The Real Deal - June 2011 Issue by The Real Deal

Moving beyond Craigslist.org

Real estate power couples

Harlem hangs on

Plaza District sees action

104

Brooklyn politicos go after real estate

THEREALDEAL

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N EW YO R K R E A L E S T A T E N E W S

Vol. 9 No. 6 June 2011 $3.00

Elliman’s challenges

FACT New ofﬁce leasing in the Garden State during the most recent quarter was at its highest level in four years, led by the northern NJ waterfront with 409,000 sf. See page 18.

The trials & triumphs of New York’s largest ﬁrm BY C. J. HUGHES Prudential Douglas Elliman is grappling with a 30 percent drop SPECIAL REPORT in listings value and the loss of stars like Ilan Bracha and Tamir Shemesh. In response, the century-old ﬁrm is revamping its image and hiring new superbrokers like Michael Bolla and Dennis Mangone.

AT A GLANCE Shadow inventory: down but still here The overhang of unsold new condo inventory has dropped, but still remains a problem in some submarkets, such as the Financial District and Williamsburg, making it tough for developers to plan for the future. See page 16.

See story on page 46

Savanna’s buying spree Distressed-debt firm racks up office deals BY DAVID JONES Small but growing Savanna Partners has become one of the big players in the office sales market, with a half-dozen sizable debt acquisitions in the past 12 months. See story on page 24

Clubbiest co-ops A look at what it takes to get into toughest buildings

BY C.J. HUGHES The Real Deal went inside the gated-off world of the city’s priciest coops to determine some of the strict ground rules of getting in. Eightﬁgure price tags are just the start. See story on page 56

Hamptons heavy hitters (l. to r.): Tim Davis and Susan Breitenbach of Corcoran, and Harald Grant of Sotheby’s, are marketing some of the East End’s priciest listings.

The top Hamptons ﬁrms

Selling “dead space” With budgets tight, co-ops and condos are turning to selling roof terraces, basements, and even, in one case, a blank wall. See page 32.

As summer season begins, brokerages compete on market’s high end

BY PETER KIEFER The East End of Long Island is seeing an increase in seven- and eight-ﬁgure deals, including last month’s $36 million sale of the 55-acre North Haven estate known as Tyndal Point, the area’s largest sale this year. Brokers say this is evidence of an increasingly stable market following the roller coaster of the last four years. In fact, rankings of the top ﬁve brokerage houses remained unchanged from last year, according to The

The A-listers Townhouse brokers rise in top agents list

Joe Moinian can’t get a room at his own hotel

BY CANDACE TAYLOR Mansions are back, and giant Fifth Avenue co-op spreads are, too. As a result, there’s been a changing of the guard in TRD’s annual top Manhattan brokers list. Nine of the top ten agents are marketing at least one townhouse, for instance, and last year’s #1, Carrie Chiang, has been unseated by Paula Del Nunzio.

See page 106.

See full rankings on page 39

Real Deal’s annual rankFEATURE STORY ing of the biggest East End ﬁrms by number of agents. This newfound stability means more expensive listings are drawing interest. Pictured above are superbrokers Tim Davis and Susan Breitenbach of Corcoran, and Harald Grant of Sotheby’s, who have some of the priciest properties on the market, for $49 million, $68 million, and $58 million, respectively. See story starting on page 60

A conversion’s core

Inside the deal numbers at 737 Park Macklowe’s latest buy a good candidate for condos? Price for rental building: $255M Free-market units: 69 Rent-regulated units: 34 Price for free-market space: $2,087/sf Cap rate in 2010: 1.5 percent

Zell’s 500 West 23rd St.

BY ADAM PINCUS If developer Harry Macklowe converts his new, estimated $255 million trophy at 737 Park Avenue from rentals to condos (as many observers expect he will), it would be the biggest luxury conversion since the Apthorp. In a post-real-estate-crash world, does the likely plan for the 20-story, 108unit building in this posh East Side location pencil out? A detailed look at many of the numbers on this new luxury frontier. See story on page 50

High Line: phase two Alf Naman’s ﬁrst ground-up development; plus, Sam Zell tests the strength of the Far West Chelsea rental market. See pages 34 and 36.

The biggest retail event of the year 32,000 attendees! Poolside parties! Renderings of Midtown ofﬁce buildings! Adam Pincus reports from ICSC in Las Vegas. See page 104.

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Highlights J U N E

2 0 1 1

Off the sidelines

The shadow knows

At the desk of: Richard Maidman

What does Jennifer Aniston’s penthouse purchase say about the market?

A look at on-the-shelf shadow inventory, and how it’s been trending. Chairman of Townhouse Management has a love of Ayn Rand and old Cadillacs.

Maidman’s modest basement ofﬁce

spree 24 Savanna’s A little ﬁrm with a big appetite for distressed debt on ofﬁce properties.

with beneﬁts 26 Friending Whether it’s Twitter or Facebook, brokers say social media generates deals.

Savanna’s Schlank (left) and Bienstock

28 Real estate power couples These dynamic duos have twin passions: home and work. �� LEED for Schools��

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Daun Paris and Peter Hauspurg

payments can improve your credit.

the cellar 32 BeSelling it rooftop or basement, buildings move to monetize their previously dead spaces.

High Line I: Alf Naman

High Line II: Sam Zell

Brokerage’s brightest stars

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credit scores 30 Beyond Kenneth Harney on how phone bill

For this developer, the West Side park is more than just urban renewal.

Rendering of TEN23, Sam Zell’s new West Chelsea luxury rental

Equity Residential’s head seeks renters with TEN23, one of the ﬁrst ground-up residential projects since the downturn.

The top Manhattan residential agents. (P.S.: This year there’s a new No. 1!)

Costas Kondylis

Stories’ premieres 42 ‘Building Skyline-builder Costas Kondylis is the subject of a new documentary.

Elliman’s dog days? 46 Douglas NYC’s biggest ﬁrm endures some big exits — but makes some superstar new hires. ��

4 June 2011 www.TheRealDeal.com

Harlem’s not-quite-Renaissance Condos are selling, thanks to gentriﬁcation (and lower prices).

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Highlights continued new condo 50 Manhattan’s Harry Macklowe’s buying 737 Park.

Ready for a luxe conversion?

Think team 52 The Four friends start a brokerage and property management ﬁrm that offers some pretty spiffy services.

737 Park Avenue

Storming the castles A look at Manhattan’s toughest co-op boards.

Lily Safra and her home, the co-op at 820 Fifth Avenue

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Mount Sinai, revised

East End elite

With three projects in the works, including a new tower, Mount Sinai expands “hospital architecture.”

Just in time for summer, our annual list of top Hamptons brokerage ﬁrms ranked by number of agents.

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

Commercial Market Report

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

From left: Harald Grant, Susan Breitenbach and Tim Davis

Movers foot the bill Feeling squeezed, buildings increasingly slap fees on new owners, tenants.

National Market Report

Reports from around the country on signiﬁcant developments and trends.

The Deal Sheet

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

100

Residential Deals

�� Metals in Construction ��

Brokers in the apartment market talk about their recent transactions. Subletting? Be prepared to write some big checks.

District Q&A 64 Plaza Experts on the fastest submarket to recover, and its unusual bounce. ��

6 June 2011 www.TheRealDeal.com

Closing: Joe Moinian 106 The The force behind the W Downtown chats about 3 Columbus Circle, his sale on Park Avenue, and more.

102

Comings & Goings The latest job moves and company announcements? We’ve got ’em here.

104

We Heard

A lighter look at industry buzz.

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E D I T O R’S

NOT E

Summertime not-so-blues

t’s that time of year again — time to escape the city and head to the beach. Time to trade your pumps and wingtips for flip-flops and sandals. Time to trade fluorescent office lighting for the sun beating down on your back. Time to reserve lunch tables for lobster roll shacks, get pieces of corn stuck between your teeth, and wash it all down with a beer. With summer season in the Hamptons kicking into gear, we thought, “What better time to take a look at the biggest firms and priciest deals on the East End?” Unlike those caught up in the migration from Manhattan, it hasn’t been vacation time for top agents out there on Long Island. In an improving market, they’ve been listing and closing deals with big seven- and eight-figure price tags. Take a look at our cover: Who does Manhattan superbroker Dolly Lenz of Douglas Elliman trust when she wants to sell her Water Mill house? That would be Tim Davis of rival firm Corcoran, who is marketing Lenz’s seven-bedroom manse for $5.9 million. And that’s one of Davis’ tinier listings: He’s got two $38 million properties on the market in the Hamptons, and a $49 million estate he is selling as well. While Elliman is the largest East End firm, the two other East End superbrokers gracing our cover are Susan Breitenbach of Corcoran and Harald Grant of Sotheby’s, who have Hamptons properties on the market for $68 million and $58 million, respectively. While those estates may not hit their asking prices, they would surpass the

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In raising prices, maybe the smart money knows something the rest of us don’t. Manhattan price record if they did, proof of the big money involved in real estate in the Hamptons. Meanwhile, another top broker, Gary DePersia, has sealed the priciest closed deal of the year so far on the East End — $36 million for the Tyndal Point estate, north of the highway, in Sag Harbor. Of course, there is time for play this summer, too. One rite of the season for the New York real estate elite has been developer Joe Moinian’s annual party at his waterfront Westhampton house (elaborate enough to involve several changes of outfit by the dapper Moinian). If you snag an invite and don’t already know him, you can learn more about Moinian in our “Closing” interview on page 106. Moinian talks, among other things, about recently raising the price of his unsold apartment at 1045 Park Avenue. The price increase is partly a result of a renovation and partly a result of the improved market, he says. For a while, this market has been about properly pricing apartments in order to achieve healthy sales. (See more in our Residential Market Report on page 14.) Yet in raising prices (which Davis has on Lenz’s house, too), maybe the smart money knows something the rest of us don’t. Speaking of smart money, this summer will mark four years since the onset of the credit crunch, which first reared its ugly head in July 2007. It’s hard to believe it has been that long. I remember driving back then from the North Fork, scratching mosquito bites and listening in rapt attention to an NPR segment explaining what credit default swaps were, and how they had almost done our financial system in. So much of our collective economic outlook is still centered around that summertime crash, but should it be? If you look at many of the stories in this issue, they show the extent to which the city’s real estate market (if not the nation’s) has staged a recovery. We look at the decline in residential shadow inventory in Manhattan (page 16); the improving northern New Jersey office market (page 18); the impact of Condé Nast’s $2 billion lease at One World Trade Center (page 22); the opening of the second phase of the High Line (page 34); one of the priciest residential conversion deals in a long time (page 50); and the demand for high-end office space in the Plaza District (page 64). Finally, check out our annual survey of Manhattan’s top agents (page 39), and some of the challenges faced by the city’s (as well as the Hamptons’) largest brokerage, Douglas Elliman (page 46). Maybe those stories will get you to stop worrying about the next global meltdown. Here’s to enjoying the lobster roll and corn on the cob.

Stuart Elliott 12 June 2011 www.TheRealDeal.com

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The one with the penthouse Aniston and other buyers come off the sidelines to make deals BY CANDACE TAYLOR ctress Jennifer Aniston has long sought to trade the (unrealistically spacious) apartment she inhabited on “Friends” for a real, ﬂesh-andblood Manhattan home. For

RESIDENTIAL MARKET R EPORT years, she’s been spotted checking out everything from newly constructed Financial District

condo 20 Pine to the Village coop 552 LaGuardia Place. Now, Aniston has ﬁnally made up her mind. Last month, her purchase of two units at the West Village condominium 299 West 12th Street hit public records, signaling once and for all that Aniston is ready to commit. Whether her buy at the building, developed by prewar tastemakers Bing & Bing, indicates a market recovery is less clear. According to the listings web-

site StreetEasy, Aniston paid $4.95 million for an 18th-ﬂoor terraced penthouse owned by the celebrity hairstylist Sally Hershberger, some 16 percent less than its last asking price of $5.9 million. However, she paid more than the $1.8 million asking price for the downstairs one-bedroom Apt. 17G, plunking down $2.1 million, roughly $2,500 per square foot. Apartment 17F is also in contract for just under its asking price of $1.99 million, listing broker

Jeffrey Stockwell said. However, he said Aniston is not the buyer. Now, 17G’s higher-than-expected price could be the result of savvy negotiating by the listing broker. But it’s also symptomatic of an overall schizophrenia in the marketplace, brokers said. Holdouts like Aniston now seem willing to come off the sidelines, brokers noted. Still, it’s difﬁcult to predict which apartments will launch bidding wars, and which ones will sit.

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“It’s astounding to me how some apartments get 10 appointments a week and others get one, and the apartment with one can have lower pricing,” said Elliman’s Leonard Steinberg. “There’s almost no rhyme or reason.” Ari LeFauve, senior vice president and associate broker at MNS, said he’s noticed a similar trend. “In some cases, bidding wars are becoming prevalent again, and in other cases a listing will sit stale for months,” LeFauve said. Ray Assis, an associate broker at City Connections Realty, said geography plays a role in demand, but it’s still unpredictable. “I’m seeing bidding wars with studios and two-bedrooms in the Columbus Circle area,” he said. Meanwhile, a $4 million exclusive in FiDi “had little activity,” with only a few buyers looking at it. Would-be purchasers remain obsessed with getting a deal. “Pricing, pricing, pricing; it’s all about pricing,” said Prudential Douglas Elliman’s Jacquelyn Lew. Often buyers’ perception of price is more important than the actual dollars and cents. “If it is perceived that a property is asking a realistic price, there is enough demand that you may experience a bidding war,” LeFauve said. “If the property is perceived to be overpriced, it will languish unsold.” Buyers are displaying more urgency than they have in the past. “The amount of people out shopping has definitely increased,” said Steven Halpern, a senior vice president at the brokerage A.C. Lawrence. “The process has gone from molasses-in-the-winter slow to rapid,” added Kristin Hitsous, associate attorney at real estate law firm Rosabianca & Associates. “I have had to, at times, drop everything to review an offering plan and financials … for a client anxious to sign a contract.” These bidding wars also mean that some properties are going into contract above their asking prices, which was virtually unheard of in recent years. “We are seeing well-priced properties moving quickly, with bidding wars and many contracts above asking price,” said Stephen Dore, a real estate salesperson at Bond New York. Stockwell, a senior vice president at Stribling, said several of his sellers in recent weeks have “refused to countersign contracts that the buyers had signed. They think they’ll get 50 percent more in a few years.” TRD

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A long shadow

Three years after the ﬁnancial crisis, shadow inventory is down, but hasn’t vanished BY JANE TIMM hortly after the ﬁnancial crisis of 2008, experts worried that the market was in even worse shape than it appeared. The culprit? Thousands of stalled and vacant condo units that were being held off the market — so-called shadow inventory — threatening to add years to New

York City’s real estate recovery. In today’s improved economy, many in the industry are wondering what happened to all that inventory. With sales picking up and some new condos morphing into rentals, everyone agrees that the number of shadow units has dropped. But no one knows by exactly how much.

“I don’t think there’s that much shadow inventory out there,” said Halstead Property executive director of development marketing Stephen Kliegerman, adding that he believes initial approximations may have been overblown. He said he thinks that New York City only has about 1,000 units of shadow inventory.

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Real estate appraiser Jonathan Condominium Recovery. The Miller, the CEO of Miller Samu- once-stalled, 597-unit Shefﬁeld, el and the preparer of Prudential for example, has sold over 100 Douglas Elliman’s market reports, apartments since changing ownhas a different take. In 2009, Mill- ers during the recession. er estimated that there were beStill, Miller estimated that it tween 6,000 and 8,000 shadow units in Manhattan. Now, he said, the borough still has 99 John Street: 180 units 4,000 to 5,000. For New York City as a 20 Pine: 10 units whole, he estimates that there are currently just un- The Edge: 210 units der 20,000 units of shadow Northside Piers: 75 units inventory. “There certainly has been some would likely be another two to erosion of [the 2009 estimate],” four years before the city’s remainsaid Miller, who is also a partner ing shadow inventory is fully abin the condo conversion venture sorbed into the market. Just because brokers “don’t see it, it doesn’t mean it isn’t there,” he said. At press time, there were 9,114 units for sale in Manhattan, according to real estate data provider StreetEasy. Some 3,145 of those for-sale units are in new or recently converted buildings, but shadow inventory could mean that Manhattan’s new development inventory pipeline exceeds 7,000 units. Shadow inventory is common in large buildings, where sellers hold off on listing apartments to create the appearance of scarcity and prevent ﬂooding the market with hundreds of similar units. In some large condo conversions, units earmarked for eventual sale still have rental tenants living in them. Additionally, banks may hold properties off the market after a foreclosure to wait for conditions to improve. That’s especially common in today’s market, according to developer Josh Guberman. “We’re seeing [it] more and more, where banks are basically taking back sales for stalled projects and selectively marketing the most sellable units,” said Guberman, the president and CEO of Core Development Group. Many view the Financial District, promoted as an emerging market before the crisis, as the epicenter of the city’s shadow inventory. Miller said as much as 40 percent of Manhattan’s shadow inventory is Downtown, and that the majority of it is in the Financial District. In 2008, for example, 99 John Street was converted from luxury rentals to a condominium known as the 99 John Deco Lofts. The 442-unit building is now 51 percent sold, according to Tali Berzak, the sales director of 99 John and a Nest Seekers International

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16 June 2011 www.TheRealDeal.com

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New Jersey office market improves C

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Ele c t r i f

yin Con m e r e le c t g m o v e r n ic s P n as on mp ic ch Br o k l y N w k ny n i t s n w i n Ap r i l f o r t h o v r si 3 c r p o r a 25,000-s q u a r t o et h ad qu rt r f o o t Jo s e ph s Ta fir t b u t y l o r wa s n t s C EO u r at a f r m t h $102 m i l l io n ub d y (Th e R s t at e le d t h l D l) d al Going to Cali

Mack-Cali Realty Corporation, a major New Jersey-based REIT, announced that it leased an impressive 787,471 sf at its office properties in Northern and Central New Jersey during the first quarter. (NJ & Co.)

R isi ng

re n t s

ac ro s s sp ac e s e c fi f o n o f 34 re n t s o ave r ag e n As k in g a p u re .46 p e r rs e y we r t o $24 e t Ne w Je r a u q he t h e firs t e y h ad t s r c e n t s in e J w c re a s e h e r n Ne - c e n t in s f. N o r t 6 4 a jum p — e n t of h igh e s t a s k ing r e g a r e v E) to an a s f. (CBR r e p 4 1 . $25

18 June 2011 www.TheRealDeal.com

La rg es t le a se The big ges t lea

sin g dea l in the sta te dur ing the firs t three mo nth s of thi s yea r wa s Qua lit y Tec hno log y Ser vic es’ renewal of its 127,865 sf space at 95 Col um bus Circle Dri ve in Jersey Cit y. (Ob ser ver)

On the wa terfront Th e N o

r waterfrothern Jersey robust ont has seen with 409,5ffice leasing, ing hands 77 sf changquarter, in the first the high helping fuel est state first-quar wide leasing to ter new four year tal in s.

fo r leckss Newmear,rk Ne wa rk’s Bri Cit y

Thi s sum Develo pment Cor p. wi ll an nou nce a new strate gy for ent icing bus ines ses in oth er parts of the state to rel ocate. An adv an tage the gro up is tou ting is downto wn Newark’s rents, 60% less than rents for similar site s in NYC.

Statewide signingrse

CB Richard Ellis e 1.3 ported there wer ice million sf of off the space renewals in the first quarter of New year statewide in 47.1 Jersey equaling tal percent of the to leasing action

A lot of availability The state had 33.96 million sf of available space on the market at the end of the first quarter of this year, compared to 33.93 million the prior quarter. It’s a subtle increase, but makes for the highest first-quarter number since 2007. (CBRE)

e l a s ord

istoth e h o k n i e o sal tate t cpp s f al es p a e o r t r e c te , Th e . o f fi quar .J t th e N s f . r om e fi c ry o h . t w ee in B i s n o t, sp li t b p l ac o t ing e fee tr e e t c ord q u ar Hudson S s b 0 0 0 to c 827,0 and 9 as sold 0 1 7 3 $ 0 n ity, w tors for twee C y e s per ve rs llis In , or $374 ot. in Je E d r n o Richa millio square f

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PHOTOGRAPH FOR THE REAL DEAL BY MICHAEL TOOLAN

the

Desk

of:

RichARD MAiDMAn

Daughter Dagny Maidman was named for a character in Ayn Rand’s “Atlas Shrugged.” Rand’s conservative politics were influential, Maidman says.

Every year , Maidman sends out a holiday card of himself and wife Gail dressed in various costumes. A recent turn was as Superman.

Einstein is a hero. “Not only was he a gentle soul in his own way,” Maidman says, “he was a good Jewish person.”

The Aurora condo was developed at 554 Third Avenue with a $36 million loan from CIBC World Markets, which this tombstone celebrates.

In the 1970s, architect Richard Meier converted a wooden saltbox colonial in Long Island into this white modern dwelling, which today serves as a weekend home for the Maidman family. A corkscrew steel slide twists from a third-floor window to the ground.

Maidman raised money for Mayor John Lindsay in the 1960s, and this poster was effectively a thank-you note.

“Exactitude,” as spelled out on this poster, is a personal motto. “You can never draw a perfect right-angled triangle,” Maidman says. “Everything in life is failing, but failing in determination.”

A pride and joy is Maidman’s 1939 Cadillac, which measures 22 feet, boasts a 16-cylinder engine, and was once owned by casino mogul Bill Harrah. “I use it socially, dressed up in my top hat,” he says.

