 25 firms on this year’s ranking sold more than $16.5 billion worth of residential real estate during the yearlong stretch TRD reviewed. With closed sales topping $1.89 billion, Brown Harris Stevens ranked No. 3, followed by Halstead Property, with $1.21 billion, and Sotheby’s International Realty, with $865.7 million. Collectively, the top 25 firms on this year’s ranking sold more than $16.5 billion worth of residential real estate during the 12-month stretch, according to TRD’s analysis. The city’s largest firms, not surprisingly, had the largest

Manhattan ﬁrms by closed sales. A look at done deals for the year ending March 31 Rank

Firm

Douglas Elliman

Corcoran Group

Brown Harris Stevens

Halstead Property

Sotheby's Intl. Realty

Stribling & Associates

Town Residential

CORE

Compass

Dollar Volume

Diane Ramirez of Halstead, which did over $1B in sales.

Warburg Realty

Nest Seekers International onal

Keller Williams NYC

Charles Rutenberg

Modlin Group

Citi Habitats Fred Peters’ Warburg had a stronger showing for sales than listings.

Bellmarc

Dolly Lenz Real Estate

Leslie J. Garﬁeld

Fenwick Keats

BLU Realty

Fox Residential Group

Kleier Residential

Elegran Real Estate

Bond New York

Level Group

Michele Kleier’s ﬁrm didn’t make the cut for listings, but did for sales.

$4.34 billion $4.29 billion $1.89 billion $1.21 billion $865.7 million $776.9 million $527.9 million $434.6 million $394.3 million $375.6 million $242.7 million $211.7 million $131.9 million $130.8 million $119.6 million $95.4 million $79.9 million $71.7 million $61.1 million $56.1 million $53.8 million $49.1 million $47.5 million $43.7 million $40.7 million

No. of Sales 2,471 2,270 693 1,066 304

rising prices have boosted firms’ bottom lines. Brown Harris Stevens’ $1.89 billion in sales, for example, included some of the priciest deals completed in the past year. The firm’s biggest deal was the $70 million sale of Edgar Bronfman’s co-op at 960 Fifth Avenue to Egyptian billionaire Nassef Sawiris. The company also sold a $48 million co-op at 740 Park Avenue and a $37.5 million condo at 1 Central Park West. “Many firms are bigger than us, but we have the highest average gross commission. We dominate the high end of the market,” said CEO Hall Willkie. In addition to a strong luxury market, Willkie said BHS benefitted from adding 35 new agents, a hiring spree that brought its total Manhattan agent headcount up to 496. Beyond the city’s largest residential brokerages, luxury inventory and big price tags contributed to completed sales at smaller firms. Powerbroker Dolly Lenz’s firm, at No. 17, closed $79.9 million in sales, according to TRD’s research. An attorney for Lenz, however, disputed TRD’s data and said her firm closed “in excess of $600 million during the past 12 months.” That figure could not be confirmed and included buy-side deals, which TRD did not count. Meanwhile, Jed Garfield, president of Leslie J. Garfield, which ranked No. 18, amassed $71.7 million in closed sales, including the French government’s townhouse at 1143 Fifth Avenue for $32.5 million. “We didn’t sell more buildings, we did larger transactions,” Garfield said. Compass, which launched in 2013 and clocked in at No. 9, closed $394.3 million, according to TRD’s research. “Selling $400 million in less than one year since launching sales reflects the quality and growth of our agents,” CEO Robert Reffkin said. The firm’s priciest closed sale was the $17 million pad at 271 Central Park West to the actor Bruce Willis. Compass’ Jay Glazer represented the seller, Wesley Edens, founder of Midtown-based private equity firm Fortress Investment Group.

317

Fast and furious

360

With limited inventory, the fight for listings is intense. But once residential properties hit the Manhattan market, they fly off the shelves fast. The good news is that inventory is creeping up. During the first quarter, Manhattan’s inventory rose 5.5 percent to 5,243 available units, but that’s still well below the borough’s historical average, according to real estate appraisal firm Miller Samuel. With those market dynamics in place, perhaps it’s not surprising that a number of firms saw their total dollar value of closed sales eclipse their listings volume. “We sold a lot of apartments, therefore they weren’t on our active list anymore,” said Gary Malin, CEO of Citi Habitats, which ranked No. 15 for closed sales. The numbers for Citi Habitats back that up. The firm had $76.4 million in listings when TRD collected its data, but it sold $119.6 million during the 12-month stretch that TRD reviewed. (That was drastically up from the 2013 ranking, when the company had just $41 million in closed sales.) Other firms had similar disparities between listings volume and closed deals. Town Residential had $437 million worth of listings as of March 29, but it closed $527.9 million in exclusive sales during the 12 months prior to that. Warburg Realty, which had $262.5 million in listings, sold $375.6 million. And

205 168 195 158 221 97 41 158 103 4 10 52 38 23 27 19 61 44

Continued on page 136

Source note: Data was gathered from OLR for the period between April 1, 2014, and March 31, 2015. TRD included transactions that were labeled as closed sales that had been held as exclusive listings by Manhattan-based brokerages and agents. Properties listed as multi-family were excluded, as were listings in contract or that had pending offers. Firms that primarily represent one building were excluded. In addition, ﬁrms that are primarily involved in new development marketing or mostly have listings in a new development building that they originally marketed or where they have a connection with the developer were excluded. Buy-side transactions were also excluded.

www.TheRealDeal.com January 2014 35 www.TheRealDeal.com May 2015 51

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BEDROOM 4 11' 3" x 14' 3" 3. 3 m x 4. 2 m

BEDROOM 3 1 9' 0" x 1 2 ' 7 " 5.7 m x 3.8 m

WIC

BATH

6' 9" x 10' 7" 2.1 m x 3.2 m

6' X 11' 11" 1.8 m x 3.6 m

BATH 10' 11" X 5' 9"

HOT TUB

TERRACE

PENTHOUSE I

1,123 s q ft 10 4. 3 s q m

B E D R O O M S : 6 | B A T H R O O M S 7. 5

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BATH

SKYLIT STUDIO / BEDROOM 6

7' 2" x 10' 3" 2.2 m x 3.1 m

24' 11" x 10' 3" 7.6 m x 3.1 m

TERRACE 1,1 3 3 sq f t 1 0 5. 3 sq m 61' 1 1" x 1 9' 0" 1 8.9 m x 5.8 m

SERVICE ELEVATOR

WIC VESTIBULE

BEDROOM 2

MASTER SUITE

1 0' 1" x 1 2 ' 3" 3.1 m x 3.7 m

1, 2 8 5 sq f t 1 1 9. 4 sq m

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MASTER BEDROOM

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TERRACE 1,767 sq ft 164 .2 sq m

GREAT ROOM 1,26 0 s q ft 1 17.1 s q m 26' 1 0" x 4 9' 3" 8.2 m x 1 0.0 m

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WIC

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LAUNDRY ROOM 8' 1 0" x 5' 1 0" 2.7 m x 1.8 m

SERVICE HALL

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1 0' 2 " x 9' 7 " 3.1 m x 2.9 m

SITTING ROOM SKYLIT MASTER BATH

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DRESSING ROOM

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GLASS CONSERVATORY

1 6' 5" x 13' 2" 5.0 m x 4.0 m

MASTER BATH

5' 2 " x 1 0' 9" 1.6 m x 3. 3 m

CLOSET

SKYLIT DRESSING ROOM

BEDROOM 5 BATH 5' 2" x 10' 9"

1 4' 1 0" x 1 0' 1 0" 4. 5 m x 3. 3 m

GALLERY 2 3' 6" x 6' 3" 7. 2 m x 2.0 m

9' 9" x 11' 9" 3.0 m x 3.6 m

HOME THEATRE 17 ' 7 " x 16' 4" 5. 4 m x 5.0 m

CLOSET

SKYLIT CENTER HALL

FOYER

1 4' 3" x 1 8' 0" 4. 3 m x 5. 5 m

8' 0" x 8' 0" 2. 4 m x 2. 4 m

A/V CLOSET

A/V

DINING ROOM KITCHEN

ELEVATOR

2 7 ' 5" x 1 4' 8" 8. 3 m x 4. 5 m

SUN ROOM / LIBRARY 17 ' 6" x 1 4' 1" 5. 3 m x 4. 3 m

GLASS CONSERVATORY

GYM / YOGA STUDIO 15' 3" x 13' 6" 4.6 m x 4.1 m

STORAGE

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REAL ESTATE INVESTING

Private equity’s new game plan As competition for NYC properties gets stiffer, funds hunt for new roads to proﬁt BY KONRAD PUTZIER ith competition for New York City real estate ﬁercer than ever, real estate-focused private equity funds are coming up with new strategies to pump up returns. To be sure, even with money pouring in

buildings and investing in luxury development properties. In fact, all private equity funds — which we deﬁned as non-public funds that pool money to invest in real estate, but are not classiﬁed as REITs — threw down more than $13 billion on New York properties

head of the real estate brokerage Berko & Associates, who has arranged several deals for private funds. This month, using data from Real Capital Analytics, The Real Deal ranked the top 15 private equity funds by the amount they’ve invested in the New York City market in the

Total deals by top private equity ﬁrms in NYC real estate NAME

PROPERTIES BOUGHT

PROPERTIES SOLD

NET

1. Thor Equities

$2.8 billion

$292.2 million

$2.5 billion

2. Blackstone

$2.75 billion

$2.84 billion

-$97.1 million

3. Callahan Capital Partners

$2.35 billion

n/a

$2.35 billion

4. Tishman Speyer

$780.2 million

n/a

$780.2 million

5. Savanna

$680.4 million

$1.41 billion

-$731 million

6. Rockpoint Group

$673.4 million

$1.74 billion

-$1.07 billion

7. Westbrook Partners

$624 million

n/a

$624 million

8. GreenOak

$298.5 million

$440.8 million

-$142.3 million

9. Lightstone Group

$252 million

$511.2 million

-$259 million

10. Crow Holdings

$178.5 million

n/a

$178.5 million

11. Premier Equities

$150.5 million

n/a

$150.5 million

12. Lone Star

$143.7 million

n/a

$143.7 million

13. RWN Real Estate Partners

$136.6 million

n/a

$136.6 million

14. Starwood Capital Group

$134.4 million

$572.3 million

-$437.9 million

15. Rockwood Capital

$124.7 million

$723.8 million

-$599.1 million

Source: Data on deals over the past 12 months provided by Real Capital Analytics.

NYC-based private real estate fundraising (in billions)

$40B

$43.4B

$50B

$25.2B

$28.4B

$30B

$7.7B

$15.9B

$10B

$10.8B

$17.7B

$18.8B

$20B

$0 2008

2009

2010

2011

2012

2013

2014

2015

Source: Real Capital Analytics

from new rivals like foreign billionaires and sovereign wealth funds, private equity has held its own when it comes to buying trophy 54 May 2015 www.TheRealDeal.com

in the last 12 months alone. “I think that we’re seeing them pursuing deals as aggressively as ever,” said Joe Berko,

last 12 months. Some firms, such as Tishman Speyer and Lightstone Group, are developers that also act as equity funds, and are therefore included in the ranking. Of the total, the three largest funds, Thor Equities, Blackstone Group and Callahan Capital Properties, have invested more than $2 billion apiece in New York properties since last April. While the 15 funds have diverse backgrounds, they collectively have a growing sense that times have changed in the New York City investment market. “The overwhelming view is that there is more competition, which makes it harder to find attractive opportunities than it was a year ago,” said Andrew Moylan, head of real estate asset products at Preqin, a research firm that tracks private funds. As they search for returns, a number of funds are modifying their strategies. In the years following the financial crisis, private funds such as Blackstone, Rockpoint Group and Savanna were among the few players with money to spend. While banks and insurers were still righting their balance sheets, these funds bought up trophy properties in Manhattan at depressed prices.

Then, when the tsunami of overseas and institutional money began sweeping over Manhattan, driving up prices, these firms netted massive profits. In one high-profile example, Savanna sold the Twitter headquarters, at 245-249 West 17th Street, last summer to American Realty Capital’s New York REIT for $335 million, more than four times the $75.8 million it paid for the property in late 2012.

New frontiers While the market boom initially boosted proﬁts, it has also made it harder to re-invest them. Buying a Manhattan skyscraper and selling it a few years later no longer guarantees the hefty returns funds have pledged to their investors. As a result, they have begun pursuing new types of deals. “Alternative debt is becoming a conversation, and funds are doing more co-sponsorships,” said Berko. Barry Sternlicht’s Starwood Capital, which invested $134.4 million in New York real estate last year and just raised

“A lot of private equity funds are getting more nervous. They were doing a lot of condo and hotel projects, but because of where we are in the cycle, they are more cautious now.” GARRETT THELANDER, CUSHMAN & WAKEFIELD $5.6 billion for a new fund, is among those branching out. The fund has partnered with Michael Stern’s JDS Development and Kevin Maloney’s Property Markets Group on a number of luxury developments. And last year, a Starwood fund gave World-Wide Group a $450 million construction loan for its condo development at 250 East 57th Street. In New York, there’s also a noticeable shift in the types of properties funds are investing in. “A lot of private equity funds are getting more nervous,” said Garrett Thelander, executive managing director of capital services at Cushman & Wakeﬁeld, who works on deals with private equity funds. “They were doing a lot of condo and hotel projects, but because of where we are in the cycle, they are more cautious now.” Some funds have begun shifting their focus to new markets — or are more heavily investing in areas that they’ve only tested in the past, including the outer boroughs. For example, Thor Equities, a retail-focused ﬁrm that’s invested in Brooklyn in the past, recently added another investment in Continued on page 140

www.TheRealDeal.com January 2014 35

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REAL ESTATE INVESTING

Real estate investor roulette Stacking up two of the most popular industry investment vehicles, REITs and private funds, yield surprising results Comparing select REIT and private fund returns REITs (annual returns since 2013)

SL Green

25.6%

Vornado

22.4%

Boston Properties Equity Residential Simon Prop.

19.5% 19.1% Owen Thomas of Boston Properties

Marc Holliday of SL Green

11.5%

PRIVATE FUNDS (annual returns since inception)

Lone Star Fund VII

53.7%

Westbrook Real Estate Fund V

43.6%

Starwood Distressed Opp. Fund IX

36.9%

Rockpoint Real Estate Fund IV

36%

Blackstone Real Estate Partners Fund VII

27.4% Starwood’s Barry Sternlicht

Sources: Sandler O’Neill, SNL Financial and NYSTRS. REIT returns measured annually since March 2013. Fund returns measured annually since each fund launched. Those dates are: February 2005 (Westbrook), June 2011 (Lone Star), December 2011 (Blackstone), December 2012 (Rockpoint), and March 2013 (Starwood).

BY KONRAD PUTZIER efore Harry Helmsley began syndicating buildings in the late 1940s, real estate investors had few choices beyond deciding which properties to buy. Things are clearly different today. By offering shares of skyscrapers like the Empire State Building to small-time buyers, the legendary developer set off a wave of innovation that transformed real estate investment. Those decades of innovation mean that today, investors looking to spend on buildings have more choice than ever — from buying assets directly, to investing through a bevy of vehicles such as real estate investment trusts, wealth managers, private funds and so-called funds of funds, which invest in private funds or REITs. And the rapid growth of real estate crowdfunding in the past few years has added yet another, though still largely untested, option. Tracking returns for the entire landscape of investment vehicles is easier said than done. Wealth managers, for example, are notoriously opaque, while crowdfunding is too new to offer reliable data. But the two most popular investment vehicles among investors without the resources or inclination to buy their own buildings or partner in new developments — namely, private real estate funds and REITs — are tracked by a bevy of analysts and researchers.

56 May 2015 www.TheRealDeal.com

This month, The Real Deal combed through data and research papers to compare how returns from those two vehicles stack up against each other. While initially it might seem that REITs are far better moneymakers, a closer look suggests a mixed picture.

investment in global real estate between 1990 and 2011. It found that pension funds that invested with REITs scooped up gross proﬁts of 10.9 percent, while those that went through private funds or asset managers got only 7.23 percent a year, on average.

REITs beat private funds on returns

Who’s on top? “Only death, taxes, and REITs are inevitable,” claimed a recent issue of the NYU Schack Institute’s Premises Magazine. The same could be said of private equity real estate. Investment in both public REITs and private real estate funds boomed in recent years. In 2014, U.S. public REITs raised $63.6 billion in capital, while the total share value of all publicly traded REITs grew to $900 billion as of March 31, according to the National Association of Real Estate Investment Trusts, which represents the REIT industry. During the same period, private real estate funds raised even more: $97.7 billion, the highest ﬁgure since 2008, according to research ﬁrm Preqin. Some data indicates REITs have drummed up far higher returns than their private real estate fund counterparts. A recent study by several economists in the Netherlands analyzed pension fund

gross returns of about 28 percent, according NAREIT (see chart). Meanwhile, recorded returns from institutional investment in private real estate were nearly 12 percent, according to the National Council of Real Estate Investment Fiduciaries’ Property Index, which some in the industry use as a rough indicator of private-fund performance. But one source, Joseph Pagliari, a professor of real estate at the University of Chicago’s Booth School of Business, said those numbers aren’t as cut and dried as they may appear. He said REITs tend to be more leveraged than private institutional real estate. After factoring in that additional risk, he saw the difference in average returns evaporate. “In the long run, the performance of REITs and private institutional real estate funds is nearly identical,” he said. Moreover, some top private real estate funds have performed far better than leading REITs, as our chart shows. Stephen Schwarzman’s behemoth private equity ﬁrm the Blackstone Group is a case in point. Blackstone’s ﬂagship fund, Real Estate Partners Fund VII, has thrown off massive annual returns of 27.4 percent since it launched in 2011, according to data from the New York State Teachers’ Retirement System, which has invested in the fund. Meanwhile, Barry Sternlicht’s Starwood Capital’s Distressed Opportunity Fund IX has generated even higher annualized returns, 36.9 percent, since March 2013. Both of those numbers trounce leading REITs and help explain why both fund managers have been so successful at raising capital.

Examining overall gains since the bust 30% 20% 10% REITS

0% -10%

FUNDS -20% -30% -40% 2008

2009

2010

2011

2012

2013

2014

Sources: Data on publicly traded REITs from the National Association of Real Estate Investment Trusts. Data on private equity funds from the National Council of Real Estate Investment Fiduciaries.

Since many private funds charge higher management fees than REITs, the real difference is even higher. There is no indication this has changed since 2011. In 2014, U.S. equity REITs generated

“Private real estate funds have generally done very, very well,” said Stephen Ellis, director of ﬁnancial services equity research at investment research ﬁrm Morningstar. With no clear evidence that REITs perform Continued on page 140

www.TheRealDeal.com May 2015 56

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Long Island City faces shopping drought Despite residential boom, burgeoning Queens neighborhood is still missing much-needed retailers

Long Island City’s massive residential growth isn’t matched with retail expansion.

BY TESS HOFMANN he residential revolution is well underway in Long Island City, as multiple condo and rental towers sprout where crumbling warehouses and manufacturing holdouts once stood. But while residents filling those thousands of new apartments may be enjoying luxury amenities in their buildings and neighborhood features like the new dog run at Hunter’s Point South, the surrounding area is still disappointingly desolate when it comes to stores. And while retail typically follows residential in a gentrifying area, in Long Island City, there are few signs of an accompanying retail revolution in the works. In the past 10 years, roughly 9,000 new living units debuted, according to data from Long Island City–based brokerage Modern Spaces. By the end of 2017, at least 14,413 additional units will hit the market, from developers like Property Markets Group, World Wide Group and Rockrose Development. This wave is rushing into a neighborhood that until now housed a modest population, pegged at just under 21,000 in the 2010 Census. The question is, where are the stores to serve the people who ﬁll those towers? Retail “is the biggest need, and it doesn’t take a real estate expert to see that there’s so much development happening, but we’re still behind on the retail,” said Dana Frankel, the director of economic development, planning and BID services for the Long Island City Partnership.

“There are still a lot of retailers that are like, ‘Long Island City? Where the hell is that?’ ” said Matthew Baron, president of Simon Baron Development, which has completed one Long Island City rental building and has two properties in the works. Bullish brokers and developers point to a handful of big leases inked over the past decade. In 2008, Rockrose brought upscale grocer Foodcellar & Co. to the lower levels of its 31-story, 394-unit residential building at 4705 Center Boulevard near the waterfront, where one-bedrooms rent for $3,000 to $3,500 a month. The only drugstore chain in the area, a Duane Reade, opened around the time Foodcellar did, in the base of the same building. Foodcellar will soon open

moving into Related Companies’ Hunter’s Point South this spring. The neighborhood features ground-floor retail in the base of the new Center Boulevard buildings, with spaces ranging from 1,000 to 8,000 square feet. The nearby commercial strip of Vernon Boulevard is lined with smaller boutique shops, many of which are only nine or 10 feet wide, in older walk-up buildings. This is the portion of Long Island City with the healthiest retail scene, including steady foot traffic on weekends and an array of dining options. “That already feels more like a neighborhood more than any other part of Long Island City does,” said Brad Schwarz, a principal with commercial brokerage Lee & Associates. Center Boulevard retail is close to fully occupied, with Vernon Boulevard not far behind, according to Dean Rosenzweig, a vice president at CBRE. Further inland, however, things are bleaker. Court Square, where the Citigroup building stands, and Queens Plaza, which is home to JetBlue and Silvercup Studios, each constitute separate retail markets where office workers have scavenged for lunch options for years and where the residents of a bevy of new towers could face a similar fate in search of necessities, if things don’t pick up. David Brause, president of Brause Realty and chair of the Long Island City Business Improvement District, said that there is a definite need for more food options

“This could be the bargain of the decade for forward-thinking retailers.”

58 May 2015 www.TheRealDeal.com

FAITH HOPE CONSOLO, DOUGLAS ELLIMAN its second location, in Court Square, in another Rockrose building, Linc LIC. But these leases are no longer new, and the lag between them and the arrival of other chains has been surprising, and particularly stark in certain pockets. Retail brokers divide Long Island City into several distinct areas. The ﬁrst is the waterfront, where many glassy towers developed by Rockrose, TF Cornerstone and others are already occupied, and where residents will start

Continued on page 138

www.TheRealDeal.com January 2014 35

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HOTEL DEVELOPMENT

Big Apple’s hotel boom may have soft spots Record room numbers, land prices, strong dollar could weigh on industry BY JANNA HERRON lliot Spitzer is building a hospitality and retail project in Hudson Yards, and Richard

Branson’s Virgin brand will soon be stamped on a towering hotel in NoMad. The independent, 52-room Audubon Hotel will soon debut on West 181st Street in Washington Heights, and no less than five national chain hotels are going up in the Financial District. In Manhattan alone, there are 73 hotel projects in various stages, comprising more than 14,000 rooms. Factor in the multiple projects in the outer boroughs, and the city is well on its way to reaching a record number of hotel rooms over the next year. But a stronger dollar, higher land and construction prices, shadow units from listing sites like Airbnb and the potential for oversupply all threaten to slow the industry’s mega-construction boom. There are 56 hotel projects with 10,740 rooms under construction, according to a TRD review of data provided by hotel data tracking firm STR, with another 17 hotels comprising 3,284 rooms in the final plans of staging. The rooms of these 63 hotels will phase into the market over the next two years, with a new high of 110,000 rooms expected during 2016. This influx comes despite significantly slowing growth for two key measures of hotel profitability in New York: average daily rates and revenue per available room. Both lost momentum last year compared to the previous four years, even as occupancy increased to an impressive 87 percent. Still, many industry insiders, especially developers, remain optimistic about the long-term returns for hospitality development in New York, and are actively looking to expand their presence in the city. “It will continue to remain strong,” said Philip Loria, who, with Sal LoDuca, president of the Broadway Plaza Hotel, is building the 90-room Artezen Hotel, with a restaurant and rooftop bar, on John Street in the Financial District. In FiDi alone, the Artezen is one of eight projects underway, in a market with at least 20 existing hotels. But Loria is confident about his prospects. “If you have a good business model with conservative debt, provide superior service and create brand loyalty and repeat business, you will do pretty well.”

60 May 2015 www.TheRealDeal.com

Perfect storm for construction boom The explosion of hotel construction isn’t just about record tourism in New York, although some might say that is reason enough. Last year, 56.4 million tourists visited the city, the most ever, and well ahead of the 55 million predicted. The number of visitors soared 23 percent since 2009, when the New York hotel industry suffered a 22.6 percent year-over-year decline in average daily rates, and 26.4 percent drop in RevPAR. “Hotels respond faster to cycles than other asset classes, which is one reason driving the hotel boom,” said Matthew Baron, president of Simon Baron Development, which is building a 30-story, 250-room Tommie Hotel, part of a chain of “micro-hotels” with small rooms and communal spaces aimed at younger travelers, on East 31st Street in NoMad. “It was the most distressed

asset during the downturn because it’s

Where’s the money?

nightly. On the ﬂip side, when the market rebounds, you can go from $100 a night to $300 overnight.” Additionally, no new hotels were built

Despite the gangbusters pipeline,

during the recession, according to Marc Magazine, executive managing director at Savills Studley. Before that, during 2005 and 2006, many hotel rooms came off-line to become condos, he said. That helped set the stage for accelerated construction once the economy rebounded, Magazine said. Developers have also been building more boutique hotels on smaller and cheaper mid-block sites with a faster turnaround time, said Mark VanStekelenburg, senior vice president and practice leader at CBRE Hotels PKF Consulting USA. “They are able to get the permitting and the hotels out of the ground on a much shorter development time line,” he said. “That’s increased the ramp-up of supply.”

NYC HOTEL HONCHOS

Eliot Spitzer, Spitzer Engineering

Matthew Baron, Simon Baron Development

construction financing is still challenging, said VanStekelenburg. Many developers are building — using cash on hand or revolving credit — and flipping, or leveraging pre-existing relationships with lenders to get projects out of the ground. For luxury hotels with mixed-use, such as condotels and those with ground-floor retail, traditional financing is typically not involved. Instead, a developer will get a note on the non-hotel component, VanStekelenburg said. Long-term loans on hotels — whether a 10-year CMBS loan or a loan through an insurance company — generally get written after the property reaches stabilization, with about a year or two’s worth of occupancy, ADR and RevPAR numbers, said Jerry Swartz, partner at HKS Capital. “We did hear that Sam Chang got a three-year bridge loan at a low rate the day he opened the Holiday Inn Downtown,” Swartz said. “There are no hard-and-fast rules when it comes to hospitality, but it helps to have a good sponsor, a good [brand name] or a good management company if it’s a boutique.” Tom Baker, corporate managing director at Savills Studley, said lending for existing hotels with in-place cash flows is still available, even as revenue growth in the New York hotel market has slowed. “As we go forward, lenders will be very sensitive to changes in occupancy and will pay close attention to the supply-demand relationship,” said Baker. “If supply starts to outstrip demand, lenders may become cautious. But we don’t see that yet.”

Hotel headwinds

Sam Chang, McSam Group

Phil Keb, Langham Hospitality Group

So far, there have been more than enough visitors to fill the hotel rooms. Last year, there was a record 32.4 million total hotel room nights. Occupancy rose to 87.1 percent, from 86.6 percent in 2013, the fifth consecutive year the rate has increased, according to hospitality consulting firm Lodging Advisors. Still, ADR edged up just 1.2 percent year-over-year and RevPAR rose a scant 1.8 percent in 2014, compared with 3.2 percent and 5.6 percent in 2013, respectively. “Last year was just about the slowest rate

Henry Kallan, Library Hotel Collection

John Lam, Lam Group

Continued on page 128

HOTEL DEVELOPMENT 1

NEW YORK HOTEL PROJECTS SLATED TO OPEN 2015-2017

31. EVEN HOTEL 321 W 35TH ST 32. COURTYARD 461 W 34TH ST

33. UNNAMED HOTEL 245-247 WEST 34TH STREET 34. RENAISSANCE 215 W 34TH ST 35. THE MARMARA 114 E 32ND ST 36. UNNAMED HOTEL 292 5TH AVENUE 37. TOMMIE HOTEL 11 E 31ST ST

38. VIRGIN HOTEL 1227 BROADWAY 39. ALOFT HOTEL 1225 BROADWAY

40. ASCEND COLLECTION THE PAUL 32 W 29TH ST

41. UNNAMED HOTEL 42-44 W 29TH ST 42. HYATT HOUSE 101 W 28TH STREET 43. CAMBRIA SUITES 123 W 28TH ST

4 9

5 7

6 8 11

12 15

27 28 32 44

23 24

33 34

13 17 21

29 26 22 30 25

14 19

38 43. 39 36 37 42 41 40 35

46 45

47 48

49 51 52 55 58

59 60 62 63 71 72 73

61 64 65 66 70 67 68 69

50 53 56 54

1. AUDUBON HOTEL 507 W 181ST ST

44. AC HOTEL W 31ST ST & DYER AVE

2. UNNAMED HOTEL 514 WEST 168TH STREET

45. THE CLOCK TOWER 1 MADISON AVE

3. FAIRFIELD INN & SUITES 538 WEST 58TH STREET

46. UNNAMED HOTEL 414 WEST 15TH STREET

4. COMFORT INN & SUITES 439 WEST 54TH STREET

47. TOMMIE HOTEL 231 HUDSON ST

5. UNNAMED HOTEL 217 WEST 57TH STREET

48. HUDSON SQUARE HOTEL 219 HUDSON ST

6. 1 HOTEL CENTRAL PARK 1414 6TH AVE

49. PUBLIC HOTEL 215 CHRYSTIE STREET

7. CARNEGIE HOTEL 160 WEST 56TH STREET

50. HOTEL INDIGO 171 LUDLOW ST

8. UNNAMED HOTEL 18 WEST 56TH STREET

51. ACE HOTEL 223-225 BOWERY

9. COMFORT INN & SUITES 439 WEST 54TH STREET

52. CITIZENM ON BOWERY HOTEL 185-191 BOWERY

10. SLS HOTEL 444 PARK AVE

53. THE STORIES GATSBY HOTEL 163 ORCHARD ST

11. BACCARAT HOTEL & RESIDENCES 20 W 53RD STREET

54. UNNAMED HOTEL 119 ORCHARD ST

12. RIU PLAZA NY TIMES SQUARE 733-763 8TH AVENUE

55. NOBLEDEN HOTEL 196 GRAND STREET

13. CAMBRIA SUITES 30 W 46TH STREET

56. BEST WESTERN 263 BROOME STREET

14. UNNAMED HOTEL 145 E 47TH STREET

57. CANAL STREET HOTEL 54 CANAL STREET

15. TIMES SQUARE HOTEL 400 W 42ND STREET

58. JOIE DE VIVRE 50 BOWERY

16. HAMPTON INN 220 W 41ST ST

59. FOUR SEASONS 30 PARK PLACE

17. THE KNICKERBOCKER 1466 BROADWAY

60. THE BEEKMAN HOTEL 5 BEEKMAN STREET

18. UNNAMED HOTEL 516-520 5TH AVENUE

61. ALOFT HOTEL 49-53 ANN ST

19. ASCEND COLLECTION 710 3RD AVENUE

62. COURTYARD 133 GREENWICH ST

20. EVEN HOTEL 219 E 44TH STREET

63. RIFF DOWNTOWN 102 GREENWICH ST

21. HYATT PLACE 120 W 41ST STREET

64. THE ARTEZEN HOTEL 24 JOHN STREET

22. UNNAMED HOTEL 12-20 WEST 40TH STREET

65. AKA WALL 84 WILLIAM ST

23. AC HOTELS BY MARRIOTT W 40TH ST & 8TH AVE

66. FOUR POINTS 6 PLATT ST

24. HOLIDAY INN 585 8TH AVE

67. RESIDENCE INN 215 PEARL ST

25. JADE HOTEL 36 WEST 38TH STREET

68. COURTYARD 215 PEARL ST

26. ALOFT HOTEL 25 W 38TH STREET

69. FAIRFIELD INN 161 FRONT STREET

27. ALOFT 450 11TH AVE

70. Q & A 70 PINE STREET

28. FOUR POINTS 444 10TH AVE

71. UNNAMED HOTEL 11 STONE STREET

29. EMBASSY SUITES 60 WEST 37TH STREET

72. HILTON GARDEN 6-12 WATER STREET

30. EXECUTIVE HOTEL LE SOLEIL 38 WEST 36TH STREET

73. UNNAMED HOTEL 10 SOUTH STREET

www.TheRealDeal.com May 2015 61

REAL ESTATE INNOVATION

Tech start-ups WITH BIG CASH Raising money is key, but it’s just one ingredient for a young ﬁrm’s success

BY KONRAD PUTZIER he real estate crowdfunding platform Fundrise recently posted an unusual offering on its website. The opportunity involved a chance to invest in a residential property “located in Mars’ up-and-coming Red Hill Neighborhood.” Fundrise’s website extolled the benefits of that “Mars Colony Offering,” promising infinite returns for a minimum investment of $1,000. While the offering was, in fact, an elaborate April Fools’ Day joke, it captured the sense of possibility that’s gripped the real estate tech scene. In the last three years, the real estate world has seen a veritable boom in the number of tech start-ups. And while many of those firms have made headlines for their splashy entrées onto the real estate scene, some are clearly pulling ahead as others are trailing. This month, The Real Deal ranked those start-ups based on how much venture capital they’ve raised. The data — gathered from CRE/Tech Intersect and Crunchbase, which both track start-ups — includes companies based in New York City as well as those that do business here. TRD focused on firms that are using novel technologies to change the way the industry operates. So while start-ups like the officesharing firm WeWork and the residential brokerage Compass, which have raised

62 May 2015 www.TheRealDeal.com

$362 million and $73 million respectively, have competed for venture capital dollars, they were excluded because they’re not primarily tech companies. Instead, crowdfunding sites and websites aimed at the commercial sector dominated the ranking. Fundrise took the top spot with $41 million raised since it launched in 2010. It was

While the real estate industry has long been known for its resistance to technological innovation, these ﬁrms are looking to fundamentally transform the way the industry operates — from the way real estate players access information to the way properties are bought and sold. And they are all harboring hopes of becoming the next billion-dollar company.

