22
NYC landlords fight cyber attacks
www.TheRealDeal.com
36
The fall of a REIT king
52
Darcy Stacom rebuilds her team
56
London market dips: will New York follow?
N EW YO R K R EAL E S TATE N E W S
136
Aby Rosen on Instagram
Vol. 13 No. 2 February 2015 $3.00
A NEW
GOLDEN AGE FOR
CAPITAL
From crowdfunding sites to Chinese investors, a look at the new wave of money flooding the real estate market p38
Merger madness Inside the $100M Massey-Cushman deal — and NYC’s quickly consolidating commercial industry p51
The coming rental boom An unexpected influx of units is about to hit in Manhattan and Brooklyn p74
Can Howard Hughes make it in NYC? Critics say firm is in over its head at South Street Seaport. CEO says not so fast. p60 ILLUSTRATION BY NOAH MCDONOUGH
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t $FOUSBM IJHIMZ BDDFTTJCMF MPDBUJPO TJUVBUFE CFUXFFO 8BMM 4USFFU BOE UIF 'JOBODJBM %JTUSJDU UP UIF 4PVUI BOE UIF 8FTU 7JMMBHF BOE 4P)P UP UIF /PSUI
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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 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.
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Contents F E B R U A R Y 2 0 1 5
22
Cyber attacks on real estate
26
The chain gang
26
In wake of Target and Home Depot hacks, NYC property owners are under the gun to protect residents’ info.
Which franchise stores are growing fastest in NYC? Hint: See photo.
Dunkin’ Donuts, which has more NYC stores than any other retailer.
28 At the Desk of: Elizabeth Ann Stribling-Kivlan The Stribling & Associates’ president on her gold flask, her obsession with Sharpies and on her mother, a doyenne of NYC real estate. Stribling-Kivlan was promoted to firm president in 2013.
32
In their words... The month’s funniest and most insightful real estate comments.
36 The rise and fall of Nicholas Schorsch How the now-ousted REIT chief went from being one of real estate’s most aggressive players to being unemployed.
38 A ‘golden age’ for NYC capital Cash floods real estate market as new players — from crowdfunders to Asian insurance companies — jump in and existing players ramp up outlays in search of higher yields.
46 Jamaica’s tipping point Mapping the wave of new development in the Queens’ nabe, where investors are pouncing.
10 February 2015www.TheRealDeal.com www.TheRealDeal.com 8 October 2012
Queens
Ƹ
Jamaica
www.TheRealDeal.com March 2012 00
Contents continued 51 Why Cushman and Massey Knakal said “I do.” The unlikely marriage is already shaking things up — both at the firm and in the industry.
+
Cushman reportedly spent $100 million to buy Massey Knakal.
52
56
Building sales bigwigs TRD’s investment sales ranking shows CBRE losing ground.
56 Lessons from London
London could be a bellwether for the NYC market.
60
Who is Howard Hughes?
74
The surprising rental boom
What does the softening of the British capital’s luxury market mean for NYC?
Some say the Texas-based firm has bitten off more than it can chew with the South Street Seaport redevelopment; not so says the CEO.
20
Contrary to popular belief, rental development is on the rise in Manhattan, but not for long.
Residential Market Report Checking in with brokers to take the pulse of the apartment market.
30 Commercial Market Report Tracking rents and vacancy figures in Manhattan’s three office districts.
94 National Market Report Reports from around the country on significant developments and trends.
Veronica Mainetti, whose father is mogul Valter Mainetti.
84
96
Day in the Life Of: Veronica Mainetti
Deal Sheet
The Sorgente Group’s U.S. chief on revamping historic gems, cleaning up Play-Doh and being a gluten-free Italian.
A roundup of office and retail leases, building buys and financing.
114 Development Updates
112
An update of the construction and sales status of projects around the city.
Spinola’s send-off REBNY gala marks end of an era. Inside: The night in photos. Outgoing REBNY president Steven Spinola
116 Residential Deals An insiders’ look at how home sales really happen.
130 Calendar of Events Check out this month’s activities.
Coming up ‘Roses’
138 Developer Jonathan Rose on dinner with Albert Einstein and growing up in a NYC real estate dynasty.
10 12 February October 2012 2015 www.TheRealDeal.com www.TheRealDeal.com
136 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.
You need Rosewood Realty Group
SOUTH FLORIDA MANAGING EDITOR Ina Cordle ART DIRECTORS Ronald Gross, Keziah Makoundou SENIOR REPORTER Adam Pincus REPORTERS Rich Bockmann, E.B. Solomont CONTRIBUTORS C. J. Hughes, Jennifer White Karp ASSOCIATE WEB EDITOR Mark Maurer WEB PRODUCERS/WEB REPORTERS Tess Hofmann, Katherine Kallergis, Claire Moses SOCIAL MEDIA COORDINATOR Kerry Barger PRODUCTION COORDINATOR Victoria Tuturice RESEARCH ASSISTANT Kyna Doles EDITORIAL ASSISTANT Brendan O’Connor
212.359.9900
www.rosewoodrealtygroup.com
Rosewood Knows New York We are pleased to announce the following results for the year-to-date January 31st 2015, Rosewood has completed total sales of
$188,780,000 which include:
Manhattan: Aggregate sales of
$96,850,000
6 Buildings / 203 Residential Units / 7 Commercial Units
INTERN Juan Zielaskowski 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 DIGITAL TRAFFIC MANAGER Junaid Zahid WEBMASTERS Nima Negahban, Andrew LoCascio
Brooklyn: Aggregate sales of
$30,230,000
3 Buildings / 125 Residential Units / 6 Commercial Units Bronx: Aggregate sales of
$13,900,000
2 Buildings / 117 Residential Units
Queens: Aggregate sales of
$47,800,000
4 Buildings / 143 Residential Units / 11 Commercial Units
© Copyright 2012 Rosewood Realty Group. All rights reserved.
14 February 2015 www.TheRealDeal.com
ASSOCIATE WEB DEVELOPER Amir Ghaheri FINANCE DIRECTOR/HUMAN RESOURCES Kenneth Cyrus OFFICE MANAGER Virginia Durso CIRCULATION Paul Destanko DISTRIBUTION Mitchell Newman, Patricia Hofmann, Forero Express ATTORNEY Barry J. Friedberg Trachtenberg Rodes & Friedberg LLP ACCOUNTANTS William T. McCallum, CPA, P.C., Christine Wang
The Real Deal is a registered trademark of Korangy Publishing Inc. Copyright © 2015. Call 212-2601332 or e-mail news@therealdeal.com. Warning: It is illegal to photocopy or reproduce any part of The Real Deal without express written consent. For reprints and duplication rights, call 212-260-1332. Principal office: 158 West 29th St., New York, NY 10001. The Real Deal is published monthly. Annual subscriptions cost $95. Send check or money order to 158 West 29th St., New York, NY 10001.
EDITOR’S NOTE ‘Strange’ money floods NYC hese are strange days, indeed. And they’re seeing lots of “strange” money, too. The amount of investment capital pouring into New York City real estate is increasingly coming from non-traditional sources — from crowdfunding to the Chinese — even as traditional banks continue to shy away from risky bets. Money is moving at the speed of the Internet, across borders. And it’s not going unnoticed by top New York players. “Real estate guys have to get used to the fact that we’re seeing a lot of strange capital in our market,” Starwood Capital chief Barry Sternlicht said last month. As reporter E.B. Solomont writes in our main cover story (see page 38), the depth and breadth of the money seeking shelter in New York is enormous. Real estate is functioning as a Swiss bank account for the world’s wealthiest. Last month, during a trip to Shanghai — where The Real Deal is planning to hold a property showcase in the fall — I was told that the next opportunity for investors in China would be crowdfunding. Crowdfunding, of course, allows the ordinary investor to put small amounts into deals in a way that real estate traditionally doesn’t allow for. The prospect of widely opening up investment to a population of 1.3 billion seems pretty staggering, if it’s actually realized. After all, 1 billion people can’t be wrong. Unless, of course, they flood the market with too much capital, it forms a bubble and then pops. But we don’t seem quite there yet. And, on the plus side, the traditional banks that had a hand in the last bust are looking downright disciplined this time around. But chances are that the next bust is not going to be prompted by the same smoking gun. One thing is for sure though: that the upper end of the residential market is hitting levels never seen before. New York’s first-ever $100 million home sold last month, at condo tower One57. Meanwhile, the price record for a co-op sale has been broken three times in the last year, and two of the buyers were foreign.
T
The depth and breadth of the money seeking shelter in New York is enormous. Is opening up crowdfunding to a billion people in China the next step? As I write in my other editor’s note this month (for our annual Data Book), there’s pricing for the global elite, and then there’s pricing for everyone else. In many ways, New York is really a “tale of three cities.” Mayor de Blasio, who campaigned around the idea of a “tale of two cities,” was missing the ultra-wealthy, global jet-setting crew, who are in a different class from the merely rich. (This is explored in the Data Book, our farmer’s almanac of New York real estate, which is included with this issue.) Another concern, meanwhile, is that with all these blockbuster deals grabbing headlines, the true state of the overall market is being obscured. As appraiser Jonathan Miller told us, “one percent of the market is getting 99 percent of the eyeballs. We’re zeroing in on the wrong things, things that are shiny and sparkle.” It’s easy to get caught up in fever dreams of excess wealth, but it’s important to drill down and examine the facts. That’s exactly what we do in a number of our stories this issue. On page 74, we take a look at the surprising number of rental units coming to market in Manhattan and Brooklyn this year. While much of the industry’s focus has been on a possible oversupply of high-end condos, the number of rental units in Manhattan is expected to jump 25 percent this year and double in 2016. In Brooklyn, the number is set to increase 120 percent this year compared to last. On the commercial side, we take a look at how New York’s “Big Four” brokerages might expand to the “Big Five” or “Big Six” (see page 50). We also rank building sales brokers (page 52), examine the strong performance of REITs (page 88), look at the surge in development in Southeast Queens (page 46), and go behind the scenes with the developer who’s remaking the South Street Seaport, but running into community opposition (page 60). Enjoy the Data Book and the issue.
Stuart Elliott 16 February 2015 www.TheRealDeal.com
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RESIDENTIAL MARKET
gain appeal 6 rooms in 1 Fixer-uppers Brokers ďŹ nd more clients willing to consider older apartments that need renovation work BY E.B. SOLOMONT key piece in a broker’s toolbox these days is an architect’s business card. Buoyed in some cases by fat Wall Street bonuses, buyers are increasingly willing to consider condos and co-ops that need work. That’s a marked difference from a few months ago, when homes that needed renovations were often considered too risky. The resurgent interest in the resale market is partly a result of sky-high prices for new development condos. Warburg Realty agent Lisa Larson said some of her clients who are looking in the resale market have been priced out of new developments. “New developments are sexy and people love talking about them,â€? she said. But increasingly, clients seeing new construction price tags say they’ll look at the apartments that need some work. In fact, so many are considering apartments that could use an update, Larson has been referring her architect to prospects who need help envisioning a renovation. “A lot of people are afraid of the unknown,â€? she said. “I’ll say, ‘Let me bring in my architect. Let’s get a rough idea of what can be done with the space and what it will cost you.’â€? For many buyers, the resale market is a value play, said Town Residential’s Jarrod Guy Randolph. “Typically, you can buy something that needs to be renovated or combined for a 15 percent discount,â€? he said. Randolph has a client who was searching for a four-bedroom condo in a new devel-
A
percent to $888,000, compared with the median price for new development apartments, which rose 3.5 percent to $1.8 million. New development price spikes pulled the resale market up, said Brown Harris Stevens’ Wendy Richardson. “But there’s still a big gap. It’s apples and oranges.â€? Richardson identiďŹ ed two distinct types of buyers. “Your buyers looking at new development, they want new, incredible trophy apartments. That’s a different person than someone who’s buying there to really live in it,â€? she said. Larson said some buyers, particularly those who work in ďŹ nance, are newly emboldened by expections for a good bonus season. For example, one client — with a budget of $5 million — has been searching for a year. After getting a promotion, the client is willing to invest in a renovation. Larson is now showing the client apartments slightly under $5 million that need work. According to a recent CityRealty report, resales showed signiďŹ cant price gains last year: Condos bought in 2013 and resold a year later averaged a 23.6 percent price gain. Rob Silber, an agent at Citi Habitats, said demand for resales is strongest among New Yorkers looking for a primary residence. “The increase in price per square foot is not as crazy as the new developments,â€? he said. That’s why he’s seeing multple bids on regular apartments. Silber recently put Unit 6E, a 950square-foot apartment at 44 East 12th Street, under contract for above the asking
“Your buyers looking at new development, they want new, incredible trophy apartments. That’s a different person than someone who’s buying there to really live in it.� WENDY RICHARDSON, BROWN HARRIS STEVENS
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opment for under $8 million. “It was nearly impossible to ďŹ nd,â€? he said. Now, the client is considering units in new-ish buildings (circa 1990s or 2000s) that can be renovated. “Every time I send them something, I send the plans to the architect and ask, ‘Will we be able to work with this plan?’â€? he said. Randolph said the trend reects the market’s limited inventory. “Because there’s not enough resale inventory and new developments are so expensive, buyers are starting to look at alternatives,â€? he said. “One choice is a renovation to get a great space and neighborhood that’s not $2,000 per square foot.â€? Overall, Manhattan’s median sales price rose to $980,000 during the 2014 fourth quarter, up 14.6 percent from the prior year, according to appraisal ďŹ rm Miller Samuel. While new development prices were higher, resale prices showed larger gains. The median price for resale apartments rose 8.1
price of $1.625 million. Three months ago, a similar apartment on the fourth oor sold for $1.4 million. “When we priced the apartment, we added a premium,â€? he said. “We had multiple offers and we took the highest one. ‌ I was able to get $200,000 more than what [the fourth-oor seller] got.â€? Silber said high demand and low inventory led to multiple bids on the unit, a junior four conďŹ gured as a two-bedroom. “People don’t have good choices. [They can pay] $3,000 per square foot for new development, and most buyers can’t afford that,â€? he said. By comparison, the apartment on East 12th sold for $1,710 per square foot. “That’s why they’re looking at this type of property.â€? To be sure, renovated apartments still sell faster, Warburg’s Larson said. “But when you’ve got still-chronic inventory shortage,â€? she said, “the people that really want to buy are looking at things that need work.â€? TRD
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Cybercrime threat grows for property managers Landlords employ software, third-party firms to protect vital tenant information BY KERRY MURTHA arge multi-national corporations like Target, Home Depot and JPMorgan Chase were the recent victims of highly publicized data breaches aimed at lifting consumer information, but the threat is not limited to the retail and financial services industries. The real estate industry is also at risk. Rental applications, credit reports and leasing agreements are just a few of the types of documents stored and shared by property managers, brokers, developers and appraisers that contain the sort of information cyber criminals crave. Access to this sensitive data, coupled with the industry’s increasing reliance on technology, such as landlords making portals available for rent payments, makes real estate players prime targets for hackers. In September, for example, Essex Property Trust, a Palo Alto, California-based real estate investment trust that owns and operates multifamily properties on the West Coast, reported that its computer networks, containing personal and propri-
L
be proactive in securing the confidential information we maintain,” said Rubler, whose firm, formerly known as Vantage Properties, manages seven residential properties in New York and New Jersey. Some firms are trying to minimize the likelihood of data breaches by installing two types of protective software: a firewall that prevents outsiders from gaining access to private networks, and antivirus software to protect personal computers from malicious infections. Daryle LaMonica, IT director for the Manhattan-based residential and commercial property firm TF Cornerstone, said viruses are his firm’s biggest concern, and in fact several have infected their computer systems in the past. “We caught them before any real damage was done, but now we are continually upgrading our software and all employees are warned against opening questionable emails,” said LaMonica. To reduce potential exposure, TF Cornerstone also contracts a third-party company with its own security system to collect online rent payments from tenants.
“It’s no longer a matter of if a company gets hacked, it’s only a matter of when.” MARK STAMFORD, OCCAMSEC
Don’t miss your chance to be featured in s Market Report Artwork must be submitted by March 20th For more information, contact us at Advertising@TheRealDeal.com or call 212-260-1332
22 February 2015 www.TheRealDeal.com
etary information, were compromised by a cyber intrusion. And the security breach at Essex is just the tip of the iceberg, industry observers said. “It’s no longer a matter of if a company gets hacked, it’s only a matter of when,” said Mark Stamford, founder and CEO of OccamSec, a Manhattan-based company that specializes in computer and Internet security. Cyber criminals can compromise an organization’s information in multiple ways, including loading spyware, crashing servers to cause data loss, hacking email accounts and hijacking business websites. Companies are employing a number of strategies to try to ward off attacks. “There’s no single solution,” said Ian Marlow, CEO of FITECH, a Manhattan real estate technology and consulting firm that counts Rudin Management Company, the LeFrak Organization, and the Silverman Group among its clients. “Each company will need to find its own configuration.” Neil Rubler’s Candlebrook Properties hired technology consultants to create an encrypted cloud that could store the firm’s email and corporate data. Rubler says the hundreds of thousands of dollars it costs each year is money well spent. “The lessons of 9/11 and the recent wave of hacking indicate that we need to
The effort to ward off cyber intruders has other firms going on the offensive, actually employing companies to hack into their systems and identify weaknesses before criminals can exploit them. “Knowing your ‘black swans’ keeps you one step ahead of the attackers,” said Stamford, whose company has tested the systems of a number of property management companies using the same techniques he claims “the bad guys” would use. Of course, nothing is foolproof and should a breach occur, the focus must shift to limiting liability and repairing damage. “Real estate companies can mitigate financial loss with cyber liability insurance coverage,” said Tim Plunkett, counsel with McKenna, Long & Aldridge, an international law firm with a number of real estate clients. The fallout of a single data breach costs businesses an average of $5.4 million, according to a 2013 report by the Ponemon Institute, which conducts independent research on privacy, data protection and information security policy. Included in this figure are the cost outlays for detection, notification and after-the-fact responses. New York State law requires all businesses to contact customers in the event of a breach. Insurance policies can defray these costs, along with legal fees should the company be sued. TRD www.TheRealDeal.com March 2010
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BY
THE
NUMBERS
76 7,473 The number of national retail chains in Number of locations H&R Block —
The chain gang
the fastest growing chain in the city — has added in NYC since 2012. This brings H&R Block’s total to 117.
NYC in 2014, according to the Center for an Urban Future’s report, a 2.5 percent increase over 2013. The year before saw just a .5 percent gain.
IIt’s t’s more more than than just just the the number off sshoppers number o hoppers that d that draw raw national national retail c hains tto oN YC retail chains NYC
318 Number of Duane Reade/Walgreens
536 Number of Dunkin Donuts locations in
in the five boroughs. That makes it NYC’s largest pharmacy chain, topping 200 Rite Aid and 138 CVS locations. However, Duane Reade/ Walgreens did not add any new stores in 2013, while Rite Aid added 10 locations and CVS 20.
NYC. The chain has more franchises than any other in the five boroughs. In 2008, there were 341 Dunkin’ Donuts in New York City. By comparison, there are just 67 locations in Boston, Dunkin’s hometown.
87 The number of new chain locations
205 The number of Starbucks outposts in ew York City shoppers are in no jeopardy of going without coffee, deodorant or cell phones anytime soon. The latest “State of the Chains” report by the Center for an Urban Future found that 2014 was a big year for national chains in the Big Apple, with brands like the burger joint Checkers and cell phone provider metroPCS among the dozens of companies adding NYC outposts. In addition, as The Real Deal reported last month, organic grocer Whole Foods, discount clothing store Marshalls and craft retailer Michaels inked the largest leases in Brooklyn in 2014. While several retailers’ footprints shrank, the city overall saw chain store numbers rise by 2.5 percent, with Queens leading the way. That translates into a stunning 185 new national retail storefronts, significantly higher growth than in 2013, when the number increased by just .5 percent. Retail brokers say the trend is not surprising. National chains like to establish outposts where the financial industry that backs them can see their operations, said Chase Welles, executive vice president of SCG Retail. They also seek the city because it brings them to the “heartbeat of retail,” with access to the industry’s top designers and cutting edge trends. “It’s not simply a case of coming to New York to make money,” Welles said, though he added that of course the volume of business provided by NYC’s masses also increases the NYC-based Duane Reade appeal. By Brendan O’Connor
N
NEW LISTING
added last year in Queens. The 5.3 percent growth in the borough topped all other boroughs in 2014.
Manhattan. The coffee powerhouse has more locations than any other retailer in the borough. There are 203 Starbucks in all of Ohio. Dunkin’ Donuts has 140 Manhattan locations, while Subway has the second-most in the borough with 171.
4 Number of ZIP code areas in Manhattan with zero chain retail locations. Two of those ZIP codes are in the Financial District (10285 and 10286) and two are in Midtown (10110 and 10165). Manhattan has 74 ZIP codes.
180 Number of chain retail locations in the ZIP codes that include Penn Station (10001) and the Staten Island Mall (10314). The two areas tied for having the highest concentration of chains in the city.
38% The portion of all stores in Manhattan that are national retailers. There are 2,807 chain stores in the borough, up 10 percent from 2,552 stores five years ago. Manhattan averages 118 national chains per square mile.
14 Number of J. Crew locations in Manhattan. The chain had the largest NYC presence among clothing chains with no outerborough stores until September, when it opened in Williamsburg.
16 Number of retailers with more than 100 locations across the five boroughs. However, 97.7 percent of growth in business citywide came from small companies — fewer than 50 employees — between 2000 and 2013.
33 Number of locations metroPCS added last year, for a total of 290, the largest increase of any national chain in the city. T-Mobile added 23 locations, to 181, while AT&T added just 1, to 60. Verizon Wireless cut its total by 7 stores, to 35.
Sources: Center for an Urban Future; Business Insider; Capital New York; Boston Globe and TRD reporting.
BY THE NUMBERS
22 East 78th Street | $12,500,000
NIKKI FIELD Senior Global Real Estate Advisor, Associate Broker | 212.606.7669 | nikki.field@sothebyshomes.com | www.nikkifield.com The Field Team | Ranked #1 Sales Team 2014 East Side Manhattan Brokerage | 38 East 61st Street, New York, NY 10065 Sotheby’s International Realty and the Sotheby’s International Realty logo are registered (or unregistered) service marks used with permission. Operated by Sotheby’s International Realty, Inc.
26 February 2015 www.TheRealDeal.com
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R E N TA L S
: F O SK E
D E H T T
A
ELIZABETH ANN STRIBLING-KIVLAN fifth-generation New Yorker and second-generation real estate executive, Elizabeth Ann “EA” Stribling-Kivlan — daughter of Stribling & Associates Founder and Chairman Elizabeth F. Stribling — sits right next to her mother on the fourth floor of the brokerage’s Madison Avenue office. After growing up in the city, the Chapin School alumnae and Chelsa resident says she is “used to concrete.” But she has several escapes: her second home in Roxbury, Connecticut, traveling the world with her fiancée, Rebecca Cleary or going fishing. Stribling-Kivlan, 35, joined the firm’s management team in 2006 as director of sales for the Downtown office. Four years later, she became director of marketing and business development. Stribling-Kivlan worked on the marketing of 1 Brooklyn Bridge Park and helped re-vamp the company’s website, which lead to a Webby nomination. In 2013, Stribling-Kivlan was named the firm’s president. BY CLAIRE MOSES
A
COUPLE SHOT
GEODE CRYSTAL
A pict picture of Stribling-Kivlan with her
In a way this rock — which has been cut open and on
fiancée Rebecca has a prominent fianc
GUMBALL MACHINE Now filled with M&Ms instead
the inside is lined with beautiful crystals
of gumballs, this artifact was
spot on the desk. It’s the first picture
— reminds Stribling-Kivlan of
originally a gift from Stribling
of tthe couple, taken on a trip to Bali
New York. “I love the hidden
marketing to developers. Stribling-
two weeks after their “whirlwind tw
beauty of it,” she said. “If
Kivlan is the only non-developer with
rromance” started in May 2014.
you have a beautiful [interior
one. “I was lucky enough to get one,”
inside] a building, it doesn’t
she said. Even though she doesn’t eat
mean the [façade] has to be
chocolate herself, she said it’s a “clever,
beautiful.”
whimsical thing for anyone who wants an M&M.” She keeps a stash of pennies in her desk drawer for potential users.
BANK
VOODOO DOLL
Stribling-Kivlan, a huge fan of
After having a bad day once, she
Beatrice Potter’s Peter Rabbit,
was given this as a gift by a former
lost her father when she was a
assistant. But, she insisted, “I don’t
STATUE OF GANESH
young teen. He gave her this
use it!”
Stribling-Kivlan has an undergraduate
Peter Rabbit bank when she
degree in comparative world religion,
was a small child. “This is just a
with a focus on Hinduism. The statue
nice reminder of my father,” she
was a gift from another agent with
said. “I’ve had this for as long I can
FLASK The
gold
whom she worked on One Brooklyn
remember.” flask
Bridge Park.
is
engraved, “A life lived in fear is a life half lived.” Stribling-Kivlan bought the flask at Barney’s after attending a breakfast where
SHARPIES
the line of products presented.
A box holds about a dozen:
“There’s something
“I have a love of the Sharpie,”
a little retro about
Stribling-Kivlan said. “I love
a flask,” she notes.
the Sharpie in every color.”
Yet — because she
She uses the different colors
doesn’t walk around
for her to-do lists in her black
was
28 February 2015 www.TheRealDeal.com
with a flask filled
BLACKJACK
Moleskin notebook. At home,
with whisky — she
Stribling-Kivlan is in awe of her mother, she says. In this picture,
Stribling-Kivlan has roughly 50
keeps a cut flower in
taken on a business trip to Las Vegas, she had just taught her
Sharpies, “all different kinds of
it instead.
mother how to play. “She’s a good blackjack player!”
markers and pens.”
PHOTOGRAPH OF ELIZABETH ANN STRIBLING-KIVLAN FOR THE REAL DEAL BY DOMINIQUE PETTWAY
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Manhattan office stats
COMMERCIAL MA R K E T
AVAILABILITY RATE
What’s old is new in office leasing Classic Manhattan towers get reclad, reworked and rebranded to keep up with new competition BY ADAM PINCUS s tenants turn their attention to the gleaming new skyscrapers rising on Manhattan’s West Side and Downtown, a handful of landlords are fighting back by reimagining some of the city’s classic office towers. In Midtown, RXR Realty is spending more than $140 million to modernize the Art Deco 75 Rockefeller Plaza and L&L Holding is recladding Clarion Partners 390 Madison Avenue (formerly known as 380 Madison Avenue). Meanwhile, Downtown, Fosun International is rebranding the International Style skyscraper 1 Chase Manhattan Plaza as 28 Liberty Street. Last month, all three buildings hit the market, adding about 2.5 million square feet of space for option-starved tenants, and driving up the availability rate for Manhattan to 10.2 percent in January from 10 percent in December, figures from commercial firm Colliers International showed. Adding to the rising availability rate was a lower amount of leasing activity, which fell from 4.1 million square feet in December to 3.1 million square feet in January, the Colliers data revealed. Even so, office leasing agents and their clients remain optimistic that the market remains firm, because at the same time, Colliers showed that average asking rents rose in Manhattan last month by 40 cents per square foot to $66.62 per foot. “I am seeing that the rents are up everywhere. A lot has to do with the tech boom, the low interest rates and employment trends,” Michael Beyda, a principal with the brokerage Benchmark Properties, said.
A
Midtown Last month, two years after Scott Rechler’s RXR acquired the leasehold on the 33-story 75 Rockefeller Plaza, the firm put about 600,000 square feet on the leasing market. The building is undergoing a major renovation, including moving mechanicals and simplifying the layout. 30 February 2015 www.TheRealDeal.com
Fosun International is rebranding 1 Chase Manhattan Plaza as 28 Liberty Street.
RXR Realty is spending more than $140 million to modernize 75 Rockefeller Plaza
“We are not getting more rentable space,” said William Elder, executive vice president at RXR. “But we are making it more efficient.” He said once the building reopens, which is set for January 2016, the nearly 70-year-old structure will be thoroughly modern. He compared it to the office tower SL Green Realty is planning to build in the Grand Central submarket. “It will be a brand new asset. No different from 1 Vanderbilt,” he said. He said the asking rents were in the $80-per-square-foot range in the base of the building up to the “low-$100s” per square foot in the tower portion. Those prices are above the average asking rents in Midtown last month. In January, the average asking rent was $75.17 per foot, the Colliers figures showed. The availability rate rose slightly in Midtown to 10.8 percent, up just 0.1 point, despite the large blocks coming on line, in part because of strong leasing activity that topped 1.9 million square feet in January, the Colliers data revealed.
Midtown South Publishers Clearing House, the direct marketing and sweepstakes company, is subleasing a floor for about $60 per square foot at 915 Broadway just south of Madison Square Park, information from leasing database CompStak shows. The lease runs through January 2021. Publishers Clearing House did not respond to a request for comment by press time.. The rental rate they are paying is near the average asking rent for Midtown South, which ticked up by 9 cents in January to $61.59 per foot, while the availability rate declined by 0.2 points to 7.7 percent, the Colliers statistics revealed. Leasing activity in Midtown South slowed last month from December, falling to just under 900,000 square feet from 1.7
AVG. ASKING RENT
Manhattan Jan ’15 10.2% $66.92 Dec ’14 10.0% $66.54 Midtown Jan ’15 10.8% $75.17 Dec ’14 10.7% $74.78 Midtown South Jan ’15 7.7% $61.59 Dec ’14 7.9% $61.50 Downtown Jan ’15 12.5% $53.70 Dec ’14 11.7% $52.23 Source: preliminary data from Colliers International
million square feet of deals inked at the end of 2014, according to Colliers figures.
Downtown Landlords put several large blocks of space in older buildings on the market last month, including 28 Liberty and Vornado Realty Trust’s 20 Broad Street, a 542,504-square-foot tower next door to the New York Stock Exchange building. Vornado listed the entire 27-story building last month, although it will not be available until the third quarter of 2016. “The mood is good for this type of property that is well located, with the opportunity for branding and building within a building,” said Bruce Surry, executive vice president at CBRE. He is leading a team that includes David Young and Brad Needleman to marketing the structure. Surry did not reveal an asking rent, but average asking rents Downtown rose sharply last month, in part because of the new space listed at 28 Liberty. The average asking rent rose by $1.47 per foot in January to $53.70 per foot, the Colliers statistics showed. But the new availabilities combined with a slow month of leasing led to a sharp increase in the Downtown availability rate in January, which rose by 0.8 points to 12.5 percent. Tenants leased just 308,000 square feet of space, even as 28 Liberty added nearly 1 million square feet to the market, on top of the block at 20 Broad. TRD
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In their words...
The funniest and most insightful comments on real estate
“How many scarves can you knit, for God’s sake?” CBRE’s Mary Ann Tighe, surprised that tenants like Etsy were driving large (100,000 sf+) leasing activity in 2014.
“Three million dollars is the new threshold for a Brooklyn townhouse.” Aleksandra Scepanovic, managing director of Brooklyn-based brokerage Ideal Properties Group.
“They couldn’t have been that serious if they didn’t even call me.” Deputy Mayor Alicia Glen, on the prospects of the website BuzzFeed moving its offices out of New York City.
“They said they had his cellphone and they’d shoot him in the head.” Douglas Elliman broker Michael Lorber, on how he nearly fell prey to scammers who claimed to have kidnapped his brother.
“I am pretty certain that until the series is over, he is not going to kill me.” Douglas Durst on his estranged brother and convicted criminal Robert Durst, who is the focus of a pending HBO documentary series.
32 February 2015 www.TheRealDeal.com
“[Steven Spinola] told me this was nothing of an affair and I shouldn’t overdress.” Sen. Chuck Schumer, on why he was sporting a casual sweater and khakis at the tuxedodominated REBNY gala.
“It’s a different kind of relationship.”
“He should step out and stop creating this distance.” RFR Realty’s Aby Rosen, on how Mayor Bill de Blasio has been rather aloof.
“It’s a sense of humor he’s missing.” Architect Annabelle Selldorf, on the mayor’s approach.
Incoming REBNY president John Banks on his friendship with outgoing president Spinola, who he said he hadn’t tapped for advice.
“$195 million is really quite reasonable.” Real estate tycoon Jeff Greene, upon putting his sprawling Beverly Hills compound, which became the country’s priciest listing, on the market.
“It is almost like found money.” Town Residential’s Adam Lynch, on how higher-than-expected Wall Street bonuses have led clients to boost their apartment budgets.
Sources: New York Post, New York Times, Wall Street Journal and The Real Deal reporting
He had the true New Yorker’s secret belief that people living anywhere else had to be, in some sense, kidding. JOHN UPDIKE
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ON-SITE SALES GALLERY: 301 EXCLUSIVE MARKETING AND SALES
THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM SPONSOR. FILE NO. CD13-0300. SPONSOR: HFZ 301 WEST 53RD STREET OWNER LLC, 600 MADISON AVENUE, 15TH FLOOR, NEW YORK, NY 10022. EQUAL HOUSING OPPORTUNITY.
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?24B9.A6;4 ?2.9 2@A.A2
Consumer protection agency launches incomplete rate tracker Government website fails to include points, fees in rate estimates BY KENNETH HARNEY hen the federal government’s consumer protection agency for financial matters tells you how to shop for a good deal on a home mortgage, you should follow the advice, right? Maybe some of it. The Consumer Financial Protection Bureau, which was created in the backwash of the worst national mortgage disaster since the Great Depression, went online with a new interactive mortgage tool last month. The CFPB’s site, www. consumerfinance.gov, offers helpful tips on shopping and has a guide to loan alternatives, closing costs and a “rate checker” feature. At first glance, the rate checker appears to be a quick way to research prevailing mortgage interest rates in your area. Here’s how it works: You enter the state where you want to apply, a FICO credit score estimate, your desired loan amount and the loan term. The rate checker then displays the local daily rate quotes collected from banks and credit unions by its data vendor, Informa Research Services Inc. of Calabasas, California.
W
include the APR along with the base interest rate. There may be other charges that come into the total cost picture as well, such as lender-paid mortgage insurance and investor “overlay” add-ons. So how big a deal could it be when only the interest rate is provided? In a statement for this column, Quicken Loans, the second largest retail lender in the country, said that quoting a rate alone, with no reference to specific points, fees and the APR, “will deliver a cost estimate that greatly differs from what is accurate.” Steve Stamets, senior mortgage banker for Apex Home Loans, Rockville, Maryland, told me “it’s inherently misleading, because you’re not getting all the potential charges” you’re going to have to pay. For example, said Stamets, a loan officer might violate CFPB rules by quoting a 3 percent rate on a hypothetical $400,000 loan to pull in customers, but not mention that to obtain that rate they will need to pay 5 points — $20,000. Those points could be paid at settlement or financed and included in the interest rate. In the latter case, using one rule of
CFPB’s rate checker’s failure to disclose full costs “violates everything a lender must do” to quote rates to borrowers in compliance with the agency’s own rules. DAVID STEVENS, MORTGAGE BANKERS ASSOCIATION Say you live in Virginia or California and want to see what rate you might get on a $400,000 house purchase with a $40,000 down payment. You input your estimated credit score. Say you’ve got a FICO 680. In Virginia, according to the rate checker readout Jan. 16, “most lenders” in the survey would quote you 3.875 percent or less for a 30-year fixed-rate loan. Two lenders offered 3.625 percent, and six quoted between 4 percent and 4.375 percent. In California, most lenders also quoted 3.875 percent or less, one quoted 3.75 percent and five came in between 4 and 4.375 percent. None went as low as 3.625 percent. But something important is missing here: The various fees and charges that the CFPB itself requires lenders to disclose as part of any mortgage quote to a consumer. As regulator of the Truth in Lending Act, CFPB regulations mandate precise disclosures of loan discount fees or “points” and lender closing charges among others. (A point equals 1 percent of the loan amount.) These are included in the Annual Percentage Rate (APR) — the effective rate applicants will be paying over the life of the loan. When lenders advertise their rates, they must
34 February 2015 www.TheRealDeal.com
thumb measure, the effective rate on the loan might jump to 4.25 percent, not the 3 percent advertised. David Stevens, CEO and president of the Mortgage Bankers Association, said in an interview that CFPB’s rate checker’s failure to disclose full costs “violates everything a lender must do” to quote rates to borrowers in compliance with the agency’s own rules. “It’s just a bad idea,” he said. “It needs to come down.” But the CFPB shows no signs of yielding to critics. In a statement for this column, the agency said the rates quoted “assume” discount points ranging between one half a point to minus one half a point “and a 60-day rate lock,” but do not include lender closing charges. Dave Hershman, a nationally known trainer and author who helps mortgage companies comply with the rules, scoffed at the CFPB’s defense: “Could you imagine (the bureau) allowing a mortgage company to be that nebulous? And to quote rates without an APR?” Bottom line: Check out the Rate Checker. But remember: There’s much more to a mortgage quote than just the rate. Ken Harney is a syndicated columnist.
4<C2?;:2;A /?623@ Marine Terminal vote sinks A $115 million project to redevelop Sunset Park’s South Brooklyn Marine Terminal stalled after local Councilman Carlos Menchaca called for further community control of the site and for the creation of a local community development corporation The South Brooklyn Marine Terminal to manage the property, Crain’s reported. The City Council was set to cast a procedural vote reassigning the lease to the city Economic Development Corp., but that vote was pulled. An earlier lease deal collapsed when the company that won it, Axis Group, went bankrupt in 2013. The terminal’s reactivation is expected to create around 350 new jobs, the New York Daily News reported. City law requires Menchaca’s approval for the project to proceed.
NYCHA to get terror-settlement funds New York’s public housing projects will receive $101 million to install surveillance cameras, new locks and doors, and improve lighting, Bloomberg reported. The money will come from a $8.83 billion settlement that BNP Paribas The Frederick Douglass Houses in Manhattan SA, France’s largest bank, paid to the city, state, and federal government after pleading guilty to violating U.S. anti-terrorism sanctions. Around $89 million will go toward infrastructure improvements, and about $12 million to security audits and surveys, the results of which will guide the design of crime-fighting strategies, Mayor Bill de Blasio and District Attorney Cyrus Vance Jr. said last month. The city will receive $440 million of the settlement; in October, de Blasio and Vance announced that $90 million would be spent on handheld devices connecting police squad cars to the NYPD’s crime and counter-terrorism databases.