A gourmand who often travels abroad to savor different cuisines, Maidman shuns microwaves because “they are no good for a bagel or bialy.”

n New York, where real estate often runs in the family, Richard Maidman, 78, fits right in. He is chairman of Townhouse Management Company, which grew out of a dress company founded in 1933 by his father, William, and he works alongside his son Mitchel, who serves as the company’s president. But the Maidmans may be most closely associated with another real estate clan, the Dursts. For decades, the two families haggled over 113 West 42nd Street, a narrow high-rise owned by the Maidmans that the Dursts needed to raze to make way for the Bank of America tower. Both sides finally struck a deal, and the Dursts picked up the building for a reported $13 million. Today, Townhouse, which owns or manages 60 rentals, co-ops and condos in Manhattan and the Bronx, is leasing 35-39 East 63rd Street, a new luxury rental where one-bedroom rents average $10,000. Maidman’s office, meanwhile, is decidedly more modest, shoehorned into the basement of a Midtown high-rise where the rent is $27 a foot. B y C. J. H ugHes

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Availability rate tightens in Manhattan as Condé Nast heads to the World Trade Center BY ADAM PINCUS he agreement by publisher Condé Nast to lease 1 million square feet at One World Trade Center underscored a trend of companies willing to move away from their traditional core locations in Midtown. “Tenants are being more open about where they are located, which is refreshing,” David Goldstein, an executive vice president at commercial advisory firm Studley, said. “It is terrific to bring a cre-

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C OMMERCIAL MARKET R EPORT ative use into an area that is traditionally dominated by financial services, legal services, insurance companies and the like.” That openness facilitates another long-term trend. With development opportunities tight in the center of Midtown, over the years, builders have been constructing towers farther west and south, a study by commercial firm CB Richard Ellis shows. Howard Fiddle, a company vice chairman, illustrated the shift over the decades in a presentation last month to the commercial real estate trade group NAIOP. New construction, which was centered around Sixth Avenue in the 1970s, began to move west in the 1990s and 2000s, and most of the major new development projects being considered today are at Eighth Avenue or farther west, such as Boston Properties’ site at Eighth Avenue and 55th Street, or Related Companies’ Hudson Yards at 10th Avenue and 33rd Street. “As a firm we are quite bullish about the viability of the south and west’s pull on the Midtown market,” Fiddle said. “It is not about ‘if,’ it’s ‘when.’” Overall asking rents in Manhattan rose by $0.41 per square foot to $50.34 per foot in April from the month before, and the availability rate fell by .2 points to 12.2 points, the most recent figures from CBRE showed.

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www.gansevoortnyc.com 22 June 2011 www.TheRealDeal.com

Even as the leasing market improved over the past year in Midtown, there were still firms returning unneeded blocks of space to the market as recently as last month. The Conference Board, the group responsible for publishing an influential index of leading economic indicators, put its entire 63,594 square feet at Rudin Management’s 845 Third Avenue on the sublet market; the block is made up of part of the second floor, and all of the third and fourth floors, information from data firm CoStar Group shows. Also, media company CBS listed

Manhattan ofﬁce stats Manhattan

Availability Average rate asking rent

Apr ’11 Mar ’11

12.2% $50.34 12.4% $49.93

Midtown

12.3% $58.73 12.3% $58.14

Apr ’11 Mar ’11 Midtown South

11.1% 11.5%

Apr ’11 Mar ’11

$43.41 $42.72

Downtown

Apr ’11 Mar ’11

13.0% $38.68 13.2% $39.33

Source: CB Richard Ellis

floors two through five at its headquarters building, known as Black Rock, at 51 West 52nd Street, for a total of about 94,000 square feet. While together those two blocks of space don’t move the market, they show that even in an improving market, occupancy remains in flux. Average asking rents rose by $0.59 per square foot to $58.73 per square foot in April from the prior month, and the availability rate remained flat at 12.3 percent, figures from CBRE revealed.

Midtown South With Midtown South’s office leasing environment the tightest in Manhattan, brokers in recent months have put several large blocks of Class B space on the market. “These are not in the ‘mainstream’ of big blocks of space,” said Nicola Heryet, a senior managing director at Cassidy Turley. “Many of these buildings are not going to appeal to your average 100,000square-foot tenant. You are not going to get a law firm going over there,” she added. However, the parcels would attract schools and creative users, she said. Insiders added that some of the space was so-called shadow inventory, which owners had kept off the market even though it was unoccupied, reluctant to lease it for a low price, while other space was composed of expiring leases. In one of the largest recent additions, the owner of the New Yorker Hotel building at 481 Eighth Avenue at 34th Street, the Holy Spirit Association for the Unification of World Christianity (also known as the Unification Church), put 243,000 square feet of direct space on the market in February, data from CoStar showed. A Cassidy Turley team that does not include Heryet took over the agency from Continued on page 88

PR O F I L E

Buy. Fix up. Repeat. With six debt acquisitions in the past 12 months, Savanna Partners is on a spree in the office market BY DAVID JONES s the market struggles to recover its footing, a few brave souls have dipped their toes into the water of New York’s turbulent real estate investment world. Meanwhile, a small but growing firm called Savanna Partners is diving into the commercial office market headfirst, with a half-dozen debt acquisitions in the past 12 months, and plans for several more by the end of 2011. Other than Los Angeles-based CIM Group, or Ziel Feldman’s HFZ, few companies have made as much of a splash here lately, and none have come close in the office market. The firm closed its second real estate fund earlier this year, with $550 million from a variety of investors ranging from pension funds to insurance companies and wealthy invidivuals. In addition, the teamoriented company’s lack of bureaucracy — combined with a deep bench of analysts and impressive fund-raising prowess — has made it the firm to watch this year. While rival firms stand on the sidelines waiting for the capital markets to move, Savanna is putting itself forward as a firm ready, willing and able to make deals happen, often before anyone else sees them coming. “If you look at the office market over the last 24 months, the value destruction that we’ve seen has been fast and furious,” said Chris Schlank, a managing partner and founder of Savanna in 1992. “What that did is create tremendous distress in deals that were capitalized in 2005, 2006 and 2007.” What seemingly sets apart Savanna from rival funds is the company’s ability to pounce on deals, and come through with funds hours or days after a contract has been signed. “It was very impressive how they were able to assemble a team of varied professionals and do due diligence in such a short period of time,” said Massey Knakal Realty Services chairman Bob Knakal, who represented Capital One in last year’s sale of $60 million in mortgage debt at 5 Hanover Square to Savanna. “They just had people [who] were immediately able to swing into action. That’s something that is not typical.” Savanna acquired 5 Hanover Square, a 325,000-square-foot office tower, for $51.5 million in October 2010, eventually taking over the property from developer Kent Swig and working out a deal to upgrade the property while retaining Swig as the property manager and leasing agent. Savanna got a $47 million loan from Los Angeles-based Mesa West Capital to renovate 5 Hanover and build out new spaces at the building, and has signed several new leases, including a 10-year deal with Odyssey Financial Technologies, with asking rents around $30 per square foot.

24 June 2011 www.TheRealDeal.com

Chris Schlank (left), managing partner and founder of Savanna, and fellow managing partner Nicholas Bienstock

“I have never been rubbed, scrubbed and massaged as scrupulously in my life.” Woody Heller, Studley, on the due diligence of the Savanna principals

From left to right: Savanna’s debt acquisitions in Manhattan over the past year have included 5 Hanover Square, 80 Broad Street and 104 West 40th Street.

It’s an act they’re ready to repeat: Just last month, Savanna acquired the $75 million senior mortgage at Swig’s 80 Broad Street at a discount, and is expected to foreclose on that note as well. “I have had a longstanding relationship with the principals at Savanna and we have been working cooperatively to take advantage of opportunities to buy discounted mortgages in the marketplace, starting with 5 Hanover and 80 Broad Street,” Swig said in an e-mailed statement. Late last month, Savanna announced it

had acquired 100 Wall Street from Lehman Brothers Holdings through a UCC foreclosure auction. The 29-story, 504,000square-foot ofﬁce building is 77 percent occupied, and lists law ﬁrm Harris Beach, the Bank of Taiwan and the New York Stock Exchange as tenants. Savanna’s activity in a still-uncertain market has prompted some to question the wisdom of Schlank and fellow Savanna managing partner Nicholas Bienstock. But the fund doesn’t just parachute in with blinders on before negotiating a deal, ac-

cording to Woody Heller, executive managing director and head of the capital transactions group at the commercial real estate services ﬁrm Studley. Heller said Savanna does an incredible amount of due diligence on a property before sitting down at the table, telling The Real Deal: “I have never been rubbed, scrubbed and massaged as scrupulously in my life.” Heller represented Bronx-based Chedward Realty Corp. in the $135 million sale of 1375 Broadway, a 513,000-square-foot Continued on page 86

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Friending with benefits Brokerage community moves away from Craigslist and toward Facebook BY KAITLIN UGOLIK n past years, many New Yorkers depended on the searchable classified ad service Craigslist.org to help them find affordable apartments, often without brokers’ fees. But these days, many are trading hours of scrolling through apartments on Craigslist for posting housing queries in the form of status updates on Facebook or Twitter. For the consumer, social media is a way of avoiding the possibility that what’s advertised on Craigslist may not really be what’s available. For the broker, it’s a new opportunity for marketing. “I find that the people that go on Craigslist are always skeptical when you’re dealing with them,” said Martin Newman, a broker at MNS, formerly the Real Estate Group New York. “By using these other social media, everyone embraces you a little bit more.” Craigslist.org, created by Craig Newmark in 1995, has long been a hub for buying and selling just about anything. But the site and its founder have recently faced criticism about its sometimes-raunchy personals section and the somewhat anarchic feeling of its listings. There are rules for posting, but scams occur regularly across all fronts, and especially, brokers say, in the real estate section. Craigslist is “so polluted,” said Jeff Schleider, managing director of Miron Properties. “There’s so much fake information out there, and such an abundance of bait-andswitch tactics.” Schleider said some brokers post photos and information for a property that may not exist or may not be available, just to encourage customers to call. Craigslist representatives were unavailable for comment. The majority of brokers use some form of social media. An April poll by the social media marketing firm Postling showed that 81 percent of real estate agents and brokers felt “comfortable” or “somewhat comfortable” using social media to connect with consumers. The most popular social network for this purpose, according to the poll, was Facebook. One consideration is ad price. An ad on Craigslist costs about $10, which isn’t much if it provides a good return. But Richard Santos, vice president of Level Group, said the cost is no longer worth it. “Two years ago, I would place one ad and would probably get maybe 10, 15 qualified candidates from it,” he said. “Now I have to place at least 10 ads to get two or three qualified candidates. One hundred dollars’ worth of advertising should get you something.” Browsing and advertising on social media, on the other hand, is, for the most part, free. From the consumer’s point of view, Facebook can be a way to avoid brokers. Lauren

Brown recently ﬁnished graduate school in Manhattan and is using Facebook to look for an apartment in Brooklyn. She posted a message on her school’s Facebook group and is writing direct inquiries on friends’ Facebook walls. For her, there’s nothing particularly use-

er the barrier to entry, and the more social veriﬁcation required to be part of a network, the more reliable the data.” Schleider had one agent who managed to do all of her business via Facebook and Twitter, never taking out a single ad on Craigslist or anywhere else. “It was fascinating that it

his sister on Facebook on a regular basis. “She has friends who might post something on her page, you know, ‘Looking for an apartment in this area,’ and then she’ll say, ‘My brother’s a real estate agent, let me put you over to his page,’” he explained. Newman of MNS created a Facebook

“We live in a space where you can function as a broker without using the traditional means almost at all, which probably wasn’t true three years ago.” Jeff Schleider, Miron Properties

ful about Facebook itself, but that’s where all her friends are. “I don’t want to deal with a broker,” she said. “I’d rather someone who knows an area and a neighborhood refer me, or a friend who knows of an opening in a building.” She said she thinks her friends who already live in the areas in which she’s looking can give her a better idea of what a reasonable price is than a broker on Craigslist might. Amanda Green, social media manager at City Connections Realty, said that if a Facebook friend points out a listing, consumers are more likely to trust them than an anonymous broker on Craigslist. “[Facebook is] just as big of a sea of people, but it’s targeting people in a place where they really want to talk,” Green said. “Facebook is a closed community. That’s a great regulator,” Schleider noted. “The great-

worked,” he said. “We live in a space where you can function as a broker without using the traditional means almost at all, which probably wasn’t true three years ago.” There are different methods of using Facebook, of course. Michael Signet, Bond New York’s director of sales, runs the Bond New York Blog, which is connected to his Facebook and Twitter accounts. Douglas Wagner, executive director of leasing for Bond New York, noted that in the second week of March, Signet was “inundated with new business from Facebook.” In this barrage of requests were: a buyer who wanted to purchase a $1 million apartment; a seller with a $1.2 million exclusive; a renter who wanted to spend $5,000 per month but ended up buying; and another renter who took an apartment for $1,800 per month. Santos, for his part, gets referrals through

group last summer directed speciﬁcally at Quinnipiac University students looking for housing in New York City. He had a friend at the school who let him know there was a growing need, and Newman got at least 15 deals out of the group. Santos said the customers he ﬁnds on social media networks are often looking there, rather than Craigslist or real estate websites, because they want to avoid paying a broker’s fee. But they’re often willing to change their mind, he noted, for the peace of mind that comes from knowing they’re working with a credible source. On Facebook, he pointed out, you can see photos and contact information for the broker, which isn’t always available on Craigslist. “On social media ... they know if push comes to shove, they have somebody to blame,” Santos said. TRD

Follow them on Twitter! @amandagreen @ccrny @levelgroup @MartinNewmanNYC @michael3358 @MironProperties @MNSrealestate @richiesantos @craigslist 26 June 2011 www.TheRealDeal.com

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Dynamic duos For these couples, real estate is a common passion BY GABBY WARSHAWER ome may be where the heart is, but what if it’s also in the workplace? This month The Real Deal takes a look at couples who work in the real estate industry. While such pairings aren’t the norm in the business, there are high-profile examples like “Jvanka” — that is, husband-andwife Jared Kushner, principal of Kushner Companies, and Ivanka Trump, a vice president at the Trump Organization. Trump has reportedly said that having a shared background in real estate has been a boon to her relationship with Kushner, as she’s keenly interested in his descriptions of work machinations that others might find dull — a sentiment echoed by everyone TRD spoke to with a partner in the industry. Aside from having a common passion, what makes couples like Trump and Kushner tick? Here’s what five of them had to say.

Peter Hauspurg, chairman and CEO of Eastern Consolidated, and Daun Paris, president of Eastern Consolidated

Jeffrey Krantz, vice president of sales and marketing at City Connections, and Kristin Krantz, broker, City Connections

Daun Paris and Peter Hauspurg

eter Hauspurg and Daun Paris were coworkers at the now-defunct brokerage Whitbread-Nolan before cofounding the investment services firm Eastern Consolidated 30 years ago. In the decades since, Eastern Consolidated has become the largest single-office commercial real estate investment services firm in the country. The pair started off strictly as business partners and didn’t pursue the relationship that eventually led to their marriage until a couple of years after Eastern got off the ground, according to Hauspurg, who says that in the early days of the company, Paris “had a lot more experience than I did; she was great at opening doors to deals, and then I would go in and fill in the details.” Paris has said that Hauspurg proposed while the two were negotiating a deal for the Lowell Hotel on East 63rd Street — a deal she thought they had lost until it went through the following day. Over the course of the company’s evolution, Hauspurg and Paris say they’ve come to manage different facets of its business. “I’m in charge of the day-to-day operations, like hiring and overseeing the staff,” Paris says, “which has freed Peter up to work on specific deals.” Paris says the “inherent teamwork” that began with how she and Hauspurg worked together has fostered a collaborative environment at Eastern, which she believes sets it apart from other companies in which the principals don’t interact 28 June 2011 www.TheRealDeal.com

at the 2001 New York Armory Show; while he came from a ﬁnance background and she had a professional background in journalism, from “day one” they connected because of their mutual passion for the built environment. “We loved attending open houses, debating properties in our neighborhood and beyond, and dreaming of all the grand pieces of property we’d like to own one day in the distant future,” she says. Scepanovic characterizes both herself and her husband as “workaholics,” and says that one of the biggest challenges in their relationship involves limiting real estate talk to the workday. However, she says that she’s probably guiltier of bringing work home: “I sometimes feel that my Mac is a natural extension of my ribcage. I don’t seem to function without it.” Still, she says that she and Serras oversee different aspects of their business — she is more focused on the company’s growth, whereas her husband is generally more involved in speciﬁc transactions — so “our paths cross only when we consult on issues that concern the company as a whole.”

Aleksandra Scepanovic and Erik Serras

Kristin and Jeffrey Krantz

Brenda Powers (left) and Elizabeth Lee Sample

on a daily basis with staff. Hauspurg says while there are “no strict rules” between the two about keeping work in the workplace — “when we have work to talk about, we do” — they’ve also learned to carve out personal space for one another. “We think it’s important to preserve the individuality of the other person,” he says. “When I decide I want to go boneﬁshing somewhere, she’ll buy me a ticket, and when she decides she’d like to go skiing in Aspen, I’m the ﬁrst to buy her a ticket.”

Aleksandra Scepanovic and Erik Serras, principals of Ideal Properties Group

leksandra Scepanovic and Erik Serras, a couple that met in 2001, started the Brooklyn-based ﬁrm Ideal Properties Group in 2007, working out of a spare bedroom in their Prospect Heights brownstone. Since then, the company has opened three ofﬁces, and now counts 80 agents and support staff among its employees. Scepanovic says that she and Serras met

effrey and Kristin Krantz, husband-andwife brokers who work together at City Connections and specialize in marketing and selling new developments, ﬁrst got together six years ago, when they had an interofﬁce romance at Cantor-Pecorella. At this point, they say there’s little separation between their work and personal lives. The two bought a unit at Parc Standard, the Harlem condo they began marketing in November 2009 and sold out last year; aside from investing in a building they were selling, they say they also like its proximity to the project they’re currently working on, sales at the Lantern condo on 113th Street. “We hop over there and do our open houses,” says Jeffrey. Still, the two say they each bring different strengths to the table when it comes to work. “I live and breathe sales, while Jeffrey is more involved in the marketing aspect of our work,” says Kristin. Thus, it was a perfectly run-of-the-mill 3 a.m. a few weeks ago when, Jeffrey says, “I woke up and said, ‘I know exactly what we need to do for our condo’s website,’ and I wrote a song for it.”

Brenda Powers, salesperson, Brown Harris Stevens, and Elizabeth Lee Sample, senior vice president and managing director, Brown Harris Stevens

lizabeth Lee Sample and Brenda Powers, who are business partners at Brown Continued on page 92

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Forget about credit scores Recession-scarred homebuyers allowed to present lenders with rent, utility and cell phone bills to help them get a mortgage

BY KENNETH R. HARNEY ome credit experts call it the best-kept secret in home mortgage ﬁnance. Others say, so what? Millions of Americans whose credit scores have declined in recent years because of economic stresses could start rebuilding their scores if their rent, utilities, cell phone, insurance and other monthly accounts were reported to the national credit bureaus. But typically they are not, and as a consequence fail to show up as positive factors on credit scoring systems such as FICO or VantageScore. These on-time payments essentially go to waste for consumers, even though monthly rents often can be as large as mortgage bills, and years of utilities and other payments are widely recog-

sion-scarred scores, but could also aid the estimated 35 million to 54 million consumers who don’t show up — or barely show up — in the files of Equifax, Experian and TransUnion, the three national credit bureaus. Many of these are young people with so-called thin files with just a couple of credit accounts, and many are minorities. So where’s the disconnect here? Why aren’t more consumers documenting their otherwise unreported monthly payments? And why are loan officers likely to stare at account records and say: “Are you kidding? We only look at credit files.” The problem is complex. Almost no one in the consumer finance field has paid much attention to the Federal Reserve’s “Regulation B,” which interprets the

Loan officers [are] likely to stare at account records and say: ‘Are you kidding? We only look at credit files.’ nized as strong indicators of creditworthiness. Now for the best-kept secret: Under federal law, these unreported accounts need not go to waste. Mortgage applicants are guaranteed the right to bring evidence of unreported on-time payments to lenders, and they in turn are required to consider those records in making a decision on granting a home loan — provided homebuyers request it. If a loan officer refuses, he or she could be open to legal penalties. Though federal financial regulators generally acknowledge the right to present supplementary data that consumers enjoy under the Equal Credit Opportunity Act, only one — the National Credit Union Administration — has published guidance informing lenders they are required to comply. Factoring in so-called nontraditional credit accounts not only could provide important help to buyers and owners with reces-

rules on treatment of alternative credit. Lenders who know about it don’t want the hassles of sorting through “shoe box” records that may or may not be accurate. Major players in the mortgage market such as the Federal Housing Administration, Fannie Mae and Freddie Mac all say they’ll accept alternative credit data but have restrictions on what they will consider. FHA, for example, does not permit applicants with low credit scores to boost them by adding positive, nontraditional data. The credit industry is eager to incorporate accurate, nontraditional information, but is illequipped to deal with sources that cannot provide large and regular amounts of veriﬁed reports. “The [national] bureaus know that alternative data is highly predictive,” says Barrett Burns, CEO of VantageScore, a joint venture created by Equifax, Experian and TransUnion. “We think millions of people could beneﬁt” if it were

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collected and loaded into scorable files. Experian already collects positive rent-payment data on approximately 8 million units in large apartment complexes and incorporates the information into its scores, he said. But Burns noted that the industry has had difficulty accessing information on utilities payments in some states, and collection of cell phone account records has raised privacy issues. Without accurate information being available in large quantities, he said, it is difficult to assist large numbers of consumers. Nonetheless, efforts are under way to mine unreported credit data — potentially the untapped shale gas of the mortgage market — and transform it into something useful. A private firm, Trycera Credit Services, has announced an agreement with the National Credit Reporting Association — a trade group representing companies that provide the merged credit bureau reports and scores used by mortgage originators — to independently verify the accuracy of consumer-supplied payment records. Those records can then be provided to lenders as part of the standard credit reporting and scoring information used in mortgage underwriting. Michael G. Nathans, president of Trycera Credit Services, says the project is just getting off the ground, but that preliminary information is available at the company’s website: www.trycera.com. The service will cost $20 to verify rental and mortgage payments, $15 for other verifications. Trycera also offers Visa debit cards that can help consumers document their nontraditional credit payments in a scorable format. Of course, there are no guarantees that lenders will accept homebuyers’ alternative credit data. But federal law requires them to at least “consider” it — if they ask. Ken Harney is a syndicated real estate columnist.