“You can build lots of great software, but if you don’t understand who your buyers are, you’re not going to have a lot of success.” JORDAN BETTMAN, BAIN CAPITAL VENTURES followed by shared-office search platform LiquidSpace, which raised $26.2 million, and California-based Patch of Land, another crowdfunder, which raised $24.9 million. Cadre, a real estate investment platform backed by Jared and Joshua Kushner, ranked fourth with $18.3 million raised, while Reonomy, which offers detailed information on commercial properties, rounded out the top five with $17.9 million raised. Some well-known tech start-ups like New York-based crowdfunding firm Prodigy Network didn’t make the list because they haven’t raised significant venture capital in the U.S.

But as the number of start-ups has exploded, so has the sense that many of them will fail. “There is only a finite number of firms that can be profitable,” said Sam Chandan, head of Manhattan-based Chandan Economics. The question currently preoccupying the real estate industry is: which firms will survive?

Finding the void For all new companies — whether they’re making pickles or selling ﬁnancial products — the key to success is usually ﬁnding a void in the marketplace. According to TRD’s

ranking, that also holds true with real estate tech firms. Companies that focus on finance and on providing information to the commercial community have raised the most start-up money, while residential-focused start-ups are noticeably absent from the list. The explanation, according to insiders, is that commercial real estate has been starved of technological innovation, leaving a huge hole for start-ups to fill. “Commercial real estate is one of the largest markets in the world, and it has been behind the curve” in terms of technological innovation, said Jordan Bettman, a senior principal at Bain Capital Ventures, a venture capital firm that’s invested a number of tech start-ups, including Reonomy. On the residential side, the barrier for entry is higher, sources said. That’s because websites like Zillow and Trulia, which are now part of the same company, already cornered the market for online residential listings information. Of course, while venture capital funding is an important marker of success, it’s not a perfect measure. The amount of money a firm raises can be seen as a measure of its potential, but since accepting venture capital usually requires giving up an ownership stake, start-ups generally don’t raise more than they need. In other words, a promising start-up may not rank well if its operating expenses (and investment needs) are low.

REAL ESTATE INNOVATION Also, since none of the latest New York– focused real estate tech start-ups have gone public, their earnings aren’t publicly accessible. In addition, there’s no good way to judge an idea because, as many sources pointed out, the business world is full of brilliant innovations that failed to make their inventors rich. “Some ideas are going to be great but end up proving to be unprofitable,” Chandan explained. Or worse: they may end up being profitable for someone else. For example, a little-known South Korean firm, Saehan, is credited with introducing the first portable MP3 player in 1998. Although it sold 50,000 players that year, Saehan soon fell behind its competitors. Apple’s iPod, in particular, became a multi-billion-dollar business, while Saehan shuttered its MP3player sales division in 2003.

Occupational hazards Launching a start-up comes with some substantial baked-in risks. Veteran firms, for example, are often not shy about adopting a new company’s idea and using their size to quash anyone threatening their market share. On the commercial front, established firms have already adopted ideas first pursued by start-ups. For example, the real estate investmentbanking firm Carlton Group and the Manhattan-based finance firm RCS Capital launched its own crowdfunding platforms last year. “This was a great time to enter the space and, frankly, to add some structure to something that doesn’t have the typical boundaries our industry is used to,” RCS Capital’s president Michael Weil said at the time. Another risk is that several start-ups attempting to corner the same space in the market could end up cannibalizing each other, sources said. VTS and Hightower — which have raised $11 million and $8.7 million respectively — each offer cloud-based portfolio management, while a plethora of crowdfunding firms are vying for the same subset of investors. “What we observe is that you will get multiple firms that will contest a certain space,” said Chandan. So how can start-ups ensure that their ideas will pay off? The short answer is, they can’t. But early and fast growth, sources said, can be a major boost. That’s especially true for listing sites and crowdsourcing platforms, which are subject to what economists call a “network effect,” meaning that the more people use them, the more valuable they become. The New York–based CompStak, which crowd sources leasing comps, is a case in point. Since launching in 2011, the platform, which requires users to upload information about their own properties in order to get access to the rest of the database, has become

a go-to source for leasing information. Its growing popularity and user involvement has, analysts say, created a buffer against potential competitors. If another company attempts to cut into CompStak’s space, it will have to convince users to abandon a

they ﬁnance with money from small-time investors. Potential borrowers about to close on a property often need money instantly, but raising money from hundreds of everyday investors can take days or weeks. To solve that problem, some platforms

“Some ideas are going to be great but end up proving to be unproﬁtable.”

The tech paradox

SAM CHANDAN, CHANDAN ECONOMICS platform they have grown accustomed to. “We have a strong competitive advantage by being the ﬁrst [to offer crowdsourced comps], because we are a marketplace-type business,” said CompStak’s CEO Michael Mandel. “Every day it becomes harder for another company to come in.” Mandel added

funded crowdfunding start-up Sharestates, acknowledged that he has lost some deals in part because he doesn’t pre-fund. “The private lending space is inherently very fast-paced. We typically have a pretty good advance knowledge of deals, but there were instances where we needed to close within a week,” he said.

have started pre-funding deals by guaranteeing loans and then assuming the risks of ﬁnding enough investors to cover them. But pre-funding requires signiﬁcant cash reserves to bridge the time between the loan closing and the time the capital is fully raised from investors.

Raising money and getting traction in the market is easier said than done. While growing a business and convincing investors to write big checks are essential, achieving both rests on the shoulders of the people behind the ﬁrm. Most sources said that even if a start-up has a great product, if the founders don’t understand the real estate game, they’d be dissuaded from investing. “You can build lots of great software, but

REAL ESTATE START-UPS WITH FAT WALLETS A ranking by fundraising prowess FIRM NAME

FUNDS RAISED TO DATE

SERVICE

YEAR FOUNDED

Fundrise

$41 million

Crowdfunding platform

2010

LiquidSpace

$26.2 million

Platform for sharing of ofﬁce space

2010

Patch of Land

$24.9 million

Crowdfunding platform

2013

Cadre

$18.3 million

Investment platform

2014

Reonomy

$17.9 million

Commercial property information

2013

42Floors

$17.4 million

Ofﬁce listings site

2011

Compstak

$14.4 million

Leasing comp database

2011

Honest Buildings

$12.3 million

Networking for construction and design

2011

VTS

$11 million

Leasing and asset management platform

2011

Realty Mogul

$10.1 million

Crowdfunding

2013

Source: CRE/Tech Intersect and Crunchbase.

that securing this ﬁrst-mover advantage is a main reason why the ﬁrm has already expanded into 15 U.S. markets.

The race for cash For most start-ups, growing cash reserves is also key. This is where venture funding comes into play. The ability to invest cash back into the business and to use it to lure top talent has increasingly helped distinguish tech startups. The nearly $18 million that Reonomy raised, for example, allowed it to hire Shutterstock’s Chris Fischer, a top technology executive, to head up its engineering efforts (see related story, page 142.) Meanwhile, with the help of its $11 million in venture capital, VTS has more than tripled its number of employees in the past year, to 65. “We now have an 18-person team whose only job is to make sure our customers are happy. This is a massive competitive advantage for us,” said VTS co-founder Nick Romito. The advantages of raising cash quickly are most apparent in the crowdfunding ﬁeld, sources said. Crowdfunding ﬁrms provide loans or equity to developers and real estate investors — often with terms as short as a year — which

That’s the main reason why Patch of Land and Fundrise are raising substantial amounts of venture capital, according to their founders. “Most good borrowers have other good options,” said Dan Miller, co-founder of Fundrise. “Being able to close loans quickly eliminates the extra burden of instantly having to raise capital online.” The approach has made Fundrise more competitive, he said, adding that the firm’s monthly deal volume more than doubled since it began pre-funding in September. According to Miller, Fundrise, which claims to have raised just under $20 million for projects in New York City alone, is already considering another round of fundraising. Firms that lack the capital to pre-fund deals appear to have fallen behind. New York–based iFunding was one of the industry’s pioneers and claimed to be the largest U.S. real estate crowdfunding site until about the spring of 2014. But the firm has so far failed to secure significant financial backing from venture firms. And according to observers, it has since fallen behind rival Fundrise in terms of self-reported monthly deal volume (see related sidebar). Allen Shayanfekr, CEO of the still self-

if you don’t understand who your buyers are, you’re not going to have a lot of success,” said Bain’s Bettman, explaining that he chose to invest in Reonomy partly because of its founders’ grasp of the real estate business. Not surprisingly, a number of the more successful real estate start-ups have their roots in real estate. CompStak’s Mandel, for example, was a broker at commercial firm Grubb & Ellis; VTS’s Romito is a veteran of Murray Hill Properties, and brothers Dan and Ben Miller of Fundrise have a well-connected real estate developer father. While people skills seem like a prerequisite in any field, in the tech field that requirement highlights a paradox. These new tech platforms are, in many cases, making personal relationships more obsolete by making data and funding widely available via the Internet. But for now, winning over investors and clients still requires good old-fashion schmoozing. Still, sources say it’s too early to predict the winners and losers among the latest crop of real estate tech start-ups. “The consolidation will come after the next downturn,” said Fundrise’s Dan Miller, “and a lot of platforms will not be able to survive.” TRD www.TheRealDeal.com May 2015 63

REAL ESTATE INNOVATION

Tech sector ‘bubbles’ up As valuations rise, bears fret that a pop is inevitable BY KONRAD PUTZIER t’s the Pavlovian effect of the business world: whenever venture capital starts ﬂowing into start-ups en masse, observers warn of a market crash. The current tech boom is no exception. As former start-ups like Twitter or Face-

book achieve sky-high valuations on the stock market, pessimists fret that a crash is inevitable. In March, telecom billionaire Mark Cuban became the latest skeptic. He wrote a blog post titled “Why this tech bubble is worse than the tech bubble of 2000,” arguing that venture firms are piling into start-ups that offer no prospects for a payout. A tech bubble is of more concern to the real estate industry now than it’s ever been. For starters, tech firms have become important tenants in Manhattan’s office market. And unlike past cycles, the current boom has given birth to a large number of real estate tech start-ups. If a bubble pops, brokers, landlords and others in the industry stand to lose a lot of money. Thankfully, the major factor in most bubble calculations — tech firms’ stock price-to-earnings ratio — looks reassuring for now. In March 2000, the average priceto-earnings ratio (PE) of firms listed on the NASDAQ peaked at 175. At press time, it stood at a more modest 25.

The data on venture capital investment looks equally reassuring. According to accounting ﬁrm PWC, venture capital investment in the U.S. totaled $14.75 billion in the fourth quarter of 2014. That’s the Mark Cuban

lot of individual investors speculating on the market in the 1990s. Valuations as a whole were much higher. Today, companies feel more real to me. They, in many cases, have revenues.” Mark Zandi

“Today, companies feel more real to me. They, in many cases, have revenues.” MARK ZANDI, MOODY’S ANALYTICS highest figure recorded since 2000, but it still pales in comparison to the first dot-com boom. In the first quarter of 2000, venture firms invested a staggering $28.4 billion — a figure they almost matched in the following three quarters. “People have learned from their mistakes,” said Mark Zandi, chief economist of research firm Moody’s Analytics. “You had a

According to Zandi, real estate tech startups’ prospects are looking particularly solid. Unlike some other tech ﬁrms, most real estate start-ups generate income. Moreover, the overall size of the commercial real estate industry and its current growth cycle should bode well for start-ups. But even though the real estate tech start-up scene appears healthy now, there

are threats on the horizon. One is a hike in short-term interest rates, which the Federal Reserve may begin this summer. Low interest rates have helped to promote venture capital investment, since they depress returns on alternative assets like bonds. Although Zandi doesn’t expect venture investment to dry up, he acknowledged that a hike in interest rates could be fatal for some underperforming start-ups. Perhaps a bigger risk is behavioral. Venture capital firms know that a lot of the companies they invest in will fail. But their behavior is based on experiences from the (often immediate) past. The longer a growth cycle lasts and the more IPOs break records, the more likely investors are to make riskier bets. “That’s the difficult thing. Ultimately, we reach an inflection point when the failure rate begins to rise and investors update their expectations,” explained Sam Chandan, chief economist of the Manhattan-based Chandan Economics. When that happens, some firms may find themselves starved of cash. Still, Chandan dismissed talks of a bubble. “I wouldn’t say that many firms failing is a bubble, because that’s the premise on which these investments were based,” he argued. “Failures are predictable, we just don’t know which ones are going to fail.” TRD

Promising start-up, former NY governor split Real estate crowdfunder iFunding was paying David Paterson just $125 an hour, then allegedly cut him off BY KONRAD PUTZIER or an ambitious real estate tech start-up, bringing on a well-connected former governor as an adviser sounds like a match made in heaven. But in the case of iFunding and former New York Gov. David Paterson, the marriage quickly turned sour. A year after the real estate crowdfunding start-up announced the state’s former chief executive had joined its board, the two sides are no longer on speaking terms. Instead, they exchanged a series of bizarre accusations, involving questionable EB-5 deals, an alleged travel ban and supposedly dire ﬁnancial straits. Taken together, they paint a picture of all that can go wrong when a ﬂedgling start-up and a career politician partner up.

This much is clear: In March 2014, Paterson signed an agreement to become a consultant for iFunding. A copy of the contract reviewed by The Real Deal shows that Paterson was to be paid $5,000 per month in exchange for at least 10 hours of 64 May 2015 www.TheRealDeal.com

work per week. That comes to a maximum of $125 per hour, less than what a junior attorney at a New York law ﬁrm typically bills. The agreement was a coup for the startup and seemed poised to turn iFunding’s fortunes around.

crowdfunding space. As late as March 2014, the ﬁrm claimed to be the most popular platform among U.S. investors, with more than $20 million in total investment volume raised domestically. It announced plans to fund a $250 million condominium tower at William Skelley

Former Gov. David Paterson

“Believe me, if you did anything [illegal] in China, you would know.” FORMER GOV. DAVID PATERSON Founded in 2012 by Sohin Shah and William Skelley, the New York–based ﬁrm was an early leader in the nascent real estate

90-94 Fulton Street. To the casual observer, it seemed like iFunding was poised to become a headline act in the crowdfunding space.

But, in fact, it had already begun losing momentum. The Fulton Street project quickly unraveled. Rival crowdfunding start-ups Fundrise, Realty Mogul and Patch of Land proved more adept at building ties to inﬂuential real estate executives and investors, and started clawing ahead. Wooing Paterson, with his extensive connections in politics and business, was iFunding’s shot at distinguishing itself. The former governor would build connections to lawmakers and work on affordable housing initiatives. Skelley and Shah also wanted to tap into Paterson’s experience in raising Chinese capital for New York construction projects, and saw him as their rainmaker in China. That was the plan, at least. Instead, the partnership quickly unraveled. And this is where the accounts begin to differ. According to iFunding’s initial version of events, the entrepreneurs planned to send Paterson to a conference in China, but then discovered that he couldn’t enter the country Continued on page 136

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What a Chinese developer’s CHI NA default means for New York WATC H More real estate ﬁrms could fall into trouble amid high debt, falling sales back home

BY KONRAD PUTZIER hinese real estate companies are often associated with limitless funds and a never-ending ability to invest in New York. But what if that image is wrong? Shenzhen-based megadeveloper Kaisa defaulted last month, sending shockwaves through the worlds of real estate and ﬁnance. As the Chinese property market continues to soften, observers are starting to wonder who will be next. Kaisa’s default carries signiﬁcance for New York’s real estate industry. Chinese investors poured $3 billion into New York properties in 2014, second only to Canadian buyers. While none of the major Chinese investors in New York appear to be in immediate trouble, some are highly leveraged, and could be vulnerable to a further slump in the Chinese real estate market. “Some developers that have overborrowed in the expansion are going to be in trouble,” David Dollar, an economist at the Brookings Institution and former U.S. Treasury

risk of default. A March report by rival agency Fitch stated that a third of Chinese developers saw declining sales over the past year.

Kaisa’s Monarch residence project in Chengdu, China. Inset: Former Kaisa chairman Kwok Ying Shing.

Paying the bills Chinese developers have $66 billion in dollar (or offshore) bonds outstanding, according to Dealogic data. The recent strengthening of the dollar has made these bonds harder to service, since these ﬁrms make the vast majority of their income in Chinese Yuan. It’s no coincidence that Kaisa defaulted on a dollar bond. Chinese developers invested in New York are among the most active issuers of dollar bonds, according to Dealogic data compiled for The Real Deal. Greenland Holdings, which bought a majority stake in Forest City Ratner’s Paciﬁc Park (formerly Atlantic Yards) project in late 2013, issued $2.7 billion in dollar bonds last year. Soho China, a stakeholder in the GM building, issued $1 billion in 2012. China Vanke, China’s largest publicly traded developer, has issued another $1 billion

A rendering of Paciﬁc Park (formerly Atlantic Yards) in Brooklyn. Inset: Greenland Holdings Chairman and President Zhang Yuliang.

While none of the major Chinese investors in NYC appear to be in immediate trouble, some are highly leveraged and could be vulnerable. emissary to China, told The Real Deal. “We are now going to see some of them default or reschedule their debts.”

Domestic difficulties Dollar doesn’t expect a wave of defaults akin to what happened during the U.S. financial crisis in 2008. But continued weakness in the Chinese property market, he said, will hold some developers down. Chinese home prices fell by 6 percent last year, according to The Economist, ending a long boom cycle. While what’s been happening lately hardly qualifies as a crash, many observers expect the property market to stay in the doldrums for now. This could pose a serious problem for Chinese developers on an unstable financial footing, especially those that have loaded up on dollar-denominated debt (debt measured in dollars). Bond rating agency Standard and Poor’s released a report last week that found “many developers are in significantly worse shape than in the previous year,” and are at higher

to date. The ﬁrm has partnered with Aby Rosen’s RFR Realty to develop a 61-story condo tower at 610 Lexington Avenue. Finally, Xinyuan Real Estate, whose subsidiary XIN is developing the Oosten condo project in Williamsburg, has issued $475 million in dollar bonds.

A bright future (still) Other major Chinese investors in New York real estate, such as Anbang Insurance Group, Sunshine Insurance Group and Fosun International, are not primarily real estate developers and so aren’t as vulnerable to the troubles in the Chinese real estate market. Though ratings agencies seem a little skeptical of Xinyuan, it appears that, for now, other major Chinese developers investing in New York are in good health. And any turmoil in China’s domestic real estate market could actually beneﬁt the market here. As prices in Beijing and Shanghai keep falling, more yield-hungry Chinese investors could seek a taste of the Big Apple. TRD

Xinyuan Real Estate Oosten at 429 Kent Avenue Among Chinese developers active in New York, Xinyuan Real Estate appears to be most vulnerable to a market shock at home. Fitch rates the firm’s bonds B+, which is a highly speculative (also known as “junk”) rating, and last August revised its outlook down to negative. “Xinyuan spent substantial amounts on land acquisitions in [the first half of 2014] to expand its business scale in 2014, but sales failed to keep pace amid negative sentiment in the sector and its selling,” the agency wrote, explaining the revision. The firm’s debt grew by more than a third in the first half of 2014 alone, while earnings fell to 20 cents per share from 91 cents, according to Seeking Alpha. NYC INVESTMENTS:

China Vanke NYC INVESTMENTS: 610 Lexington Avenue (or One Hundred East Fifty Third Street)

China Vanke is rated investment grade by Moody’s and Fitch. Despite the slowing market, Vanke managed to increase proﬁts by 8 percent last year, and its total debt of 69 million Yuan ($11.1 billion) stood at a manageable 46.7 percent of capitalization (the sum of a company’s debt and equity) in 2014, according to Moody’s.

Greenland Group NYC INVESTMENTS: Paciﬁc Park Greenland is also rated investment grade, though it received slightly lower ratings than Vanke, and its debt level was much higher, at 70 percent of capitalization. Still, Moody’s expects the ﬁrm “to manage its debt leverage down from the current level through contracted sales growth.”

Soho China The Real Deal is hosting the ﬁrst-ever U.S. properties showcase in China on Sept. 10-12 in Shanghai. Check TheRealDeal.com /Shanghai for more information. 68 May 2015 www.TheRealDeal.com

NYC INVESTMENTS : The GM Building

at 767 Fifth Avenue, Park Avenue Plaza at 55 East 52nd Street Soho China appears to be in even better shape than Vanke and Greenland, with a debt-to-capitalization ratio of 27.7 percent in 2014. Moody’s gave the ﬁrm a rating of Baa1, ahead of Vanke’s Baa2 and Greenland’s Baa3.

www.TheRealDeal.com January 2014 35

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Credit unions boost lending Nonprofit institutions ramp up mortgage business with low-cost deals aimed at young borrowers BY KENNETH HARNEY redit unions have been expanding their presence in housing, more than quadrupling their share of total mortgage market volume nationwide in the past nine years, according to the National Association of Federal Credit Unions, by offering deals that simply can’t be found at most banks. Case in point: The country’s largest credit union, the $64 billion-asset Navy Federal, closed more than $1 billion in home-purchase loans during the month of March alone. That’s big. But what’s really extraordinary: 59 percent of the loans went to firsttime buyers, and two-thirds of those first-timers were from a demographic slice that has been missing in action for years: borrowers ages 18 to 34. The historical norm for first-time buyer participation in home purchasing is around 40 percent but currently is just 28 percent to 29 percent, according to the National Association of Realtors. So how is Navy Federal pulling in hordes of young first-timers? By offering loans that address their needs — zero-down payments, no private mortgage insurance premiums, plus the standard low-down payment

costs if the home purchase doesn’t go to settlement by the contract date. Still other credit unions help new homebuyers with their expenses by refunding portions of real estate agents’ commissions. The Boeing Employees’ Credit Union, which is open to all residents and workers in the state of Washington, not just Boeing employees, gives purchasers the option of receiving a 20 percent cash refund of their real estate agent’s commission, plus a $250 credit toward mortgage closing costs. But here’s a key question: Are credit unions that offer come-ons like these increasing their risk of defaults and losses? Counterintuitive though it might seem, credit union home-purchase programs generally have minuscule delinquency and default rates. Katie Miller, vice president for mortgages at Navy Federal, told me its serious delinquency rate as of March on its entire portfolio was 0.57 percent. Stacie Walker, senior vice president for loan origination at North Carolina’s State Employees’ Credit Union, said that its portfolio of zero-down

Fifty-nine percent of loans went to first-time buyers, two-thirds of whom were from a demographic that’s been missing in action for years: borrowers ages 18 to 34. menus of the Federal Housing Administration (3.5 percent minimum) and the Department of Veterans Affairs (zero minimum) loans. Navy Federal also is tapping into a massive membership base of 5 million members worldwide and adding young new members quickly: It’s open to all branches of the armed services, active and retired, civilian employees, contractors and a wide range of relatives. Even “cohabiting partners” are eligible for membership. Navy Federal’s first-time buyer focus is hardly unique. Other credit unions are running programs with tempting terms. North Carolina’s State Employees’ Credit Union offers qualified members up to 100 percent financing on mortgages as large as $400,000 with no private mortgage insurance premium payments. The interest rate as of mid-April: 4.25 percent on a 30-year term that has a rate adjustment after five years. For buyers who need help on closing costs, the program can lend them an additional $2,000, pushing the loan-to-value ratio beyond 100 percent. NASA Federal Credit Union, which is open not only to NASA-related employees but to members of 900 “partner” companies and associations, offers zero-down mortgages up to $650,000 with no private mortgage insurance plus a $1,000 “lender credit” toward closing

70 May 2015 www.TheRealDeal.com

payment, first-time buyer loans “actually performs better” than the entire mortgage portfolio, though she did offer specific figures. “We know our members,” said Miller, and Navy Federal has been following “ability to repay” underwriting guidelines for years, well in advance of congressional mandates for all lenders to do so after the mortgage crisis of the last decade. Credit unions’ rapid growth — they now have about 100 million members — hasn’t gone unnoticed by banks and mortgage companies who compete against them. Robert Davis, executive vice president for mortgage markets at the American Bankers Association, says large credit unions get an unfair break — they essentially function like banks, but they have lower costs because as not-for-profit, member-owned institutions, they are exempt from federal taxation. But let’s be frank: For a first-time buyer, tax policy issues probably aren’t a concern. They just want the lowest-cost option for a mortgage. Not all credit unions offer attractive loan deals, but many do. To check out credit union membership possibilities in the New York area, go to www.culookup.com. Ken Harney is a syndicated columnist.

4<C2?;:2;A /?623@ EDC takes Brooklyn Marine Terminal The city Economic Development Corp. will take over the vacant Brooklyn Marine Terminal along the waterfront in Sunset Park, following an agreement between the city and local City Council member Carlos Menchaca, to develop the site. In January the city abandoned plans for the waterfront property because Menchaca was The Brooklyn Marine Terminal aiming for too much control over the project, but the council member eventually re-entered negotiations with the city, the Wall Street Journal reported. EDC could potentially lease 72 acres of the site to a shipping or marine-cargo tenant, a move that could bring hundreds of high-wage industrial and manufacturing jobs to the district.

Fire escapes going extinct The classic New York City outdoor fire escape is disappearing, thanks to efforts to restore buildings and rethinking about the best way to save people from a burning building. Fireproof interior stairwells are now seen as a better emergency exit, the New York Post reported. Many of the fire escapes attached to buildings were added in the early 20th century, after laws were passed following the 1911 Triangle Shirtwaist Factory fire, which killed 146 people. A 1968 building code law essentially banned exterior fire escapes for new buildings, as buildings Exterior fire escapes are got taller and fire detectors became on their way out more common. Now older buildings are having their fire escapes removed amid renovations, as long as building owners can prove there is a safe way to exit.

Asbestos found in Gracie Mansion roof Asbestos removal was scheduled to begin at Gracie Mansion in April, following the discovery of the potentially cancer-causing material in the mansion’s roof. Mayor Bill de Blasio and his family plan to remain in the residence during the removal, as it has been deemed safe for them to stay, the Associated Press reported. The $250,000 contract for removal was awarded Gracie Mansion to Regional Management Inc. Replacing the landmark’s 30-year-old roof follows several emergency patches throughout the winter months. The complete repairs will cost closer to $3.4 million, city ofﬁcials said.

Rezoning sparks gentrification fears The city has promised to build up to 7,000 new affordable housing units as part of the plan to rezone East New York, in an effort to avoid gentrification in the area, DNAInfo reported. The plans include turning Atlantic Avenue, Rezoning may allow 12-story buildings in East New York. from North Conduit Boulevard to Jamaica Avenue, into a dynamic space with buildings reaching 12 stories and shopping services, city officials stated. The Department of City Planning proposal aims to preserve the neighborhood’s character with low-scale duplexes and row houses permitted throughout the area. The massive development plan will also consider the relative income of residents, in an effort to avoid large-scale gentrification. Compiled by Andrea Cetra

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Fat checks for retailers

Landlords are digging deeper to convince merchants to walk away from leases Juicy Couture parent company LCI Holdings got $52.4 million from Jeff Sutton and SL Green Realty last year to exit the lease for its former ﬂagship store at 650 Fifth Avenue. The three-ﬂoor, 18,000-square-foot space remains unoccupied, and is now surrounded by scaffolding.

BY RICH BOCKMANN he massive rise in store rents is prompting some Manhattan landlords and developers to reach deep into their wallets to convince retailers to walk away from their leases. Those players are not willing to wait for

retail tenants’ leases to expire. Instead, they’re paying them big sums to leave, knowing they can lock in new rents at far higher amounts. While that practice is not new, the amounts being paid are rising fast and are higher than ever, sources told The Real Deal. “It used to be called ‘key money,’ and now it’s called a buyout. It’s the same thing; it’s just a new word for it,” said Faith Hope Consolo, chair of Douglas Elliman’s retail group. “The difference is now the numbers are bigger.” The gulf between current (and projected) retail rents and what a tenant may have locked in years earlier are, of course, central when it comes time to negotiate a buyout. And if a tenant signed, say, a 10-year lease even a few years ago, they could be staring down a big check just to pack up and go home. Indeed, rents have been rising at unprecedented rates — especially on some prime corridors. For example, from 2004 to 2013, the average retail asking rent in Midtown climbed a net of just $4, to $133 per square foot, according to reports from the Real Estate Board of New York. But between the spring of 2013 and fall of last year, average asking rents shot up 49 percent, to $198 per square foot, according to the latest report. On upper Fifth Avenue between 49th and 59th streets, average asking rents more than doubled, to $3,420 per square foot, from the spring of 2009 to last fall. In Times Square, asking rents rose about 150 percent, to an average of $2,317 per foot, during the same period. And on Broadway in Soho, asking rents nearly doubled, to $890 per square foot, 72 May 2015 www.TheRealDeal.com

between 2009 and 2014. Retail rents are so high that they’re often the determining factor when it comes to purchasing a property. “It’s upside down. Retail is what’s driving [building] sales,” said retail broker Joanne Podell of Cushman & Wakeﬁeld. “When someone buys a building, the ﬁrst thing they do is call a bunch of retail brokers.” “I know a couple of buildings in Soho where buyers were asking, ‘What you think this base is worth?’ and I’m saying it’s worth $1,000 a foot, and the tenants are paying $250, $300,” she added. “I’m serious.” Brokers said the city’s prime shopping districts — Times Square, Fifth Avenue, Soho, and Herald Square, to name a few – are where these buyouts are occurring most. Developers sometimes buy tenants out too, when they’re preparing sites for construction, though there is certain language often worked into leases that makes the process more straightforward. Many leases include due-on-sale and demolition clauses, which outline terms in advance to deal with the sale or tear-down of a property.