State to subsidize Bronx housing development Gov. Andrew Cuomo announced a plan to supplement a mixedincome housing development in the Bronx — the Marcy Sheridan Apartments in Claremont — with $2 million from the state, as part of the New York State Homes and Community Renewal initiative, the New York Daily News reported. Developers Dunn Development Corp. and NYC Partnership NDFC are awaiting city approval to begin work on the project, which will cost $23 million. Officials said that the initiative is intended to encourage a mix of income levels in affordable housing developments. The nine-story, 74-unit complex will also include housing for 37 tenants living with HIV/AIDS.
Southern Tier casino ideas get second look The Gaming Facility Location board, which is responsible for picking casino locations in upstate New York, approved Gov. Andrew Cuomo’s request to reopen the bidding process for licenses in the Southern Tier, the New York Times reported. When the board reviewed proposals for casino licenses in December, it approved three, withheld a fourth, and rejected two from the Southern Tier that it deemed not viable. The board recommended licenses for a $750 million casino resort in the Potential casino sites will Catskills, near Monticello, a $300 be reconsidered. million casino in Schenectady, and a $425 million gambling hall in the Finger Lakes. Cuomo, who initially supported the board’s conclusions, asked the board to reconsider its decision after local leaders complained, according to the Times. Board Chairman Kevin Law said the board could still decide not to award a license to another proposal, but that if new proposals were submitted and included improvements upon the previous proposals, they would be duly considered. TRD
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PROFILE
The rise and fall of Nicholas Schorsch How the now-ousted REIT chief went from one of real estate’s most aggressive players to unemployed BY JANNA HERRON year ago, Nicholas Schorsch was guiding American Realty Capital Properties — part of a complex empire of publicly traded and private REITs — through a spending spree. The REIT was flying high, snapping up companies and property portfolios left and right. Schorsch — whose labyrinth of companies included New York REIT, the only public REIT to focus exclusively on the Big Apple — was cementing a reputation as one of real estate’s most aggressive players. But an accounting scandal that inflated the company’s earnings proved to be his undoing. While Schorsch announced plans to step down as company CEO in October, before the scandal was made public, he was forced to resign his board positions at 11 other companies at the end of last year. Here’s how the run-up and fall-out unfolded.
A
The final nail Schorsch resigns as chairman and CEO at New York REIT, which had bought trophy properties like 1440 Broadway, Worldwide Plaza and others on his watch. He also steps down from the boards of RCS Capital and 11 nontraded REITs and direct investment programs sponsored by AR Capital. New York REIT appoints Michael Happel as CEO. “We see the resignation of Mr. Schorsch as imperative,” William Katz, an analyst with Citigroup Capital Markets, recommends 12 days before Schorsch resigns.
Eyes on the NYC prize In April, New York REIT goes public, making it the first listed REIT exclusively acquiring New York real estate. During the first quarter, ARCP acquires Early 2014 was all about acquisitions 224 properties worth just over $1 billion. for Schorsch and ARCP. Among its An article in Investment News quotes conquests: a $3 billion takeover of sister an investment banker describing REIT American Realty Capital Trust IV and Schorsch as a “swashbuckler” the $601 million purchase of a 120-property for his aggressive style. portfolio. At the same time, the company The first sign of trouble comes in June, reports a record $240 million in revenue for when ARCP shareholders reject a new $222 2013, a 260-percent increase over 2012. It million executive pay package for Schorsch also announces plans to close on more and his team. Under the plan, Schorsch would than $1 billion in acquisitions in have pocketed about $93 million. That same the first quarter. month, activist investor Marcato Capital Management publicly complains about “disorderly financial controls” and ARCP’s rapid growth. “The company is engaging in too many transformative transactions too quickly,” Marcato founder Richard McGuire writes in a letter to an ARCP exec.
Swallowing companies whole
Blood in the water
David Kay was made CEO of ARCP, but also stepped down amid the scandal
The cover up
A former accounting exec files a lawsuit against Schorsch, alleging that he directed her to cover up accounting errors and that he fired her after she shared her concerns with others. AR Capital responds by saying the lawsuit “is without merit” and that Schorsch denies all allegations and will defend himself “vigorously.”
The CEO swap In June, with revenue still skyrocketing and the company newly minted as the largest single-tenant landlord in the country, Schorsch announces plans to step down as CEO in October, but to stay on the board. Company President David Kay is tapped as the new CEO. “Our goal is to constantly improve our corporate governance,” Schorsch says in a statement. “All of these efforts are taken with a view toward creating long-term value for stockholders.”
The unraveling begins 1440 Broadway, one of the trophy towers New York REIT bought on Schorsch’s watch.
Nicholas Schorsch
Goodbye, Schorsch
Schorsch resigns as executive chairman of ARCP and from a slew of other company boards. Kay and COO Lisa Benson also resign. Company exec William Stanley is named interim CEO and chair, while the company pledges to unwind its relationships with all entities where Schorsch serves in a leadership role. Meanwhile, Schorsch, who remains head of private equity firm AR Capital, a sponsor of ARCP, gives up a $100 million pay package, and credit agencies Standard & Poor’s and Moody’s cut ARCP’s credit rating to junk status. “We have no leadership and no financials. Talk about having the maximum amount of uncertainty surrounding a publicly traded stock,” Paul Adornato, an analyst at BMO Capital Markets, tells William Stanley was named interim CEO the Washington Post.
Class action ARCP investors file a series of class-action lawsuits, and the Securities and Exchange Commission looks into a possible investigation of the company, according to a Crain’s report. “We think there were clear violations of SEC laws, and we think shareholders should be compensated for the very substantial losses they have suffered,” one investor’s attorney Jeffrey Block, tells Crain’s.
In late October, ARCP announces that its 2014 financial quarterly reports overstated the company’s revenue and understated its losses. In a stunner, it also says some errors were intentionally left uncorrected. The firm’s top accounting and finance execs resigns.
Worldwide Plaza, another high-profile purchase by New York REIT
and chair when Kay and Schorsch departed.
36 February 2015 www.TheRealDeal.com
www.TheRealDeal.com March 2012 00
REAL ESTATE FINANCING
NYC ’S ‘GOLDEN AGE’ FOR CAPITAL Money floods market as new investors hunt for higher yields and existing players ramp up outlays
BY E.B. SOLOMONT ack in 2009, financing for New York real estate was a rare commodity. Fast forward six years, and developers and lenders say the market is flush with money. “If I got a multifamily deal and someone needed financing for $100 million, I’d have 50 people fighting over it,” said Jonathan Aghravi, the senior director of the Capital Advisory Division at the commercial brokerage Eastern Consolidated. Recently, the marketplace for real estate capital has added a number of new players — from crowdfunding platforms to Asian insurance companies — and seen other sources ramping up their financial outlays. “We’re in sort of a golden age of availability of capital for New York City real estate,” said Scott Singer, president of the Singer & Bassuk Organization, which arranges debt and equity financing. “There are lots of new sources, structuring is very creative and pricing is extraordinarily aggressive. It’s a good time to be a borrower or an owner.” The economics of why investing in New York City real estate is so popular is straightforward: Low interest rates and low U.S. Treasury yields mean investors are searching afield for profits. Throw in economic instability in many parts of the world, and the strength of New York real estate offers an increasingly compelling upside. And players are pouring in from all over. “Banks are still shying away from risky bets,” said Navish Chawla, chief investment officer at the New York-based real estate investment banking firm the Carlton Group. “So you’re seeing capital come from private equity funds, debt funds and other non-traditional lenders.”
B
38 February 2015 www.TheRealDeal.com
Singer pointed out that certain lenders, such as insurance companies and pension funds, have an “absolute need” to generate yields in order to meet their own fiscal obligations. “There’s no yield in money market funds. There’s an extremely low yield in government securities. The stock market is at an all-time high. So the investment options are limited; at the same time, real estate has become a desired, and essentially necessary, component of a diverse portfolio.”
“We’re in sort of a golden age of availability of capital for New York City real estate.” SCOTT SINGER, SINGER & BASSUK ORGANIZATION Starwood Capital’s Barry Sternlicht echoed that sentiment publicly in December, citing the growing number of sovereign wealth funds looking to deploy capital here. “Real estate guys are having to get used to the fact that we’re seeing a lot of strange capital in our market that’s here as a fixed-income investment,” he said. Below is a look at some of the new players and the shifting landscape for capital in the Big Apple. www.TheRealDeal.com January 2014 35 ILLUSTRATION BY NOAH McDONOUGH
REAL ESTATE FINANCING
Crowdfunding When brothers Benjamin and Dan Miller launched Fundrise in 2010, they faced little competition from other real estatefocused crowdfunding platforms. Then came the JOBS Act in 2012, which eased federal restrictions on fundraising for small companies. That was a major windfall for crowdfunding firms, which raise smaller amounts of money from a large number of people, typically on the Internet. Now Fundrise has about 50 competitors nationally in an increasingly, well, crowded space.
City real estate, according to a tally by The Real Deal of publicly cited projects. That’s nearly half the roughly $135 million raised through crowdfunding for real estate nationally, according to an estimate by the Wall Street Journal. Fundrise has already raised $37 million, including $31 million in 2014 from investors like Chinese tech firm Renren, Ackman-Ziff Real Estate Group and Silverstein Properties. In January, it began offering investors the chance to buy into a $2 million share of the tax-free bonds used to finance Silverstein Properties’ 3 World Trade Center.
but the technology allows us and them to efficiently access the smaller scale,” said Fundrise’s Dan Miller. It also allows them to cherry pick deals. “With crowdfunding, investors can pick the specific assets of their choosing, as opposed to investing in a blind pool of money with multiple assets,” said Rodrigo Nino, CEO of the crowdfunding platform Prodigy Network, which secured more than $250 million in funding from 6,000 investors including Deutsche Bank, Bank of America and the Canadian Imperial Bank of Commerce.
Early crowdfunding entrepreneur Dan Miller; developer Michael Shvo; Attorney Joel Rothstein of Paul Hastings Law Firm and Dave Behin from MNS Realty.
Ayush Kapahi, left, Jerry Swartz and John Harrington, owners of commercial mortgage brokerage HKS Capital Partners, and Tetsuji Kosaki, president of Japan’s Jowa Group.
Prodigy Network’s Rodrigo Nino, left; China Vanke President YuLiang; Related’s Jeff Blau and Zhang Yuliang, chairman and president of China’s Greenland Group.
“With crowdfunding, investors can pick the specific assets of their choosing, as opposed to investing in a blind pool of money with multiple assets.” RODRIGO NINO, PRODIGY NETWORK In the past year, new entrants have continued to flood the market. And along with everyday investors, institutional players are getting into the game. For example, the Carlton Group — which specializes in equity and debt placement as well as investment sales — launched its crowdfunding platform in April with a minimum investment of $1 million. Carlton, which co-invests in each deal, has crowdfunded several big transactions, including $240 million in equity and debt for developer Michael Shvo’s 125 Greenwich Street. Shvo and co-developer Bizzi & Partners paid $185 million for the property. Carlton has another $550 million of deal activity pending, according to Chawla. While data is hard to come by, crowdfunding platforms have raised more than $65 million in debt and equity for New York 38 February 2015 www.TheRealDeal.com
And the numbers are growing at a fast clip. This month, Dave Behin, director of investment sales at residential brokerage MNS, is launching CityFunders with his brother Albert Behin, along with Jerry Swartz, Ayush Kapahi and Jon Harrington, owners of commercial mortgage brokerage HKS Capital Partners. CityFunders will provide crowdfunded equity and loans for New York developments. In a twist, it has obtained a $40 million line of credit so that it can deploy the capital immediately, even before the crowdfunding is complete. Beyond the sheer number of platforms, the influx of institutional money is enabling crowdfunders to do larger deals, and gives institutional lenders access to smaller projects that they might not have known about. “They still see lots of deals everywhere,
He also noted that crowdfunding opens doors for smaller lenders to invest in big projects. For developers, crowdfunding offers more financing options. Developer Brad Korman noted that crowdfunded financing provides “another alternative as we look to grow our portfolio.” His firm, Korman Communities, has financed some projects through Prodigy’s platform, including extended-stay residences AKA Wall Street and AKA United Nations. “Frankly, some of the international capital that’s coming in … is giving us, as an operator, a whole other group to talk to,” he said. “That’s how we’ve used crowdfunding, as a partner base for us and deals in New York.” Still, when it comes to future growth,
there are potential roadblocks — such as a market downturn or regulatory changes. Currently, regulators are looking at the dollar value of assets investors need in order to be an accredited investor; if the threshold is raised, as speculated, to $5 million from $1 million, the pool of potential investors might drop significantly. “You’re in a new market, with shifting regulatory guidelines,” said Miller. “Right now, it’s almost like the beginning days of e-commerce.”
Asian investment Where Russian oligarchs once dominated headlines for eye-popping real estate investments, Asian investors have recently swooped in with money to spend. But while the Russians were paying record prices for lavish pied-à-terres, Asian investors are dropping even more cash on mega commercial assets and development projects. Just behind Canada, which pumped $3.4 billion into New York City real estate, China ranked as the No. 2 source of foreign capital for New York City real estate last year. Chinese investors spent a whopping $3.35 billion — a roughly $1 billion jump over 2013, according to data from the research firm Real Capital Analytics. Investors from Singapore, meanwhile, ranked No. 3 with $1.6 billion, followed by Norway with $1.1 billion, Qatar with $770 million and Japan with $680 million. “It has to do with the state of the foreign economies,” said James Murphy, executive managing director of the investment sales group at Colliers International. Instability abroad makes New York more attractive. “It’s a safe haven.” With China’s economy slowing, Asian investors are increasingly turning to other markets. Chinese investors, Murphy noted, are making direct buys and taking partial interest in trophy properties. Last year, Colliers created a new 11-person team in Asia, run out of Singapore, in order to “help capital there migrate here.” Carlton CEO Howard Michaels said foreign investors are moving toward making direct investments in New York projects, rather than putting their money in private equity funds because “they want more control.” During the downturn, he said, many investors were caught in “passive” fund investments that they could not get out of. “It has more to do with ... investors not wanting to be passive and wanting to have more control and say in a project,” said Michaels, who noted that Carlton is currently working on two deals that would bring $2.2 billion in Chinese capital to New York City developments. But investors’ growing appetite can also be attributed to legislative changes in Asia. Over the past two years, a number of governments — including those of China, Japan, South Korea and Taiwan — have eased regulations that previously prevented life insurance companies from making direct investments in the U.S. www.TheRealDeal.com February 2015 39
REAL ESTATE FINANCING As such, Asian investment in the U.S. is poised to grow, according to commercial brokerage CBRE, which projected that Asian insurance funds would increase their spending on overseas real estate by $75 billion, to a stunning $205 billion in 2018. And New York, of course, is already feeling the impact of the shift. In addition, China implemented changes that are already being felt here, including increasing allowable investments in other countries to $1 billion from $30 million (with government oversight, of course). Last year, China’s Anbang Insurance Group picked up the Waldorf Astoria for $1.95 billion, a record sale price in the U.S. for a single hotel. Investment from Japan — which was going gangbusters in the 1980s, but tanked during the Japanese recession in the 1990s and has mostly stagnated since — has also picked up recently, thanks to companies like real estate giant Mitsui Fudosan. The Japanese firm, which owns 1251 Avenue of the Americas and 527 Madison Avenue, has said publicly it plans to spend up to $3 billion on Manhattan real estate by 2017. At the end of 2014, Mitsui Fudosan paid $259 million for a 90 percent stake in 55 Hudson Yards, a 1.3-million-squarefoot tower going up at 33rd Street and 11th Avenue. The Related Companies and Canadian pension investment firm Oxford Properties are the other owners. Meanwhile, in January, Japanese real estate investment firm Jowa Holdings paid $210 million for two Madison Square Park office buildings, at 24-28 West 25th Street and 40 West 25th Street. The firm also bought 440 Ninth Avenue, an office building, for $210 million in 2013. “All of a sudden, we see [the Japanese] companies active again. Folks are actively buying that haven’t for 15 years,” said Mark Edelstein, chair of Morrison Foerster’s real estate finance practice. The Japanese investment, of course, coincides with heavy Chinese activity in the five boroughs. China’s Greenland Group acquired a 70 percent stake in Forest City Ratner’s Atlantic Yards project, now known as Pacific Park Brooklyn, for a $547 million in 2014. All told, Greenland will put $1.5 billion into the project. There’s also the Oosten, Xin Development Group International’s 216-unit residential development at 429 Kent Avenue in Williamsburg. Plus, China’s largest residential developer China Vanke and developer Aby Rosen are teaming up on a condo project at 610 Lexington. Then there’s Fosun International’s $725 million purchase of 1 Chase Manhattan Plaza in 2014 and mogul Zhang Xin’s roughly $700 million purchase of a stake in the GM building back in 2013. Grant Frankel, a managing director at Eastdil Secured, said U.S. prices per square foot are relatively cheap compared to Tokyo, London and Moscow, while financing rates are pretty attractive. “You are seeing guys looking to diversify out of their countries,” he said. “It’s a global search for yield.” 40 February 2015 www.TheRealDeal.com
Bridge loan boom The strength of the market hasn’t just attracted new lenders, it’s also prompted certain types of lenders to change their ways. For example, bridge lenders, who provide short-term loans, have been ramping up their investments in New York in the last six months, sources said.
said that in parts of Brooklyn like Bushwick and Greenpoint, where the neighborhood has changed dramatically, borrowers are increasingly using bridge loans to reposition buildings. “They’re used not just because purchase price has been increased, but because people’s exit strategy has been a quick sale,”
In addition to shops like Aries Capital, (a Chicago-based real estate investment banking firm), lender Mesa West Capital, and private equity group CIM Group (who have been bridge lending for a while), newer players on the bridge-lending scene include Trevian Capital, a Manhattan-based firm launched in 2013, and Thorofare, a Los
Fundrise is offering investors the chance to buy into a $2 million share of Silverstein Properties’ 3 World Trade Center, left. Japanese Firm Mitsui Fudosan paid $259 million for a 90 percent stake in 55 Hudson Yards.
Manhattan-based Emerald Creek Capital closed on a $23 million bridge loan for the acquisition of 50 Clinton Street last year, left. China Vanke and developer Aby Rosen are teaming up on a condo project at 610 Lexington.
“Regulation is still very constraining to regional, community banks, which is causing traditional financings to take a significant amount of time, even though we’re six years post-Lehman and the height of the crisis. The conventional path is not the most expeditious.” MARK PENNA, EMERALD CREEK CAPITAL “There’s a feeling in the marketplace among [bridge] lenders that it’s more appealing and the markets are back. There’s more reason to be willing to extend capital in that format,” said John Wilcox, vice president of Marcus & Millichap Capital Corp., the financing arm of the commercial brokerage. Rising prices in New York have also increased the demand for short-term financing as buyers race to acquire properties. Eastern Consolidated’s David Schechtman
he said, noting that there’s been an uptick in property flipping. The most recent national statistics show that during the third quarter of 2014, close to 22 percent of bank loans for commercial buildings or sites were done with bridge financing, according to a CBRE report. Eastern Consolidated’s Aghravi said the market’s strength has emboldened lenders willing to make riskier, short-term loans that typically have higher interest rates.
Angeles-based firm that launched a $400 million bridge-loan fund in September. In July, Thorofare funded a $28 million bridge loan used by a property owner to buy out a partner in a seven-building portfolio in Brooklyn and the Bronx. Meanwhile, in January, Cantor Fitzgerald began raising some $400 million of equity for a new bridge-loan fund. “Some started because there were no other lenders out there,” said Jonathan Stern www.TheRealDeal.com February 2015 39
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REAL ESTATE FINANCING of Meridian Capital Group. For example, Manhattan-based Emerald Creek Capital, which launched at the height of the recession in 2009, closed on $200 million in bridge loans last year, including one for $23 million for the acquisition of 50 Clinton Street. In January, the firm launched a fourth capital raise, with a target of $250 million. Co-founder Mark Penna said bridge lending has been particularly active for
traditional financings to take a significant amount of time, even though we’re six years post-Lehman and the height of the crisis,” Penna said. “The conventional path is not the most expeditious.”
EB-5 visas When Related raised a record $600 million from EB-5 investors for its Hudson Yards development, CEO Jeff Blau called the
visas last year, up from 6,346 in 2013. And more than 80 percent of those applications came from China. “It’s not that once you reach the quota, the program shuts down. It just causes massive delays,” said Joel Rothstein, an attorney at the law firm Paul Hastings who focuses on EB-5. To date, the EB-5 program has been something of a silver bullet for a handful of developers.
The $1.45 billion CMBS deal for 388-390 Greenwich Street, left, was among 2014’s largest. The Norwegian sovereign wealth fund holds a stake in 475 Fifth Avenue.
portions of its Pacific Park Brooklyn project and the Durst Organization has raised $260 million for its pyramid-shaped building on West 57th Street and its 375-unit rental tower at 855 Sixth Avenue. According to members of the EB-5 community, sweeping changes to the program are unlikely. “Any change is basically tied to the comprehensive immigration reforms in Congress, and I don’t think that will happen soon,” said Rothstein. However, Rothstein said the EB-5 community is lobbying for alternatives, including an executive order from President Barack Obama to allow investors to tap unused visas from prior years, or to change the way investors are counted so that only investors — not their family members, as is the practice now — would be counted as part of the 10,000. As it stands, the current visa cap threatens to halt the flow of capital from foreign investors. “We’re trying to attract investors,” said Laura Reiff, an attorney at Greenberg Traurig, who helps run a group called the EB-5 Legislative Coalition, which is lobbying for changes to the quota “Why would you limit [their participation] arbitrarily? The quota doesn’t make a whole lot of sense.” The coalition suggests removing the per-country quotas, and administrative fixes to recapture unused visas and funnel unused visas in any government fiscal year. Coalition members include Marriott Hotels and American Hotel and Lodging.
Sovereign wealth
Among 2014’s major CMBS deals was one for $750 million for 277 Park Avenue, left. In 2014, the Norwegian sovereign wealth fund paid $1.5 billion for 45 percent of 601 Lexington,center. Durst tapped the EB-5 program to raise funds for 855 Sixth Avenue, right.
the past six months, because the market is bifurcated. “There’s a very narrow group at the top that has access to unlimited money at very low rates,” he said. “For everybody else, it continues to be a long process.” That’s where bridge loans come in. “The real estate market has been moving and people have been actively buying and selling,” he said. “Time is money; people want to be able to take advantage of opportunities and they recognize a four- to six-month process [for a conventional loan], they might miss an opportunity.” Penna said Emerald Creek focuses on loans that have specific timing needs. “Regulation is still very constraining to regional, community banks, which is causing 42 February 2015 www.TheRealDeal.com
financing a “critical piece of the puzzle,” and indicated Related would seek more EB-5 funds. But even as the much-ballyhooed program — which provides U.S. visas to foreigners in exchange for investments in the U.S. economy — has surged in popularity in recent years, its future is unclear. Unlike the other sources of capital highlighted by TRD, which are flowing more freely into the New York real estate market, there are concerns that the growth of EB-5 financing is hitting a wall. At issue is how to get around a national cap of 10,000 investors, which was reached for the first time in 2014. In fact, more than 10,000 foreign investors applied for EB-5
“Capital is pretty freely accessible, and EB-5 is clearly the elixir du jour in the city,” said Morrison Foerster’s Edelstein. “It’s low-cost capital.” Launched in 1990, EB-5 began growing in force when the recession hit, as borrowers looked for alternate sources of capital when they couldn’t get traditional financing for deals. The program offers a visa to foreign investors in exchange for a $500,000 investment and the creation of 10 jobs. As TRD has reported, some of the city’s biggest developers have tapped the program for cash. Related’s record $600 million financed the construction of foundations at three Hudson Yards towers. Meanwhile, Forest City Ratner has raised more than $475 million for
Beyond insurance companies and private funds, sovereign wealth funds — stateowned investment funds — are making a renewed push into New York City real estate. Starwood Capital, which has $37 billion in assets under management, attracted a number of sovereign funds during a recent round of fundraising, CEO Sternlicht told CNBC in December. “They are screaming for yield,” he said during an interview on Squawk Box. “Look out the window. These buildings, every one of them, is a bond to these investors.” While sovereign funds aren’t new players on the New York real estate scene, that search for yield is fueling more investment — and in enormous sums. For example, the Abu Dhabi Investment Authority, with $773 billion in assets, partnered with Related and the Government of Singapore to buy offices at 10 Columbus Circle for $1.3 billion last year. There are also players making first-time investments in New York. Last year, Norway’s $884 billion sovereign fund, which first invested in U.S. real estate in 2013, said it would increase its real estate portfolio to the tune of $11 billion. The fund’s investments will be focused in the northeast, specifically in New York, Boston and Washington, D.C. Continued on page 122
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Skidding on oil Slide in fuel prices changes buying habits of Russian, Middle Eastern real estate investors in NYC BY JANNA HERRON hen oil prices drop — and anyone who has read a newspaper recently or gone to the gas station to fill up their tank knows they are at rock bottom — Americans get giddy. It’s also a source of political pride as President Barack Obama made clear in his State of the Union address last month. “Thanks to lower gas prices and higher fuel standards, the typical family this year should save $750 at the pump,” he told the nation. But the effect of lower oil prices is a little more nuanced when it comes to New York City real estate. When talking about foreign real estate investors in New York, Joseph Harbert, president of the Eastern region at Colliers International, said there is “still some Middle Eastern interest, but the fall in oil prices will slow that down temporarily.” In general, many are wondering whether investors from other oil-rich countries, predominantly Russia, will continue to pour money into the Big Apple. For example, when the news broke last month that Russian billionaire Mikhail Prokhorov planned to sell his 80 percent stake in the Brooklyn Nets, reports suggested that, along with the basketball team’s disappointing record, the drop in oil prices (and Russia’s tanking economy) had something to do with it. To be sure, Russian interest in New York hasn’t fallen off entirely. Late last month, Prokhorov’s fellow Russian billionaire, Roman Abramovich — owner of the London-based soccer team Chelsea F.C. — asked the city’s Landmarks Preservation Commission to approve his plans to build a mega mansion on the Upper East Side. But sources say he’s a rare exception and predict that some investors from Russia and other oil-rich countries will be more selective about what kind of New York real estate they acquire — or finance — this year. “I think top trophy condo buildings may have trouble selling at $40 million,” said Melissa Cohn, president of GuardHill Financial. “So investors may look at $20 million opportunities instead.”
W
An (oil) stable Middle East The current drop in oil prices is nothing to sneeze at. Oil prices have fallen by more than half since peaking in June 2014, after the U.S. ramped up shale oil production. At the same time, global energy demand has weakened because of lackluster economic growth in Europe and a slowdown in Asia. And at nearly $45 a barrel, oil prices are at their lowest level in five years. But not all investors with petroleum-based 44 February 2015 www.TheRealDeal.com
The hospitality subsidiary of Qatar’s Al Faisal Holding is planning a $546 million purchase of the Manhattan at Times Square Hotel.
roughly $80 million and a Holiday Inn Express on West 36th Street for roughly $66 million. Meanwhile, in December, the royal family of Bahrain purchased the Marriott at 170 Broadway for $150 million. Also in December, the hospitality subsidiary of Qatar’s Al Faisal Holding announced plans to buy the Manhattan at Times Square Hotel for a mega $546.4 million. Nonetheless, some sources say that in the short-term, activity by Middle Easterners could dip a bit. “Those countries are oil economies and have very stable production,” said Harbert. “They will continue to thrive in the long run unless oil goes to zero. They aren’t poor, but the short-term effect is a slowdown in purchase activity in the U.S.”
Russian doubt
Left, Hamad bin Isa Al Khalifa, the head of the royal family of Bahrain, which recently purchased the Marriott at 170 Broadway for $150 million. Right, Russian billionaire Mikhail Prokhorov is reportedly planning to sell his stake in the Nets.
fortunes are experiencing the price drop in the same way. “When it comes to foreign investors, I think you look at each country specifically. I don’t think there any shortages of riches in the Middle East,” said Harbert of Colliers. “With Russia, it’s not just oil’s decline, it’s geopolitical, too.” Despite oil’s recent plunge, the Organization of Petroleum Exporting Countries, or OPEC, a 12-country consortium that produces 40 percent of the world’s crude oil, has surprisingly refused to cut production. Nonetheless, the decline doesn’t appear to be dampening Middle Eastern investment in New York real estate yet (see related story on page 38).
Investors from the Middle Eastern countries of Bahrain, Kuwait and Qatar pumped $1.16 billion into New York’s commercial real estate market last year, an increase of 342 percent from the year before, according to figures from the real estate research firm Real Capital Analytics. The countries’ share, according to RCA, accounted for 9.6 percent of all foreign investment in the market. According to RCA, while the prices of transactions have been a little lower in recent months, the number of acquisitions by Middle Eastern investors hasn’t slowed since the price of oil began falling in June. In September, Kuwait investors picked up a Hampton Inn on East 43rd Street for
Russia, of course, is a different story. That’s largely because the country’s economic problems go deeper than its oil fields. A year ago, after Russia’s march into Crimea — the peninsula that it annexed in a territory dispute with Ukraine — the U.S. and Europe enacted harsh sanctions against Russia. The country unsuccessfully attempted to buoy its declining currency by hiking interest rates to 17 percent. But that sent the ruble plummeting. Additional measures have also flopped. The tanking ruble has led some real estate observers in New York to question the resiliency of Russian condo buyers. (Russians are far more active on the residential side of the market than on the commercial side and have become known for picking up expensive pied-á-terres.) “I have two clients from Russia who don’t want to close on their condos, one in Chelsea and one on West 66th,” said Emir Bahadir, co-founder of brokerage RLTY NYC, whose family operates a real estate firm in Turkey. “They need the cash at this point.” In the past, he said, Russian investors would buy without really looking at a property’s price. Now, he said, they are being more careful, with some going for smaller, less-expensive units. “Instead of $8 million, they are buying units between $3 million and $4 million,” Bahadir said. Ed Mermelstein, a real estate attorney who has many Russian clients, said Russian investors have recently shifted away from high-profile, vanity condo purchases and are looking for stakes in commercial development, which can offer better returns than in their own home country. He recently closed several large deals with Russian investors that had been temporarily in limbo after the ruble’s steep decline at the end of 2014. But Mermelstein said he’s actually seeing the economic situation in Russia help spur more investment in New York. “When the rest of the world is in havoc, the U.S., and especially New York City, is the safest and strongest place to invest,” he said, during a phone interview. “I’m on a plane right now going to Russia to meet with groups looking to put money into projects in New York,” he said. TRD www.TheRealDeal.com January 2014 35
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DEVELOPMENT
Jamaica’s tipping point Queens’ nabe sees waves of new towers rise as developers grab cheaper land BY RICH BOCKMANN takeholders had high hopes for Downtown Jamaica when the city rezoned 368 blocks in 2007. The Queens neighborhood had all the makings of a real-estate hotbed at the time: great transportation, retail infrastructure and cultural institutions. It had been largely left behind as other parts of the city gentrified and prospered, and planners thought the 2007 rezoning would finally provide a springboard to boost the neighborhood’s fortunes. Then came the financial crisis. Southeast Queens became the city’s epicenter for foreclosures, and grand schemes were put on hold. Yet now developers, including big-time Manhattan players like the Chetrit Group and United American Land, are showing increasing interest in the area. And sources say a few mega-projects in the pipeline may prove to be the real estate tipping point for Jamaica. “We have received a great deal of interest recently,” said Carlisle Towery, president of the nonprofit Greater Jamaica Development
S
Albert Laboz
compared to Long Island City,” said CPEX Real Estate’s Sean Kelly, who has a listing for a development site in a prime area near the Long Island Rail Road station for $24 million, or roughly $55 to $65 per foot. “I think that as land prices increase in Brooklyn and the primer parts of Queens, we’ll see them continue to rise here,” he added. Below is a look some of the projects on Jamaica’s drawing board: 1. The Crossing at Jamaica Station Midtown-based BRP Development announced plans early last year to build a $225 million, mixed-use building across the street from the Long Island Rail Road station, which will be the largest-ever private investment in the neighborhood. The double-towered, 730,000-squarefoot building will rise on a swath of nearly a dozen properties assembled over several years by the GJDC. The sale to BRP is expected to close this quarter. The project, slated for completion in mid-2017, will include 584 market-rate and affordable rental units spread over a pair
Joe Chetrit
Corporation, which owns a large property portfolio in the area, some of which it’s selling off to developers who have large projects planned. The real estate market is also starting to heat up in other corners of the neighborhood. In September, Flushing-based developer Chris Jia Shu Xu closed on the purchase of a $22 million site at the corner of Guy R. Brewer Boulevard and Archer Avenue, with roughly 720,000 buildable square feet. The price works out to about $30 per buildable foot. While that’s a far cry from the $200 to $250 per square foot that developers are paying in places like Long Island City, brokers in the area say prices are on the rise. “Land prices are cheap compared to most of Downtown Brooklyn. They’re cheap 46 February 2015 www.TheRealDeal.com
Ira Lichtiger
of 15-story and 25-story towers. The taller building will include three stories of retail spanning 80,000 square feet. BRP said it’s looking at rents in the mid$30s per square foot, which would put the monthly rent for a 750-square-foot one bedroom at about $2,188. By comparison, the median asking rent in the neighborhood is $1,695, according to the real estate data website StreetEasy. Duane Reade currently occupies the corner retail at the site and sources say the project’s stakeholders are discussing ways to bring the pharmacy back once construction is complete. BRP said it’s targeting other retail tenants, such as restaurants, grocery stores, banks, appareland home-goods providers.
2. Hilton Garden Inn On the southern end of the LIRR tracks, New Jersey-based y-based Able Management plans to o build a 28-story, four-star hotel on another plot of land assembled by the GJDC. JDC. The two announced the he land sale in mid-2013, but a legal spat with a partner who owned a stake in one of the properties held things up in the courts. s. Last month a judge ruled in favor of the GJDC, clearing the way for the nonprofit to sell the site to Able in the first half of this year. Able, which owns and operates hotels on Long Island, is planning a 125,000-square-foot 00-square-foot tower with about 240 rooms, ms, bars on the ground floor and roof, a pool and a restaurant. The hotel will sit directly ctly across from the AirTrain Station, which serves as a connection for passengers traveling between Manhattan and JFK Airport. Able CEO Viral Patel said room rates will range from $179 to $299 per night and that the hotel will be consistent with the other Hilton Garden Inns in the metro area. 3. Norman Towers Queens-based developer the Bluestone Organization cut the ribbon late last year on a 100-unit, two-building rental project at 90-11 160th Street. Bluestone developed the $32 million affordable-housing project, which is now entirely leased up, with the help of nearly $14 million in city and state subsidies. All of the units in the project’s two buildings — which rose on a blockthrough site previously owned by the GJDC — are set aside as affordable housing in different pricing tiers. The building has few amenities, and one-bedrooms for tenants earning between roughly $52,000 and $108,000 rented for $1,450 through a city-run housing lottery. “The market in Jamaica for something like this is actually lower” than the most expensive units at Norman Towers, Bluestone partner Ira Lichtiger said. The project also includes about 5,700 square feet of ground-floor retail space. The building has two retail tenants — a restaurant and dentist’s office — and a third space is on the market. Retail rents on the side streets can range from $35 to $45 per square foot. 4. United American Land retail Jamaica Avenue is the neighborhood’s main retail strip. In the mid-20th century,
QUEENS Jamaica
d i iits h during heyday, d iit was a b bustling li shopping h i destination, home to Macy’s, along with the now-defunct Gertz and Gimbels department stores. Now the nearly mile-long strip is home to national retailers like the Gap, Old Navy and Applebee’s, as well as a mix of electronics and beauty-supply stores. Major retailers are concentrated east of Parsons Boulevard — the last stop on the E, J and Z subway lines. That’s where Manhattan-based United American Land, headed by developer Al Laboz, paid $20.7 million to assemble a trio of properties in 2012 and 2104. The developer is now combining the three buildings into one and repositioning the properties into approximately 150,000 square feet of retail. Laboz said Jamaica Avenue is similar to Fulton Street in Downtown Brooklyn, where the firm brought in tenants such as discount fashion stores H&M and T.J. Maxx. “Queens is a strong borough and this is the strongest block in Queens in terms of retail,” Laboz said. “Tenants are always looking to get into urban markets, and this is a very strong urban market.” 5. Mary Immaculate Hospital conversion The Chetrit Group has owned this nearly full-block-sized medical campus overlooking Rufus King Park, Jamaica’s largest green space, since 2009, when it acquired the defunct hospital following a bankruptcy auction. The roughly 460,000 square feet of space is currently spread across a handful of buildings and a parking garage. The developer has filed plans to convert one of the buildings into a 324-unit residential
DEVELOPMENT
Queens Library
7 5
8
6 3
Queens Supreme Courthouse
4
JAMAICA AVENUE
Rufus King Park
1
York College
Long Island Rail Road Station
2
A rendering of the Crossing at Jamaica Station, which will have nearly 600 rental units and will be the area’s largest-ever private investment.
A rendering of the 150,000-square-foot retail project developer Al Laboz is planning on Jamaica Avenue.
development. But the project is something of a mystery, even to those steeped in the Jamaica real estate scene. In late 2013, the city slapped the developer with a stop-work order for having a large pile of debris on the site during demolition and fined the firm $172,980 for other violations. The stop-work order was lifted in early 2014, but the company has yet to restart construction.
through a public request for proposals. Property records show the company paid $8 million for the plot. Architecture firm FXFowle designed the 12-story, 400,000-square-foot building, which incorporated the Italian Renaissance-style facade of the courthouse and includes amenities like entertainment rooms, a
Chetrit, which did not respond to requests for comment, is currently involved in a number of high-profile properties around the city, including the conversion of the Sony Building at 550 Madison Avenue into luxury condos.
fitness center, roof deck and concierge service. The project is entirely leased up, with monthly rents ranging from $1,350 for a studio to $2,000 for a two-bedroom. “To rent a comparable apartment in the higher-end neighborhoods of Brooklyn or Manhattan, residents would be paying two to three times A rendering of the 28-story as much,” Andrew Levison, Hilton Garden Inn that Able Management is planning director of asset manageacross from the AirTrain ment and operations at Station. Dermot, wrote in an email.