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GOVERNMENT BRIEFS Republicans accused of ‘affordable housing massacre’ As Democrats and Republicans in Albany spar over New York City rent regulations set to expire June 15, Senate Democrats accused GOP members of attempting an “affordable housing massacre” at the behest of city landlords, the Catharine Young Daily News reported. The charge came in response to a bill introduced last month by Senate Housing Committee Chairwoman Catharine Young that would ease the requirement that rents must reach $2,000 a month before an apartment can be deregulated. Amid Democrats’ accusations, the Metropolitan Council on Housing submitted a request for copies of all communications between landlord groups and top GOP leaders in the Senate. A spokesperson for Senate Majority Leader Dean Skelos denied the GOP was working on landlords’ behalf.

Homeless shelter to open in Chelsea The city last month cleared the way for a controversial 200-bed homeless shelter to open in Chelsea, according to DNAinfo. The Bowery Residents Committee signed a $76 million, 20-year contract with the city to convert 127 West 25th Street into a 12-story facility for men with a history of mental illness, as well as a 32-bed chemical dependency crisis center. At a hearing last month, some 75 area residents expressed concerns 127 West 25th Street about safety and declining property values due to the facility.

Destito to assess state-held real estate RoAnn Destito, who was sworn in last month as the new commissioner of the state Office of General Services, said she would review all state real estate holdings, according to the Albany Times Union. The move comes as Gov. Andrew Cuomo seeks new ways to streamline government spending. A recent series of audits requested by the governor found widespread inefficiency in the way New York spends roughly $3 billion annually on office space, goods and services.

Queens residents protest taxes Queens residents gathered last month to protest sharp increases in the values of co-op buildings caused by computer error, according to the New York Times. Due to the glitch, the Finance Department artiﬁcially inﬂated market values of some Queens co-op buildings by as much as 150 percent, clearing the way for an increase in the owners’ property taxes. City Comptroller John Liu has said he would investigate the mistake, and the city has also moved to correct the values of 40 properties. But State Senator Toby Ann Stavisky said many of her constituents still faced double-digit valuation increases. She Toby Ann Stavisky is pressing to pass a bill to cap annual assessment increases for owners of co-op and condo units at 6 percent.

More limits proposed for Fannie and Freddie Republicans in the U.S. House of Representatives last month began introducing a series of new bills in a move toward privatizing the mortgage industry, Reuters reported. Fannie Mae and Freddie Mac ﬁnance about 90 percent of home loans in the country, and have received more than $160 billion in taxpayer money since being placed in conservatorship by the U.S. Treasury in 2008. House Republicans have introduced proposals including a cap on taxpayer support and barring the Treasury from lowering the dividends Fannie and Freddie pay to the government. Compiled by Kaitlin Ugolik

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Selling the cellar

With budgets tight, buildings move to monetize ‘dead space’

BY PETER KIEFER ere is a quick test for the entrepreneurially inclined: Open the front door of your apartment, peer down the hallway, and then take a slow, observant walk up to the roof. What exactly do you see? For most, the answer will be dusty linoleum, mass-produced Swedish light fixtures or, for the unfortunate few, a rickety staircase. A select few, however, will see revenue — possibly tens of thousands of dollars — that could help fill the coffers of their coops or condominiums. When a building on Spring Street and Sixth Avenue was torn down a few years ago and turned into a parking lot, a neighboring co-op with its exterior wall newly exposed to the street saw an opportunity. The shareholders of the co-op got together and decided to sell their newfound space to advertisers. The result: $40,000 a year in additional revenue. Typically, a building gets incremental revenue from an owner combining two adjacent apartments who needs to incorporate the common hallway space for a single entryway. In those situations, the board will appraise the space and sell it to the renovating shareholder (along with additional shares in the building, if it’s a co-op). Nowadays, however, New York residents are coming up with even more inventive ways to squeeze some coin out of any dead space — a cellar, an unused utility closet, a staircase or even a rooftop antenna. “We call it ‘searching for hidden assets,’” said James Samson, a partner at the real estate firm Samson, Fink & Dubow, and an expert on tapping the value of condo and coop dead space. For the boards of New York City buildings, finding unexploited value can be as simple as taking a look around. And while it may not be an entirely new trend, squeezing money out of stones appears to be gaining popularity, due in large part to a more unpredictable real estate market, according to a number of experts in the field. “I think the boards are looking into it more,” said Alvin Schein, a partner at Seiden & Schein. “Most boards are under financial stress; taxes and expenses are going up. What can they do to bring in income? One of the things that boards do look at is: ‘Do we have any dead space to sell?’”

cess and said, ‘What if we put [in] roof decks that we can then sell?’” said Dennis Greenstein, a tenant in the building as well as a real estate partner at Seyfarth Shaw. The result was the creation of 13 private roof decks of varying sizes, priced at approximately $300 per square foot, six of which have sold already. The sale of those six has already offset the design and construction costs, Greenstein said. The sale of the remaining seven, meanwhile, is expected to be pure proﬁt, netting the co-op tens of

32 June 2011 www.TheRealDeal.com

space, it has a synergistic effect on the value of their apartment,” he said. Michael Berenson, president of Akam Living Services, said that properties that he manages on the Upper West Side have sold maids’ quarters to shareholders who then convert them into storage spaces, ofﬁces or even once a personal gym. While Berenson declined to disclose the building addresses, he noted that he could think of three different buildings that had converted these spaces in the past two years. “There have been a lot of apartments on the market — much more inventory than in many years past — so shareholders are looking for ways to make their apartment stand out.” The process of converting common space into revenue differs for co-ops and condos. Co-op boards have exponentially more power, and can allocate shares when converting a onetime common space to private space,

The boards are looking into it more. Most boards are under ﬁnancial stress [since] taxes and expenses are going up. Alvin Schein, Seiden & Schein

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For the board members of a building at the corner of Mercer and Waverly streets in the Village, the answer was ‘yes.’ As capital improvement costs mounted at the 62-unit co-op last year, the board began looking around for a way to buffer those costs. “We analyzed it, and we hired a good architect, and we went through the pro-

thousands of dollars, if not more. According to Mary Ann Rothman, the executive director of the Council of New York Cooperatives & Condominiums, there is no ofﬁcial registrar of how many co-ops and condominiums are in the process of monetizing their dead space or how much additional revenue the process brings in. However, some legal consultants have experienced an uptick in the demand for their services. “More and more of it is going on now,” said Aaron Shmulewitz of Belkin Burden Wenig & Goldman. According to Shmulewitz, rather than taking a risk on selling their current apartment and seeking to upgrade, more and more owners are opting to stay put and add value. “So if they can acquire an adjacent hallway area or patio

whereas the process for condominiums is slightly more complicated. Even so, condos and co-ops are borrowing ideas from each other. Co-ops, which can vote on any given transaction, are starting to employ a condo-like “right of first refusal,” according to James Goldstick, vice president and director of sales for Mark Greenberg Real Estate. Goldstick noted that two co-ops his firm manages — one in Kew Gardens Hills and one on the Upper West Side — have the right of first refusal in their corporate documents, and have used the power to buy units in their buildings. The hope is to wait out the market trough and then resell the building-owned units when the market rebounds, thus making a profit for the co-ops. With buildings hemmed in by fixed space and limited square footage, the question remains: Where will this hunt for additional capital lead the building community? According to Samson, the likely next frontier is the sale of naming rights to corporations. Somewhere in the world, Donald Trump is laughing. TRD

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A developer’s climb Alf Naman’s first ground-up building was 25 years in the making BY ADAM PIORE lf Naman is standing in front of a wall of plate-glass windows, in skinny jeans and a blazer, sipping a Pellegrino and gazing down on workers tending a grassy stretch of the High Line at 23rd Street. A sliver of New York Harbor shimmers in the distance. It’s the kind of multimillion-dollar view the veteran real estate broker spent decades showing off to clients when he worked on the Upper East Side. But this particular $5 million apartment — one of 11 units in a 14-story luxury building known as HL23 — has an added twist. Naman built it himself. “As a former broker,” he is saying, “you understand all the features that trigger positive feedback from buyers, based on your own experiences.” Thus the bathrooms built of marble imported from Italy, the steel-paneled building exterior designed by famed architect Neil Denari, and the glass walls with remote-controlled shades for privacy. Naman, who has been inching toward full-time development work for years, will find out soon enough whether buyers respond to his refined tastes, and those of his development partner, Garrett Heher, and his broker, Erin Boisson Aries of Brown Harris Stevens, who is handling sales at the 515 West 23rd Street project. HL23’s official opening is this month, timed to coincide with the opening of the newest stretch of the High Line, which will extend the existing park built on elevated tracks in a second phase stretching from 20th Street to 30th Street. Of course, that “official” date is an arbitrary one. Naman says he already has three units in contract, and offers on several others. While Sam Zell is opening up a luxury rental a stone’s throw away (see page 36), few developers have as much reason to celebrate the neighborhood’s current promise as Naman, who is completing his first-ever ground-up development. “My dream was always to develop and build and create,” Naman says.

‘Something a little different’ A native of Andover, Mass., Naman moved to Manhattan after graduating from Tufts University, began selling real estate on the Upper East Side in the late 1970s during a stint at New York University’s Stern School of Business, then took an advertising job hawking Folgers Crystals. He later returned to real estate and opened up his own shop in the mid-1980s, focusing on rental apartments but eventu34 June 2011 www.TheRealDeal.com

ally expanding to everything from shopping centers to high-end brownstones. But it was the co-op conversion boom of the 1980s that gave him his ﬁrst chance to buy his own properties. The owners of apartment buildings across the city were converting rentals to co-ops, under laws

to buy distressed properties, including the former site of Andy Warhol’s 47th Street studio, known as “The Factory.” He also worked with a steady stream of high-proﬁle clients, ranging from Annie Leibovitz to Arthur Schlesinger, acting variously as seller, buying agent or simply real estate

a desolate stretch of car-repair shops, Naman became convinced the area was poised for development. This was long before the High Line, but Naman — who had begun to focus primarily on buying real estate — noticed that galleries were already beginning to colonize the area, and developers had invested millions in Chelsea Piers. Naman had previously fought for a toehold during Tribeca’s real estate gold rush, but found himself priced out by better-financed concerns. He was determined not to let that happen again. “By the time I got to Chelsea, I had amassed enough capital, and I had help,” he says. Naman hit the streets of West Chelsea on foot. He noted the properties he liked, and started knocking on doors. “You’ve got a great property,” he told the owners. “We’d be really interested in talking to you if at some point you have an interest in selling.” Over the course of several years, Naman cultivated personal relationships with owners throughout the area as he acquired around 10 lots. Naman knew the owner of the HL23 site for five years before the man decided to sell. “He was a beverage wholesaler. I would go visit him; he kept saying he would sell me the building when he retired,” Naman says. The neighborhood was already beginning to develop, but when the High Line project gained steam in the mid-2000s, interest exploded. When the city Alf Naman overlooking the second phase of the High Line from his HL23 project finally did convert the rusting, elevated train tracks into an urban that required them to first offer the park, Naman looked units to their tenants at steep discounts. prescient. In recent years, he’s Naman formed a firm called The building, at 515 West 23rd St. (left), and the High Line’s already opened first section Apple Rights, contacted tenants in been trading properties like baseball cards. He subdivided a buildings about to be converted, and of- consigliere. fered to pay for the tenant’s “right to buy.” Jed Garfield, a veteran broker with Les- 24,000-square-foot plot on 24th Street “When I first moved here, everything lie J. Garfield & Co., says Naman has had and 10th Avenue; sold a 29th Street site was a bit run-down and shabby,” Naman “one toe in development and one toe in bro- for $400 per square foot; and got $300 to explains. “I saw an opportunity to offer kerage” for a long time. Naman “has always $400 per square foot from Avalon Bay for something a little different. I would paint been very good at finding deals,” Garfield air rights at 28th and 10th. It was Naman who tied up the property the apartments, renovate them and freshen notes, then calling in someone with “real things up.” money.” and accompanying air rights that would Garfield adds: “I think if you peel back be used to construct Jean Nouvel’s highNaman flipped about 150 apartments between 1983 and 1989. the layers behind Alf, it’s very rare that he is profile tower at 100 11th Avenue — though When the condo conversion boom dried the majority equity in deals. But he is very, Naman’s equity partner ran into trouble up, Naman moved to the construction side very good at putting deals together. Alf is during the recession and Naman is no lonof the business, working as a general con- always wheeling and dealing — that’s Alf’s ger part of the project. thing.” tractor. Naman’s dealings have not always won All the while he continued his real eshim friends. Several brokers he has worked tate business. During the downturn of the Trading properties with had negative things to say. One opined early 1990s, he teamed up with investors In the late ’90s, when West Chelsea was still Continued on page 92 PHOTOGRAPH OF NAMAN FOR THE REAL DEAL BY CHRIS MARTIN

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High Line or high wire? With TEN23, Zell bets on West Chelsea even as he bypasses trades BY DAVID JONES ince the 2008 financial meltdown, the pace of new residential construction in Manhattan has been limited by tight capital markets, rising labor and material costs, and weak demand for new housing. But a new luxury West Chelsea rental project from billionaire Sam Zell is being closely watched as an indicator of where new development is headed in the near future. Already, the project at 500 West 23rd Street has been a focal point for union protests. Certainly, with 23 union contracts set to expire this month in New York, the kerfuffle is indicative of the deteriorating relationship between big developers and organized labor in the city. Still, the developers have high hopes for the High Lineadjacent building, as the rental market recovers in one of the city’s busiest areas for new development. Equity Residential — the giant real estate investment trust led by Zell — paid $11.25 million in January 2010 to acquire the 23rd Street development site from struggling developer Shaya Boymelgreen, who had planned to build 107 luxury rental units there but stalled out. (Boymelgreen defaulted on his loans and couldn’t work out a deal with his lender, Aristone Capital.) Just months after the acquisition, Equity Residential began working with Gerner, Kronick + Valcarcel Architects to redevelop the property. Called TEN23, the development will have 111 market-rate apartments and 10,000 square feet of retail space. The project is one of the few ground-up residential developments in New York since the downturn. Now, almost a year and a half later, the $55 million development — which topped out in January — is scheduled to debut by the fourth quarter of 2011. Equity officials said the company, which owns and manages more than 3,800 units in Manhattan alone, sees this new project as an important addition to its existing portfolio. “New York is a core market for Equity Residential and we generate 13 percent of our net operating income here,” company spokesman Marty McKenna said in an emailed statement. “It’s a terrific place to own apartments, and we continue to look for opportunities to [expand] our New York portfolio both through acquisition and development.” The company declined to release further details about the project, but confirmed that rents at TEN23 will begin at $3,000 a month for studios, and range up to $5,800 per month for 1,053-square-foot, two-bedroom apartments, with private terraces and washer/dryers inside. The property, which is being marketed by an in-house team, will

36 June 2011 www.TheRealDeal.com

also feature three common roof gardens in a bid to attract the hip, young crowd that frequents the restaurants and arts scene around the newly constructed High Line park. A new section of the High Line is expected to open this month between 20th and 30th streets. Meanwhile, Newmark Knight Frank’s senior managing director, Craig Slosberg, is marketing the building’s 10,000-squarefoot retail space.

questions about the company’s labor policies and safety record. Among the issues the site highlights is the 2010 collapse of an Equity Residentialowned apartment building garage in Hackensack, N.J., which cost the company more than $12 million to repair.

our residents don’t care,” he added. He noted that the Regional Plan Association, a Manhattan-based urban policy research group, released a report last month urging labor unions to offer additional concessions to help get new construction projects off the ground. The report, released

As the rental market recovers, the developers have high hopes for the High Line-adjacent building.

A rendering of 500 West 23rd Street, with the second phase of the High Line on the right

Recession concessions In planning the project in the aftermath of the ﬁnancial crisis, Equity Residential was one of several major ﬁrms engaged in talks with New York labor unions for concessions. “We were asked by one Sam Zell of the general contractors [on the project], Bovis, to see if we could do something to be more competitive with the nonunion labor,” said Terry Moore, the business agent for Local 46 of the Metallic Lathers and Reinforcing Ironworkers Union. Moore said that union workers agreed to a number of concessions regarding wages and work rules, but Zell decided to go forward with nonunion labor on the project. As a result, the building has been the target of union protests since June 2010. “We’re looking to work with [Zell], but he won’t work with us,” said Moore. The union has posted a website called “Equity Residential Watch,” which raises

in advance of the expiring union contracts, advocates the adoption of open shops with a mix of union and nonunion labor, which the RPA said could save more than 20 percent in costs for new developments. “Unfortunately, New York’s construction costs Shaya Boymelgreen have risen to uncompetitive levels,” said RPA president McKenna told The Real Deal that Equity is Robert Yaro in a statement. in the final stages of rebuilding the garage Gary LaBarbera, president of the Buildand most of the tenants have moved back ing and Construction Trades Council in into the building. New York, which is negotiating labor agreeDuring the company’s first-quarter con- ments on behalf of unionized contractors, ference call with analysts in late April, Equity emphasized union labor’s competency and Residential executives stood by the decision safety. “It’s unfortunate that the developto bypass the union agreement at TEN23. ers of 500 West 23rd Street don’t underDavid Neithercut, president and CEO of the stand that we have the city’s most skilled REIT, said the company gave the unions spe- and prepared workforce, with an excellent cific targets to hit, but that they were “unwill- safety record,” LaBarbera said. “While the largest and most successful developers aling or unable to do so.” Since then, union members have “tried to ready know this, we will continue to comdo things to annoy our residents at various municate to others like Mr. Zell who are buildings around New York, and I tell you, Continued on page 88

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Plying the palaces Manhattan’s top brokers see ascent of mansions and co-ops, as condos wane

BY CANDACE TAYLOR n March, Brown Harris Stevens broker Paula Del Nunzio put the Woolworth mansion at 4 East 80th Street on the market for $90 million. The listing — the priciest Manhattan residential listing ever — signaled that the era of massively expensive property sales is back, with a vengeance. Brokers say there is more high-end product on the market than last year, and furthermore, many of these new, pricey listings are resales rather than the newly constructed condos that seemed to dominate the luxury market in Manhattan for so long. That trend is reﬂected in The Real Deal’s annual ranking of the city’s top brokers, which is based on who is marketing the most Manhattan property. For years, new condo specialists like Dolly Lenz and Ilan Bracha dominated The Real Deal’s top-10 list. But this year, the top three slots were captured by Del Nunzio, Sotheby’s Serena Boardman and Corcoran’s Carrie Chiang, all of whom are currently marketing pricey resale mansions. According to The Real Deal’s data, collected from the OLR listing service last month, Del Nunzio is marketing 19 listings asking a total of $358.4 million. That includes the Grosvenor Atterbury Mansion on East 74th Street, on the market for $38 million, and a newly renovated townhouse at 170 East 80th Street, asking $35 million. As for the Woolworth mansion, Del Nunzio said the high price is warranted because the property is “unique in that it is the only renovated mansion of 20,000 square feet to ever be available for sale in New York, as all other sales of large mansions required renovation.” Boardman, meanwhile, is marketing 18 listings for a total of $341.1 million, includ-

ing a 14-room spread at 998 Fifth Avenue, listed at $34 million, which returned to the market in April after a six-month hiatus. Both topped 2010’s No. 1-ranked broker, Chiang, who last year at this time was marketing $324 million worth of product. This year, Chiang has the not-too-shabby total

Paula Del Nunzio

Woolworth mansion at 4 East 80th Street

of $271.8 million, including a 25-foot-wide townhouse at 106 East 71st Street, which is listed for $28.8 million. Prompted by news of big-ticket sales — like Johnson & Johnson heiress Libet Johnson’s agreement to pay a reported $48 million for the Vanderbilt Mansion at 16

Serena Boardman

Manhattan agents with the highest dollar volume of current listings RANK NAME

FIRM

DOLLAR VOLUME

APT. LISTINGS

BUILDING NOTES LISTINGS

Paula Del Nunzio

Brown Harris Stevens

$358,434,000

Listings include the Woolworth mansion for $90 million.

Serena Boardman

Sotheby’s International Realty

$341,145,000

Listings include 22 East 71st Street for $50 million.

Carrie Chiang Team

Corcoran

$271,787,131

Listings include exclusive marketing assignments for 250 East 49th Street and 232 East 50th Street.

Shlomi Reuveni, Brown Harris Stevens Select Team

Brown Harris Stevens

$211,713,650

Listings include exclusive marketing assignments for 350 East 82nd Street, 15 Union Square West and 2150 Broadway.

Dolly Lenz

Prudential Douglas Elliman

$200,515,000

Listings include 845 United Nations Plaza, PH-90B, for $34.5 million.

John Burger

Brown Harris Stevens

$183,664,000

Listings include an 11-room unit, including three bedrooms, at 145-146 Central Park West for $20 million.

Raphael De Niro, the De Niro Group2

Prudential Douglas Elliman

$175,703,000

Listings include 16 East 95th Street for $26 million.

Leighton Candler

Corcoran

$145,925,000

Listings include 7 East 80th Street for $24 million.

Leonard Steinberg Team

Prudential Douglas Elliman

$130,170,000

Listings include 200 11th Avenue, PH1, for $12.7 million.

Meredyth Smith

Sotheby’s International Realty

$129,100,000

Listings include 22 East 71st Street for $50 million, with Serena Boardman, and 333 East 68th Street, Apt. C, for $5.95 million.

Alexa Lambert

Stribling and Associates

$116,035,000

Listings include a 10-room, four-bedroom penthouse at the Plaza for $37.5 million.