Faith Hope Consolo

Jason Pruger

These clauses can set a dollar ﬁgure, or work out a schedule depending on how much time is left on the lease, said broker Adelaide Polsinelli of Eastern Consolidated. “Of course, you don’t usually get the highest rent” when these clauses are included, she said. And while it may seem

that a tenant without one of these clauses would have an outsized amount of leverage, Polsinelli said developers always have options, such as building around a site or waiting out the end of the lease. On Fifth Avenue in particular, escalating retail rents are driving transactions. Take, for example, Jeff Sutton and General Growth Properties’ $1.75 billion purchase of the Crown Building at 57th Street, which was due to close around press time. The recordsetting deal was driven by the huge potential to increase the retail rent rolls. Retail rents on that property were reportedly well below market rate. REBNY pegged the average asking rents for Upper Fifth at $3,420 a square foot, but Sutton is said to have targeted the retail at $5,500 per square foot. At 650 Fifth, Sutton and SL Green Realty paid Juicy Couture parent company LCI Holdings $52.4 million about a year ago to walk away from its lease, public records show. Juicy reportedly had about seven years left on its three-ﬂoor, 18,000 square-foot lease. The landlords are reportedly looking

Joanne Podell

to add another 11,000 square feet of retail to the site, which is still seeking a new tenant. Retail brokers said owners almost always have a new tenant lined up and new rental rates in place when they negotiate a buyout. The retailers’ performance is also a huge factor in the buyout price. Property owners

are more likely to get away with paying less if the retailer is performing poorly. The mother of recent Manhattan retail buyouts — a deal at 666 Fifth several years ago — was such a market maker that it’s become a case study. In that situation, a partnership of Kushner Companies, the Carlyle Group and Crown Acquisitions paid nearly $75 million in 2009 and 2011 to buy out a trio of tenants: The NBA store, designers Hickey Freeman and Brooks Brothers. “Regardless of the proﬁtability of the tenants, it was going to be an expensive and timely series of lease buyouts,” read a 2013 analysis of the deal by the Center for Urban Real Estate at Columbia University. Kushner, which bought the building in 2007, brought Carlyle and Crown in as partners on the retail. “At the time of the buyouts, Kushner underwrote the Fifth Avenue retail at $1,600 PSF, but the subsequent leases were well north of $2,000,” the Columbia report read. The partners ultimately divided the existing spaces to add additional (and lucrative) Fifth Avenue frontage and then inked four new mega-deals: Uniqlo signed a 15-year lease worth $300 million; Swatch inked a 15-year deal for $80 million, Vornado bought a $707 million retail condo and Inditex, Zara’s parent company, bought a retail condo for $350 million. Newmark Grubb Knight Frank’s Jason Pruger said not only can landlords increase cash flow from higher rents through buyouts, but can also get more aggressive underwriting for reﬁnancings. “In a lot of the cases, it’s the cost of doing business,” he said, noting that “it has to make sense or they won’t do it.” “If there’s a big enough spread between what a landlord can get and what it will cost to get [the tenant] out,” Pruger added, “they will do it every single time.” TRD

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There are experts, and then there are ‘experts’ StreetEasy’s new advertising program comes under scrutiny from brokers BY REY MASHAYEKHI hen StreetEasy launched its Building Experts advertising program, it was billed as a “win-win” that would reward agents for their knowledge of a building and match consumers with the best possible broker for a given listing. Rolled out as a pilot program across 250 buildings in Manhattan, Brooklyn and Queens, it replaced the site’s prior feature, Top Agents. That feature, which used a merit-based algorithm, gave users a list of the top brokers at a property based on deal history. The more prolific an agent was at a particular building, the higher their position. The new Building Experts program has come under scrutiny from some brokers who expressed concerns to The Real Deal that a merit-based tool was discarded in favor of paid advertising, which may not accurately or transparently deliver the most qualified agent. It’s also seen by some as another unwelcome change brought about by Zillow, which acquired StreetEasy in 2013 for $50 million. The Building Experts program lets StreetEasy users view qualified agents’ successful deals in a building of interest and contact them. Up to three agents can be displayed at a property, and an agent needs

only to have been involved in two transactions at the building in the last 24 months to qualify. Of those two transactions, however, one could be a current listing, StreetEasy confirmed, meaning that it’s possible a building expert may have completed only

brokerage Bold New York, is okay with the program in principal, citing the inﬂuence of “the Zillow/Trulia” model. He expressed concern, however, that it could cause confusion about who the actual rep is for a listing. “The average listing broker will see this

Middle, a sample of the Building Experts ads that StreetEasy is testing. Left, Jordan Sachs of Bond New York. Right, StreetEasy’s Susan Daimler.

one transaction at a property. Some agents, who asked not to be named to avoid damaging their relationships with StreetEasy, expressed disappointment that their previous Top Agent status at a property had been replaced by a paid program with a relatively low threshold for qualifying as an “expert.” Others were more sympathetic. Jordan Sachs, president and CEO of residential

as competition to getting deals done,” Sachs said. “But brokers who are seeing the bigger picture and thinking long-term should not allow it to be a hindrance” as long as there’s no ambiguity about who is the actual rep is. StreetEasy general manager Susan Daimler said the company is excited about the program’s early reception, and said it provides “exposure and personal branding”

for agents “that simply did not exist” with the prior program. Building Experts operates on a cost-per-impression model “typical for most online advertising programs,” Daimler said, with each listed building given a specific price and traffic forecast that “gives agents the opportunity to select how much exposure they want to purchase.” She added that 60 percent of the 250 buildings in the pilot program “already have Building Expert representation,” and StreetEasy is “hearing from agents requesting buildings to be added to the program.” Caren Maio, founder/CEO of listings database Nestio, said the strategy “makes sense.” “They’re trying to monetize placement where they see it’s relevant,” Maio said. “I think it makes sense to monetize all the traffic they get and the fact that they have a big footprint in this market.” Sachs said transparency is “important,” and that there “needs to be some metrics in place from StreetEasy’s side to understand whether that ‘expert agent’ should be considered an expert.” “Do [two deals in 24 months] make you a pro? That’s a question that can be argued,” he said, adding that it “depends on the building.” TRD

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Reverse commutes The spurt of new Brooklyn office development will only partly ease borough’s space crunch BY REY MASHAYEKHI f there were any outstanding questions about Brooklyn’s viability as an office market, they were put to rest last month, when Hillary Clinton signed on for a large block of space in Brooklyn Heights. Clinton’s decision to take nearly 78,000 square feet of space for her 2016 presidential campaign headquarters at 1 Pierrepont Plaza is only expected to add momentum to the Brooklyn office market. While it is often overshadowed by the borough’s booming residential market, commercial brokers say there has never been more demand for office space in Brooklyn. “There’s a tsunami of people hoping to take advantage of the Brooklyn office market,” said Timothy King, managing partner at Brooklyn-based CPEX Real Estate Services. “It used to be a back-office bastion, and today it’s flourishing as one of the most desirable places to be in the city.” However, with residential development more lucrative than ever in the borough, the incentive for investors to build commercial development is still limited. “It is a very tight office market … the numbers are far better to go residential,” said Joe Cirone, senior director of brokerage at the commercial firm Cushman & Wakefield. Nonetheless, at least 2.5 million square feet of office space is coming to the Brooklyn market in the next few years, according to Cushman & Wakefield research. The vast majority of that space is not brand-new Class A buildings going up in Downtown Brooklyn; it’s redeveloped industrial space, or other existing buildings originally designed for none-office use, now geared mainly toward creative-type tenants. The pipeline, brokers say, is full of units for those perhaps dreaming of becoming the next company to be bought by Google or Facebook. The most high-profile Brooklyn office project, of course, is courtesy of Kushner Companies and RFR Realty, who teamed up in 2013 to buy the Jehovah’s Witness Watchtower complex in Dumbo for $375 million. The complex, which is being redubbed “Dumbo Heights,” will contain 963,000 square feet of office space and is slated for completion this year. Asking rents there are up to $60 per square foot, sources said. Meanwhile, Midtown Equities’ Empire Stores development in Dumbo is expected to open this fall and bring roughly 385,000 square feet of office space to the market. It has made waves, with record-breaking asking rents climbing as high as $85 per square foot. In addition, the Brooklyn Navy Yard, which already has 4 million square feet of space in use, is adding another 2 million square feet of office space by 2017. And further

80 May 2015 www.TheRealDeal.com

down the line, Jamestown is in the midst of converting its massive Industry City project in Sunset Park, reviving 6.5 million square feet of dilapidated manufacturing space by 2027. Both of these developments also contain light manufacturing components. Richard Warshauer, senior managing

struction is a leading indicator of how that market’s doing,” he said. “But in Brooklyn, there’s a different dynamic: More space is being converted into ofﬁces than is being built ground up.” A variety of factors are driving the market for office conversions in the borough,

Kushner Companies and RFR Realty will include 963,000 square feet of ofﬁce space at the Dumbo Heights complex.

Hillary Clinton signed on for ofﬁce space in the borough.

TerraCRG’s Ofer Cohen

There’s 500,000 square feet of ofﬁce space included in the plans for the Domino Sugar project.

“The market’s changed. There’s more demand and less space every day. There’s just more tenants than space.” CHRISTOPHER HAVENS, APTSANDLOFTS.COM director at Colliers International, said new construction is traditionally “the bellwether of the viability of any real estate market.” “The extent to which one sees new con-

including limited space, the lack of impetus for new commercial developments compared to residential ones and the class of tenants seeking to make a home in Brooklyn.

Creative tenants, not surprisingly, are behind much of the demand for Brooklyn office space. “It’s a market that didn’t exist before,” Ofer Cohen, founder and president of Brooklyn commercial brokerage TerraCRG, told The Real Deal. “These are start-up companies being founded by an entrepreneur who lives, loves Brooklyn and thinks, ‘Why do I have to go to Chelsea?’ ” E-commerce website Etsy, which was founded in the borough, is a prime example, said Tucker Reed, president of the Downtown Brooklyn Partnership, the business improvement district that lobbies on behalf of the area. Last year, the company signed a lease for nearly 169,000 square feet at the Dumbo Heights project. “There’s plenty of evidence that creative class companies, in particular, are eager to invest in this area,” agreed David Lombino, director of special projects for Two Trees Management. Lombino cited Kickstarter’s 2012 purchase of its 29,000-square-foot headquarters in Greenpoint, and Vice Media’s 70,000-square-foot lease in Williamsburg, signed last year. Shared space providers are also moving into the market, with WeWork committing to more than 160,000 square feet at Dumbo Heights and Cowork|rs signing on to 42,000 square feet at a rehabilitated Gowanus industrial building. That eagerness from technology, advertising, media and information technology tenants — the so-called TAMI sector — is driving Two Trees’ hopes for its redevelopment of the former Domino Sugar refinery in Williamsburg, a mixed-use plan that will include 500,000 square feet of commercial office space. Two Trees “actually reduced the amount of residential space and increased the amount of commercial space, as was allowed,” Lombino said. Cohen speculated that there is roughly 20 million square feet of space in the borough that could potentially be redeveloped for commercial use in the coming decades through “flexible zoning.” While such widespread redevelopment would take years, if not decades, to come to fruition, Cohen said the Brooklyn market is “hungry for a creative, cool office experience.” “It’s not a commodity space,” he said. “People want a specific kind of space, and that’s the space developers are trying to cater to.” Of course, such space can’t simply crop up alone; there are logistical considerations that must be taken into account. Cohen mentioned the importance of amenities, like nearby dining options, to an office development’s desirability, while also noting that unreliable high-speed Internet connections are a reality at some converted properties. But the demand is there, and commercial brokers and developers alike recognize the importance of meeting it. “People come to Brooklyn from Manhattan, and they have certain expectations; they expect the gritty office space with great light and great views,” Cirone Continued on page 138

www.TheRealDeal.com January 2014 35

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Real estate agents affiliated with Compass are independent contractor sales associates and are not employees of Compass. Equal Housing Opportunity. Compass is a licensed real estate broker located at 90 Fifth Avenue, 3rd Fl. NY, NY 10011. All information furnished regarding property for sale or rent or regarding ďŹ nancing is from sources deemed reliable, but Compass makes no warranty or representation as to the accuracy thereof. All property information is presented subject to errors, omissions, price changes, changed property conditions, and withdrawal of the property from the market, without notice. To reach the Compass main office call 212.913.9058.

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New York / New Jersey

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Company Wide

Richard Orenstein

Louise Phillips Forbes

Mary Higgins

The Sneddon Team Jaime Sneddon & Kendall Sneddon

Louise Phillips Forbes

HIGHEST NUMBER OF SALES DEALS CLOSED

HIGHEST NUMBER OF SALES DEALS CLOSED Team New York / New Jersey

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Jeremy Bolger and Neal Young

Fern Hammond

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Brian Lewis

* 2014 Halstead Property Company-wide

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* 2014 Halstead Property Company-wide

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PR O F I L E

Back at the table

Largely out of the limelight since 2005, Louise Sunshine is acting as a consultant on Vornado’s 220 Central Park South BY E.B. SOLOMONT s the first lady of new development marketing in the 1980s, 1990s and early 2000s, Louise Sunshine left her mark on more than 75 projects in New York, Miami and beyond. A biography on her website describes her life as having been “one of almost epic proportions.” Since 2005, however, when her Sunshine Group officially merged with the Corcoran Group, she’s been largely out of the limelight. Now, she’s taking on her most highprofile assignment in a decade. Steven Roth, CEO of Vornado Realty Trust and a longtime friend of Sunshine, has tapped her to serve as a consultant on 220 Central Park South, the Robert A.M. Stern-designed ultra-luxury building that is the most hotlyanticipated addition to Billionaires’ Row. Corcoran Sunshine Marketing Group, an offspring of the Sunshine Group, is handling sales at 220 CPS. But Sunshine’s relationship with Roth and her new development track record suggest that her influence on the project will be immense. “It’s a masterpiece,” Sunshine said of 220 CPS, which she is otherwise not permitted to discuss, in part due to Roth’s notorious aversion to media interviews. Industry players said it’s no surprise to see Sunshine and Roth teaming up again, after collaborating in the past on the Park Laurel at 15 West 63rd Street and Bloomberg Tower at 731 Lexington Avenue, which houses the 105-unit One Beacon Court. “She is an icon in the business, and that’s a really big mothership,” said Donna Olshan, founder of Olshan Realty. The project at 220 CPS is one of only a handful that Sunshine has been publicly associated with since she sold her company in 2002 to Corcoran parent NRT. “Staying relevant after you have fulfilled the majority of your goals and accomplished many things you set out to accomplish when you were younger, it’s a very interesting question,” she told The Real Deal over a recent breakfast of yogurt and berries. “Maybe the title of a book.” Ensconced at a back table inside The Mark Restaurant, the Jean Georges eatery inside The Mark Hotel, Sunshine was dressed in a blue tweed jacket and wearing a signature pendant necklace and oversized rings. “I designed this,” she said of the space, which the Alexico Group renovated for around $100 million before the bust. Tucked under the table is a black cane, which the 74-year-old has carried since undergoing open spinal surgery several years ago. Sunshine is now involved in four Manhattan new developments, three of which remain undisclosed. Outside the city, she’s a consultant for developer Nadim Ashi’s The Surf Club Four Seasons in Miami Beach and Granite Park Place in Pasadena, California.

84 May 2015 www.TheRealDeal.com

She’s also working on what she described as a tech-driven approach to real estate design that, in her words, will take predevelopment planning to “the next place.” “That’s where my strength is,” she added. The granddaughter of Barneys New York founder Barney Pressman, Sunshine worked in New York state politics before kicking off her real estate career with Donald Trump. She was a key player in the rollout of the Trump International Hotel and Tower at

Since the non-compete ran out, Sunshine has quietly, and sometimes not-so-quietly, consulted on projects locally and around the country. In 2012, she rolled out Sunshine Select Residences, a brand that offers curated furnishings for high-end residences. Through Sunshine Select, she’s become a “mini developer” herself by ﬂipping penthouses. She’s currently asking $11.75 million for her Miami Beach penthouse, a 6,400-squarefoot pad that was originally two units. Sunshine purchased the two apartments for a combined $4

Directors, and another veteran in the space. “Twenty years ago, you could put together a beautiful presentation and that would do it.” Today’s end-user clients are incredibly savvy, Albert added. “You have to be able to justify everything, including the heating system, the cooling system, construction details, your pricing,” she said. “You can’t be on the sidelines watching, you have to be in the game every day if you want to make things happen.” It’s been a decade since Sunshine was a day-to-day player. But sources said her strength is a singular focus on creating value for developers. “Louise’s strong suit was always understanding what the product wanted to be and inventing new ways to express value,” said Nancy Packes, who has been called the rental counterpart to Sunshine. Joseph Moinian, who hired Sunshine in 2012 to boost sales at his W New York Downtown project, said in an email that Sunshine

Louise Sunshine is acting as a consultant on Vornado’s 220 Central Park South.

Central Park, a project that inspired her to copyright the phrase, “All square feet are not created equal,” and helped change the landscape of the 59th Street corridor. The neighborhood subsequently saw the rise of Related Companies’ Time Warner Center and the emergence of Billionaires’ Row. In 2005, Sunshine left her ﬁrm when it ofﬁcially merged with Corcoran to form Corcoran Sunshine Marketing Group, now led by Kelly Kennedy Mack. Sunshine was bound by a non-compete agreement until 2010, but an exception to the agreement permitted her to work for Izak Senbahar and Simon Elias’ Alexico Group, which developed 165 Charles Street, the Laurel and the Grand Beekman on East 51st Street. “I was very appreciative that I could continue to work with Alexico,” she recalled. “It kept me in the game.”

million in 2013 and subsequently convinced the building’s board to change the façade of the building as part of an extensive renovation of the penthouse. “It’s where I’m going in life,” she says. “I want to keep being able to create value for people by helping furnish and design.” The condominium owners association at the project, known as the Grand Venetian Condominium in Miami Beach, allegedly asked her to pay a $1 million fee to combine the penthouses, and Sunshine is battling the association in court. Sunshine is widely acknowledged as a pioneer of New York City new development marketing. When she started her ﬁrm in 1986, she was able to set the tone for how luxury projects in the city were positioned. Now, however, competition in the space is far more intense. “It’s a very different world than it once was,” said Adrienne Albert, the founder and CEO of new development sales ﬁrm the Marketing

represented the developer and his project “at the highest levels of personal and professional excellence.” “Her ability, taste and marketing acumen is unrivaled,” Moinian added. Still, sources observed that Sunshine’s partnership with Corcoran Sunshine on 220 CPS was likely borne out of necessity. “Louise doesn’t have a sales company anymore, so they’d need someone to handle on-site sales,” one source noted. But if there is any tension stemming from having too many cooks in the kitchen, neither side will say. Corcoran declined to comment, and Corcoran Sunshine did not respond to a request for comment. Vornado also did not comment. “I’m not competing with Corcoran Sunshine at all,” Sunshine said. “They have a speciﬁc mantra. They are challenged to sell a project. My role is geared toward everything needed to develop a property so they can sell, or so the developer can position the property to create more value.” TRD www.TheRealDeal.com January 2014 35

TRD Broward Forum draws thousands Panelists see growth north of Miami among both international and domestic buyers BY INA CORDLE gainst a backdrop of the Design Center of the Americas’ luxury showrooms, more than 2,000 real estate wheelers and dealers mingled at The Real Deal’s Broward Forum and Showcase on April 23 in Dania, Florida. Panel discussions explored the future of foreign investment in South Florida and what is next for development in Broward County. TRD Publisher Amir Korangy told attendees that the location was chosen because of increased development in Broward. With rising land prices in Miami-Dade, many developers have turned their attention northward. “What we have seen is a tremendous growth,” which has

been brewing for 15 or 20 years, said panelist Bradley Deckelbaum, owner of Premier Developers Riva Fort Lauderdale. Scott Leventhal, co-founder of The Trillist Companies, said he is seeing strong demand from Latin American consumers who are looking for a home. Philip Spiegelman, principal of International Sales Group, agreed. “It’s not just one or two countries. We are seeing all of South America, Central America and Mexico,” he said. The strongest trend, however, is the growth of domestic buyers, including those from Chicago, in addition to the Northeast, said Dora Puig, principal of Luxe Living Realty. “We’re back to the U.S.A.,” she said.

From left: Ross Fox; Nick Perez; Veronica Escobedo.

From left: Carlos Melo; David Martin; Philip Spiegelman.

A captivated audience at the panel on the future of foreign investment in South Florida.

“Most Chinese buyers I’ve met want their kids to go to school here, and they want them to stay here.” DAVID MARTIN, TERRA GROUP

Attendees check out the Related Companies’ booth. Turnberry Ocean Club model.

TRD’s Ina Cordle interviews Scott Leventhal of Trillist. Amir Korangy, The Real Deal publisher.

More than 2,000 people viewed the new developments on display.

“It’s not that a building boom is happening in Fort Lauderdale. It’s that Fort Lauderdale is changing into an entirely different place to live.” BRADLEY DECKELBAUM, PREMIER PROPERTIES

George Mato, VP of Sales at the Ritz-Carlton Residences.

ArX’s Patricio Navarro and Turnberry’s Maxwell Pawk.

86 May 2015 www.TheRealDeal.com

TRD team: Sean Stewart-Muniz; Katherine Kallergis; Ina Cordle.

From left: Jack McCabe; Bradley Deckelbaum; Scott Leventhal; Michael Hammon; Kobi Karp.

www.TheRealDeal.com January 2014 35

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MEET THE LANDLORD

VITAL STATS

NAME: Danny Wrublin COMPANY: Dalan Management AGE: 33 HOMETOWN: Roslyn Harbor, N.Y. CURRENTLY LIVING IN: Union Square

How many NYC buildings does Dalan own? We have about 43 buildings in the city — with 1,200 apartments and a little over 100 commercial units, both retail and office. A lot of what we target are mixed-use properties in Manhattan and the Bronx. Our rentals are a mix between rent-stabilized and market-rate units. In Manhattan, the majority of them are in the East Village, West Village and Chelsea. They’re largely five- or six-story walk-up buildings with 10 to 45 apartments and ground-floor retail. But there are outliers, like a 164-unit building on 44th Street for which we just bought the ground lease.

What kind of renovations does the firm do on its buildings? We typically do something different than what the last owner did. That often involves modernizing common areas and building a roof deck. Depending on our partners — sometimes RWN Real Estate Partners and the Praedium Group — we try to hold them for at least ﬁve years.

How did you get into the business? I was an economics major at Duke University, where I graduated in 2003. My father Andrew was running G. Wrublin Company, an electronics company started by my grandfather. We bought our ﬁrst building in Harlem that year. I was working as a ﬁnancial analyst by day and, at night, showing apartments at our 15-unit building. I left my job and started bringing in investors. We bought a building with 30 units, then one with 60, and kept going from there. I always liked numbers, but I also liked the physical aspect of real estate.

Do you deal with tenants firsthand? Over the years, I have. When I started the business, I did everything. I looked at broken refrigerators in Washington Heights. Occasionally now, I come face-to-face with a tenant to discuss a buyout or some signiﬁcant legal dispute that’s outside of not paying the rent.

What’s the strangest thing you’ve been asked by a tenant? I received my weirdest request last year. We agreed to buy out a rentstabilized tenant at one of our West Village properties. He added a clause that he wanted to take the front door with him. This guy literally walked out the front door with the front door and his check in hand.

Do you have any tenant horror stories? I remember going to one of our buildings on 150th Street to look at a refrigerator that wasn’t working. Next door lived a tenant whom we knew to be dealing drugs. We were in the process of suing to get him out. He heard noise, or heard we were next door. He came out of the apartment and tried to engage in an altercation. The police ultimately came. He later [moved out]. I don’t remember whether he was evicted or left on his own. When we went to renovate the apartment, we

88 May 2015 www.TheRealDeal.com

took down the walls to the studs and found all sorts of cash. This was sort of my indoctrination into the business.

Do you have any interest in developing? It’s something we would consider. When things were very bleak ﬁve years ago, we were very active buyers of non-performing loans. Those really helped elevate the company to the next level. They ended up being great deals. But one of my regrets is that I didn’t look at any pure development plays. We only looked at loans that were collateralized by existing properties that we could comfortably take over and reposition.

What would it take for you to consider a development project? Between air rights and zoning, sometimes you fall into it. For example, we have three buildings on the corner of 22nd Street and Sixth Avenue in Chelsea. We have owned two of them for a while, and then two years ago, we found out that an adjacent building was becoming available. All of a sudden, we had the makings of a [potential] development site.

Many Manhattan multifamily landlords focus on Upper Manhattan. Why did you set your sights on Chelsea and the Village? From 2003 to 2006, we only bought in Harlem, Washington Heights and the Bronx, with a small exception in Chelsea. When the market corrected, we bought notes and started getting a taste of owning more Downtown. The ability to improve the property but also have the rental demand to justify the expense to do stuff really resonated with us. Over the last few years, we slowly sold off essentially everything we owned in Upper Manhattan and the Bronx. There were good opportunities Downtown to make a decent return with the upside of rent growth, which is more substantial than that of Upper Manhattan or the Bronx.

You have 800 apartments in Phoenix and are buying up more. Why Phoenix? The yields and the cap rates are higher than in New York. The cash flow is better. New York tends to get very frothy and it’s difficult to find quality opportunities. We’re not necessarily looking to be … an expert in 20 markets. But if we can be experts in a couple markets, it’d be better than being stuck in only one.

What neighborhoods would you like to break into next? We’ve looked in Flushing. We missed out on a deal there last year. We regularly look in Brooklyn. Like everywhere else, it’s gotten expensive. As for myself, I’m moving to the Upper East Side this summer. I bought an apartment and have a baby on the way, so there are a lot of changes. By Mark Maurer

PHOTOGRAPH FOR THE REAL DEAL BY CHANCE YEH

4million .6 The Corcoran Group is a licensed real estate broker located at 660 Madison Ave, NY, NY 10065. *Source: Corcoran Sunshine Market Research April 2015 – Data represents Manhattan new development average unit price reported and sold in 2014 represented by marketing ﬁrms and in-house sales.

AVERAGE SALE PRICE IN NEW DEVELOPMENTS REPRESENTED BY CORCORAN AND CORCORAN SUNSHINE MARKETING GROUP IN 2014

MORE THAN ANY OTHER FIRM

At The Corcoran Group there are a thousand ways to measure success, but only one way to ensure it — understanding our clients well enough to ﬁnd the home that lets them live who they are.

NEIGHBORHOOD DIVE

A well-kept Brooklyn secret is out New projects, residents ﬂow into Prospect-Lefferts Gardens

BY KERRY MURTHA ucked away on the east side of Prospect Park, a short walk away from the Brooklyn Botanic Garden, Prospect-Lefferts Gardens has long been one of Brooklyn’s best-kept secrets. The largely residential enclave bordered by Empire Boulevard to the north, Clarkson Avenue to the south, New York Avenue to the east and the park to the west, encompasses an historic district of 800 homes, including single-family Tudors,

TOP DEVELOPMENTS One of the largest developments, at 626 Flatbush Avenue, will bring 254 units to the area, with 20 percent marked for discounted rents to low-income families. Rents will depend upon income, but a two-bedroom will go for approximately

A rendering of 626 Flatbush Avenue

limestone townhouses and shingled Victorians. Once a bastion for the wealthy, the area grew more diverse as Hispanics, Asians and a prominent Caribbean community moved in starting in the 1950s. Today, its reasonable prices, tree-lined streets and easy commute to Manhattan draw young professionals and families looking for an alternative to pricier Park Slope and Prospect Heights. In response, developers are ﬂooding the market with rental and condo units. With more generous limits on

building heights and relatively inexpensive land costs, development has exploded over the past two years — 1,000 units of housing have hit the market since 2013. Prior to that year, new housing was virtually nonexistent. The last signiﬁcant construction was a two-tower apartment complex that rose in the 1960s. The residential boom has spurred a crop of new retail, restaurants and bars to open along the commercial stretch of Flatbush Avenue, giving this quiet neighborhood new life.

The former Caledonian Hospital at 123 $850. Hudson Companies is developing Parkside Avenue is being converted into the 23-story luxury rental, which is being designed by Marvel Architects. The project 120 rental units by the Chetrit Group. The includes 4,000 square feet of retail space. Karl Fischer-designed building will include a gym, media room, children’s playroom and Completion is expected in 2016. a planted lawn on the Anderson Associates roof. Studios will fetch is developing $2,000 per month, onethe Lincoln Park bedrooms, $3,500. Apartments. The two Residential connecting multiDevelopment Group family buildings will is constructing stand nine stories four new threehigh, allowing for story, three-family park views, and will A rendering of 123 Parkside Avenue townhouses at 274 include 133 rental units, 20,000-square-feet of retail space, to 280 Hawthorne Street. Asking prices a rooftop deck and underground parking. will range from $1.4 million to $1.6 million. Twenty percent will be affordable, 80 percent The cheapest, number 278, is already sold. market rate. Completion is expected this year. Sales are being handled by Corcoran.

Retail Scene New restaurants and bars are replacing the bodegas and hair salons that have long dotted the main thoroughfare of Flatbush Avenue. Retail rents have shot up to $50 per square foot, brokers said, a roughly 15 percent jump Gratit Gra Gratitude titude tit ude de Cafe Cafe f over the past year. Among the newcomers: Cinnamon Girl, a gourmet bakery that serves gluten-free goods and kombucha on tap, and Gratitude Cafe, which aims to provide healthy fare and community space. In October, two “New Brooklyn”type hangouts opened: Bluebird Food and Spirits, and Midwood Flats, which offers craft beers and creative snacks like torta topped by duck conﬁt, fried egg and arugula.

What to Watch for A number of residents are opposed to new high-rise developments, which they fear will obscure coveted views of the park and change the neighborhood’s character. Neighbors unsuccessfully sued developer the Hudson Companies over its 23-story apartments at 626 Flatbush. Community organizations have called for a moratorium on such development and hope to get zoning changed to prevent future towers.

Demographic changes from 2000 to 2010: Population: 168,117, up 2.2% since 2010, down 2.9% since 2000 Median Income: $39,319, up 1% since 2010, up 31% since 2000 White Collar: 67.7% Blue Collar: 32.3%

A Broker’s Take on Commercial “This neighborhood has the beginnings of becoming like Park Slope,” said Keith Mack, an associate broker at Corcoran. “There are a growing number of vacant signs as landlords, anticipating changes, are hiking rents and pricing out existing tenants.”

When completed next year, 520 Parkside Avenue will include 50 units in two towers rising seven stories each. Aspen Equities is the developer and Joseph Spector the architect. Amenities include a landscaped courtyard with individual garden plots and a roof deck.

A rendering of 274-280 Hawthorne Street

Price Trends

127% Increase of the median sales price of a home since last year, to $1.3 million from $587,000.

$1,500 Average monthly rent for a studio, up 20 percent from last year; one-bedrooms average $1,700; two-bedrooms, $2,000 and threebedrooms, $3,100.

$160,000 Average price for a studio co-op; $299,000 for a one-bedroom co-op.

$614 Average price per square foot for homes, a 41 percent increase from last year, yet still less than the $1,000 per square foot cost in nearby Prospect Heights.

On the Market

626 Flatbush

A Broker’s Take on Residential Most Expensive Recent Sales:

Least Expensive Recent Sales

51 Maple Street, 3,618-squarefoot, six-bedroom one-family sold for $2.4 million.

Unit #6L, 1,371-square-foot, threebedroom condo sold for $200,000.

605 East New York Avenue,

square-foot, ﬁve-bedroom townhouse sold for $2.2 million.

502A Maple Street, 4,230-square-foot, four-unit multi-family sold for $400,000.

239 Sterling Street,

504 Maple Street, 3,360-

1,680-square-foot, three-bedroom townhouse sold for $1.7 million.

square-foot, four-unit multi-family sold for $400,000.

61 Midwood Street, 3,848-

92 May 2015 www.TheRealDeal.com

“Lefferts Gardens is a mix of housing stock of the early 1900s, with many residents who have lived here most of their lives,” said Bill Sheppard, a Brown Harris Stevens broker who has lived in the area for 24 years, “but an influx of new developments and younger people are transforming this neighborhood into a classic New York melting pot.”

42 Hawthorne Street, left, is attached on one side

42 Hawthorne Street, 13,000-square-foot, eight-unit townhouse for $3.9 million. 80 Winthrop Street, unit Z2, 500-squarefoot studio co-op for $130,000.TRD

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WH AT TH E Y ’ R E READING NOW

Real estate pros share picks for books on development, history and the U.S.’s atomic legacy Where do you look for insight and inspiration? To ﬁnd out, The Real Deal asks leaders in the industry what they’re reading.

Brian Ezra Co-founder, Avery Hall Investments What are you reading right now, or what did you finish most recently? I just finished “Little Failure,” a memoir by one of my favorite authors, Gary Shteyngart. I find his writing ceaselessly funny, poignant and tortuous. I recommend starting with “The Russian Debutante’s Handbook” if you haven’t read him yet. I also just picked up “Robert Moses: The Master Builder of New York City,” by Pierre Christin. What was the appeal of the Moses book? I am fascinated by the history of New York City’s development, and as required reading I wrestled my way through Robert Caro’s “The Power Broker” right after college. When I saw a new graphic biography on Robert Moses, I had to get it. Has anything in it stuck with you? Christin’s comic book-styled portrayal is both fascinating and entertaining and well worth a read. Moses remains a polarizing and controversial figure, and I think we will be debating his powerful legacy for years to come.