6. Moda The Dermot Company was the first developer to bring luxury-style amenities to Jamaica when it opened the 346-unit Moda rental in 2010. The company, headed by William Dickey, had won the right to redevelop the former Queens Family Courthouse on Parsons Boulevard in 2005,
“Our goal was to deliver a new Manhattan-quality building in Jamaica at an affordable price point for the local residents and we think that goal was achieved.” The building also has more than 50,000 square feet of retail space occupied by Associated Supermarket and the barbecue CityRib, one of the few restaurant/bars in the neighborhood. 7. Retail mall Blumenfeld Development Group, the company that built the massive East River Plaza mall in East Harlem, is bringing its retail game to Jamaica. The company is planning to develop a roughly 180,000-square-foot mall at 90-02 168th Street, a side street off Jamaica Avenue.
The project, which will include an adjacent 550-plus-space parking garage, is slated to rise on a pair of GJDC-owned parking lots. 8. ACHS Management retail Manhattan investors and developers Alex Adjmi and Bobby Cayre, known for their extensive New York City retail portfolio, are about three months away from completing a 50,000 square-foot strip mall at 168-50 Jamaica Avenue. Planet Fitness and discount retailer Family Dollar have both already signed leases, and while the partnership declined to comment on rents, brokers said they can range from roughly $80 to $100 per square foot on Jamaica Avenue. The partnership paid $2 million in 2008 for a handful of properties that make up the site. The location is toward the far eastern end of the neighborhood’s shopping area, but it could get a boost if Blumenfeld’s retail mall brings more foot traffic that way. TRD www.TheRealDeal.com February 2015 47
Are new condo marketing costs going to skyrocket this year? Industry insiders discuss strategies to stand out amid a glut of new Manhattan inventory
Among the new developments facing tougher competition this year are, from left: 515 Highline, 111 West 57th Street, 53W53 and 50 United Nations Plaza. Amenities like the pool at 252 East 57th Street, right, are among the lures developers are using to draw buyers in the crowded market.
BY TESS HOFMANN anhattan’s condo market is gearing up for a major influx of new product. About 6,500 new units across more than 100 buildings will open for sales this year, compared with just 2,500 units across 59 buildings last year, according to Corcoran Sunshine Marketing Group. Developers haven’t faced such stiff competition since 2007, and some in the industry expect
M
to see a return to the lavish marketing and one-upmanship of the boom years. Others say that today’s battle is won in pre-development. Rather than expanding marketing budgets, they say, developers are devoting more dollars to building superior product. Whatever the strategy, it’s clear that this new marketplace won’t suffer complacency. “Clearly developers are increasing their marketing
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budgets,” said Corcoran Group broker Tamir Shemesh. “They are aware that because of the increase in inventory, they have to be more visible to the buyers.” David Maundrell, president of Brooklyn-focused brokerage aptsandlofts.com, expects developers to spend more on sales galleries, launch parties, in-house broker commissions and incentives for outside brokers. Shemesh said that the last time inventory was this high, developers threw lavish events for the brokerage community. “There used to be great gifts at those events,” he said, including iPads and Vespas. Whether a developer is targeting New York or the world will also be a factor. Projects targeted to local buyers may not need to up their budgets, said Andrew Gerringer of the Marketing Directors, while projects courting foreign buyers will be forced to go above and beyond. Zeckendorf Development’s 50 United Nations Plaza and World Wide Group’s 252 East 57th Street, Gerringer said, are examples
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of projects in “tertiary” locations whose absorption rates will be hurt by increased competition. “I think [developers] will be going out more on the road to see what they can do, rather than sitting there waiting for buyers to come to them,” he said. Maundrell emphasized the importance of technology in marketing strategy, saying that these days he frequently advises clients to bump up their Internet search optimization budgets to increase efficacy. “We’re just trying to keep up with Google and follow their algorithms and stay relevant with search,” he said. Khashy Eyn, founder and CEO of brokerage Platinum Properties, also sees online budgets being amped up in the resale market. “The marketing will get more pricey, because everyone will want to keep beating each other,” he said. Continued on page 124
PS30208RD-1114
48 February 2015 www.TheRealDeal.com
Some Closed Transactions in 2014
Over $1 Billion In Deals Thanks to all who helped make it happenâ&#x20AC;Ś. SOLD
SOLD
SOLD
SOLD
Manhattan, NY
Manhattan, NY
Manhattan, NY
$132,500,000
$99,750,000
$85,000,000
Manhattan, NY Upper West Side
17 Story Elevator Bldg 176 Residential Units 5 Stores 126,778 SF
17 Story Elevator Bldg 128 Residential Units 2 Stores 110,590 SF
9 & 12 Story Elev. Bldgs 93 Residential Units 10 Office Spaces
SOLD
SOLD
SOLD
Manhattan, NY West Harlem
Bronx, NY
$53,680,000
$66,700,000
13 Building Portfolio 492 Residential Units 5 Stores
21 Walk Up Buildings 224 Residential Units 30 Stores
SOLD
SOLD Manhattan, NY Washington Heights
Brooklyn, NY East Williamsburg
$23,825,000
$21,000,000
4 Five Story walkup Bldgs 55 Residential Units 9 Stores
4 Four Story Walkup Bldgs 32 Residential Units 38,000 Sq Ft
SOLD
SOLD
Bronx, NY
$8,125,000 2 Five Story Walkup Bldgs 93 Residential Units
$67,000,000 12 Story Elevator Bldg 69 Residential Units 110,000 Sq Ft
SOLD
Manhattan, NY Upper West Side
Manhattan, NY Washington Heights
$37,350,000
$27,500,000
6 Story Elevator Building 38 Res. Units & 2 Medical Approx. 47,832 SF
2 Elevator Bldgs 1 Walkup bldg. 130 Residential units
SOLD
SOLD
Bronx Portfolio
Harlem Portfolio
$18,600,000
$15,200,000
3 Six Story Elevator Bldgs 186 Residential Units 4 Stores
3 Five Story Bldgs. 31 Residential Units 3 Stores
SOLD
JV
Brooklyn, NY Clinton Hill
Brooklyn, NY Bushwick
Manhattan, NY
$6,000,000
$4,000,000
75 X 100 Development Site 30,000 Buildable Sq Ft
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$210,000,000 25 Story Elevator Office Building 550,000 Sq Ft
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THE CONSOLIDATION GAME In a twist, the latest wave of commercial firm mergers could leave New York City with more big brokerages
BY ADAM PINCUS he global commercial real estate industry may be consolidating, but in a twist, New York City’s “Big Four” commercial brokerages — CBRE, Cushman & Wakefield, Newmark Grubb Knight Frank and JLL — may end up with more jumbo competitors. The current wave of mergers and acquisitions may add one, or even two, more gargantuan commercial brokerages to the New York landscape, real estate professionals predict. The most recent high-profile acquisition, the surprise purchase of Massey Knakal Realty Services by Cushman in December (see related story on page 51), was just one of several major mergers in the last eight months. The others, of course, are: The
T
marriage of U.S. firm Cassidy Turley with the global DTZ, and the purchase of the Manhattan-based Studley by the Londonbased Savills. These new unions illustrate just how much pressure there is on global companies to get even bigger. The reason for the pressure is, not surprisingly, revenue. In order to boost
But the changes on the commercial side are having a more substantial impact, giving the global firms a new relationship with landlords, developers, investors and other influential real estate players in the city. The mergers will also create more competition at the highest echelon of the New York commercial brokerage industry, sources predicted. “It may take a while, but they will spend the time [and] they will spend the resources,” said Alan Cohen, executive managing director and partner at the brokerage ABS Partners Real Estate.
The agenda The trend toward larger commercial firms has been going on for decades, but each of the acquiring firms involved in these latest deals had a very specific agenda. The DTZ-Cassidy Turley transaction (bankrolled by private equity firm TPG Capital and others) and the Savills-Studley deal actually hinged on similar rationales, insiders said: Both firms were strong players in Europe and Asia, but had only tiny U.S. operations.
These new mergers illustrate just how much pressure global firms are under to get even bigger. their top lines, many global companies are looking to expand into new markets or beef up operations in cities they are already in. Rather than doing that organically, it’s often easier to snap up another firm. “You are either a consolidator or a consolidatee,” said Robert Shibuya, president of the national tenantrepresentative firm Mohr Partners, and former head of the global property and engineering firm UGL Services/DTZ, which has since split into two companies. While mergers are altering New York’s commercial brokerage world, the same is not true on the residential side. That’s despite some big shakeups, including Related Companies investing in CORE last fall, William Raveis entering the market, and Coldwell Banker dropping its affiliation with Bellmarc. 50 February 2015 www.TheRealDeal.com
In 2013, the combined global revenues of DTZ and Cassidy Turley came to $2.6 billion, just below those of the second-largest international commercial firm, JLL, which had revenues of $3.7 billion in 2013. (DTZ has also tapped Brett White, the former CEO of CBRE, to take over as executive chairman after a non-compete with his former employer expires next month.) For its part, Savills’s purchase of Studley — the company is now known as Savills Studley in the U.S. — is slightly different, because Studley was in the shrinking niche business of representing tenants. Meanwhile, in a first, the Massey Knakal-Cushman deal will give the global firm scores of brokers targeting smaller investment sales deals — ranging from under $1 million to about $50 million. Most of the large New York firms currently have
SIZE MATTERS: A LOOK AT THE NUMBER OF EMPLOYEES AT THREE NEWLY MERGED FIRMS
BUYER +
SELLER
SAVILLS
STUDLEY
JOINT FIRM
=
SAVILLS STUDLEY
NYC EMPLOYEES
180
160
20
GLOBAL EMPLOYEES
26,000
600
26,600
CUSHMAN & WAKEFIELD
MASSEY KNAKAL
CUSHMAN & WAKEFIELD
NYC EMPLOYEES
900
200
700
GLOBAL EMPLOYEES
16,000
240
16,240
DTZ
CASSIDY TURLEY
DTZ
NYC EMPLOYEES
250
200
50
GLOBAL EMPLOYEES
4,000
24,200
28,200
Source note: Data is for total number of employees including brokers and other staff. Numbers are rounded and came from the companies.
DOLLARS AND CENTS: THE COMBINED GLOBAL REVENUE OF THREE NEWLY MERGED FIRMS
FIRM DTZ
REVENUE $2.6 BILLION
CUSHMAN & WAKEFIELD
$2.5 BILLION
SAVILLS STUDLEY
$1.7 BILLION
Source note: Revenue figures are combined numbers from the separate firms for 2013, the most recent full year available. Numbers are from company filings and news reports.
teams of investment sales brokers vying for deals priced at $50 million and up. While those three big deals are all different in nature, they all spell one thing for the local landscape: a shake-up. And the change-ups are only expected to continue. The Cushman acquisition may very well prompt other global firms to consider getting into the low-end property sales game, said Paul Massey, the co-founder of Massey Knakal and now president of New York investment sales at Cushman. The Savills and DTZ deals could ignite more competition for New York leasing assignments and/or corporate services on
both the landlord and tenant sides, in turn driving down related fees and commissions, industry professionals said. “There will be [increased] pricing competition because of these mergers,” said ABS Partner’s Cohen.
‘Public’ peer pressure In addition to the near-compulsion to get bigger, there’s also more drive among global firms to go public. By selling into the public markets, they get access to cheaper capital, which allows them to expand further and make more money for investors. Continued on page 118
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Why Cushman and Massey Knakal said “I do.” The unlikely marriage is already making waves: Corporate behemoth to adopt scrappy local firm’s territory system BY ADAM PINCUS ushman & Wakefield’s purchase of Massey Knakal Realty Services for a reported $100 million came as an end-of-the-year shock for the industry. But the real surprises will come as the companies begin merging their business models and cultures. On its face, the merger seems like an unlikely marriage. For starters, Cushman is a New York-based global firm with a worldwide corporate identity, while Massey Knakal is a regional firm that has made a name for itself as a scrappy outer-borough brokerage specializing in building sales under $50 million. In addition, Cushman, which is headed by Edward Forst, follows a traditional brokerage system, while Massey Knakal uses a unique system that divides brokers and teams into roughly 50 geographic territories in the city. The question that’s been on every industry mind since the deal was announced was: What would become of that signature territory system? But as The Real Deal reported last month, Paul Massey, co-founder of his namesake firm and now the president of New York investment sales at Cushman, said that Cushman is actually going to adopt the territory system for all of its New York City sales brokers — a fact that other sources confirmed. “We approached [the acquisition] saying to them we like what you are doing, and we want to continue that,” said Ron Lo Russo, president of brokerage at Cushman for the tri-state region. The implementation of the system, however, “could take some time,” Massey said. Sources say that Cushman’s plan to adopt the system raises a whole new round of questions, from “How will it change the company’s competitive standing against its rivals?” to “What will it mean for long-time Cushman brokers?” But Massey said the system was “definitely part of what [Cushman] values about our platform.”
C
Little fish, big splash On the global front, the deal barely registers as a blip for Cushman. The firm, which has 16,000 employees and is owned by the publicly traded Italian firm Exor, is only adding a little more than 200 employees to its ranks. But the deal, which closed on December 31, could have a transformative impact on the city’s investment brokerage landscape. 74 April 2014 www.TheRealDeal.com
Not only does it boost Cushman’s headcount by more than 30 percent from about 700 to just over 900 in New York, it also makes the Manhattan-centric Cushman one of the most dominant players in the under $50 investment sales world in the
management team are already working of out Cushman’s headquarters at 1290 Avenue of the Americas. But for now, as the companies hammer out an integration plan, most of Massey Knakal’s brokers are still at that firm’s 275 Madison Avenue office
Top left, Edward Forst, Cushman’s CEO; top right, Robert Knakal, co-founder of Massey Knakal and Cushman’s new chairman of NYC investment sales. Bottom left, Paul Massey, co-founder of Massey Knakal and Cushman president of NYC investment sales; bottom right, Bruce Mosler, chairman of global brokerage at Cushman.
outer boroughs. It also could mean a big boost for Cushman’s bottom line regionally. Last year, Massey Knakal did roughly $4 billion in deals (see related story on page 50.) That additional business could be a game changer for Cushman’s New York office, which got more beat up than its two
and at outposts in Brooklyn and Queens. Meanwhile, several industry insiders said the deal could spawn a sea change among the global commercial firms in New York, which have for years negotiated low-revenue office leases, but eschewed similar work in investment sales.
The deal could spawn a sea change among New York’s global commercial firms, which have for years negotiated low-revenue office leases, but eschewed similar work in investment sales. main competitors, CBRE and JLL, in the wake of the recession, losing brokers to competing firms and struggling through two global leadership shakeups. Massey, Knakal, and some other members of their
With Cushman now squarely taking on the lower-end investment sales world, some say CBRE, which already has a presence in the sub-$25 million market, might look to get more aggressive in that sector.
“I could see CBRE getting larger in the business,” said Brandon Dobell, who is a partner with the Chicago-based investmentbanking firm William Blair & Company and an analyst covering real estate stocks. Ofer Cohen, president of the Brooklynbased brokerage TerraCRG and a former Massey agent, said larger firms have not made a push to enter the Brooklyn market since the news hit last fall that Massey Knakal was for sale. “I have not seen it yet. But I would not be surprised if there was a little bit of exploration,” Cohen said.
Getting territorial It’s unclear what Cushman’s move to the territory system will look like; Massey said many of the details have not been hammered out yet. “We are working through a thoughtful and careful strategy that will be completed by the end of the first quarter,” he said. Some of the questions that will need to be answered: How will Cushman’s primary New York City investment sales team — which includes Nat Rockett, Helen Hwang and others — work within the system? And what about even more senior brokers like Bruce Mosler, chairman of global brokerage, who specializes in leasing, but occasionally does investment sales? Also, what role will Massey Knakal cofounder Robert Knakal, now chairman of New York investment sales at Cushman, play? At Massey Knakal, he was a virtual company within a company, responsible for roughly $2.1 billion worth of deals last year, or about half of the company’s total investment sales. The Massey Knakal system does allow brokers to go outside of their assigned zone, but when they do, they are required to pay the broker who specializes in that area a commission split. Knakal and James Nelson, also a top producer, did many deals outside their own geographic area. If Cushman brokers have to suddenly start giving up even a small fraction of their commissions simply because they did a deal in someone else’s territory, some sources said it would create a backlash. “Giving Bob Knakal a cut is one thing, but giving Joe Schmuckly a cut out in wherever is another,” said one industry source. “In theory you give cuts because of value-add, but if there isn’t … that is essentially the rub in trying to reconcile the territory system with Cushman’s system.” Some possible scenarios, Massey said, are that Cushman brokers could “join a team [or] they could be a lead territory agent. There is flexibility.” In addition, Massey said that Cushman is eyeing the possibility of exporting the territory system to other U.S. markets to corner the lower-end investment sales markets elsewhere. That would create an entirely new revenue stream for the firm. Cushman’s Lo Russo also said the firm would be flexible with the system. Continued on page 120
www.TheRealDeal.com February 2015 51
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Gap widens between rivals Ranking of top investment sales brokerage firms shows CBRE losing ground; Stacom says team is being rebuilt BY ADAM PINCUS ne of New York City’s longeststanding rivalries, between Eastdil Secured and CBRE for the lead in investment sales, now appears to be on ice. A new ranking this month by The Real Deal of New York City’s top investment sales firms for 2014 reveals a yawning gap between the two top firms. In 2014, Eastdil brokered nearly twice as many investment sales deals as CBRE in the city, expanding its lead over its competitor to nearly $6 billion, according to TRD’s survey. Eastdil’s investment sales office in New York — led by the dogged Doug Harmon and his younger counterpart Adam Spies — closed $11.2 billion in property trades in the city last year. CBRE, meanwhile, ranked a distant second with $5.4 billion. Massey Knakal Realty Services, which was purchased by Cushman & Wakefield at the end of 2014, snagged the No. 3 spot with just under $4 billion in closed deals. Global giant JLL and Aaron Jungreis’ Rosewood Realty Group rounded out the top five with $2.2 billion and $2 billion deals respectively. The rankings — which included investment sales of $1 million and up, ground leases and leaseholds — were tallied using industry databases such as Real Capital Analytics and CoStar Group, as well as information from the firms. TRD also estimated the commissions that each firm made on these deals, using a sliding scale based on the size of the transaction (see chart). The Eastdil-CBRE rivalry should not go without some historical context. During the boom years, CBRE brokered a string of headline-grabbing deals, most notably the $5.4 billion sale of the Manhattan housing complex Stuyvesant Town and Peter Cooper Village in 2006. But the investment sales team at the firm began falling further behind Eastdil in the post recession years. While CBRE has managed to hold onto its secondplace standing, the gap between it and Eastdil has widened in the last few years going from under $2 billion in 2011 to $5.8 billion today. “They have become dinosaurs with antiquated ways of doing business and thinking, all within a culture that could prosper pre-credit crises but not post,” one industry source said. But Darcy Stacom — who along with William Shanahan leads CBRE’s New York investment sales team — told TRD that she expects to regain some market share this year as a shift in strategy that she implemented about two-and-a-half years ago begins to bear fruit. “This infrastructure is now largely in place and I will be able to get back to doing deals, which I really look forward to,” Stacom said over coffee in Midtown.
O
52 February 2015 www.TheRealDeal.com
Top NYC investment sales firms, 2014 RANK
BROKERAGE
EST. COMMISSION
DOLLAR VOLUME
% CHANGE FROM ’13
# OF DEALS
$11.2 billion
6%
43
$50 to $65
(IN MILLIONS)
1
Eastdil Secured
2
CBRE
$5.4 billion
-20%
43
$35 to $40
3
Massey Knakal Realty Services
$3.8 billion
56%
256
$65 to $75
4
JLL
$2.2 billion
15%
28
$15 to $20
5
Rosewood Realty Group
$2.0 billion
0%
130
$20 to $25
6
Savills Studley
$1.8 billion
220%
15
$10 to $14
7
Eastern Consolidated
$1.52 billion
89%
69
$25 to $35
8
HFF
$1.51 billion
12%
17
$10 to $14
9
Newmark Grubb Knight Frank
$1.14 billion
-5%
31
$15 to $20
10
Marcus & Millichap
$1.1 billion
58%
185
$30 to $35
11
Westwood Realty Associates
$889 million
286%
25
$10 to $14
12
Cushman & Wakefield
$875 million
-51%
9
$8 to $12
13
Besen & Associates
$639 million
97%
79
$20 to $25
14
Ariel Property Advisors
$528 million
1%
44
$10 to $14
15
GFI Realty Services
$448 million
60%
59
$10 to $14
16
TerraCRG
$305 million
64%
51
$10 to $14
17
Avison Young
$301 million
367%
6
$5 to $8
18
Pinnacle Realty of New York
$275 million
59%
26
$8 to $10
19
Prince Realty Advisors
$268 million
n/a
2
$1 to $3
20
HPNY
$247 million
67%
13
$5 to $8
21
Berko & Associates
$242 million
n/a
4
$2 to $4
22
Friedman-Roth Realty Services
$229 million
29%
23
$5 to $8
23
Cignature Realty Associates
$223 million
n/a
18
$5 to $8
24
Epic Commercial Realty
$208 million
148%
32
$5 to $8
25
CPEX Real Estate
$188 million
166%
27
$5 to $8
26
Carlton Group
$184 million
-35%
1
$1 to $2
27
Capin & Associates
$183 million
n/a
33
$8 to $10
28
ABS Partners Real Estate
$182 million
n/a
7
$4 to $6
29
Brookfield Financial
$181 million
-51%
4
$3 to $5
30
Highcap Group
$155 million
19%
19
$5 to $8
Source note: Ranking compiled through industry databases including Real Capital Analytics and CoStar Group, as well as information from the firms. In addition to investment sales of $1 million and up, sales for ground leases and leaseholds were included. All firms that represented an ownership interest in a transaction were credited with the value of the stake that they brokered. Minority interest deals were not included. The commission figures are estimates made by TRD using a sliding scale based on the size of the deal. Massey Knakal and Cushman were tallied separately because the ranking covered 2014. The companies’ merger closed on Dec. 31, 2014, after these deals were complete.
CBRE’s Darcy Stacom said the jack-of-all-trades approach on her investment sales team was replaced with a more specialized strategy. Stacom said the jack-of-all-trades approach that her 10-member team was using in the past was replaced with a more
specialized approach with top agents focusing on sub-specialties such as multifamily and office.
“If you don’t have someone in charge [of each specialty] you are not going to be able to deliver to the client the right services,” Stacom said. While the change has cost the firm in the short term, several insiders noted that rivalries tend to flip flop — tennis fans think John McEnroe and Björn Borg — and said they expect the firm to rally going forward. Stacom has already started this year with www.TheRealDeal.com January 2014 35
EAT . SLEEP . CLOSE . REPEAT . In 2014, Meridian Capital closed over $30 billion PU ÄUHUJPUN That’s $120 million L]LY` I\ZPULZZ KH` :OV\SKU»[ `V\ IL ^VYRPUN ^P[O (TLYPJH»Z TVZ[ HJ[P]L KLI[ IYVRLY&
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COMMERCIAL BROKERAGE momentum, including the anticipated sale of 32 Old Slip in Lower Manhattan to RXR Realty for $675 million. Stacom said broker Paul Leibowitz is now exclusively targeting multifamily, while Marcella Fasulo is focused on attracting foreign investors. Meanwhile, Shawn Rosenthal, who Stacom hired in 2013 from financial firm Ackman-Ziff Real Estate Group, is working on debt origination. Office specialist Paul Gillen, meanwhile, is departing CBRE, leaving an opening on her team. The past several years have brought other challenges as well. Beginning in 2013, Stacom said she was flying to Florida every several weeks to tend to her sick father, the legendary office leasing broker Matthew Stacom. He died in January 2014. “I did not even notice how much it wore on me. It was very trying,” said Stacom, commenting on both the emotional and professional toll. Meanwhile, during that turmoil, Eastdil was continuing to oil its already-well-greased machine. One former Eastdil broker said Harmon and Spies have a supreme level of confidence. “They treat every deal like, ‘How could you not hire us?’” he said. He said Eastdil also has a leg-up because it’s a “pure-play shop,” meaning it focuses exclusively on investment sales and finance, rather than a wide range of brokerage and management services. And that approach seems to have paid off. Furthermore, its numbers are even higher than its $11.2 billion total because it brokered billions of dollars of partial-interest deals that TRD did not include. It represented Paramount Group, Blackstone Group, Beacon Capital, and others in those deals. “Eastdil had a biblical year,” said another broker at a competing firm. “All the stars seemed to be aligned.”
Tier two The rankings below those two heavyweights have fluctuated in recent years, and will likely go through another shake-up because of Cushman’s $100 million purchase of Massey Knakal Realty Services (see related story on page 51). Massey Knakal’s third place showing came with an impressive 56 percent jump in dollar volume over 2013. That mega gain was driven largely by company co-founder Robert Knakal taking on larger deals. The firm’s deal volume has exploded in recent years, ballooning its closed deals to $3.8 billion from roughly $880 million in 2011. Its largest 2014 deal, which was brokered by co-founder Paul Massey, was SL Green Realty’s $282 million purchase of the land under 760 Madison Avenue and two adjacent properties By comparison, Cushman’s investment sales team had a tough 2014, closing just $875 million, or about half the $1.8 billion it closed in 2013. Meanwhile, JLL is gaining ground. Its New York investment sales group, including Richard Baxter and Jon Caplan, jacked up its deal volume, giving the local office a boost of about 15 percent year-over-year to $2.2 54 February 2015 www.TheRealDeal.com
Top 5 Manhattan investment sales firms, 2014 RANK
BROKERAGE
DOLLAR VOLUME
# OF DEALS
1
Eastdil Secured
$10.9 billion
40
2
CBRE
$4.5 billion
30
3
Massey Knakal Realty Services
$2.8 billion
120
4
JLL
$2.0 billion
24
5
Savills Studley
$1.8 billion
13
Top 5 Brooklyn investment sales firms, 2014 RANK
BROKERAGE
DOLLAR VOLUME
# OF DEALS
1
CBRE
$618 million
6
2
Massey Knakal Realty Services
$487 million
83
3
Rosewood Realty Group
$361 million
41
4
Marcus & Millichap
$327 million
96
5
TerraCRG
$305 million
51
Top 5 Bronx investment sales firms, 2014 RANK
BROKERAGE
DOLLAR VOLUME
# OF DEALS
1
Rosewood Realty Group
$335 million
38
2
Newmark Grubb Knight Frank
$270 million
1
3
Ariel Property Advisors
$229 million
9
4
Besen & Associates
$222 million
33
5
JLL
$114 million
1
Top 5 Queens investment sales firms, 2014 RANK
BROKERAGE
DOLLAR VOLUME
# OF DEALS
1
Rosewood Realty Group
$482 million
11
2
Massey Knakal Realty Services
$457 million
37
3
CBRE
$192 million
4
4
Pinnacle Realty of New York
$109 million
14
5
Marcus & Millichap
$87 million
21
Source note: See main chart.
CBRE’s Darcy Stacom
Eastdil’s Doug Harmon
Rosewood’s Aaron Jungreis
JLL’s Richard Baxter
billion. The largest of its 30 deals was the sale of the Lower Manhattan office building 61 Broadway to RXR Realty for $330 million. “The rankings ebb and flow each year, but the bottom line is we are happy there is so much activity, and that everyone is making money,” said Stephen Shapiro, a senior vice president in JLL’s New York capital markets group. Rosewood, the tiny Midtown-based powerhouse headed by Jungreis, impressively remained in the top five with $2 billion in deals, but unlike the others its dollar volume didn’t really budge from 2013. Jungreis’ biggest deal was a Queens portfolio that he co-brokered with Knakal for $216 million. And while most of the firms on the ranking are familiar names, some, like Westwood Realty Associates, which is headed by Steven Vegh, did an impressive $889 million in business.
The borough breakout When the numbers are crunched by borough, a bunch of other firms with geographic specialties make the cut. The one exception to that is in Manhattan, where four out of the top five firms were the same as the citywide top players. The only difference there was that Savills Studley clocked in at the No. 5 spot rather than Rosewood. Savills Studley was buoyed by a giant $1 billion deal in which Brookfield Property Partners bought a majority interest in the nearly 4,000unit residential “Putnam portfolio” in Upper Manhattan and on Roosevelt Island that was controlled by Urban American Management, a firm that remained in the deal. Meanwhile in Brooklyn, CBRE, Massey Knakal and Rosewood were followed by Marcus & Millichap and TerraCRG in the top five. Forest City Ratner’s $547 million sale of the majority ownership to Chinese investment firm Greenland Holdings at Pacific Park in Brooklyn, formerly known as Atlantic Yards, was a big boon for Stacom. That mega-deal was one of only six deals that CBRE closed in the borough. But those deals were big enough to give the firm a higher dollar volume, by far, than any of its competitors. By comparison, Massey Knakal closed 83 Brooklyn deals and Rosewood closed 41. Ofer Cohen, the president of TerraCRG, said the dollar volume of buildings sales has soared in Brooklyn since the economic recovery took off. The firm, which was founded in 2008, closed $305 million in deals in 2014 versus just $28 million in 2011. “The market went from $1 billion to $6.7 billion, so you can get a sense of the transformation in this market,” Cohen said. “We think there is a lot more upside for us as a brokerage.” But, he said, the competition to represent sellers in Brooklyn is intensifying. “We used to go and pitch business and there was no one else. Now there are often at least three firms pitching,” Cohen said. “That shows the level of sophistication in the market. There are lot more brokerages trying to get a piece of the business.” Continued on page 120
www.TheRealDeal.com January 2014 35
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INTERNATIONAL
LOOKING TO
LONDON BY TOM ACITELLI ystery buyers forking over $100 million for apartments on Billionaire’s Row may grab the headlines, but the real money in luxury real estate isn’t on 57th Street; it’s in London. In 2014, Britain’s capital overtook Hong Kong as the most expensive city in the world for new residential real estate. The average price per square foot there reached $3,380, according to a December report from commercial brokerage CBRE, which tracked what it called “key global cities favored by high-net-worth individuals.” Hong Kong ranked second with the average price for luxury homes at $3,290 a square foot, while New York came in third at $3,040. Yet prices for London’s high-end properties are showing signs of leveling off, if not dropping slightly, brokers say. The change is a result of a stronger pound relative to the euro and the U.S. dollar, coupled with higher real estate taxes and Britain’s upcoming spring election. “It kind of plateaued around the spring of last year, and then continued to flat-line throughout the year,” said Tom Wright, a broker with Knight Frank in London. London and New York, of course, are often talked about in the same breath — namely because their economies have more in common with each other than they do with the countries they reside in. As a result, many in the New York real estate industry are looking to London as a bellwether. Sources say the recent slowdown in London can be largely attributed to foreign buyers
M
What does the softening of the British capital’s luxury market mean for NYC?
getting spooked by the political and tax uncertainty. Those buyers account for a huge chunk of the market: According to a 2013 report by Knight Frank, a stunning 77 percent of London buyers were either non-British or did not reside in the United Kingdom (49 percent were non-Brits and 28 percent lived elsewhere). In New York, by comparison, foreigners make up about a third of higher-end condo buyers, according to Census Bureau estimates and other sources. Sources say if New York’s foreign buyers begin to turn elsewhere, the New York luxury market will see a similar softening. But for now, they note, New York could pick up more foreign buyers as result of the uncertainty in the U.K. and in other parts of the world. But insiders note London’s leveling off or dip must also be viewed in relation to the titanic increases luxury prices there saw during the boom of the aughts and since the bust. “In 2009, we set off on quite a boom and prices rose rapidly in 2010, 2011, 2012,” said David Adams, a broker at the European firm John Taylor, which recently partnered with the Corcoran Group in New York. “Many parts of London are now 30, 35, 40 percent above where they were at the peak, whereas, in New York, I believe, they’re back at 2007 levels.” And the brokerage Savills’ projects that luxury prices will rise 1 percent in 2015, but by 8
Many in the New York real estate industry see the London market as a bellwether.
Priciest closed sales The three priciest residential sales in London for 2014 ranged in price from about $47 million to $85 million, according to London’s municipal land registry. Ironically, none of them bested the latest record breaker in New York: Extell Development’s $100 million penthouse sale at One57, which closed last month. Still, these London pads are not too shabby. Price: $85.6 million The apartment, which sold to an undisclosed buyer in July, is the second-most-expensive single home sale in British history, behind a mansion in West London, which went for just under 55 million pounds in 2012. The newly constructed maisonette is located in the new seven-unit development known as 5 Princes Gate in Westminster. Luxury developer Mike Spink never publicly marketed the spread. 56 February 2015 www.TheRealDeal.com
Asking $59.8 million is this 13,564-square-foot eight-bedroom townhouse on Charles Street.
percent in 2016 and by around 25 percent through 2019. Luxury sales, too, have risen steadily. In 2014, there were 237 London residential sales of at least $6 million — up from 212 in 2013, 158 in 2012 and 32 in 2009, right after the bust. Below is a look at some of the big sales, trends and players in the changing London market.
A house at 8 Thornwood Gardens sold for $47.7 million, London’s third highest sale last year.
Price: $78.6 million This six-bedroom, 8,400-square-foot duplex is located at 21 Chesham Place in the Royal Borough of Kensington and Chelsea. The Norman Foster-designed six-unit building, which was developed by brothers Nick and Christian Candy, is a former telephone company exchange. The unit, which was listed for about $60 million, sold (well over ask) in October. The Candys, of course, are the duo behind London’s now-famed One Hyde Park, where a multi-unit sale in 2011 topped $222 million. Price: $47.7 million The house, which is located at 8 Thornwood Gardens in Kensington and Chelsea, has 10 bedrooms and four “reception” rooms. It’s part of a 45-home, garden-centered development from early in the last decade with a pool and a gym. It sold in February. It
INTERNATIONAL last sold for $17.57 million in 2006, giving a good idea of just how much London luxury prices have jumped. Source note: Sales from London’s municipal land registry.
Priciest three listings
Gauging the priciest London listings is difficult because the most expensive homes are never actually publicized. “Many buyers for these most expensive properties do not want to The penthouse at see this imprint available the Heron has a The Heron on the Web, for security retractable glass roof. The 367-foot, 36-story and privacy reasons,” said tower, which opened Adams of John Taylor. in 2013, was the tallest TRD, however, was able to residential development find the priciest listings on England’s publicly in the City of London neighborhood in available multiple-listing service; not more than 30 years. The 285-unit building surprisingly, most did not have includes a 6,000-square-foot duplex exact addresses. Unlike the penthouse that features a retractable glass New York market, where new roof (not a skylight, a roof) and is asking construction apartments are $27.2 million. The tower was 97 percent currently fetching top dollar, most sold before construction was finished, of London’s priciest listings are according to developer houses. Heron International.
THE FOREIGN BUYER POOL
A
bout 70 percent of buyers purchasing London homes for more than $15 million are foreigners. For all property
Asian 1.7%
types, 49 percent were non-British and 28 percent did not reside primarily in the U.K. Here’s how that 49 percent breaks down:
1.1%
Akhmetov bought a 25,000-squarefeet two-unit pied-à-terre for $222.2 million. The deal still ranks as the overall priciest residential purchase in U.K. history. But there are a slew of new projects, particularly along the currently unfashionable South Bank of the Thames River. Here’s a look at the most noteworthy among them:
0.5% South American
Australian 4.5% Indian
16% European
4.7% U.K. (N. Ireland, Scotland & Wales)
4% 7.5% Middle Eastern
9% Russian
North American
Price: $70.4 million One Blackfriars The seven-bedroom The coming spring election could see The tallest portion Party Leader Ed Miliband replace house on Lyndhurst LabourConservative of this three-building Prime Minister David Cameron. Road in London’s development on the well-to-do Hampstead neighborThames’ South Bank will reach 557 feet hood includes four reception and about 50 floors. All told, the rooms, an indoor swimming pool and lush gardens over more than half an acre.
Berkeley Group-developed project will include 274 apartments and 162 boutique hotel rooms as well as retail, such as restaurants. While One Blackfriars is not slated to open until 2018, prices are expected to range from $1.7 million to $34.8 million.
Price: $59.8 million The 13,564-square-foot eightbedroom townhouse sits just off Mayfair’s ultra-fashionable Berkeley Square on Charles Street. It comes with a twostory reception hall and traces its architectural roots to the late 1700s (though it’s been recently renovated).
Battersea Power Station This 40-plus acre development on the South Bank of the Thames is scheduled to come online by 2017 and will transform an old coal-fired power plant into more than 3,992 homes, a train station, two hotels, 250 retail spots and a park. Sales started in October, with prices ranging from under $756,700 for a
Price: $51.7 million This seven-bedroom mansion is in the neighborhood known as St. John’s Wood. It includes flourishes like a home theater (with a bar) and a “leisure complex” with gym, steam room and indoor pool.
studio to $45.4 million for a penthouse. The project, the biggest new residential development in London, is backed by Malaysian investors and was jointly designed by starchitects Frank Gehry and Sir Norman Foster.
One Blackfriars is slated to open in 2018 with prices as high as $34.8 million.
Source note: Listings from England’s MLS.
The development darlings Like New York’s One57 and 432 Park, London has its own buzzworthy projects. When it opened in 2011, the Candy brothers One Hyde Park, was the “it” project, making international headlines when Ukrainian mogul Rinat
Sales at the massive Battersea Power Station development started in October, with prices ranging from under $756,700 for a studio to $45.4 million for a penthouse.
Upcoming challenges The London market is facing a couple of key challenges in the coming months, namely retaining its status as a go-to investment for wealthy foreigners. “The thing about the London David Cameron market is that it’s not
The seven-bedroom house on Lyndhurst Road is London’s priciest listing, at $70.4 million.