Roger Erickson

Sotheby’s International Realty

$112,200,000

Listings include a 14-room apartment at the Pierre for $25 million.

Jed Garﬁeld

Leslie J. Garﬁeld & Co.

$111,850,000

Listings include 35 East 63rd Street for $37.5 million.

Ilan Bracha, the Bracha Group4

Keller Williams NYC

$101,954,400

Listings include exclusive marketing assignment for 70 West 45th Street (Cassa Hotel and Residences).

Kathy Sloane

Brown Harris Stevens

$100,540,000

Listings include a six-bedroom at 640 Park Avenue for $23.5 million.

Ryan Serhant

Nest Seekers International

$98,975,000

Listings include 95 Greene Street, PH-ABCE, for $25 million.

Lisa Lippman and Scott Moore5

Brown Harris Stevens

$89,224,000

Listings include exclusive marketing assignment for 535 West End Avenue.

Robert Browne Team6

Corcoran

$86,015,000

Listings include 145-146 Central Park West, Apt 25-E, for $12.5 million.

Elizabeth Lee Sample and Brenda Powers

Brown Harris Stevens

$82,115,000

Listings include a ﬁve-bedroom apartment at 25 Columbus Circle for $25.95 million.

Michael Lorber

Prudential Douglas Elliman

$80,338,500

Listings include 502 Park Avenue, PH-21, for $25 million.

Richard Orenstein

Halstead

$76,245,000

Listings include 484 Greenwich Street for $11.2 million.

Debra Stotts

Trump Sales and Leasing

$74,722,000

Building Specialist at 845 UN Plaza (Trump World Tower).

Susan Green and Brett Miles7

Town Residential

$72,694,000

Listings include 400 West 12th Street, 11-AB, for $17.5 million.

Louise Beit

Sotheby’s International Realty

$71,550,000

Listings include 116 East 70th Street for $26 million.

Michele Kleier Team8

Gumley Haft Kleier

$68,715,000

Listings include an apartment at 995 Fifth Avenue for $27.5 million.

PHOTOGRAPH OF DEL NUNZIO FOR THE REAL DEAL BY HUGH HARTSHORNE

www.TheRealDeal.com June 2011 39

TO P M A N H A T T A N A G E N T S East 69th Street — more and more wealthy New Yorkers are putting their homes up for sale after years of avoiding the uncertain market. “Sellers are feeling more confident about listing their properties,” said Sotheby’s Meredyth Smith, who is ranked at No. 10 on The Real Deal’s list, with $129.1 million worth of property for sale. “There’s a buildup of inventory, but in a good way, because it’s reflecting confidence. People feel that now is a good time to go forward.” In particular, townhouse sales have picked up, which bodes well for brokers who specialize in them. According to a recent market report from the Corcoran Group, in the first quarter of 2011, the number of Manhattan townhouse sales increased 52 percent from the same 333 East 68th Street quarter of the prior year, while the median price increased 14 percent to $9 million. In March, Seagram’s heir Edgar Bronfman, Jr. sold his mansion at 117-119 East 69th Street (formerly owned by Muppets creator Jim Henson) to James Murdoch for $23 million. The listing, a co-exclusive shared by Del Nunzio, Chiang and Bronfman’s daughter Vanessa, went into contract after only a month on the market. “A lot of people are buying townhouses and fixing them up and selling them,” said Elliman’s Raphael De Niro, who moved up one slot on The Real Deal’s list from No. 8 last year to No. 7, with some $175 million in property for sale, in-

Carrie Chiang

John Burger

Raphael De Niro Shlomi Reuveni

Dolly Lenz

Leighton Candler

cluding four single-family Manhattan homes. “Turnkey townhouses sell really well.” In the past, De Niro has been known for marketing new condos, but he’s been making an effort to sell more townhouses in the past year, he said. Especially in today’s difﬁcult climate, where problems with a building’s ﬁnances can derail a sale, he said, “there’s something to be said for not being subject to the whims of a coop or condo board, and that’s what a townhouse allows you to do.” Another factor in this year’s shakeup in the rankings is a reduced pipeline of new condo projects, due to the vacuum of funding for new development projects created by the credit crunch. With the economy regaining strength, there are now new projects in the works, but many of them won’t debut until late 2011. De Niro, for example, said he has signed on to sell two new condo projects, one in the West Village and one in Soho, but he can’t yet talk about them because they are not yet on the market. These projects are part of a slew of new

RANK NAME

FIRM

DOLLAR VOLUME

APT. LISTINGS

BUILDING NOTES LISTINGS

Kyle Blackmon

Brown Harris Stevens

$68,565,000

Listings include a three-bedroom at 15 Central Park West for $31.5 million.

Daniel Neiditch

River 2 River Realty

$67,063,900

Building Specialist at the Atelier at 635 West 42nd Street.

Richard Wallgren

Brown Harris Stevens

$64,950,000

Building specialist at 15 Central Park West.

Deborah Grubman and David Dubin

Corcoran

$62,745,000

Listings include 625 Park Avenue, 9-A, for $20 million.

Sassy Johnson and Elizabeth Lorenzo

Stribling and Associates

$60,350,000

Listings include exclusive marketing assignment at the Plaza.

Sabrina Saltiel9

Prudential Douglas Elliman

$59,545,000

Listings include 144 Duane Street, PH, for $30 million.

Fredrik Eklund and John Gomes

Prudential Douglas Elliman

$58,080,000

Listings include exclusive marketing assignments for 949 Park Avenue and 471 Washington Street.

Deanna Kory, the Deanna Kory Team10

Corcoran

$57,049,000

Listings include 455 Central Park West, LM-17, for $5.65 million.

Kevin Brown

Sotheby’s International Realty

$57,014,000

Listings include a four-bedroom at River House for $15 million.

Patrick Smith

Brown Harris Stevens

$55,901,701

Listings include exclusive marketing assignment for 1280 Fifth Avenue.

Christopher Rounick

Sotheby’s International Realty

$55,295,000

Listings include a ﬁve-bedroom at 990 Fifth Avenue for $42 million.

Fred Williams

Sotheby’s International Realty

$55,000,000

Listings include 266 West End Avenue for $30 million.

Jacky Teplitzky, the Jacky Teplitzky Team11

Prudential Douglas Elliman

$53,976,000

Listings include 236 East 47th Street, PH-2AD, for $5.495 million.

Charlie Attias

Corcoran

$53,895,000

Listings include 300 East 79th Street, PHC-PHD, for $8.8 million.

Ariel Cohen

Prudential Douglas Elliman

$53,741,500

Listings include 1 Central Park West (Trump International Hotel & Tower), 26-D, for $8.75 million.

Richard Steinberg

Warburg

$53,505,000

Listings include exclusive marketing assignment for 39 East 29th Street.

Eva Mohr

Sotheby’s International Realty

$53,140,000

Listings include a ﬁve-bedroom at 110 Central Park South for $27 million.

Lois Nasser

Sotheby’s International Realty

$52,645,000

Listings include a ﬁve-bedroom at 990 Fifth Avenue for $42 million.

Cathy Taub

Stribling and Associates

$51,740,000

Listings include a 10-room apartment at 1105 Park Avenue for $8.85 million.

George van der Ploeg

Prudential Douglas Elliman

$51,600,000

Listings include 325 East 53rd Street for $15 million.

Trisha Riedel and Holly Parker

Prudential Douglas Elliman

$51,349,000

Listings include exclusive marketing assignment for 100 11th Avenue.

Rana Hunter Williams

Trump Sales and Leasing

$51,115,000

Listings include a three-bedroom at 721 Fifth Avenue (Trump Tower) for $16.4 million.

Shelley O’Keefe

Corcoran

$51,050,000

Listings include exclusive marketing assignment for 311 West Broadway.

Robert Schulman

Warburg

$50,045,000

Listings include a six-bedroom at 625 Park Avenue for $29.75 million.

Cathy Franklin and Alexis Bodenheimer

Brown Harris Stevens

$48,900,000

Listings include 16 East 95th Street for $26 million.

40 June 2011 www.TheRealDeal.com

PHOTOGRAPH OF CHIANG FOR THE REAL DEAL BY BEN BAKER; PHOTOGRAPH OF REUVENI BY MAX DWORKIN

TO P M A N H A T T A N A G E N T S projects set to hit the market in the near future, he said, including the Jean Nouvel-designed MoMa tower at 53 West 53rd Street, Extell’s Carnegie57 and the Elad Group’s 250 West Street in Tribeca. “You’ve got some serious stuff coming out,” he said. In the meantime, however, De Niro has been focusing primarily on resales. Leonard Steinberg, who heads a team of brokers at Prudential Douglas Elliman and was ranked at No. 9 on The Real Deal’s list, said he too has a number of new development projects that will soon be unveiled. In the meantime, he’s marketing the $45 million penthouse at the Sky Lofts condominium at 145 Hudson Street. While that building has been on the market for some time, the penthouse hit Leonard Steinberg the market last month. Steinberg is also marketing a newly built townhouse at 26 Downing Street, listed at $16.95 million, after selling two others on the same street last year. One exception is Shlomi Reuveni, a new condo specialist who heads the Brown Harris Stevens Select group. Previously in a managerial role as the head of new developments for Brown Harris Stevens, Reuveni said he recently decided to “step back” and focus on working as an agent, with a team of four people. Meredyth Smith Reuveni is the only broker in the top 10 who is not marketing at least one townhouse. He is, however, currently marketing two new projects: the Laureate on the Upper West Side, and 15 Union Square West. Still another project, Reade57 in Tribeca, hasn’t hit the market yet. Lenz, who in late 2010 left her exclusive sales role at Upper West Side mega-project the Apthorp, came in at No. 5 on the list, down from No. 2 last year and No. 1 the year before.

Bracha, who is also known for focusing on new condos, dropped to No. 14 on the list from No. 7 last year. (Earlier this year, Bracha left Elliman to found a New York City outpost of Keller Williams Realty.) Focusing solely on new developments — or on any one niche — can be a risky strategy for brokers, Chiang noted. “I see brokers that focus on projects, and if the project doesn’t go [well], their whole income collapses,” she said. In her own business, she said, she does a little of everything, including some new condos, townhouses and resales, and even commercial property. Chiang said she’s done over $300 million in deals so far in 2011. That’s down from around $500 million in 2008 — her best year ever. Still, she said, “no complaints.” Other top brokers said they too are diversifying their listings. Brown Harris Stevens’ John Burger, who said he has sold more apartments at the Dakota in the past 20 years than any other broker in New York City, currently has three listings there, but also two homes for sale in Gramercy Park. Burger also recently sold the 55th-ﬂoor penthouse at the Park Millennium condominium at 111 West 67th Street for $10.25 million. Corcoran’s Leighton Candler, ranked No. 8, said she is currently listing “four great condos” in addition to her usual stable of co-ops and townhouses. One of them is Jeff Blau’s penthouse at the Chatham at 181 East 65th Street, which is listed at $18.9 million. “Most of the real luxurious homes long ago were co-ops,” said Candler. “Now, there’s just so many gorgeous condos.” Still, Candler clearly has a knack with co-ops. A few weeks ago, her $35 million listing at 1020 Fifth Avenue went into contract, and the deal is now awaiting board approval. Also this year, she found a buyer for Renée Zellweger’s two apartments at 24 East 82nd Street. Candler also reportedly represented the buyer of Robert Hurst’s apartment at 950 Fifth Avenue, listed by Brown Harris Stevens’ Cathy Franklin, in late 2010 for $25 million, though Candler declined to comment on the transaction. She did, however, comment on the market. “I think there’s a lot more decisionmaking going on now,” she said. “People are committing to this market, both buyers and sellers.” TRD

RANK NAME

FIRM

DOLLAR VOLUME

APT. LISTINGS

Thomas Wexler and Lisa Fitzig

Corcoran

$48,844,500

Listings include 59 East 77th Street for $18.75 million.

Liora Yalof and Elizabeth Sahlman

Corcoran

$48,344,000

Listings include a four-bedroom at 800 Park Avenue for $15 million.

Dina Lewis and Melanie Lazenby

Prudential Douglas Elliman

$47,449,999

Listings include 2 Horatio Street, PH-CD, for $14.9 million.

Howard Margolis

Daniela Kunen

BUILDING NOTES LISTINGS

Prudential Douglas Elliman

$47,125,000

Listings include 101 West 67th Street, PH-3B, for $29.5 million.

Prudential Douglas Elliman

$46,149,000

Listings include 1185 Park Avenue, 16-AB, for $13.995 million.

Neoly Lika Williams

Prudential Douglas Elliman

$45,932,000

Listings include 502 Park Avenue, 12-B, for $6.8 million.

Daniel Kessler and Ann Jeffery

Brown Harris Stevens

$45,195,000

Listings include a three-bedroom at 834 Fifth Avenue for $24.9 million.

Jeff Adler

Prudential Douglas Elliman

$45,000,000

Listings include 101 West 67th Street, PH-3B, for $29.5 million.

Vickey Barron

Core

$44,664,000

Listings include 11 Fifth Avenue, PH-L, for $7.495 million.

Shirley A. Mueller

Brown Harris Stevens

$44,500,000

Listings include 33 East 74th Street for $38 million.

Richard Pretsfelder

Leslie J. Garﬁeld & Co.

$44,494,999

Listings include 116 West 71st Street for $18 million.

Linda Reiner and Lisa Deslauriers

Warburg

$43,790,000

Listings include a ﬁve-bedroom at 970 Park Avenue for $22.5 million.

Stephen McRae

Sotheby’s International Realty

$43,485,000

Listings include a seven-bedroom at 60 Warren Street for $28 million.

Sherry Matays, the Matays Group13

Corcoran

$41,885,000

Listings include 390 West End Avenue, 9ABC, for $16.075 million.

Frances Katzen

Prudential Douglas Elliman

$41,708,000

Listings include 238 East 61st Street for $6.7 million.

Jessica Cohen

Prudential Douglas Elliman

$41,534,000

Listings include 205 West 76th Street, PH-1F for $5.35 million.

Sachiko Goodman

Prudential Douglas Elliman

$40,939,000

Listings include 151 East 85th Street, PH-D, for $7 million.

Richard Ferrari

Brown Harris Stevens

$39,235,000

Listings include a three-bedroom at 150 Central Park South for $8.25 million.

Kirk Henckels

Stribling and Associates

$38,935,000

Listings include the Nelson Rockefeller apartment at 810 Fifth Avenue for $27.5 million.

Elie Pariente14

Synergy NYC

$38,807,300

Listings include exclusive marketing assignment for 55 Wall Street.

Jason Haber

Rubicon Property

$38,212,000

Listings include 123-125 East 10th Street for $13.95 million.

Ammanda Espinal

Prudential Douglas Elliman

$38,027,000

Listings include exclusive marketing assignments for the Azure at 333 East 91st Street.

Jason Walker

Prudential Douglas Elliman

$37,685,000

Listings include exclusive marketing assignment for 50 Franklin Street.

Maria Velazquez

Carol Friedman

Synergy NYC

$36,642,300

Listings include exclusive marketing assignment for 55 Wall Street.

Nest Seekers International

$36,636,249

Listings include exclusive marketing assignment for 36 Gramercy Park East.

Notes: 1 The Carrie Chiang Team includes Loy Carlos ($137.3M in listings), Janet Wang ($130.2M in listings) and Richard Phan ($41.2M in listings). 2 The De Niro Group includes Claudine De Niro, Linda De Niro, Lauren De Niro Pipher, Danielle Sevier, Erica Glasser Losen, Sara Dai, Maggie Leigh, James Flowers and Dona Monteleone. 3 Herve Senequier had $129M in listings, but is part of a team with Leonard Steinberg. 4 Eleonora Srugo had $60.6M in listings, but is part of a team with Ilan Bracha. 5 Scott Moore had $68.9M in listings, but is part of a team with Lisa Lippman. 6 The Robert Browne Team includes Chris Kann ($64.3M in listings) and Gregory Sullivan ($51.7M in listings). 7 Brett Miles had $69.4M in listings, but is part of a team with Susan Green. 8 Sabrina Kleier Morgenstern and Samantha Kleier Forbes are part of a team with Michele Kleier. 9 Sabrina Saltiel and Matthew Gulker are co-brokers at 144 Duane, PH, for $30M. 10 The Deanna Kory Team includes Christine Morgan ($31.9M in listings), Jane Martin and Wendy Clark. 11 The Jackie Teplitzky Team includes David Cooper, Iman Barkhordari, Max Dobens, William Martin and Shaun Anders. 12 Marie Espital had $31.6M in listings, but is part of a team with Howard Margolis. 13 The Matays Group includes Holly Hart. 14 Elie Pariente and Maria Velazquez are co-brokers on all 55 Wall Street listings. Source: On-Line Residential Inc. (OLR.com). Includes active Manhattan residential sales listings (apartments and townhouses with no commercial/retail component) as of mid-May 2011 that had been updated within the previous 15 days. Listings that did not also appear on the ﬁrm’s website were not included. Known teams or partnerships are counted as a single entity. Listings shared by two agents are counted as a full listing for both agents. On-site agents who work exclusively for a developer have not been counted. However, if an agent works for a brokerage ﬁrm, he/she has been included on this list.

www.TheRealDeal.com June 2011 41

Kondylicious!

TRD hosts premiere of “Building Stories,” a look at NYC’s most prolific architect

here was plenty of red carpet at the Morgan Library as Costas Kondylis, the architect responsible for 86 NYC buildings, was feted at the May 11 premiere of “Building Stories,” a TRD-produced documentary about him. The screening was swarming with Manhattan’s real estate elite, including developers Joe Moinian (interviewed on page 106), Ziel Feldman, Robert Gladstone, Henry Justin, Izak Senbahar and Joe Sitt; brokerage firm heads Andrew Heiberger of Town Residential and Pam Liebman of Corcoran; superbrokers Wendy Maitland, Bruce Mosler, Louise Sunshine and more, including social luminaries Katherine Karadjordjevic, Crown Princess of Serbia, her dashing husband Costas Kondylis, the man of the hour

Prince Alexander, and will-he-run-for-mayor Gristedes magnate John Catsimatidis. The hourlong flick, which features interviews with Richard Meier, Aby Rosen and Larry Silverstein, among others, was directed by Toni Comas, scripted by TRD’s own editor-in-chief, Stuart Elliott, and produced by publisher Amir Korangy. Donald Trump, who has commissioned Kondylis for multiple buildings, including superscraper Trump World Tower at 845 U.N. Plaza (until recently the world’s tallest residential building) and West Side redevelopment Riverside South, praised Kondylis effusively, saying, “I’ve never told you this, Costas, because I wanted you to keep your fees down.”

Korangy delivered introductory remarks at the screening, sponsored by Town Residential, and the evening included a talk by “Tabloid City” author Pete Hamill. Also seen milling about were “Shark Tank” star Barbara Corcoran, Park51 developer Sharif El-Gamal, and real estate atAn ebullient Donald Trump

torney Edward Mermelstein. Reaction to “Building Stories” was warm — and even though he’s no longer a presidential contender, The Donald didn’t hesitate to mention that he wants a documentary, too. By Alison RogeRs Joe Moinian (left) and son Mitch

Author Pete Hamill and Town’s Wendy Maitland work the crowd.

You’re hired: Costas Kondylis (left) and Donald Trump TRD publisher and film producer Amir Korangy

From left: Corcoran’s Pam Liebman, Town’s Andrew Heiberger and wife Robyn, and Louise Sunshine

Princess Katherine Karadjordjevic

42 June 2011 www.TheRealDeal.com

Town’s Brett Miles with Nicole Oge

PHOTOGRAPHS BY CLiNT SPAuLDiNG/PATRiCKMCMuLLAN.COM AND NeiL RASMuS/BFANYC.COM

Barbar

ra Corcoran

Town’s Janis Aurichio (left) and Kate Johnson

Pete Hamill speaks.

Mark David and Claudia Saez-Fromm

Morgan Library reading nook

The “Building Stories” crowd

Pam Liebman and Jeffrey Appel

Park51 developer Sharif el-Gamal

William O’Shaughnessy

Gristedes’ John Catsimatidis

CBRe’s Brad Gerla and ADNY’s Jennifer Mikitan running for president.

ijaz Malik and Della Rounick

From left: Shari Forrest , Ron Ramsey and itzy Garay

Prince Alexander

From left: Bert Dweck, Sam Terzi and Joe Sitt

www.TheRealDeal.com June 2011 43

THIS MONTH IN

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Call The Experts 646.867.7994 mmccue@codegreensolutions.com www.codegreensolutions.com 44 June 2011 www.TheRealDeal.com

REAL ESTATE HISTORY The Real Deal looks back at some of New York’s biggest real estate stories

1973: REBNY ACCUSED OF CO-OP COMMISSION PRICE FIXING

he federal government charged both the Real Estate Board of New York and an apartment building owner and management group of illegally setting commission rates and other fees in the sale of co-op units, 38 years ago this month. The U.S. Justice Department’s antitrust division claimed in a civil complaint filed in Manhattan that for two decades, REBNY and a group called the Apartment Association conspired “to raise, fix and maintain the commissions and fees” for brokers. Such collusion violated the Sherman Antitrust Act, the agency said. While the government claimed that the practice would prompt residential brokerages throughout the industry to adopt the same rates as these two industry leaders and create an unlevel playing Edmund Hume, president field for consumers, REBNY defended its policy of publicly stating of REBNY in the 1970s the percentages agents should be paid. At the time it was 5 percent for sales under $100,000 and a lower rate for more expensive apartments. “The establishment of commission rates provides protection to the public and offers sensible guidelines to the real estate broker,” Edmund Hume, president of REBNY, was quoted as saying in the New York Times. In November 1974, the two firms, without admitting guilt, signed an agreement with the government pledging to refrain from dictating commission rates or other fees.Today, REBNY says it does not establish commission rates, although it is generally 6 percent for residential apartment sales.