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94 May 2015 www.TheRealDeal.com

President, Siderow Residential & Commercial Groups What are you reading now? The book I am reading now is “The Rise of Theodore Roosevelt,” by Edmund Morris, which is part of a trilogy on Roosevelt. What spurred you to read the book? I have a strong interest in NYC history and Teddy was a character in another book I was reading, “The Alienist,” which is historical ﬁction. His strong character and what he did in NYC fascinates me. Has anything else in it stuck with you? He deﬁnitely didn’t take no for an answer and never backed down from a

challenge — whether it was by overcoming his illnesses, courting his ﬁrst wife or becoming the youngest U.S. president. Strongly recommended.

Jennie Lamensdorf Contemporary art curator Time Equities What did you finish most recently? I just finished reading “Command and Control: Nuclear Weapons, the Damascus Accident, and the Illusion of Safety,” by Eric Schlosser. What spurred you to read that book? I’m very interested in America’s atomic and nuclear legacy. I first started thinking about this subject in 2005 when I spent two months backcountry camping in the Southwest as part of my graduate studies in art history. It really changed my perspective of America. Typically, I look at this subject from an environmental and social perspective and in my work I’m very interested in artists who seek to make visible the invisible. [Similarly] the atomic legacy is generally invisible; we cannot see radiation, only its effects. “Command and Control” was my first foray into the subject from a military history standpoint. Has anything you read in it stuck with you? Schlosser, a journalist, wrote the book like a thriller. I got sucked in as if I was reading a novel. What sticks with me most is the broad message that we face a problem of our own construction and that denying something we cannot see (in this case classified documents and missiles, radiation damage, etc.) does not negate its existence. I think this can apply to so much in life; there are so many invisible forces that drive us: ambition, anxiety, fear, friendship, envy, love. And, in many ways, this is what art is about ... making the invisible visible. Work I find successful typically works on two levels: It’s formally substantive (interesting to look at or experience) but it also has to confront or explode something I thought I already knew. A really powerful artwork will change your mind about the things you thought you knew best. I think this book is successful in the same way. Compiled by Andrea Cetra www.TheRealDeal.com March 2010

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1969: APARTMENT-TO-OFFICE CONVERSIONS OK’D anhattan property owners were granted the OK to transform residential apartments into office suites on a unit-by-unit basis, as commercial tenants in Midtown clamored for more space, 46 years ago this month. Prior to the ruling by the city’s Board of Standards and Appeals, landlords could only convert apartments to office use one floor at a time, and the office space had to be below the residential floors. The change came at a point during a commercial boom, when office tenants in Midtown paid landlords more per square foot than residential tenants. 135 East 50th Street was among the buildings found A city analysis at the time found 115 renting illegally to office tenants. apartments in buildings, including 135 East 50th Street, that were occupied illegally by office tenants, contrary to zoning code. The BSA ruling overturned regulations that prohibited offices from being on the same floor as a residential apartment, even if the building was in a commercial district.

1928: NY REALTY PROS SAY CITY IMMUNE TO DOWNTURN eal estate professionals said the New York City market would not fall victim to the boom and bust cycles that were starting to impact land values in other regions of the United States, 87 years ago this month. Louis Tishman, a member of one of the city’s leading development families, said, “No matter what levels real estate valuations may reach in New York City, there will never be a [bubble] in Manhattan real estate.” Tishman, a vice president at Tishman Realty and Construction, continued, “What would be wild speculation elsewhere is simply a sane, sound investment in New York.” Even after the collapse of the financial markets in October 1929, leading brokers kept up a positive public face. Joseph P. Day, an influential deal maker, wrote an opinion piece in January 1930 that conditions remained healthy, and the city had not experienced a “boom.” “The real estate symptoms I perceive for the coming year are healthy and not feverish,” he said, citing the city’s Louis Tishman population growth as a driving factor. One year later, broker Lawrence Elliman predicted that land values would rise over the next decade, although he acknowledged that it would be slow at first. But just months later, one insider’s attitude was less sanguine. Broker Edgar Levy, speaking at a meeting of the Real Estate Board of New York in April 1931, said the city was suffering from oversupply. “I am sure that more houses, apartments and office buildings were being planned in 1929 and 1930 than could possibly have been filled even if the boom had continued,” Levy, president of a prominent firm at the time that bore his name, told the group.

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96 May 2015 www.TheRealDeal.com

EQUAL HOUSING OPPORTUNITY.

1907: RECORD RETAIL RENT ON 34TH STREET

growing drug store chain signed a retail lease that set a record on West 34th Street, 108 years ago this month. The druggist, William B. Riker & Son, signed the lease with the department store Bonwit Teller & Co., to pay about $1,100 per front foot per year for the ground ﬂoor and lower level at 13-15 West 34th Street, just west of Sixth Avenue. Riker developed and patented hair tonics, among other products, such as Riker’s Septone, “an antiseptic hair food.” “Front foot” was a measurement used around the turn of the century, calculated by dividing the annual rent by the street frontage. The yearly rent payment was $43,000 per year, or about $7 per square foot for the ground ﬂoor, today measured at a bit more than 6,000 square feet. By way of comparison, tenants on the west side of Broadway south of 42nd Street were paying about $800 per front foot in rent. Bonwit Teller originally planned to occupy the location itself, but chose to rent it out. The retail district along 34th Street between Fifth and Seventh Riker’s Septone avenues surged following the 1902 opening of R. H. Macy & was one of the prodCompany’s mega department store on Broadway between 34th ucts sold by William B. Riker & Son. and 35th streets. Compiled by Adam Pincus

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ARCHITECTURE REVIEW

JA M E S G A R D N E R

Signature, but not stand out Design of Japanese master Tadeo Ando’s first New York City building appears uninspired t is good news for New York (in specific) and for architecture (in general) that the 73-year-old Tadao Ando agreed to design a new building at 152 Elizabeth Street at the point where it intersects with Kenmare Street. A Pritzker Prize-winning architect based in Osaka, Japan, he has built all over the world, and has even done some residential interiors in the Big Apple, as well as “Iron Chef ” Masaharu Morimoto’s eponymous Japanese restaurant in the Meatpacking District. But heretofore, developers have not succeeded in procuring his services for an actual stand-alone building in Manhattan. That will now change, it appears, thanks to the exertions of the developers Sumaida + Khurana, whose art world cred is clearly proved by their having a plus sign in their name, rather than an “and” or, God forbid, an ampersand. Whatever inducement they and their partners, private equity firm Nahla Capital, marshaled to their cause for their first New York City building, however, it seems to have worked, and it is difficult to shake the belief that Ando is doing Gothamites a favor by consenting to design a building here. Most starchitects feel that way, but in his case it may actually be true. Indeed, the same firm has even secured the services of the equally elusive Portuguese architect Alvaro Siza for his first building in the United States, a proposed 400-foot-tall building in Midtown. On Elizabeth Street, Ando will create a far smaller structure, seven stories in all, containing a mere seven apartments that will range from about $6 million for a half-floor unit to more than $30 million for the fourbedroom penthouse. The building will be confected out of the poured-in-place concrete used in many of this architect’s buildings, as well as galvanized steel and sheer glass for the floor-to-ceiling windows. It also promises to have a living green wall nearly 100 feet wide and more than 50 feet high, thus making it one of the largest in the city, or anywhere else. Meanwhile, the press release informs us that the wood for the flooring comes from trees that are over 250 years old, a fact that is impressive and admirable, as long as you don’t think about it too much. If you do, it starts to seem like the arboreal equivalent of a mounted stag’s head, antlers and all, and such satisfaction as one might have from it is apt to consist in the knowledge that nature, in one of its more ancient forms, has now been subdued by human art and acquired by human wealth.

98 May 2015 www.TheRealDeal.com

In terms of its design, 152 Elizabeth Street is in a sense two buildings in one. The taller of the two, by two floors, consists of six stories of pristine curtain wall, raised up on a concrete plinth or podium. Interspersed between these floors are exposed I-beams that are reprised in the flat roof, which cantilevers around 10 feet over the smaller building to the east. Here the mural element formed by

have drawn more evocative poetry out of bare concrete than Tadao Ando. The result promises to be a worthy structure, and one that, through the quality of its workmanship, will doubtless impress the average passerby as well as the more studious scholars of architecture. And yet I must register a certain dissatisfaction with this development. There is nothing at all wrong with Ando’s

152 Elizabeth Street; below, a detail of the building; inset, architect Tadeo Ando.

broad expanses of concrete, is far more pronounced, although the result feels far more conventional. In truth, the ultimate success of the building, which is expected to be complete in late 2016, will consist in the skill of its manufacture, which, if Ando’s previous works are any indication, will be very high indeed. Few people, with the possible exception of Louis Kahn,

design — other than the fact that he can do so much better. Why does it seem as though there were something in the very air over the ﬁve boroughs that (with eminent exceptions, of course), draws even the ﬁnest international masters round to the nearest available mediocrity? The workmanship, as I say, should be very good on Elizabeth Street, but the design is perhaps a little lackluster.

For all the refinement of the details, the two halves of the building are the sort of thing that many a second-tier architect could have produced — and has produced — around the city. With a few adjustments, and minus a few admitted refinements, is there much in the six floors of curtain walls that we have not seen 1,000 times in the five boroughs? Other than the exposed concrete in the lower half of the building, there is little, if anything, in the design as it meets the eye that is not entirely typical of New York. In this regard, it appears as though Ando’s 152 Elizabeth Street is yet another instance of a building by a high-minded Japanese master whose style of austere, rectilinear minimalism, which by its very nature flirts with a certain inertia, tips over into tedium on the island of Manhattan. (Fumihiko Maki’s Tower 4 at the World Trade Center and Yoshio Tanaguchi’s revised Museum of Modern Art are, to some degree, further examples.) At least that is the overwhelming impression you get when you compare what Ando has designed here with what he has done, well, anywhere else. Surely, there is a constant element to his buildings, their geometric purity and the laying bare of their materials, whether glass or concrete or steel, that will be borne out on Elizabeth Street as well. But that inspiration that raises Ando’s best projects to a higher level of invention, that touch of the poet, is nowhere in evidence in the Elizabeth Street project. Where is that brilliant and inventive contrast that defines his building for the Langen Foundation in Westphalia, Germany, its concrete core wrapped in an exquisite crystal box of perfectly proportioned glass on all sides, as well as the roof? Or that stunning parody of Le Corbusier’s Unite d’Habitation at the Novartis headquarters in Basel, Switzerland, its perfectly proportioned box propped up on pylons and covered on all sides by brise-soleil that have the refinement of watered-silk? Or the library of Japan’s Shiba Ryotaro Memorial Museum in the Osaka Prefecture, whose shelves rise up three stories to contain 20,000 volumes, and in the process create a dizzying cross between architecture and conceptual art? None of that, unfortunately, is likely to materialize in Tadao Ando’s first venture in New York City. Allow me to repeat, more emphatically than before, that there is nothing wrong with 152 Elizabeth Street, and that, if any other architect had made it, I’d have been happy enough with it. But Tadao Ando can do far better, and to see yet another fine architect have his wings clipped by the Manhattan market is by all accounts a dreary spectacle. TRD PHOTOGRAPH OF ANDO BY INGMAR KURTH

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CHI NA WATCH BY RICH BOCKMANN hinese developers are teaming up with New York real estate players on projects big and small throughout the city, but they are readying themselves to ﬂy solo in the near future. Sources say that many of the Chinese companies that are investing in projects here are insisting on partnership structures that allow them to extract as much information as possible from their co-developers. That often involves parachuting executives in from China to shadow their New York counterparts to learn about the entire development process — from negotiating for the site to dealing with government regulations to marketing. In addition, they are also enlisting their joint-venture partners to help them establish connections with brokers, consultants and other industry players in New York who can help them do their own deals in the future. “For the development companies, the M.O. is to start with partners and learn how

100 May 2015 www.TheRealDeal.com

The(Chinese)apprentice Chinese ﬁrms aren’t teaming up with NYC players to make friends, they’re laying the groundwork to do projects solo

it’s done here so they can do their own deals,” said Robert Ivanhoe, chair of Greenberg Traurig’s global real estate practice. “A lot of other [foreign] investors may have someone advising from back home,” he added. “The big difference with the Chinese is that they’re more about being here and being on the job and actually being in the meetings to do all those things.” Attorney Dennis Russo, who heads the real estate group at Baker Hostetler, said a number of the Chinese companies that his law ﬁrm deals with are not content with writing a check and investing from the sidelines. “They won’t do the deal at all unless you let them be co-developer, or at a minimum shadow you around,” said Russo, who specializes in putting together joint-venture agreements. “They’re honest about [the fact] that they want to learn from you.” Sources said that Chinese ﬁrms aren’t necessarily negotiating unique terms into their contracts. But they are being more aggressive when it comes to following through on their existing privileges to, say,

review contracts or exercise approval rights, compared to other foreign companies. On Long Island, RXR Realty is working with a Chinese firm to develop a 1,500-unit residential project in Glen Cove. Company President Michael Maturo said the overseas partner has a team in the United States that’s “been very involved in understanding our zoning process and in understanding market demand in terms of design and amenity features.” Though he declined to provide specifics, he said via email that, “they plan to have their people apprentice with our development people on the [build out].” There are plenty of other issues for Chinese firms to master, too.

For example, negotiating for land is very different in China than it is here. In China, most development sites are bought directly from the government — a process described more as a “dialogue” than a negotiation by one consultant who helps U.S. companies navigate cultural differences with Chinese partners. As a result, Chinese ﬁrms are looking to beef up their negotiating skills and learn to haggle over prices. In addition, it was only in 2007 that the Chinese government introduced the legal framework allowing investors to form partnerships, so even the practice of forming joint ventures is, well, foreign to Chinese ﬁrms. Continued on page 130

The Real Deal is hosting the ﬁrst-ever U.S. properties showcase in China on Sept. 10-12 in Shanghai. Check TheRealDeal.com /Shanghai for more information.

www.TheRealDeal.com March 2012 00

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Q&A

NYC restaurants feel the heat Well-funded chains and healthy lunch spots expand, but many eateries get pushed from prime locations

BY JENNIFER WHITE KARP ew York City restaurants are feeling the heat in their kitchens, in the form of rising rents and competition from other well-funded retailers. A spate of high-profile restaurant closures — and a pending shutdown in the case of the famed Union Square Café — has focused attention on the sector recently. This month, The Real Deal talked to brokers who specialize in putting together restaurant deals to find out how restaurateurs and landlords are coping. To be sure, restaurants are on the rise in New York City, and most brokers say leasing activity in the sector is up — or is at least stable. Still, many eateries new and old are getting priced out of prime avenue locations and getting pushed to side streets and emerging neighborhoods. While brokers freely admit that many restaurants can’t afford the same rent bills that national retailers can, they note that landlords are often willing to cut them a deal because they act as foot-traffic magnets and drive up the prices for the surrounding commercial

Karma McDermott Partner, SKH Realty A number of highproﬁle restaurants have closed in the last year or so, blaming their demises on rent increases. What are you seeing in terms of restaurant leasing activity? We’re seeing continued stability in the volume of transactions, but more so amongst the fast-casual or [quick-service restaurant] concepts, as well as multiunit restaurant groups who can afford the higher occupancy expense. Which types of restaurants or chains are expanding most rapidly in NYC? Health-focused, scalable, and attainable chains. Chef Franklin Becker’s Little Beet and ESquared Hospitality’s new [vegan] concept By Chloe are good examples of the types of concepts we see signing leases. Are you seeing more expansion to other cities by NYC-based restaurants than you were a few years ago? We have seen a sharp spike in restaurateurs who are open to, and actively searching for, licensing opportunities in other countries, particularly in Asia, and most commonly within hotels. Hong Kong has attracted Boqueria, Mario Batali and Shake Shack. Miami has continued to be a consistent expansion pad for New York operators, including Dale Talde who will be opening Talde at the Thompson Miami Beach. Which neighborhoods in Brooklyn and Manhattan are faring best when it comes to retaining and attracting restaurants in this market? With a surge in residential development in Downtown Brooklyn on the way, land102 May 2015 www.TheRealDeal.com

lords [are valuing] food and beverage tenants in their buildings, and the deals reflect that. NoMad has also attracted interest from a wide spectrum of operators and groups, despite high rent. Which areas of Manhattan and Brooklyn are struggling most on the restaurant front? Park Slope has experienced a spell of turnover and difficulty attracting tenants. Chelsea, specifically on Eighth Avenue from 14th to 23rd streets, has seen a rise in for-rent signs and turnover. Are landlords trying to avoid long-term leases these days so that they can capture future rent increases earlier? The benchmark for restaurant leases is still a minimum 10-year term. Restaurant operators simply won’t sign short-term leases, other than in pop-up scenarios. We often suggest a percent rent as additional income to help landlords achieve their expectations on rent. Restaurants look at rents in terms of occupancy cost — usually 8 to 10 percent of gross sales — and not per-square-foot dollars. Landlords sometimes need to make concessions in their asking rents to accommodate for restaurant tenants. Dry-use tenants can typically pay higher per-square-foot rents. There’s a notable increase in the number of Eataly-style food courts in Manhattan, such as the ones at Gotham West and Brookfield Place. What do these types of food courts offer landlords? Landlords look to hedge their risk on multiple concepts and [rent to] operators who can be replaced individually in the event that they are not successful. Landlords who sign leases to a single operator for a single large-format concept run the risk of the concept not being successful. [We’ve] recently worked on several feasi-

and residential space. Brokers also note that brand-name restaurant groups, as well as the new wave of venture-backed healthy lunchtime chains, like Dig Inn and Sweetgreen, are the fastestgrowing players in the sector. In addition, large and “curated” Eataly-style food halls — which are popping up at new developments like Gotham West, the Gotham Organization’s mega residential project on the Far West Side, and the office complex Brookfield Place in Lower Manhattan — are gaining in popularity. Steven Kamali’s SKH Realty “recently worked on several feasibility studies on behalf of developers and landlords who are considering this model,” said Karma McDermott, a partner at the hospitality guru’s firm. For more on which neighborhoods are striving and struggling to land restaurants, as well as the skinny on which sectors of the business are oversaturated, we turn to our panel of experts.

bility studies on behalf of developers and landlords who are considering this model.

ful site selection, looking for emerging neighborhoods and undiscovered sites.

What’s the most surprising real estate trend in the NYC restaurant business now? We’re seeing a dichotomy between landlords who will make signiﬁcant concessions in rent to have a restaurant serve as an amenity to their buildings, versus landlords who are pricing restaurants out altogether, in favor of banks and dry-use retailers who will pay market rates.

How does restaurant leasing activity compare to activity of other types of retailers in NYC right now? Restaurants and food are still a major part of the leasing in new projects like Brookﬁeld Place, the World Trade Center, and Hudson Yards, as well as buildings that are being redeveloped and have big blocks of space like 1095 Sixth Avenue and 7 Bryant Park.

What are the biggest challenges brokers who specialize in restaurants face in this market? Rising retail rents coupled with the increasingly difﬁcult process of obtaining or transferring a liquor license without time stipulations. Time stipulations on liquor licenses have made it much harder for restaurants to capitalize on late-night business, which is needed to drive revenue numbers when considering higher rents.

Are you seeing more expansion to other cities from NYC-based restaurants today compared to a few years ago? Las Vegas, Chicago and Miami are some popular ﬁrst destinations for New York– based restaurateurs. The West Coast also has appeal. At the end of the day, it’s not necessarily about being from New York, it’s about a concept that can be replicated proﬁtably elsewhere, that’s often more to do with a ‘named’ chef, a brand, or a type of food that resonates elsewhere.

Jacqueline Klinger Vice president, SCG Retail What are you seeing in terms of restaurant leasing activity? The current asking rents have created a challenging economic model for even the most talented chefs and restaurateurs. Closures like Mesa Grill and the [pending closure of ] Union Square Café are purely based on increased rents. However, there are landlords that see a bigger picture … the true value of having a successful restaurant tenant. Deals are still getting made for the brand-name players, but the process is more complex and labor intensive than it once was. The key is care-

Spencer Levy Managing director, Robert K. Futterman & Associates What kind of retail leasing activity from restaurants are you seeing? Restaurant leasing is up considerably in the last few years, and I believe it will continue to stay strong because there are many new projects coming to market simultaneously. Chefs like Gabriel Kreuther at the Grace Building, Joël Robuchon at Brookﬁeld Place, Marc Murphy at the Viceroy New York [hotel], Shea Gallante at the Baccarat are bringing ﬁne dining back to New York City. www.TheRealDeal.com September 2014 83

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Q&A Which types of restaurants or chains are expanding most rapidly in NYC? Local restaurant groups with multiple concepts and locations like [Union Square Hospitality Group], Altamarea Group [owner of Central Park South restaurant Marea], Starr Restaurants and Major Food Group are doing well. These ‘blue chip’ brands have credibility with landlords. They understand the local markets, tend to be well funded and can move more quickly than national restaurant chains. Quickservice restaurants are also a growing segment of restaurant expansion. Their capital expenditures are lower than fullservice establishments and the occupancy percentages they can pay are higher. [As a result] these tenants are able to secure prime spaces that full-service restaurants cannot afford. Do you think the quick-and-healthy lunch category is oversaturated? People are finally willing to pay more to eat healthier foods. In central business districts, office workers tend to stay within a three-block radius for lunch. New York City remains underserved in the quick-and-healthy lunch market, and I believe there is adequate differentiation between the brands for competition. Are you seeing more expansion from NYC-based restaurants to other cities? There is something sexy about being international, and landlords in foreign markets think it’s compelling to have New York brands at their properties. Shake Shack Dubai, City Bakery Japan and Jean-Georges Hong Kong are all cool, but the majority of the expansion I see is more local. Restaurateurs are looking at markets outside of New York City that are within an easy travel distance and where the cost of doing business is significantly lower. We’re seeing New York brands open locations in places like D.C., Philadelphia, Boston, and as far away as Miami. Which neighborhoods in Brooklyn and Manhattan are retaining and attracting restaurants in this market? I think there’s a difference between retaining and attracting. Areas that retain restaurants usually have a large concentration of attractions and are in proximity to transportation, or both, like Times Square. But Gramercy, the Upper East Side and Upper West Side are also stable markets with higher retention rates for restaurants because of the sheer density of residents. The areas attracting restaurants today are ones with new developments where landlords are offering large contributions toward the initial buildout or where rents are still affordable. Some of the markets are Williamsburg, Bushwick, Midtown, Midtown West, Hudson Yards, FiDi, South Street Seaport and Downtown Brooklyn. 104 May 2015 www.TheRealDeal.com

Max Talpalar Director, Sinvin Real Estate With retail rents rising so rapidly in Manhattan, are restaurants getting squeezed out of prime locations? I think the characterization of squeezed out is unfair. It is a free market, and restaurants can take any space they desire if they can afford it. That said, most local restaurants cannot pay the same in rent as international retailers. Naturally, restaurants looking for value can find it in side streets, second floors or basements. Are landlords avoiding long-term leases to capture rent increases earlier? Landlords understand that restaurants need a long enough lease to amortize their initial start-up costs. I wouldn’t say landlords are looking for shorter terms. However, with the increased demand for restaurant spaces, there is no longer an incentive for landlords to offer extra-long leases like they did in the past. What do the new large, open food halls offer landlords? In many cases the large food courts act as an amenity to a residential or office building. The food court at Brookfield Place acts foremost as a service to the office tenants of the building. It helps Brookfield retain those tenants and potentially charge higher office rents. Similarly, Gotham West helps attract residential tenants to a part of town that is otherwise short on restaurants. The rental revenue is secondary to the big picture. Which types of restaurants or chains are expanding most rapidly in NYC? Fast-casual healthy restaurants, like Dig Inn, are expanding very rapidly. Other examples include Fresh & Co., Roast Kitchen, Juice Press. The growth of these chains parallels the growth of fitness companies like SoulCycle. Are you seeing more expansion from NYC-based restaurants to other cities? Large hotels in major cities have been luring NYC restaurants to serve as an amenity for guests. The hotels can offer financial incentives and steady traffic. For example, the Dutch is at the W Hotel Miami; Scarpetta is at the Fontainebleau in Miami; Jean-Georges [is] at One&Only Ocean Club in the Bahamas, and Public in Chicago. Of course, Las Vegas has been doing this for some time, with restaurants by Mario Batali and others. What’s the most surprising thing about the restaurant business in the city? I am constantly surprised at the gall of people who create an uproar when an old

restaurant announces a closure, rather than supporting the restaurant before it is forced to close. Where were those angry people when the restaurant was still in business? Why weren’t they visiting the restaurant to help it make money?

Josh Siegelman Broker, Winick Realty Group What kind of retail leasing activity from restaurants are you seeing? In the last three to five years, there was a steady growth period for both full-service and quick-service restaurant concepts that catered to an … increasingly health-conscious demographic. However, as real estate values continue to grow, there is a smaller window of growth for restaurant tenants within those spaces. As a result, in the last six to eight months, I think restaurant activity has plateaued. Restaurants are also evolving and changing their formats to fit in smaller spaces and operate efficiently with less overhead. Are restaurants getting squeezed out of prime locations? Real estate values are infinite, whereas a restaurant’s ability to monetize a space is finite. Prospective restaurants can only fit a certain number of seats, turn the tables over a certain number of times and only charge so much for a hamburger. In general, restaurants are getting squeezed out of main avenue locations, but they have shown an interest in securing sidestreet space that can harness the same market with decent visibility. Are NYC landlords avoiding long-term leases with restaurants these days? No prospective operator really considers less than a 10-year term, especially for a space that requires a full buildout. As a new tenant secures the space, they need to amortize that initial construction cost over the term of the lease to actually make money. The shorter the term they have, the harder that is.

James Famularo Senior director of retail leasing, Eastern Consolidated What kind of retail leasing activity from restaurants are you seeing? Leasing activity has increased 25 percent within the last two years, and I think this is due to the extremely talented chefs and foodie culture. Everyone wants to be in the restaurant business. But I would only recommend it to someone who has a passion for it. Unfortunately,

when things go wrong, people point their ﬁngers in every direction. Are you seeing more expansion from NYC-based restaurants to other cities? Yes, we are working with several concepts looking for locations in Shanghai, Hong Kong, Dubai and Panama, and some are considering Cuba. Which neighborhoods in Brooklyn and Manhattan are faring best when it comes to retaining and attracting restaurants? Midtown East and West are very popular in Manhattan. Greenpoint and Flatbush are hot in Brooklyn. The retail rents in those areas are still very reasonable compared to the West Village, Meatpacking, or Williamsburg.

Marc Frankel Senior managing director, Newmark Grubb Knight Frank Retail What kind of retail leasing activity from restaurants are you seeing? There’s no shortage of new restaurant openings. The past 12 to 18 months have been as active as I can remember. While certain areas have increased in value beyond what is comfortable for many food establishments, [they have] created new corridors where more upscale restaurants open, drive traffic and generate vibrancy for other retailers, residents and office dwellers. NoMad is a great example of this transition. Which types of restaurants or chains are expanding most rapidly in NYC? I’m seeing several areas. There is the ‘natural’ or ‘healthier’ segment such as Little Beet/Little Beet Table, Sweetgreen, Lyfe Kitchen and Dig Inn that seem to be the right thing at the right time. I’d expect much growth in that arena. That being said, comfort offerings like Melt Shop, Shake Shack and Five Guys continue to have lines out their doors. Do landlords charge restaurants the same rates as other retailers? If there’s some benefit that the landlord gains from the restaurant’s presence — such as more traffic or extended stays from customers or as an amenity to its [commercial] tenants, then [the landlord] will often offer either a lower rent or other favorable deal terms. What are the biggest challenges facing brokers who specialize in restaurants? Time is probably the biggest challenge. Restaurant deals are often some of the most complicated. Often in the time it takes to work out the design, the deal points and the financing, something else can happen to put the deal in jeopardy. TRD www.TheRealDeal.com July 2013 65

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

SOUTH FLORIDA REPORT

Faena reveals towers Alan Faena is adding to his Faena Miami Beach developments with two new luxury residential towers: Versailles Classic and Versailles Contemporary. The additions bring the Faena district to three condo towers, along with a hotel, event and retail complex in burgeoning Mid Beach area. Faena Versailles Classic will be a 22-unit tower designed by William Soﬁeld. Architect Brandon Haw will design Faena Versailles

Renderings of the Versailles Classic and Versailles Contemporary. Left, Alan Faena.

Contemporary, which will feature 41 units. Prices will range from $3 million to more than $50 million. Douglas Elliman is marketing the projects. Faena Miami Beach spans from 32nd Street to 36th Street. It includes the Faena Saxony hotel, a marina and a retail complex designed by Rem Koolhaas and OMA. The 47-unit Faena House sold out last year. Closings are scheduled to begin shortly. By Katherine Kallergis

New Sunny Isles condo The Verzasca Group plans a 19-story luxury tower on the site of a Denny’s on Collins Avenue in Sunny Isles Beach. The condo will be on the west side of the street where new residential projects are scarce. The planned development, at 17550 Collins, will have 76 units, priced from below $1 million to just under $2 million, said Gennady Barsky, executive chairman of the Verzasca Group.

Verzasca paid $10.5 million for the .99-acre Denny’s property, according to public records. Architect Luis Revuelta of Revuelta Architecture International is designing the project. Sales are expected to launch in August. The tower marks the third project in the region for the Russian developers, who plan

A rendering of Verzasca’s Sunny Isles tower.

to invest $700 million in South Florida. The group has two developments underway in Bay Harbor Islands, Pearl House and Le Jardin, which are each nearly 50 percent sold, Barsky said. Verzasca also plans to develop “the tallest building in Edgewater,” he said. A “world renowned architect,” whom he declined to name, will design the building. By Ina Cordle

Ion East plan revamped

Some of the best things in New York originated somewhere else.

The developer of the Ion East Edgewater scuttled plans to develop the 36-story condo tower at 2701 Biscayne Boulevard in Miami. Sakor Development said it is reevaluating the project, due to delays caused by a legal dispute involving one of the parcels assembled for the project. “With land values along the Biscayne corridor rising, we are conﬁguring the property for mixed-use

Engel & Völkers was founded 37 years ago in Hamburg, Germany. Today you’ll find Engel & Völkers shops on some of the most iconic thoroughfares in the world, including Park Avenue. Like all Engel & Völkers shops, our New York City location is staffed by local market experts who embrace the firm’s founding values — competence, exclusivity and passion. These values translate into any language, resonating with buyers and sellers in 39 countries. We think you’ll appreciate them too. Contact one of our advisors to learn more.

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©2015 Engel & Völkers. All rights reserved. Each brokerage independently owned and operated. Engel & Völkers and its independent License Partners are Equal Opportunity Employers and fully support the principles of the Fair Housing Act.

106 May 2015 www.TheRealDeal.com

The Arquitectonica-designed tower for Ion East Edgewater was scrapped.

development,” the statement said. “This will ensure the highest and best use of the site given the appreciating land values in one of Miami’s fastest growing neighborhoods.” Sakor had hoped to start construction of the 328-unit project during the fourth quarter of 2014. Arquitectonica designed the tower; Hirsch Bedner was handling interior design. The project planned one-, two- and three-bedroom condos starting in the low $300,000s. It also included six two-story townhomes. By Francisco Alvarado

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THE POWER OF TWO

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Nº 1 REAL ESTATE TEAM IN AMERICA AS RANKED BY THE WALL STREET JOURNAL FOR THE LAST TWO YEARS

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

This 3,064-square-foot, 11-room home in Hyannis Port is listed for $2.45 million.

Hawaii Oscar-winning actress Julia Roberts listed her Hanalei, Hawaii, home for $29.85 million. The two-acre, 3,792-square-foot property located on 200 feet of beach frontage boasts seven bedrooms and four full baths. In its earliest days, the house was owned by Hans Faye Peter, a well-known Garden Isle sugar plantation manager.

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.

CAPE COD acation home sales are breaking records on Cape Cod, part of a national boom in second home buying fueled by high stock prices and low interest rates. Single-family home sales in Barnstable County, which encompasses the Cape, were up 11 percent in February compared with the previous year. Total sales in Massachusetts gained just 0.7 percent over the same period. Similar trends prevailed in other vacation property markets like the Hamptons, Lake Tahoe and

SEATTLE Edith Maceﬁeld’s holdout house is up for sale.