This seven-bedroom mansion in the neighborhood known as St. John’s Wood is listed for $51.7 million.
about London and the U.K. — it’s about the global market,” said Knight Frank’s Wright. Below are three factors that sources say could push foreign buyers out of the market. Higher taxes At the end of 2014, the British government increased the sales tax on properties worth more than $2.3 million to 12 percent, up from about 5 percent two years ago. British residents refer to this as the “stamp duty” or “mansion tax.” Nearly every property trade, of whatever price point, is subject to a stamp duty; the mansion tax is for properties trading in only about the top 2 percent of the U.K. housing market — basically, the prime London market.
in five years on May 7. The uncertainty over who will control the national government post-election has contributed to the slight softening of the London luxury market, sources said. The Labour Party, which lost the last general election to a ConservativeLiberal coalition and has a good chance of regaining power, has proposed a new annual tax starting at $4,500 on homes worth at least $3 million. The amount of the tax would increase with the value of the home. Stronger pound
General election
Although a stronger pound speaks well to the British economy, it also makes it more expensive for foreigners looking to buy London real estate. In July 2014, the pound hit a six-year high against the U.S. dollar, rising above $1.70. It was around $1.50 at
The U.K. will host its first general election
press time. TRD www.TheRealDeal.com February 2015 57
The luxury sideshow The hype surrounding Manhattan’s über-pricey residential deals masks more concerning reality for overall market, including drop in activity BY C. J. HUGHES n the world of New York City real estate, the market for über-luxury apartments can seem like the only game in town. But despite the buzz about big-ticket sales, deals above the $5 million and $10 million mark are not as big a slice of the overall market as some might think, according to an analysis by The Real Deal of closed deals on the website StreetEasy. The numbers show that only about 1 percent of all Manhattan co-op and condo
I
Market analysts say that while the luxury market is a growing percent of the overall market, its small size makes it a poor gauge of the market’s health. Analysts also say the obsession with colossally large deals obscures what’s going on with the vast majority of the market, including in the lower-end luxury sweet spot between $1.5 million and $3.5 million. Jonathan Miller, president of Miller Samuel, pointed to some troubling signs in the market that are not getting much attention — like a drop-off in sales activity
“No one knows how deep the market is for apartments for more than $10 million,” RAPHAEL DE NIRO, DOUGLAS ELLIMAN
sales — or about 370 out of 30,900 sales between January 2013 and January 2015 — fetched $10 million or more. (Figures from the appraisal firm Miller Samuel show about 5,000 fewer overall sales — StreetEasy’s
at the year’s end, and a shortage of inventory in the resale market. For example, while the number of deals is up in the $10 million-plus world, overall sales activity in the fourth quarter
“It’s a societal norm today to talk about the Kardashians instead of the millions and millions of other people on the planet. Dreams are much more exciting than reality.” LEONARD STEINBERG, URBAN COMPASS
stats tend to include more non-linear deals like co-op transfers and some land deals — but the same basic proportions hold true.) Meanwhile, only about 1,300 sales, or 4 percent of all sales, went for $5 million or more during that same time. Even sales priced at $3 million and
plummeted 18 percent year-over-year, according to Douglas Elliman’s marketing report, which is prepared by Miller. “One percent of the market is getting 99 percent of the eyeballs,” he said. “We’re zeroing in on the wrong things, things that are shiny and sparkle.”
“One percent of the market is getting 99 percent of the eyeballs. We’re zeroing in on the wrong things, things that are shiny and sparkle.” JONATHAN MILLER, MILLER SAMUEL
up — the “luxury” benchmark used by several market reports — accounted for only 3,230 deals, or just over 10 percent of all transactions. 58 February 2015 www.TheRealDeal.com
Of course, it’s easy to get taken with the luxury deals: Despite the fact that they don’t account for much of the activity in the market, they do account for a large
(and growing) chunk of the dollar volume. While the dollar value of closed deals priced in the $5 million-and-above category hasn’t budged much in the last year in Manhattan — creeping to $1.42 billion in 2014’s fourth quarter from $1.4 billion at the end of 2013 — the dollar value of closed deals priced at $10 million-and-up jumped by about 65 percent. There were 40 of those sales valued at $931 million in 2014’s fourth quarter, up from 36 sales valued at $506 million at the same time the year before. Historical data, not surprisingly, shows that luxury property sales in general are gobbling up more of the overall market share as well. With the exception of early 2008, the last decade has rarely logged more than 15 or so deals a quarter in excess of $10 million, according to Miller Samuel. That is, until 2013, when sales of condo units in a crop of pricey new condo towers began closing. Since then, the $10-millionplus sector has grown and even leapt upward so much that in the last year Miller began charting a new category: $30 million and up. There were eight of those monster deals in the fourth quarter, up from one during the same time the year before. In addition to skewing the overall market statistics, the growth of the high-end market is creating some problems in its own particular niche. For starters, Fred Peters, president of Warburg Realty, echoed other observers when he noted the city is “moving to a bit of a glut in the ultra-luxury market.” And that can knock pricing out of whack. “You have a very visible circus sideshow dominating the discussion about the housing
FACT BOX: MEGA
DEALS ON THE
RISE The dollar value of closed Manhattan deals priced at $10 millionand-up jumped by about 65 percent between the fourth quarter of 2013 and 2014, from $506 million to $931 million. market, which has the tendency to influence unsupported optimism,” Miller said. The flashy deals can cause sellers to overprice their properties, believing that the buyer pool is deeper than it actually is. Meanwhile, not everything on the high end is selling fast. Raphael De Niro, a top agent at Douglas Elliman who is marketing a $20 million duplex co-op at 969 Fifth that’s been listed since 2012, said selling hugely expensive apartments still takes time. “No one knows how deep the market is for apartments for more than $10 million,” he said. Leonard Steinberg, president of Urban Compass, pointed out that it’s only human nature to focus on the sexy deals with mega price tags. “It’s a societal norm today, to talk about the Kardashians instead of the millions and millions of other people on the planet,” said Steinberg. “Dreams are much more exciting than reality.” TRD
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COMPANY PROFILE
Who is Howard Hughes? Some say the Texas-based firm has bitten off more than it can chew with the high-profile South Street Seaport redevelopment; not so says the CEO
An aerial view of Howard Hughes’ vision for the Seaport district, including a 42-story residential tower, new marina and a rebuilt Pier 17.
BY MARK MAURER n 1938, after flying around the world in a record three days, legendary tycoon Howard Hughes Jr. was greeted with a ticker tape parade in Lower Manhattan to mark the triumph. Three-quarters of a century later, David Weinreb — CEO of the eponymous Howard Hughes Corp. — is not getting the same adoring reception. The company has already won approval to revamp the famed South Street Seaport, but its development plans for some of the surrounding sites have generated intense community controversy. A Dallas-based development firm, Howard Hughes inherited a dozen projects after spinning off from then-bankrupt mall operator General Growth Properties in 2010. The Seaport is the first New York City project for the firm, a publicly traded builder of master-planned communities nationwide. And some wonder if the company, which has $5.3 billion in assets and was spawned from the empire of Hughes himself, is biting off more than it can chew. Weinreb, 50, rejected that characterization, and said the company is committed to getting the community on board with its plans.
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60 February 2015 www.TheRealDeal.com
“We’re trying to create something that both respects its past but helps look into the future, so it can stand the test of time,” Weinreb told The Real Deal during an interview at the Woolworth Building offices of SHoP Architects, the firm spearheading the redevelopment design. “We’re spending a lot of money to do that.” Howard Hughes Corporation —which controls the South Street Seaport proper through a lease with the city, as well as all of the other buildings in the district bounded by John Street, Peck Slip, Water Street and the East River —said it’s investing $1.5 billion for the project in full. Howard Hughes CEO, David Weinreb, said the company is committed to getting the community on board with its plans.
Part of that funding would go toward the already-approved centerpiece of the plan: the redevelopment of Pier 17 into a two-story retail hub with a 10,000-square-foot rooftop venue that’s slated to break ground this year. But the company is also looking to revamp several of its other sites and to build a 42-story condo tower with which some of the community is less than thrilled. Bridget Schuy, an agent at Bond New York and member of the steering committee for opposition group Save Our Seaport, argued that the neighborhood is “in danger of being Disney-fied.”
Tower power The most controversial aspect of the plan is the proposed mixed-use tower, located just east of Pier 17 on the edge of the river. The building, which calls for 150 marketrate condo units and a middle school at the base, would rise on the site of the currently uninhabitable New Market Building (part of the former Fulton Fish Market) next to the actual Seaport. Local residents have criticized the tower’s height, location and design, arguing that it’s out of step with the low-rise historic
neighborhood. (Howard Hughes has already agreed to chop the height to 42 stories from 52.) The firm will also construct a new fivestory building with 60 or 70 affordable rental units on Schermerhorn Row, a historic block that formerly housed 19th-century hotels. Weinreb said the number of affordable units, which comes to 30 percent of all the residential units the firm is proposing, is not only more than required to win approval, but is “the highest percentage that any developer has ever offered in affordable housing.” The master plan also calls for the Tin Building, the other now-uninhabitable former outpost of the Fulton Fish Market directly north of the pier building, to be moved 30 feet to the east and turned into a state-of-the-art food market. In addition, the Link Building, a transitional structure that sits just west of the pier building, would be demolished to make way for a new façade for the Pier 17 building. The plan also calls for widening the esplanade at the pier, constructing a new marina and upgrading the Seaport Museum. The company needs to secure approval from the Landmarks Preservation Commis-
www.TheRealDeal.com January 2014 35 RENDERING BY SHoP ARCHITECTS; PHOTOGRAPH OF WEINREB FOR THE REAL DEAL BY MAX DWORKIN
COMPANY PROFILE sion for key parts of the project before it can file for the Uniform Land Use Review Procedure — the final public approval process. The tower, which is currently envisioned at just under 500 feet, requires approval under ULURP to exceed 350 feet. But it could be an uphill battle: Landmarks rejected GGP’s plan for a 42-story condo-hotel tower on the same site. Weinreb said his firm is open to transferring the development rights to a site within a few blocks away, but he has yet to find one. But Manhattan Borough President Gale Brewer — who with City Council Member Margaret Chin has led the opposition to the firm’s plans for the area surrounding the Seaport site — claims Howard Hughes and the other stakeholders “haven’t looked hard enough.” When asked whether the tower would win city approval, Chin replied simply: “Not right now.”
Securities and Exchange Commission filings. Peter Martin, managing director and senior analyst at San Francisco-based JMP Securities, said there are key signs that Howard Hughes is in a “very healthy position,” including its ease with securing project financing and the more than $800 million in cash on its balance sheet. He added that the Seaport is more the firm’s most public project than its most contentious. “Development rules, regulations and public scrutiny in Texas is much less than in New York,” Martin said. The firm is helming other large-scale projects, including the 60-acre Ward Village master-planned community in Honolulu that includes 22 towers slated to rise over the next 10 to 15 years. Honolulu residents have criticized the heights of the three towers proposed for the
it comes to locking up approvals, because it is not based in New York or steeped in the political scene here. The firm is, however, represented by veteran political consultant and lobbyist Suri Kasirer. And Weinreb disputed that the company is at any disadvantage, saying “I think of myself as a New Yorker and our whole team is New York-centric.” Last year, the firm signed a 10-year lease for its first New York City office — nearly 37,000 square feet at 199 Water Street. The office, which has more than 50 employees, doubles as the East Coast headquarters. For his part, Weinreb grew up in Westchester and attended New York University for a semester before leaving to work for, and eventually partner with, real estate investor Jerry Reinsdorf, who also owns the Chicago Bulls and Chicago White Sox. And Weinreb noted his first real estate
Mayor Bill de Blasio has not opposed the tower. And Howard Hughes has plenty of supporters, including several Manhattan business groups and high-powered players. Company board members include hedgefund tycoon Bill Ackman, who went to high school with Weinreb and serves as chair, CBRE’s Mary Ann Tighe, and the Georgetown Company’s Adam Flatto.
Market impact Industry players agree that the redevelopment of the Seaport and surrounding area will have a positive impact on the real estate market. RKF, which is handling retail leasing for Howard Hughes, has been targeting restaurants and fashion tenants. The retail mix is intended to be familyfriendly and less high-end than, for example, Brookfield Place, said RKF’s Robert
Howard Hughes plans to restore the Tin Building and create a local food market inside it.
Real estate mogul Bill Ackman, company chairman.
Yet some are skeptical about that idea, because it would mean starting from scratch. Seth Pinsky, who was EDC president when the city approved the Pier 17 plan, said the redevelopment would vastly improve the South Street Seaport area. “If you want a developer to preserve the Tin Building and make improvements to the public space, the developer needs to be able to pay for it,” said Pinsky, now executive vice president at RXR Realty. “It’s hard to imagine that a project without this level of density or some other significant new revenue source would allow a developer to cover those costs. I don’t see another way.” For his part, Weinreb told TRD: “We’ve basically provided all the benefits we’re able to provide with this project.”
New York state of mind Howard Hughes has no doubt had success in other parts of the country. In the third quarter of 2014, the firm, which has 12 offices and about 1,000 employees nationwide, brought in $119.2 million in revenue, up nearly 20 percent from $99.6 million a year earlier, according to U.S. 62 February 2015 www.TheRealDeal.com
first phase, the New York Times reported. And Weinreb said he has been “dealing with the [local] council and a host of very complicated steps.” “We’ve had a lot of history as a company in taking on challenging opportunities that we believed in,” he said. But the Seaport plan is undoubtedly among the most contentious projects the company has ever tackled.
deal was the purchase of a condo across from the Flatiron Building, at age 16. (As a teen, he had success in opening as a singer for standup comedians in the Catskills, and also did voiceovers and work in TV commercials — affording him various luxuries.) “He sounded like a Jewish Frank Sinatra,” said Simon Ziff of Ackman-Ziff, which was hired to arrange financing for Howard Hughes after the Seaport retail leasing is complete.
Futterman. But the only lease announced so far is a luxury iPic movie theater set to anchor 11 Fulton Street at Fulton Market, one of the other buildings Howard Hughes plans to revamp. Bradley Gerla, executive vice president at CBRE, said the changing Seaport neighborhood could attract tech tenants, who are already moving into Lower Manhattan. And, he said, nearby office
“We’re trying to create something that both respects [the Seaport’s] past but helps look into the future. ... We’re spending a lot of money to do that.” DAVID WEINREB, HOWARD HUGHES CORP. Weinreb, however, said that while the firm “recognized there were challenges” around redeveloping the site, they viewed it as “unique opportunity.” “We felt this was an asset that, with our skill set, was ultimately what the company’s mission was all about: creating a community, not only building buildings,” he said. “We could come in and reimagine what the Seaport could be, while studying the storied past that it had.” Some real estate players contend that Howard Hughes is at a disadvantage when
Ziff, who said he has been friends with Weinreb for more than 15 years, described him as “hard-driving, team-oriented and charismatic.” Weinreb — who currently spends at least 10 days a month in New York and is looking to buy a condo in Lower Manhattan — served as head of TPMC Realty Corp. in Dallas from 1993 to 2010, rising up the ranks from broker to CEO. And he made some powerful friends along the way. Despite the community opposition,
towers with a glut of vacancies, such as 180 Maiden Lane, would benefit from a surge of activity in the area. Weinreb said he knows his plans are ambitious and risky, but he’s optimistic they will be realized. And, he noted, they are in keeping with the philosophy of the company’s late, reclusive founder. “I think that I’ve worked hard over a long career in real estate to do transformational things,” Weinreb said. “In that sense, Howard Hughes [Jr.] and I share a vision that [only] some people are able to see.” TRD 34 RENDERING BY SHoP ARCHITECTS
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NEIGHBORHOOD DIVE
TRIBECA TRIUMPHANT
One of city’s priciest nabes maintains its character as it grows
BY KERRY MURTHA A few decades ago, Tribeca was a less expensive option for artists seeking affordable living and studio space in the newly converted grocery warehouses of the old “butter and egg district.” Now, it’s a residential mecca hosting some of the most expensive real estate in the city. It’s the domain of the rich and famous, where TV pundit
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TOP DEVELOPMENTS The Sorgente Group, a Rome-based development firm headed by Veronica Mainetti, has taken painstaking measures to preserve the architectural details of 60 White Street, an 1869 cast-iron landmark her firm converted into 8 loft-style condos. Eighty percent of the material salvaged from the site has been restored. Units range from $4.5 million for a 2-bedroom to $9 million for a three-bedroom penthouse. Sales are being handled by Douglas Elliman. 60 White Street
Jon Stewart recently sold his 6,000-square-foot duplex loft at 161 Hudson Street for $17.5 million — three times what he paid for it in 2005. It’s the place where Robert De Niro — who first took note of the neighborhood when he needed a vacant loft to practice his fight scenes for the movie “Raging Bull” — opened the Tribeca Grill in 1990. The restaurant, which still maintains the exposed brick and airy space of the warehouse
At 821 feet and 60 stories, Herzog & de Meuron’s 56 Leonard Street skyscraper will be a unique addition to the downtown skyline. With its rising cantilevered floor slabs, it’s been compared to a “Jenga” tower and a “surreal totem pole.” The 145 56 Leonard Street units range in price from $2.9 million for a 1,029-square-foot onebedroom to $47 million for a five-bedroom 7,799-square-foot penthouse. Corcoran Sunshine Marketing Group is handling sales. The Sterling Mason, a new 33-unit condominium development at 71 Laight Street, is actually two buildings meshed into one. The Morris Adjmi-designed two-faced facade consists of a converted 1905 brick and terracotta former tea and coffee warehouse
Office scene
Local lore
Office rents continue to rise as well, as residential conversions shrink the amount of available office space. Rents now top off at $80 per square foot. The area is less known for its Class A office space than for its raw Class C attitude. But what it lacks in conventional amenities, it makes up for in larger floor plans, higher ceilings and landlords willing to negotiate leases — a perk particularly attractive to the swarm of technology companies looking to plant roots in Manhattan. The landmark former Western Union building at 60 Hudson Street, which was converted to a colocation center that handles an astonishing amount of Internet traffic, boasts more than 100 telecommunications companies as tenants, and is credited with keeping huge chunks of the world connected. Companies like the Telx Data Center got its start there and recently leased an additional 69,000-square-feet of space on top of the 80,000 square feet it already occupies.
Duane Park was acquired by the city in 1795, the first site specifically set for use as a public park. It bears the name of James Duane, NYC’s first mayor after the Revolutionary War. Within the triangular park is a small patch that is reportedly the only slab of soil in Lower Manhattan never built upon.
Retail scene Tribeca has avoided an overcrowding of brand name food chains and big box stores. Instead, smaller boutique retailers and hip restaurants with longstanding reputations — including renowned chef David Bouley’s flagship eatery,which opened in 1987 on Duane Street — line its streets. But inventory is limited with a current vacancy rate of 3.3 percent. Retail space is fetching rents as high as $120 per square foot.
from which it was converted, is in a sense emblematic of the neighborhood’s charm. Instead of changing what was, Tribeca prides itself on maintaining and restoring its industrial age architecture and the Old World feel of the neighborhood. It’s one of the city’s most sought-after addresses, a magnet for new development and an attractive option for the burgeoning technology companies calling New York home.
adjoined to a new aluminium-clad replica of the original structure. Developed by Taconic Investment Partners, unit prices range from $5 million for a one-bedroom to $20 million for a four-bedroom. All tenants — a recent prospect included Leonardo DiCaprio — have access to a library, gym, and yoga studio. The newly redesigned Smyth Hotel at 85 Broadway boasts 100 rooms with floorto-ceiling windows and sweeping views of downtown Manhattan. The 14-story hotel is a partnership between Thompson Hotels and Tribeca Associates. It was designed by
The Sterling Mason
the Soho-based architects Gachot Studios, known for its work on New York City’s Acme restaurant. Rooms start at $325 per night. When the Four Season 30 Park Private Residences at 30 Place Park Place is completed, the Robert A.M. Sterndesigned structure will stand at 926 feet, the tallest residential building in Lower Manhattan. Developed by Silverstein Properties, the top floors of the 82-story tower will have 157 residential units, ranging from one to six bedrooms, all reached through a dedicated residential lobby. The 185-room Four Season Hotel below will have its own lobby on Barclay Street.
Price trends A commercial broker’s take “The cost of commercial space will continue to rise as demand flourishes,” said Marcus & Millichap’s Jeffrey Nissan. ”When you see a vacancy in Tribeca it’s because the rent costs continue to escalate and tenants can’t afford to renew their leases.”
$3,700 Average monthly rental price for a onebedroom. Studios average $2,500; threebedrooms, $8,700.
$1,704 Average price per square foot for a condo, up from $1, 578 last year.
$963 A residential broker’s take “Continued development of multifamily units is bringing in younger families, empty-nesters and a migration from neighborhoods uptown, which we never really saw before,” said Corcoran’s Deanna Kory.
Average price per square foot for a co-op, down from $1,400 psf last year.
43.6% Sales price jump over the last 5 years.
$2.8 million Median home sales price, 113% higher than the NYC average.
Most expensive recent sales:
161 Hudson Street 6,000-square-foot penthouse, owned by Jon Stewart, sold for $17.5 million
157 Hudson Street, #3A 5,416-square-foot, four-bedroom condo, sold for $12.1 million
101 Warren Street, #3220 6 Hudson 60 Hud dso sson on nS treet treet tre et Street
68 February 2015 www.TheRealDeal.com
3,034-square-foot, four bedroom condo, sold for $11.65 million
Demographic changes from 2000/2010: Population: 37,889, down 0.9% since 2010 and up 37% from 2000 Median Income: $118,959, up 12% from 2010 and 67% from 2000 White Collar: 73% Blue Collar: 27%
443 Greenwich
On the market 443 Greenwich: 8,659 square-foot, fivebedroom condo for $51 million 261 Broadway: 754-square-foot, onebedroom co-op for $975,000 TRD
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TOWNRESIDENTIAL.COM TOWN Residential LLC is a partnership with Buttonwood Residential Brokerage, LLC and Thor Equities, LLC. No representation is made as to the accuracy of any description. This is not intended to solicit property already listed. The number of bedrooms listed above is not a legal conclusion. Each person should consult with his/her own attorney, architect or zoning expert to make a determination as to the number of rooms in the unit that may be legally used as a bedroom. TOWN Residential LLC is a licensed real estate broker, proud member of REBNY, abides by federal and state equal housing opportunity laws and owns the following subsidiary licensed real estate brokers: TOWN Astor Place LLC; TOWN Fifth Avenue LLC; TOWN Flatiron LLC; TOWN Gramercy Park LLC (â&#x20AC;&#x153;TOWN Gramercyâ&#x20AC;?); TOWN Greenwich Street LLC (â&#x20AC;&#x153;TOWN Financial Districtâ&#x20AC;?); TOWN Greenwich Village LLC; TOWN Soho LLC; TOWN West Village LLC; and TOWN 79th :[YLL[ 33* ¸;6>5 <WWLY ,HZ[ :PKLš ;V^U 5L^ +L]LSVWTLU[ :HSLZ HUK 4HYRL[PUN 33* ;OL JVTWSL[L VÉ&#x2C6;LYPUN [LYTZ HYL PU HU 6É&#x2C6;LYPUN 7SHU H]HPSHISL MYVT [OL :WVUZVY -PSL UV *+
520 WEST 19TH STREET - PH
5 BR 5.5 BATH
$21.5 M
WEB ID: 738305
CHELSEA
ADAM S. TAYLOR (646) 998-7447 • WILBUR GONZALEZ (646) 738-6937
45 GREENE STREET
2 BR 3 BATH
$10.8 M
WEB ID: 275231
SOHO
GREGORY S. GARWOOD (646) 790-6927
4 SUTTON PLACE
4 BR 6.5 BATH
$18 M
WEB ID: 565243
MIDTOWN EAST
JARROD GUY RANDOLPH (646) 588-4320 • CHRIS DOMINIAK (646) 503-3088
THE CHARLES*
4 BR 4 BATH
$9.882 M
WEB ID: 917135
UPPER EAST SIDE
8 GREENE STREET - PH
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450 WEST 17TH STREET
3 BR
4 BATH
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WEB ID: 579251
CHELSEA
JOSEPH R DELORENZO (646) 998-7499 • KELLY A. ROBINSON (646) 998-7413
JASON P KARADUS (646) 998-7435 • GINGER C BROKAW (646) 998-7408
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STEVEN GOLD (646) 998-7403
BIDs get down to business A look at the city’s prominent business improvement districts and how they’ve helped boost real estate and development in their backyards BY CLAIRE MOSES here’s an often unseen force behind many of the changes in New York City’s neighborhoods over the last few decades. The city’s 70 Business Improvement Districts do more than plant flowers and hire people to sweep up litter: they’ve also played a big role in some of the more fundamental transformations of areas like Times Square, the Financial District and Downtown Brooklyn. The goal of the organizations is to spruce up neighborhoods and draw new businesses across the five boroughs. Every district has its own budget, its own priorities, its own relationship with local property owners and its own leadership. Some of those leaders wield a good deal of clout in their pursuit of projects and development, such as adding more pedestrian access to a neighborhood, creating public
T
Tim Tompkins, president, Times Square Alliance t’s been a long time since it seemed like it was impossible to walk through Times Square without getting mugged. But while crime dropped, the increasing popularity of the area brought another problem. It became virtually impossible to get through the area at all, due to congestion. The 2009 closing of Broadway and subsequent creation of pedestrian plazas are among the biggest changes in the neighborhood over the last decade or so. The Times Square Alliance, led for the last 12 years by Tim Tompkins, is in charge of maintaining the plazas and has worked to improve quality of life in the square, mostly with regard to hecklers and the aggressive costumed characters that are often accused of harassing tourists. The alliance also advocates for an investment from the city in tourism in the square. One such addition to the square is the red steps, which double as the roof of the TKTS booth, where discounted Broadway tickets are sold at Duffy Square. The rebuilding of that area went forward in conjunction with property owners such as Sherwood Equities, which owns 2 Times Square and 1600 Broadway. Over time, however, the biggest change in Times Square, Tompkins said, has been the “soaring asking rents for retail.” Office rents in the area hover between $45 and $85 per square foot, while ground floor retail can go for as much as $1,000 per square foot. A safer, more accessible Times Square has lead to an uptick in tourist activity, which in turn fueled the soaring real estate values.
plazas or holding community events to make neighborhoods more 24/7. High-profile or low, BIDs all work in the same way. The property owners in each district pay an annual assessment fee to the city Department of Finance, which redistributes it to the BIDs. A district’s budget depends on the assessment of the commercial properties there, which is calculated by either square footage or resale value. In other words, bigger BIDs and those in prime locations have bigger budgets. The city estimates BIDs invest $100 million in programs and services in neighborhoods throughout the city annually. The Real Deal took a look at some of the city’s most notable and most historic BIDs in Manhattan, Brooklyn and Queens. Read on for an introduction to their leadership:
Ellen Baer
I
Monica Blum, president, Lincoln Square Business Improvement District onica Blum started her tenure as president 19 years ago. When she arrived, the neighborhood was less safe, less clean and there were barely any plants
M
72 February 2015 www.TheRealDeal.com
Ellen Baer, president, Hudson Square Connection he Hudson Square Connection’s main issue is traffic congestion near the Holland Tunnel. With more car traffic than most other neighborhoods and a history of being pedestrian unfriendly and not much of a ground floor environment, “we are different from practically everyone else,” Ellen Baer said. “We were formed to try and mitigate the physical and psychological impact of being a neighborhood that was once just a place on the way to the tunnel, and we’ve done that.” The BID was formed in 2009, takes in $2.5 million in assessment fees from commercial landlords and focuses mostly on cleanliness and safety. Baer said the BID is working to raise $13 million to renovate a park on Sixth Avenue and Spring Street. When it started, the BID aimed to boost retail and commercial space in a neighborhood that used to be primarily focused on manufacturing. Hudson Square was one of the last true industrial neighborhoods of Manhattan south of 96th Street, Baer said, with the tunnel as “a defining factor.” The BID helped to add sidewalks and pedestrian countdown lights to the area, as well as pedestrian “traffic managers” — people hired by the BID to direct traffic —
T
Tim Tompkins
Monica Blum
or parks. The budget was much smaller too — $1 million back then, compared with $2.7 million today. On top of that, the neighborhood had far fewer restaurants and retail options. Property owners in the BID include Milstein Properties and Millennium Partners, along with the Mayflower Hotel and the Empire Hotel. Blum started out working in the budget office in the Ed Koch administration, where she also met her husband. She spent most of her career working for multiple city agencies. She said she is always available to talk and listen to developers interested in the area, but added, “I don’t advocate one type of use over another.” One of the major properties awaiting redevelopment in the neighborhood is the American Bible
Tucker Reed
Society Building on Broadway and 61st Street, which was listed for sale last year at $300 million. While the BID takes a
“We were formed to try and mitigate the physical and psychological impact of being a neighborhood that was once just a place on the way to the tunnel, and we’ve done that.” ELLEN BAER, HUDSON SQUARE CONNECTION hand in beautifying the neighborhood — Blum said she has raised nearly $1 million toward that goal — she maintained she would have little input about the Bible Society project. “It’d be presumptuous for me to sit down with a developer.”
in the street. “We’ve created a pedestrian environment here,” she said. Improving the streetscape by planting trees is another way the BID has helped improve the Continued on page 124
www.TheRealDeal.com January 2014 35
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TOWNRESIDENTIAL.COM TOWN Residential LLC is partnership of Buttonwood Residential Brokerage, LLC and Thor Equities, LLC. No representation is made as to the accuracy of any description. This is not intended to solicit property already listed. The number of bedrooms listed above is not a legal conclusion. Each person should consult with his/her own attorney, architect or zoning expert to make a determination as to the number of rooms in the unit that may be legally used as a bedroom. TOWN Residential LLC is a licensed real estate broker, proud member of REBNY, abides by federal and state equal housing opportunity laws and owns the following subsidiary licensed real estate brokers: TOWN Astor Place LLC; TOWN Fifth Avenue LLC; TOWN Flatiron LLC; TOWN Gramercy Park LLC (“TOWN Gramercy”); TOWN Greenwich Street LLC (“TOWN Financial District”); TOWN Greenwich Village LLC; TOWN Soho LLC; TOWN West Village LLC; and TOWN 79th Street LLC (“TOWN Upper East Side”).
RENTAL MARKET
The coming Manhattan rental ‘boom’ Number of new rental units will spike in 2015 and 2016, but fall off sharply after that BY RICH BOCKMANN ith new rental projects becoming harder and harder for developers to pencil out in Manhattan as the price of land and construction rises, it would make sense to assume that rental inventory would be shrinking. In reality, new rental inventory is expected to grow over the next two years, but the trend is not forecast to last much beyond that time frame. The rental market in Manhattan south of 96th Street is projected to expand through
W
The three largest rental projects debuting in Manhattan this year:
Manhattan rental debuts 2014: 3,313 units 2015: 4,152 units Source: Citi Habitats
Brooklyn rental debuts 2014: 3,000 units 2015: 6,527 units Source: Citi Habitats
Left: The former home of AIG at 70 Pine Street is being converted into a 644-unit rental building. Right: Moinian Group’s 605 West 42nd Street will have 1,174 rental units.
Median monthly rental prices Manhattan: $3,250 Brooklyn: $2,900 Queens: $2,839 Source: Miller Samuel
2016 as the pipeline of projects developed over the past several years comes to market. The prime area of the city is projected to see a roughly 25 percent uptick in new rental apartments this year to 4,152 units (up from last year’s number of 3,313) and then more than double in 2016 to almost 8,800 units, according to the rental brokerage Citi Habitats. For developers and landlords the nearterm onrush could give way to concerns of a glut, but Jim Hedden, chief development officer for Rose Associates, said he thinks demand is strong enough to offset the additions on the supply side. “Is it staggering? I look at some studies and it doesn’t scare me,” said, Hedden, who is bringing one of Manhattan’s largest rental developments to market this year, 70 Pine Street. “As a rental guy, I think [in 2015 and 2016] you’re going to see the pipeline deals from ’13 and ’14 and it’s going to fall off after that. There’s just no land available and everything is priced for condos.” In fact, new inventory is expected to reverse course in 2017 and decline 14 percent to 7,540 apartments, according to the brokerage’s projections. And the culprit, industry pros say, is the sky-high prices development sites are fetching these days that almost necessitate 74 February 2015 www.TheRealDeal.com
The Durst “pyramid” building on West 57th Street will include 709 rentals.
“You’re going to see the pipeline of deals from ’13 and ’14 and it’s going to fall off after that. There’s just no land available and everything is priced for condos.” Jim Hedden, Rose Associates Brooklyn is “no longer a step sister to Manhattan, but to many people it’s more desirable than Manhattan.” Scott Avram, Lightstone Group “While land and construction costs are also on the rise in Brooklyn and Queens, they are still far lower than they are in Manhattan, making it easier for developers to convince lenders to provide financing.”
David Maundrell, aptsandlofts.com
condos as opposed to rentals. In the short term, the increase this year is largely the result of a couple of megaprojects, most notably the Moinian Group’s 1,174-unit 605 West 42nd Street, the Durst Organization’s 709-unit “pyramid” on West 57th Street and Rose Associates’ aforementioned 70 Pine Street, which will deliver 644 units. Projects like these work either because the developer has owned the sites for many years or was able to lock them in at attractive bases, industry watchers say. But in today’s market, those rental-appropriate development sites are becoming harder and harder to find. By way of comparison as to how these projects began on paper, Moinian paid an average of roughly $205 per buildable square foot in 2005 and 2007 when it purchased the two Far West Side parcels that made up the development site for its 60-story-tall rental tower. By last fall, the average price for a buildable square foot in Manhattan had climbed to $548, up 23 percent from the year before, according to commercial brokerage Massey Knakal Realty Services. Oskar Brecher, Moinian’s executive vice president and director of development, said that shortly after the recession, the developer considered the project as a condo in the face of a potential condo inventory crunch. “But as the [overall real estate] market improved, we concluded the financing could work as a rental and we moved the building over to a much simpler scope,” he said. Nowadays, considering the price of land and the underwriting challenges for rentals, Brecher said developers will have to get more creative when putting together projects that pencil out soundly. “It’s much more difficult to make the numbers come together,” he said. Rose got involved with 70 Pine in 2012, when it bought out the stake held by the partnership of Ronnie Bruckner and Nathan Berman’s Metro Loft Management, which for a short time had planned to do a condo conversion at the former headquarters of American International Group. Rose’s Hedden said the two teams’ divergent approaches came down to “philosophical differences,” and that the decision to steer the project to a rental was “never much of a discussion.” One result of the higher prices developers are paying for property these days, he said, is that it pushes minimum rents up to the areas of $75 and $80 per square foot. “What we found in the market is that the people who pay those types of prices expect certain finishes and a certain lifestyle,” he said. “It’s driving the product to a higher level of finish than what was put out five or six years ago.” “So what you’re seeing then is the life cycle of finishes used to be 10 to 15 years. Now www.TheRealDeal.com January 2014 35
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RENTAL MARKET it’s five years. It gets updated a lot quicker and adds to the acceleration of the rent,” he said, adding that the demand for the latest finishes and amenities creates “room for growth in those rents.” Andrew Heiberger, the CEO of Town Residential, said that because of “rising costs of land and exorbitant construction budgets, we will see few ground-up rental projects in Manhattan.” Meanwhile, rising employment numbers and tight credit restrictions for first-time homebuyers have been pushing Manhattan rents up for nearly a year. The median price for a Manhattan rental climbed to $3,250 in December, capping 10 consecutive months of year-over-year gains, according to the most recent market report released by appraisal firm Miller Samuel. That’s a 4.8 percent bump on the year. And with the dearth of new rental construction on the horizon, prices are expected to continuing rising. The lack of construction “coupled with the increasing trend of existing rental projects converting to condo, will cause a ripple effect in the rental market with monthly rents rising as high as 5-10 percent in 2015,” Heiberger told The Real Deal last month.
Taconic Investment Partners’ 525 West 52nd Street will include 400 units.
Considering the many underwriting challenges today for rentals, developers will have to get more creative when putting together projects that pencil out soundly. OSKAR BRECHER, MOINIAN GROUP
Condos grow at faster clip
MNS CEO Andrew Barrocas also said prices will continue to climb, “I’m not saying, ‘Hey, I think it’s going to increase.’ I know it’s going to increase,” Barrocas said.
Moving out of Manhattan Manhattan is not the only borough in New York City that will see more rental units coming online this year. In fact, the number of units coming to market in Brooklyn is expected to jump 120 percent to 6,527 units from just shy of 3,000 in 2014, according to Citi Habitats. In Queens, Long Island City is forecast to add 1,800 new rentals this year, a bump of 87 percent over last year. And the swell of units in those places, sources say, is a direct result of the changing face of the rental landscape in the city. “It’s no longer a stepsister to Manhattan, but to many people it’s more desirable than Manhattan,” Scott Avram, senior vice president at Lightstone Group, said of Brooklyn, echoing a common refrain. The firm is working on a pair of large rental buildings in Gowanus, at 363-365 Bond Street. National home builder Toll Brothers originally planned to do a 450unit condo building at the site, but when 76 February 2015 www.TheRealDeal.com
they got bogged down in a rezoning process, Lightstone picked the project up for $33.15 million in 2013 and decided to reposition the two buildings as 700 rental apartments. “It’s one of those niche neighborhoods where the rents, from the developer side, are so strong that we could not look away,” Avram added. Town’s Heiberger noted that Brooklyn, along with areas such as Jersey City, Hoboken, Astoria and Long Island City, are all benefitting from “Manhattan’s white-hot sale and rental markets.” Rents in Queens were up 5.9 percent on the year in December, with a median price of $2,839, according to Miller Samuel. In Brooklyn, the median price of $2,900 was up 9 percent on the year. David Maundrell, founder and president of the brokerage aptsandlofts.com, said the rental surge in Brooklyn is as strong as he’s ever seen it. While land and construction costs are also on the rise in Brooklyn and Queens, they are still far lower than they are in Manhattan, making it easier for developers to pencil out the numbers and convince lenders to provide financing. Maundrell said that back in 2006, when Brooklyn was in the midst of a condo boom, “there were no major rental projects here.” The rentals that did come online were the “shadow product,” projects envisioned as condos that switched course mid-stream because of financial struggles. “The enormous amount of product on the rental side” today has different roots, he said, though he noted that renters are still discerning. “The renters are there and they’re willing to pay top dollar, but the product has to be worth it,” he said.