1950: QUEENS GROWS PAST BRONX TO BECOME THIRD-LARGEST BOROUGH

fter trailing far behind Manhattan, Brooklyn and the Bronx in housing development in the early decades of the 20th century, development in Queens exploded in a postWorld War II boom. While the other boroughs barely grew, Queens become the third-largest borough in the city, a U.S. Census report released 61 years ago this month showed. The 1950 Census count reported that the population in Queens jumped about 19 percent, or by 250,000 residents, in the preceding decade, while the Bronx added just 6,000 residents. One of the largest new projects was Parkway Village, which opened in 1947 with 685 apartments in Kew Gardens Hills. In the decennial count, Brooklyn had 2.74 million residents, Manhattan had 1.96 million and Queens had 1.55 million. There were 1.45 million residents Parkway Village, which opened in 1947 in Kew Gardens Hills in the Bronx and roughly 190,000 in Staten Island. By comparison, three decades earlier, in 1920, Queens had just 470,000 residents while the Bronx had 730,000. Queens continued to grow rapidly, and in the next Census in 1960, the borough overtook Manhattan to claim the second-most populous position. Today the most populous boroughs, in order, are: Brooklyn, Queens, Manhattan, the Bronx and Staten Island.

1921: STATE COMMITTEE UNEARTHS NYC COMMERCIAL MORTGAGE ABUSE

State Senate committee investigating the root causes of the housing crisis in New York City caused by the post-World War I population surge uncovered a widespread pattern of mortgage lenders overcharging owners of office and rental apartment buildings, 90 years ago this month. The Lockwood Committee, chaired by Republican Brooklyn State Senator Charles Lockwood, and led by renowned consumer rights attorney Samuel Untermyer, discovered that commercial mortgage lenders tacked on fees and expenses worth between 20 percent and 50 percent of the entire loan. In some cases, borrowers were forced to buy undesirable property from lenders in order to make the deal. In one case, an owner of an unidentified office building on Seventh Avenue borrowed $1.45 million from Mutual Life Insurance. But a condition of receiving the loan was to buy scattered properties from the insurance company for $650,000. The committee also helped put the brakes on steep rental increases, and halted 40,000 proceedings to evict tenants that were underway at the time. Compiled by Adam Pincus

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PROFILE

The trials of Douglas Elliman The city’s largest brokerage ﬁrm faces challenges, revamps image

BY C. J. HUGHES at Elliman, joined Core in December 2010. be regulars on the New York City spin-off of rudential Douglas Elliman has Elliman isn’t in danger of losing its status Bravo’s “Million Dollar Listing.” “We have had some departures, as have the most agents of any real estate as a major player in the Manhattan real esbrokerage in the city. Its offerings tate market, but many insiders say the rash all firms,” the firm’s management said in a account for nearly one-quarter of Man- of recent departures isn’t a coincidence. Mo- statement, “but we believe that our newhattan’s listed apartments, and it turns rale at the firm has fallen as agents complain est recruits more than make up for those 100 this year. about mounting fees, management policies departures.” But in recent months, the firm’s top-ba- and a play-favorites culture in which a few nana status may have slipped somewhat. top brokers are handed the juiciest listings Industry makeover In the last year, Elliman has seen its and given more support than other agents. The turnover at Elliman comes after a year Manhattan listings decline from 2,010 Dorothy “Dottie” Herman, the firm’s pres- of contraction: From May 2009 to May to 1,320 as of May 2011 — a drop of 34 percent, the largest dip among Manhattan’s major firms. Perhaps more important, the total value of those listings fell sharply, from $3.8 billion to $2.6 billion, according to The Real Deal’s analysis of data from On-Line Residential. A busier residential sales market may bear some of the responsibility for that slide. Because The Real Deal’s data does not include properties that have recently sold, a drop in the value of a firm’s listings could mean that fewer homes are lingering on the market. However, even if that’s the case, competitor companies seem to be replacing their sold listings at a quicker clip than Elliman is. For instance, the Corcoran Group, the only other firm that Dottie Herman, the president and CEO of Prudential Douglas Elliman, and Howard Lorber, the company’s chairman rivals Elliman in size and influence, saw an uptick in listings in the past year, from 1,784 to 1,815, a 2 percent increase. Corcoran’s aggregate listing value also dipped — from $4 billion to $3.5 billion — but the drop in total value was less than half that of Elliman’s. What’s more, a topsy-turvy market isn’t the only challenge facing Elliman. ident and CEO, argued that Elliman’s ap- 2010, Elliman saw its ranks ebb 3.3 percent, Over the past few months, more than proach has benefited her agents immensely. down from 1,513 brokers to 1,462. a half-dozen top-producing agents have “I let them do a lot of things that other comIt’s also taking place as the industry unquit to go to rival brokerages. panies don’t let them do,” she said. dergoes a major makeover: With many broWhile brokers switching companies is In addition, Herman insisted her firm is kerages now offering models with heftier not unusual, some of Elliman’s most high- not stingy, but generous: “No one has a more commission splits, the current competition profile stars have left, including Ilan Bra- lucrative commission schedule and budgets to retain agents is especially fierce. Compacha, who headed Elliman’s biggest group than I do,” she said. nies like Rutenberg Realty and Keller Wilbefore leaving to start his own firm earlier Firm management attributes any drop in liams, where agents pay a preset amount this year; Tamir Shemesh, whose Elliman morale to the market downturn, and points to the firm but keep the remainder of their team had ranked in the top 10 since 2003; to the fact that the firm has added 289 new commissions, have been some of the fastestand Efraim Tessler, who was named Elli- sales agents since the beginning of 2011. growing in Manhattan. man’s No. 2 broker in 2009. The Barak/ Managers also pointed out that Elliman Salespeople, meanwhile, are concludBlackburn Group, led by Christine Black- has recently landed some other big-name ing that having a brand-name firm on their burn and Lior Barak, which was Elliman’s brokers, including Michael Bolla and Den- business cards isn’t required for success, a top team in number of transactions in nis Mangone (both of whom have worked shift that appears to be hitting Elliman — 2009, departed last year for Corcoran. with celebrity clients), and Core brokers the city’s biggest brand-name firm — parDoron Zwickel, also a top-ranked agent Fredrik Eklund and John Gomes, who will ticularly hard.

“It’s like the Wild West over there.” Andrew Gerringer, the Marketing Directors

46 June 2011 www.TheRealDeal.com

“Agents are saying, ‘What is this company doing for me? They are charging me money, and there aren’t as many managers to talk to,’” said Donna Olshan, founder of the boutique ﬁrm Olshan Realty. Brokers with a decent Rolodex, Olshan noted, might see little need to work for a big-name shop when they have become their own brands. “The whole business,” she noted, “is in ﬂux.”

Perhaps mindful of the changing industry, Elliman is revamping its image, and industry insiders say the company is in the process of dropping its affiliation with Prudential, as evidenced by new marketing efforts that refer to the firm as simply “Douglas Elliman.” That move could save the firm some cash, because the Prudential name costs 2 percent of gross income every year, according to brokers who are familiar with the company’s financial structure. Herman would not confirm the amount her firm pays to Prudential, and said any talk of severing ties with Prudential is premature. Elliman also announced last month it is partnering with United Kingdombased real estate agency and consulting firm Knight Frank Residential in a bid to promote exclusive properties among their combined international client pools and boost sales. European and other global properties should begin to appear on Elliman's website in

PHOTOGRAPH OF HERMAN FOR THE REAL DEAL BY MARILYNN K. YEE; PHOTOGRAPH OF LORBER FOR THE REAL DEAL BY HUGH HARTSHORNE

PROFILE Elliman stars ...

... and top producers who’ve left

Dolly Lenz

Ilan Bracha

Michael Bolla

Tamir Shemesh

Fredrik Eklund

Laurie Bloomﬁeld

Dawn Doherty

Vickey Barron

the coming weeks, according to Crain’s. Elliman also recently tapped its new hire, Bolla, along with Carl Black, to launch a new, national sales-side interior design service called Elliman Equity Design. Finally, also last month, Dawn Doherty, formerly responsible for strategic development and brand awareness at listing website StreetEasy, moved to Elliman to assume the newly created role of chief digital ofﬁcer. In defending the ﬁrm, Herman and other executives say that when a company is a juggernaut, it’s bound to attract criti-

cism, and that the comments of disgruntled former employees need to be taken with many grains of salt. Privately held Elliman “has no debt,” added Herman, who noted that 2010 was her most proﬁtable year to date. By contrast, Elliman’s chief rival, the Corcoran Group, is, through corporate holdings, a subsidiary of the debt-saddled Realogy Corporation.

The Beginning Founded by Douglas Ludlow Elliman on Madison Avenue in 1911, the ﬁrm that would

become Manhattan’s largest started with a high-end, white-glove approach. Indeed, an early focus, according to historical accounts, was to convince the city’s aristocrats to leave their Upper East Side townhouses and live side by side with other families in new multi-unit co-ops. Mr. Elliman died in 1972, leaving a leadership vacuum in his wake. After years of infighting, exacerbated by a real estate downturn, the firm’s principals sold the company in 1989 to the Milstein family for an undisclosed price. A decade later, in 1999, the Milsteins sold to Andrew Farkas’ Insignia Financial Group. Then, in 2003, Herman, an ambitious single mom who started as a real estate agent on Long Island, purchased Elliman for $72 million with help from moneyman Howard Lorber, president and CEO of the Vector Group. Vector’s holdings include tobacco companies Liggett Group and Vector Tobacco, while Lorber’s non-tobacco holdings include the hot-dog chain Nathan’s Famous. Herman, who had previously purchased Prudential Long Island Realty in 1989, was determined to offer services, in the words of the firm’s slogan, “from Manhattan to Montauk.” Since the arrival of Herman and Lorber, who serves as the firm’s chairman, Prudential Douglas Elliman has grown steadily, consolidating its position as the city’s largest brokerage with the help of superstar brokers like Dolly Lenz (who is reported to have sold $748 million worth of real estate in one single year during the real estate boom). In terms of number of agents, Elliman has been the top firm in Manhattan for each of the past five years. Elliman now has 12 offices in Manhattan, out of its nearly 60 in the region. Most heads of rival firms would not comment, citing a general policy of not talking about the competition. Still, some critics said that being sold three times in 22 years has harmed the company more than it has helped it. For one, Elliman’s corporate structure is resistant to innovation, a problem that has worsened every time the company has been sold, insiders said. “It’s a big company, and they are set in their ways,” said a former Elliman broker who is now with a different firm, noting that the company did not close offices to save money during the downturn, as other firms did. Andrew Gerringer, former head of Elliman’s new development division, logged two decades at the firm before leaving last year for the Marketing Directors. “I was growing increasingly unhappy with how the program was being run,” said Gerringer. In terms of a lack of consistent rules, “it’s like the Wild West over there,” he noted. Gerringer also said that the firm seems

to overly reward superstars over others in the company. What particularly rankled him, however, was that Elliman brokers who were supposed to be marketing new developments were grabbing buyers and bringing them to see their other listings, he said. Plus, the firm’s agents were regularly using inflated comps to price units in new buildings, which stalled sales, Gerringer claimed. Indeed, others in the industry pointed out that Elliman’s recent track record with new developments hasn’t been great. Elliman lost the behemoth conversion Manhattan House, one of the city’s largest projects, to Corcoran Sunshine in 2009. The same thing occurred at 515 East 72nd Street (formerly Miraval Living), and last fall at the Upper West Side’s famous Apthorp. Of course, switching brokers was a common tactic used by developers to goose sales during the worst of the real estate downturn. And Elliman has certainly taken over developments from other firms, notably the Azure on East 91st Street, as well as Jean Nouvel’s 100 Eleventh Avenue (though Elliman took over the latter from Corcoran Sunshine after Lorber lent capital to the project, providing the funds necessary for construction to continue). Lorber did not return a call seeking comment. However, a statement from Elliman’s management, delivered via a spokesperson, disputed Gerringer’s claims, and said he was asked to leave the firm. In an e-mailed statement, managers said: “Unfortunately, Andy could never embrace the concept that [Elliman] is an agent-driven company — Andy did not like or want to deal with agents or managers. Any criticisms of [Elliman] or its Development Marketing Group are merely sour grapes.” In general, one reason for agents’ disgruntlement is the firm’s fees, sources noted. Elliman agents pay desk, technology and legal fees (lumped under the heading of “business fees”), as well as covering the industry-standard “errors and omissions” insurance. What’s more, when buyers purchase homes at new condos represented by Elliman, the company takes a “referral fee” out of the sales agents’ commission, brokers said. The fees were imposed during the real estate downturn to pad the company’s bottom line, and “were basically created so as to never show a loss,” according to one former broker at the firm, echoing others. Other large firms have similar fees, brokers noted. The firm’s management said through a spokesperson that overall, Continued on page 90

www.TheRealDeal.com June 2011 47

Cheaper condos moving in Harlem Uptown new development inventory is selling, albeit at lower prices BY JAKE MOONEY obb Pair, president of the brokerage and development firm Harlem Lofts, had an uncomfortably closeup view of that neighborhood’s tumbling sales market in recent years. He estimates that the three-family townhouse that he owns at 119th Street and Lenox Avenue, where he lives with his family, has lost about a million dollars in value since its peak in last decade’s boom. Among Harlem’s woes has been a glut of new condominium units, many of which were located in troubled buildings that just missed the boom years or suffered during the downturn. The number of new condo and co-op units in Upper Manhattan — Harlem and neighborhoods to the north — has risen steadily since 2008, with an accompanying slide in average sale prices. Buildings marketed by Pair’s company are no exception. Still, he maintained in a recent interview that he is optimistic, and that he is not alone among people who deal in new construction and conversions uptown. “It sounds like broker talk, but if you compare it to two years ago, we’re jumping-up-and-down happy,” Pair said. That excitement, brokers said, stems from an uptick in sales that followed sharp reductions in prices citywide. There are plenty of units still available, they say, but sales are being made — albeit at lower prices than three years ago. Ariel Property Advisors, an investment sales firm, found in its 2010 year-end condominium report that prices of units in Upper Manhattan (which it defines as Harlem through Inwood) dropped an average of 6.6 percent from 2009, after an 8.8 percent decline that year. Shimon Shkury, the company’s president, said it’s a positive sign for Harlem that prices fell at similar rates to those elsewhere in Manhattan, indicating that the neighborhood is no longer viewed by consumers as marginal. “I think that’s a healthy decline, it’s a reasonable decline,” Shkury said. “It means that the area, in my opinion, is relatively established and in good shape.” Shkury also said he was encouraged by brisk sales in buildings along Frederick Douglass Boulevard and, to a lesser extent, in East Harlem. He noted that development sites are still changing hands, though buyers tend to be those with longer-term plans: people looking to build in 18 months, international investors, or institutions like schools and nonprofit organizations that are planning to build for their own use. Adrienne Albert, chief executive officer of the Marketing Directors, said that in any downturn, emerging neighborhoods like Harlem should be expected to face more problems than prime neighborhoods. Still, she added, “Harlem is seeing that supply be-

48 June 2011 www.TheRealDeal.com

Uptown condo market at a glance Q1 2011

Q1 2010

% change

Condo closings:

102

+55%

Average sale price:

$597,000

$570,000

+5%

Average size (square feet):

1,050

1,074

-1%

Average price per square foot: $568

$537

+5%

Source note: Data for condos in Manhattan above 110th Street compiled by the Marketing Directors.

The Apex condo. Below, Robb Pair of Harlem Lofts in front of his townhouse on 119th Street and Lenox Avenue.

“We’re just going to take the losses and move on.” Robb Pair, Harlem Lofts ing absorbed rather quickly in the last four months, maybe five months.” According to the firm’s data, closings above 110th Street were up 55 percent over the first quarter of 2010, while the average price per square foot rose 5 percent. Data from real estate website StreetEasy, focusing on condo and co-op sales in new and newly converted buildings, seems to bolster that point. In Manhattan as a whole, the site counted 406 closings in the first quarter of 2011 — the fewest in a first quarter in years. But in Upper Manhattan as a whole — which StreetEasy defines as Central Harlem through Washington Heights — closings were up by 46 percent over 2009. What’s more, this year’s closings in Cen-

tral Harlem were pricier than last year: The average sale price rose 33 percent from the ﬁrst quarter of 2010. The neighborhood has been able to respond to the improved sales market in the city precisely because there is so much available inventory, Albert said. Drawing buyers, though, has required adjustments. At the Apex, a 44-unit condo project represented by the Marketing Di-

rectors at 124th Street and Frederick Douglass Boulevard, building sponsor RCG Longview announced last month that it had trimmed its budget in order to offer reduced common charges. The building, which came on the market in September, is now 30 percent sold. Some price corrections have been more dramatic. Pair, at Harlem Lofts, pointed to two buildings his firm is marketing: 764 Saint Nicholas Avenue in Hamilton Heights and 108 West 131st Street in Central Harlem. Both originally entered the market at $775 per square foot, he said. Now the asking prices for their units are around $480 and $450 per square foot, respectively. “They’ll never fetch the original prices,” Pair said. “We’re just going to take the losses and move on.” The lower prices, he said, are partly a result of the area’s ample supply of new units. He added, though, that there is a bright side, once prices have found the right level. “Frederick Douglass had an oversupply, but as a result of this, now it’s got a boom happening,” Pair said. “Obviously something happened, where they’re selling at better rates and people are moving in there.” One factor is gentrification: The area has gained higher-end amenities in the last year, including a branch of Levain Bakery, the beer garden Bier International, and the boutique hotel Aloft Harlem, located in the same building as the Apex condos. Harlem’s apparent turnaround came too late for some buildings and developers. Units in the WA Condominiums, a six-story building at 131st Street and Adam Clayton Powell Boulevard, were listed at $1,200 per square foot when they came on the market in 2008. The lender foreclosed in November 2009 after the owners did not get a temporary certificate of occupancy, and no units are currently listed for sale. In many buildings where prices have been lowered, Pair said, someone is making money — if not the original developers and lenders. “What happened is behind-the-scenes, the paper was sold, and the new owners were able to buy the paper at whatever, 50 cents on the dollar, and put them back on the market,” he said. “Someone took the hit, and now the guys that bought the paper are making out like bandits.” As a resident, Pair said, he believes that the downturn has been good for Harlem, scaring off some investment buyers and making units available for people who want to live in them. “I live in the neighborhood and I’m raising my family here, so I care about the neighborhood,” he said. “If I just cared about the money, I might not be so happy.” TRD PHOTOGRAPHS FOR THE REAL DEAL BY MICHAEL TOOLAN

INSIDE

THE

DEAL

Penciling out 737 Park

A look at the calculations behind Harry Macklowe’s newest purchase

737 Park Avenue Buyers pay more for apartments with four or more bedrooms, so condo converters often combine units. The current conﬁguration of the 17th ﬂoor, which includes a rent-stabilized tenant in unit 17E.

A possible new ﬂoor plan, combining units 17A and 17B to form a four-bedroom unit; and combining 17C and 17D to form a four-bedroom apartment. The large 17E is untouched because of its regulated status.

BY ADAM PINCUS ast month, developer Harry Macklowe signed a contract as the operating partner to buy the 108-unit rental apartment building 737 Park Avenue for $255 million, reports said. The property, on the corner of 71st Street, is located on one of Manhattan’s most soughtafter residential blocks, and that fact hasn’t escaped Macklowe’s notice. He has not formally announced plans, but sources say he intends to convert the building to luxury condominiums. Once closed, Macklowe’s acquisition will be the most expensive residential building purchased for conversion since Maurice Mann and Africa Israel bought the Apthorp for $391 million in 2007, data from Real Capital Analytics shows. The deal marks the return of developers doing large-scale luxury condominium conversions following the real estate downturn. “This is a litmus test [for whether] a condo conversion is a viable strategy for the next few years,” said Ben Thypin, senior market analyst at Real Capital Analytics. “This is a pretty bold move for [Macklowe]. If he can execute, that’s great, he’s still got it. But if he can’t, I don’t

50 June 2011 www.TheRealDeal.com

think that will surprise many people, because his basis is so high.” When a property is offered for sale, the selling brokerage, in this case a Jones Lang LaSalle team led by Jon Caplan, creates a “confidential offering memorandum,” which is sent to select potential buyers, who sign confidentiality agreements. This includes the internal finances of the building, as well as a breakdown of the rent-regulated and free-market units, two of the most important pieces of information for buyers deciding how much to pay for a building. This month, The Real Deal took an exclusive behind-the-scenes look at the 73-year-old property through these rarely seen documents, usually shared only with a selective group of potential bidders. The memorandum, obtained by The Real Deal, is a prism through which to examine one of the biggest deals in recent years.

1. Building ﬁnances Developer Sam Minskoff & Sons constructed the 20-story, 216,246-squarefoot building in 1940. Four years later, real estate developer and investor Louis Katz acquired it. He died in 1965, and the building is now in the hands of his one surviving

daughter, Ruth Haberman, and eight of Katz’s grandchildren. The building has 103 apartment units, five professional spaces totaling 7,500 square feet, and an additional 1,603 square feet of space on the ground floor that could be rented or sold, the JLL marketing information says. But a look at 737 Park’s closely guarded income and expense records from the last four years reveals one reason the Katz family likely wanted to sell. Despite being valued at $255 million, the property only generated an annual net operating income of $2.77 to $5 million between 2007 and 2010, providing a capitalization rate of only 1.5 percent in 2010. Because of that, the actual annual distribution for the nine Katz heirs is low. In 2009, just $3 million was distributed among them, the records show. While nothing to sneeze at, that is a far lower annual return than one would expect from an investment of such value. The building also has a high number of vacant units: 14, according to the memorandum. The bottom line is also impacted by some rent-controlled units in which tenants, some affili-

ated with the owners, pay an envy-inducing annual rent of only $300.