Even if a prospective buyer would like to live in one of the country’s most famous development holdouts, it may be demolished. Seattle resident Edith Maceﬁeld became a legend in 2006 when she refused to sell her 600-squarefoot bungalow in the Ballard neighborhood, despite a $1 million offer. Dubbed the “Up” house by fans for its resemblance to the home in the 2009 Disney movie, visitors often leave balloons on the fence outside in homage. Maceﬁeld died in 2008 at age 86, and the home, which is now surrounded by a large commercial building, went into foreclosure. North Carolina-based investment management company American IRA took control of the site earlier this year and put the property on the market, the New York Times reported. It may be torn down regardless of the buyer, as zoning restricts residences from remaining in commercial districts.

CLEVELAND A commercial building available for lease in Cleveland.

The city’s commercial real estate market has turned around dramatically since 2011, opening up opportunities 108 May 2015 www.TheRealDeal.com

Hollywood Hills

Miami, according to Bloomberg Business. Nationally, sales of vacation properties were up 57 percent in 2014, to a total of 1.13 million transactions, 21 percent of all transactions for the year, the highest proportion since the National Association of Realtors started counting in 2003. Larry Yun, NAR chief economist, attributed the rise to increased conﬁdence and purchasing power among the afﬂuent, and to Baby Boomers buying second homes for retirement.

for businesses looking for property. Citing a Cushman & Wakefield/Cresco Real Estate survey, Cleveland.com reported the recovery has led to increased property values and interest from outside investors. Improved market confidence is also playing a role. The strengthening economy is expected to increase demand for industrial property nationwide through 2015, and the industry is expected to return to pre-Great Recession levels of growth by 2016, according to the National Association for Industrial and Office Parks. In Northeast Ohio, estimates say property values will increase between 4 and 5 percent, and rents will outpace home values by the end of the year.

PARK CITY, UTAH Park City Mountain Resort’s ski deals draw international visitors, who often then buy in the area.

Tom Cruise is offering his European-style villa for $13 million. The 2.75-acre property overlooks the city and features ﬂoor to ceiling glass, an Italian farmstyle kitchen, wide-plank oak ﬂoors and Venetian plaster walls. There’s also a four-bedroom guest house, as well as a patio, bridge, lagoonstyle heated pool, spa and waterfall.

Ohio Mike Tyson’s 58-acre former palace, now abandoned, was bought by The Living Word Sanctuary church. The congregation spent $750,000 on the 33,000-square-foot property although the land was valued at $1.3 million in 1999. The space will be converted into a place of worship, replacing an indoor boxing glove-shaped swimming pool with a sanctuary.

Manhattan Beach Foreign investors are being drawn to Park City’s charm — or more likely to Vail Resorts’ presence in town. The company’s Epic Vail Pass works at Park City Mountain Resort and Canyons Resort, where visitors are ﬁnding that Park City offers a prime location for ski homes. Visitors from Europe, South America, and Mexico are skiing for $729 a week at the resorts in the city. And brokers are reporting that many of these visitors are deciding to return to the area, putting down cash on ski homes where the current median price of a single-family home is 12 percent below peak values. However, this new interest amid generally low inventory might raise area prices, pushing out local buyers. Compiled by Andrea Cetra and Ariel Stulberg

“New Girl” star Zooey Deschanel purchased a 5,166-square-foot home with her ﬁancé for $4.6 million. The quasi-Cape Cod/Colonial-style home is newly built and includes six bedrooms, a large kitchen and built-in wine storage.

OW N D I F F E R E N T. DE SI G NE D BY WOR LD LEA D IN G A R C HITEC T MIC HA EL GRAVES

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EXCLUSIVE SALES & MARKETING

ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING REPRESENTATION OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, MAKE REFERENCE TO THIS BROCHURE AND TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY DEVELOPER TO A BUYER OR LESSEE. THE PROPERTIES OR INTEREST DESCRIBED HEREIN ARE NOT REGISTERED WITH THE GOVERNMENTS OF ANY STATE OUTSIDE OF THE STATE OF FLORIDA. THIS ADVERTISEMENT DOES NOT CONSTITUTE AN OFFER TO ANY RESIDENTS OF NJ, CT. HI, ID, IL, OR ANY OTHER JURISDICTION WHERE PROHIBITED, UNLESS THE PROPERTY HAS BEEN REGISTERED OR EXEMPTIONS ARE AVAILABLE. PLANS, FEATURES AND AMENITIES SUBJECT TO CHANGE WITHOUT NOTICE. ALL ILLUSTRATIONS AND PLANS ARE ARTIST CONCEPTUAL RENDERINGS AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. CONRAD® IS A REGISTERED TRADEMARK OF HLT CONRAD IP, LLC, AN AFFILIATE OF HILTON WORLDWIDE INC. (“HILTON”). THE RESIDENCES ARE NOT OWNED, DEVELOPED, OR SOLD BY HILTON AND HILTON DOES NOT MAKE ANY REPRESENTATIONS, WARRANTIES OR GUARANTIES WHATSOEVER WITH RESPECT TO THE RESIDENCES. THE DEVELOPER USES THE CONRAD® BRAND NAME AND CERTAIN CONRAD TRADEMARKS (THE “TRADEMARKS”) UNDER A LIMITED, NON-EXCLUSIVE, NON-TRANSFERABLE LICENSE FROM HILTON. THE LICENSE MAY BE TERMINATED OR MAY EXPIRE WITHOUT RENEWAL, IN WHICH CASE THE RESIDENCES WILL NOT BE IDENTIFIED AS A CONRAD BRANDED PROJECT OR HAVE ANY RIGHTS TO USE THE TRADEMARKS.

SCORECARD

Apartment sales, one of the city’s main economic drivers, slowed sharply last quarter, and some would-be buyers instead opted to rent. Even so, land prices remained high in Manhattan. Ofﬁce rents continued to rise, but real rent growth slowed in Midtown South and Downtown.

RESIDENTIAL MANHATTAN SALES

SALES FALL AS RENTS RISE

No. of apartment sales down 3,307

19.5%

2,661

“ We don’t know how deep the buyer pool is.”

Q1 2014

Donna Olshan, Olshan Realty

Q1 2015

Source: Miller Samuel

3-bed+: Studio: 14% 16%

Closed apartment sales, Q1 2015

2-bed: 29%

1-bed: 41%

Source: Bond New York

% of new development listing by price Q1 2015

52%

$5M+

$3M–$4M

7.2% 8.2%

$2M–$3M

8.9%

$4M–$5M

15.6%

$1M–$2M

8.2%

< $1M

Source: Halstead Property

BY ADAM PINCUS partment sales took a respite last quarter, even as the rental market heated up. The number of apartment units sold in Manhattan declined in the first quarter by nearly 20 percent, to 2,661 from 3,307, figures from Miller Samuel showed. Median pricing fell as well. Even with a slowdown and price dip, there may not be much comfort to entry- and mid-market buyers, because the bulk of the new product being offered for sale is skewed toward apartments of $5 million and up. Furthermore, the new development market will likely remain focused on pricey units. The question for developers remains whether there are enough luxury purchasers. “We don’t know how deep the buyer pool is,” Donna Olshan, president of Olshan Realty, said. In the rental market, median rents were up across the board, a first-quarter report from Miller Samuel showed. The sharpest increase was for mid-level apartments, which jumped by 8.1 percent to $3,253 per month. Harlem and Soho each saw double-digit rent growth. ”There are a lot of clients looking to buy, and are not finding what they want to buy, so then end up renting,” said Andrew Steiker-Epstein, an agent at Keller Williams NYC, who focuses on rentals. TRD

MANHATTAN RENTALS Median rental rates by tier Q1 2015 vs. Q1 2014

“There are a lot of clients looking to buy, and are not ﬁnding what they want to buy, so then end up renting.”

Luxury

Upper

up 3.2% to $8,530

up 2.6% to $4,516

Mid

Entry

up 8.1% to $3,253

up 6.8% to $2,308

Andrew Steiker-Epstein, Keller Williams NYC

Source: Miller Samuel

Median rental rates by type Q1 2015 vs. Q1 2014 up 54.4%

Loft $8,023

$4,333

New development Doorman $3,808

up 5.3% up 3.6%

Non-doorman $2,780 up 6.3% Source: Miller Samuel

Biggest neighborhood rent gains Q1 2015 vs. Q1 2014 17.7%

16.1% 9.9% 7.7%

Harlem

Soho

Financial District

Battery Park City

Source: MNS

COMMERCIAL COMMERCIAL SALES

RECORD SALES IN QUARTER

NYC investments sales by quarter

uyers snapped up New York City investment real estate at a record level last quarter, paying a combined $20.8 billion citywide, figures from Cushman & Wakefield showed. That total was driven by big-ticket transactions, and surpassed the previous high-water mark of $20.1 billion, set in the first quarter of 2007. The price per foot for Manhattan development sites rose sharply in the first three months of the year, up 18 percent from last year, a report from Newmark Grubb Knight Frank showed. The average rose to $732 per foot, from $620 per foot. Brokers said as prices keep rising, it remains unclear where the top will be. “Will there be an inflection point? These numbers have never been tested before,” said Stephen Shapiro, executive vice president at JLL. Even with strong leasing activity, the amount of available space jumped up in the first quarter of the year, its largest quarterly increase since the recession in 2009. “It means that, quite literally, there are more options available,” said Franklin Wallach, of Colliers International. In addition, there was a slowdown in the growth of net effective rents in Midtown South and Downtown. TRD

BILLIONS

$20.1

$20.8

$19.5

15 10 YEAR

0 Q1 2012

Q1 2007

Q1 2015

Source: Cushman & Wakeﬁeld

Manhattan development parcel sales, average ppf $732

2015 (ytd)

$620

2014

$446 $420

2013 2012 2011 2010

$332 $325 Source: Newmark Grubb Knight Frank

“These numbers have never been tested before.” STEPHEN SHAPIRO, JLL

110 May 2015 www.TheRealDeal.com

COMMERCIAL LEASING The growth in net effective rent — the actual rent payment minus free rent and landlord construction contributions — slowed in Midtown South and Downtown, but saw a strong jump in Midtown.

Net rent growth slows Midtown Q1 2015 $67.08 Q4 2014 $61.37

Midtown South Q1 2015 $54.18 Q4 2014 $53.76

Downtown Q1 2015 $43.55 Q4 2014 $42.83

Source: Newmark Grubb Knight Frank

Availability jumps 14 %

Manhattan saw the largest quarterly increase WMRGI ½VWX UYEVXIV

12 % 10 % 8% 6% 4% 2% 0% Q1 2010

Q1 2015 Source: Colliers International

“It means that, quite literally, there are more options available.” FRANKLIN WALLACH, COLLIERS INTERNATIONAL

Brooklyn Townhouses + Condominiums 130 Flushing Ave, Brooklyn, NY 11205 +1 (718)–878–1770 www.navygreenbk.com This advertisement is not an offering. It is a solicitation of interest in the advertised property. No offering of the advertised units can be made and no deposits can be accepted, or reservations, binding or non-binding can be made until an offering plan is ﬁled with the New York Department of Law. This advertisement is made pursuant to Cooperative Policy Statement No. 1, issued by the New York State Department of Law. File No. CP14-0114. Equal Housing Opportunity.

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 3/14/15 to 4/13/15. Please submit future deals to deals@therealdeal.com.

Ofﬁce leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

200 Park Ave

500,000

MetLife / Bruce Mosler and John Cefaly, Cushman & Wakeﬁeld

Tishman Speyer Properties / Michael Berg, Kenneth Siegel, Peter Riguardi, JLL

The insurance company signed an expansion lease to occupy the third through ﬁfth ﬂoors of its namesake building.

1460 Broadway

180,000

WeWork / Derrick Ades and Barry Finkelman, CBRE

Himmel + Meringoff and Swig Company / n/a

The shared ofﬁce-space provider signed a 19-year lease.

1400 Broadway

117,248

OnDeck Capital, Inc. / Paul Ippolitto, Newmark Grubb Knight Frank

Empire State Realty Trust / Keith Cody, Empire State Realty Trust; Scott Klau, Erik Harris, Neil Rubin, Newmark Grubb Knight Frank

The tenant signed a renewal and expansion lease.

280 Park Ave

100,000

PJT Partners / Evan Margolin, Savills Studley

Vornado Realty Trust and SL Green Realty / Peter Turchin, Mary Ann Tighe, Eric Deutsch, Sam Seiler, Gregg Rothkin, CBRE

The tenant signed an expansion lease.

119 West 24th St

83,686

Anheuser-Busch InBev / James Frederick, Jay Holland, Peter Occhi, DTZ

Kaufman Organization / Grant Greenspan and Jessica Kosaric, Kaufman Organization

The brewing company signed an 11-year lease at the newly-renovated building.

350 Fifth Ave

78,361

HNTB Corporation / Sven Sykes, Tyler Owens, Mark Friedman, Colliers International

Empire State Realty Trust / Fred Posniak, Empire State Realty Trust; William Cohen, Jonathan Tootell, Shanae Ursini, Newmark Grubb Knight Frank

The tenant signed a new lease.

503 Broadway

50,000

Limited Brands / Eric Deutsch, CBRE

Hang Seng Realty / Eric Cagner and David Falk, Newmark Grubb Knight Frank

Bath & Body Works signed a 10-year renewal lease to occupy the entire fourth and ﬁfth ﬂoors.

260 Madison Ave

37,000

Marcus & Millichap / Jeffrey Nissani, Marcus & Millichap

Sapir Organization / Alan Wildes, Cushman & Wakeﬁeld

The tenant signed a 10-year lease to occupy the ﬁfth ﬂoor.

31-00 47th Ave (Queens)

34,000

Regus / CBRE

Jamestown / Cushman & Wakeﬁeld

The shared-ofﬁce space provider signed a 10-year lease.

525 Seventh Ave

28,000

Nicole Miller / Jim Wenk and Kirill Azovtsev, JLL

Olmstead Properties / Steven Marvin, Olmstead Properties

The designer signed 10-year extension lease.

11 East 26th St

24,166

Avenue World Holdings / James Buslik, Adams & Company

East Twenty Sixth Associates / James Buslik, Adams & Company

The tenant signed a renewal and expansion lease for its headquarters.

1120 Avenue of the Americas

22,818

Citizen Watch Company of America / William Iacovelli and Mark Revesloot, CBRE

Edison Properties / Gus Field, Michael Burgio, David Berke, Cushman & Wakeﬁeld

The Japanese brand signed as lease to occupy the entire 10th ﬂoor of the building as headquarters for the Citizen Group.

509-525 West 34th St

22,500

Transel Elevator & Electric / Steven Hornstock, ABS Partners

Sherwood 34 Associate / Sherwood Equities

The tenant signed a 10-year lease for the entire 40th ﬂoor.

350 Fifth Ave

21,401

Workday / Robert Lowe and David Berke, Cushman & Wakeﬁeld

Empire State Realty Trust / Fred Posniak, Empire State Realty Trust; William Cohen, Jonathan Tootell, Shanae Ursini, Newmark Grubb Knight Frank

The tenant signed a new lease.

100 West 93rd St

19,008

Manhattan Childrens Center / David Abrams and Marc Finkel, RFK

n/a / David Abrams and Marc Finkel, RFK

The tenant signed a lease.

387 Park Avenue South

19,000

Citi Habitats / Chris Mongeluzo, Newmark Grubb Knight Frank

TF Cornerstone / Matt Leon and Chip Sealy, Newmark Grubb Knight Frank; TF Cornerstone

The tenant signed a lease and is moving its corporate headquarters.

575 Fifth Ave

15,475

Westpac Banking Corporation / Daniel Horowitz and Gary Kerper, Savills Studley

Metropolitan Life Insurance / Keith Caggiano and Gregg Rothkin, CBRE

The Australian bank signed a 10-year lease to occupy the entire 39th ﬂoor.

162 Fifth Ave

12,250

Amobee / Matt Felicea and Gil Ohls, JLL

162 5th Associates / Jay Caseley and Joe D’Apice, ABS Partners Real Estate

The mobile advertising company signed a lease to occupy the entire 10th ﬂoor.

27 Union Square West

11,652

Chimera Securities / Dmitry Levkov, Colliers International

Newmark Holdings / Eric Gural, Newmark Holdings

The proprietary trading broker-dealer signed a lease to occupy the entire fourth ﬂoor.

276 Fifth Ave

10,000

Didit / Dana Moskowitz, EVO Real Estate Group

276 Managers LLC / Elliot Klein, EVO Real Estate Group

Public relations tenants LVM Group and Bridge Global Strategies signed a 10-year lease.

320 West 37th St

9,769

AbilTo, Inc. / Eric Thomas, CRESA Partners

Yadidi Realty Group / Joseph Mangiacotti, CBRE

The tenant signed a ﬁve-year lease to occupy the entire seventh ﬂoor.

666 Third Ave

9,000

Boca Group International / Matthew McBride, CBRE

Tishman Speyer Properties / Rob Weller and Greg Conen, Tishman Speyer Properties

The tenant signed a lease to occupy a portion of the sixth ﬂoor and is relocating from 200 Park Ave.

12 East 49th St

8,846

DTZ / Dirk Hrobsky, Christian Helgesen, Giorgio Versea, Black River Asset Management

Kato International / Robert Bakst, Kato International

The real estate company signed a 10-year lease to occupy a portion of the 37th ﬂoor.

320 West 37th St

8,662

New York & New Jersey Minority Supplier Development Council / Shawna Menifee, JLL

Yadidi Realty Group / Joseph Mangiacotti, CBRE

The tenant signed a 12-year direct lease to occupy the entire 11th ﬂoor.

519 Eighth Ave

8,000

Rosenwasser/Grossman Consulting Engineers / Steven Kaufman and Barbara Raskob, Kaufman Organization

Kaufman Organization / Steven Kaufman and Barbara Raskob, Kaufman Organization

The structural engineering tenant signed a 10-year lease to occupy the 20th ﬂoor.

237-247 Avenue U (Brooklyn)

8,000

John C. Picone Inc. / n/a

Taverna Real Estate Company / Gennady Gerovich and Bernard Kostovetsky, United National Realty

The MTA contractor signed a four-year lease to occupy the entire second ﬂoor.

112 May 2015 www.TheRealDeal.com

THE PENTHOUSE AT THE PIERRE HOTEL PRICED AT ITS MARKET VALUE

The single most important cooperative penthouse in New York City Asking Price: $63,000,000

Mary K. Rutherfurd

Leslie R. Coleman

Licensed Associate Real Estate Broker

mrutherfurd@bhsusa.com

lcoleman@bhsusa.com

212-906-9211

212-906-9387

NEW YORK CITY

THE HAMPTONS

PA L M B E AC H

All information is from sources deemed reliable but is subject to errors, omissions, changes in price, prior sale or withdrawal without notice. All rights to content, photographs and graphics reserved to Broker. Equal Housing Opportunity Broker.

Ofﬁce leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

55 Broadway

6,992

Physique57 / Carol Sacks, ABS Partners

Harbor Group / Brad Gerla and Jonathan Cope, CBRE

The ﬁtness company signed a 15-year direct lease to occupy a portion of the 16th ﬂoor.

320 West 37th St

6,404

SNAP Interactive / Jamie Adeo and Justin Halpern, CRESA Partners

Yadidi Realty Group / Joseph Mangiacotti, CBRE

The software and social media company signed a seven-year direct lease to occupy the entire 13th ﬂoor.

675 Third Ave

6,388

MSRT Holdings / Clyde Reetz, CBRE

Durst Organization / Ashlea Aaron and Tom Bow, Durst Organization

The tenant signed a 10-year lease to occupy the entire seventh ﬂoor.

597 Fifth Ave

6,364

Bateleur Capital / Peter Van Duyne, Cushman & Wakeﬁeld

Thor Equities / Christel Engel, Colliers International

The tenant signed a lease to occupy the entire ninth ﬂoor.

597 Fifth Ave

6,364

GCT Constructors / Ted Spiegel, Spiegel Real Estate

Thor Equities / Christel Engel, Colliers International

The tenant signed a lease to occupy the entire fourth ﬂoor.

1 World Trade Center

4,936

Tinypass / Freddie Fackelmayer, Zachary Price, Christoher Corrinet, CBRE

Durst Organization / Karen Kuznick, Durst Organization; Cushman & Wakeﬁeld

The ecommerce software developer signed a ﬁve-year lease.

250 West 55th St

4,905

ProFunds Distributors / Cynthia Wasserberger, Heyley Shoener, Jonathan Schifrin, JLL

Boston Properties / Peter Turchin, Christie Harle, Sam Seiler, CBRE

The company signed a direct lease to occupy a portion of the16th ﬂoor.

530 Seventh Ave

4,800

Romeo & Juliet Couture / Michael Heaner, Kaufman Organization

Savitt Partners / Nicole Goetz and Brian Neugeboren, Savitt Partners

The fashion brand signed a ﬁve-year lease for a showroom.

80 Broad St

4,371

Hamlyn Williams / Willard Overlock, Cushman & Wakeﬁeld

Broad Street Development / David Israni and Ramona Huegel, Broad Street Development

The global recruiting consultancy signed a lease to occpuy the third ﬂoor.

250 Hudson St

4,011

Interpublic Group of Companies / Robert Romano, JLL

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

The company signed an expansion lease and will occupy more than 50,000 square feet.

80 Broad St

3,831

OneTitle National Guaranty Company / Peter Cento, Cushman & Wakeﬁeld

Broad Street Development / David Israni and Ramona Huegel, Broad Street Development

The direct title insurance underwriter signed a lease to occupy the third ﬂoor.

915 Broadway

3,244

Samsung Fashion, Inc. / Avison Young

915 Broadway Associates, LLC / James Caseley, Carol Sacks, Gregg Schenker, Steven Hornstock, Alex Kaskel, ABS Partners Real Estate

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

37 West 20th St

3,100

Motorola Solutions / Matthew Bergey, Stuart Siegel, Brett Kaye, CBRE

37 West 20th Street Co. / Daniel Breiman, Olmstead Properties

The company signed a ﬁve-year direct lease to occupy a portion of the 10th ﬂoor.

63,500 SF AVAILABLE 1200 WATERS PLACE, BRONX WILL SUBDIVIDE TO 10,000 SF Simone Development is now offering for OHDVH &ODVV $ RIĆFH KHDOWKFDUH VSDFH RQ WKUHH ćRRUV DW :DWHUV 3ODFH LQ WKH +XWFKLQVRQ 0HWUR &HQWHU RIĆFH FRPSOH[ ■ 'LUHFWO\ RII +XWFKLQVRQ 5LYHU 3DUNZD\ LQ 3HOKDP %D\ VHFWLRQ RI WKH %URQ[ ■ PLQXWHV WR 0DQKDWWDQ ■ /HVV WKDQ D PLOH IURP PDMRU KRVSLWDOV ■ )LUVW FODVV DPHQLWLHV ■ $EXQGDQW SDUNLQJ ■ &RPSOLPHQWDU\ 6KXWWOH 6HUYLFH DQG 07$ EXV VHUYLFH WR QHDUE\ VXEZD\ ■ $GMDFHQW WR QHZ 0HWUR &HQWHU $WULXP ■ 2SHQLQJ 6RRQ 0DUULRWW /X[XU\ +RWHO VIEW DIGITAL BROCHURE AND FLOOR PLANS AT HUTCHMETROCENTER.COM

For Leasing Information Call (718) 518-8600 Jim MacDonald - jmac@simdev.com Josh Gopan – jgopan@simdev.com

114 May 2015 www.TheRealDeal.com

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;OL JVTWSL[L VMMLYPUN [LYTZ HYL PU HU VMMLYPUN WSHU H]HPSHISL MYVT :WVUZVY -PSL 5V *+ (SS PTHNLZ HYL HY[PZ[ÂťZ YLUKLYPUNZ HUK HYL WYV]PKLK MVY PSS\Z[YH[PVU W\YWVZLZ VUS` (SS ZX\HYL MVV[HNLZ HUK KPTLUZPVUZ HYL HWWYV_PTH[L HUK Z\IQLJ[ [V UVYTHS JVUZ[Y\J[PVU ]HYPHUJLZ :X\HYL MVV[HNL L_JLLKZ [V \ZHISL Ă&#x2026; VVY HYLH :WVUZVY YLZLY]LZ [OL YPNO[ [V THRL JOHUNLZ PU HJJVYKHUJL ^P[O [OL [LYTZ VM [OL VMMLYPUN WSHU :WVUZVY! )LLRTHU 7YVWLY[` 6^ULY 33* )YVHK^H` Z[ -SVVY 5L^ @VYR 5L^ @VYR

Ofﬁce leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

60 East 42nd St

2,844

Michael Faillace & Associates PC / Michael Faillace, Michael Faillace & Associates PC

Fred Posniak of Empire State Realty Trust; William Cohen, Jonathan Tootell, Julie Christiano of Newmark Grubb Knight Frank / n/a

The law tenant signed a lease.

1 World Trade Center

2,488

Casablanca Capital / Peter Simel and James Emden, Colliers International

Durst Organization / Karen Kuznick, Durst Organization; Cushman & Wakeﬁeld

The investment advisory tenant signed a ﬁve-year lease.

80 Broad St

2,422

Lemire / Travis Wilson, Newmark Grubb Knight Frank

Broad Street Development / David Israni, Ramona Huegel, Broad Street Development

The investigations and consulting tenant signed a lease to occupy the 12th ﬂoor.

1055 Bedford Ave (Brooklyn)

2,000

Miron Properties / n/a

n/a / n/a

The real estate company signed a lease.

530 Seventh Ave

1,900

Triumph of Europe / Brian Neugeboren and Nicole Goetz, Savitt Partners

Savitt Partners / Brian Neugeboren and Nicole Goetz, Savitt Partners

The lingerie brand signed an expansion leaseto occupy the 14th ﬂoor.

530 Seventh Ave

1,700

Mutyaar / Fared Freede, CBRE

Savitt Partners / Brian Neugeboren and Nicole Goetz, Savitt Partners

The fashion company signed a lease and is relocating from 485 Seventh Ave.

10 West 33rd St

1,645

Affordable Luxury Group / David Levy and Brett Maslin, Adams & Company

Ten West Thrity Third Associates / David Levy and Brett Maslin, Adams & Company

The tenant signed a lease, and plans to use the space for general and executive ofﬁces and showroom space for an accessories company.

62 Wooster St

1,550

Byredo / Nick Cowan, Isaacs & Company

Jeff Greene / Josh Siegelman and Aaron Fishbein, Winick Realty

The Stockholm-based fragrance company signed a 10-year lease.

10 West 33rd St

1,407

BH Brands / David Levy and Brett Maslin, Adams & Company

Ten West Thrity Third Associates / David Levy and Brett Maslin, Adams & Company

The tenant signed a lease, and plans to use the space for general and executive ofﬁces and showroom space for an accessories company.

51 West 28th St

1,400

Italian Showroom / n/a

n/a / Andy Kim and Bijoy Guha, BLU Realty Group

The tenant signed a lease for ofﬁce and showroom space.

10 West 33rd St

1,090

American Green Rug / David Levy and Brett Maslin, Adams & Company

Ten West Thrity Third Associates / David Levy and Brett Maslin, Adams & Company

The tenant signed a lease, and plans to use the space for general and executive ofﬁces and showroom for an accessories company.

10 West 33rd St

1,023

J&J International Design Group / David Levy and Brett Maslin, Adams & Company

Ten West Thrity Third Associates / David Levy and Brett Maslin, Adams & Company

The company signed a lease, and plans to use the space for ofﬁce and showroom for display and sale, at wholesale, of ladies’ accessories.

10 West 33rd St

988

Buxton Acquisition Company / David Levy and Brett Maslin, Adams & Company

Ten West Thrity Third Associates / David Levy and Brett Maslin, Adams & Company

The tenant signed a lease, and plans to use the space for general and executive ofﬁces and showroom for an accessories company.

530 Seventh Ave

900

Maoteng Group / Brian Neugeboren and Nicole Goetz, Savitt Partners

Savitt Partners / Brian Neugeboren and Nicole Goetz, Savitt Partners

The designer signed a lease for ofﬁce and showroom space.

10 West 33rd St

891

Alfa Travel Grear / David Levy and Brett Maslin, Adams & Company

Ten West Thrity Third Associates / David Levy and Brett Maslin, Adams & Company

The company signed a lease, and plans to use the space for ofﬁce and showroom for display and sale, at wholesale, of fashion accessories.

10 West 33rd St

507

Pure Element Apparel / David Levy and Brett Maslin, Adams & Company

Ten West Thrity Third Associates / David Levy and Brett Maslin, Adams & Company

The tenant signed a lease, and plans to use the space for general and executive ofﬁces and showroom for an accessories company.

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

1 New York Plaza

17,000

Retro Fitness / Brian Katz, Katz & Associates

Brookﬁeld Property Partners / Steven Baker, Winick Realty

The gym signed a lease for its ﬁrst Manhattan location.

501 Seventh Ave

9,660

Cathy Daniels, Ltd. / Robert Gallucci, Cushman & Wakeﬁeld

Empire State Realty Trust / Keith Cody, Empire State Realty Trust; Harry Blair, Sean Kearns, Cushman & Wakeﬁeld

The tenant signed a lease.

168-42 Jamaica Ave (Queens)

8,500

Family Dollar / Gluck Realty

Alex Adjmi / n/a

The retail chain signed a lease.

40-24 College Point Blvd (Brooklyn)

8,000

Uniqlo / n/a

Onex Real Estate Partners / n/a

The Japanese clothing retail chain signed a lease.

3150 Webster Ave (Bronx)

8,000

Family Dollar / Gluck Realty

n/a / n/a

The retail chain signed a lease for a new store in the Bronx.

603 137th St

7,500

Go Laundry World Inc. / Nissim Kassab and Ziv Ismirly, United National Realty

603-609 East 137th Street LLC / Nissim Kassab and Ziv Ismirly, United National Realty

The laundromat chain signed a 25-year lease.

2309 Ave U

6,000

NY Pharmacy / Nissim Kassab and Ziv Ismirly, United National Realty

2309-11 Avenue U LLC / Nissim Kassab and Ziv Ismirly, United National Realty

The pharmacy signed a 15-year lease.

1290 Amsterdam Ave

6,000

Suvalakshmi Inc. / n/a

n/a / Andrew Stern, Jackie Totolo, Gary Alterman, RFK

The tenant signed a lease.

311 Amsterdam Ave

5,000

Sweetgreen / Jacqueline Klinger and David Firestein, Shopping Center Group

170 West 75th Street Retail LLC / Jeffrey Roseman and Stu Morden, Lucas Kooyman, Newmark Grubb Knight Frank

The restaurant signed a lease.

2271 Broadway

4,443

Bolton’s / Jeffrey Roseman and Mark Utreras, Newmark Grubb Knight Frank

AJ Realty Development Company LLC / Jeffrey Roseman and Mark Utreras, Newmark Grubb Knight Frank

The discount store signed a lease.

221 East 161st St (Bronx)

4,088

Burger King|Popeye’s / n/a

Feil Organization / Nicholas Forelli, Feil Organization

The combined restaurants signed a lease at the newly-renovated shopping center.

116 May 2015 www.TheRealDeal.com

WALTER & SAMUELS, INC. CHAIRMAN

DAVID I. BERLEY CONGRATULATES OUR JOINT VENTURE PARTNER AT 315 WEST 36TH STREET

SL GREEN REALTY FOR ITS 136,118 SF LEASE WITH WeWork WITH SPECIAL THANKS TO SL GREEN DIRECTOR OF LEASING

STEVEN DURELS

WALTER & SAMUEL SAMUELS, INC. NC. | 419 PARK AVEN AVENUEE SOUTH, 115TH FLOOR, NEW YORK, NY 10016 | 212.685.6200 | WWW.WALTER-SAMUELS WWW.WALTER-SAMUELS.COM

Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

132 Perry St

3,700

277 West 10th Owner LP / Tom Brady and Sal Falcone, Town Real Estate

132 Perry Retail LLC / n/a

The tenant signed a lease.

10 West 18th St

3,000

New York Functional Furniture / Isabelle Sedghi, Moinian Group

Moinian Group / Isabelle Sedghi, Moinian Group

The furniture company signed a lease to occupy the entire ground ﬂoor.