World Wide Group is building 41-50 24th Street, a Long Island City rental.
Lightstone Group picked up 363-365 Bond Street from Toll Brothers, and is building 700 rental units on the Gowanus property.
While developers are delivering more rental units in Manhattan this year, rentals in the borough are a decreasing percent of the new residential pie. Last year, rental units in Manhattan accounted for 58 percent of the new residential product, according to Citi Habitats. This year, they will make up only 41 percent. That is because condo production is projected to outpace growth on the rental side this year, expanding roughly 150 percent to 6,097 units. The opposite is true in Brooklyn, where rental growth outpaces condos. New rentals are expected to make up more than 80 percent of the market in Brooklyn, as well as in Long Island City. On the rental rate front, some analysts point out that the reason for increases in Manhattan is that there’s an inherent demand for rentals because the tight credit market still makes it difficult for many to buy. “The reason rents have been rising, or at least have been at a high level for the last three or four years, is not unique to Manhattan. It’s a function of tight credit,” said Miller Samuel’s Jonathan Miller. “People are tipped back to the rental market and it creates a logjam. This is a national phenomenon.” TRD
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COVER PARTY
Toasting a new cover star for Luxury Listings A-list party celebrates Kimberly Guilfoyle of Fox News, featured in TRD’s sister publication From left: Robert Khodadadian of Skyline Properties and Lior Darel
ressed to the nines and toasting a recordbreaking year for the real estate industry in New York, about 250 guests gathered at swank East 56th Street eatery Harlow in January to celebrate the latest issue of The Real Deal’s sister publication, Luxury Listings NYC, along with its cover woman, Fox News host Kimberly Guilfoyle. Turnberry Ocean Club, Trump Tower Toronto, nto, EverBank, Skyline Properties and Gilad Azaria sponsored ored the event celebrating Guilfoyle’s cover. Among the industry players in attendance: Cushman & Wakefield’s eld’s Bruce Mosler and Bob Knakal; Douglas Elliman’s Yuval uval Greenblatt, Eva Penson and Neil Siroca; Urban Compass’ pass’ Gordon Golub; MNS’ David Behin; HAP Investment ment Developers Eran Polack; Town Residential’s Wendy ndy Maitland; Brown Harris Stevens’ Bess Freedman and Robby Browne; Platinum Properties’ Khashy Eyn and bi. Daniel Hedaya, and Peter Ashe Realty’s Asher Alcobi. The glitterati of the media world, including legendary dary New York Post gossip columnist Cindy Adams, Vanity nity Fair contributing editor George Wayne, Fox News’ ews’ Ainsley Earhardt, Gigi Stone Woods and Andrea drea Tantaros and HarperCollins senior vice president Lisa Sharkey showed up, as did former LLNYC cover star and artist Domingo Zapata. Guilfoyle recently bought an apartment at the Beresford on the Upper West Side. Architect Campion Platt, who is helping Guilfoyle renovate there, also attended. Guilfoyle’s friend, Dr. Dendy Engelman, who recently bought a condo in the city, played to the crowd of real estate pros. “New York real estate is never a bad investment,” she said. “In a world of few guarantees, you can always bet on New York.”
D
“Real Housewives” star Ramona Singer and LLNYC cover girl and Fox host Kim Guilfoyle
From left: Eric Bolling of Fox News, Dr. Dendy Engelman, Kim Guilfoyle and Ainsley Earhardt of Fox News
Cyrus Eyn of Platinum Properties and Courtney Langer
Tom Brady of Town Residential and Bob Knakal of Cushman & Wakefield
Gilad Azaria of Douglas Elliman and Kim Guilfoyle
From om m left: le eft: Neil ef Neil e Sroka, Srok , Douglas Do ougl glass Elliman, g Ell llim liiim llim man an n,, Robby Browne, Stevens B Brow wne ne, Brown Brrow rown Harris Harris S Ste eve vens en n and n Kim nd Kiim K im Guilfoyle
From left: Sheree Yellin of CORE, James Dorcely and Ruth Katz
From left: LLNYC Publisher Amir Korangy and Dan Riordan, Turnberry Associates tktktktk
Kim Guilfoyle and Asher Alcobi of Peter Ashe Real Estate
Vanity Fair’s George Wayne ne and guest st
Artist and past LLNYC cover star Domingo Zapata and Kim Guilfoyle
Gilad Azaria and Ainsley Earhardt
From left: Gina Mignona, Bruce Mosler of Cushman & Wakefield, Eran Polack of HAP and Jennifer Djurkovic of Massey Knakal Realty
Kim Guilfoyle Guilfoyl Gui oyl y e and and legendary eg ge endar ndary d y gossip gossip i co c columnist olu umnis mn t Cindy mni dy Ada Adams ams ms From left: Neil Sroka of Douglas Elliman, Robby Browne of Brown Harris Stevens and Kim Guilfoyle
From left: Joseph Waldman, Neil Labatte, Amir Korangy, Kim Guilfoyle and Robert Khodadadian of Skyline Properties
78 February 2015 www.TheRealDeal.com
From left: left: Kim Kim Guilfoyle Guilf Gu uilfoyle and Mark uilfoyle Mark Wenitzky Wenitz Wenitz nitzky ky ky From
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Marc Scrivo and Kim Guilfoyle
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WH AT TH E Y ’ R E READING NOW
Real estate pros share picks for books about confronting obstacles and uniting rivals Where do you look for insight and inspiration? To find out, The Real Deal asks leaders in the industry what they’re reading.
Ofer Cohen Founder and president, TerraCRG What are you reading right now or what did you finish most recently? I am currently reading “What Got You Here Won’t Get You There,” an amazing book written by leadership coach Marshall Goldsmith. The book is based on the idea that we have at least one bad habit which prevents us from growing professionally. What spurred you to read that book? It was given to me by my firm’s business consultant, Lisa Bing, who I work closely with to manage our growth and expansion.
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season 6 of HGTV’s hit reality series Design Star, is one of the most sought-after design and home staging experts in the country.
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Has anything you read in it stuck with you? Would you recommend it to others? I would highly recommend this book to others, especially in positions of leadership in any industry. Leaders lead by having people unite and work toward a common goal.
Dan Marrello Leasing director, Town Flatiron What are you reading right now? Right now, I am reading Malcolm Gladwell’s newest book, “David and Goliath.” What spurred you to read that book? Gladwell is an author whose work I really enjoy. Aside from “David and Goliath,” I have read “The Tipping Point” and “Blink.” They all have the same intriguing concept, where he dissects real-life situations and moments to create a new meaning or figure out why they happened. What spurred me to read this particular book was my interest in the history of “David and Goliath” and how Gladwell would dissect the story of their fight — a book to challenge the reader’s thinking about obstacles, disadvantages, and how to cope with them.
Phyllis Pezenik
Interior designer Cathy Hobbs ASID, a finalist on
5 Emmys. 25 years as an award-winning television host. 10 years as the go-to choice in real estate staging and styling. $250 million in real estate staged and
Has anything you read in it stuck with you? Would you recommend it to others? The bad habit that really spoke to me is starting sentences with “no,” “but,” or “however.” After learning this, I found myself listening closely to typical conversations in meetings and was shocked to count the number of times people start sentences with one of these words. I agree with the author when he says that by starting with any of these words, you are making the other person feel like they are wrong. I have been working very hard to avoid doing this, and I highly recommend this book to any entrepreneur or executive.
What spurred you to read that book? Many times, we are confronted with personalities that require an approach that is more conducive to create the opposite of divide and conquer, but unite and strengthen your team.
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80 February 2015 www.TheRealDeal.com
Principal broker, DJK Residential What are you reading right now? Doris Kearns Goodwin’s “Team of Rivals,” about President Abraham Lincoln and his ability to successfully reconcile conflicting personalities in dealing with the men who ran against him in the 1860 election. He appointed these men to his Cabinet as Attorney General, Secretary of Treasury and Secretary of State.
Has anything you read in it stuck with you? Would you recommend it to others? The one thing that stuck with me in this book is how at times many of us may feel like David in this story, while trying to compete as a real estate broker in New York City, figuring out what tools we need to use in order to be successful and overcome our obstacles. Yes, I would recommend it to others. Compiled by Brendan O’Connor
Subscribe! The Real Deal. www.TheRealDeal.com March 2010
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? 2.9 2 @A.A2 5 6@A<?F 1968: ANTI-RENT CONTROL PROTEST FLARES AT AUCTION roperty owners opposed to rent control laws shouted angrily during an auction the city held 47 years ago this month to sell dozens of tax-delinquent properties, including apartment buildings. Shouts of “Sucker!” and “You’ll be sorry!” were heard during the proceedings in the Grand Ballroom of the Roosevelt Hotel at 45 East 45th Street in Midtown. The city’s Department of Real Estate sought to sell 123 buildings it had taken title to after their owners fell behind on property taxes. Many of them were small, multi-family structures with units under rent control. At the auction, the city accepted bids for 72 of those buildings. The faction interrupting the sale said landlords had lost the properties because the laws regulating rent limited the income the buildings generated and made it impossible to Auctioned for back taxes in 1968, 241 E. 7th St. has since maintain the structures. been converted to condos. The anti-rent control groups included the United Taxpayers, the American Property Rights Association and the Metropolitan Fair Rent Committee. Most of the properties auctioned were located in the outer boroughs, but six were in Manhattan. They included two in the East Village: the 22-unit 241 East 7th Street, which sold for $19,300, and the six-story 254 East 4th Street, which sold for $20,100.
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1930: RULES TIGHTEN ON UNLICENSED REAL ESTATE FEES eal estate brokers were prohibited from giving finder’s fees to unlicensed individuals who were actively involved in arranging a real estate transaction by an opinion the New York State attorney general issued 85 years ago this month. The attorney general released the statement in response to a question about unlicensed persons canvassing friends and colleagues to interest them in buying a bungalow on behalf of an unidentified real estate company. The real estate firm was offering a $1,500 bungalow as the top prize for the most successful people in procuring buyers. The company would pay others 5 1930s-era bungalows in the Rockaways percent of the business that they generated. The attorney general said that activity too closely resembled the negotiation of a real estate transaction, and because of that was not permitted. However, the decision said brokers were still allowed to pay fees or “prizes” to unlicensed individuals who were passively involved in a sale, who simply “procured the job for the [broker] to sell the property.” While finder’s fees for nonlicensed individuals are now illegal, a 2014 law clarified that brokers are permitted to give rebates to buyers, sellers, landlords or tenants involved in a transaction.
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1907: CITY PLANS PARK TO REPLACE CHINATOWN he city proposed demolishing the heart of Chinatown in Lower Manhattan 108 years ago, to turn it into a park. New York’s then most powerful governmental body, the Board of Estimate, approved the proposal to level a city block bounded by Mott, Pell and Doyers streets and the Bowery and make way for the 1.5 acre recreational area. That block is where Chinatown first started in the 1860s and 1870s, and by 1900 the population had grown to more than 6,000 Chinese, the vast majority of them men. An article in The New York Times at the time used racist invective to describe the Asian residents of the neighborhood, who it said participated in a wide range of immoral and illegal activities such as gambling, opium use and bribery, all in cramped quarters. It was, “a citadel of concentrated depravity.” The article said there was no opposition to the plan Chinatown at the turn of the 20th century the day of the vote, and none was expected when a public hearing was scheduled a few weeks later. The city proposed the park despite the opening in 1897 of the large Mulberry Bend Park (now Columbus Park) just one block to the west. Yet when the plan came before the hearing, no one came to support it, and in fact many arrived in opposition to the demolition, which was scrapped. Compiled by Adam Pincus
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DAY IN THE LIFE OF:
Veronica Mainetti
The Sorgente Group’s U.S. chief on revamping historic gems, cleaning up Play-Doh and the paradox of being both gluten-free and Italian
Veronica Mainetti, the president of U.S. operations for the Italian development firm the Sorgente Group.
eronica Mainetti is president of U.S. operations for the Italian development firm the Sorgente Group. The family company, led by her father Valter Mainetti, owns $6 billion in real estate worldwide. The younger Mainetti, 35, moved to the U.S. from Rome in 2004 and now lives in Soho. In New York, Sorgente owns a majority stake in the Flatiron Building, now valued at more than $250 million. And it’s currently renovating a trio of five-story, 1860s-era cast-iron offices at 60-66 White Street in Tribeca. Two of the buildings will house luxury condos. The third will be offices geared toward design and tech firms. The project is slated for completion by late 2015. In the U.S., the firm is also making its push on the West Coast, with projects like the renovation of the Fine Arts Building and an upgrade of the historic Clock Tower, both in Los Angeles.
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6:00 a.m. I receive a wake-up call from my beautiful son Giulio jumping in bed. 6:30 a.m. I gave up going to the gym during the week because I pretty much get all the cardio I need with my [3-yearold] every morning. Lately we’ve been playing a lot of hide-and-seek, which is great because during the hiding part I get to check my emails. 7:00 a.m. My partner Lorri [Shackelford], Giulio and I have breakfast. I get Giulio dressed and ready for either school or his weekly Italian play date [with an Italian group of kids and teacher.] I walk him to pre-school nearby. 9:00 a.m. I’m on the phone with Europe. 84 February 2015 www.TheRealDeal.com
We have properties in Italy, France and England. While on the call, I clean paint or Play-Doh from our [kitchen] island.
6:30 p.m. I’m back in the kitchen to fulfill
10:30 a.m. I’m ready to leave the house. Before I do, I always make cold-pressed juice with an apple or pineapple base, and with kale or spinach.
Play-Doh, one of her son’s favorite toys.
11:00 a.m. I begin my meetings at either the office or our current project’s sales office. I’m either looking at potential properties or meeting with my development team. They all have to be historic properties — we don’t do groundup development. We invest in properties that have architectural and historical value. It’s kind of our niche. I also have a huge passion for cast-iron buildings. 12:00 p.m. Between meetings, I check in with my project manager to get an update on all of our U.S. projects. Recently, the call was about our Fine Arts Building.
7:00 p.m. We have dinner and then playtime with Giulio before he goes to bed.
The Sorgente Group owns a majority stake in the Flatiron Building.
1:00 p.m. I have a lunch meeting with partners, sellers, consultants or brokers. I’ve been spending a lot of time at the Crosby Hotel. It’s very quiet and great for business meetings. 2:00 p.m. I pick up my son from school near the office and drop him with Lorri at home.
my Italian [cooking] duties. It’s a little bit of a paradox because I can’t eat gluten. We usually eat organic red lentil pasta with all kinds of sauces and any meat other than red meat. … If we go out, we’ll do a date night at Blue Hill at Stone Barns in Tarrytown. We also attend galas for foundations such as Finding a Cure for Epilepsy & Seizures [because] I have epilepsy.
8:30 p.m. We watch MSNBC or the Italian news network Sky TG24. I work on my photography. I love to do travel and portrait photography on weekends and during trips. Whenever I can, I bring my Nikon D800 with me. I wouldn’t call it a hobby because it’s more than that. Lately I’ve been checking out Instagram. I’m very late to the game, but I find it to be a less intrusive social media tool. [The Sorgente Group] got buyers for the White Street project through Instagram. I call filmmaker Daniel Fickle of Two Penguins Productions. We are shooting a documentary about the White Street project.… It has a lot to do with energy efficiency and sustainability. We’ve been shooting for a year and we have another year to go.
9:30 p.m.
A photo that Mainetti shot in Greenland.
3:00 p.m. I arrive at the office and meet with my team to go over our U.S. projects.
10:00 p.m. Lorri and I watch a movie. The last one we watched was “Boyhood.”
5:00 p.m. I check in with Lorri. She used to be the vice president of [talent agency] Wilhelmina Models and is writing a novel right now [and] spending more time with our son.
The Crosby Hotel, a regular spot for business meetings.
12:00 a.m. We’re off to bed and everything starts again. By Mark Maurer
PHOTOGRAPH OF VERONICA MAINETTI FOR THE REAL DEAL BY TOBIAS TRUVILLION
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ARCHITECTURE REVIEW
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JA M E S G A R D N E R
Instant classic on the Upper East Side Robert A. M. Stern building on East End Avenue evokes Park Avenue structures of 1920s t has often been observed that there is a quality that distinguishes the architecture of New York City from that of all other cities. The late Frank Williams, who designed 20 buildings in Manhattan from the 1980s into the new millennium, used to call this quality “New Yorkism.” He was referring mostly to prewar buildings, whose style he evoked in his own work. And he was struck by the aggregate of window treatments, facings, massings and canopies at street level, and a thousand other details that made a building fit into the city but that would cause it to seem out of place in Philadelphia or Chicago, and that would cause one of the buildings from either of those cities, if it magically showed up in Manhattan, to seem simply, but decisively, out of place. As is well known, Robert A. M. Stern is a master of contextual architecture, and a prodigious designer of buildings in Manhattan, as well as farther afield. He has now designed a new building, 20 East End Avenue, which will soon begin to rise. For followers of Stern’s work in the city, it is interesting to see how this new project fits in with the other work he has done in Manhattan; it provides a new perspective on the way in which all of it is subtly attuned to minute variations in its changing urban context. Yet if New York architecture is different from all other architecture, the architecture of the Upper East Side differs almost as much from that of the Upper West Side. Indeed, there are variations throughout the Upper East Side: the architecture of Fifth Avenue differs from that of Park, for example, and both differ from Second Avenue. As far as Second Avenue goes, Stern has improved it with one of his best buildings, the Seville, a 2002 work that is decidedly more modernist than one usually expects from Stern and his studio. But a more interesting distinction can be made between the traditionalist works that he designed for the Upper West and East sides, specifically between works like 15 Central Park West and the Harrison on Amsterdam, on the one hand, and 20 East End Avenue, on the other. To understand this difference, it helps to review very briefly the history of apartment developments in the general vicinity of Central Park. Fifth Avenue was the first to be developed, with a string of private mansions, which were then razed and replaced, starting in the
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1920s. By this time, Central Park West had developed an imposing skyline of buildings like the Dakota (1882), the Langham (1907) and the Prasada (1907) all of which were not only more eclectic and historicist in their varied classicism and medievalism than the buildings that would eventually rise on the Upper East Side, but also far more interesting in their volumetric boldness.
sort of building that the legendary Rosario Candela designed, and such is the sort of structure that Stern invokes at 20 East End Avenue. In fact, there is probably no other building by Stern that comes closer to the spirit of Candela’s work. This new 17-story building, being developed by Corigin Real Estate Group and Florida East Coast Realty, will rise over the rubble of a research building
Robert A.M. Stern’s (inset) design for 20 East End Avenue calls for 43 apartments starting at 2,000 square feet.
Even when a later generation of buildings came along like the Majestic (1930), the San Remo (1930) and the Eldorado (1931), the innovative use of volume remained, and it is reflected in Stern’s 15 Central Park West, which opened in 2007. On Park Avenue, however, when most of what we see today was being built in the 1920s, such bold volumes had largely passed out of fashion, and there were rigorous codes from the city determining height, setbacks and the like. A similar development occurred on East End Avenue and areas like Sutton Place. Their massing was simpler, and the interest of the building was more a question of surface treatment. Such is the
purchased two years ago from the City University of New York for a reported $61.75 million. The prices for 43 units will range from $4.5 million for the smallest apartments, at 2,000 square feet, to $20 million for the penthouses, prices that now sound almost reasonable compared with those commanded by buildings on Central Park South and 57th Street. As close as 20 East End Avenue appears to classic Candela buildings like 720 and 740 Park Avenue, it is, as Stern explains in a video on the building’s website, importantly different in its functions from any of Candela’s buildings. For instance, because even wealthy families no longer tend to have a large, live-in serving staff, the areas formerly
occupied by servants’ quarters have been transformed into family spaces. Real estate, Stern explains in the video, is about lifestyle, and so he had conceived parts of the building — whose interiors were also designed by his firm — as a kind of private club. As such, it will have a wine cellar, an alcohol storage locker for each residence, a 3,000-square-foot gym with shower rooms, and a spa and wood-paneled library on the second floor that promises to have a display “curated” by the architect, as well as a billiards room and a dining room for larger gatherings. As for the exterior of the building, it is largely a boxy structure up to the 12th floor, at which point it begins to fritter away in a complicated series of setbacks like those seen in Candela’s 770 Park Avenue. The surface of the building is marked by rusticated limestone cladding at the base, and on the first and second floors, with a two-tone gray brick surface along the rest of the façade. This two-toned gray brick seems to me fundamentally unlovely, the one weakness in the design. Furthermore, although there is the occasional precedent for it, for example at 880 Park Avenue, it doesn’t look good there either, and it seems alien to the aesthetic that animates the rest of 20 East End Avenue. Despite his apparent devotion to Candela, Stern is happy to take liberties, disrupting the window treatments on the East End Avenue side with a sequence of curving bay windows. The transition at the 12th floor from the bulk of the building to the setbacks is attractively announced by a pure white, classical structure that is linked to the upper floors with a group of balustrades. These recur, together with sundry other variants, on the upper floors. Perhaps the building’s most striking element of urban scenography is a massive arched entranceway on 80th Street, which adds an unexpected element of volumetric drama to what is otherwise an affair of planar surfaces. This porte-cochere, whatever its functionality, promises to look wonderful and was doubtless suggested to Stern by buildings like the Dakota and several structures on Sutton Place. This entrance-way will lead in turn to a splendid lobby in the form of an octagonal rotunda arrayed in Venetian plaster, floors of marble and limestone and a dramatic stairway to the public rooms on the second floor. Until now, this stretch of East End Avenue has not been, perhaps, the most elegant part of the avenue. One suspects that that is about to change. TRD
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Q&A
REITs wrestle new rivals Still among the most aggressive NYC buyers, REITs face new round of competition from foreign investors
BY BRENDAN O’CONNOR eal estate investment trusts are among the most aggressive players in the New York market for trophy real estate. In the last year, they’ve purchased some of New York City’s priciest properties, including the $778 million acquisition of 338 Greenwich Street, which was occupied by Citigroup, and the $800 million purchase of a portion of the World Trade Center’s retail. In this month’s Q&A, The Real Deal talked to REIT analysts and professionals about the latest issues and challenges facing the sector. In 2014, the index that tallies all REIT activity had total returns of roughly 27 percent, compared with about 14 percent for the the S&P 500 Index, said Hans Nordby, managing director of CoStar Portfolio Strategy. However, that strong showing came after a tougher 2013, when REITs only generated about 3 percent in returns, he noted. Today, one of the biggest issues dogging REITs in New York is increased competition
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Hans Nordby managing director, CoStar Portfolio Strategy How are REITs faring now compared to the past several years? REITs had a phenomenal year in 2014. [They] had a total return of 27.2 percent for 2014, compared with 13.7 percent for the S&P 500 Index. This was a strong improvement from the previous year, when the total [REIT] index posted just 3.2 percent. There were two big contributors to this outperformance: First, commercial real estate fundamentals continued to improve, and second, the 10-year treasury yield fell by some 83 [basis points] during the year. Which REITs have been most aggressive in NYC and nationally in the last year? In New York City, the most active REITs in terms of buying activity in 2014 were those focused on office and retail acquisitions, and on multifamily development. SL Green was a standout last year, in large part due to its $778 million dollar purchase of a partial interest in [the building once known as] Shearson Lehman Plaza, the 2.6-million-square-foot office property in Tribeca occupied primarily by Citigroup. … A single transaction also put the Westfield Corporation near the top of the list of REIT buyers in 2014 — Westfield purchased a partial interest in the new World Trade Center’s retail component for $800 million. Avalon Bay also completed the development of its 413-unit AVA High Line in Chelsea in 2014 and continued construction on its 305-unit Avalon West Chelsea. The trend with REITs in New York is that deals often gravitate to projects with a value-add or development component. 88 February 2015 www.TheRealDeal.com
Which other sectors of real estate investment are most and least attractive to REITs in NYC now? Many investors are expecting accelerating rent growth, or even a rent spike, in the office and retail sectors, making acquisition or development of those assets relatively more attractive. Conversely, REIT acquisitions of apartment properties dropped off significantly in 2014, because pricing has surged in that sector. Cap rates for the highest-quality apartment properties are close to 3 percent, which isn’t particularly attractive for a REIT that needs to pay out healthy dividends, especially considering the competition that now exists in the apartment market by new supply. Construction on about 14,000 new apartment units will be completed in the New York metro area this year. That’s a level not seen since the 1980s. What new and surprising trends are you seeing among REITs in NYC? How do the trends for NYC differ from national trends? The most surprising trend in New York is simply the aggressive pricing. On office deals, for example, prime assets are regularly trading at prices 20-to-30 percent above peak 2007 sales prices. You aren’t seeing prices push this far above last cycle’s peak in most markets across the country. In markets such as Atlanta and Phoenix, even prime assets are often still trading at substantial discounts to 2007 pricing. What are the biggest challenges for REITs in NYC and how do those challenges differ from last year and the past few years? One of the greatest challenges facing REITs in New York today is the competition posed by foreign buyers. With bond yields depressed globally and the dollar expected to appreciate, international investors are increasingly shifting capital into U.S., and particularly New York, commercial real
for assets — from both private New York investors and foreign investors, the latter of which are increasingly looking to move capital into the U.S. because of turmoil in their own countries or depressed global bond yields. As a result of these escalating property prices, Cantor Fitzgerald’s David Toti said, REITs in New York City are “increasingly focusing investment outlay on development, where they have the potential to achieve higher returns.” In addition, REITs are branching into new, non-traditional areas, like owning cell towers, billboards and casinos, sources said. And although REITs are still among the most competitive buyers in today’s market, sources said if valuations on commercial real estate get too high, REITs could very well walk away. They do, after all, have investors to satisfy. For more on those challenges and others we turn to our panel of experts.
estate. As a buyer, you have to be willing to bid aggressively to compete with foreign investors looking at real estate as an alternative to low-yielding U.S. or European bonds.
Alexander Goldfarb managing director/senior REIT analyst, Sandler O’Neill How are REITs faring now compared to the past several years? REITs are doing well. They are beneficiaries of the lowrate environment, and we expect that rates are going to stay low. The turmoil in Europe and Asia means that sovereign yields are going to stay low. That bodes well for real estate values. What are the biggest challenges for REITs in NYC and how do those challenges differ from the past few years? The biggest challenge is pricing. If you look back five years, the street retail players were a very small group. Now, you have more people playing in that world, and more money being thrown at it. In addition to General Growth Properties entering the field and Vornado, you have private players like Thor and Sutton. Pricing has escalated as a result of that. It’s not just
wouldn’t have commanded those prices. We would expect that surge to continue. Which REITs have been most aggressive in NYC and nationally in the last year? General Growth for street retail in New York. Vornado, SL Green — for properties that they want, they are willing to pay the price. By the same token, there are trophy buildings that have traded that haven’t involved the REITs, like the Verizon Building and the Sony Building. Where the REITs see an opportunity, they’re not afraid to be the winning bidder. But they are not the sole bid. There have been a number of trades that have gone privately. Are there any new REITs either in NYC or the U.S. that the industry should be watching? Huxton Pacific out on the West Coast has done an excellent job of creating a portfolio that targets tech. The biggest change has been Vornado — the company has gotten out of businesses it shouldn’t have been involved in and has done a great job of getting back to its roots. American Realty Capital is involved in a scandal for overstating its earnings. Do you think more oversight of the REIT industry is needed? The disclosure that REITs provide is exceptional — the quarterly supplemental packet that [all] of the companies put
“REITs in New York City are increasingly focusing investment outlay on development, where they have the potential to achieve higher returns.” DAVID TOTI, CANTOR FITZGERALD Fifth and Madison avenues between 49th and 60th streets. The areas of street retail have expanded, and prices are being paid for properties in areas that five years ago
out is comprehensive. You can really get almost to the “t” the value of the company, a pretty good handle on exposure, debt maturity, the rent profile, etc. In the credit www.TheRealDeal.com July 2014 77
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Q&A crisis, there was only one company that ended up in bankruptcy: General Growth. They were over-leveraged. I think the REIT industry has demonstrated itself to be a pretty durable and responsible industry. That said, any industry can have companies that make headlines, but 99 percent of REITs, they are pretty transparent.
Brad Case senior vice president, research and industry information, NAREIT What’s going on with REIT stock performance in general? How much are stock prices up or down by? Total returns in 2014 were more than 28 percent. In 2013, returns were only up marginally, and the broader stock market went gangbusters. Over the last few years, returns have gone up nearly 17 percent per year for REITs, while the S&P has gone up 15.5 percent. The recovery has been stronger for REITs. The Paramount Group set a record with a $2.3 billion initial public offering a few months ago. Are you expecting another surge of REIT IPOs in the coming year? The REIT industry experienced a surge of IPOs in the ‘90s — I can’t see the future better than anybody else, but I don’t expect to see that same surge again. There weren’t very many publicly traded REITs then; now there are, and they’re very, very well run. … So if you want to do an IPO, you have to have a good balance sheet, a good management team, and you’ve got to convince investors that if they trust you with their money, their returns will be as good as they will be with the publicly existing REITs. It’s hard to make the case
is fierce competition. Dividends are determined by property performance, and REITs compete fiercely to own the best properties and to manage them better than everybody else.
Keven Lindemann director, SNL Real Estate Are you expecting another surge of REIT IPOs in the coming year? It’s always hard to predict the number of IPOs that will actually get done. There are just so many factors that play into the process. 2013 was a very active year for IPOs, with 13 U.S. REITs going public and raising $4.9 billion. In 2014, there were only six, but the companies raised $4.1 billion. Obviously a big chunk of that was the Paramount deal. If REIT valuations stay healthy in 2015, we would expect to see more IPOs, though it’s less likely we’ll see a deal the size of the Paramount Group IPO. That one was unusually large. How much money have REITs raised nationally and, more specifically, in NYC in the last year and how does that compare to recent years? U.S. REITs raised $62 billion in 2014. While that was down from 2013, when they raised $74 billion, it was still a very robust year. … The main takeaway is that U.S. REITs have enjoyed ready access to the capital markets for the past few years. These companies need this access to fuel growth and refinance maturing debt. REITs, like most institutional players in commercial real estate, are taking advantage of continued low interest rates.
“If valuations on commercial real estate get stretched, REITs may not be able to achieve the investment returns they need, and may not ‘win’ the bidding for some of these assets.” KEVEN LINDEMANN, SNL REAL ESTATE that your IPO is going to do better than the ones that have been around for 40 years. We may well have the same number of IPOs or more in 2015 as we did in 2014, but not a lot more. SL Green recently announced a 20 percent annual dividend hike on its stocks. What kind of competition is there among REITs right now to lure investors? The thing to keep in mind is that REITs operate under a fairly restrictive set of requirements — they have to distribute at least 20 percent of their taxable earnings, and often they pay more than that. So what’s the competition? There 90 www.TheRealDeal.com 78 February July 20142015 www.TheRealDeal.com
What sort of buying activity are you expecting from REITs in 2015 and 2016 in New York and nationally in terms of dollar volume? If interest rates stay relatively low, as many expect, and if the broad economy continues to improve, REITs should have continued access to capital and will be in the mix. But recognize that REITs will compete for acquisitions with other players like insurance companies, pension funds, private equity and sovereign wealth funds. And if valuations on commercial real estate get stretched, REITs may not be able to achieve the investment returns they
need, and may not “win” the bidding for some of these assets. What are the biggest challenges for REITs in NYC right now? The challenges for REITs in NYC are the same challenges facing other institutions with a heavy NYC presence — it’s difficult to find acquisitions that make financial sense, and they are increasingly competing with foreign investors. What new and surprising trends are you seeing among REITs in NYC? The REIT market is larger and more liquid now than it has ever been, and those are good things for investors. One of the most notable recent developments in the REIT market is the emergence of companies focused on non-traditional property types. We have had REITs that invest in office, retail, industrial and apartments for decades. Then hotels and self-storage facilities came into the REIT market, along with healthcare facilities and student housing. Now we have REITs that focus on the ownership of cell towers, billboards, casinos, farmland, singlefamily homes, timber, and oil and gas pipelines. There have been complaints that we have ”strayed” from the original purpose of REITs by expanding into these new areas, but in my mind it’s a healthy sign of an evolving industry. What’s going on with REIT stock performance in general? How much are stock prices up or down by overall in the last year, two years and five years? In 2014, REITs generated a total return of 28 percent compared with 14 percent for the S&P 500. In 2013, the S&P 500 generated a total return of 32 percent compared with only around 4 percent for REITs. Over a longer time period, if we go back five years, REITs have outperformed the broad market, 122 percent vs. 105 percent. If you were fortunate enough to invest in REITs at the market bottom in March 2009, you would have generated total returns of 374 percent through the end of 2014. Timing is everything. American Realty Capital is involved in a scandal for overstating its earnings. Do you think more oversight of the REIT industry is needed? I don’t think so, no. REITs have brought transparency to an investment sector that historically had very little transparency. … Every 90 days, the company opens the kimono to its operations by filing with the SEC and holding conference calls with
investors and analysts. There are over 100 analysts who follow this sector full time and regularly publish reports on these companies. And the impact on ARCP’s share price when the irregularities were discovered — the stock fell 35 percent in two days — did not go unnoticed by other REITs. Doubtless a lot of meetings subsequently took place at these companies to confirm there are rigorous internal controls around accounting and finance.
David Toti senior managing director, Cantor Fitzgerald What sort of buying activity are you expecting from REITs in 2015 and 2016 in NYC and nationally in terms of dollar volume? We expect REIT acquisition activity to fall well below 2012 and 2013 peak levels, given the rich pricing environment for assets. For many REITs, years of portfolio recycling via asset acquisition and disposition are complete. What new and surprising trends are you seeing among REITs in NYC? REITs in New York City are increasingly focusing investment outlay on development, where they have the potential to achieve higher returns. Mixed-use, retail and office are sub-sectors in focus. The newest trend appears to be an interest in “off-island” sites, particularly in Brooklyn. Which REITs have been most aggressive in NYC and nationally in the last year? In New York City, SL Green remains one of the most active REITs, both buying and selling assets, underwriting mezzanine lending and assembling development parcels — across multiple sub-sectors. Boston Properties also remains active in NYC, although the company has expressed that pricing has hampered efforts to be more active. Do you think more oversight of the REIT industry is needed? There could be more oversight of the REIT industry overall, especially with regard to reporting metrics. FFO [funds from operations], AFFO [adjusted funds from operations] and NAV [net asset value] — these are all terms thrown around that are reported differently by each REIT. There are other issues that should be advanced by NAREIT as well, such as governance standards. TRD
www.TheRealDeal.com July 2014 77
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Real estate news in the Sunshine State TheRealDeal.com /miami
SOUTH FLORIDA REPORT
Setai sells for $90M The Nakash Family, founders of the Jordache Jeans empire, purchased The Setai Hotel in South Beach from Lehman Brothers Holdings Inc. for nearly $90 million. The famed fashion clan already counts Casa Casuarina â&#x20AC;&#x201D; formerly known as the Versace mansion â&#x20AC;&#x201D; as well as several boutique hotels including Hotel Victor and Thompson Ocean Drive, in its Miami Beach hotel portfolio. The family purchased Casa Casuarina
condo tower completed the same year. Miami-Dade public records show that prior to the deal, the Nakash family owned more than 10 units in the tower.
The Setai Hotel in South Beach
EB-5 at risk? at auction in September 2013 for $41.5 million. â&#x20AC;&#x153;The Setai is the jewel of Miami,â&#x20AC;? a Nakash family representative said. â&#x20AC;&#x153;We plan to increase the level of service and operate to the highest
standard of luxury.â&#x20AC;? The Setai was built in the 1930s and then redesigned in 2004 by Jean Michel Gathy and Jaya Ibrahim. The duo also designed the adjacent 40-story
The pool of foreign investors looking to secure permanent U.S. residency through the EB-5 program could dry up, impacting investment in South Florida, experts say. A State Department ofďŹ cial warned that U.S. Immigration and Citizens
Services would likely run out of the 10,000 special visas earmarked for ďŹ scal year 2015 by mid-summer. While state-by-state data on the visas is not available, Lauren Cohen, the founder of a consultancy specializing in EB-5 visas, said that South Florida is one of the busiest regions for EB-5 investment. Cohen
Miamiâ&#x20AC;&#x2122;s Panorama Tower had the cityâ&#x20AC;&#x2122;s ďŹ rst EB-5 designation
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92 February 2015 www.TheRealDeal.com
told The Real Deal a backlog of EB-5 visa applications could lead to a drop in foreign investments in South Florida and other booming real estate markets. Cohen said a delay of any kind could be a major setback for the industry. â&#x20AC;&#x153;A backlog might create a domino effect of problems.â&#x20AC;?