2. Rent-regulated vs. free-market units One of the single most important factors in determining the value of a rental

Harry Macklowe

BUILDING PHOTOGRAPH FOR THE REAL DEAL BY DEREK ZAHEDI

INSIDE building is the ratio of rent-regulated to free-market apartments. At 737 Park Avenue, 69 of the 103 units, or 67 percent, are free-market, the result of years of efforts to remove rent-regulated tenants. Such a high number of free-market tenants is unusual, and increases the value of the building for several reasons, brokers said. “Seventy [percent] is rare. You pray for 50 percent,” noted Iva Spitzer, an executive vice president at Corcoran Group Marketing who has marketed dozens of conversion projects. The advantage to a developer of a low number of regulated units is clear: In the short term, the building collects signiﬁcantly more rent from the free-market tenants. The average market-rate tenant at 737 Park pays $66 per square foot, while the 30 rent-stabilized residents are paying about $22 per square foot, according to the memorandum. For example, veteran real estate broker Carol Cohen and her husband, Lester, live in 1,622-square-foot, rent-stabilized Apt. 6F, where they pay $3,061 per month for the

737 Park Avenue breakdown Year constructed Floors

1940 20

Residential sf

187,351

Professional ofﬁce sf

7,500

Underutilized sf

1,603

Total square feet

216,246

Source: Jones Lang LaSalle offering memorandum

two-bedroom unit. (Cohen left the Corcoran Group in December amid controversy surrounding a lawsuit ﬁled by the Katz family, who alleged that the Cohens lied about their income on state forms to prevent a rent increase. Cohen is now licensed with Brown Harris Stevens.) Two ﬂoors up, a tenant is paying about three times as much, or $9,900 per month, for the same-size apartment.

3. Removing regulated tenants At ﬁrst glance, armchair investors might assume that the 34 rent-regulated tenants, 26 of whom are paying more than the critical luxury decontrol threshold of $2,000 per month, would be easy to remove. The JLL memorandum suggests as much: “With the average monthly stabilized rent over the $2,000 threshold, the property offers

THE

DEAL

Building ﬁnances 2008

2009

2010

Revenue

$8,066,205

$8,849,418

$8,027,985

Expenses

$3,679,174

$3,801,804

$4,167,121

Net operating income

$4,387,031

$5,047,614

$3,860,864

Distributions to shareholders

$4,387,031

$3,072,467

n/a

Source: Income and expense statements

great opportunities for luxury decontrol.” But conversion experts say Macklowe won’t be able to remove many tenants, in the short term at least, because the owners have already worked for years to dislodge them. Often, that means petitioning the state for “high-income rent deregulation,” which applies if a unit’s tenants are paying more than $2,000 per month, and the combined income of those renters is greater than $175,000 annually for two years running. The owners of 737 Park have applied “year after year for the same units for high-income decontrol,” Maggie Russell-Ciardi, executive director at the housing advocacy group Tenants & Neighbors, said after reviewing the documents. Petitions are ﬁled annually for more than two dozen apartments in the building, but the state has granted only one since 2004. Buyouts are common practice in conversions, but with rents this low, developers likely have to pay astronomical sums to get tenants to move. Lawsuits, like the Katzes’ suit against the Cohens, are another favored tactic, but can be cumbersome and costly. Another way to pressure tenants to leave is by making life unpleasant. Some cynical conversion experts note that the noise and turmoil of a gut renovation of the building might help push some renters to take a buyout. Certainly, dislodging rent-regulated tenants isn’t for the faint of heart. But industry insiders noted that Macklowe, who once had buildings demolished in the dark of night to make way for a Times Square hotel project, has a tough stomach when developing around in-place renters. “Harry has always been aggressive,” one attorney said. “Doing a gut renovation with tenants does not scare [him].” In addition to restrictions due to rent laws, there are three very valuable upper-ﬂoor apartments at 737 Park that the owners can’t immediately convert. The tenants, including a daughter and granddaughter of Louis Katz,

have life-leases that a new owner must honor, for three-, four- and ﬁve-bedroom units on ﬂoors 18 and 19.

4. Underutilized space Another option for would-be purchasers is expanding the amount of residential space by repurposing underutilized floor area (see related story on page 32) or converting professional space. Jones Lang LaSalle’s materials suggest that five ground-floor doctors’ offices at 737 Park could be combined with second-floor apartments to create sought-

Residential apartments Unit type

Number of Units

Average sq. ft.

Studio

820

1-bedroom

1,376

2-bedroom

1,731

3-bedroom

2,402

4-bedroom

3,420

5-bedroom

3,188

after maisonettes — apartments with their own entrances to the street. There is also a 1,603-square-foot space, once used as maids’ quarters, which could be turned into an apartment. Getting the doctors to move out could be tricky — one tenant has an option to extend his lease to 2023. But “if you throw up a construction bridge, a commercial tenant very often will make a reasonable [buyout] deal,”

age and consulting firm Georgia Malone & Company, said. According to JLL, four-bedroom condominiums in the area sell for an average of $2,500 per square foot, but apartments with three or fewer bedrooms go for less than $1,500 per square foot. However, a new owner can’t combine units by fiat, because the rent-regulated tenants are blocking them on nearly every floor. So in determining the value of a building, would-be converters need to pay careful attention to the in-place free-market and regulated apartments as they craft their so-called stacking plan, a diagram of apartments by floor. A new owner would most likely want to combine units on the same floor rather than duplex them, because of the space considered wasted in the latter for stairs.

6. The competition Nearby new-construction luxury buildings have achieved sales prices of about $3,000 per square foot, such as Vornado Realty Trust’s One Beacon Court at 158 East 58th Street. One three-bedroom apartment there sold for $14.45 million, or about $4,921 per square foot, last month. However, conversions have not always garnered the same top numbers. In March of this year, Extell Development, the sponsors at the former Stanhope Hotel at 995 Fifth Avenue, sold a ﬁve-bedroom apartment for $21 million, or $2,513 per foot, according to the real estate listings website StreetEasy. Luckily for Macklowe, there are few other prewar condominiums on Park Avenue in the Lenox Hill neighborhood. Two nearby condo conversions, in 715 Park Avenue and 838 Fifth Avenue, are both in less desirable postwar buildings.

7. Development costs Conservative buyers may look at the project as if it were two buildings: one a condominium conversion, the other a rent-regulated rehabilitation. Since there are only 122,136 square feet of

Residential rents Average rent per foot

Lease type

Units

Square feet

Free market

122,136

$66.67

Rent stabilized

57,294

$22.48

Rent controlled

7,921

$11.82

Total

103

187,351

$48.39

Source: Jones Lang LaSalle offering memorandum

said an attorney who has done litigation at the building and asked not to be identiﬁed.

5. The stacking plan

Jon Caplan

Carol Cohen

A new luxury condo conversion on Park Avenue would likely attract wealthy families looking for large apartments. So maximizing the value of 737 Park means combining units, most of which are currently around 1,800 square feet each. “Most people who pay a lot of money need about 3,000 square feet,” Georgia Malone, a conversion expert and president at broker-

residential free-market space (plus any additional space that can be added from underutilized areas), the acquisition cost of $255 million is about $2,087 per square foot, which is a high basis, as Thypin pointed out. However, brokers said it was impossible to estimate the sell-out price or proﬁt that Macklowe is projecting, because it is not known how much he expects to spend on renovations. Renovation costs range from $300 to $500 per square foot or more, depending on the quality of the ﬁnishes, Spitzer said. TRD www.TheRealDeal.com June 2011 51

Think about it Three-year-old real estate company tries out innovative approach BY SARAH GROSS hink Properties started with a tsunami. New York natives Hunter Gellin and Shawn Vardi had crossed paths socially in high school, and both attended Northeastern University in Boston. But it was Gellin’s fortuitous 2004 trip to Thailand that really brought them together. Vardi, who had started a jewelry business after college, knew Thailand well. “I had called Shawn to ask for some advice” on travelling to the area, recalled Gellin, who was working in fashion at the time. He then headed off to Asia, only to be stranded when the history-making tsunami swept across the Indian Ocean. “Shawn was worried, and had his business associates in Thailand call me, and provide me with any assistance I needed getting out,” Gellin said. “When I got back, I met up with him to thank him. We got to talking, and before we knew it ... we were planning Think Properties.” Both Gellin and Vardi had come from families that worked in real estate, but what they had in mind wasn’t just another upstart brokerage. They envisioned an

break the traditional real estate mold. After a fledging partnership based in Brooklyn, the four opened Think Properties in 2008. Less than five years later, the company has offices in Manhattan and Miami, and owns and manages some $450 million in multifamily residential real estate in New York, including 20 buildings

From left: Shawn Vardi, Lee Brodsky, Hunter Gellin and Mark Shemel

entirely new type of real estate company, incorporating technology, luxury and lifestyle services in ways they had not seen before. Along with two other acquaintances — National Property Management Group founder Mark Shemel and Lee Brodsky, son of developer Bert Brodsky — they set out to

and some 100 corporate temporary housing units. In addition to property management, the ﬁrm handles residential sales and rentals, and is currently marketing the new 52unit Boulan South Beach condominium in Florida (developed by Bert Brodsky). Also, for the ﬁrst time this year, Think Properties

appeared on The Real Deal’s annual ranking of Manhattan’s top boutique firms, coming in at No. 9 with $18.1 million worth of sales listings, including a $13 million residence for sale at Trump Tower in Midtown. Due in part to Shemel’s previous experience, the firm started off by purchasing multifamily buildings and managing units in them, a business model that quickly led to marketing and sales. It was a challenging time to start a new venture, but the founders view that as an advantage. “During the economic crisis, we believed we could enter a market where competition was thinning and new ideas were needed,” Gellin said. The key to Think’s business plan is incorporating services that other real estate companies don’t offer. For example, the founders developed an extended stay-type program in their New York and South Beach buildings to help buyers rent out their apartments when not using them. In these buildings, Think not only rents out the units, but provides cleaning and staffing services for an additional fee. The increased costs notwithstanding, the firm claims to give clients an up to 40 percent return on their investment. “Our rental programs are designed to maximize returns to owners that participate,” Shemel said. “We incorporate a comContinued on page 86

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CO-OPS

Getting across the moat at the top cooperatives BY C. J. HUGHES ike mushrooms, glass-walled condos and fancy rentals with wine storage popped up with fury across the city in recent years, and seemed to fundamentally alter New York’s housing stock in the process. No longer would the pinnacle of city living be the exclusive Uptown co-ops that had ruled the roost for decades, the trend seemed to suggest, but instead this new crop of buildings with impressive architecture and an A-to-Z range of luxuries. It didn’t hurt that they were a lot easier to get into. Indeed, why would a buyer subject himself (or herself) to invasive co-op board packages and taxing interviews, the thinking went, when that buyer could get just as nice a home without having to trot out reference letters galore? But then a funny thing happened when the recession hit: Many condos tanked in value, in part because their open-door policy was seen as exposing them to risks like job-challenged residents missing maintenance payments. Meanwhile, co-ops, whose residents are required to have deep cash reserves, generally weren’t so hard-hit. That resiliency might explain why coops, for all the hoops they make buyers jump through, continue to be popular, says Michael Gross, author of “740 Park: The Story of the World’s Richest Apartment Building.” In addition, the city’s co-ops “are still some of the best buildings, in terms of quality, layout and spaciousness,” says Gross, adding that they probably won’t be upstaged anytime soon. “They will survive this moment, I think, and hold their value for many, many years to come.” That said, winning approval of the coop boards at these country-club-type highrises isn’t for the faint of heart: In addition to occasional controversial rejections (as anybody following the lawsuit by a former board president of the Dakota against that storied co-op’s board will know), most have strict rules. Almost all of the city’s top co-ops, for example, ban subletters. Most frown on ﬁnancing. Some require an interview of your four-legged friend and prohibit dogs from using front-of-the-building elevators, brokers say. Complicating matters in buildings this elite (years ago, author Tom Wolfe deemed many of them “Good Buildings”) is the fact that many of the rules are unwritten. Further, brokers seem to follow Fight Club rules when talking about these überresidences — one doesn’t talk about co-ops. Nonetheless, The Real Deal went inside the

56 June 2011 www.TheRealDeal.com

clubby world of the city’s priciest co-ops to determine some of the ground rules. This roundup is far from complete — standouts like 950 Fifth, packed with hoteliers and investment-bank chiefs, and 778 Park, where Brooke Astor had a duplex, are just as notorious but too hard to get good data on. Still, this list may shed a little light on a shadowy process.

buyers fork over just 2 percent. In contrast, at any modest non-VIP Downtown co-op, that fee may be just 1 percent, or even tinier, because it’s based on a ﬁxed dollar amount for each of the shares being purchased, bro-

deal. Since then, he says, requirements have become more speciﬁc, in part because then there weren’t as many millionaires. Now, he says, “somebody can be a millionaire one day and broke the next,” so co-ops,

1. 740 Park Avenue

he city’s ritziest co-ops are found on the Upper East Side, and Fifth Avenue, with its Central Park vistas, is generally where the most elite buildings stand. But 740 Park, a 19-story, 30-unit limestone co-op with a storied pedigree, may be the ne plus ultra when it comes to board requirements. To wit: The “multiple,” which refers to how much in liquid assets a buyer must have on hand in order to be considered for admission into the co-op, is equal to at least four times the purchase price, according to Gross. So the 740 Park duplex currently being marketed by Sotheby’s for $23 million, (which, to be fair, does have a walnut-paneled library and marble baths) would require a buyer to have $100 million in a bank account that he or she could withdraw on command. Perhaps that rule is too strict; the unit has languished on the market for three years, with price chops along the way, according to StreetEasy, the real estate data service. (In 2008, the apartment, #45C, was listed for $35 million, which might have required cash reserves of close to $150 million.) Still, the rule shows no sign of being relaxed, brokers say. Also, the board may look askance at buyers who don’t run in banking circles, but instead news and entertainment ones. Home to John Rockefeller Jr., Saul Steinberg and Ron Perelman through the years, No. 740 has famously rejected Barbara and Barbra — Walters and Streisand — and Neil Sedaka as well, Gross reported.

2. 834 Fifth Avenue

ike at 740 Park, the presence of a Rockefeller may be a good tip-off that the walls of a co-op are not going to be easily breached, and 834 Fifth Avenue, a 15-unit limestone Art Deco gem where Laurance Rockefeller once lived, is no exception. Besides the usual ban on mortgages, buyers have to shoulder a relatively hefty ﬂip tax of 3 percent of the purchase price, or around $1 million on a $40 million spread, which is slightly higher than in other comparable Fifth Avenue buildings. At 960 Fifth, say,

740 Park Avenue Once home to John D. Rockefeller Jr.

4 East 66th Street /845 Fifth Ave. Home to Howard Solomon

834 Fifth Avenue Home to Rupert Murdoch

2 East 67th Street Home to Arthur Carter

“This building is sort of impossible to get in, not only for you and me, but for rich people as well.” Michael Gross, author of “740 Park,” discussing 2 East 67th Street kers explain. The building, which counts media mogul Rupert Murdoch and Jets owner Woody Johnson among its residents, also demands a soup-to-nuts list of assets from buyers, including antiques, paintings and retirement packages, with their values corroborated by insurers, so buyers can’t bluff, explains Laurence Kaiser of KeyVentures, who has frequently worked as a broker there. In fact, he’s sold #9-10A four times, he said, and his sale of #8B at No. 834 in the late 1970s was New York’s ﬁrst $1 million

not just at this location, want more proof of liquidity. In fact, when Rockefeller bought in, he probably had to provide a letter from whoever oversaw his trust fund at J.P. Morgan, Kaiser guesses, versus today, when he might have to produce a heavy stack of paperwork. “I think [back then] he might have needed just a smile,” Kaiser jokes. At 834 Fifth, the sizable ﬂip tax “guarantees that the roof is done, the ﬂowers look beautiful, and the uniforms on the doormen are fresh,” Kaiser says. However, some rules are notably more lax than those of other

PHOTOGRAPHS OF 4 EAST 66TH STREET AND 834 FIFTH AVENUE FROM PROPERTYSHARK.COM

CO-OPS top-ﬂight buildings — dogs are actually allowed, for example.

3. 4 East 66th Street / 845 Fifth Avenue

his dual-address, 12-story building, which was built in 1920 and features 16 apartments, was designed by ubiquitous Uptown architect J.E.R. Carpenter, who was known for his spacious rooms with lofty ceilings. Carpenter’s imprimatur, along with that of also-celebrated architect Rosario Candela [see 2 East 67th Street], can be a sign that

of ownership, one of those lenders, hedge fund New Stream Capital, ﬁled for Chapter 11 in March.

4. 2 East 67th Street

any buyers in rareiﬁed towers like this limestone 15-unit high-rise, built in 1928, bring more to the table than just fat bank statements. In fact, it’s not uncommon that some boast vast collections of luxuries such as Louis XVI armoires, say, or rows of Surrealist paintings. Yet for a deal to happen, buyers need to show that they could hit up an ATM at any

Of course, it can’t hurt to have some intangibles going for you, like being related to a prominent family. Last year, Eduardo Safra, an heir to the Safra global banking fortune, bought a pair of adjacent units on the fourth ﬂoor of the building for a total of $18 million. Still, Arthur Carter, the investment banker turned publisher on the building’s board, has been known to reject well-qualiﬁed candidates, including a friend of Carter’s ex-wife, actress Dixie Carter, according to reports. “This building is sort of impossible to get in, not only for you and me, but for rich people as well,” Gross says.

5. 770 Park Avenue

770 Park Avenue Once home to Hassan Nemazee

820 Fifth Avenue Home to Lily Safra a building will have a high barrier to entry. One who did pass muster here was Howard Solomon, the chief executive of pharma giant Forest Laboratories, who bought a four-bedroom, seventh-floor unit with five wood-burning fireplaces for $25 million in 2003. (Solomon’s future fortunes, however, might be in question; in the wake of admitted drug marketing violations last year, Solomon is now in the crosshairs of Washington regulators, who say he must cease doing business with the government.) However, it’s hard to know what the criteria might be for him and others because apartments hit the market so infrequently. Buying at No. 4 might also require some sleuthing skills. A unit belonging to Veronica Hearst, of the Hearst publishing empire, was lost to lenders in 2008, according to city records, after Hearst got into trouble with debt. Yet, further tangling the chain

812 Fifth Avenue Once home to Nelson A. Rockefeller

435 East 52nd St. (River House) Home to Henry Kissinger moment, so to speak, and pull out wads of cash — and not wait for an auction at Sotheby’s to unload that antique furniture, says Richard Steinberg, a broker with Warburg Realty, who declined to speak speciﬁcally about 2 East 67th Street but was commenting on these types of co-ops in general. The key, then, is to have largesse that can be tapped easily if, say, a hedge fund collapses, which the recession proved could be the case. The ﬁnest co-op boards want to know that a buyer will be able to cover his monthly maintenance, which could be $10,000, no matter what kind of trouble blows in. “Picassos and jewelry really don’t count,” Steinberg says. “It’s not about net worth, but liquidity.” Also at 2 East 67th Street, not only does a buyer need to be wealthy, but he also must part with some of his money for philanthropic causes, brokers explain.

he board here has seven people, brokers say, which makes it slightly easier than the more autocratic buildings, because at least one’s offer will be subject to debate. But impeccable bank records are still key. When buying in co-ops like this redbrick, Candela-designed confection at East 73rd Street, buyers are expected to pay entirely in cash, and not rely on a loan from a bank. Faced with competition from condos over the years, some respected co-ops have eased this rule somewhat, and now may allow mortgages for 50 percent of the purchase price, but those instances are still rare (see sidebar). However, the co-ops on this list have not budged on that front, even if the wealthy crave the tax perks that come with a home loan, says Kirk Henckels, a broker with Stribling who often sells in these types of buildings. “I’m surprised some haven’t changed to allow for the tax deduction,” he says. Certainly, if a buyer were to take out a typical $2 million loan to buy #10D, a ﬁvebedroom, four-and-a-half-bath apartment currently listed for about $12 million, the savings generated because of that mortgage tax credit could be about $30,000 a year, or about four months of maintenance there. But even when buyers don’t ﬂinch about cash deals, problems can develop, like with the case of Hassan Nemazee, an Iranian investor and political fund-raiser who was busted last year for bank fraud and subsequently lost his apartment at No. 770 to federal prosecutors, city records show. It

has not been sold yet, according to city records.

6. 812 Fifth Avenue

ot all that is posh is prewar; 812 Fifth Avenue, a 19-story, 30-unit building constructed in the 1960s (despite what its limestone façade might suggest), is also a coveted co-op, brokers say. Part of that can be explained by its East 62nd Street location, they add, which is tantalizingly close to Midtown. Of course, No. 812, where Core is now listing a 17th-ﬂoor two-bedroom with 2,000 square feet of terraces for $12 million, requires buyers to plunk down cash, and cash alone, to make the cut. But in a twist, the building, which was once home to former Vice President Nelson A. Rockefeller, does allow units to be used as pieds-à-terre, or essentially part-time crash pads, which the other co-ops on The Real Deal’s list strongly forbid. Along the same lines, top co-ops, which for years have shunned subletting or made it extremely difﬁcult to rent out apartments to nonresidents, are starting to discuss ways that it might responsibly work, says Stuart Saft, the attorney who heads the Council of New York Cooperatives & Condominiums. “It’s been the big issue as of late,” says Saft, who suggests that more co-ops of different stripes might someday adopt a rule of thumb where shareholders can sublet for two years but only after living there for two years — and receiving approval from the co-op board, natch.