147 Grand St

3,000

Spoke & Weal / Kyle Allen, Synapse Retail

Empire Capital Holdings / Jeremy Modest, Ripco Real Estate

The high-end salon signed a lease to open its East Coast ﬂagship studio.

328 East 61stSt

3,000

TS Fitness / Alex Karas, Bond New York

Hirschfeld Properties / Elie Hirschfeld, Hirschfeld Properties; Elliot Zelinger, Savitt Partners

The ﬁtness studio signed a lease. The building is now full, and completes landlord plans to be a destination for sport, dance and ﬁtness.

1641 Second Ave

3,000

Tequila Gastropub / Harrison Abramowitz, Newmark Grubb Knight Frank

1641 Second Avenue LLC / n/a

The restaurant signed a lease.

11 Penn Plaza

2,902

Starbucks / David Firestein and Taryn Brandes, SCG Retail

n/a / Meredith Fales, Vornado Realty Trust

The coffee chain signed a 15-year lease.

1400 Broadway

2,288

Chipotle Mexican Grill / Kenneth Hochhauser, Winick Realty

Empire State Realty Trust / Fred Posniak, Empire State Realty Trust; Jared Lack, Newmark Grubb Knight Frank

The tenant signed a lease.

1515 Broadway

2,113

Swatch / Haim Chera, Crown Retail Services

SL Green Realty / Jeffrey Roseman and Marc Leber, Newmark Grubb Knight Frank

The watch company signed a lease.

4857 Broadway

1,813

Probus / Jason Pruger, Tyler Scalzo, Harrison Abramowitz, Newmark Grubb Knight Frank

4857-59 Broadway, LLC / Jason Pruger, Tyler Scalzo, Harrison Abramowitz, Newmark Grubb Knight Frank

The tenant signed a lease.

8 West 38th St

1,689

Zegna Baruffa USA / Ruth Colp-Haber and David Alperstein, Wharton Property Advisors

n/a / Ron Zimmerman and Andy Udis, ABS Partners

The wholesale fabric and yarn distributor signed a seven-year lease to occupy part of the 10th ﬂoor.

1378 Madison Ave

1,585

Starbucks / Faith Hope Consolo and Joseph Aquino, Douglas Elliman Retail Group

n/a / n/a

The coffee shop signed a new 10-year lease, expanding into the space next door.

1378 Madison Ave

1,585

Starbucks / David Firestein, SCG Retail

n/a / Faith Hope Consolo and Joseph Aquino, Prudential Douglas Elliman

The coffee chain signed a 10-year renewal lease.

241 Columbus Ave

1,560

IRO / Joshua Strauss and Taryn Talmadge, RFK

Brandon Eisenman, Ariel Schuster, RFK / n/a

The tenant signed a lease.

140 East 45th St

1,515

Starbucks / David Firestein and Taryn Brandes, SCG Retail

n/a / Sean Moran and David LaPierre, CBRE

The coffee chain signed a 10-year lease.

1058 Bedford Ave (Brooklyn)

1,500

Stonefruit Espresso / n/a

n/a / Alex Beard, Greg Covey, Barry Fishbach, David Rosenberg, RFK; PD Properties

The coffee shop signed a lease for a Bedford-Stuyvesant location.

406 Rogers St (Brooklyn)

1,500

Oaxaca / Daniel Rodriguez

n/a / Alex Beard, Barry Fishbach, David Rosenberg, RFK; Bantam Realty

The tenant signed a lease.

204 Wythe Ave (Brooklyn)

1,500

amika: hairdo / Sonya Smith, Alex Beard, Barry Fishbach, RFK

Sean Phillips and Corey Zelnick / n/a

The tenant signed a lease.

1441 2nd Ave

1,460

Spruce & Bond / Jay Gilbert and Jansen Hafen, Newmark Grubb Knight

Rose Associates / Bruce Spiegel

The salon signed a lease.

225 Schermerhorn St (Bronx)

1,450

Tangerine Hot Power Yoga / Chris Haven and Eloise Paul, aptsandlofts.com

Waterton Residential / CBRE

The yoga studio signed a 10-year lease.

350 Fifth Ave

1,344

Sushi-teria / Bunny Escava, Kassin Sabbagh Realty

Empire State Realty Trust / Fred Posniak, Empire State Realty Trust; Andrew Goldberg, Matthew Chmielecki, CBRE

The tenant signed a lease.

14 Wall St

1,300

Starbucks / David Firestein and Taryn Brandes, SCG Retail

n/a / Aaron Cukier and Jason Pruger, Newmark Grubb Knight Frank

The tenant signed a lease to sublet from True Religion.

350 Amsterdam Ave

1,280

Juice Press / Adam Weinblatt

The Related Companies / Brian Von Schmid

The juice and smoothie bar signed a lease.

350 Fifth Ave

1,173

Starbucks / David Firestein, Shopping Centers Group

Empire State Realty Trust / Fred Posniak, Empire State Realty Trust; Andrew Goldberg, Matthew Chmielecki, CBRE

The tenant signed a lease.

1475 Third Ave

1,161

Salon / Elizabeth Capen, Lansco

Saxon Associates / Tom Citron and Noah Birnbaum, Newmark Grubb Knight Frank

The salon signed a lease.

16 Court St (Brooklyn)

1,000

Gregory’s Coffee / Albert Manopla, Kassin Sabbagh Realty

SL Green Realty / Jeremy Bier, SL Green Realty; Robert Hebron IV, Ingram & Hebron

The coffee shop signed a lease for its ﬁrst Broolyn location.

130 East 7th St

700

Derossi Global / Albert Manopla, Kassin Sabbagh Realty

Helm Management / Albert Manopla , Kassin Sabbagh Realty

The restaurant signed a 10-year lease. The reported asking price was $150 per square foot.

164 Orchard St

500

Insomnia Cookies / Jay Gilbert and Jansen Hafen, Newmark Grubb Knight Frank

Lucky of 195 Madison Street Rooﬁng and Contracting Inc. / n/a

The pastry shop signed a lease.

To view more deals visit our website: www.TheRealDeal.com 118 May 2015 www.TheRealDeal.com

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Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

730 Fifth Ave

290,000 sf

Michael Shvo, Vladislav Doronin / n/a

n/a / n/a

The fourth through 24th ﬂoors ofﬁces in the building sold for $500 million.

5 Madison Ave

273-key

Abu Dhabi Investment Authority / n/a

n/a / n/a

The hotel sold for $337 million.

525 East 73rd St

1,200,000 sf

Memorial Sloan-Kettering Cancer Center, Hunter College / Mark Weiss, Justin DiMare, Howard Kesseler, Newmark Grubb Knight Frank

New York City Economic Development Corporation / n/a

The ofﬁce building sold for $226 million.

33-00 Northern Boulevard (Queens)

437,000 sf

Vornado Realty Trust / David Robinov and Marc Warren, Ackman-Ziff Group

Madison Marquette, Perella Weinberg / David Robinov and Marc Warren, Ackman-Ziff Group

The ofﬁce building sold for $142 million.

85 Fifth Ave

12,946 sf

Wharton Properties / Bob Knakal, Cushman & Wakeﬁeld

RFR Realty / n/a

The retail condo sold for $86 million.

311 West 50th St

81,000 sf

Torkian Group / n/a

Douglaston Development / n/a

The multi-family building sold for $72 million.

1 Flatbush (Brooklyn)

120,000 sf

Slate Property Group, Meadow Partners / n/a

Capstone Equities, Carlyle Group / Woody Heller, Will Silverman, Eric Negrin, Savills Studley

The development site sold for $59 million, or nearly $500 per square foot.

4101 Broadway, 4113 Broadway

126,000 sf, 140 units

Newcastle Realty Services / n/a

Candlebrook Properties / Robert Knakal and Robert Shapiro, Cushman & Wakeﬁeld

The two multi-family buildings sold for $42 million.

1711 -1751 Fulton St (Brooklyn)

4 bldgs, 6-story, 292 units, 277,200 sf

n/a / Aaron Jungreis, Rosewood Realty Group

The four mixed-use buildings sold for $38 million.

355 West St

1-story, 41,000 sf

Ian Schrager / n/a

Weinberg Properties / n/a

The development site sold for $37.2 million. The developer plans to build a 12-story, 88-unit residential building.

893 Broadway

4-story, 17,500 sf

Cholla LLC / Adelaide Polsinelli, Eastern Consolidated

Judith Green / n/a

The mixed-use building sold for $35 million.

3100 & 3124 Atlantic Ave (Brooklyn)

12-story, 210 units, 186,100 sf

n/a / Amit Doshi, Besen & Associates

3100 & 3124 Atlantic Avenue LLC / David Davidson, Besen & Associates

The mixed-use building sold for $30 million.

28 East 14th St

5-story, 9 units, 11,875 sf

Derrick Fok / Julie Kang, Keller Williams NYC

Ultimate Realty / James Nelson, Cushman & Wakeﬁeld

The mixed-use building sold for $29.5 million.

117 West 21st St

38,612 sf

David Amirian / Brian Ezratty, Eastern Consolidated

Alfa Development / Brian Ezratty, Eastern Consolidated

The multi-family building sold for $28.5 million. The tenant plans to convert the building into luxury condominiums.

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120 May 2015 www.TheRealDeal.com

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Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

520 East 21st St (Brooklyn)

7-story, 100 units, 103,000 sf

Parkway Realty Group / Aaron Jungreis, Rosewood Realty Group

Black Spruce Management / Aaron Jungreis, Rosewood Realty Group

The multi-family building sold for $26.5 million.

28 West 132nd St, 3 West 137th St, 273 West 150th St

3 bldgs, 47 units, 39,456 sf

ABJ Properties / Shoy McKen, Besen & Associates

Action Housing LLC / Shoy McKen, Besen & Associates

The seven story rental building sold for $26.5 million.

1777 Grand Concourse (Bronx)

12-story, 172 units, 172,032 sf

Asden Properties LLC / Aaron Jungreis, Rosewood Realty Group

1777 Grand Concourse LLC / Aaron Jungreis, Rosewood Realty Group

The mixed-use building sold for $26 million.

2051-2055 Grand Concourse (Bronx)

5-story, 9,480 sf, 64 units

Parkash 2051 LLC / Amit Doshi, Besen & Associates

2051-2055 Grand Concourse LLC / Amit Doshi, Besen & Associates

The 12-story elevator apartment building sold for $26 million. The property consists of 167 apartments, ﬁve commercial units and 34 indoor parking spaces

80 Wooster St

6,300 sf

Jenel Management / n/a

n/a / n/a

The retail co-op sold for $25.3 million.

160 Lexington Ave

22,000 sf

David Berley / Ric Kaiser, Cohen Real Estate

Lexington Landmark Properties / Helen Putterman, Cohen Real Estate

The Beaux Arts building sold for $24.5 million.

250 Bowery (Brooklyn)

11,000 sf

International Center of Photography / Jane McVerry, Atria Properties

Bowery Star LLC / Beth Rosen, Andrew Stern, Benjamin Zack, RFK

The ofﬁce building sold for $23.5 million.

240 Fifth Ave

11,350 sf

Sicis, Bianca USA Real Estate / Peter Weisman, Lansco Corporation

Paul Zheng / n/a

The four retail buildings sold for $22 million.

98 Morningside Ave

65,800 sf

Thor Equities / Steven Vegh, Westwood Realty Associates

Baruch Singer / Steven Vegh, Westwood Realty Associates

The multi-family building sold for $21.6 million.

500 West 43rd St

3-story, 25,680 sf

n/a / Jesse R. Cirolli-Quinones, Besen & Associates

n/a / Alex Frants, Besen & Associates

The parking garage sold for $17.8 million.

301 East Fordham Rd (Bronx)

2 stories

Harbor International Group / Josh Augenbaum, Allie Beyda, Augenbaum Realty

Urban - Scape / Josh Augenbaum and Allie Beyda, Augenbaum Realty

The retail building sold for $12 million.

358 West St

3-story, 12,250 sf

Ian Schrager / n/a

William Gottlieb Real Estate / n/a

The development site sold for $11.3 million. The developer is planning a 12-story, 88-unit residential building.

41-43 Greene St

3,750 sf

Thor Equities / Shawn Sadaghati, GFI Realty Services

Bisazza / Ben Katz, GFI Realty Services

The retail space sold for $10.5 million.

500 West 148th St

33 units

500W148 LLC / Seth Glasser, Peter Von Der Ahe, Scott Edelstein, Raﬁ Moskowitz, Marcus & Millichap

n/a / Seth Glasser, Peter Von Der Ahe, Scott Edelstein, Raﬁ Moskowitz, Marcus & Millichap

The mixed-use building sold for $10 million.

1774 Amsterdam Ave

21,395 sf

n/a / Peter Von Der Ahe, Scott Edelstein, Seth Glasser, Raﬁ Moskowitz, Marcus & Millichap

The mixed-use property sold for $10 million to a private investor.

932 Columbus Ave

5,277 sf

MM Consolidated Corporation / George Niblock and Eric Roth, Friedman-Roth

42-78 86 Realty LLC / George Niblock and Eric Roth, Friedman-Roth

The mixed-use building sold for $10 million.

960 Sixth Ave

102,000 sf

n/a / n/a

Hidrock Realty / n/a

The mixed-use building sold for $10 million.

27 West 72nd St

9,600 sf

Jack Terzi / Jeffrey Fishman and Ross Berkowitz, RFK

Stellar 85 LLC / Jeffrey Fishman and Ross Berkowitz, RFK

The base of the 16-story condominium sold for $9.5 million.

79-40 Cooper Ave (Queens)

94,000 sf

Carye & Sons Acquisitions, adjacent landowner / Jason Meister, Vincent Carrega, Jon Epstein, Neil Helman, Charles Kingsley, Joe Ibrahim, Avison Young, Right Time Realty

Hansel & Gretel Brand / Jason Meister, Vincent Carrega, Jon Epstein, Neil Helman, Charles Kingsley, Avison Young

The industrial building sold for $9.2 million.

910 81st St

4 stories

n/a / Erik Yankelovich, GFI Realty

n/a / Ben Katz, GFI Realty

The mixed-use building sold for $8.9 million.

137 Ludlow Ave

4-story, 9,780 sf

n/a / n/a

Ludlow Holding Inc. / Otis Duffy, Michael Todd Mueller, Centum Real Estate Group

The mixed-use building sold for $8 million.

109 Madison St

5-story, 22 units, 9,480 sf

n/a / Joseph Friedman, Besen & Associates

Mus Realty LLC / Robert Koda and Joseph Friedman, Besen & Associates

The mixed-use building sold for $8 million, or $844 per square foot.

256 Webster Ave (Brooklyn)

13,629 sf

n/a / Michael Dukhovny and Gennady Gerovich, United National Realty

Webster OPRealty / Michael Dukhovny and Gennady Gerovich, United National Realty

The building sold for $7.8 million and will be developed for residential R7A zoning.

2147 Second Ave

9-story, 18,078

n/a / Edmond Levy, Cornerstone Real Estate Investments

n/a / Lev Kimyagarov, Cushman & Wakeﬁeld

The mixed-use building was sold $7.5 million.

626-630 Fifth Ave (Brooklyn)

22,500 sf

n/a / Jakub Nowak and Matthew Rosenzweig, Marcus & Millichap

Eagle Provisions / Jakub Nowak and Matthew Rosenzweig, Marcus & Millichap

The retail building sold for $7.5 million.

28 West 132nd St

40,000 sf

ABJ Properties, Ben Soleimani, Joe Soleimani / Shoy McKen, Besen & Associates

Action Housing / Shoy McKen, Besen & Associates

The multi-family sold for $7.5 million.

970 Lexington Ave

4-story, 5 units, 3,496 sf

n/a / Nick Judson, Judson Realty

n/a / Thomas Gammino and Guthrie Garvin, Cushman & Wakeﬁeld

The mixed-use building was sold for $7.4 million.

39 Ainslie St (Brooklyn)

20,000 sf

Brooklyn Standard Properties / n/a

Arm & Leg Co. / Brendan Maddigan, Ethan Stanton, Mark Lively, Cushman & Wakeﬁeld

The mixed-use building sold for $7 million.

27-28 Thomson Ave (Queens)

41,924 sf

n/a / Jared Baritz, Northeast Equity

n/a / James Nelson, Mitchell Levine, David Chkheidze, Cushman & Wakeﬁeld

The multi-family-family building sold for $6.8 million.

56-48 Myrtle Ave (Queens)

17,645 sf

Keystone Equities, BIG / Danny Millan, MNS

n/a / Thomas Donovan, Tommy Lin, Eugene Kim, Robert Rappa, Cushman & Wakeﬁeld

The four-building portfolio sold for $6.8 million.

100 Union Ave (Brooklyn)

10,453 sf

Adam America & Partners / n/a

n/a / Ofer Cohen, Melissa Warren, Dan Marks, Peter Matheos, Michael Hernandez, TerraCRG

The building sold for $6 million, and will be host to a new residential building with retail on ground ﬂoor.

463 86th St (Brooklyn)

4,475 sf

Zucker Organization / n/a

n/a / Thor Equities

The retail building sold for $5.7 million.

11-33 Irving Ave and 333-359 Moffat St (Brooklyn)

34,945 sf

Kobe Bussan / Masa Ikeda, Taichi Realty

Arctic Glacier / Ofer Cohen, Melissa Warren, Dan Marks, Peter Matheos, Michael Hernandez, TerraCRG

The two industrial buildings sold for combined total of $5.7 million.

3449-3461 Fort Hamilton Pkwy (Brooklyn)

4 bldgs, 9,900 sf

n/a / Leiby Gold, Eretz Realty

n/a / Jeffrey Shalom, Cushman & Wakeﬁeld

The four retail buildings sold for $5 million.

122 May 2015 www.TheRealDeal.com

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Buys continued Address

Size

Buyer / Representative

Seller / Representative

Notes

113 First Ave

6,226 sf

113 First Avenue Partners / Daniel Barcelowsky, Misrahi Realty

Si Woo Moon / n/a

The multi-family building sold for $5.5 million.

3860 East Tremont Ave (Bronx)

1-story 38,618

Ashkenazy Acquisitions / n/a

n/a / Jason Gold, Victor Sozio, Scot Hirschﬁeld, Ariel Property Advisors

The retail building sold for $5.1 million.

39 West 29th St

8,068 sf

Paciﬁc Television Center / Carri Lyon, Cushman & Wakeﬁeld

Hariri & Hariri Architecture / Michael Rudder and Michael Heller, Rudder Property Group

The 12th floor penthouse sold for $5 million. The TV station bought the 12-floor penthouse for office space.

523 West 135th St

13,170 sf

n/a / Victor Sozio, Shimon Shkury, Michael Tortorici, Josh Berkowitz, Ariel Property Advisors

The multi-family building sold for $4.9 million.

40 East 20th St

3,500 sf

David Berley / Walter & Samuels

Diamond Properties / Adelaide Polsinelli, Eastern Consolidated

The ground ﬂoor retail condo sold for $4.7 million.

150 West 179th St

6-story, 36 units, 33,564 sf

150 Westmar Realty LLC / Amit Doshi, Besen & Associates

150 W 179 LLC / Amit Doshi, Besen & Associates

The multi-family building sold for $4 million, or $120 per square foot.

440 Atlantic Ave (Brooklyn)

4,756 sf

n/a / CPEX Real Estate

Barrett Design / Andre Sigourney and Harrison Balisky, CPEX Real Estate

The retail condominium sold for $3.25 million.

2114 Daly Ave (Bronx)

21,355 sf

n/a / David Gerstel, Friedman-Roth

n/a / George Niblock, Friedman-Roth

The multi-family-family building sold for $2.8 million.

41-43 Dean St (Brooklyn)

2,226 sf, 4,452 buildable sf

n/a / Stephen Palmese, Cushman & Wakeﬁeld

The development site sold for $2.5 million

130-134 East 177th St (Bronx)

56,438 sf

Post Graduate Center for Mental Health / Scot Hirschﬁeld, Jason Gold, Victor Sozio, Marko Agbaba, Ariel Property Advisors

n/a / Scot Hirschﬁeld, Jason Gold, Victor Sozio, Marko Agbaba, Ariel Property Advisors

The development site sold for $2.5 million.

2390 Hoffman St

5-story, 13,650 sf

2390 Hoffman Realty / 3JM Realty

Hoffman Realty / 3JM Realty

The multi-family building sold for $2.45 million.

167 East 106th St

7,328 sf

n/a / Michael Tortorici, Victor Sozio, Josh Berkowitz, Marko Agbaba, Ariel Property Advisors

The mixed-use building sold for $2.4 million.

5517 Fifth Ave

6,492 sf

n/a / John Brennan and Jakub Nowak, Marcus & Millichap

The mixed-use building sold for $2.4 million.

340 Junius St (Brooklyn)

24,000 sf

BJ 1368 Ventures LLC / Nissim Kassab, Ziv Ismirly, United National Realty

350 Junius Holding LLC / Nissim Kassab and Ziv Ismirly, United National Realty

The two-story building was sold for $2.1 million.

25-40 Steinway St (Queens)

4,380 sf

n/a / George Niblock, Friedman-Roth

The mixed-use building sold for $2 million.

80-02 Grand Ave

1-story, 5,730 sf

Dong Yuan Group / Winzone Realty

Community Real Estate / John Falco, Falco Isak Realty Services

The retail building sold for $1.7 million.

355 Stockholm St (Brooklyn)

6 units

Fund manager / Said Boukhalfa, Marcus & Millichap

n/a / Shaun Riney, Dan Greenblatt, Thomas Shihadeh, Marcus & Millichap

The building sold for $1.6 million, a 20% increase of its original sale price just over one year ago.

150-42 12th Ave (Queens)

4,500 sf

n/a / n/a

n/a / Stephen Preuss and Stephen Palmese, Cushman & Wakeﬁeld

The ofﬁce building was sold for $1.5 million

173 Concord St

3-story 1,750

YSA Homes Corporation / Mehmet Kilinc, KW Commercial

Estate of Paulsen / KW Gold Coast

The multi-family building sold for $1.3 million.

806 Macon St (Brooklyn)

6 units, 4275 sf

n/a / n/a

n/a / Matthew Cosentino and Eric Satanovsky, TerraCRG

The multi-family building sold for $1.2 million.

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

110 John St

337,000 sf

Moinian Group / Drew Anderman, Meridian Capital Group

Balance sheet lender / n/a

A $160 million loan was arranged for the mixed-use building. The ﬁrm plans to pay-off their existing mortgage and build a new residential tower.

33 West 46th St

38,259 sf

n/a / n/a

Morgan Stanley / n/a

A $19.5 million loan to reﬁniance the ofﬁce building.

600 West 111 St

147-unit co-op

Broadway 111 Owners Corp. / n/a

National Cooperative Bank / n/a

A $6.2 million ﬁrst mortgage and a $1 million line of credit were arranged for the cooperative.

84-01 Main St

199-unit co-op

Eden Rock Owners, Inc. / n/a

National Cooperative Bank / n/a

A $5.5 million ﬁrst mortgage and a $1 million line of credit were arranged for the cooperative.

127 West 79th St

123-unit co-op

Clifton House Owners Corporation / n/a

National Cooperative Bank / n/a

A $4 million third mortgage was arranged for the co-op.

92 West Houston St

n/a

n/a / John Leslie, Cushman & Wakeﬁeld

A $3.8 million, 30-year loan was arranged for the co-op.

233 East 70th St

87-unit co-op

233 East 70th Street Owners Corporation / n/a

National Cooperative Bank / n/a

A $3.4 million ﬁrst mortgage and $1 million line of credit were arranged for the cooperative.

534 East 11th St

21-unit co-op

534 East 11th Street HDFC / n/a

National Cooperative Bank / n/a

A $3 million line of credit was arranged for the co-op

166 West 76th St

40-unit co-op

166 West 76th Apartment Corp. / n/a

National Cooperative Bank / n/a

A $1.1 million ﬁrst mortgage and a $500,000 line of credit were arranged for the cooperative.

50 Park Terrace West

49-unit co-op

Inwood Tenants Corp. / n/a

National Cooperative Bank / n/a

A $1 million second mortgage was arranged for the cooperative.

431 West 54th St

20-unit co-op

431 West 54th Street, Inc. / n/a

National Cooperative Bank / n/a

A $750,000 ﬁrst mortgage was arranged for the cooperative.

35-37 78th St

15-unit co-op

122-21 Street Jackson Heights, Inc. / n/a

National Cooperative Bank / n/a

A $300,000 ﬁrst mortgage was arranged for the co-op

To view more deals visit our website: www.TheRealDeal.com 124 May 2015 www.TheRealDeal.com

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Other Deals IPG will be subleasing 112,300 square feet on the 23rd through 25th ﬂoors and part of the 20th ﬂoor from Forest Laboratories. JLL’s Scott Panzer, Robert Romano and Shannon Rzeznikiewicz represented the tenant. A CBRE team led by Howard Fiddle represented Forest Laboratories. Details about the rent were not divulged, but according to CompStak, two recent subleases in the building rented in the $40s per square foot. (The deal was announced after the deadline for the Deal Sheet.)

Abu Dhabi closes on $337M purchase of New York Edition The Abu Dhabi Investment Authority closed on the purchase of the New York Edition Hotel at 5 Madison Avenue, according to property records ﬁled last month. The 273-room hotel is the third Edition hotel buy for the sovereign wealth fund. It already owns the London Edition and recently paid $230 million for the Miami Beach Edition Hotel. Marriott International, which created the Edition hotel in partnership with Ian Schrager, acquired the landmarked clock tower for $165 million in 2011.

Gucci moving to L&L’s 195 Broadway in FiDi

Abu Dhabi Investment Authority’s Sheikh Khalifa

TIAA-CREF secures $190M loan to spruce up 685 Third Avenue MetLife has provided a $190 million loan to fund upgrades to TIAA-CREF and the Australian Government Future Fund’s 685 Third Avenue. The five-year debt deal closed in March, according to the New York Observer. The 31-story tower doesn’t have any other existing debt. TIAA-CREF and the Australian sovereign wealth fund acquired the more than 646,000-square-foot property in 2010 from Pfizer for $190 million. Last year, the Foundation for the Global Compact, a Midtown East-based nonprofit that partners with the United Nations, signed a lease for 27,235 square feet at the tower. Last year, renovations to the building’s lobby and a new pocket park were completed as part of a capital improvement plan. (The deal was announced after the deadline for the Deal Sheet.)

In Gucci’s search for new Downtown offices, the luxury fashion house landed on 195 Broadway, where it is negotiating for an 80,000 square foot lease across two floors. The Financial District building at Fulton Street is owned by L&L Holding Company, and asking rent is $55 per square foot, the New York Observer reported. Sushi restaurant Nobu also signed a lease in the building earlier this year. Gucci has been looking for a new space since selling its current digs at 685 Fifth Avenue to Thor Equities last year. Cushman & Wakefield‘s Bruce Mosler, Mark Mandell and Ethan Silverstein will represent Gucci in the deal, while David Berkey and Andrew Wiener will represent L&L. (The deal was announced after the deadline for the Deal Sheet.)

195 Broadway

Brookﬁeld signs Skadden to mega-lease, will begin construction on 1 Manhattan West 685 Third Avenue

WeWork inks 180K sf lease at 1460 Broadway Shared office-space provider WeWork has signed a 19-year lease to take up 180,000 square feet at Himmel + Meringoff and the Swig Company’s 1460 Broadway. WeWork will take up all of the building’s office space, according to the New York Post. It’s the company‘s first foray into the Times Square area. In total, WeWork has 15 locations in Manhattan, according to the newspaper. In February, WeWork inked a lease for 240,000 square feet at 85 Broad Street. Rents in the Miguel McKelvey and Adam Neumann, WeWork building range from the high $50s to the mid-$60s.

Rendering of 1 Manhattan West Brookfield Property Partners signed law firm Skadden, Arps, Slate, Meagher & Flom to a 20year lease for 550,000 square feet at Brookfield’s 1 Manhattan West, allowing the real estate investment trust to kick off construction on the 2.1 million-square-foot office tower. The law firm will take the 28th to 43rd floors of the tower, one of two planned commercial buildings at Brookfield’s 7 million-square-foot Manhattan West project, Brookfield announced today. A JLL team led by Peter Riguardi, Kenneth Siegel and Matthew Astrachan represented Skadden. The in-house team of Jerry Larkin, Duncan McCuaig and David McBride, as well as a Cushman & Wakefield team including Bruce Mosler, Josh Kuriloff and Mikael Nahmias represented Brookfield. Skadden will relocate from its current headquarters at 4 Times Square upon the expiry of its lease in 2020, the New York Daily News reported in August. (The deal was announced after the deadline for the Deal Sheet.)

Financial data firm Markit signs huge lease at 5 Manhattan West Markit, a London-based global financial data provider, is consolidating its New York City offices into a 140,000-square-foot space at Brookfield Property Partners’ 5 Manhattan West, The Real Deal has learned. Markit inked a 15-year deal this week to occupy the full fifth floor of the 1.8 million-square-foot property at 450 West 33rd Street, now undergoing an upgrade as part of the $4.5 billion Manhattan West project on the Far West Side, according to sources familiar with the deal. Cushman & Wakefield’s Bruce Mosler, Josh Kuriloff, Mikael Nahmias and Ethan Silverstein represented the Rendering of 450 West 33rd Street landlord, while Savills Studley’s Jeffrey Peck and Daniel Horowitz represented Markit. Sources said Markit, founded in 2003, plans to vacate its offices at two buildings, H.J. Kalikow & Company’s 101 Park Avenue and the New York Times Building at 620 Eighth Avenue. The firm has just over 47,000 square feet at 101 Park and nearly 32,000 square feet at 620 Eighth, according to CoStar data. (The deal was announced after the deadline for the Deal Sheet.)

Catsimatidis’ Red Apple Group secures $155M in loans for Myrtle Avenue project Rendering of 86 Fleet Place John Catsimatidis’ Red Apple Group secured $155 million in loans for its development at 86 Fleet Place in Brooklyn, according to property records ﬁled with the city. Bank of America provided a $137 million building loan and a $18 million project loan. Catsimatidis ﬁled plans for the 32-story tower — part of a four-building development by Red Apple on Myrtle Avenue in Brooklyn — in September. The Goldstein, Hill and West-designed building is slated to stand 346 feet tall, with 400 apartments and retail space across nearly 400,000 square feet. In a prior interview with The Real Deal, Catsimatidis called the neighborhood a “win-win area.” Red Apple is also developing the Andrea at 218 Myrtle Avenue, 81 Fleet Place and 180 Myrtle Avenue, all located across from MetroTech Center. (The deal was announced after the deadline for the Deal Sheet.)

IPG inks huge expansion at Vornado’s 909 Third Avenue The Interpublic Group, one of the “big four” global advertising shops, is expanding its Third Avenue footprint by more than 100,000 square feet, The Real Deal has learned. The advertising giant — whose brands include McCann Erickson, R/GA and Donny Deutsch’s Deutsch, Inc. — is moving its corporate group from Brookfield Office Properties’ 1114 Avenue of the Americas, otherwise known as the Grace Building, to Vornado Realty Trust’s 909 Third Avenue, where the ad firm already occupies some 220,000 square feet. IPG CEO Michael Roth 126 May 2015 www.TheRealDeal.com

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Mid-sized ranking

from page 48

“It’s not rocket science,” he said. When agents tell him they’ve had the same marketing support and technology for years, he said: “To me, that represents a tremendous opportunity.” Together the top 12 mid-sized ﬁrms held $2.6 billion worth of active listings — far more than that the $1.1 billion that last year’s mid-sized companies racked up. But much of that increase is thanks to Sotheby’s presence on the list.

Overall, Warburg had 141 listings on March 29, down from 153 listings last year. The firm has another 100 listings in contract, Peters said, noting that the firm’s listings ebb and flow with the market. “If anything, the market has flattened out in the last six months.”

Market shake-out Other ﬁrms popped on and off of this year’s mid-sized ranking.