Compass points south Urban Compass is making like a snowbird and heading to South Florida this winter. Gene Martinez, formerly of the Corcoran Group, will lead the technology-driven brokerageâ&#x20AC;&#x2122;s expansion into Miami. Martinez, who grew up there, was named director of sales and business development for both Miami and Gene Martinez, Washing- Urban Compass ton, D.C. Founder and CEO Robert Reffkin said that Miamiâ&#x20AC;&#x2122;s status as one of the fastest-growing U.S. markets and a global hub for foreign investment made the area critical to the ďŹ rmâ&#x20AC;&#x2122;s national efforts. â&#x20AC;&#x153;We will look to build our Miami presence with a disciplined approach to high-level recruiting and the development of superior technology and marketing solutions,â&#x20AC;? he said. While Urban Compass has poached some top broker talent in New York City â&#x20AC;&#x201D; including Martinez â&#x20AC;&#x201D; itâ&#x20AC;&#x2122;s not yet clear whether its cachĂŠ as the hot new upstart in town will translate down South. No additional hires have been made. By Heather Grossman
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4 55 48 5 PIN NET ETRE REE RE E DR R | MIA AMI M BEA ACH H | DOC OCK K | INT NTRA RACO ACO COAS ASTA TAL TA L VI VIEW EWS S $18. $1 8 77 8. 7M | 6BR BR/6 /6 6+2 + B BA A | LA:10 A:10 10,3 ,3 383 83 SF | LOT T: 3 39 9,7 700 0 SF | WF: F 100 00’’
54 446 6 N BAY Y RD | MIA AMI BEA EACH ACH CH | MOD ODER ERN MA MAST TERPI ERPI ER PIEC PIE ECE | LOT: OT T 30 30,7 ,740 ,7 40 0 SF $ 7M $3 M | 8BR BR/8 /8+2 + BA +2 A | 13, 3,00 000 00 0 SF F | WF: 186 8 ’ | WID DE BA BAY & DO DOWNTO TOWN W VIE WN IEWS W WS
71111 FISHE IS SHE H R IIS SLA LAND ND DR | FIS ISHE ER IS ISLA LAND LA ND | 5,0 ,040 40 0 SF | OCE CEAN A FR AN FRON ON NT CA C NA NABA B BA $14M $14M M | 4BR BR+S +STU +S T DY TU D /6 /6+1 + BA +1 A | 4,0 000 00SF SF F TER ERRA RACE RA C | CIT TY/ Y/OC O EA OC AN /G / OV O ’T CUT T VIE EWS
94 4 10 0 W B RO OA AD D VI V EW W D R | B AY H AR RB BO OR | DO OC C K | O PE PEN E N WA W TE E R VI V EW WS $14. $1 4 75 4. 5 M | 5 BR BR/5 /5+3 /5 +3BA +3 BA | 9 ,2 ,251 2 51 5 1 S F | L OT O T: T: 20 0 ,4 4 75 5 | W F: F 1 17’ 17 7
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15 54 S IS SLA LAND ND D DR | GOL OLD DE EN BE BEAC EACH ACH | VER AC RSA S IL SA ILLE LES S INSPIRED HOM O E $ 1M $1 1 | 5BR BR/6 /6+1 /6 6+1 +1BA BA A | ±10 0,0 ,00 000 00 SF | LOT T: 17 17,6 ,661 61 SF | WF: F 190’
1788 17 885 88 5 CO C LL LLIN NS AV AVE | 120 06 | SUN U NY Y ISL LES E | AC CQ QUA U LI L NA A $ .6 $6 6M | 5BR BR/4 /4BA /4 BA | 5,4 472 72 SF | 2-S -STO TO TORY OR RY Y HOM OME | DIR REC E T OC CE EA AN VI V EW WS
668 66 8 GO GOLD L EN BEACH DR | GOL LD OLDE DE EN BE BEAC ACH | 2-S -S STO TORY RY WAT RY ATE ER R RF FRON FRON FR NT HO HOME ME E $ .5 $4 5M | 6BR/5+1BA | 4,8 83 30 0 SF | LO OT T: 110 0,567 | WID ID DE IN NTR TRAC ACOASTAL AL L VIEW IE EWS
1022 10 0225 5 CO COLL LLIN INS S AV AVE E | 200 004 4 | BAL HAR ARBO BOUR UR | WRA RAPP-AR A OU UND TER E RA ER RACE CE $3.7 $3 .775 75M M | 4BR BR/4 /4+1 +1BA BA | 2,9 918 SF | OCE EAN A , IN INTR TRAC A OA AC AST S AL L & CIT TY VI V EW EWS S
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Snapshots of real estate news from around the U.S.
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San Diego
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.
President Barack Obama’s foundation is expected choose a site for his presidential library next month.
CHICAGO he University of Chicago, one of four institutions to submit bids to build Barack Obama’s presidential library, has proposed two locations on Chicago’s South Side, the Chicago Sun-Times reported. In addition to being a fitting tribute to Obama’s political roots, the location, the university argues, would also spur $200 million of real estate investment. However, the proposal has generated controversy because it involves using parkland that the university does not own. The
T
HOUSTON A 361-unit tower called Catalyst is one of a slew of new residential projects going up in Houston.
Developers are planning more than 4,200 new apartments in Downtown Houston, which until now has been almost exclusively the domain of office towers. The area’s current population of about 3,600 is expected to more than triple, according to the Wall Street Journal, which reported that most of the new units are rentals. The new residential development is being spurred by a tax break passed in 2012 that offers relief of up to $15,000 per unit and which officials said is nearing its 5,000-unit cap. The development is part of nearly $4 billion in new construction and renovation that Houston is expecting in the coming years. The Houston Business Journal reported that five residential projects are already under construction, including a 40-story, 463unit tower; a 361-unit complex called Catalyst; and a conversion project with 323 planned luxury apartments.
BOSTON Kendall Square in Cambridge is the Boston area’s biotech hub.
Foreign investment in Boston’s office market skyrock94 February 2015 www.TheRealDeal.com
Barack Obama Foundation, which is overseeing the site selection, has reportedly expressed concerns about that. The foundation is also said to be concerned about leadership changes at the University of Illinois, another bidder. Nonetheless, Chicago Mayor Rahm Emanuel predicted that the Obamas would select the Windy City. Columbia University and the University of Hawaii have also submitted bids. The foundation will reportedly select the location next month.
eted between 2013 and 2014, jumping to $4.2 billion from $1.3 billion, according to the Boston Herald. Growth in biotech (which is centered in the Cambridge office market), health care, and financial services is making Boston more attractive to foreign capital. Still, the city does still does not crack the top five U.S. cities for foreign capital, according to the Association of Foreign Investors in Real Estate. Foreign investors accounted for about 30 percent of real estate transactions in Beantown that were greater than $2.5 million, the paper said, citing statistics from the research firm Real Capital Analytics.
DENVER Denver saw a higher jump in rents than any other U.S. city last year.
Pro golf champ Phil Mickelson and his wife have sold their fiveacre Rancho Santa Fe compound for $5.7 million. The home, which has been listed in the past for as much as $12 million, returned to the market in November asking $6 million. The 9,200-squarefoot main residence is filled with hand-carved stone fireplaces and the master suite features a coffee/juice bar. The property, of course, also includes a three-hole putting green.
Old Saybrook, Connecticut Famed movie star Katharine Hepburn’s former 8,368-squarefoot home on Long Island Sound has been listed for $14.8 million. The actress, who died in 2003, designed the house in 1939 and spent summers there, before moving there full-time in the 1990s. The home, which is now owned by New York developer Frank Sciame, was previously listed for $28 million.
Carpinteria, California The comedian and political commentator Dennis Miller has listed his half-acre beach house for $22.5 million. The fivebedroom, five-and-a-halfbathroom, 6,320-squarefoot oceanfront home includes a two-story entry with a pitched ceiling, six fireplaces and a guest apartment.
Hollywood Hills West Rents increased last year in all 79 U.S. metro areas tracked by real estate research firm Reis Inc., but smaller cities on that list — like Denver, Charleston, S.C., and Raleigh, N.C. — led the way. While the national rental rate average jumped 3.6 percent to $1,124 a month over the prior year, those three cities logged rental rate jumps of 7.9 percent, 5.5 percent and 4.8 percent, respectively. That was despite the fact that the national jump was the highest increase since Reis began tracking the statistic in 1980. Rent increases are expected to continue at a slower pace in 2015 as a flood of new development comes online. Meanwhile, the national residential rental vacancy rate dropped to 4.2 percent, its lowest level since 2000. Compiled by Brendan O’Connor
Actor Jared Leto, who won an Oscar for his performance in “Dallas Buyers Club,” plunked down $5 million for a compound that was once part of the Lookout Mountain Air Force Station, which after World War II housed a secret facility that produced classified films and photos of nuclear tests. In addition to an eight-bedroom house, the site includes studios, a sound stage, art galleries and a theater.
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Deal Sheet summary
The Deal Sheet, on pages 98 to 110, covers transactions from 12/11/14 through 1/10/15. Please submit future deals to deals@therealdeal.com.
Overview Property sales
Financing
Leases (# of deals)
Leases (square feet)
Deals
57
Transactions
10
Office
48
Office
1,334,715
Dollars
$2,398,030,000
Aggregate value
$855,700,000
Retail
46
Retail
350,686
Total
94
Total
1,685,401
Sales By dollar volume (in millions)
By type
2
25
55
Office Retail
3
Development site Hotel
Office
16 7. 4
4
165 .9
2 3
Multi-family
120.2
Multi-family
Retail Development site
.2
47
Hotel
Industrial
Industrial
Mixed-use
Mixed-use
63
18
3.1
3
2 9.
0 2 1
Office leases Office leases by industry
Office leases sf, by industry
Industry
Number of deals
Top tenant reps for office leasing, by sf
Industry
Leased square feet
Broker
Leased square feet
Advertisement/Marketing
2
Advertisement/Marketing
3,559
Savills Studley
400,000
Events
2
Events
3,429
Newmark Grubb Knight Frank
239,334
Fashion*
5
Fashion*
164,635
Olmstead Properties
200,000
Financial
10
Financial
249,970
CBRE
139,158
Legal
3
Legal
417,994
JLL
41,179
Media
3
Media
233,206
Cushman & Wakefield
36,102
Office Space Provider
2
Office Space Provider
56,800
Coldwell Banker
26,322
Other
12
Other
130,584
ABS Partners
20,771
Professional Services
4
Professional Services
12,465
Ripco
18,800
Publishing
2
Publishing
59,062
Adams & Co.
12,657
Retail leases Top tenant reps for retail leasing, by sf Education
25,700
RFK
15,964
Health & Beauty
Okada & Co.
15,500
Real Estate
SRS Real Estate Partners
14,500
Wireless
Winick Realty Group
8,961
Fashion
Murro Hill
7,300
Entertainment
Dollar Store Services
7,000
Pliskin Realty & Development
6,970
96 February 2015 www.TheRealDeal.com
Financial
1
Other
3 3 2
4
8
3
Health & Beauty
3
12
5
Real Estate
0
Wireless Fashion
7
43,10
0 ,01
157
14
Entertainment Financial
Gifts & Souvenirs
Gifts & Souvenirss
Food & Beverage
Food & Beverage
64
9 8,
,19
1
00
Other
Cushman & Wakefield
,9
Education
40,000
10
153,848
Cassidy Turley
736 24,
CBRE
600 4,435
Retail leases sf, by industry 700
Retail leases by industry
27,
Leased square feet
9,050
Broker
(*includes showroom space)
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 12/11/14 to 1/10/15. Please submit future deals to deals@therealdeal.com.
Office leases Address
Size
Tenant / Representative
Landlord / Representative
Notes
601 Lexington Ave
400,000
Kirkland & Ellis / Mitchell Steir and Matthew Barlow, Savills Studley
Boston Properties and Norges Bank Investment Management / n/a
The international law firm signed a 20-year renewal lease.
225 Park Avenue South
200,000
Buzzfeed / Steven Marvin, Olmstead Properties
Orda Management / Brian Waterman and Andrew Peretz, Newmark Grubb Knight Frank
The media company signed a lease. The reported asking rent was $85 per square foot.
One New York Plaza
156,000
OSP Group / Brian Goldman and Eric Cagner, Newmark Grubb Knight Frank
n/a / n/a
The plus size apparel company signed a lease and is relocating its corporate headquarters from Midtown Manhattan.
1301 Sixth Ave
125,000
CohnReznick / Michael Laginestra, Rocco Laginestra, Michael Wellen, CBRE
Paramount Group / Andrew Sachs, Timothy Gibson, Ben Shapiro, Bill Levitsky, Newmark Grubb Knight Frank
The accounting firm signed a lease. The reported asking rent was $68 per square foot.
475 Fifth Ave
56,000
Penske Media Corporation / n/a
TIAA-CREF / Douglas Neye and Cynthia Wasserberger, JLL
The publishing company signed a lease to occupy the second, third, 14th and 16th floors.
1290 Sixth Ave
47,000
Neuberger Berman / Neil Goldmacher, Newmark Grubb Knight Frank
Vornado Realty Trust / Glen Weiss, Vornado Realty Trust; Josh Kuriloff and Bruce Mosler, Cushman & Wakefield
The investment firm signed an expansion lease and will occupy a total of 400,000 square feet.
One Pierrepont Plaza (Brooklyn)
38,000
Regus / n/a
Forest City Ratner Companies / n/a
The workplace provider signed a 12-year lease to occupy the 12th floor.
469 Seventh Ave
34,000
Metropolitan Transit Authority / n/a
Foremost Real Estate / Eric Meyer and Marty Meyer, Colliers International
The transit company signed a renewal lease to occupy the entire 11th and 14th floors.
14 53rd St (Brooklyn)
30,623
Hunt Slonem / Carri Lyon, Cushman & Wakefield
SL Realty / Peter Thorsen, SL Realty
The artist will relocate his art studio and occupy the entire sixth and a portion of the second floor.
535 Fifth Ave
28,340
IQPC/Penton Media / Noel Flagg and E.N. Cutler, Newmark Grubb Knight Frank
The Moinian Group / Mitchell Arkin, Myles Fennon, Haley Fisher, Remy Liebersohn, Adam Nelson, Cushman & Wakefield
The tenant signed a long-term renewal and expansion lease.
51 Astor Pl
25,000
Tudor Investment Corporation / Cynthia Wasserberger, JLL
Edward Minskoff / Paul Glickman, JLL
The hedge fund signed a lease to occupy the entire 11th floor.
452 Fifth Ave
24,000
StormHarbour Securities / Barry Lewen, Coldwell Banker
PBC USA Real Estate LLC / Alicia Popper, PBC USA Real Estate LLC; Craig Reicher and Howard Fiddle, CBRE
The financial advisory firm signed a lease to occupy the entire 29th floor and the northern half of the 30th floor.
594 Dean St (Brooklyn)
18,800
Industrious / Andrew Clemens, Ripco
1121 LLC / Robert Klein, Kalmon Dolgin Affiliates
The shared office space provider signed a long-term lease.
469 Seventh Ave
17,000
Severud / n/a
Foremost Real Estate / Eric Meyer and Marty Meyer, Colliers International
The engineering firm signed a renewal lease to occupy the entire seventh floor.
1359 Broadway
12,900
LF Distribution Holding, Inc. / Alexander Chudnoff and Mitchell Konsker, JLL
n/a / Keith Cody, ESRT; William Cohen, Neil Rubin, Andrew Weisz, Newmark Grubb Knight Frank
The tenant signed an expansion lease to occupy a part of the 9th floor, and will increase its total occupancy to 104,000 square feet.
One Pierrepont Plaza (Brooklyn)
12,700
SmartSign / n/a
Forest City Ratner Companies / n/a
The custom sign maker signed a 10-year lease to occupy the 13th floor.
99 Park Ave
12,268
Flushing Bank / Alan Friedman and Alan Cohen, ABS Partners
Eastgate Realty / Paul Glickman, Dana Biasotti and Harley Dalton, JLL; Michael O’Neil and Alicia Amsterdam, Cushman & Wakefield
The Long Island-based bank will open its second location in Manhattan. It will occupy retail space on the ground floor and lower level, and office space on the eighth floor.
One Pierrepont Plaza (Brooklyn)
10,000
U.S. Legal Support / n/a
Forest City Ratner Companies / n/a
The legal services provider signed a 10-year lease to occupy the 13th floor.
140 Broadway
7,994
Kelner & Kelner / Paul Davidson and Adam Leshowitz, Newmark Grubb Knight Frank
140 BW LLC / Robert Constable and Will Overlock, Cushman & Wakefield
The tenant signed a renewal lease.
One Grand Central Pl
6,637
Quintiles Inc. / Dylan Mattes, Colliers International
Empire State Realty Trust / Fred Posniak of ESRT; William Cohen, Jonathan Tootell, Julie Christiano, Newmark Grubb Knight Frank
The tenant signed a lease.
64 Wooster St
6,000
Harbinger Group / Matt Bergey, CBRE
n/a / David Zar, Zar Property NY
The tenant signed a 10-year lease. The reported asking rent was $79 per square foot.
48 West 37th St
5,639
Running Man / Jeff Buslik and Seth Godnick, Adams & Co.
Forty Eight Thirty Seven Associates / David Levy, Adams & Co.
The post-production company signed a 10-year lease to occupy the 11th floor. The reported asking rent was $42 per square foot.
757 Third Ave
5,479
CyndX Advisors, LLC / Mike Burgio and Dan Organ, Cushman & Wakefield
RFR Realty / Steve Morrows, RFR Realty; Dan Turkewitz and Matt Polhemus, JLL
The financial services firm signed a lease to occupy the 15th floor.
1350 Broadway
5,096
TC Electric, LLC / Ivan Hillman, CBRE
Empire State Realty Trust / Keith Cody, ESRT; William Cohen, Neil Rubin, Andrew Weisz, Newmark Grubb Knight Frank
The tenant signed a lease.
One Grand Central Pl
4,866
Telenav Inc. / Sheena Gohil and Whitney Anderson, Colliers International
Empire State Realty Trust / Fred Posniak, ESRT; William Cohen, Jonathan Tootell, Julie Christiano, Newmark Grubb Knight Frank
The tenant signed a lease.
767 Third Ave
4,293
Argot Partners / Alan Friedman, ABS Partners
The Kaufman Organization / n/a
The corporate and financial communications firm signed a seven-year lease.
463 Seventh Ave
3,549
Boston Traders Inc. / Jeff Buslik and Seth Godnick, Adams & Co.
The Arsenal Company LLC / David Levy, Adams & Co.
The fashion apparel company signed a five-year lease to occupy the 13th floor to use as executive offices and showroom space.
98 February 2015 www.TheRealDeal.com
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Baltimore, MD • Boston, MA • Cleveland, OH • Dallas, TX • Detroit, MI Long Island, NY • Los Angeles, CA • New York, NY • San Francisco, CA
Office leases continued Address
Size
Tenant / Representative
Landlord / Representative
Notes
One Grand Central Pl
3,279
Ferguson Partners L.P. / Christopher Kraus, JLL
Empire State Realty Trust / Fred Posniak, ESRT; William Cohen, Jonathan Tootell, Julie Christiano, Newmark Grubb Knight Frank
The tenant signed a lease.
501 Seventh Ave
3,136
United Corporate Services Inc. / Paul Bostick, Brentler Inc.
Empire State Realty Trust / Keith Cody, ESRT; Harry Blair and Sean Kearns, Cushman & Wakefield
The tenant signed a lease.
44 Wall St
3,062
Penny Publications / CBRE
44 Wall Owner, LLC / Gregg Schenker, Keith Lipstein, Jay Kreisberg, Joseph D’Apice, ABS Partners
The puzzle magazine signed a three-year-one-month lease.
355 Lexington Ave
2,796
Dasoma Capital Management / Joseph D’Apice, Robert Kempner, Mark Tergesen, ABS Partners
Rudin Management / n/a
The capital management firm signed a two-year-one-month lease.
350 Fifth Ave
2,733
Second Curve Capital, LLC / Hugh McDonald, Hanley Advisors LLC
Empire State Realty Trust / Fred Posniak, ESRT; William Cohen, Jonathan Tootell, Shanae Ursini, Newmark Grubb Knight Frank
The tenant signed a lease.
501 Seventh Ave
2,322
P. Devos Designs Inc. / Steven Pressler, Coldwell Banker
Empire State Realty Trust / Keith Cody, ESRT; Harry Blair and Sean Kearns, Cushman & Wakefield
The tenant signed an expansion lease.
140 West 36th St
2,300
TiqIQ / Helen Demetrious and Ina Donath, Capstone Realty Advisors
KND Realty Corp. / n/a
The event ticket company signed a lease.
20 Jay St (Brooklyn)
2,254
Zipari Inc. / Amy Lawrence, Denham Wolf
Two Trees Management / Two Trees Management
The tenant signed a lease.
37 Varick St
2,134
Johnson & McGreevy Inc. / Sagirah Abraham, AC Lawrence
The Rector, Church-Wardens, and Vestrymen of Trinity Church / n/a
The advertisement branding company signed a three-year lease.
200 Park Ave South
1,425
George Nikiforov Inc. / n/a
200 Park South Associates LLC / John Gols, Alan Friedman, Charles Conwell, Gregg Schenker, Earle Altman, Steven Hornstock, ABS Partners
The marketing company signed a three-year lease.
552 Seventh Ave
1,414
Springtex USA LLC / Jonathan Cohen, ABS Partners
Savitt Partners / Sam Friedfeld and Steve Marvin, Olmstead Properties
The apparel manufacturer signed a lease.
250 West 57th St
1,401
Merchants’ Choice Payment Solutions East LLC / n/a
Empire State Realty Trust / Keith Cody, ESRT; Harry Blair and Sean Kearns, Cushman & Wakefield
The tenant signed a lease.
110 West 40th St
1,350
Treajean Corp. / n/a
One Ten West Fortieth Associates / Dave Levy and Brett Maslin, Adams & Co.
The tenant signed a lease. The reported asking rent was $48 per square foot.
“Our company is unique to the real estate brokerage industry because it is organized like an investment bank, with separate sales and research divisions. By enabling our sales teams to deploy more resources to every transaction, this structure produces outstanding results for our clients.” Shimon Shkury President Ariel Property Advisors
MEET THE TEAM People and relationships are at the heart of every real estate transaction. We’re committed to providing clients with unmatched value by combining our relationship-driven investment sales operation with superior research and market knowledge.
100 February 2015 www.TheRealDeal.com
arielpa.com | 212.544.9500
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Office leases continued Address
Size
Tenant / Representative
Landlord / Representative
Notes
110 West 40th St
1,233
Taiko Enterprises Corp. / Century 21 New Golden Age Realty
One Ten West Fortieth Associates / Dave Levy and Brett Maslin, Adams & Co.
The tenant signed a lease. The reported asking rent was $48 per square foot.
200 Park Ave South
1,141
JKNY Realty, LLC / n/a
200 Park South Associates LLC / John Gols, Alan Friedman, Charles Conwell, Gregg Schenker, Earle Altman, Steven Hornstock, ABS Partners
The real estate management company signed a five-year lease.
110 West 40th St
1,129
Entertainment Link LLC / Dave Levy and Brett Maslin, Adams & Co.
One Ten West Fortieth Associates / Dave Levy and Brett Maslin, Adams & Co.
The tenant signed a lease. The reported asking rent was $52 per square foot.
112 West 34th St
1,128
Impact Imports International Inc. / n/a
Empire State Realty Trust / Fred Posniak, ESRT; Scott Klau, Erik Harris, Neil Rubin, Newmark Grubb Knight Frank
The tenant signed a lease.
110 West 40th St
1,070
Winnitex America Inc. / Dave Levy and Brett Maslin, Adams & Co.
One Ten West Fortieth Associates / Dave Levy and Brett Maslin, Adams & Co.
The tenant signed a lease. The reported asking rent was $48 per square foot.
8 West 38th St
954
Staffing Solutions USA Inc. / Fraglow Realty
n/a / Andrew Udis and Ron Zimmerman, ABS Partners
The full-service staffing company signed a five-year lease.
110 West 40th St
800
Michael J. Mason & Company / Dave Levy and Brett Maslin, Adams & Co.
One Ten West Fortieth Associates / Dave Levy and Brett Maslin, Adams & Co.
The tenant signed a lease and plans to use the space as showroom space. The reported asking rent was $52 per square foot.
110 West 40th St
470
Crafted Home NY LLC / Dave Levy and Brett Maslin, Adams & Co.
One Ten West Fortieth Associates / Dave Levy and Brett Maslin, Adams & Co.
The tenant signed a lease. The reported asking rent was $52 per square foot.
Retail leases Address
Size
Tenant / Representative
Landlord / Representative
Notes
850 Third Ave (Brooklyn)
100,000
Bed Bath & Beyond / Lon Rubackin, CBRE
Salmar Properties / Timothy King, CPEX Real Estate
The retailer signed a lease to occupy the second floor.
1133 Avenue of the Americas
40,000
Steinway & Sons / Richard Bernstein, Susan Kahaner, Jennifer Ogden, Cassidy Turley
The Durst Organization / Thomas Bow and Rocco Romeo, The Durst Organization
The piano manufacturer and retailer signed a 15-year lease.
11 Penn Plaza
40,000
AMC Networks / Mary Ann Tighe and Gregory Tosko, CBRE
Vornado Realty Trust / Glen Weiss, Vornado Realty Trust
The cable network signed an expansion lease and will occupy a total of 330,000 square feet.
740 Madison Ave
24,000
Bottega Veneta / Cushman & Wakefield
Wildenstein Realty Corp. / Cushman & Wakefield
The luxury brand signed a lease. The annual reported asking rent was $8 million.
114 Fifth Ave
15,964
Lululemon / Jeremy Ezra and Karen Bellantoni, RFK
L&L Holding Company / Alan Schmerzler and C. Bradley Mendelson, Cushman & Wakefield; David Berkey and Andrew Wiener, L&L Holding Company
The yoga apparel retailer signed a 10-year lease. The reported asking rent was $500 per square foot on the ground floor, $100 per square foot in the basement and $75 per square foot for the mezzanine.
475 Fifth Ave
15,500
Muji / Chris Okada, Okada & Co.
TIAA-CREF and Norges Bank Investment Management / Ariel Schuster, RKF
The Japanese design store signed a lease to occupy the ground floor. The reported asking rent was $400 per square foot.
71 West 47th St
7,713
Valley National Bank / Michael Blum, CBRE
n/a / Alan and Adam Abramson, Abramson Brothers Inc.
The bank signed a 15-year lease.
1010 Dean St (Brooklyn)
7,500
Crow Hill Cross Fit / n/a
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The fitness and nutrition center signed a lease.
2152 Third Ave
7,000
The Dollar Diva / Dollar Store Services
Gloria Drelich / Hal Shapiro and Zach Diamond, Winick Realty Group
The discounter signed a lease.
221-06 Merrick Blvd (Queens)
6,970
Advance Auto Parts / Marvin Hartman, Pliskin Realty & Development
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The auto repair shop signed a lease.
250 Mercer St
6,000
Haven Spa / Jennifer Skolnick, Winick Realty Group
Mercer Square LLC / Michael Gleicher and Danielle Weissberg, Winick Realty Group
The spa signed a lease.
212 East 57th St
5,500
Halevy Life / Julia Maksimova, Keller Williams NYC
Sutton Retail LLC / n/a
The private training studio signed a long-term lease for its flagship location.
700 Eighth Ave
5,000
City Souvenirs On 8th Inc. / Mark Kapnick, SRS Real Estate Partners LLC
Thor Milford Retail LLC / Mark Kapnick, SRS Real Estate Partners LLC
The tenant signed a 15-year lease. The reported asking rent was $550 per square foot.
564 Fifth Ave
4,500
Gifts On 5th Inc. / Mark Kapnick, SRS Real Estate Partners LLC
Thor Equities / Mark Kapnick, SRS Real Estate Partners LLC
The tenant signed a lease.
76 Montague St (Brooklyn)
4,225
Friend of a Farmer / Douglas Elliman
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The café signed a lease.
647 Bryant Ave (Bronx)
4,000
SERF Safety Training / n/a
David Zar / n/a
The tenant signed a 10-year lease.
57-38 Myrtle Ave (Queens)
3,700
Ridgewood Ale House / n/a
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The restaurant signed a lease.
18 West 23rd St
3,600
Oxido Modern Mexican / Mark Kapnick, SRS Real Estate Partners, LLC
Studio Park, LLC. / n/a
The restaurant signed a 15-year lease.
509 Fifth Ave
3,500
Skechers / n/a
Jeff Sutton / n/a
The shoe brand signed a 15-year lease. Skechers will replace shoe retailer Steve Madden.
647 Bryant Ave (Bronx)
3,500
Liberty Tax / n/a
David Zar / n/a
The tax preparation service signed a 10-year lease.
221 West 37th St
3,400
Miscoe LLC / Helen Demetrious and Ina Donath, Capstone Realty Advisors
221 West 37th LLC / Alexander Hill, Murrow Hill
The boutique fitness group signed a lease to occupy the fourth floor. The reported asking rent was $45 per square foot.
365 Fourth Ave (Brooklyn)
3,300
Gymboree Play & Music / n/a
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The childcare learning center signed a lease.
102 February 2015 www.TheRealDeal.com
“Cathy Franklin is a megastar of the real estate industry with an outstanding record of achievement. We are privileged to welcome Cathy and her team to the Corcoran family.” Pamela Liebman CEO & President of The Corcoran Group
C AT H Y F R A N K L I N Licensed RE Salesperson & Senior Global RE Advisor (m) 917.863.8209 | (o) 212.323.3236 cathyfranklin@corcoran.com
Real estate agents affiliated with The Corcoran Group are independent contractors and are not employees of The Corcoran Group. The Corcoran Group is a licensed real estate broker located at 660 Madison Ave, NY, NY 10065
Retail leases continued Address
Size
Tenant / Representative
Landlord / Representative
Notes
221 West 37th St
3,100
NY Skyride / Cosmo Montemurro, Murro Hill
221 West 37th LLC / Alexander Hill, Murro Hill
The tenant signed a lease to occupy the ground floor. The reported asking rent was $80 per square foot.
252 Atlantic Ave (Brooklyn)
2,978
TD Bank / Richard Senior and Isaac Shabot, Ripco
Boerum Place LLC / Richard Senior and Isaac Shabot, Ripco
The bank signed a 15-year lease.
4 East 43rd St
2,800
Arco Wines LLC / Alexander Hill, Murro Hill
n/a / Alexander Hill, Murro Hill
The wine shop signed a lease to occupy the ground floor, mezzanine and basement. The reported asking rent was $35,000 per month.
325 South End Ave
2,361
Chipotle / Winick Realty Group
The Lefrak Organization / Mark Kapnick, SRS Real Estate Partners, LLC
The restaurant chain signed a 15-year lease.
345 West Broadway
2,200
Marie Lou & D Salon & Spa / Margie Sarway, Sinvin
n/a / Simon Goltche and Daniel Rahmani, Venture Capital Properties
The salon signed a long term lease.
705 Ninth Ave
2,000
Otto’s Tacos / Josh Halegua, EVO Realty Group
705 Ninth Avenue / Joshua Siegelman, Winick Realty Group
The restaurant signed a lease.
514 86th St (Brooklyn)
1,750
Huntington Learning Center / Jabour Realty Company
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The learning center signed a lease.
3827 Nostrand Ave (Brooklyn)
1,725
Sprint / Jeremy Sholder, CBRE
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The wireless provider signed a lease.
469 Seventh Ave
1,700
Nanoosh / Kenji Ota, Cushman & Wakefield; Rob Bonicoro, CBRE
Foremost Real Estate / Eric Meyer and Marty Meyer, Colliers International
The Mediterranean eatery signed a long-term lease.
1610 Sheepshead Bay Rd (Brooklyn)
1,500
Sprint / Jeremy Sholder, CBRE
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The wireless provider signed a lease.
398 Atlantic Ave (Brooklyn)
1,440
Ciao Bow Wow / Keith Oliver, Brooklyn Real Properties
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The animal daycare and pet grooming service signed a lease.
445 Fifth Ave
1,400
City Souvenirs On 5th Ave Inc. / Mark Kapnick, SRS Real Estate Partners, LLC
Thor Equities / Mark Kapnick, SRS Real Estate Partners, LLC
The tenant signed a 15-year lease.
188 Seventh Ave
1,400
Filicori Zecchini / Cosmo Montemurro, Murro Hill
Chelsea Piermont / Alexander Hill, Murro Hill
The coffee chain signed a 15-year lease.
228 Lexington Ave
1,300
Impact Theatre / Bona Kim, Midtown Commercial
120 East 34th Street / Steven E. Baker and Joshua Siegelman, Winick Realty Group
The dance studio signed a lease.
479 Fifth Ave (Brooklyn)
1,210
Sprint / Jeremy Sholder, CBRE
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The wireless provider signed a lease.
190 Union Ave (Brooklyn)
1,200
The Grain & The Vine / Louie Hamdan, Kalmon Dolgin Affiliates
Lindsay Park Housing Corp. / n/a
The wine and spirit shop signed a lease to occupy the ground floor.
1031 Lexington Ave
1,100
74th Street Yarns / Diane Mandel, Lansco
1031 Realty Company / Joshua Siegelman, Winick Realty Group
The yarn store signed a lease.
1694 Flatbush Ave (Brooklyn)
1,000
Avon / Josh Augenbaum and Allie Beyda, Augenbaum Realty Corp
Shur Realty / n/a
The beauty supplier signed a lease.
168 Court St (Brooklyn)
800
Benefit Cosmetics / Ron Brien, Alliance Commercial Property LLC
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The cosmetics company signed a lease.
128 East 4th St
700
Fantastic Tea Shop / Sagirah Abraham, AC Lawrence
Eight Cooper Equities LLC / Kristy Schuck, Besen Retail LLC
The tea shop signed a seven-year lease
20 Clinton St
600
50 Clinton Properties / Darrell Rubens and Matthew Ball, Winick Realty Group
n/a / Darrell Rubens and Matthew Ball, Winick Realty Group
The condo sales office signed a lease.
38 Avenue B
600
Dojo Izakaya / Helen Demetrious and Ina Donath, Capstone Realty Advisors
n/a / n/a
The restaurant signed a long-term lease.
150 Fourth Ave (Brooklyn)
500
Allstate / Patrick David, E.A.R. Real Estate Group
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The insurance company signed a lease.
71 Hoyt St (Brooklyn)
450
Oaxaca Taquerías / Daniel Rodriguez, Bantam Realty Services
n/a / R. Condren, K. Triglia, G. Danut, CPEX Real Estate
The restaurant signed a lease.
Buys Address
Size
250 West 19th St
25-bldgs, 800,000 sf total
200 East 82nd St
28-story
298, 304 Mulberry St
90,500 buildable sf
170 Broadway
Buyer / Representative
Seller / Representative
Notes
Thor Equities Residential / n/a
Caiola / n/a
The twenty-five rental buildings sold for $800 million.
Rockpoint Group / n/a
J.P. Morgan Investment Management / Darcy Stacom and Paul Leibowitz, CBRE
The mixed-use building sold for $218 million, or $977,578 per unit
Broad Street Development / Eli Dweck, Wachtel Missry
GID Investment Advisers / Andrew Scandalios, Jeffrey Julien, Rob Hinckley, HFF
The two mixed-use properties sold for $178.5 million.
18-story, 228-key
Premier Group / n/a
Carlyle Group, Crown Acquisitions, Highgate Hotels / n/a
The hotel sold for $150 million.
122-130 East 23rd St
200,000 buildable sf
Toll Brothers Inc. / n/a
United Cerebral Palsy / Jon Epstein, Vincent Carrega, Neil Helman, Charles Kingsley, Avison Young
The office building sold for $135 million.
301 West 45th St
17-story, 176-units
S.W. Management Acquisitions / Aaron Jungreis, Rosewood Realty Group
Melohn Properties / Steven Vegh, Westwood Realty Associates
The mixed-use building sold for $132.5 million.
231, 251, 355, 376, 401 Chester St, 350 Bristol St, 167, 170 Riverdale Ave, 436 Livonia Ave (Brooklyn)
n/a
L+M Development and Housing Partnership Development Corporation / n/a
DeMatteis Organizations / n/a
The multi-family and mixed-use buildings sold for $98.6 million.
To view more deals visit our website: www.TheRealDeal.com 104 February 2015 www.TheRealDeal.com
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866 329 8206
FourSeasonsFortLauderdale.com
Broker participation welcome. Oral representation cannot be relied upon as correctly stating the representations of the Developer. For correct representation, make reference to the documents required by section 718.503 Florida Statutes, to be furnished by the Developer or Buyer or Lessee. Not an offer where prohibited by State Statutes. Plans, features and amenities subject to change without notice. All illustrations and plans are artist conceptual renderings and are subject to change without notice. This advertisement does not constitute an offer in the states of NY or NJ or any jurisdiction where prior registration or other qualification is required. The Four Seasons Hotel & Residences Fort Lauderdale are not owned, developed or sold by Four Seasons Hotels Limited or its affiliates (Four Seasons). The Developer, Fort Partners, uses the Four Seasons trademarks and trade names under a license from Four Seasons Hotels Limited. The marks “FOUR SEASONS,” “FOUR SEASONS HOTELS AND RESORTS,” any combination thereof and the Tree Design are registered trademarks of Four Seasons Hotels Limited in Canada and U.S.A. and of Four Seasons Hotels (Barbados) Ltd. elsewhere. Fort Realty is responsible for the sales of the Four Seasons Hotel & Residences Fort Lauderdale.
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Buys continued Address
Size
Buyer / Representative
Seller / Representative
Notes
n/a / Steven Vegh, Westwood Realty Associates
E&M Associates / Steven Vegh, Westwood Realty Associates
The 13 multi-family buildings sold for $53.7 million.
2755, 2763 Sedgwick Ave, 11 West 172nd St, 41 West 184th St, 2291 University Ave, 226 West Tremont Ave, 1786 Topping Ave, 2076 Creston Ave, 2238 Morris Ave, 1631 Grand Ave, 2322 Grand Ave (Bronx), West 228th St, 159 West 228th St
13-bldgs, 497-units total
316 Bergen St (Brooklyn)
84-units
n/a / n/a
Naftali Group s / n/a
The multi-family building sold for $52.2 million.
251 West 45th St
97,000 buildable sf
Extell Development / n/a
Champion Parking / n/a
The development site sold for $48.5 million.
636 Sixth Ave
18,280 sf
TIAA-CREF / n/a
Clarion Partners / Jon Caplan, Scott Latham, Anthony Ledesma, Stephen Shapiro, JLL
The retail building sold for $42 million.
184-186, 204-206 Bedford Ave (Brooklyn)
n/a
RedSky Capital / Peter Levitan of Lee & Associates
n/a / Brendan Maddigan, Massey Knakal
The two development sites sold for $39.7 million, or $3,200 and $2,500 per buildable square foot.
633, 636, 642, 643, 650 West 173rd St
146-units, 120,000 sf total
n/a / Robert M. Shapiro, Thomas A. Donovan, Massey Knakal
RockFarmer Capital / Robert M. Shapiro, Thomas A. Donovan, Massey Knakal
The five multi-family buildings, part of the Palace Portfolio, sold for $30 million.
195 Montague St (Brooklyn)
80,000 sf
Treeling Cos., Long Wharf Real Estate Partners, KABR Realty / n/a
Santander Bank / n/a
The top four stories of the office building sold for $30 million.
191-231 Moore St, 33-39 White St, 208-244 Seigel St (Brooklyn)
101,447 sf total
Toby Moskovits and Heritage Equity / Yona Edelkopf and Seth Peyser, Epic Commercial Realty
n/a / n/a
The five industrial buildings sold for $28.2 million.