7. 820 Fifth Avenue

o understand how hard it can be to get into this 1916 co-op, which contains a “chauffeurs’ lounge” and whose 12 limestone-fronted stories contain just one unit a ﬂoor, consider the case of Jeff Blau, the president of the Related Companies. Despite helping to run one of the country’s most successful real estate companies, Blau was rejected in 2009 when he tried to buy the apartment belonging to Ara Hovnanian, the homebuilder, for $31 million. Perhaps inside offers had a better chance; that unit was later sold to neighbor Lily Safra, the mother of Eduardo Safra Continued on page 92

Some co-ops now ‘easier’ to get into

y deﬁnition, there are no easy co-ops. Just assembling thick board packages is a tough task, even if the broker handles it. But a handful of Uptown co-ops may have gotten a

touch easier to get into in the last few years, on account of the fact that they now allow buyers to finance their purchases with mortgages. Some buildings allow you to finance 40 percent of the purchase price, brokers say. One that fits this bill, according to brokers who sell there, is 131 East 66th Street, at Lexington Avenue, which is a 12-story, 37-unit co-op where the apartments include prewar details like beamed ceilings and hardwood floors. The most expensive unit to close there recently, according to StreetEasy, was a five-bedroom that traded in 2009 whose last list price was $12.5 million. However, cheaper units have come on the market, like a 725-square-foot one-bedroom (with a maintenance fee of $2,109) listed at $525,000. Sorry, bargain hunters, it currently has a signed contract. Otherwise, some of the postwar co-ops on the side streets in the East 80s — 11 East 86th Street, a white-brick building with about 70 units, for instance — also will now allow buyers to purchase with mortgages, though they wouldn’t necessarily want to be known as being less exclusive than before, brokers add. “‘Easy’ is a strange word,” Kaiser says. “You have to put quotes around it.”

www.TheRealDeal.com June 2011 57

ARCHITECTURE REVIEW

James Gardner

Mount Sinai — remade The hospital’s new Center for Science and Medicine shows up older neighbors

ew blocks in Manhattan are changing as rapidly, or as fundamentally, as 102nd Street between Madison Avenue and Central Park, an area dominated by Mount Sinai Medical Center. The hospital, which currently occupies a superblock stretching from 98th to 102nd streets between Fifth and Madison avenues, has three simultaneous projects in the works. These include two striking, brand-new buildings that are eventful for the neighborhood: Mount Sinai’s new Center for Science and Medicine, a research building, and a 43-story residential tower at 4 East 102nd Street.

hibit varying degrees of success. The preexisting brown-brick apartment building at 1212 Fifth Avenue was built by the developer Nathan Raisler in 1926. Mount Sinai acquired this property in the 1970s, and its current renovation and conversion is being undertaken by Durst Fetner Residential. The architectural ﬁrm involved is SLCE, while the interiors are to be designed by S. Russell Groves. The conversion should improve — without greatly altering — the look of the neighborhood. A far greater change is coming in the

diminished next to its skyscraping neighbor. Already, the new building can be seen in isolation from miles away, a rarity for Manhattan, and the effect alters the Upper East Side skyline dramatically. Designed by Pelli Clarke Pelli Architects, the finished building will consist of a collage of five differentiated and interlocking zones, two of them fashioned from crème-colored cast stone, the other three from reflective window glass. Doubtless the whole thing will look better when it is finished, but for now the place reeks of value engineering. The cast-stone

(Left ) A sketch of the research center and East 102nd St. tower; (center, right) the tower being built.

Together with the third project — a 16story prewar rental building at 1212 Fifth Avenue that’s being converted into condos — the changes considerably improve the quality of the area’s building stock. The hospital has something of a checkered architectural history: Until now, the entire length of Madison Avenue between 101st and 102nd streets had been given over to a drearily Rationalist postwar structure, two stories high — one half of it in white brick, the other in a two-toned lozenge pattern. Why is it — we must ask in passing — that so many hospital wings of the postwar period seem to have been contrived with the express intention of inspiring despair in all who enter? Whatever one thinks of the hospital architecture that followed, either in the 1980s or today, surely it is far better than what was done before. Still, the three Mount Sinai projects ex58 June 2011 www.TheRealDeal.com

form of the two new buildings to the east. The high-rise at 4 East 102nd Street is destined to contain 230 luxury condos, 20 percent of which will be affordable housing. The building is about eight months from completion but is almost at its full height, and enough of its cladding has been applied 1212 Fifth Avenue and its interior designer, S. Russell Groves that we are in a position to offer a preliminary assessment of the project. surfaces feel slapped on, while the glass that At over 500 feet, this building will be one makes up the rest of the façade seems to of the tallest on the Upper East Side. Even pucker in places. The cast stone at the base now, in its incomplete state, it is taller than of the building is ill-suited to the glass, and anything for a mile around, including the the protruding strips of stone on the upper Annenberg Building, the towering black ﬂoors make little architectural or aesthetic Skidmore, Owings & Merrill monolith that sense. Even the shifting zones of the building look tired and uninspired. houses the Mount Sinai Medical School. There was controversy when the AnAnother (and better) addition to the skynenberg Building arose, because of its great line is the Center for Science and Medicine, height, but even its impression may seem on the southwest corner of Madison Avenue

and 101st Street. The Skidmore, Owings & Merrill-designed building is all but complete on the outside. The boxy nature of the building, which is much shorter than 4 East 102nd, diminishes the sense of just how large it is, but it rises to a height equal to that of the Guggenheim Pavilion to the south (designed by Pei Cobb Freed & Partners and completed in 1992). Scheduled for completion early next year, the 11-story building, like the Guggenheim Pavilion, emphatically asserts the integrity and seeming solidity of its walls. Though a rendering seemed to suggest that windows would occupy more of the building’s surface, as realized they read more like the long and narrow windows of a medieval fortress. Each of these windows, like a double-height slit in the masonry walls, is made of glazed terra-cotta and has echoes in the cast-stone passages of the contiguous high-rise at 4 East 102nd, with which it will communicate. The width of the windows varies, somewhat arbitrarily, from one floor to another and even within a given floor, but the overall effect is of pleasing and regimented order. The generally tawny hue of the surface recalls that of the Guggenheim Pavilion, though it has none of the Postmodern perspectival tricks and historicist allusions that characterize Pei’s building. But the Center for Science and Medicine does seem to convey a strong sense of contextualism: The textured cladding and the slightly recessed windows all have a greater richness and resonance than one might expect from such a relentlessly geometrical design. If one wanted an object lesson in how much better, in a general way, hospital architecture has become in recent years, it would not be unfair to compare the new Center for Science and Medicine with the hospital’s truly atrocious Klingenstein Pavilion, completed in 1952 by Kahn & Jacobs, two blocks south. This older, International Style building is little more than a rectangular box whose flattened surface is distinguished by nothing more than an unyielding monotony of strip windows alternating with layers of infill. Granted, the Center for Science and Medicine is destined to be a research center rather than an in-patient hospital. But unlike its 60-year-old neighbor, it succeeds in conveying a sense of hope as well as history, and — even more important in a context like that of Mount Sinai — a sense of health and regeneration. TRD BUILDING PHOTOGRAPHS FOR THE REAL DEAL BY DEREK ZAHEDI

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TO P H A M P T O N S B R O K E R A G E S

Riding the roller coaster East End ﬁrms jockey for position amid stabilizing market

From left: Star brokers Tim Davis and Susan Breitenbach of Corcoran, and Harald Grant of Sotheby’s

BY PETER KIEFER fter edging past Corcoran in 2010, Prudential Douglas Elliman this year hung on to its title as the largest residential brokerage in the Hamptons. Over the past 12 months, Elliman’s total head count fell by one — giving it 319 agents. But that was still enough for the firm to maintain its position as the top residential real estate player in the Hamptons, according to The Real Deal’s annual ranking of the biggest East End firms by number of agents. (Meanwhile, the firm is facing challenges in the city. See story on page 46.) Corcoran remained in the No. 2 spot with 312 agents, but closed the gap somewhat, with six more agents than it had at this time last year. (Corcoran executives said the company has more than that number of agents, because some do not appear on the firm’s website, which The Real Deal uses to tally head counts for all firms because it’s more up to date than state licensing filings.) In fact, rankings of the top five brokerage houses remained unchanged from last year — evidence of what brokers say is an increasingly stable market following a roller-coaster-like four years. Brown Harris Stevens came in at No. 3 with 146 brokers. The No. 4-ranked firm, Town & Country Real Estate, added 21 agents, most of whom joined the firm through its acquisition of the Westhampton brokerage

60 June 2011 www.TheRealDeal.com

Phillips Beach Realty in March, bringing its total to 119. Sotheby’s International Realty rounded out the top five with 88 brokers and, along with Corcoran, dominated The Real Deal’s ranking of the priciest listings. Meanwhile, three-year-old Saunders & Associates also continued its forceful pursuit of greater market share. The firm added 15 new brokers and jumped up a spot to No. 6. As The Real Deal reported online last month, it recently opened a new office in Southampton, and will be adding 13 more brokers there.

As a result, Saunders overtook Century 21 Albertson Realty, which saw its agent ranks drop to 45 from 57 last year. The remaining firms on the top-10 list included Devlin McNiff, Daniel Gale Sotheby’s International Realty and WHB Real Estate. While Town & Country had more new agents than any other firm on the list, its CEO said the company is “not aggressively recruiting. It’s more a function of whether it is a good fit,” said Judi Desiderio, who founded the firm in 2007. “It is really all

about ‘who,’ not ‘how many.’” Most of the brokers interviewed by The Real Deal said despite a recent dip in median and average sales prices, the market has been relatively healthy. “The market seems to be moving in the right direction,” said Aspasia Comnas, executive managing director of Brown Harris Stevens for the Hamptons and North Fork. “Revenue [for BHS] is up over last year, which in turn was up over the year before that,” she continued. “It is not back to the

Biggest East End ﬁrms Rank

Number of agents

2011

2010

Prudential Douglas Elliman

319

320

Corcoran

312

306

Brown Harris Stevens

146

154

Town & Country Real Estate

119

Sotheby’s International Realty

Saunders & Associates

Century 21 Albertson Realty

Devlin McNiff Real Estate

Daniel Gale Sotheby’s International Realty

WHB Real Estate

2011

2010

Firm

Source note: Agent numbers are from ﬁrms’ websites. Research was done by The Real Deal in April.

GROUP PHOTOGRAPH FOR THE REAL DEAL BY DEREK ZAHEDI

TO P H A M P T O N S B R O K E R A G E S Rick Hoffman of Corcoran

Aspasia Comnas of Brown Harris

Paul Brennan of Elliman

Priciest East End sales in 2011 to date Property

Broker

$44,990,000 1

Tyndal Point estate in North Haven/Sag Harbor

Gary DePersia, Corcoran; Scott Strough, Strough Real Estate

$32,500,000 2

Francis Fleetwood-designed oceanfront estate in Southampton

Tim Davis, Corcoran

$24,950,000 3

New-construction English farmhouse in Sagaponack

Michael Davis, Michael Davis Design & Construction

$22,350,000

Sagg Pond waterfront estate in Bridgehampton

Susan Breitenbach and Matthew Breitenbach, Corcoran

$20,500,000

Oceanfront estate in Bridgehampton

Beate Moore, Sotheby’s

Rank

Listing price

1. Price is last listing price. The ﬁnal sale price was $36 million, according to public records made available late last month; 2. The sale was in contract at press time; price is last listing price; at the time of the sale this was an open listing; 3. The sale was scheduled to close at press time. Source: HREO.com and information provided by the ﬁrms. The broker column refers to the listing broker.

levels of the boom years, but then, I did not expect it to be in the Hamptons.” To be sure, the general health of the market in the Hamptons has improved since the dark days of 2008 and 2009. The average sales price in 2010 was $1.7 million — still off the 2007 peak of $1.8 million, but up from $1.5 million in 2009, according to the appraisal firm Miller Samuel. The number of sales in 2010 also rebounded to 1,632, up from 1,124 in 2009 and gaining ground on 1,917 in 2007, when the market was still roaring. But the rankings come amidst a significant drop in sales prices and sales volume in the first quarter of 2011. According to Elliman’s latest market report, the average sales price in the first quarter of 2011 — $1.2 million — represents a drop of 22 percent from the same period last year. And, perhaps more important, the number of sales was down almost 22 percent from the first quarter of 2010. Anecdotally, many brokers said they were not seeing that kind of pain on the ground — so it might be a quarterly blip in the data, or it may be because those brokers made the biggest-brokerage list and are expanding their businesses. “We are doing an awful lot of business and I can’t imagine that we are the only ones,” said Andrew Saunders, president of Saunders & Associates. “It doesn’t feel to me like we are down. It seems like there is more balance, and things are selling. This is not a declining market.” But Town & Country’s Desiderio said there is still some noticeable slack in the marketplace. “After 29 years of monitoring our market in the Hamptons and on the North

Fork, I can honestly say the great recession was the worst I’d ever experienced,” she said. “We are off the bottom, but it will be a long and arduous climb back up to the top.” Meanwhile, eight-ﬁgure sales continue to dominate the headlines in the Hamptons. Last month, a 55-acre waterfront North Haven estate known as Tyndal Point sold to real estate investor Jeffrey Greene for $36 million, making it the largest sale on the East End this year. The Corcoran Group’s Gary DePersia, who had the listing as a co-exclusive with Scott Strough of Strough Real Estate Associates, said it was the largest-ever residen-

tial sale north of the highway (Route 27). And the market is still rife with eye-poppingly expensive listings (see chart below), though some have seen major price chops and have lingered on the market. The priciest home currently for sale in the Hamptons market is Bridgehampton’s Three Ponds Farm, listed for $68 million with Susan Breitenbach of Corcoran. Harald Grant of Sotheby’s International Realty is marketing a four-acre estate on Hayground Cove in Water Mill for $58.5 million. Other high-priced listings include an oceanfront Wainscott property listed with Sotheby’s Ed Petrie and Julie

Wolfe for $55 million, and a Southampton estate listed with Corcoran’s Tim Davis for $49.5 million. Properties priced in the low- to mid-seven figures are also moving at a nice clip, according to several brokers. But in this stillshaky market, brokers echo their Manhattan counterparts and say that realistic pricing is still the key to getting a house sold. “In 2005 and 2006, it was less about pricing and more about supply. Things were selling close to their asking price,” Saunders said. “Today the buyers are so educated and people know when they come into a house what similar houses traded for over the same period, so things have to be priced properly — whether that is $500,000 or $35 million.” In addition, because it takes more work to get a house sold, the competition among brokerages in the Hamptons remains fierce. Corcoran representatives refuted The Real Deal’s ranking, claiming that they were, in fact, the largest brokerage firm in the Hamptons. The last time they held that title, according to The Real Deal data, was in 2009. The firm’s regional senior vice president for the East End, Rick Hoffman, said Corcoran has a “Referral Director Program,” which includes less active but legally licensed brokers who are not listed on the website. If those agents are counted, Corcoran would have 361 agents, surpassing Elliman (whose operations in the Hamptons are led by regional manager Paul Brennan). Hoffman also claimed that Corcoran was involved in more than half of the transactions of $10 million and above in the past year, and that his firm had more listings and open houses than any other company. One thing is for sure: With more sevenand eight-figure deals closing, the Hamptons continues to stand out as a welcome anomaly to a national housing market that has struggled to rebound. “I’ve been impressed and relieved,” said Hoffman. “It came back quicker than what a lot people predicted.” TRD

Priciest current listings on the East End Rank

Listing price

Property

Broker

$68,000,000

Three Ponds Farm Estate, Bridgehampton (60 acres)

Susan Breitenbach, Corcoran

$58,500,000

Hayground Cove/Mecox Bay estate (4 acres)

Harald Grant, Sotheby’s

$55,000,000

Wainscott oceanfront compound (3-plus acres)

Ed Petrie & Julie Wolfe, Sotheby’s

$55,000,000

Two Trees Farms, Bridgehampton (115 acres)1

Currently an open listing

$50,000,000

Modern private residence, Montauk (35.5 acres)

Susan Breitenbach, Corcoran

$49,500,000

Grosvenor Atterbury-designed estate, Southampton2

Felicitas Kohl and Tim Davis, Corcoran

$49,500,000

The Sandcastle estate, Bridgehampton (11.5 acres)

Gary DePersia of Corcoran and Chris Burnside of Brown Harris Stevens

$39,000,000

Normandy House estate, Southampton (8.4 acres)

Donald Gleasner, Corcoran

$38,000,000

Private compound on Wainscott Pond (14.6 acres)

Dana Trotter, Cynthia Shea and Barbara Bornstein, Sotheby’s

$38,000,000

Oceanfront contemporary, East Hampton (3.5 acres)

Tim Davis, Corcoran

$38,000,000

Country estate, Southampton (4.5 acres)

Tim Davis, Corcoran

(tie)

1. Two Trees Farms originally went on the market for $95 million in 2008, and is now an open listing marketed by Susan Breitenbach and Michael Breitenbach of Corcoran, Tony Cerio of Brown Harris Stevens, Jay Flagg of Saunders and Harald Grant of Sotheby’s International Realty; 2. This Southampton property was rented out for the summer for $850,000 to Russian composer Igor Krutoy, who purchased a record-setting $48 million condo at the Plaza Hotel this spring. Source: HREO.com, with additional information provided by the brokers and ﬁrms.

www.TheRealDeal.com June 2011 61

Paying more to get in the front door

Photo: Peter Murdock

Struggling boards, managing agents increase processing fees for new buyers and renters

Cooper, Robertson & Partners Architecture, Interiors, Urban Design

www.cooperrobertson.com 62 June 2011 www.TheRealDeal.com

BY SARABETH SANDERS he last three years may have brought Manhattan apartment prices down, but actually moving in New York City is getting more and more expensive. Faced with skyrocketing operating costs, but also under pressure to keep monthly owners’ charges low — and reserve funds high — condo and co-op boards are feeling the pinch. That means zeroing in on easy revenue-boosters, many of which are charges imposed on new buyers and renters. Often totaling several thousands of dollars, these costs come in the form of application review fees, administrative fees, move-

aging agents and the boards themselves. In recent years, boards have encountered mounting ﬁnancial pressures: Water and sewer taxes are going up, as are oil and heating bills; what’s more, in co-ops, ﬂip-tax revenue has declined thanks to fewer sales in the weak economy. In the face of these pressures, many boards see managing agent fees as a bloated line item, primed for cost-cutting. Forced to keep their base fees to a minimum (or risk losing their building contracts), managing agents have, in turn, upped the processing fees they charge to renters and buyers — and in some cases,

in fees and various other add-ons from managing agents and boards. These fees, which have been on the rise in many co-ops and condos since the downturn, are usually just an annoyance for buyers, but for potential renters, they can be a deal-breaker. Rising fees can have a “chilling effect” on rentals and sublets in certain buildings, said Steve Wagner, a partner at law ﬁrm Wagner Davis specializing in co-op and condo law. “If the rents are the same, and the apartments are both equivalent, and one has lots of fees and one doesn’t, which one are you going to rent?” Wagner said. Patricia Levan, principal of Levan Real Estate, said that in 2007, her rental clients at Midtown’s Orion condo paid nonrefundable processing fees of $550, plus $1,000 in additional refundable fees, in order to move in. Those nonrefundable fees have since increased to $1,720, with $2,000 in additional refundable fees, she said, causing many prospective tenants to back out. Penmark Management, which oversees operations at the Orion, did not respond to a request for comment. Real estate attorneys say the ballooning fee structure has to do with both man-

have tacked on additional ones. Processing fees have always ranged widely, with some managing agents charging as low as $400, and others as much as $1,200 per application, according to sources in the industry. Still, Aaron Shmulewitz, a partner at Belkin Burden Wenig & Goldman who represents hundreds of condo and co-op boards throughout the city, estimates that the average fee has increased from around $600 when the downturn hit to close to $800 today. Meanwhile, minor jobs that managing agents used to include as a courtesy — from filing 1098 tax forms with the IRS to checking for window guards in apartments with small children — may now be billed as extras to residents, said Wagner. Of course, not all managing agents have raised their fees. “I’m aware of some firms that have increased their fees,” Alex Kalajian, COO of Manhattan-based property management firm Solstice Residential Group, said. “We have not.” But boards, too, have been simultaneously seeking ways to raise cash, increasingly charging fees of their own. Continued on page 86 ILLUSTRATION FOR THE REAL DEAL BY DAVID COLE

Q&A

Plaza District keeps its premium Tony ofﬁce district sees more high-end activity, even as lowerand middle-market tenants look elswhere for bargains

BY MELISSA DEHNCKE-MCGILL s New York City real estate is to the country, the Plaza District seems to be to New York: The last to fall and the first to rise. In this month’s Q&A, The Real Deal talked to commercial brokers, analysts and building managers about the office district — one of the toniest commercial submarkets in Manhattan. They said that while rents there declined by over 40 percent during the recession, they have shot up by as much as 32 percent in the last year, and the district is outperforming other high-profile commercial submarkets like Times Square in its recovery. While rents are still far off from their peak and landlords are still offering concessions, the market has attracted headlines lately for how quickly it appears to be tightening — particularly on the high end. For example, while landlords, especially those of smaller spaces, may have been willing to build out space for a tenant for the last few years, they are claiming they “want to get

Ben Friedland

senior vice president, CB Richard Ellis We know that ofﬁce rents in the Plaza District fell the sharpest of any submarket during the downturn, but that they’ve been increasing lately. How much of a discount off asking rents are tenants getting — if any — in the Plaza District right now, and how does that compare to three months ago, six months ago and a year ago? Historically speaking, the Plaza District submarket is more volatile than the other submarkets. In April of last year, the average asking rent in the Plaza District

The Plaza District rents are up 32 percent in the past 12 months, whereas Park Avenue is up 17 percent and Times Square is basically ﬂat. What kinds of incentives — if any — are landlords in the Plaza District offering to tenants these days? How much are they giving tenants in free rent and tenant improvements, and how does that compare to three months, six months and a year ago? Landlords for the city’s top buildings work hard not to lower their rents during a downturn, as the rent of one deal often affects subsequent deals. So to remain an attractive alternative for highend users … [landlords] often increase the value of the concession package. As the market has continued to improve,

“Landlords are still open to shorter-term leases. The landlords’ thinking is that when the short-term lease expires, the market should be better [and] rents should be higher.” Evan Margolin, Studley was $63.17. In just a year’s time, the average has increased $20 a square foot, to the current $83.36. Comparatively, the overall Midtown market increased from $55.44 to just $58.14. Have any buildings in the Plaza District hit the rents they were getting at the peak of the market? If so, which ones? Rents are not where they were at the peak. At the height of the market, for tower space in the city’s top buildings, a few deals topped $200 a square foot. While there are a few smaller renewals being negotiated now in the $170-plus range for A++ space, overall, we’re not near $200. How is the Plaza District doing in terms of recovery compared to other high-proﬁle Manhattan submarkets like the Park Avenue corridor and Times Square? 64 June 2011 www.TheRealDeal.com

the value of the concession packages has decreased, and where landlords were willing to build space [in exchange for getting a lease term of ] three to five years, that has generally shifted back to a minimum term of seven to 10 years. Average concession packages range from six to eight months of free rent … compared to six months to a year ago, when they were offering eight to 12 months of free rent. We know that hedge funds traditionally have taken the most expensive space in the Plaza District. Are you seeing any change on that front, or any new types of tenants shopping for space in the area? Financial firms, specifically hedge funds, wealthy family offices and private equity firms, continue to dominate. Of the 13 deals thus far in 2011 that have topped

out of the construction business,” one source said, noting that they will still give a tenant an allowance to do so on their own. Also, so-called country-club buildings like 9 West 57th Street, the GM Building and others have increased asking rents to $135 or $140 a square foot recently. While deals haven’t been inked at that amount yet, brokers say the fact that landlords have the confidence to ask for that much is a good sign for the market. Plus, brokers report that the velocity of deals over $100 has dramatically increased and that financial firms like private-equity and hedge funds are snapping up space again. Still, brokers say there will be continued weakness for the middle and lower ends of the market, where tenants no longer seem willing to pay for the cachet of the fancy Plaza District name if they can go a few blocks in another direction for a lot less money. For more on which buildings are performing best, what kinds of concessions are being offered and where the bargains are, we turn to our panel of experts.