Strategy sessions As the market shifts, the challenge for mid-sized companies is to adapt to the ever-changing Manhattan landscape. CORE, which rounded out the top three on this year’s ranking, is seeing its star rise, after Related Companies acquired a 50 percent stake in the firm this past fall for an undisclosed sum. “It’s a huge game-changer for us as a company,” said CORE’s CEO Shaun Osher. Going forward, CORE will collaborate with Related on the development and sales of its residential projects. The firm had 119 agents as of March 29, up from 78 last year. In addition, CORE snagged $277.5 million worth of sales listings, up from $156.9 million in 2014. Meanwhile, Warburg, which ranked No. 4, is in the midst of a major rebranding under the direction of Fred Peters, president, and his daughter Clelia Peters, who came on board last year as Warburg’s director of strategy and innovation. “It’s an interesting challenge to figure out how most effectively to compete if you are, like me, a relatively small brokerage, and you actually want to run a business that’s cash positive,” Fred Peters said. Warburg had $262.5 million in sales exclusives, up from $166 million last year, according to TRD’s analysis. The firm’s two priciest listings are a duplex at the Eldorado, at 300 Central Park West, that’s asking $29 million, and a 12room co-op at 998 Fifth Avenue that’s listed at $28 million.

does,” said Fox, who represented the buyer of a $16.5 million condo on Park Avenue last year. She also represented the buyer of unit 7K at Extell Development’s One57, which went for $30 million, she said. Of the firm’s overall drop in listings, Fox said she personally did less business over the past 12 months because she was focused on renovating the firm’s new office at 14 East 60th Street. Of all the mid-sized firms on this year’s ranking, Spire Group saw the largest increase in the dollar volume of its active listings. Kevin Kurland’s 100 percent-commission firm, which launched in 2011, had $21 million worth of listings, compared with just $9.7 million in 2014. At the same time, the firm’s agent count dropped to 131 from 161. As in previous years, firms that were lower down in the ranking were dogged by a lack of Manhattan residential inventory, which translated to fewer listings but a faster pace of closing deals. Clocking in at No. 5, BLU Realty had 31 listings, worth $80 million, compared with last year’s 22 listings, worth $91 million. “Over the last month and a half, we have a lot of accepted offers and contracts out,” said BLU founder David Tobon. After a slow third and fourth quarter last year, Tobon said his agents are starting to do more deals. “We definitely [have seen] more bidding wars” recently, he said. Other newer firms, which debuted in the wake of the recession, saw mixed results in 2015. KIAN, founded in 2011 by Charles Doolan and Jae Muk Chung, attracted more agents — some 222 this year compared to 172 last year. But listings dropped to $20.8 million from $22.4 million. KIAN’s sweet spot, between $800,000 and $2.5 million, has been particularly strapped for inventory. “There’s too much of this ultra-luxury happening,” Doolan said. TRD

“It’s an interesting challenge to ﬁgure out how most effectively to compete if you are, like me, a relatively small brokerage, and you actually want to run a business that’s cash positive.”

Hotels

FRED PETERS, WARBURG REALTY For example, Stribling & Associates, the top firm on last year’s mid-size list, once again catapulted back onto the biggest-firms ranking with 281 agents and $694 million in listings. Platinum Properties, which ranked No. 5 last year, now appears on the boutique ranking because its agent head count fell to 36 from 68. Meanwhile, Fox Residential, a longtime presence on the boutique list, jumped to No. 7 among the mid-sized firms. The firm had more agents this year (51 this year versus 46 last year), but a lower dollar volume of listings ($36.7 million in 2015 compared with $43.9 million last year.) Founder Barbara Fox noted that because TRD’s ranking only factors in sales listings, the firm didn’t get credit for all of its buyer-side deals. “That’s what a small brokerage

from page 60

of increase in the U.S.,” said Sean Hennessey, founder and president of Lodging Advisors. He noted that rising land prices will also make development more difficult in coming years. “That is undercutting the financial feasibility of some new projects,” he said. “Whereas in the past, a developer didn’t have to do a lot of soul-searching before building a project, now it’s more challenging, given the changes in the fundamentals.” Additionally, nontraditional hospitality services such as Airbnb and Couchsurfing are starting to hamper the ability of hotels to hike rates during certain peak times, such as New Year’s Eve and during the U.S. Open, said VanStekelenburg. During these events, Airbnb availabilities expand exponentially. In the past, Airbnb “was too small to be on the radar screens, but now it has become a massive company,” he said. “It’s bigger than the Hyatt and most hotel companies, and we don’t know what the ramifications will be.”

128 May 2015 www.TheRealDeal.com

There are also questions about the resiliency of international tourism (which represented more than one-ﬁfth of New York City visitors last year) in the face of a stronger dollar. “A strong dollar

based Langham Hospitality Group, said that Langham Place on Fifth Avenue in Midtown hasn’t seen a reduction in demand. In fact, Langham, which has about 30 luxury properties worldwide, is

“Whereas in the past, a developer didn’t have to do a lot of soulsearching before building a project, now it’s more challenging, given the changes in the fundamentals.” SEAN HENNESSEY, LODGING ADVISORS hits gateway cities more drastically and New York City is at the forefront of that,” VanStekelenburg said. A better exchange rate could also make New York less appealing for U.S. travelers than overseas, and reduce domestic visitor rates.

Enthusiasm persists So far, Phil Keb, executive vice president of development at the Hong Kong-

interested in opening a second Manhattan location. “The good news is we have seen no contraction in demand through December 2015,” he said. “Our European bookings through the summer have seen a slight increase year-over-year.” Henry Kallan, president of Library Hotel Collection, which owns four boutique hotels in New York including

its namesake on East 41st Street and the Hotel Giraffe on Park Avenue South, and caters to foreign travelers, saw a slowdown in January and February, with occupancy hitting 85 percent, versus a consistent 90 percent to 92 percent last year. That coincides with the January report from STR that showed a sharp decline in ADR and RevPAR and a decrease in occupancy. Kallan blamed the weather, which, while cold, didn’t bring as much snow as last winter, which stranded travelers in the city. Others pointed to the one-time bump from last year’s Super Bowl. “But I can take 80 to 85 percent any month of the year,” Kallan said. Developers also are buoyed by the recent eye-popping sales of the WaldorfAstoria and Baccarat Hotel, which went for $1.36 million per key and more than $2 million per key, respectively, to Chinese investors. “If another hotel goes for another crazy price,” Savills Studley’s Baker said, “that won’t do anything to discourage any developers.”TRD

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Rabsky

from page 36

And that’s just a portion of a slew of Rabsky’s deals in the last five years. While big development firms like Two Trees Development and Hudson Companies have been long established on the Brooklyn scene, Rabsky is among a batch of developers — along with Adam America and Yoel Goldman — to emerge in a forceful way in the Brooklyn market since 2012. Earlier in his career, Dushinsky appears to have pooled together investment money from friends and relatives in his community. But with larger projects come larger loans and more institutional sources of financing. In January, for example, Rabsky secured a $95 million mortgage from TD Bank to refinance its debt at Leonard Pointe. Other lenders include Bank Leumi, based in Israel, and BBVA Compass, a subsidiary of Banco Bilbao Vizcaya Argentaria, based in Spain. Real estate players said Dushinsky has the financial means and business savvy to turn around projects and flip properties quickly. “Simon has the ability to capture the market momentum and buy quickly,” said Ofer Cohen, CEO of Brooklyn-based commercial firm TerraCRG, which is working with Rabsky on two pending deals. “He’s working with much of his own money and can move faster, with confidence, independence and capital behind him.” Rabsky, for example, bought a threestory former silverware factory at 51 Jay Street in Dumbo for $25 million in 2012. The next year, it secured Landmarks Preservation Commission approval for a one-story addition as part of a proposed

Chinese shadowing

And though Rabsky has largely steered clear of legal disputes, in 2005, Dushinsky, Rabinowitz and another equity partner, Aaron Jacobowitz, were named in a lawsuit by a Chapter 7 bankruptcy trustee. The trustee alleged that between 1998 and 2003, they fraudulently diverted “tens of millions of dollars” from the public pharmaceutical distributor Allou Healthcare, which was headed by the Jacobowitz family, to fund their Park Plaza project.

A rendering of a 72-unit rental at 26 West Street in Brooklyn.

Along with the widening scope of its developments, Rabsky is gradually stepping outside of its comfort zone in both the neighborhoods it’s building in and the type of projects it’s pursuing. “His path became a lot more strategic as he got bigger, following the growth of up-and-coming neighborhoods,” said TerraCRG’s Cohen. Dushinsky would rather be in a solid market and overpay than make a deal in uncharted territory, sources said. In 2013, Rabsky looked toward Long Island City for building a 44-story, 415-

While Dushinsky can sometimes seem like a ghost, he is not entirely off the radar.

The majority of the claims were dismissed in bankruptcy court in 2007. Separately, Jacobowitz, who controlled multiple LLCs for the bankrupt Allou, was among eight people indicted as part of a $177 million fraud scheme and was sentenced to 10 years in prison in 2007 for money laundering. (Jacobowitz is due for release

unit residential tower at 39-32 Northern Boulevard. In a span of five months, the firm bought a two-story building on the site for $35 million, then sold it for $53.3 million to Simon Baron Development, which sought to carry out the plans. Now Rabsky is back with plans for two other projects in the neighborhood: a 25-story, 284-unit rental building at 4441 Purves Street and a 15-story, 99-unit building at 42-20 27th Street that will likely be rental. And in a departure from its residentialheavy portfolio, Rabsky is partnering with Toby Moskovits’ Heritage Equity Partners on a 400,000-square-foot office building at 25 Kent Avenue in Williamsburg. As Rabsky’s footprint grows, Dushinsky is expected to become even more of a force

While it’s been a while, back in 2005 and 2006, he doled out political contributions to Queens Democrat Melinda Katz, as well as to Brooklyn Democrat David Yassky and former City Council Speaker Gifford Miller in their bids for public ofﬁce.

in June.) But there have been no legal disputes since. Sources note that as the Rabsky Group takes on bigger projects, it will have no choice but to become more visible.

in the market and possibly make a move into Manhattan. “I don’t think he’s married to Brooklyn or Queens,” Pinnacle’s Junik said. “For him, it’s all about opportunity. If he ﬁnds the right opportunity, he’ll make a move.” TRD

later, the developer agreed to buy. “You usually get a ‘yes’ or ‘no’ very quickly,” Kelly said. “He looked at the zoning and the numbers, and he was committed.”

Getting visible

from page 100

“Chinese property developers are not accustomed to the traditional distinction of partner roles customary in the U.S. market,” said Daniel Rosen, founder of the Rhodium Group, a New York City-based consulting firm that focuses on Chinese and Indian economic trends. Rosen noted that the learning curve can be steep. Chinese companies, he said, often attempt to dominate all aspects of a project rather than “hone comparative advantage” in one area while allowing their co-developer to handle another. “This predilection to do everything yourself rather than divide business with partners does not always work well for these new players because they are often not experienced enough to fly solo,” Rosen said. One Chinese firm that stands out for forgoing partners and building on its own is XIN Development Group International, which is working on the 216-unit condo, the Oosten, in Williamsburg. However, XIN’s parent company, Xinyuan Real Estate, went

130 May 2015 www.TheRealDeal.com

residential conversion, and then sold the building to Silverstone Property Group for $45.5 million. Martin Nussbaum and David Schwartz, who left Silverstone to form Slate Property Group, are now developing it into 73 condo units and a townhouse with Adam America. Sean Kelly, managing director at CPEX Real Estate, conﬁrmed his decisive nature. He said last fall he showed Dushinsky a Park Slope assemblage, and less than a day

public on the New York Stock Exchange in 2007 and has been working in the U.S. for some time. Unlike many other Chinese firms sending teams over to apprentice in the U.S., Xinyuan built up XIN by hiring employees here. “We don’t have anyone who parachuted in,” said XIN’s John Liang. “I can tell you that from the beginning we also explored the opportunity of teaming up with local real estate players, but we found it extremely difficult to be co-developers.” Liang said the problem was that potential suitors looked at the company as more of a hands-off investor. “It had a lot to do with ego and a lot to do with the bottom line,” he said, referring to the limited role U.S. firms were offering XIN. XIN, Liang noted, also had the benefit of a close relationship with Sam Zell’s Equity International, one of the investors that took XIN public back in 2007. That relationship gave the company a better understanding of the U.S. market.

Observers said the hands-on approach by Chinese ﬁrms is unique compared to those companies from places like Canada, Europe or South America. But, they note, that while Chinese ﬁrms may be able to handle small or medium-sized development projects, that gaining the expertise to build independently on a large scale will take serious time. “Would I expect them to go it alone on major real estate developments here?” said Stephen Orlins, president of the National Committee on United States-China Relations, which promotes understanding between the two countries. “If you underline ‘major,’ then no, not in the next decade.” TRD

CORRECTIONS AND C L A R I F I C AT I O N S “Million Dollar Listing New York” star and Douglas Elliman broker Fredrik Eklund’s book, “The Sell,” is published by Avery Books. The publisher’s name was incorrect in a review in the April magazine.

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Boutique ﬁrms

from page 50

Led by Stuart Siegel, a veteran broker formerly with Sotheby’s International Realty, the ﬁrm is marketing two condos at the Plaza’s Private Residences, one of which is listed at $20.4 million and the other at $18.3 million. Siegel said Engel & Völkers’ hallmark is its ability to connect international buyers with local brokers and properties. “We are a global business; we happen to be in the New York ofﬁce,” Siegel said.

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Faced with low inventory and high competition, some smaller firms are recalibrating to boost their bottom line. Platinum Properties, which appeared on the ranking of mid-sized firms last year, joined the ranks of boutique firms this year, coming in at No. 8 after a major restructuring in 2014. (Ranking just before Platinum was New York Residence in the No. 5 spot; Peter McCuen & Associates at No. 6; and Domus Realty at No. 7.) The nearly 10-year-old Platinum Properties closed its office in Midtown and cut its agent headcount to 36 from 68. “There’s always been someone right next door saying, ‘I can do what you do.’ You have to specialize,” said President Danny Hedaya. “We started in the Financial District and that’s where we want to focus our attention.” Platinum snagged $41.3 million worth of listings as of March 29, down from $51.5 million in 2014. Hedaya said the drop was a function of the spring season just getting

firms — including those leading the boutique ranking — were forcing them to the sidelines. New York Residence had $75.5 million worth of listings, down from $120.4 million last year. Peter McCuen had $64.8 million, down from $79.5 million, and Domus had $53.4 million, down from $82.5 million. To be sure, the volatility among boutique brokerages makes them targets for large firms, which have gobbled up a number of smaller shops over the last few years. Berk said she has been approached several times by larger companies, but so far she’s turned them down. To stay valuable to clients, Berk said her agents take on roles beyond brokerage. “A small firm is almost like a private investment counselor,” Berk said.

The global game The global appeal of New York real estate has enticed new firms — including some that are extensions of national and international brands — to join the fray. Engel & Völkers’ Siegel said having worldwide clients who want to purchase New York City real estate is “what made the market appealing.” The firm, which started in 1977 in Germany, officially launched its Manhattan outpost in October. “At our core, we’re a local brokerage,” Siegel said. “But we have this defined and credible access to global markets” and international clientele, he added. “We’re not just pins on a map.”

“There’s always been someone right next door saying, ‘I can do what you do.’ You have to specialize.” DANNY HEDAYA, PLATINUM PROPERTIES

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started, and noted that Platinum listed $10 million worth of Manhattan real estate in the first few days of the second quarter. Platinum has also started to explore the commercial market, and currently has $30 million worth of commercial listings. “Our focus has always been a little more on high-end, international buyers. Those trends are not slowing down by any means,” Hedaya said. Mercedes/Berk, No. 8 on last year’s list, dropped off this year’s ranking with $2.6 million worth of listings on the day TRD collected its data, down from $38.9 million last year. “On that particular day, we had the lowest amount [of listings] we’ve had in the last 10 years,” said co-founder Noel Berk, who explained that over the past six months, Mercedes/Berk has focused its energy on representing buyers. The firm, however, closed nearly $30 million worth of sales listings last year, according to TRD’s research. Other boutique firms experienced a similar listings crunch, suggesting that bigger

Thomas Guss, founder of New York Residence, which caters to international clients, said last year was the firm’s best year since the boom of the early aughts as foreign buyers eyed big-ticket properties. “Usually, we saw, ‘Oh, I want a second home or a condo to rent out,’” said Guss, who’s Austrian. “International buyers now have an appetite for different types of product, multifamily and commercial. The things that we sell are now larger-ticket items.” While not international, Connecticutbased William Raveis also opened its first Manhattan office in 2014. William Raveis NYC is headed by industry veterans Paul Purcell and Kathy Braddock. But the firm put its new development business on hold after big-name hires, including Fabienne Lecole and Julia Boland, decamped for the Corcoran Group. As of March 29, the firm, which didn’t make TRD’s cut, had 38 agents and $4.2 million in Manhattan listings. “In any business you have little bumps,” CEO Bill Raveis told TRD last month. “We have staying power.” TRD

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Biggest ﬁrms

from page 46

MANHATTAN AGENTS WITH A $10M LISTING OR HIGHER Rank Rank 2015 2014

Firm

2015

2014

% Change

54 45 25 11 10 5 4 1 1 1 0 0

50%

14%

38%

11%

400%

-33%

---

-50%

-100%

---

Douglas Elliman

Corcoran Group

Brown Harris Stevens

Town Residential

n/a

Stribling & Associates

8 (tie)

Nest Seekers International

Halstead Property

8 (tie)

11 (tie)

Bond New York

8 (tie)

Charles Rutenberg

8 (tie)

Citi Habitats

11 (tie)

8 (tie)

Bellmarc

11 (tie)

Keller Williams NYC

Park Avenue, which has an estimated sellout of $2.9 billion. Meanwhile, Stribling picked up new projects like 252 West 57th from World Wide Group and Rose Associates, a building where a penthouse will reportedly ask $37.5 million. Those projects helped boost its listing dollar volume 26 percent to $693 million. And the number of new units is poised to go up. Some 6,000 new condo units are expected to hit the Manhattan market this year, up from 2,400 units in 2014, according to data from Corcoran Sunshine Marketing Group, the new development arm of Corcoran.

Giant jumps, big falls While the order of the food chain changed, the rising market

lifted most firms. The majority of the firms on the ranking saw an increase in their dollar volume of listings from last year, according to TRD’s analysis. Elliman added the most — with nearly $600 million worth of additional exclusives. Meanwhile, Corcoran added more than $180 million, and Brown Harris Stevens added $172 million, for a total of $2.3 billion in listings. Among the 12 firms, Bond’s 222 percent increase was the biggest dollar volume jump. That brought the firm’s exclusive listings up to nearly $74 million. Meanwhile, Nest Seekers saw listings volume jump to $347 million, up 112 percent. That jump was buoyed by a $48.5 million triplex at 240 Riverside Boulevard.

Two exceptions were the embattled Bellmarc Group, where the dollar volume plummeted 56 percent to $41.7 million, and Citi Habitats, where dollar volume dropped 32 percent to $76.4 million, according to a TRD analysis. Citi Habitats President Gary Malin said TRD’s one-day snapshot didn’t reﬂect Citi Habitats’ entire business, which increasingly is focused on Brooklyn and Queens. (TRD only includes Manhattan data.) “It’s a ﬂuid business for all of us,” he said. Citi Habitats, thanks to its strong rental base, also does “heavy buy-side” business when those clients decide to buy, Malin noted. “Manhattan inventory is very small,” he added. “There are a lot of people who aren’t putting their apartments on the market. What comes on gets sold very quickly.” TRD

Source: All data was gathered from the OLR listing portal on March 30. Data includes only Manhattan-based brokerages and agents and only active Manhattan residential sales listings that had been updated within the last 360 days at the time of the survey. Data does not include multi-family properties, listings that are in contract or listings that have pending offers. Percent changes are based on ﬁgures before rounding. Primary rankings are based on number of Manhattan agents; ﬁrms on that list are then ranked by other factors.

MANHATTAN AGENTS WITH NO ACTIVE LISTINGS

Rank Rank 2015 2014

Firm

2015

2014

% Change

96% 95% 93% 90% 89% 88% 88% 77% 77% 75% 71% 67%

95%

92%

91%

90%

-1%

83%

92%

-4%

74%

73%

72%

71%

65%

Bond New York

Citi Habitats

Charles Rutenberg

Keller Williams NYC

Bellmarc

6 (tie)

Town Residential

6 (tie)

Nest Seekers International

8 (tie)

Douglas Elliman

8 (tie)

n/a

Stribling & Associates

Halstead Property

Corcoran Group

Brown Harris Stevens

134 May 2015 www.TheRealDeal.com

Closed sales

from page 51

CORE, with $277.5 million in listings, sold $434.6 million. “We work extremely hard not to overprice our exclusives and sell them quickly,” said Warburg President Fred Peters. He said Warburg had 100 exclusives in contract versus only 50 on the market as of March 29. Fox Residential founder Barbara Fox said the hottest segment of the market — “so hot you can’t touch” — is for two- and three-bedroom apartments in good condition and priced in the $1 million to $3 million range. “When they come on, they sell. It’s off the charts,” she said. Fox saw its listings tally drop to $36.7 million, however, it sold $53.8 million during the yearlong stretch. And Kleier Residential, which didn’t make the cut on the boutique list, ranked No. 22 here, with $49.1 million in sold properties. “I’m dealing with a lot of buyers as opposed to exclusives,” said company President Michele Kleier, who explained that in the past the ﬁrm focused on representing sellers. “We’re getting a lot of people who are looking ﬁrst because they’re

Paterson

afraid they won’t ﬁnd anything,” she added, echoing a point that Malin and others made.

Even though big firms saw the highest total sales volume, smaller brokerages triumphed when it came to the average volume of sales per agent. The highest per-agent average was at the 10-person Modlin Group, which sold $130.8 million worth of real estate for an average of $13.1 million per agent. Adam Modlin, founder and CEO of Modlin Group, said the first quarter of 2015 was the most robust market since 2007, thanks to a “thriving economy and people’s desire to own a piece of Manhattan.” Among Modlin’s priciest deals was the sale of a $14.9 million penthouse at 150 Columbus Avenue. The firm is currently listing Demi Moore’s triplex pad at the San Remo for $75 million. Meanwhile, the 13-agent Leslie J. Garfield saw an average

of $5.5 million per agent on its $71.7 million in closed deals. It’s worth noting that at the top, Corcoran bested Elliman. Corcoran’s 1,158 Manhattan agents averaged $3.7 million in sales, compared with Elliman’s 1,977 agents, who averaged $2.2 million. Still, many smaller ﬁrms are working their size to their advantage. CORE — with 119 Manhattan agents and $434.6 million in closed sales — racked up an impressive $3.6 million sales per agent. “We’re small but have a powerful footprint,” said CEO Shaun Osher. And with 281 Manhattan agents and $776.9 million in closed sales, Stribling & Associates logged in with roughly $2.7 million sales per agent. “What makes me successful is my size. I’m very nimble. I can act quickly,” said Stribling President Elizabeth Ann Stribling-Kivlan. “Our size allows us to play in the sandbox.” TRD

had fired her as his assistant after their relationship soured. The alleged legal troubles that Skelley referred to concern Paterson’s work in China. In 2011, Paterson began traveling there to court investors for the New York Immigration Fund, a firm that specializes in procuring foreign investors for New York real estate projects through the EB-5 program. One of the projects he raised capital for was a new Times Square Hotel, at 400 West 42nd Street. Paterson acknowledged that in 2012, the Chinese state news outlet CCTV reported that some of the fund’s Chinese investors complained about delays in the hotel’s construction (work has since started on the project). TRD could not immediately confirm that such a news report exists. At any rate, Paterson claimed that the complaints concerned the immigration fund, not his work for it. Moreover, he said that he traveled to China several times in 2013 and 2014 and never encountered any difficulties. Instead, Paterson offered a markedly different account of his split with iFunding. He said he was only paid for his first month at the firm, and by the time of the split, in July, was owed two

months pay. When Skelley and Shah told him he couldn’t travel to China, he claimed he contacted the Chinese consulate and received confirmation that he could, in fact, visit the country. “They probably just didn’t have the money to pay me and came up with this bogus story,” Paterson told TRD. “Believe me, if you did anything [illegal] in China, you would know.” Paterson rubbished Skelley’s account and claimed he repeatedly tried to contact iFunding’s founders, only to have his calls ignored. He described the firm’s conduct as “unprofessional” and “dishonest.” “When they said they called me and I never returned their calls: Why would I not respond if they owe me money?” he added. When TRD asked Skelley if he had any evidence that Paterson was at any point not allowed to enter China, Skelley answered by email: “No I do not have any evidence. Obviously I was mistaken. I apologize for misspeaking.” Asked if the contract with Paterson was ever officially terminated following their falling out in July, he responded: “It was a long time ago and I don’t really remember.” TRD

Small ﬁrms pack punch

from page 64

because of ongoing legal troubles. Skelley and Shah instantly decided to terminate the agreement, they claimed, and told Paterson’s secretary as much. They also claimed that they were unable to reach Paterson because he was ignoring their calls. “Our legal team immediately said this isn’t someone we want to work with,” Skelley recalled in a phone conversation with TRD. iFunding’s allegations seem to fall in line with the former governor’s image as someone who regularly flirts with scandal. Paterson assumed the governorship in March 2008 following Eliot Spitzer’s outing as “Client 9” in a prostitution scandal and held the post until Andrew Cuomo took office in January 2011. He became New York’s first African-American and legally blind governor. But his brief term was mired by allegations of witness tampering and improper use of his office to secure perks such as World Series tickets. After Paterson left Albany to become a professor at Touro College, scandal followed him to New York City. In April 2014, just before he joined iFunding, Touro reached a settlement with a former lover of Paterson’s, Pamela Bane, who claimed Paterson

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LIC

from page 58

for ofﬁce workers in these areas, as well as nice brunch spots for residents. The waterfront and Vernon Boulevard has “a phenomenal collection of restaurants. We’d love to see that expand north into Court Square and Queens Plaza,” he said. Many sources lamented the lack of a major drugstore or grocery store to anchor the area, though the opening of the Court Square Foodcellar will provide some relief. Some say that the number of residents in those areas doesn’t yet justify the investment for retailers. “With all the development surrounding Jackson Avenue and Queens Plaza, those services have yet to come, partially because buildings are going up or are planned. They’re just not here yet, so people are questioning the overall viability of those parts of Long Island City,” said CBRE broker Jeremy Scholder. CBRE’s Rosenzweig spoke of a “herd mentality” that is just starting to ease. In the last few years, clients have told him, “Look at Brooklyn, make sure Williamsburg is on the list,” he said. “When we suggest Long Island City, they scratch their heads. It’s almost an afterthought.” Recently, however, national chains that Rosenzweig brought to the area have expressed more interest, though

they are hesitant to sign because sales projections are low for the ﬁrst few years. Eric Benaim, president of brokerage Modern Spaces, said that he has heard rumors of chains like Starbucks, Whole Foods, Tim Hortons, and Jamba Juice looking in the area, but so far none have inked leases. Commercial rents in the neighborhood have a wide range, from about $45 to $75 per square foot, according to multiple sources, with the priciest spaces located on Vernon Boulevard, and the most affordable in the Queens Plaza area. By comparison, Williamsburg retail currently ranges from about $100 to $300 per square foot, while Astoria rents are closer to Long Island City’s, with the most desirable locations reaching $100 per foot. “This could be the bargain of the decade for forwardthinking retailers,” said Faith Hope Consolo, chair of Douglas Elliman’s retail group. Schwarz and other brokers said their main selling tool for Long Island City is a map of all the residential development in the works. “Here’s the rent that you can get today. That rent is going to be double or triple in four or ﬁve years,” he tells clients. “As the residential population grows, you knock it out of the park.”

With much of the residential development designed to attract families, one notable hole right now is a lack of large spaces that could house supermarkets or big-box retailers. But several upcoming developments include sizable retail spaces. The two towers being built by G&M Realty’s Jerry and David Wolkoff on the former 5Pointz site, for example, will include 50,000 square feet of retail space. And Simon Baron Development’s residential project at 29-26 Northern Boulevard will have almost 20,000 square feet of retail, while 3030 Northern Boulevard, an office and retail property being developed by Alma Realty, will have 138,000 square feet over three floors. Brokers said the demographics of the newcomers are even more promising for retailers than the head count. Benaim said households settling in Long Island City typically have annual incomes of $150,000 or above, with $500,000 not uncommon. A large portion of the influx works in the financial industry, and many are families with children. As retailers take note of those demographics, “it’ll give them the increased confidence in locating here,” said Scholder. “As the next census comes about in five years, there’s going to be a lot of change in the area.” TRD

Brooklyn from page 80 noted. “While it certainly does exist, it’s in short supply because it got swallowed up by predominantly growing Brooklyn companies.” “But I think you’re gonna see more of it come online in the next 18 months,” he added.

Low vacancies Still, the ofﬁce space coming down the pike for creative-type tenants is several years out, and current demand is putting pressure on Brooklyn’s existing ofﬁce supply, particularly Class A space.

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The strain on inventory is perhaps no more obvious than in Downtown Brooklyn, the traditional epicenter of the borough’s office market. The neighborhood is experiencing “historic lows” in vacancy rates, according to Reed. The availability rate in Downtown Brooklyn stood at 7.4 percent in 2015’s first quarter, below the 10-year average of 7.9 percent, according to Newmark Grubb Knight Frank. The level of difficulty in finding office space in the Brooklyn market “depends on what one’s looking for,” Warshauer said, with tenants in

mercial leasing at the complex. “The only space they have is two relatively small subleases.” The complex has drawn younger companies in recent times, diversifying its traditional base of financial and government tenants. The Tough Mudder event series relocated to MetroTech from Dumbo in 2013, while 3D printer manufacturer MakerBot signed on in 2012. But space constraints, at MetroTech and other office properties, affected leasing activity in the Downtown/Dumbo area through the first three months of 2015.The availability of large blocks was “particularly limited,”

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138 March 2015 www.TheRealDeal.net

search of larger spaces around or in excess of 50,000 square feet finding it “very difficult.” “It also has to do with the consumer’s level of expectation,” he added. “If the consumer’s looking for Class A buildings, it’s starved. And that’s because nobody built any Class A buildings of any size [in Brooklyn] from the Great Depression to MetroTech,” in 1990. The MetoTech Center itself, long the standard for Class A office space in the borough, is virtually leased out. “There’s no space in MetroTech,” said Warshauer, a former Forest City Ratner vice president who oversaw com-

Newmark Grubb noted, with just 10 blocks of space above 20,000 square feet available. Those conditions have resulted in price increases, with average asking rents in the Downtown area of just over $39 per square foot in the ﬁrst quarter, up from about $29 for the 10-year average, according to Newmark Grubb. “The market’s changed. There’s more demand and less space every day,” said commercial broker Christopher Havens of Aptsandlofts.com. “There’s just more tenants than space.” TRD

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REITs

from page 56

better than private funds, an investor’s choice often boils down to individual preferences.

Stock shock There are, of course, some key differences between the two that investors need to consider before throwing down cash. While both REITs and private real estate funds allow investors to buy a share of a real estate portfolio, the way they pay out returns is different. Many of those differences stem from the fact that most major REITs — like SL Green Realty, Vornado Realty Trust and Boston Properties — are publicly traded and legally required to pay out 90 percent of their income to investors in return for tax relief. Their investors make money through

Private equity

dividends and stock appreciation. Private funds, on the other hand, are not listed on stock markets, although their managers (like the Blackstone Group), sometimes are. Most private equity funds require a significant minimum investment and many have a fixed life span, meaning investors will only get paid out in full after a number of years. “Public real estate benefits from liquidity. People know it’s easier to get in and out,” said Alex Goldfarb, managing director of equity research at investment banking firm Sandler O’Neill and Partners. But publicly traded REITs are also subject to fluctuations in the stock market. In the long run, sources say, that doesn’t matter much, because REIT performance is ulti-

mately tied to real estate values. But in the short term, it can add volatility and give investors the jitters. Another point of distinction is transparency. As public companies, REITs face greater scrutiny than some private funds. “There is a whole industry around publicly listed REITs, with analysts and press following them,” said Piet Eichholtz, an economist at Maastricht University in the Netherlands and one of the authors of the above-mentioned report. And while stock price ﬂuctuations may add volatility, they also give a more immediate sense of asset values, explained NAREIT’s senior vice president of research Brad Case. “What’s happened in stock markets is that the true value of assets is revealed,” he said. TRD

dished out $605 million for the ofﬁce tower 1740 Broadway last year, while Tishman Speyer plans to develop a $3.2 billion ofﬁce tower in Hudson Yards.