11 Jane St
31,032 buildable sf
Minskoff Equities / n/a
Marital Trust of Sydelle Yager Mitchell and the Wolk Family Limited Partnership
The development site sold for $26 million.
115 Ocean Ave (Brooklyn)
87,000 sf
n/a / n/a
Lincoln Prospect Associates / n/a
The multi-family building sold for $25.7 million, or $295 per square foot.
91 Crosby St
6-story, 10-units
GreenOak / n/a
APJ Realty Corp. / n/a
The multi-family building sold for $25 million.
319-321 West 38th St
4-story, 16-units, 54,504 buildable sf
LeTap Group / n/a
n/a / Robert Knakal, David Kalish, Jonathan Hageman, Massey Knakal
The mixed-use building sold for $23.5 million.
165 William St
10-story, 12-units, 31,073 sf
Princeton Holdings and Bluestone Group / Amit Doshi, Besen & Associates
Kash Group / Daniel Shapiro, Besen & Associates
The mixed-use building sold for $20.5 million, or $660 per square foot.
3572, 3574, 3576, 3578 DeKalb Ave (Bronx)
4-bldgs, 6-story, 140-units, 133,200 sf total
DeKalb 3752 LLC / Aaron Jungreis, Rosewood Realty Group
3572 GI L.L.C. / Aaron Jungreis, Rosewood Realty Group
The four contiguous multi-family buildings sold for $18.8 million.
Connect to the best kept secret in commercial mortgage lending Oritani Finance Company – the source for experienced commercial real estate professionals
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$11.5MM
$27.0MM
Mixed Use, Acquisition
7-Property Portfolio, Refinance
Midtown Manhattan
Philadelphia-Area
CLOSED
CLOSED
$32.7MM
$17.9MM
Retail Portfolio, Acquisition
Grocery-Anchored Retail, Refinance
Bronx, New York
Newark, Delaware Contact us:
David R. Garcia, Managing Director - dgarcia@oritani.com 201-937-7459 Bing Luh, Vice President - bluh@oritani.com 917-885-1265
Noah Littell, Vice President - nlittell@oritani.com 201-906-0051 Joseph Laquidara - jlaquidara@oritani.com 914-261-3171
888-ORITANI • oritani.com A wholly-owned subsidiary of ORITANI BANK 106 February 2015 www.TheRealDeal.com
1120 Avenue of the Americas, 4th Floor-suite 4169, New York, New York 10036 Oritani Bank Corporate Office: 370 Pascack Road, Twp of Washington, NJ 07676
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Buys continued Address
Size
Buyer / Representative
Seller / Representative
Notes
710 Third Ave
35,625 buildable sf
n/a / Limor Nesher, CORE
n/a / Clint Olsen, Massey Knakal
The hotel development site sold for $17.4 million, or $488 per buildable square feet.
303, 329, 331 West 76th St
5-story, 30-units, 17,141 sf
n/a / Rubin Isac and Alex Isac, Falco Isak Realty Services
n/a / Rubin Isac and Alex Isac, Falco Isak Realty Services
The five multi-family buildings sold for $15.5 million.
2215 Newkirk Ave (Brooklyn)
6-story, 79-units, 117,564 sf,
n/a / David Berger, Rosewood Realty Group
2215 Properties LLC / Aaron Jungreis, Rosewood Realty Group
The multi-family building sold for $14.7 million.
33-33, 33-55 11th St (Queens)
1-story, 57,400 sf
JPRG Holdings / Hentze Dor Realty
33-11 Associates Partnership and Jacobson Realty Corp / Grant Dolgin and Dmitri Gourianov, Kalmon Dolgin Affiliates
The industrial building sold for $14 million.
11 Spencer Ct (Brooklyn)
13-story, 23-units
Persam White / n/a
Gaia Real Estate / TerraCRG
The multi-family building sold for $13 million.
1400-1416 Fifth Ave
31,000 sf
Ashkenazy Acquisition Corporation / Lev Kimyagarov, Massey Knakal
Full Spectrum / Lev Kimyagarov, Massey Knakal
The retail condo sold for $12.5 million.
102 Greenwich Ave, 224-226 West 13th St
36-units, 11,843 sf total
n/a / Paul J. Massey, Jr, James Nelson, David Shalom, Massey Knakal
n/a / Paul J. Massey, Jr, James Nelson, David Shalom, Massey Knakal
The three multi-family buildings sold for $12.1 million, or $1,024 per square foot.
963 First Ave
5-story, 11,607 sf
n/a / Clint Olsen, Massey Knakal
n/a / Clint Olsen, Massey Knakal
The mixed-use building sold for $10.4 million, or $896 per square foot.
7 West 24th St
23,700 buildable sf
Mark Geragos / Tina Glandian
n/a / Bob Knakal and John Ciraulo, Massey Knakal
The mixed-use building sold for $9.5 million.
866, 868 Lorimer St (Brooklyn)
Development site
Chatham Development Company / n/a
New Warsaw Bakery Company and Brooklyn Electric Co. / Adrian Langsner-Smilovici and Michael J. Leben, Delta Commercial Real Estate
The two development sites sold for $8.7 million
141 Nagle Ave
44-units, 35,640 sf
n/a / Isaac Kohanim, Capin & Associates Inc.
n/a / Nathan Benelyahou, Capin & Associates Inc.
The mixed-use building sold for $8 million.
88 East End Ave
5-story, 7,875 sf
n/a / Thomas D. Gammino, Jr., Massey Knakal
n/a / Thomas D. Gammino, Jr., Massey Knakal
The mixed-use building sold for $6.1 million, or $775 per square foot.
401 East 57th St
4-story, 4,964 sf, 6,000 sf of additonal air rights
Sutton 57 Realty / Gary Schwartzman and Ira Rovitz Newmark Grubb Knight Frank; Michael Ferrara, Highcap Group
Anthony’s Overhead Doors, Inc. / Jeff Weiss, Highcap Group
The mixed-use building sold for $6.1 million.
39 Ferris St (Brooklyn)
14,000 sf
Kobe Bussan USA / Yoko Evans, Furumoto Realty
39 Ferris Street LLC / Jeffrey Unger, Kalmon Dolgin Affiliates
The industrial building sold for $5 million.
754 Grand St (Brooklyn)
5,840 sf, 4,000 sf of additional air rights
n/a / Matt Fernandez, Town Real Estate
n/a / Brendan Maddigan, Massey Knakal
The mixed-use building sold for $4.3 million, or $745 per square foot.
1026 Woodycrest Ave (Bronx)
6-story, 36-units, 23,508 sf
n/a / Shallini Mehra, Besen & Associates
1026 Woodycrest Holdings LLC / Amit Doshi, Besen & Associates
The multi-family building sold for $4.1 million, or $177 per square foot.
2480 Belmont Ave (Bronx)
5-story, 26-units total, 20,250 sf
n/a / Shallini Mehra, Besen & Associates
2480 Belmont LLC / Amit Doshi, Besen & Associates
The mixed-use building sold for $3.6 million, or $178 per square foot.
137, 148, 150 Patchen Ave (Brooklyn)
3-bldgs, 22-units, 20,000 sf total
Silvershore Properties / Marcel Fridman, Barcel Group
Patch Realty Corp / Marcel Fridman, Barcel Group
The three multi-family building sold for $3.6 million.
619 Nostrand Ave (Brooklyn)
11-units total
n/a / Marcel Fridman, Barcel Group
n/a / Bart Zimmermann, Barcel Group
The mixed-use building sold for $3.4 million.
1316-1318, 1322-1324 Nostrand Ave (Brooklyn)
2-bldgs, 4-story, 19-units, 18,600 sf total
Strand Two LLC / David Berger, Rosewood Realty Group
1320 Nostrand Corp / Michael Guttman, Rosewood Realty Group
The two contiguous buildings sold for $3.2 million.
546 East 182nd St (Bronx)
5-story, 25-units
n/a / Shulem Paneth and Eli Matyas, GFI Realty Services, Inc.
n/a / Wilfred Matias, GFI Realty Services, Inc.
The multi-family building sold for $2.8 million, or $112 per unit.
185 Graham Ave (Brooklyn)
4-story, 5,500 sf
n/a / Daniel Barcelowsky, Misrahi Realty
n/a / Brendan Maddigan, Mark Lively, Stephen R. Preuss, Massey Knakal
The multi-family building sold for $2.4 million.
80 New York Ave (Brooklyn)
8-units
n/a / Derek Bestreich, Lucien Sproviero, Steve Reynolds, Marcus & Millichap
n/a / Derek Bestreich, Lucien Sproviero, Steve Reynolds, Marcus & Millichap
The multi-family building sold for $2.3 million.
508 West 149th St
n/a
Aaron Running / n/a
508 West 149 St LLC / Sarah KatzWorley, Pleasant Properties
The multi-family building sold for $1.9 million.
235 Dekalb Ave (Brooklyn)
3-story, 2,280 sf
n/a / Stephen P. Palmese, Massey Knakal
n/a / Stephen P. Palmese, Massey Knakal
The mixed-use building sold for $1.8 million, or $800 per square foot.
719 Henry St (Brooklyn)
4-story, 8-units, 5,000 sf
n/a / Ronnie Shaban, Besen & Associates
Double 719 Realty Inc / Sanjay Gandhi, Besen & Associates
The multi-family building sold for $1.8 million, or $350 per square foot.
423 West 154th St
n/a
423 West 154 LLC / n/a
423 W154 LLC / Sarah Katz-Worley, Pleasant Properties
The multi-family building sold for $1.7 million.
6817 Third Ave (Brooklyn)
5-story, 10-units
n/a / Josh Golflam, Highcap Group
Jeffrey X Inc. / Roni Soleimani, Highcap Group
The mixed-use building sold for $1.6 million.
570 Putnam Ave (Brooklyn)
5,600 sf
n/a / n/a
n/a / Matthew Cosentino and Eric Satanosky, TerraCRG
The multi-family building sold for $1.5 million, or $323 per square foot.
239 Stanhope St (Brooklyn)
6-units
n/a / Shaun Riney, Dan Greenblatt, Thomas Shihadeh, Marcus & Millichap
n/a / Shaun Riney, Dan Greenblatt, Thomas Shihadeh, Marcus & Millichap
The multi-family building sold for $1.5 million.
17-31 Linden St (Queens)
3-story, 6-units
n/a / Gavin Bolsom, GFI Realty Services, Inc.
n/a / Alexandra Rossland, GFI Realty Services, Inc.
The multi-family building sold for $1.5 million.
1471 Amsterdam Ave
1-story, 1,350 sf
n/a / George Niblock, Friedman-Roth Realty Services LLC
n/a / George Niblock, Friedman-Roth Realty Services LLC
The retail building sold for $1.4 million.
297 Himrod St (Brooklyn)
6-units
n/a / n/a
n/a / Matthew Cosentino and Eric Satanosky, TerraCRG
The multi-family building sold for $1.3 million, or $257 per square foot.
565 Evergreen Ave (Brooklyn)
5,150 sf
n/a / Eric Eckhardt, Marcus & Millichap’s
n/a / Eric Eckhardt, Marcus & Millichap’s
The mixed-use building sold for $1.2 million.
104 Marcus Garvey Blvd (Brooklyn)
3-story, 3-units, 3,300 sf
n/a / n/a
n/a / Matthew Cosentino and Eric Satanosky, TerraCRG
The mixed-use building sold for $930,000, or $282 per square foot.
To view more deals visit our website: www.TheRealDeal.com 108 February 2015 www.TheRealDeal.com
OW N D I F F E R E N T. 8% LEASEBACK PROGRAM
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LUXURY S T UDIOS , ONE , T WO & THREE BEDRO O MS FROM THE $ 4 0 0’ S A L S O AVA IL A BL E , CO ND O MINIUM RE SIDEN CE S NEW ON-SITE SALES GALLERY: 551 NORTH FORT LAUDERDALE BEACH BOULEVARD, FORT LAUDERDALE, FLORIDA, USA 954 749 7200 | THEOCEANFORTLAUDERDALE.COM
EXCLUSIVE SALES & MARKETING
ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING REPRESENTATION OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, MAKE REFERENCE TO THIS BROCHURE AND TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY DEVELOPER TO A BUYER OR LESSEE. THE PROPERTIES OR INTEREST DESCRIBED HEREIN ARE NOT REGISTERED WITH THE GOVERNMENTS OF ANY STATE OUTSIDE OF THE STATE OF FLORIDA. THIS ADVERTISEMENT DOES NOT CONSTITUTE AN OFFER TO ANY RESIDENTS OF NJ, CT. HI, ID, IL, OR ANY OTHER JURISDICTION WHERE PROHIBITED, UNLESS THE PROPERTY HAS BEEN REGISTERED OR EXEMPTIONS ARE AVAILABLE. CONRAD® IS A REGISTERED TRADEMARK OF CONRAD HOSPITALITY, LLC, AN AFFILIATE OF HILTON WORLDWIDE (“HILTON” OR THE “HOTEL COMPANY”). NEITHER HILTON NOR ANY OF ITS PARTNERS OR AFFILIATES IS IN ANY WAY PARTICIPATING IN OR ENDORSING THE OFFERING DESCRIBED IN PUBLIC DISCLOSURE DOCUMENTS AND NONE OF THEM WILL RECEIVE ANY PROCEEDS FROM THE SALE OF THE CONDOMINIUM UNITS AND THE PURCHASERS OF THE CONDOMINIUM UNITS WILL NOT RECEIVE ANY INTEREST IN HILTON OR ANY OF ITS PARTNERS OR AFFILIATES. HILTON HAS NEITHER ENDORSED NOR APPROVED THE SALE OF THE CONDOMINIUM UNITS PURSUANT TO ANY PUBLIC DISCLOSURE DOCUMENTS.
Financing Address
Size
Borrower / Representative
Lender / Representative
Notes
101 Sixth Ave
23-story, 411,000 sf
Edward Minskoff / JLL
Citibank / n/a
A $200 million loan was arranged for the office building.
99-103 Washington St
50-story, 495-key
Holiday Inn Financial District / Meridian Capital Group, LLC
n/a / n/a
A two-year, $135 million loan was arranged for the hotel.
511 West 18th St, 131 10th Ave
2-bldgs, 69,000 sf total
The Related Companies / n/a
Deutsche Bank AG / n/a
A $125 million loan was secured for the development site.
200 East 82nd St
28-story
Rockpoint Group / Jason Krane and Patrick Hanlon, Ackman-Ziff Real Estate Group
Wells Fargo / n/a
A $115 million acquisition loan was provided for the mixed-use building.
25 Kent Ave (Brooklyn)
8-story
Heritage Equity Partners / n/a
Madison Realty Capital / n/a
A $70 million construction loan was arranged for the office.
60 Fulton St
23-story, 120-units
The Parkland Group, LLC / HFF
Pacific Life Insurance Company / n/a
A 33-year, $61.7 million construction-perm loan was arranged for the mixeduse development.
6002 Bay Pkwy (Brooklyn)
125,000 sf
Marcal Group / Meridian Capital Group, LLC
n/a / n/a
A 10-year, $49 million CMBS loan was arranged for the office property.
300 Lafayette St
11,622 sf
LargaVista Companies / HFF
n/a / n/a
A 20-year, $40 million fixed-rate loan was arranged for the development site.
96 Wythe St (Brooklyn)
8-story, 150-key
Heritage Equity Partners / n/a
G4 Capital Partners / n/a
A $40 million construction loan was arranged for the hotel.
714 Madison Ave
5-story, 6240 sf
Buccellati / Meridian Capital Group, LLC
n/a / n/a
A seven-year, $20 million loan was arranged for the office and retail property.
Other Deals Ivanhoé Cambridge closes on $2.2B acquisition of 1095 Sixth Canadian property investor Ivanhoé Cambridge, together with partner Callahan Capital Properties, has closed on the acquisition of 3 Bryant Park for $2.2 billion from Blackstone Group. The 1.2 million-square-foot office tower at 1095 Sixth Avenue — located between 41st and 42nd streets — houses tenants such as MetLife, Verizon and Dechert LLP. The tower is 97 percent leased. Whole Foods is also taking a large retail space on the Daniel Fournier, CEO of tower’s ground floor. The sale marks the priciest transaction Ivanhoé Cambridge of a single office building since the GM Building at 767 Fifth Avenue traded hands for $2.8 billion in 2008. “The opportunity to acquire a truly iconic property like Three Bryant Park is extremely rare,” said Ivanhoé’s executive vice president Arthur Lloyd. He added that acquiring the office tower “represents a cornerstone of our expanding U.S. office platform. It fits perfectly into our investment strategy of building a diversified portfolio of top-quality office properties in gateway U.S. office markets.” (The deal was announced after the deadline for the Deal Sheet.)
Jeff Sutton pays $86M for Lower Fifth Avenue retail co-op Less than a month after purchasing the Crown Building, Jeff Sutton’s Wharton Properties has purchased a lower Fifth Avenue retail coop near Union Square for $86 million. Anthropologie currently takes up the entire 12,946-square-foot space at 85 Fifth Avenue, which is split between a ground level with 15-foot-plus ceilings and a basement. The womenswear and home goods retailer holds the lease until 2021, Crain’s reported. Lower Fifth Avenue has become a busier shopping destination in recent years, with Eataly at its northern end and newly renovated J. Crew and Club Monaco stores to the south. Massey Knakal Realty Services’ Bob Knakal, who is now Jeff Sutton chairman of New York investment sales at Cushman & Wakefield, and his colleague John Ciraulo represented the seller, a company called Caguax. Sutton and national mall owner General Growth Properties bought the Crown Building at 730 Fifth Avenue for $1.75 billion in December, just one day after it hit the market. In September, Sutton bought a three-building Soho portfolio from Joseph Sitt for $327 million. (The deal was announced after the deadline for the Deal Sheet.)
110 February 2015 www.TheRealDeal.com
Savanna wraps up deal for new Meatpacking District property Real estate private equity and asset management firm Savanna bought a newly-built property in the Meatpacking District for an undisclosed amount. The firm purchased the property from Michael Miller and son Brandon Miller‘s Real Estate Equities and Alfieri Development, according to a release. The building, located at 461 West 14th 461 West 14th Street Street, holds 24,682 square feet. It is a corner retail property located underneath the High Line. As previously reported by The Real Deal, Savanna was thought to have made an offer of $85 million for the site in May. The property, which previously housed a Mobil gas station, is on the corner of 14th Street and 10th Avenue. The site has three storefronts. Real Estate Equities and Alfieri took out a ground lease on the site in 2012. That lease “collapsed at closing,” a source with knowledge of the deal told the New York Observer. In November, Savanna and the Feil Organzation sold 21 Penn Plaza to financial services giant TIAA-CREF. (The deal was announced after the deadline for the Deal Sheet.)
Sitt’s Thor picks up UES retail co-op for $42M Continuing his buying frenzy, Joe Sitt has acquired an Upper East Side retail co-op for $42.3 million. The deal closed last month, according to sources close to the negotiations. The 9,240-square-foot retail component at 1114-1120 Madison Avenue, near East 83rd Street, houses six tenants on the ground floor and lower level, including Italian restaurant Giovanni Venti Cinique, children’s clothing store Infinity and Maui-based brand Letarte Swimwear. The 56-apartment residential component of the 12-story, 98,000-square-foot property uses the address of 25 East 83rd Street. It is unclear 1114-1120 Madison Avenue whether brokers were involved. Sitt, who recently inked a nearly $800 million contract for the Caiola family’s residential portfolio, could not be reached for comment. In October, a two-story retail building next door at 1122 Madison Avenue hit the market for $50 million, as TRD reported. (The deal was announced after the deadline for the Deal Sheet.)
Relationship Driven. Execution Focused. Only Meridian Capital Groupâ&#x20AC;&#x2122;s powerful financing relationships can consistently achieve the unparalleled results our clients require.
Meridian Capital Group
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1 Battery Park Plaza New York, NY 10004 | 212 972 3600 | www.meridiancapital.com
REBNY GALA
Spinola bids colleagues farewell Elected officials and industry salute longest-serving president of city’s most powerful trade organization at glittering REBNY affair Marc Packman of Fisher Brothers and Suzy Reingold
or nearly three decades, Steven Spinola has worked hundreds of rooms in Albany, Washington and New York City on behalf of the real estate industry, and at the Real Estate Board of New York’s 119th annual banquet in mid-January, the room was unequivocally in the palm of his hand. The crowd in the New York Hilton ballroom broke into thunderous applause as REBNY Chairman Rob Speyer presented the outgoing president of the city’s most powerful trade organization with the Harry B. Helmsley Distinguished New Yorker Award. “Steve Spinola has been the most important person in the history of REBNY,” Speyer said. “He has made us a force to be reckoned with in the city, in the state, and it’s literally transformed the landscape of our industry.” ”My stepping down as your president only ends one chapter in the very impressive, continuing history of the Real Estate Board of New York,” Spinola said. “Together we have accomplished much. Great challenges remain and REBNY could not be in better hands.” He vouched for his successor, John Banks, saying the Con Edison lobbyist “brings to this position all of the skills necessary to lead our great industry.” Spinola addressed industry titans such as Mary Ann Tighe, Jerry Speyer, Burt Resnick, Jonathan Mechanic and Dan Tishman. The political elite also attended, including Deputy Mayor Alicia Glen, Public Advocate Tish James, City Planning Chairman Carl Weisbrod, Manhattan Borough President Gale Brewer, New York City Council Speaker Melissa Mark-Viverito and council members Daniel Garodnick, Jumaane Williams and David Greenfield. Mayor Bill de Blasio made a brief cameo and Senator Chuck Schumer dashed in at the end.
From left: le Ken Horn of Alchemy Properties; Alex Horn and Ivan Hakimian of HPNY Hakimi
F
From left: Joanne Podell of Cushman & Wakefield and Amy Rose of Rose Associates
From left: CBRE’s Mary Ann Tighe, Jessica Lappin of Alliance for Downtown NY
Jared Kushner of Kushner Companies
Jon Mechanic of Fried Frank
Ali Davis of REBNY and City Council member Jumaane Williams
Marc Holliday of SL Green
Mike Blaustein and Maureen Clancy of Barclays
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New York City Council Speaker Melissa MarkViverito and REBNY chairman Rob Speyer
United States senator Charles Schumer, center, with REBNY’s Steven Spinola, left
Alicia Glen, deputy mayor
MaryAnn Gilmartin of Forest City Ratner
Thomas Elghanayan of TF Cornerstone
From left: Neil Garfinkel and Larry Haber of Abrams Garfinkel Margolis Bergson
Joseph Aquino and Faith Hope Consolo of Douglas Elliman
Barry Gosin of Newmark Grubb Knight Frank
Peter Hauspurg and Daun Parris of Eastern Consolidated
112 February 2015 www.TheRealDeal.com
PHOTOGRAPHS FOR THE REAL DEAL BY ADAM PINCUS, GOTHAM PHOTO COMPANY AND CHANCE YEH
REBNY GALA Senator Chuck Schumer
From left: Adam Spies of Eastdil Secured; Sean McSweeney of Mitsui Fudosan America and Paul Pariser of Taconic Investment Partners
Pamela Liebman of Corcoran
Public Advocate Tish James
Norman Sturner of Murray Hill Properties
Joseph Harbert of Colliers International
Robin Abrams of Lansco
Jerry Speyer of Tishman Speyer
REBNY’s Steven Spinola
State Senator Leroy Comrie
From left: Georgia Malone of Georgia Malone and Co.; Gary Jacob of Glenwood Management and Cindy Neiditch of Counsel Abstract
From left: Jeffrey Levine of Douglaston Development; Angela Pinsky of REBNY and Ben Levine of Douglaston Development
From left: Jay Neveloff of Kramer Levin & Naftalis and David Neveloff of Green Field
From left: Cushman & Wakefield ‘s Bruce Mosler, Ed Forst and Ray Kelly
Scott Rechler of RXR Realty
Kent Swig of Swig Equities
From left: Mary Ann Tighe and Jessica Lappin
Incoming REBNY president John Banks
www.TheRealDeal.com February 2015 113
DEVELOPMENT UPDATES SALES UPDATES
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Wythe Lane Townhouses, a collection of six four-story, single-family homes just north of the Williamsburg Bridge, is now 50 percent sold. Each 3,800-square-foot townhouse features an open floor plan, 10- to 11-foot-high ceilings and a private garden. The garden features a built-in gas grill for al fresco cooking and dining as well as a 52-inch gas fireplace. Prices for the remaining residences start at $3.99 million. Halstead’s Harkov Lewis Team is handling sales. Contact: www.wythelane.com. 156 Broadway Sales launched at 156 Broadway, a century-old cabinet factory purchased by Boaz Gilad’s Brookland Capital in 2012 for $2.65 million and converted into a three-story, eight-unit building. There are four duplexes on the second level and four triplexes on the third; the ground floor will house retail. Three of the eight units have been made available: prices range from $745,000 to $795,000. Aptsandlofts.com is handling sales and marketing. Contact: www.aptsandlofts.com.
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498 West End Avenue Half of the available inventory at the 12-story, 19-unit prewar building has been sold, including all three-bedroom residences. The remaining four- and five-bedrooms units are priced from $7.8 million to $9.08 million. They range in size from 3,347 square feet to 3,784 square feet. Building amenities include an attended lobby, fitness room, and bicycle storage. Halstead is handling marketing and sales. Contact: www.498WEA.com.
175 West 95th Street Sales of studio and three-bedroom residences launched at the 27-floor, 226-unit full-service condominium conversion building. Residences range in size from 504 square feet to 1,253 square feet and in price from $620,000 to $2.1 million. Amenities include an attended lobby, a fitness center, children’s playroom, and over 10,000 square feet of indoor and outdoor space on the second floor accessible to residents. Corcoran Marketing Group is handling sales. Contact: 175w95.com.
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732 West End Avenue The 16-story, 14-unit building developed by Sackman Enterprises is 80 percent sold. The remaining residences are a $2.625 million, three-bedroom simplex, a $4.75 million triplex maisonette, and the $7.9 million penthouse. The units range in size from 1,777 square feet to 3,190 square feet. Amenities include an attended lobby, private elevator
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access and a fitness center lit by a gardenlevel atrium. Town New Development is handling sales. Contact: www.732wea.com. 114 February 2015 www.TheRealDeal.com
45 Great Jones Street One contract has been signed at 45 Great Jones, where four full-floor residences range in size from 1,579 square feet to 1,615 square feet and in price from $2.8 million
to $3.1 million. Amenities include direct elevator entry, bicycle storage and a backup generator that ensures core in-residence continuity-of-service, should a power failure occur. The building is also expected to receive a national green building standard certification. The ground floor contains 2,500 square feet of retail space. Great Jones Realty is the marketing and sales agency. Contact: www.45GreatJones.com. Compiled by Brendan O’Connor
DE L I VER IN G CU TTING E D GE FINANC IAL STRUCTURING $123,000,000
$70,000,000
$67,500,000
222 Units Multifamily
15,565 SF Retail
60,000 SF Office Condo
New York, NY
New York, NY
New York, NY
$31,175,000
$14,440,000
$11,250,000
258 Key Hotel
86 Units Student Housing
158,000 SF Retail
San Diego, CA
Knoxville, TN
Westminster, CO
Debt Acquisition
Debt Refinance
Debt Acquisition
Debt Construction
ONE FIRM. C A P I TA L
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Another Great Conference is Coming, Mark Your Calendar Now! 32nd Annual Regional Conference of Mortgage Bankers Associations March 8 - 12, 2015 Borgata Hotel Casino & Spa Atlantic City, NJ A new venue for the Regional Conference of Mortgage Bankers Associations, The Borgata Hotel Casino & Spa, a beautiful location with great restaurants, free wi-fi and free access to the health club for Regional Attendees and a $109 room rate! Two days of commercial m o r t g a g e lending/brokerage followed by the residential mortgage conference, still the best after 31 years! Attend both commercial and residential or pick the one of your choosing, either way a great choice! The exhibitor prospectus will be available soon so watch for further information about the Regional.
Murray Hill $2.2 million 111 East 30th Street, #12AB
Four-bedroom, three-and-a-half bathroom, 1,668-square-foot condo in the Pierpont. Features a south-facing private balcony, exposures from the north, south and east, and fully renovated kitchen. Building amenities include a 24-hour doorman, courtyard, and rooftop deck. Common charges: $2,014 per month. Taxes: $1,909 per month. Asking price: $2.55 million. 16 weeks on the market. (Brokers: Morgan Turkewitz, Citi Habitats; Frances Langbecker, Douglas Elliman.) “I had previously rented out the apartment for the owner. It was tenantoccupied when we started showing it, which made things a little bit difficult. But we listed it when we did because we were right at the height of the market. The tenant was home often … and there were boxes stacked on boxes stacked on furniture when people were coming by to look at the apartment. It was hard for them to imagine themselves in the space. That lasted for about a month. After the tenant moved out, someone came in and staged it. It looked like a completely different apartment. Activity really picked up, and two months later we closed the deal. The buyers were a young couple with a child. They just saw a place to raise a family and grow in. It’s a unique apartment — not everyone is looking for a four-bedroom. We didn’t have 20 people at every open house. But it has great potential. Actually, we got the highest price per square foot in the building.” — Morgan Turkewitz, Citi Habitats
Upper West Side $1.46 million 171 West 71st Street, #4C
www.mbanj.com
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Two-bedroom, one-and-a-half bathroom, 1,375-square-foot co-op in the Dorilton, a prewar Beaux-Arts building. Features newly renovated kitchen, double French doors 116 February 2015 www.TheRealDeal.com
opening onto a formal dining room and period moldings with gold leafing. Maintenance: $2,854. (46 percent deductible). 32 weeks on the market. Listing price: $1.45 million. (Brokers: Leslie Lazarus and Brian Wagner, DJK Residential; Chun Wong, Law Office of Chun W. Wong) “This apartment had been on the market with another firm for several months. We relisted it, and after a few small reductions in price it was featured in the New York Times’ Home of the Week. After that we received numerous offers over ask. The buyers had seen it in the Times. They were starting a family, looking for a place on the Upper West Side. The apartment itself is a little bit unusual — somewhat like a lavish bachelor pad. It’s a one-bedroom with a small room for a nursery. The owner had just lost her husband to a sudden death, so this was more than a transaction — [it was a] heartfelt transition. And the seller was really happy to sell to a family.” — Leslie Lazarus, DJK Residential
Upper West Side $335,000 243 West End Avenue, #711
The lobby of 243 West End Avenue
One-bathroom, 325-square-foot studio apartment in a prewar co-op. Features high ceilings, hardwood floors and a walkin closet. Maintenance: $768 (43 percent deductible). Asking price: $335,000. 4 weeks on the market. (Brokers: Sheryl Berger and Beth Littman, Argo Residential; Douglas Keisler, Flat Finders.) “The couple [who bought the unit] came to one of my other open houses. We had just put #711 on the market a few days before. I told them about this and that I would [show it to them] after the open house. They were buying for their son. They liked that it was a sponsor sale — no board package was needed, they didn’t even need board approval. And they had cash. The apartment was move-in ready and time was of the essence. Their son had to move out of his apartment on the 31st, but he was living in Times Square and we had to close on the 30th because no trucks were allowed into Times Square on [the day of ] New Year’s Eve. The sponsors’ attorney came back from vacation on the 29th [to get the deal done]. — Beth Littman, Argo Residential Compiled by Brendan O’Connor
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Consolidation game from page 50 While Savills is already a public company and Cushman is owned by the publicly traded Italian ďŹ rm Exor, many observers are expecting TPG and its partners to take DTZ public in a few years. In addition, some expect Exor to reprise its 2014 IPO of Fiat Chrysler, another company it owns, by spinning off Cushman. â&#x20AC;&#x153;Publicly traded organizations have a lower cost of capital and thus can pay more for both acquisitions and recruits,â&#x20AC;? said Peter Hennessy, the president of the tri-state region for DTZ. The drive to ďŹ ll gaps in revenue is whatâ&#x20AC;&#x2122;s often driving the shopping list. Mohr Partnersâ&#x20AC;&#x2122; Shibuya described each acquisition as either a â&#x20AC;&#x153;bolt-onâ&#x20AC;? (in which a ďŹ rm buys a company that provides them with a new line of business) or an â&#x20AC;&#x153;inďŹ llâ&#x20AC;? (in which the ďŹ rm purchases another ďŹ rm to grow an existing service). â&#x20AC;&#x153;Think about geography, think about service lines and about clients,â&#x20AC;? he said, explaining how executives determine which companies to buy and which areas to expand into. William Elder, executive vice president at the landlord RXR Realty, said that when a brokerage is managing the real estate needs of global clients (whether it be for ofďŹ ce leasing, building purchases or other investments), it needs to have a worldwide network to tap into. â&#x20AC;&#x153;When you represent the big, multi-national corporations, you need the footprint to be international,â&#x20AC;? he said. While leasing and sales can provide more than half of the revenue for most commercial brokerages in a strong market, that revenue stream is volatile. As a result, Wall Street likes public companies to have a steady stream of money coming in from advisory and corporate services
because it helps to bolster stock prices. â&#x20AC;&#x153;The corporate services business is huge for these companies, as itâ&#x20AC;&#x2122;s contractual and predictable income,â&#x20AC;? Elder said.
No guaranteed success This, of course, is not the ďŹ rst wave of consolidation of the commercial industry in New York. In 2008, the Toronto-based company FirstService acquired a stake in the local GVA Williams Real Estate. Now known locally as a branch of the global Colliers International, the company has a signiďŹ cant local share, but remains within a pack of second-tier players. More recently, in 2012, Newmarkâ&#x20AC;&#x2122;s parent company, BGC Partners, acquired Grubb & Ellis, which was in bankruptcy at the time. That move has, however, had little local impact. In addition, real estate mogul Andrew Farkas bought NAI Global, a global network of commercial companies, in 2012. NAI has made little headway in New York so far, but it struck a deal late last year with EVO Real Estate Group, which is now its New York commercial brokerage brand. And sources are not counting the ďŹ rm out, given Farkasâ&#x20AC;&#x2122; track record. In 1996, Farkasâ&#x20AC;&#x2122; Insignia Financial Group bought the Edward S. Gordon Company, the predecessor to CBRE in New York, the biggest commercial ďŹ rm in the city. Yet despite the massive amounts of money involved in these company acquisitions, there is no guarantee that joining forces will make an impact in New York. â&#x20AC;&#x153;[The] Savills Studley merger still wonâ&#x20AC;&#x2122;t make them a full-service ďŹ rm,â&#x20AC;? said Joseph Harbert, president of the Eastern Region for Colliers, calling the deal a combination
of â&#x20AC;&#x153;tenant rep and some investment sales.â&#x20AC;? â&#x20AC;&#x153;It wonâ&#x20AC;&#x2122;t make them competitive with full-service ďŹ rms,â&#x20AC;? he added. As for DTZ, Harbert said it has a weak presence in New York and others markets. â&#x20AC;&#x153;The DTZ folks have a lot of work to do before they compete effectively in New York and elsewhere,â&#x20AC;? he said. In fact, the largest power shifts in Manhattan in recent years were not the result of major corporate acquisitions. Instead they stemmed from good, old-fashion poaching. In 2011, JLL lured a large leasing team from Cushman that included powerbrokers Paul Glickman and Mitchell Konsker. Two years before that, the company wooed a top leasing team from Newmark headed by Scott Panzer. Both of those moves redirected tens of million of dollars in annual revenue, and massively upped JLLâ&#x20AC;&#x2122;s leasing game in New York. JLL also hired an investment sales team from Cushman in 2010 led by Richard Baxter, Jonathan Caplan, Scott Latham and Yoron Cohen. Sources said that while the new DTZ has some industry veterans with deep contacts, such as Hennessy, the ďŹ rm still lacks a major rainmaker. â&#x20AC;&#x153;It is going to be very hard to make real inroads against JLL, CB,â&#x20AC;? one source said. â&#x20AC;&#x153;It is a great opportunity [for DTZ], but the hard part is going to be getting real talent over there.â&#x20AC;? Hennessy said he â&#x20AC;&#x153;canâ&#x20AC;&#x2122;t disagree that the hard part is recruitiwng the right talent.â&#x20AC;? But he said the companyâ&#x20AC;&#x2122;s new resources and capital partners would allow it to do that. â&#x20AC;&#x153;DTZ has a new compelling story that we believe will resonate with the right talent,â&#x20AC;? Hennessy said. TRD
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Massey-Cushman from page 51 “We are going to take it as it comes,” he said, leaving open the possibility of refining the system as it’s being implemented. “We are not married to any particular way of doing anything. You have to be nimble in any environment,” Lo Russo said.
Put a tie on it Massey Knakal’s two founding partners — who met at Coldwell Banker Commercial Real Estate as young brokers and founded their firm back in 1988 — are widely credited with creating a professional platform for the city’s unglamorous, lower-end investment sales market, making it more palatable to institutional players. That transformation, sources said, is akin to what the late Edward S. Gordon, along with the lesser-known Robert Ballard, who’s still at Cushman, did for modernizing office leasing back in the 1970s. “They took a sector dominated by random, schlocky brokers and put a tie on it,” said one top investment sales broker, speaking about Massey Knakal.