In the ﬁrst quarter of 2015, only four funds raised money. But they hauled in $15.9 billion. Blackstone dominates among New York–based real estate fund managers. Its real estate funds have raised $68.1 billion dollars since 2008. That’s around 40 percent of the total raised by all funds. Between December and March alone, Blackstone reportedly raised $14.5 billion for a new real estate fund, and indications are some of its money may end up in the Big Apple. At a conference last month in Manhattan on the REIT industry, the head of Blackstone’s real estate group, Jonathan Gray, echoed caution over hotel and condo development. (See related story on page 56.) But he also argued that changes in the global economy will continue to drive up real estate prices. “We’re deﬁnitely bullish on New York City and London,” he said. TRD

from page 54

the borough to its roster. The firm, which according to TRD’s ranking spent more in New York City in the last 12 months than any other private equity firm, shelled out $36.1 million for a 3,600-square-foot development site at 180 Bedford Avenue in Williamsburg. And the Lightstone Group, an investment and development firm that also acts as an equity fund, is constructing a 700-unit rental building at 363 Bond Street in Gowanus. There are, of course, still plenty of funds going after Manhattan trophy properties. In January, the Chicago-based Callahan Capital Partners teamed up with the Canadian real estate investment and development firm Ivanhoé Cambridge on the $2.2 billion purchase of 3 Bryant Park. That deal helped to catapult Callahan to the No. 3 spot on the ranking. And there were other trophy purchasers. Blackstone

Money to spend Private funds have continued to invest in New York City despite the growing competition in part because they simply have so much money available. With bond yields at historic lows, institutional investors like insurance ﬁrms and pension funds are increasingly looking at private real estate funds to invest in. “What we’ve seen in terms of fundraising is a reﬂection of institutional appetite for real estate,” said Preqin’s Moylan. And the fundraising numbers bear that out. New York– based private real estate funds reached a post-crisis peak of $28.4 billion in 2014 and are on track to top that total this year.

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140 March 2015 www.TheRealDeal.net

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Meridian Capital Group launches its own investment sales division Rivals say move makes sense; see room for new branch to compete in middle of market BY MARK MAURER eridian Capital Group, one of the city’s top large-loan brokerages, said last month it plans to launch Meridian Investment Sales, a new division of the firm specializing in brokering building sales. Three former Eastern Consolidated brokers — principals David Schechtman and Lipa Lieberman and associate director Abie Kassin — are among those joining the team, sources said. Meridian, led by CEO Ralph Herzka, also tapped Goldman Sachs alumni Yoni Goodman to help lead the effort, sources said. Goodman handled real estate banking and financing at Goldman before joining Meridian late last year. The investment sales arm, which will focus on the multi-family, office and retail sectors, will not be located at the firm’s New York headquarters at 1 Battery Park Plaza. The division will operate out of a new office, slated to open this month in a Midtown location that was not disclosed by press time. “Eastern Consolidated has a long history of developing top brokers at all levels,” said the firm’s president, Daun Paris. “David, Lipa and Abie were all successful rising through our program. We wish them well.” A representative for Meridian declined to comment on the status of the Moshe Group, a one-man investment sales offshoot led by Moshe Majeski, who’s based in its New York office. The move puts the firm face-to-face with its chief competitor, Eastdil Secured, in a second part of the industry. Meridian, which started in 1991 specializing in small loans for multi-family buildings, closed about $30 billion in deals in 2014, according to the firm’s website. The firm handles a mix of large and small mortgage deals, and has offices in six states. It recently negotiated $325 million in financing for RXR Realty’s purchase of the leasehold at 32 Old Slip. Just last year, Meridian, along with Eastdil, arranged $700 million in financing for the purchase

142 May 2015 www.TheRealDeal.com

of the Mobil Building’s leasehold. Key players in the New York City investment sales space said the arrival of Meridian is unlikely to affect heavyweights such as Eastdil and CBRE Group, but could have a big impact on brokers focused on the middle of the market. In 2014, Eastdil saw $11.2 billion in dollar volume of brokered sales, while CBRE

president in JLL’s Capital Markets Group, pointed to Eastern Consolidated, Cushman & Wakefield, Marcus & Millichap, Aaron Jungreis’ Rosewood Realty Group and Steven Vegh’s Westwood Realty Associates as ﬁrms likely to face Meridian head on. “The second tier of top investment sales ﬁrms is where some of the competition will

Eastern Consolidated principals David Schechtman, left, and Lipa Lieberman are heading to Meridian.

Meridian recently negotiated $325 million in ﬁnancing for RXR Realty’s purchase of the leasehold at 32 Old Slip.

Key players said Meridian’s arrival in the NYC investment sales space is unlikely to affect heavyweights such as Eastdil and CBRE Group, but could impact the more mid-market-focused brokerages. saw $5.4 billion, The Real Deal reported in February. Stephen Shapiro, executive vice

really rear its head,” Shapiro said. Meridian’s Goodman said the ﬁrm is setting up its investment sales division

“to be distinctly Meridian-like in its approach.” Noting that it has clients ranging from individuals and families to large private equity funds and institutions, he said, “This new division will look to serve the needs of all of our clients, whether the property at hand is a small walk-up apartment building, a luxury retail condominium or a large office building. When it comes to our people, process and overall business orientation, we are looking to be very institutional in our approach.” Some investment sales brokers expressed concerns that Meridian could become the latest firm at which mortgage brokers refer their clients to in-house sales brokers. Critics called this practice a conflict of interest given Meridian’s area of expertise, while others said it’s a relatively standard practice. The primary focus of Eastdil Secured’s parent company, Wells Fargo, for example, is lending. Bob Knakal, chair of New York investment sales at Cushman & Wakefield, said it was a logical move, in the vein of Massey Knakal Realty Services, since sold to Cushman, launching its lending arm, known as Massey Knakal Capital Services. J.D. Parker, first vice president at Marcus & Millichap, echoed Knakal’s reaction, saying, “The prevailing thought is we’re able to offer our client more options, rather than just sell or just get financing. It’s hard to give sound advice if you’re limited.” Parker said he wasn’t concerned about Meridian’s push into his space. “The best firms aren’t looking over their shoulder,” he said. “They’re trying to improve their platform.” While the investment space may be crowded, there’s room for Meridian to make a splash, insiders said. Meridian will likely fare well in unproven markets with less liquidity and fewer lenders, Shapiro said. “In just Manhattan alone, there was about $40 billion in sales in 2014 of buildings over $10 million,” Shapiro said. “If you capture just 10 percent of that market, you could make $4 billion in deals.” TRD

www.TheRealDeal.com March 2010

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The American Institute of Architecture, NY Chapter presents pre-conference programming leading up to the Lightfair International Conference, in conjunction with the Illuminating Engineering Society, the International Association of Lighting Designers and AMC. The conference features workshops that run from three hours to two days; topics include computer-aided lighting design, basic lighting and daylight fundamentals for energyefﬁcient buildings. Begins at noon, continues through May 4. Conference runs May 5 through May 7. At the Jacob K. Javits Convention Center, 655 West 34th Street. Fees begin at $270 for preconference courses, full ﬁve-day program: $1,495; prices for individual events vary, discounts available. Information and registration: www.lightfair.com.

The Appraisal Institute, New York Chapter, presents Taking the City by Storm, an interview with Jared Kushner, CEO of Kushner Properties. Joel Leitner, managing director of Butler Burgher Group, will be the interviewer. Luncheon meeting begins at 11:30 a.m. Club 101, 101 Park Avenue. Fee: $120. Information and registration: www.aimetrony.com.

The Real Estate Board of New York hosts its residential Brooklyn seminar: How to Create an Exceptional Customer Experience. Mike Staver, best-selling author and award winning speaker, will be the featured speaker. 9 a.m. to 11 a.m. St. Francis College, 180 Remsen Street, Brooklyn. Free admission; members’ only event. Information and registration: www.rebny.com.

NYC & Co., the New York City Economic Development Corp. and the mayor’s ofﬁce present NYCxDesign, a 12-day celebration of design across all disciplines. More than 200 events highlight graphic design, architecture, technology, urban design, fashion, product design, interiors, landscape, furniture, design thinking, and more. Lectures, exhibitions, trade shows and tours will be held in 181 venues across the ﬁve boroughs. Through May 19. Fees: Vary depending on event; includes free programs. Information and registration: nycxdesign.com

The Historic Districts Council presents Building Materials. Featured speaker Dan Allen, principal at CTA Architects, will discuss how various materials are used and how to identify, conserve and maintain them. 6 p.m. Neighborhood Preservation Center, 232 East 11th Street. Fee: $10. Information and registration: www.hdc.org.

The Real Deal hosts its annual Real Estate Forum and New Development Showcase. The event includes panel discussions on crowdfunding, foreign investment and EB-5 and the ultra-luxury development market. Among the speakers are: Ziel Feldman, chairman, HFZ Capital Group; Joe Moinian, CEO, the Moinian Group; Marty Burger, CEO, Silverstein Properties; Adrienne Albert, CEO, the Marketing Directors; Rodrigo Nino, CEO, Prodigy Network and Daniel Miller, president, Fundrise. Noon to 6 p.m. The Metropolitan Pavillon, 125 West 18th Street. Fee: $25 in advance, $35 at door. Information and registration: www.therealdeal2015forum.eventbrite.com.

146 May 2015 www.TheRealDeal.com

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31

The New York State Association for Affordable Housing presents its 16th annual New York State Housing Conference. Workshops include development and preservation, ﬁnancing affordable housing and housing policy. Pre-conference forum begins at 9 a.m. Conference held May 13 through 4 p.m. State Homes & Community Renewal Commissioner Darryl Towns will give the opening remarks. Marriott Marquis Times Square, 1535 Broadway. Fee: Members: $175 pre-conference only, $500 conference only, $600 both days; Nonmembers: $275 for pre-conference only, $600 for conference only, $785 for both days. Early registration deadline is May 9. Information and registration: www.nysafah.org.

The New York Building Congress hosts its 94th Anniversary Leadership Awards Luncheon. Honorees include Skanska USA President and CEO Richard Cavallaro, Milstein Properties Chairman and CEO Howard Milstein and city Deputy Mayor for Housing and Economic Development Alicia Glen, who will receive the Jack and Lewis Rudin Award for Service to New York City. WSP | Parsons Brinckerhoff US President and CEO Gregory Kelly and Howard Hughes Corp. CEO David R. Weinreb will moderate. Reception at 11:30 a.m., luncheon at 12:30 p.m. New York Hilton, 1335 Avenue of the Americas. Fee: $550 for individuals; tables of 10 start at $5,250. Information and registration: www.buildingcongress.com.

The Building Owners and Managers Association hosts Survive-Communicate-Assist: A building staff’s mantra during an active shooter incident. Topics of discussion include preparing for an emergency shooter scenario, informing tenants and staff interaction and response under the “Pillars of Preparedness” planning model. Speakers include Louis Trimboli, senior real estate manager at CBRE and Stephen Iannone, sergeant and supervisor of the detective squad at the NYPD Counterterrorism Division. 8 a.m. Club 101, 101 Park Avenue. Fee: $125 for members, $180 for nonmembers. Registration deadline May 11. Information and registration: www.bomany.org.

The Council of New York Cooperatives & Condominiums hosts Maximizing the Value of your LL 87 Energy Audit in conjunction with the Urban Green Council. The discussion will include compliance with the required energy audit, cost saving opportunities, legal issues surrounding New York City’s Local Law 87 and maximizing the value of information compiled by the audit. Energy Expert Valerie Corbett will be the speaker. 7 p.m. Location TBA. Fee: Free for members, $50 for nonmembers in advance, $15 extra at the door. Information and registration: www.cnyc.com.

Professional Woman in Construction presents a course, Sue Everyone! The Anatomy of a Construction Lawsuit. Attorneys from Goldberg Segalla will discuss the legal elements of construction lawsuits. 6:30 p.m. General Society of Mechanics and Tradesmen of New York, 20 West 44th Street. Free admission. Information and registration: www.pwcusa.org.

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RE:CAP A roundup of real estate-related happenings last month COMPILED BY ANN IMPERATORE

LUXE

This Vegas-like neon sign for 220 Central Park South. We hope what happens at 220 CPS, stays at 220 CPS.

Move Over Eataly! Anthony Bourdain’s new food hall also will have an oyster bar, a beer garden, a bakery ...

… and lines 10 deep, crowds and chaos.

We’ve ofﬁcially run out of names for things: s: The hotel formerly known wn as The Level in Williamsburg sburg was renamed The William lliam Vale. Can’t they be like Kanye and call it the North h West?

S&P/Case-Shiller says NYC’s overall price growth lags well behind the U.S. average. Imagine where it might be without Bill Ackman’s One57 penthouse...

Also in #NomNom news: DeKalb Market Hall, opening next year, with BBQ, mini-doughnuts and Chinese pulled noodles.

They Got the Power: Commercial Observer adds “Power Architects” to this year’s Power 100 List because “Power Developers” like to hire “Power Architects.” Topping the list: the new Whitney Museum designer Renzo Piano. Nestseekers throws huge MDLNY llaunch party in Ryan Serhant’s honor, complete with thong-clad gogo dancers

Fredrik Eklund hosts event for his bestseller “The Sell,” and announces he will soon be a father of a daughter named Milla. Congrats!

Avenue Magazine’s Mad Men–inspired ad pictorial featuring many of NYC RE’s titans costumed in vintage attire. How meta: An ad about ads!

Author Daniel Asa Rose’s crusade against car honking in the chauffeur lane of a luxury building near his home.

These gorgeous us neighborhood d drawings created ed by artist Todd Selby elby for CORE.

FAIL

In other Can’t-We-All-Just-Get-Alongnews: William Raveis’ CEO accuses news Elliman of blocking incoming email; Elliman accuses Raveis of sending mass email to poach agents.

#movetodetroit: NYers encouraged to move to Detroit via new billboards here. Response: #DoNotWant

#SaveNYC hosts a small business crawl to assist momand-pop shops affected by the Second Avenue explosion in the East Village.

Don’t worry, Curbed Kids, we can concoct a few new acronyms for you, too, once we’re done at our REAL jobs! The parody video created by Above Average highlights annoying noises your upstairs neighbors make to torture you.

The Awl highlights, investigates and ranks online NYC apartment scams.

a 0 $74 nth! mo

Ryan Serhant playing Hedge Fund Dave, an insufferable jerk, in the new movie “While We’re Young.” “Apartment Troubles,” an improbable movie about two roommates sharing an illegal sublet in Downtown Manhattan for only $1,500 a month.

NYCRealEstateMaven on Instagram, a new account chronicling changes to the real estate landscape.

Comedienne Kate McKinnon’s spot-on imitation of Robert Durst in a recent SNL skit. She killed them all, of course.

LOW RENT 148 May 2015 www.TheRealDeal.com

WeWork’s April Fool’s prank video launch for WeWee, 24/7 access to bathrooms.

Shade thrown at Curbed on Facebook by NY Post RE editor David Kaufman after the blog mocked Post’s coining of “NoMid” for North Midtown.

This picture featured on Rapid Realty’s Facebook page

Geraldo reports Donald Trump is upset Mayor de Blasio hasn’t met him yet.

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COMINGS & GOINGS Vornado’s top female exec Silverstein exits

Movers and shakers

endy Silverstein, who as co-head of acquisitions and capital markets was the top female executive at Vornado Realty Trust, left the multibillion-dollar real estate investment trust, according to a Securities and Exchange Commission filing. In early March, after more than 15 years with Vornado, Silverstein signed a separation agreement with the firm that went into effect April 1. A company spokesperson did not respond to a request for comment, but a Vornado employee who answered the phone confirmed that Silverstein was no longer at the firm. Silverstein’s corporate biography was also removed from the Vornado website. Silverstein, 54, could not be reached for comment. In a letter included in the SEC filing, Vornado Chairman and CEO Steven Roth wrote to Silverstein to “confirm our conversations concerning your decision to step down.” “I want to thank you on Vornado’s behalf for all that you have done for the company and its shareholders for the past 17 years,” Roth wrote. The terms of the separation agreement call for Silverstein to receive her salary and a Wendy Silverstein prorated bonus through her resignation date. She would also be allowed to keep a company car the firm provided for her. Her total compensation for the 2013 fiscal year was $5.36 million, according to Reuters. Silverstein, a graduate of the Wharton School, met Roth while she was working with the real estate group at Citibank in the 1990s. She joined Vornado in 1998, and as co-head of acquisitions specialized in arranging debt and equity for deals. By Rich Bockmann

Colliers International expanded its New York operations with the addition of John DiFiore as executive managing director for the property management and owned portfolio division. Previously, DiFiore served as chief financial officer for Metropolitan Equity Partners. In John DIFiore his new role, DiFiore will oversee operating and reporting procedures for New York City properties managed by Colliers International. Colliers also hired Franklin Wallach as senior director of research in the New York office. Previously, Wallach was a senior research analyst for CBRE. Engel & Völkers tapped George Perez as vice president of market development, Marc Seinfeld as senior vice president of expansion and Alyson Donnelly as New York City director Alyson Donnelly of business development and training. Perez, who most recently was manager of global sales operations for Rita’s Water Ice Franchise Company, previously worked for Realogy Corporation, Brookfield Real Estate Services and Wyndham Hotel Group. Seinfeld has held positions with NRT in Madison, N.J., the CoStar Group in Washington, D.C. and most recently, Realogy/ Coldwell Banker Real Estate. Donnelly previously served as a licensed real estate salesperson for Brown Harris Stevens and Citi Habitats. Eastern Consolidated promoted Benjamin Tapper and Peter Carillo to principal. In addition to their roles as senior directors, both executives will also contribute toward Benjamin Tapper the firm’s overall strategy. David Burton joined Avison Young as a director. He was previously with commercial real estate services firm DTZ. Savanna hired Valerie Kitay as general counsel. Previously, she held the position of counsel at Hunton & Williams. Kelly Broderick rejoined Cushman & Valerie Kitay Wakefield as a senior director. She was at Cushman & Wakefield for seven years before taking a position for a year with Colliers International. Adrienne Berman has joined Brown Harris Stevens at its Park Avenue office as a licensed associate real estate broker. Previously, Berman was vice president associate broker at Corcoran Group. The Corcoran Group appointed Michael Sorrentino senior managing director for the Corcoran Park Slope office. He returns to Corcoran after five years at Citi Habitats. Sorrentino will oversee over 100 Park Slope agents. Robert DiBiase joined Temple Morrow as director of townhouse sales. DiBiase was formerly managing director for Massey Knakal. Rose Associates hired Michael Garrett as Michael Garrett associate director of multifamily management. He most recently acted as regional manager for Equity Residential.

Cohn sues GuardHill for wrongful firing tar mortgage broker Melissa Cohn, one of the few top-ranking female executives in the mortgage industry, is suing her former employer, GuardHill Financial, claiming wrongful termination. Cohn was fired by GuardHill in January, months after being hired as president. The complaint alleges that the mortgage bank and brokerage had no good cause to fire Cohn. Instead, it claims she was canned because of a power struggle with CEO Alan Rosenbaum. GuardHill maintains that Cohn was fired for “her continued unacceptable behavior,” and said Cohn’s claims are without merit. “With the benefit of hindsight, it is now clear to Cohn that after years of running GuardHill by himself, Rosenbaum was neither able nor comfortable listening to constructive proposals and suggestions from someone with even more experience and proven record of success,” states Cohn’s complaint, filed last month in New York State Supreme Court. In a statement, a representative for GuardHill said, “Unfortunately, after months of trying to work with Ms. Cohn on her behavior and attitude, GuardHill terminated Ms. Cohn’s employment for cause in January, four months after it hired her. Ms. Cohn’s lawsuit appears to be consistent with her strategy of suing former employMelissa Cohn ers in an attempt to avoid contractual promises she made not to compete or solicit.” Cohn, whose LinkedIn profile currently doesn’t reveal any company affiliation and whose attorney couldn’t be reached for comment, is seeking undisclosed damages. GuardHill intends not only to defend against Cohn’s claims, “but also to counter-sue for money that Ms. Cohn has wrongfully refused to return to the company following her termination.” By Kyna Doles and Konrad Putzier

Reonomy hires Shutterstock’s VP of tech eal estate research and data startup Reonomy, which raised $13 million in a Series B round in January, wooed one of Shutterstock’s top technology executives to head its engineering efforts. Chris Fischer, who was vice president of technology operations at the image-sharing giant, will oversee design of Reonomy’s products. “Being able to build an early-stage company, with an exciting vision in a pretty cool space, that’s not a job to me,” Fischer said, referring to his decision to leave behind a behemoth with a market cap of $2.54 billion in favor of a startup. Fischer added that apart from his technical chops, he would be Chris Fischer able to share lessons he learned through failures. “I’ve got a lot of scar tissue from working on multiple startups,” he said, including cloud computing firm Reality Check Network (now DigitalOcean) and Beatport, an online mecca for electronic music enthusiasts. “Given that at the core we’re a tech and data company, there is no better guy I can think of than Chris to help us grow,” said Richard Sarkis, CEO and co-founder of Reonomy. “I really see him as a peer and thought partner.” Sarkis founded Reonomy in April 2013 with Charlie Oshman. The firm collects and crunches data from hundreds of public databases to produce granular information on properties and a high-level snapshot of the competitive landscape. Brokerages such as JLL and Meridian Capital Group are clients, as are local investment firms such as Benchmark Real Estate Group and many major lenders. By Hiten Samtani

150 May 2015 www.TheRealDeal.com

In memoriam

Greg Young

Greg Young, 54, founder and president of the broker training company Broker Heaven, died last month. Young, who was previously a director of sales at Citi Habitats, lived in Fallsburg, New York. He is survived by his wife, Jacque Lyn Le Faucheur, father, stepmother, stepfather, two brothers and two sisters. Memorial service details were pending at press time.

Compiled by Jennifer White Karp and Andrea Cetra

Hobnobbing with Bjarke Ingels WE H E A RD

The Danish architect, who may revamp 2 WTC, cites Lego museum as proudest design

elebrated architect Bjarke Ingels’ has a slew of cutting-edge skyscrapers to his name. But the building he’s most proud of is one that a toddler might appreciate. The 40-year-old Dane said designing Denmark’s Lego House museum — which is set to open in 2016 and will look like it was constructed with giant building blocks — was the “highest honor any architect can receive.” At least that’s what he told a group of several dozen real estate players who gathered last month at the home of The Real Deal’s publisher Amir Korangy to meet him. But that could change soon. Shortly after last month’s meet-and-greet, news broke that Ingels may be brought on to redesign starchitect Sir Norman Foster’s plans for 2 World Trade Center with the goal of making way for Rupert Murdoch’s media companies 21st Century Fox and News Corp, which are reportedly

Roth goes rogue T

considering signing on as anchor tenants. Sources told outside the ordinary,” he said. the Wall Street Journal that the tower would stay the same But don’t expect him to scrap the existing plans: “It’s not height but would need TV studios for its new tenants. like we impose some kind of expensive, spectacular, unpracIt’s still unclear if Ingels — who designed the under-construction pyramid building for the Durst Organization on 57th Street — will even get the chance to revamp the WTC tower. Or what he would do if he did. But before the news of his latest (possible) Bjarke Ingels. Middle, Ingels’ design for the Lego House museum in Denmark. Right, Ingels reportedly may be tapped to revamp at least part of fellow starchitect Norman Foster’s design for 2 World Trade Center. assignment was made public, he told those gathered at Korangy’s that he generally tical craziness. It’s actually rather that we say, ‘is this really looks for “some kind of problem that needs solving, or some enough or could we do more?’” Whether working on a tower at the WTC can beat the kind of potential that hasn’t been realized.” “Then once you ﬁnd that it becomes an invitation to go Lego museum, still remains to be seen. By Rich Bockmann

The normally press-shy Vornado chief exchanges ﬁery, fun zingers with Extell’s Barnett and Related’s Blau

he quips and jabs ﬂew fast and furious when a trio of the city’s powerhouse developers shared a stage last month, with Vornado Realty Trust’s CEO Steven Roth in particularly high spirits. Roth exchanged zingers with Extell Development’s Gary Barnett and Jeff Blau of Related Companies, who are among his ﬁercest competitors. The exchange offered a rare peek at the nature of the REIT’s often publicity-shy chief. When Blau pointed out that Roth failed to win the bid to develop the 17 million-square-foot Far West Side Hudson Yards site, for instance, Roth countered with: “By not owning it, I lost? Or maybe I won, we’ll see!” Related, of course, is developing the site. Here are some of the fun zingers from the event, a forum hosted by the China General Chamber of Commerce at Bloomberg LP’s headquarters.

• Roth proclaimed that Vornado’s 220 Central Park South will be the city’s ﬁnest building, giving no quarter to competing projects — not even its near neighbor, One57. “Don’t be jerky,” he told Barnett, “it’s not even close.”

Steven Roth. Right, top to bottom: Gary Barnett, Jeff Blau and Andrew Farkas.

• Island Capital Group chairman Andrew Farkas set the tone when, as moderator, he joked “they always pick the least interesting person” for the task.

Motor City bound? F rom Soho to Bushwick, billboards popped up in recent months with the most unlikely suggestion for New Yorkers: Move to Detroit. The idea behind them is reportedly to encourage people, especially young and creative ones, to move to the Motor City. Not surprisingly, Bushwick, the latest neighborhood to see rapid gentriﬁcation, was targeted for two of the ads: “Detroit, Just west of Bushwick,” and “Detroit, Be left alone.” “I think Detroit is a compelling place for people to be moving,” Philip Kafka of Prince Media Co., the boutique billboard company behind the campaign, told the news website Business Insider. “I can do things there as a young guy that I could never imagine doing in New York or any other major market in the U.S.” Kafka, who is based in New York, told BI he owns property in Detroit and is opening a Thai restaurant there called Katoi. Some of the signs say, “Detroit, Now Hiring,” with the name of the restaurant below.

152 May 2015 www.TheRealDeal.com

• Barnett took the humble route and described himself as someone who “built what I thought was a really nice building at One57, and a few others.”

• While Roth said that building 220 Central Park South was a no brainer because the cost of capital was only 1.4 percent, the real estate trust generally shies away from residential projects because developers get boxed out of proﬁting on resales when the market goes up. “I sold an apartment to a famous person here for $20 million,” Roth said, gesturing above him to One Beacon Court, which is above Bloomberg’s headquarters, and likely referring to scandal-plagued hedge funder Steven Cohen. “He now has it on the market for $85 million — I hate that!” By Hiten Samtani

Billboards pop up urging New Yorkers to move west But the campaign may have legs that Kafka didn’t imagine. The phrase “Move to Detroit” was also spray-painted and stenciled in spots around New York, with one prom-

A Bushwick billboard with a surprising suggestion.

inent tag on the Brooklyn Bridge. Photos of the grafﬁti have also been posted on Instagram with the hashtag, “#movetodetroit.” The steady loss of population since the 1950s is one of the many contributing factors to Detroit’s recent ﬁnancial troubles. Detroit emerged from bankruptcy in December, but now has fewer than 700,000 residents, less than half of the 1.85 million it had in the 1950s. Brooklynites who make the move would follow in the footsteps of one Kings County native: the Galapagos Art Space, a 20-year-old performance center that helped put Williamsburg on the map, then moved to Dumbo. It closed in December and is decamping. “Born in Brooklyn, Raised in Detroit,” the center’s website states. “Simply put, New York City has become too expensive to continue incubating young artists,” Galapagos explains on its site, blaming “the canaries in New York City’s real estate gold mine.” By Eileen AJ Connelly

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How much did you ultimately sell it for? $225,000. And then we bought an apartment in the San Remo. [Goldberger currently lives in another classic apartment on Central Park West.] I’ve been lucky about [living in] incredible buildings. In the mid-1970s people thought you were crazy to live in New York City. [Buying real estate] was like buying Microsoft or Apple stock at the very beginning. How did you celebrate winning the Pulitzer? We got the news on the first night of Passover. There was definitely a reason that night was different than all other nights. What’s the strangest professional situation you’ve found yourself in? A few years ago, I was asked to do an interview for a documentary film about Masdar, a new city in Abu Dhabi, which is being built as a model for sustainability and low energy. It appeared on the Discovery Channel and I forgot about it completely. A few months ago, I started getting calls from people saying, I didn’t know you were a spokesperson for Shell Oil. It turns out Shell had put the money up for the documentary and had taken my interview and just cut a clip out and put it into a commercial. It put me in an extremely awkward and embarrassing situation. I hired a lawyer and so far I have not succeeded in getting anywhere. But I will not ever sign a release without reading it again.

THE CLOSING

WITH PAUL GOLDBERGER From two golden perches — at the New York Times and the New Yorker — the Pulitzer-winning architecture critic has taken on structures such as Frank Gehry’s tower at 8 Spruce Street, which he called “one of the most beautiful towers Downtown,” and Richard Rogers’ Millennium Dome in London, which he referred to as a “Big Top.” He also took on two projects in Silicon Valley: Foster + Partners’ headquarters for Apple and Gehry’s nearby campus for Google, about which he asked: “The real question is whether, for all their ambition, they will do much to change the underlying suburban culture.” A former dean of the Parsons School of Design, Goldberger is currently a contributing editor at Vanity Fair. He has written more than a dozen books, including “Why Architecture Matters” (2009), as well as a biography of Frank Gehry, titled “Building Art: The Life and Work of Frank Gehry,” to be published in September 2015. He won his Pulitzer at the Times in 1984 for distinguished architecture criticism.

NAME: PAUL GOLDBERGER

BORN: DECEMBER 4, 1950 HOMETOWN: NUTLEY, NEW JERSEY MARITAL STATUS: MARRIED 35 YEARS

154 May 2015 www.TheRealDeal.com

What were you like as a kid? Somewhat into books. Into cars, into buildings, into building things and into writing. I was editor of my high school newspaper. What was your first job? My first job ever was at a dye manufacturing plant in [Nutley] during the summer when I was 15. The following summer I got a job at the weekly paper in town, the Nutley Sun. How did you end up writing about architecture? I majored in art and architecture history at [Yale University] and when I had a chance to work for the New York Times after college, it seemed like a very good thing to do. How did you get in at the Times? [At the Nutley Sun], I wrote about this white militant vigilante leader who was trying to arm whites to fight back against blacks. A friend of my parents, who was an editor at Time, was visiting for dinner, and he encouraged me to send a letter to the New York Times Magazine, proposing this story. I did, and they said yes. They didn’t know I was 18. How much did they pay you for the article? $400, and let me tell you, in 1968-69 it was a fortune. And the Times offered you a job after graduation? It was actually not my first choice. My first choice was a fellowship to the University of Cambridge, but I didn’t get it. I’m not going to be falsely modest. I think I was a very good writer, especially for a kid, but there’s also a lot of luck that comes into it. What was your first apartment in New York City? It was a tiny apartment in a brownstone on West 69th. In the mid-’70s, I bought a one bedroom at the Dakota for $42,000.

When you see a building, do you have an immediate reaction? There’s an instant feeling of ‘this works, this doesn’t work.’ I don’t know that I’ve ever changed my mind 180 degrees, but it can certainly move on the scale once I really dig deeper. Any examples? I have a lot of concerns about the new supertall, superthin towers. The more I dug into [Extell Development’s] One57, the less I liked it. The more I looked into [Macklowe Properties’] 432 Park Avenue, the more I liked it. I still have concerns about what it represents sociologically and culturally, but if you look at 432 Park individually, and you look at [JDS Development’s] 111 West 57th Street, those are actually very impressive and remarkable buildings. Do you socialize with any architects or developers? It’s impossible not to encounter people socially. Generally the ones I’m friendlier with are younger ones who I enjoy talking with and sharing stories with, not ones whose work I’m likely to write about. I try to keep those things apart. What developer does consistently good work? Gerry Hines. He is 90, he’s still around. The company, Hines, is still an international leader in developing serious and architecturally ambitious buildings. How do you deal with criticism? No one loves being critiqued. If it’s smart and respectful and teaches me something, I’m OK with it. If it’s nasty and personal, I’m not. How do you feel about the term “starchitect”? It’s an annoying term. Celebrity has permeated so much of our culture, including architecture. That said, it’s a reminder of greater public engagement in architecture. … The most exciting, intellectually engaging and culturally meaningful things still are generally works of individual creation. By E.B. Solomont

PHOTOGRAPH FOR THE REAL DEAL BY MARC SCRIVO00 www.TheRealDeal.com July 2006

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