Massey Knakal’s approach seems to have boosted the value of the firm. The sale of the company to Cushman took place at a multiple of “10-plus” times the firm’s net earnings, according to sources. “The multiple is north of 10, which is a high multiple for a transactional business,” said one industry player who signed a confidentiality agreement and so did not want to be identified. “It is not an annuity like corporate services.” Still, despite its valuation, Massey Knakal — which has very little name recognition outside of New York, but is arguably the most recognizable commercial brokerage in the outer boroughs — will drop its name entirely, said Massey. “The Massey Knakal name will fade pretty quickly,” one longtime Cushman broker said. Massey said only that a timeline to remove the name would be ironed out by the end of March. “We will change the name to Cushman and we plan to
communicate that to our clients. Our people are excited about being part of a global brand,” Massey said. Some sources pointed to the irony that the Massey Knakal name is being dropped, noting that it took serious shoe leather — brokering deals and plastering signage on buildings all over the boroughs — to get property owners to get to know the hard-to-pronounce name. Now agents have to introduce the Cushman & Wakefield name, which is more associated with the corporate Manhattan brokerage world, to Queens, the Bronx and Brooklyn. “I find it interesting that Cushman intends to do away with the brand,” said Robert Hebron IV, a broker with the family-owned, Brooklyn commercial brokerage, Ingram & Hebron Realty. “So much effort went into creating this incredibly recognizable market presence over all the years of their success.” For now, however, all brokers are handing out two-sided business cards with both company names. TRD
York and Marcus & Millichap took the fourth and fifth spots in the borough, which, of course, has seen an enormous amount of residential construction in Long Island City. Finally, in the Bronx (Staten Island was excluded from the ranking because there is not enough brokerage data) Rosewood was the top firm. It was followed by Newmark Grubb Knight Frank, Ariel Property Advisors, Besen & Associates and JLL. In that borough NGKF was boosted by one giant multifamily
deal, in which the Related Companies bought a 35-building portfolio from SW Management for $270 million. Rosewood’s Jungreis said with interest rates low and sellers desperate to secure tax breaks by plowing profits back into building purchases as they sell properties, the market will keep rising. “It will keep going up unless something happens,” he said. “It’s eight times rent, then 8.5 times rent then nine. Yesterday’s price is always cheap.” TRD
Investment sales from page 54 In Queens, Rosewood dominated, with 11 deals totaling $482 million. That included the $216 million sale by Hudson Realty Capital to an affiliate of the Midtown-based A&E Real Estate. Massey Knakal took second place, boosted by that same deal. They were followed by CBRE, which sold the office building 37-18 Northern Boulevard in Long Island City for $110 million. The Queens-focused Pinnacle Realty of New
120 February 2015 www.TheRealDeal.com
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Brookfield’s first Manhattan West office tower to cost $2.1 billion 2 million-square-foot building will have 100,000 square feet of retail BY RICH BOCKMANN rookfield Office Properties has pegged the total development cost for the first of its two Manhattan West office towers at slightly more than $2 billion, per an application it filed to avail of tax benefits. One Manhattan West — the northernmost of a pair of office towers set to rise as part of Brookfield’s 5.4 million-square-foot, mixed-use megaproject on the Far West Side — will cost $2.1 billion to develop, according to an application the real estate investment trust filed with the New York City Industrial Development Agency, the financing arm of the New York City Economic Development Corp. The figure includes hard and soft costs such as construction and marketing, as well as the price paid for land. The Skidmore, Owings and Merrill-designed tower at Ninth Avenue and 33rd Street will span two million square feet, 100,000 of which will be set aside for retail. The IDA will hold a hearing early next month to consider Brookfield’s application to make certain
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payments in lieu of property taxes, though the dollar figure of such payments was not immediately clear. Representatives for the REIT weren’t available for comment. Other developers in the Hudson Yards neighborhood have applied for the same financial benefits for their multimillion-square-foot real estate proposals, and in the process have revealed telling information about the projects. In July, Tishman Speyer put a $3.2 billion price tag on the 61-story office tower it is planning for the corner of 10th Avenue and 34th Street, as The Real Deal reported, and in December, the Moinian Group said it will cost $1.6 billion to develop its 1.7 million-square-foot office property at 11th Avenue. Brookfield finished work on the concrete platform capping the Penn Station rail yards under its site in November, marking a major milestone for the project. Soon after, the developer filed an application to purchase $93 million worth of bonus building rights for
Brookfield’s rendering of 1 and 2 Manhattan West.
3 Manhattan West, the 62-story residential tower planned at the southern end of the campus. TRD
NYC capital from page 42 Norway is fast becoming a top buyer of commercial real estate. “That’s something that’s really come to light in the last 12 months,” said Bob Knakal, founder of Massey Knakal Realty Services and chairman of New York City investment sales at Cushman & Wakefield. “With the ruble in the tank, no Russian investors are being aggressive.” In 2014, the Norwegian sovereign wealth fund paid $1.5 billion for a 45 percent interest in 601 Lexington. This past fall, the fund reportedly bid $2.2 billion (unsuccessfully) for Blackstone’s 1095 Sixth Avenue. It also holds a stake in 475 Fifth Avenue and 470 Park Avenue South with joint venture partner TIAA-CREF, a pension fund. Meanwhile, Israel, a longtime source of capital for New York developers, will launch its own sovereign fund next year. In 2013, the Israeli government approved a sovereign fund to manage the expected windfall from two newly discovered natural gas reserves. The fund is expected to start operating next year. In the meantime, as TRD has reported, developers have turned to the Israeli bond market to raise nearly $800 million for New York projects. Gary Barnett’s Extell Development raised $271 million through bond offerings on the Tel Aviv Stock Exchange; Boaz Gilad and Assaf Fitoussi’s Brookland Capital raised $34.5 million; David Lichtenstein’s Lightstone Group raised $120 million, and Abraham Leser’s Leser Group raised $150 million.
CMBS After grinding to a halt in 2009, the commercial mortgage backed securities market has roared back to life.
122 February 2015 www.TheRealDeal.com
Last year’s $13.3 billion in CMBS loans in New York City was more than double the $6.2 billion written in 2012, according to data from Trepp, a real estate analytics firm that specializes in CMBS. To fully grasp how far the market’s come, there were only $1.1 billion CMBS loans in 2010 and $2.8 billion in 2011. The increase in CMBS loans, in which pools of real estate loans are bundled together and sold off in pieces, comes as insurance companies and commercial banks ease lending standards. “When it comes to CMBS, everyone who closed their shop in 2007 has re-entered the market,” said Eastern Consolidated’s Aghravi. “People are just more comfortable with the real estate and the economy.” Among the big players, Cantor Fitzgerald’s commercial real estate arm, which launched in 2010, originated $10 billion in CMBS loans in 2014, nearly double the $5.5 billion in loans it originated in 2013. Credit Suisse, whose CMBS shop stopped originating loans in 2008, re-entered the market in 2014 with a $187 million deal for two hotels in Santa Monica, California. And, in January, French bank Societe Generale relaunched a CMBS shop, after winding down its CMBS loan practice in 2008. Major CMBS deals last year in New York City included the $700 million loan secured by David Werner and Mark Karasick to buy the Mobil Building at 150 East 42nd Street; $1.45 billion for 388-390 Greenwich Street, Citigroup’s headquarters; $900 million for the Grace Building and $750 million for 277 Park Avenue. Overall, there were nearly $100 billion in new CMBS issuances nationally in 2014. While that’s still less than the
record $230 billion in 2007 issuances, it far exceeds 2009, when CMBS loans dwindled to practically nothing. This year, CMBS loans are poised to go even higher, according to Trepp economist Joe McBride, who projected $120 billion to $130 billion in issuances in 2015. “There’s a high amount of loans maturing in the next three years, coming due from 2005 through 2007,” he said, describing a so-called “wall of maturities.” McBride said $70 billion in CMBS loans are coming due this year, the most ever, and 2016 and 2017 are expected to see upwards of $110 billion come due. With an opportunity for many property owners to refinance, he said, “There’s going to have to be a lot of new originations.” TRD
CORRECTIONS A N D C L A R I F I C AT I O N S
A list of New York City’s most expensive residential sales of 2014 that appeared in the January issue of The Real Deal incorrectly stated the price for 768 Fifth Avenue #901+. It is $38 million, not $33.2 million. The deal ranks as the 15th most expensive, not the 18th. *** The January magazine story “Code-and-flue season,” used the wrong photo for Tamarkin & Co. partner Kartik Desai. *** The January architectural review, “Adding a cherry on top,” incorrectly identified the architect for 345meatpacking. DDG designed the building.
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BIDs
from page 72
neighborhood, she said. Hudson Square now has roughly 45,000 people working there, in TAMI and other industries. As a result of the influx and the area’s improvements, the neighborhood’s retail scene has improved with many new restaurants.
While the former was formed 1979, the latter came about in 2005, around the time of the start of the neighborhood’s transformation. The main corridors that run through Long Island City — Queens Plaza and Jackson
Elizabeth Lusskin, president of the Long Island City Partnership, takes a picture each month from her window to document the changes in the Queens neighborhood.
Tucker Reed, president, Downtown Brooklyn Partnership he Downtown Brooklyn Partnership is the combination of three smaller BIDs from adjacent neighborhoods: the Metrotech BID, the Fulton Mall Improvement Association and the Court-Livingston-Schermerhorn BID. The partnership formed in 2006 and the different BIDs were incorporated in the summer of 2011. Since a rezoning in 2004, Downtown Brooklyn is becoming more residential, and in the next two years, roughly 12,000 more units will be added, Reed said. The BIDs’ biggest challenge as the neighborhoods change is transforming the governmental center of the borough into a 24/7 destination. The BID oversaw changes — such as repurposing buildings and renovating public spaces — necessary to attract more investment in the area. Together, the Downtown Brooklyn BIDs are among the largest in the city, with a total operating budget of roughly $7 million. Before running the partnership, Reed worked for the Bloomberg administration and ran a BID in Dumbo. He also worked for the Brooklyn-based Two Trees Management Company, and at one time served as the developer’s representative on the board of the Brooklyn Partnership. Reed has been in his current position since 2012.
picture from the office’s window overlooking Queens Plaza every month, to document the changes going on around her, such as new residential towers sprouting up. Before joining the Long Island City Partnership
T
Elizabeth Lusskin, president, Long Island City Partnership he Long Island City Partnership is both the local development corporation and the BID for the Queens residential hotspot.
T
in October 2013, Lusskin was involved with urban improvement and worked for Manhattan’s Downtown Alliance when it was first formed. “I really was so excited about this neighborhood,” she said. “It’s a city within a city … it’s not a one-dimensional challenge.”
Avenue, all the way down to Court Square — have seen major changes in the last decade. Lusskin said the area didn’t feel safe in the past. The BID has helped enhance it, through efforts like pushing the city to install a bike path leading up to the Queensboro Bridge and the transition of Dutch Kills Green — 1.5 acres of open space that is part of the Queens Plaza roadway, pedestrian and bicycle improvement project — along with the addition of new trees and new lighting. While thousands more rental apartments are being built throughout the area, retail development is still slow, Lusskin said. “There is still a ways to go,” she said. “We’re now in a situation where we have a lot coming that isn’t quite here yet.” With the influx of more residents, however, the BID director is expecting more retail to follow, but pointed to retail marketing as the last big frontier for the area. Lusskin takes a
New condo marketing costs Several players reached by The Real Deal were reluctant to share their marketing playbooks. Corcoran Sunshine’s Kelly Kennedy Mack, Douglas Elliman Development Marketing’s Susan De Franca, 432 Park co-developer CIM Group, and 53W53 developer Hines all declined to provide comment. Michael Stern’s JDS Development Group and Kevin Maloney’s Property Markets Group, the co-developers of the planned 111 West 57th Street, did not respond.
124 February 2015 www.TheRealDeal.com
Jessica Lappin, president, The Alliance for Downtown New York he BID for Lower Manhattan — fittingly, the city’s oldest neighborhood has the city’s oldest improvement district — is coming up on its 20th anniversary. With a budget of roughly $18 million, the Downtown Alliance is also among the city’s largest, encompassing nearly all of Lower Manhattan. When the BID started, Lappin said, “nobody was here after 5 p.m.” The alliance was tasked with the challenge of making the area a 24/7 community, including making it more attractive to retail and adding a convenient way to get around in the neighborhood. “There’s an energy and a dedication that you feel when you talk to tenants and residents,” said Lappin. “There’s real passion and commitment for this community.” Among the major
T
public real estate developments in the area over the last few years is the Fulton Transit Center near One World Trade, where nine subway lines come together. A mall is opening up inside the newly created transit hub. One of the projects Lappin is working on is a 12,500-squarefoot work, lounge and meeting place for the creative industries at 150 Broadway. NY Tech Meetup and NY Tech Council are planning to run programs from there. The alliance will operate the site, which aims to serve as a collaborative workspace. A massive retail revolution is also underway in the neighborhood. Including Westfield’s mall at the World Trade Center and the shops at Brookfield Place, roughly 250 new stores will open in the area over the 18 months. “It’s unbelievable that this will be a shopping destination, that’s a huge change for us,” Lappin said. “A very positive change.” The Alliance has a research department that gives out information about Lower Manhattan and is responsible for the Downtown Connection — a hopon, hop-off bus Jes Jes Jessica e ssic ica ic a Lappin Lapp Lapp ap ppin in n ser vice that operates throughout Lower Manhattan — along with homeless outreach, Lappin said. The former councilwoman started at the BID in March 2014. TRD
w w w. Th e R e a l D e a l . c o m
from page 48
Show, don’t tell Industry insiders agree that competition is also heating up in pre-development. They’re “coming up with extremely interesting and innovative designs that are magnificent, to be honest,” Shemesh said. “They look at it as, ‘Instead of extending more money into advertising, we’re going to deliver a superior product.’” Maundrell said more money is being put into exteriors, as well as amenities such as private pools and fire pits. Consider 515 Highline, the 12-unit condo building by Bauhouse Group that
will open for sales this spring. The building, which is bordered on two sides by the High Line, features a wavy facade designed by Soo K. Chan, as well as a private outdoor fire pit for each residence and finishes such as bleached oak floors and bronze and leather details. Bauhouse managing member Joseph Beninati said they’re not planning to hike the budget put together in late 2013. “That’s not in the cards for us. Our view is that a better party with fancier entertainment is not going to make a second tier location that is overpriced sell in the
marketplace … We’re not pricing at $6,000$10,000 a square foot.” Eight units will be priced at about $2,500 per foot, while four penthouse units will range from $3,500 to $4,500 per foot. Beninati isn’t concerned about the increasingly crowded marketplace. “We look at it in relationship to six billion people in the world,” he said, “and I just can’t travel anywhere on planet Earth these days without people talking about investing in New York.” TRD
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Only 6 percent of affordable units in NYC built below 96th Street Advocates call for subsidized housing in a greater range of neighborhoods BY TESS HOFMANN s rising rents in desirable neighborhoods encourage landlords to convert non-market-rate homes to market rate units, a massively disproportionate volume of the city’s affordable housing is shifting to impoverished and low-opportunity neighborhoods, according to a report from New York University’s Furman Center for Real Estate and Urban Policy. On average, neighborhoods that lost affordable units between 2002 and 2011 had rents of $400 more per month than neighborhoods where affordable housing was preserved, the report found. Neighborhoods converting more apartments to market-rate also tended to have better public schools, lower poverty rates, lower violent crime rates, and better access to jobs requiring an associate degree or higher. During this same period, the city’s newly constructed affordable units were located, on average, in neighborhoods with a violent crime rate in the top fifth of neighborhoods, a poverty rate over 30 percent, and a local public school where just 40 percent of students performed at grade level
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126 February 2015 www.TheRealDeal.com
in language arts, according to the report. “Rising market rents in a neighborhood make exits from affordability restrictions more likely, and they also may make preservation more expensive for the city,” said Max Weselcouch, director of the Moelis Institute for Affordable Housing Policy at the Furman Center. “Still, the need for
“Rising market rents in a neighborhood make exits from affordability restrictions more likely, and they also may make preservation more expensive for the city.” MAX WESELCOUCH, FURMAN CENTER
affordable units greatly exceeds the supply, and preserving units in a range of neighborhoods — low-cost and high-cost — may allow the city to spread its subsidy dollars further.” Building more affordable housing is central to Mayor Bill de Blasio’s agenda, and his administration has committed to building or preserving 200,000 units over the next decade. Since 2000, only 6 percent of the city’s subsidized housing was constructed in Manhattan below 96th Street, and of these, all have been in mixed-income 80/20 projects. As a comparison, in the 1970s, 17 percent of the city’s new affordable housing was built below 96th Street. Over the next decade, 58,288 subsidized units will become eligible to opt out of affordability restrictions, many of them located in high-amenity neighborhoods. The report notes that landlords with buildings in shabbier condition might be less likely to convert to market-rate, driving the overall quality of affordable housing down. Currently, the city’s largest concentrations of subsidized housing are located in Upper Manhattan, the South Bronx and Central Brooklyn. TRD
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SELECT LISTINGS
128 February 2015 www.TheRealDeal.com
F E B R UARY The Brooklyn Historical Society presents its first quarterly Brooklyn Real Estate Roundtable of 2015. A networking cocktail reception will be followed by the luncheon program. Caroline Pardo of Ingram and Hebron and John Horowitz of Marcus & Millichap are the co-chairs of the Real Estate Roundtable Steering Committee. 12 p.m. to 2 p.m. At the Brooklyn Historical Society, 128 Pierrepont Street. Individual series ticket: $1,000; corporate series ticket: $3,000. Information and registration: www.brooklynhistory.org.
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Elephant Networking hosts a New York City Real Estate Professionals Night, for residential brokers, commercial brokers, attorneys, CPAs, movers, home stagers, investors and buyers to connect. The event is capped at 125 people. 6 p.m. to 9 p.m. At Pranna, 79 Madison Avenue. Tickets: $10 for first 50 registrants; $20 for regular registration. Information and registration: www.elephantnetworking.com.
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The Museum of the City of New York and the Friends of the High Line present “The High Line as Urban Accelerator: A Conversation.” High Line co-founder Joshua David will discuss the public-private collaboration’s impact on the city and its economy with architectural critic Paul Goldberger and Vishaan Chakrabarti of SHoP Architects. At the Museum of the City of New York, 1220 Fifth Avenue. 6:30 p.m. Reception to follow. Fees: free for Museum and Friends of the High Line members; $12 students/seniors; $16 general public. Information and registration: www.mcny.org.
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At the Center for Architecture’s February Oculus book talk, Artist Dan Graham, writer Jessica Russell and illustrator Mieko Meguro speak about their book “Architecture/Astrology,” analyzing architectural figures like Frank Gehry, Frank Lloyd Wright and Le Corbusier through their astrological signs (Pisces, Gemini, and Libra, respectively). At the Center for Architecture, 536 LaGuardia Place. 6 p.m. to 8 p.m. Tickets: free for AIA members and students; $10 for non-members. Information and registration: cfa.aiany.org.
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The Real Estate Investors Association of New York City hosts a general meeting on business ownership. Reprosperity’s Heather Robinson will discuss her experience as an investor, business manager and serial entrepreneur. At the Wyndham Hotel, 345 West 35th Street. 6 p.m. to 9:30 p.m. Tickets: $15 for members; $30 for non-members. Information and registration: www.reianyc.org.
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The Real Estate Board of New York hosts the 17th Annual Residential Management Leadership Breakfast, at which it will honor Noreen McKenna of Brown Harris Stevens. McKenna will receive the Residential Management Executive of the Year Award. At the Roosevelt Hotel, 45 East 45th Street. Coffee: 8 a.m. to 8:30 a.m.; program: 8:30 a.m. to 10 a.m. Tickets: $85 for individuals. Information and registration: rebny.com.
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Real Estate Weekly hosts its 2015 Women’s Forum, “Women Helping Women.” The panels, led by speakers like Halstead CEO Diane Ramirez and the NYC Department of Building Chief Sustainability Officer Gina Bocra, will cover topics from cap rates to resilience to the future of New York’s changing neighborhoods. Ample time will be allowed for networking. At Wyndham New Yorker Hotel, 481 8th Avenue. 8 a.m. to 5 p.m. Tickets: $519. Information and registration: rewomensforum.com.
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The Professional Women in Construction’s New York Chapter hosts “Meet the Construction Chiefs,” a dinner honoring Skanska USA Co-chief Operating Officer Richard Kennedy, NYC Department of Buildings Commissioner Rick Chandler, Port Authority Engineering Department Deputy Director and Assistant Chief Engineer Denise Berger and IBEX Construction President Andy Frankl. At Club 101, 101 Park Avenue. 5:30 p.m. to 8 p.m. Tickets: $85 for PWC members; $95 for non-members; $100 at the door. Information and registration: www.pwcusa.org.
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The Museum of the City of New York’s Curator of Architecture and Design, Donald Albrecht, discusses “Paul Rudolph’s Postwar New York Interiors” with the University of Massachusetts’ Timothy Rohan, who has written a book on Rudolph. They will cover Rudolph’s residence on Beekman Place, fashion designer Halston’s 1970s townhouse, and numerous Fifth Avenue apartments. At the Museum of the City of New York, 1220 Fifth Avenue. 6:30 p.m. Tickets: free for Museum members; $12 students/seniors; $16 general public. Information and registration: www.mcny.org.
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25 The Anchin Construction & Development Forum presents a full day of education and networking. Discussions and break-out sessions will focus on the 2015 construction and development outlook, adding value through design, risk management, public-private partnerships and more. Keynote speakers are Eran Chen, founder of ODA architectural firm and Brad Perkins, co-founder and chairman of Perkins Eastman. At the Scholastic Auditorium, 557 Broadway. Tickets $499. Registration and information: anchinforum.com.
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The NYU Schack Institute of Real Estate presents the 4th Annual Conference on Sustainable Real Estate. The conference is intended to bring together leaders from the real estate industry, the public sector and research organizations to continue the conversation about sustainable real estate. Kathleen Hogan, Deputy Assistant Secretary for Energy Efficiency at the U.S. Department of Energy, will deliver the morning keynote address. At NYU Kimmel Center, 60 Washington Square South. 8:45 a.m. to 4 p.m. Information: www.scps.nyu.edu.
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COMINGS & GOINGS Durst, Fetner partnership breaks up ntil late last year, real estate enthusiasts walking by one of the Far West Side’s most distinctive projects — the Bjarke Ingels–designed “pyramid” on West 57th Street — would likely have spotted the logo of developer Durst Fetner Residential, the joint venture between the Durst Organization and Sidney Fetner Associates that was spearheading the project. Now that logo is out of commission. Durst and Fetner went their separate ways, ending a marriage that began in 2007 in which they jointly managed a large rental portfolio and developed major residential projects. Hal Fetner, the partnership’s erstwhile CEO, told The Real Deal they amicably Hal Fetner Do Dou Douglas ougla glas D Durst urs rsst parted effective Jan. 1. Durst spokesman Jordan Barowitz confirmed the split. “They were developing together and managing a portfolio of aggregated assets,” he said. “Now both organizations have met a critical mass in terms of the number of rental units so that it makes it more efficient to disaggregate the portfolio and manage the units on our own.” Durst, which controls a multimillion-square-foot commercial and residential portfolio that generates nearly $300 million in annual income (according to TRD‘s last count in October 2013), will continue to develop the two major projects Durst Fetner had in the pipeline: West 57th Street, a tetrahedron-shaped 709-unit rental building designed by Danish architect Ingels, and 855 Sixth Avenue, a 570,000-square-foot, mixed-use building at West 30th Street. Hal Fetner said his new firm, Fetner Properties, set up shop in the East 40s. It will retain an interest in 855 Sixth, but walked away from West 57th Street. It’s also developing a project in Brooklyn, he said, but offered no more details. By Rich Bockmann
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More exits, and some returns, at Corcoran he revolving door continues to spin at the Corcoran Group. The brokerage saw several high-profile departures last month, but also welcomed back two key players. Among the notable departures from the firm was Matthew Breitenbach, who left for Douglas Elliman. A top Hamptons agent, Breitenbach, 31, sold more than $1 billion of real estate to date as half of the motherson Breitenbach team. Breitenbach, who joined Corcoran in 2005, comes from a prominent Hamptons real estate family. His father, Stephen Breitenbach, is a luxury homebuilder and owner of Breitenbach Builders, while his mother, Susan, remains a top agent at Corcoran. Also departing Corcoran is Linsday Barton Barrett, who followed several former colleagues to Urban Compass. Barrett, who had a career in law before getting into real estate, joined Corcoran 12 years ago and closed $100 million in sales in 2014, including 45 Montgomery Place in Park Slope, which sold for $10.8 million, the third-priciest sale in Brooklyn to date. Not all of the changes at the Corcoran were departures. Bill Cunningham returned to the brokerage after an eight-month stint as president of Trump International Realty, and a few days later, longtime agent Andrea Wohl Lucas went back after a “brief association” with Elliman. Cunningham is assuming leadership responsibilities from Tresa Hall, Corcoran’s longtime director of sales, who is retiring this month after 25 years with the brokerage. Cunningham joined Corcoran in 2001 and worked his way up to running the firm’s main East Side office. He took the job at Trump International in May. Lucas first joined Corcoran in 2004. With husband Bruce Lucas, who also returned to the firm from Elliman, her clients include Lenny Kravitz, Martin Scorsese, Kelsey Grammer and others. In May, she sold developer Alexandre Mathew Breitenbach Bosoni’s penthouse at 170 East End Avenue for $14.85 million. By E.B. Solomont
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Tishman global property manager steps down he head of Tishman Speyer’s 99 million-square-foot global portfolio, Michael Norton, stepped down last month, and was replaced by Thomas Madden, who was head of asset management for Rockefeller Center. The change was announced in an internal company email signed by Jerry and Rob Speyer, the fatherand-son team that leads the company. “Mike has been with us for over 17 years and has been responsible for our first-class property management platform,” the email said. “Leading our global efforts, he has reinforced policies and procedures to ensure consistency of highquality management striving for operational excellence.” The change was a full-circle for Madden, who before 2000 was head of global property management before taking the lead at Rockefeller Center. He will continue to serve in that capacity. It was not known what Norton would do next. The email from the Speyers did not Michael Norton elaborate. Calls to the individuals were referred to an outside spokesperson, who did not respond to requests for comment. Tishman Speyer’s properties include about 20 million square feet in Manhattan, among 49 million square feet in North America, according to the firm’s website. In addition, the firm has 18 million square feet in China, 12 million in India, 10 million in Brazil and 9 million in Europe. Property management is a low-profile portion of the real estate industry, but impacts billions of dollars globally through vendor contracts and relationships with employees and unions. By Adam Pincus
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Movers and shakers Halstead Property Development Marketing promoted Robin Schneiderman to managing director and director of new business development from senior vice president. He works closely with Halstead’s research team, tracking trends. He joined Halstead in 2011 after a stint as a Citi Habitats broker. Robin Schneiderman Olshan Properties named Matthew Winn its chief operating officer, reporting directly to chief executive officer Andrea Olshan. Winn will lead daily operations and refine its operating policies. Previously, he was global retail COO at Cushman & Wakefield. James De Luca was hired by Colliers International as senior managing director of tristate operations. De Luca was most recently a senior director at Cushman & Wakefield. At Colliers he will continue representing landlords, tenants and consulting. James De Luca Colliers also tapped Eric Yarbro as executive managing director. Yarbo was most recently a senior vice president with CBRE, managing $500 million in transactions. He will continue to represent clients and will also be responsible for developing Colliers’ urban strategy and promoting diversity awareness. Camille Duvall-Hero was named director of sales for Warburg Realty’s downtown office. A top broker at Warburg for over 12 years, she will head the new 50-agent office. Sungwon Hwang joined Brown Harris Stevens from Corcoran, where she placed in the top 2 percent of brokers and was in the MultiMillion Dollar Club. She is fluent in Korean, Camille Duvall-Hero Japanese, and English and received her M.A. from New York University’s Schack Institute of Real Estate. Varughese Cherian was named senior vice president of WSP, the international engineering and design firm. He will supervise building projects, especially Sungwo Sun Sungwon gwon H gw Hwang wang wan g aviation-related projects.
Also on the move Avison Young’s Fairfield/Westchester office hired William Anson and Lori Baker as senior vice president and vice president, respectively… Halstead appointed Tony Oakley to executive director of sales, West Side… Tim Crowley joined CORE as director of new development… GFI Insurance Brokerage hired Vince Vieni as senior vice president of sales and strategy… Plaza Construction hired David Munoz as vice president of business development.
In memoriam Jay Furman, 72, the co-founder of New York University’s Furman Center for Real Estate and Urban Policy, died Jan. 4 from lung cancer. The Furman Center was launched in 1995. Furman also ran the firm RD Management, which developed and owned buildings throughout the U.S. and in Puerto Rico.
Announcements Town Residential founder and CEO Andrew Heiberger was appointed to the Hudson Union’s Board of Advisors.
Dress codes out of fashion WE H E A RD
Brokers mostly left to themselves to determine best on-the-job wardrobes
eet a dozen brokers and you’re likely to encounter nearly that number of standards for work attire. Few NYC firms enforce a written dress code, relying instead on best judgment. A handful offer guidelines. For instance, Brooklyn-based aptsandlofts. com discourages sneakers and shorts for men, along with midriffs and skirts shorter than just above the knee for women. But for the most part, it’s up to individuals to set their own standards. And while most brokers agree that having fashion sense is an unspoken Dvir Atias of Nest Seekers will prerequisite for success, they split dress down for rental clients on whether it should reflect the status of their clients. “If you want to sell million dollar apartments, you have to look like a million dollars,” said Dvir Atias of Nest Seekers International. But while Atias pulls out a full suit for million dollar-plus listings, he will wear corduroys or jeans with a blazer for rental clients. Zach Gutierrez of Urban Compass also tries to meet a
client’s comfort level — a suit jacket for a client from BlackRock, say, but chinos for a recent graduate. “People can relate to others who mirror them, not just physically, but in the way that they speak,” he said.
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Chelsea Werner of Bold New York will also cater to the client, for instance wearing more casual apparel like dark jeans and a fun scarf or hat when working with younger renters. Others say the age and status of the client shouldn’t matter. Linda Stillwell of Brown Harris Stevens likes to break out a leath-
Zach Gutierrez of Urban Compass tries to dress to a client’s comfort level.
er blazer when showing a Downtown property, but won’t otherwise vary her look. “Whether it is a celebrity or a businessperson, I think they enjoy that I am acting as my own person.” Among Stillwells high-profile clients are “The View” U an Urb Urban n Compass’ Comp pass ass’ s’ T Tinn Tinnie inn nn nie eC Chan han han host Rosie O’Donnell and Sassan Sas sano san no ssays ays clients’ clien cl ients ients’ ts’ s’ attire attir attir at tiire Sassano New York Mets owner Fred doesn’t doesn doesn’ do doe ssn’ n’t influence influ nfluenc ence her enc her e own ow w style. style st yle. yle e. Wilpon. Tinnie Chan Sassano of Urban Compass, who favors tailored shapes and a neutral palette, said dressing casually is a client’s prerogative, but their attire won’t influence her style. Pocket square devotee Paul LeMarc Brown of Stribling & Associates summed up the philosophy of consistency: “You’re there as an adviser to them, so I would think that the more professional you dress, the more at ease they would be.” Personal grooming also sends an important message. Gutierrez, for instance, recommends manicures — even for men. “It’s something that shows you’re detail-oriented,” he said. “Ryan Serhant was a hand model.” By Tess Hofmann
Aby Rosen shows his lighter side Opinionated developer shares travel, art and #TBTs on Instagram erman-born real estate mogul Aby Rosen is known for his vast property portfolio, often controversial art collection and unforgiving opinions on some of New York City’s famous institutions and players. (In Surface magazine’s Power 100 issue, he referred to Gary Barnett’s One57 as an “ugly monster” and an “atrocity,” and called author Tom Wolfe a “buffoon.”) What many may not realize, however, is that Rosen is somewhat of a dark horse on Instagram. The RFR Holding principal bears a modest following on the mobile photo-sharing app, with 3,688 followers as of late last month. Rosen may not have the social media star-power the The ultimate #TBT, Fredrik Eklunds Rosen in 1984. and Ryan Ser-
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hants of the real estate world possess, but the throwback Thursday photos, filtered Southampton sunsets and travel pics from Moscow’s Red Square speak for themselves. Also scattered throughout Rosen’s feed, which dates back Not above a selfie, it was “85 degrees in the shade” when Rosen posted this photo during a vacation last winter.
to 2012, are pictures of his family and snapshots of paintings and installations from across the world of art. Instagram users can glance at Rosen’s account (@abyrosen) and find themselves looking out over Tokyo, treading the waters off the Aeolian archipelago, or sitting across the table from worldrenowned sushi master Jiro Ono. By Kerry Barger
Scuba diving with sharks, shared just over two years ago.
HEARD AROUND TOWN Displaced pancakes? A WHITE MAN JOGGING, a white couple with a baby stroller, the disappearance of neighborhood standbys. All were offered as suggestions for how to tell when a neighborhood is gentrifying, during a panel discussion on the phenomenon in Downtown Brooklyn late last month. The consensus seemed to be that you know it when you see it. “Every single IHOP and beauty supply store that I grew up with are all gone,” said Jherelle Benn, a community organizer with the Flatbush Tenant Coalition. What to do about the changes hitting so many of the city’s neighborhoods was not as easy to pinpoint. But the panel members agreed there can be negative consequences to the 136 February 2015 www.TheRealDeal.com
boom in formerly marginal parts of the city. City Comptroller Scott Stringer said he doesn’t want to tell his kids they “have to live in Iowa or Montana, because they can’t afford New York.”
The Williamsburg “crave” SPEAKING OF GENTRIFICATION, Adam America paid $23 million for a development site in East Williamsburg that was formerly home to a White Castle. That’s an awful lot of sliders.
Almost taken IN WHAT MICHAEL LORBER DESCRIBED as “the worst experience of my life,” the Douglas Elliman broker nearly fell for an increasingly common type of scam: a fake kidnapping. The son of Elliman Chairman Howard Lorber revealed
that he received a call at his office in December demanding he pay $2,000 to save his brother Brian’s life. “They told me Brian had been in a car accident, they’d kidnapped him, broken his hand, and I needed to meet them with $2,000 in cash to pay for the damage to their car,” Lorber told the New York Post. “They said they had his cellphone and they’d shoot him in the head if I called him.” Lorber started to head to an ATM, but slipped a note to an office aide on the way out to call Brian at his office. “Thankfully, he was in his office and he was fine.” When he confronted the scammers on the phone, they still threatened to kill Brian. “Thank God I didn’t go and meet them,” Lorber said. Compiled by TRD staff
THE CLOSING
JONATHAN
ROSE A scion of the venerable Rose real estate dynasty, Jonathan Rose is a trailblazer on both the environmentally sustainable and affordable housing fronts. Guided by the idea that real estate can be a vehicle for social change, Rose has completed more than $1.5 billion in projects nationwide, including $850 million in New York. After graduating from Yale University and earning a master’s degree in regional planning at the University of Pennsylvania, the developer began his career in 1976 at Rose Associates, the firm started by his grandfather Samuel Rose and great-uncle David Rose in 1928. But after 13 years, he left the firm — which today is run by his brother, Adam, and cousin, Amy — and launched Jonathan Rose Companies. His firm currently has six projects worth $216 million underway in New York, including the nearly $80 million Harlem RBI project, which will have 89 affordable housing units, office space and a charter school. Rose’s first book “The Well Tempered City,” which examines what makes cities successful, is being published this year by HarperCollins. NAME: JONATHAN FREDERICK PHINEAS ROSE
BORN: JULY 21, 1952 HOMETOWN: WASHINGTON, D.C. MARITAL STATUS: MARRIED 30 YEARS CHILDREN: TWO DAUGHTERS Where does Phineas come from? My father’s name is Frederick Phineas Rose, and I was named Jonathan Rose. One day when I was about six or seven, I said, ‘I want your name.’ I don’t know if they ever really [legally] changed it. What were you like as a kid? I was always interested in nature, the environment and issues of social justice. I’d accompany my mother in the ‘60s on voter-registration drives. I’d also go with my father to visit the Mitchell Lama projects his company was developing. I remember going on weekends to the rental offices, where families would be there with their applications, and feeling so proud that my father was creating housing they could afford. You come from one of New York’s big real estate dynasties. What’s the family dynamic? We are separate, but in great friendship. We had a very amicable split 25 years ago. I’m very close with my family. Several family members have invested with me, and I have invested in their projects. When you are together, do you talk real estate? No. Between my siblings and cousins, there are 10 of us, and most of us are not in real estate. We’re much more concerned with what’s going on in the world than with what’s going on in real estate. 138 February 2015 www.TheRealDeal.com
Why’d you go out on your own? Twenty-five years ago, I was developing a [mixed-use] project on the old Atlantic Terminal site. My family decided that they really preferred to work privately, versus doing public-private partnerships. They sold the site to Forest City [Ratner].… There were a series of things I wanted to do that wasn’t what the family wanted to do. And it was clear to me that it was not fair to them. There were a lot of them and only one of me. How did your father take it? I think at that point he knew who I was, so he was actually very supportive. What did you learn from the Atlantic Terminal project falling through? It was a very, very large project, so after that I decided to do a small project perfectly and build my way up. I learned to design large projects so they could be developed in smaller pieces. How would you describe your development philosophy? One of the early decisions I made was that we would create extraordinary projects that would be highly duplicable.… If I created models that hundreds of other people copied, it would have much more scale. The best way to make projects copied is, they should be profitable. Very few people are going to copy a project that loses money. Do you have hobbies outside of real estate? One of the reasons my wife and I live in Garrison, New York, is the Appalachian Trail goes right by our house and we hike every weekend with our dogs. I also love to play music. I play bass; I have a group of friends and we just get together and play music about once a month. So you’re in a band? No, no. We could be a band, but I don’t want to have
a band. With a band you have to perform. We make music for pleasure. It’s a range of blues, folk and more exploratory music. Any hiking stories? I walked the Appalachian Trail 42 years ago during spring break in college. It was March and it was cold and snowy and crummy. I was in one of those threesided lean-to [shelters], and it was freezing; I was struggling to make dinner. I shined a flashlight on the wall, and someone had carved into the wall, “I was miserable here.” How did you meet your wife? When I was in my 20s, I started a jazz record company, and I met her through that world. She was producing concerts at the Cathedral of St. John the Divine for an artist named Paul Winter. I was distributing his records at the time. What’s your favorite album to listen to? [Pianist] Gerlinde Otto’s performance of Bach’s WellTempered Clavier, Book II. How would you describe yourself in a few words? Too busy. If you could have dinner with anyone, who would it be? Albert Einstein. He was not only an amazing mind, he was [also] incredibly compassionate. Is there a building or project you wished you had done? Rockefeller Center. But that’s obvious. Is it? It’s one of the best-loved, amazing [pieces] of real estate. I would have really liked to have done a building in Battery Park City. I competed to do buildings down there several times and was never able to win one. By E.B. Solomont PHOTOGRAPH FOR THE REAL DEAL BY STUDIO SCRIVO www.TheRealDeal.com July 2006 00
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