$100 a square foot, all but one have been leased by financial firms. What are the most positive aspects of leasing in the Plaza District today? Post-Lehman … many firms were concerned with the ramifications of being perceived as too opulent. As time has passed, that concern has largely subsided, which is certainly a positive for the health of the Plaza District. A lot of sublease space that came onto the market after Lehman collapsed was dumped by big financial firms. We know a bunch of it has been leased, but has it fully worked its way through the system? It has worked its way through. The Midtown sublease availability rate peaked at 5.1 percent in June 2009, with the vast majority of sublease space brought to the market by financial, law, and media-related firms. Today the Midtown sublease availability rate is 2.8 percent, and almost all the quality sublease space has been leased or back-filled.

Evan Margolin

corporate managing director, Studley How much of a discount off asking rents are tenants getting in the Plaza District right now, and how does that compare to three months ago, six months ago and a year ago? The discount from asking to taking rents has compressed just a little bit … but the real difference is when you look at the net effective rents where you take into consideration the concessions like the free rent and the build-out allowances. There is a much bigger spread now — though it is hard to say on a percentage basis — than

we saw three months, six months or a year ago. On smaller spaces, where for the past two years I would say it was expected that the landlord would do a whole build to suit a tenant, now landlords are claiming that they want to get out of the construction business and just go back to giving a tenant improvement allowance and letting the tenant build the space themselves. We are starting to see that, but not across the board. We know that hedge funds traditionally have taken the most expensive space in the Plaza District. Are you seeing any change on that front, or any new types of tenants shopping for space in the area? Hedge fund and boutique financial firms — be it advisory firms or private equity firms — are still the types of companies that are commanding that super-highend space. Those businesses typically don’t require a tremendous amount of space. As they grow in assets, they don’t necessarily require much more in the way of employees or space. The rent is not material to their profitability; that’s why they are able to pay those high asking rents. What are the biggest challenges of leasing in the Plaza District today? There will continue to be challenges leasing up the space in the low or middle part of nondescript buildings that happen to be in the high-rent district. That space exists in lots of different buildings in lots of different areas, and it’s going to be difficult to find tenants that are willing to pay up just to be in the Plaza District. Can you give us some examples of some recent leases in the Plaza District that illustrate what’s going on in the market there? I can give you a list of buildings that command, or are announcing, rents north of $100 a square foot: 510 and 590 Madison

Q&A Avenue; 375 and 450 Park; 712 and 767 Fifth Avenue; 9 West and 152 West 57th Street, and some others. That is compared with just a handful of deals in 2009 and 2010 that had triple-digit rents. We’ve reported on landlords agreeing to shorter leases during the downturn. Are landlords still willing to negotiate shorter leases for brand-new tenants? Yes, landlords are still open to shorterterm leases. The landlords’ thinking is that when the short-term lease expires, the market should be better [and] rents should be higher. We know that a bunch of the subleased space that was put on the market after Lehman collapsed has been leased up, but has it fully worked its way through the system? A good portion of the sublet supply that came on the market post-September 2008 has been absorbed, and in some cases, it’s been taken off the market where firms anticipate using it for future growth rather than subleasing it. A good portion of the sublet supply that remains on the market since that time is challenged in some way. It’s either a short-term sublease or from a financially challenged sub-landlord or in a building that might have landlord issues. Anything else you want to add that we didn’t cover? While it sounds very rosy for landlords, there are definitely still some bargains out there for tenants with needs. While tenants may have missed the absolute bottom of the cycle, there are still opportunities to lease space at 30 percent less than comparable space might have leased in a building at the peak, especially for spaces outside of the Midtown trophy properties.

Robert Emden

executive managing director, Newmark Knight Frank How much of a discount off asking rents are tenants getting in the Plaza District right now, and how does that compare to three months ago, six months ago and a year ago? [Asking] prices are up. …There are the “country-club buildings” — of which there are maybe ﬁve or six — 9 West 57th, the Seagram Building, Lever House, the GM Building and 667 Madison. … I don’t think there are transactions that have been inked, but ... I think that market is approaching $135 to $140. I don’t think that’s been achieved yet, but the asking rent is there. Then there is the market below that, which … depending upon ﬂoor height, rents range between the $80s and $120.

That’s what we’ve been flirting with of late. There seems to be sufficient activity to warrant those prices today. How is the Plaza District doing in terms of recovery compared to other high-profile Manhattan submarkets like the Park Avenue corridor and Times Square? I always say the Plaza District is the last to fall and the first to rise. So it has come back strongly. What are the most positive aspects of leasing in the Plaza District today? Absorption. That’s the best sign you could ask for. The volume of leasing activity is up there. What are the biggest challenges of leasing in the Plaza District today? Probably the ability to get the right-size space. There is a lack — and it’s becoming a dearth — of good-quality space because tenants are looking to expand.

Steve Morrows

executive vice president, codirector of leasing, RFR Realty How much of a discount off asking rents are tenants getting in the Plaza District right now, and how does that compare to the recent past? The discount at the bottom of the recession was up to 35 to 40 percent. Since then prices have dramatically increased. At the peak of the market, prior to the crash, our high point at 375 Park Avenue was $181 a square foot. At the bottom of the market, we were doing deals at $105 a square foot. Now our rent is up to $140. Can you give us some examples of recent leases in the Plaza District that illustrate what’s going on in the market there? We are seeing tenants starting to renew early and expand. At 712 Fifth Avenue, there is a 9,000-square-foot deal at $140 a square foot for half the term and $155 a square foot for the second half of a sevenyear [deal]. Several deals that have been done in the Seagram Building have all been signed — or are about to be signed — in the $140-a-square-foot range. At the GM Building there was a 9,000-squarefoot deal at $127 a square foot, with $5 a foot in [new building installation]. The velocity of deals over $100 has dramatically increased.

Aaron Jodka

manager of U.S. market research, CoStar Group How much of a discount off asking rents are tenants getting in the Plaza District right now, and how does that

compare to the recent past? Rents certainly fell sharply in the Plaza District during the downturn, with average asking rents declining by 42 percent for all Class A buildings. But rents have been rising for more than a year now, and are now 22 percent above their cyclical low. We’ve heard the highest asking rent in the district today is $140. Is that right, and are any landlords getting that? That is right, the highest asking rent for office space is $140-plus a square foot — at 667 Madison Ave. Unfortunately, many landlords are not listing asking rents, making it difficult to decipher which space or spaces are on the market for the highest rate. Meanwhile, space at 660 Madison Avenue is asking up to $135 a square foot. How is the Plaza District doing in terms of recovery compared to other high-profile Manhattan submarkets? The Plaza District is far outpacing other high-profile submarkets, particularly Times Square. Times Square is a much smaller submarket, with 37 Class A buildings for a total of about 37.75 million square feet of space. While vacancies have been falling in Times Square for two straight quarters, rents have yet to stabilize. After posting back-to-back quarters of growth in the second and third quarters of 2010, rents have now fallen since in Times Square. As a result, cumulative rent losses have amounted to 65 percent. We know that hedge funds traditionally have taken the most expensive space in the Plaza District. Are you seeing any change on that front, or any new types of tenants shopping for space in the area? Nearly half of the leases signed in the past 12 months have been to financial institutions. Historically, these firms make up closer to 30 percent of the market’s occupied space. What are the most positive aspects of leasing in the Plaza District today? The most positive aspect of leasing in the Plaza District is simply that there is leasing. Tenant activity has been strong over the past seven to eight quarters. [There was nearly] 8.3 million square feet of Class A leasing from the second quarter of 2009 to the second quarter of 2010. The last time this market posted such strong leasing on an annual basis was the tail end of the tech boom. … That said, one of the leasing challenges in the Plaza District is that after such a torrid start coming out of the downturn, leasing is easing. Leasing remains in line with the submarket’s historical average, but is clearly trending downward. Until more pronounced job growth forces tenants to expand and take on extra space, rather than consolidate or fill empty desks, it would not be surprising to see leasing activity stumble.

What are the most surprising trends in the Plaza District today? The most surprising trend is the continuation of financial firms choosing to locate here. The submarket was highly exposed to the downturn due to its reliance on finance.

Frank Doyle

vice chairman, Jones Lang LaSalle What kinds of incentives are landlords in the Plaza District offering to tenants these days? The market is absolutely tightening, and concession packages are coming down. Over the past 12 to 18 months, concessions have gone from $100-plus a square foot [for tenant improvements], to $75 to $85 a square foot in pre-build turnkeys, to a market today where landlords are offering $50 to $60 [in tenant improvements] and tenants are assuming the balance of the cost needed to build their space. This is especially true in the trophy buildings within the Plaza District. It looks like vacancy rates in the Plaza District are going down. How does that compare to three months ago, six months and a year ago? And how is it impacting deals? For the ﬁrst quarter of 2010, we had a vacancy rate in the Plaza of 14 percent. Six months ago, in September 2010, it was 13.4 percent. Three months ago, in December 2010, it was 12.2 percent, and in the ﬁrst quarter of 2011 it was 11.9 percent. Obviously the trend is going down.

Dirk Hrobsky

managing director, UGL How is the Plaza District doing in terms of recovery compared to other high-profile Manhattan submarkets? I think it’s doing disproportionately better than the rest of the submarkets, and I think it’s not so much because of the real-world economy than the capital economy. Is the challenge to lease up lower-floor space a problem for landlords? [The tenants] paying these numbers would rather pay $10 to $20 a square foot more to be higher in the stack because it is a more prominent position in the building. There are certainly incentives to get people to go lower in the building, but again, those lower floors are not moving all that quickly. … Who wants to pay $80 instead of $100 a square foot to look at a brick wall? A lot of these entities would rather buck up and be [on a higher floor]. TRD www.TheRealDeal.com June 2011 65

TRI-STATE BRIEFS LONG ISLAND

Coastline is largest hurricane risk in area A recent report on 10 coastal metro areas found that Long Island has the most residential property at risk of hurricane damage, according to the Long Island Press. CoreLogic, the private real estate ﬁrm that conducted the research, found that Long Island faces $99 billion in potential damage from hurricanes. The report noted that damage

A home in West Islip, the Long Island town most likely to be impacted by hurricanes

could be done to 250,000 properties on Long Island if a Category 4 hurricane hit. (Most meteorologists agree that the area’s cool waters make a Category 5 storm, the biggest possible, highly unlikely.)

Even a Category 1 storm could cause $32.1 billion worth of damage to almost 74,000 residential properties on the Island, the report said. West Islip would be most affected by a hurricane, followed by Massapequa, Riverhead, the Flatlands in Brooklyn (which is geographically part of Long Island), Bay Shore, East Islip, Sheepshead Bay in Brooklyn, Merrick and Cutchogue. The report also concluded that the majority of homes at risk are not located in federally deﬁned ﬂood zones. Only 21.8 percent of

the at-risk properties on Long Island are located within surge and ﬂood zones.

WESTCHESTER

Tax appeals soar Local governments in Westchester County are being bombarded with property-tax appeals, the New York Times reported. The number of tax grievances in the county nearly quintupled between 2008 and 2010, according to the Times. The county, which has both high taxes and an-

PUSHING THE ENVELOPE

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tiquated tax rolls, has seen a growing number of companies offering to seek reductions in homeowners’ tax bills in exchange for a share of the savings. In Greenburgh, for example, Long Island-based Assessment Correction Group filed 471 grievances in 2010 after setting up shop in Westchester the previous year. Meanwhile, 703 taxpayers filed grievances on their own in 2010, up from 449 in 2009. “Now that the economy’s so bad, people are saying, ‘If I can get away with it, I’m going to challenge my taxes,’” Paul Feiner, Greenburgh’s town supervisor, told the Times. The deluge of grievances is swamping local assessors, who must defend against scores of appeals. Meanwhile, a backlog of cases is exacerbating municipal fiscal problems, as towns may become liable to pay future tax refunds without being able to accurately budget for them.

Local assisted-living centers on the rise ��

More assisted-living facilities are appearing in Connecticut and throughout the New York City metro area, according to the Wall Street Journal. While new ofﬁce buildings are rare in the still-struggling economy, developers are moving ahead with assisted-living facilities, a cross between apartment buildings and nursing homes. The New York City area currently has the second-fewest assisted-living units in the country, with growth of only 3 percent —

Maplewood’s new assisted-living facility in Danbury, Conn.

below the national average of 7.4 percent, according to the National Investment Center for the Seniors Housing & Care Industry. Maplewood Communities, for example, in 2004 bought a failed nursing home in Danbury for $11.5 million, and converted it into an assisted-living community. Its value is now some $18 million, company head Greg Smith told the Journal. Smith has since built two other communities in Connecticut. Compiled by Omari Allen

66 June 2011 www.TheRealDeal.com

NATIONAL MARKET REPORT Commercial and residential real estate news briefs from around the U.S.

The Boston waterfront

Chartres Lodging Group, had purchased the building in 2006 for $98 million. The Journal reported the company had been staving off foreclosure for over a year, defaulting on $79 million in loans. Despite assets of $100 to $500 million, ALT Hotel owes between $50 and $100 million, according to documents ﬁled with the U.S. Bankruptcy Court.

Phoenix

Boston Vertex Pharmaceuticals signed a 15-year, $1.1 billion lease to move its base of operations from Cambridge to the South Boston waterfront, according to the Boston Herald. The biotechnology company announced last month that it had finalized a $72.5 million-per-year lease on 1.1 million square feet of office space at South Boston’s Fan Pier Complex, where developer Joe Fallon is slated to soon begin construction on two 18-story structures for Vertex. Thomas Menino, the mayor of Boston, had angered Cambridge officials in January by offering a $71.8 million package of state and local government incentives to attract Vertex. The deal, however, remains contingent on Vertex gaining necessary approvals for Incivek, a hepatitis C drug.

Miami Musician Lenny Kravitz is all set to rock Miami as his New York-based Kravitz De-

are stabilizing, the pace of leasing is picking up, and developers have new projects in the works, according to the Houston Chronicle. In one of the biggest sales this quarter, three office buildings connected to the Galleria mall were sold to investment firm Unilev Capital Corp. for $176 million. In 2010, commercial real estate transactions had jumped 44 percent compared with 2009, thanks to the sales of downtown’s Heritage Plaza and a hefty industrial portfolio of more than 1 million square feet; experts now predict that this year will be better than last. A national report by Jones Lang LaSalle recently highlighted Houston as one of several markets seeing the most leasing activity during the first quarter of 2011. However, the citywide vacancy rate was a high 15.9 percent, according to data from CB Richard Ellis. Rental rates averaged $23.17 per square foot, up from $22.82 per square foot in the previous quarter.

Los Angeles

Singer-songwriter-designer Lenny Kravitz

sign was tapped to redesign the interior and outdoor spaces of the 47-story Paramount Bay condominium. According to the South Florida Business Journal, the ﬁrm will be responsible for the spa ﬁtness center, lobby and pool terraces at the 340unit mixed-use tower, which was taken over through a foreclosure by iStar and ST Residential. Brokerage Fortune International is marketing the building, which has not set an opening date. Kravitz Design previously worked on the Florida Room lounge at the Delano, as well as the penthouse recording studio at the Setai Resort & Residences in South Beach.

Houston In Houston, commercial property values 68 June 2011 www.TheRealDeal.com

The booming real estate market of the mid-2000s caused millions of people to relocate within Southern California during the last decade, the Los Angeles Times reported. According to the 2010 census, large chunks of the population relocated for construction jobs, moving from Los Angeles and Orange counties to the Inland Empire — the area around the cities of Riverside and San Bernardino. Buyers had also been priced out of coastal regions as home prices soared in communities by the ocean. Recently, however, real estate prices have fallen more sharply inland than in coastal regions — by about half again. In addition, the jobless rate inland is higher than in neighboring counties, with most of the job loss tied to the construction industry.

tial units in towers up to 240 feet tall, as well as a grocery store on-site.

Las Vegas The developers of Harmon Corner, a $100 million retail and shopping complex on the Las Vegas Strip, broke ground last month. BPS Partners, led by the developer Brett Torino, is constructing the three-level, 110,184-square-foot mall at the corner of Las Vegas Boulevard and Harmon Avenue. BPS had bought the 2.17-acre property last year for $25 million, or $11.57 million per acre; the parcel had been the ﬁrst piece of vacant land on the Strip to change hands since the recession hit. Walgreens is the anchor tenant of the triangular complex, designed by SH Architecture. The center is seeking other 10-year tenants, with asking rents of around $230 per square foot.

Chicago The owner of Chicago’s landmarked Allerton Hotel has filed for Chapter 11 bankruptcy protection, according to the Wall Street Journal. Built in 1923, the 443room hotel was one of the first high-rises along the “Magnificent Mile” on Michigan Avenue. Hollywood stars like Jack Benny and Bob Hope were known to socialize at the Allerton, which was designated a landmark in 1998. ALT Hotel, a group led by

San Francisco The San Francisco Planning Commission last month approved a plan to build 1,600 new residential units at Executive Park, a 70-acre triangular parcel of land located between Candlestick Park and Highway 101, according to the San Francisco Chronicle. Developers include Universal Paragon Corporation. The development could ultimately see some 2,800 residen-

The landmark Allerton Hotel

Washington-based investment ﬁrm Weidner Apartment Homes spent $68 million to acquire distressed apartment communities in Arizona, bringing the total of apartment complexes it owns in Phoenix and Tucson to 13. The recent $68 million purchase includes four properties: Indigo at the Park, Barossa at the Park, the Arete apartment homes and Biltmore Club. The buy added around 1,160 units to the company’s portfolio in Arizona, where it’s been purchasing apartment properties since early 2010. In early February, a limited liability corporation operated by Weidner had bought the Peaks at Papago Park at 815 N. 52nd Street, in the biggest multifamily housing transaction in Arizona this year.

Seattle Seattle is measuring its green: Last month, the City of Seattle launched a formal program that will measure and track the energy efﬁciency of commercial buildings, according to Market Wire. About 800 large commercial property owners received letters informing them of the program, which requires that all commercial and multifamily residential buildings of 10,000 square feet or larger be benchmarked for their energy performance using EPA’s Energy Star program. The energy ratings may be provided to potential tenants, buyers and lenders during real estate transactions. The U.S. Department of Energy estimates that commercial buildings consume more than 70 percent of the total electricity generated in the United States. Compiled by Katherine Clarke

Limitless views Floors 52-75 Now renting

212.877.2220 Eight Spruce Street NewYorkbyGehry.com Owner Developer: Forest City Ratner Companies Marketing Consultant: Nancy Packes, Inc. Marketing & Leasing Agent: Citi Habitats Marketing Group

THE

MA R K E T

Commercial properties recently placed on the market Rosen wants $2,000 psf for Seagram stake Aby Rosen’s RFR Holding is looking to unload a 49 percent stake in the landmark Seagram Building at more than $2,000 per square foot, which would revalue the property at about $1.8 billion. According to the New York Post, the record price per square foot for an ofﬁce building was set at $1,585 in 2007 with the sale of 450 Park Avenue, and while prices have The Seagram Building rebounded somewhat since the real estate crash, such a price is untested in today’s market. “If you want to test the strength of the market, it’s certainly the building with which to do it,” said Woody Heller, head of the capital transactions group at Studley, which is not involved in the marketing of the building.

Cooper Square Hotel up for sale

Cooper Square Hotel

The mezzanine lender that took over the Cooper Square Hotel in a debt restructuring deal late last year is now ready to unload the property. Sources said the hotel is expected to fetch upward of $80 million. According to the Post, Westport Capital Partners tapped Douglas Harmon and Adam Spies of Eastdil Secured to market the

70 June 2011 www.TheRealDeal.com

21-story hotel at 27 Cooper Square, which debuted in late 2008 after years of delays. It ran into ﬁnancial trouble soon after, and last year, as restructuring talks were ongoing, the owners of the Soho Grand and Tribeca Grand hotels had come close to purchasing the 145-room property but pulled out of the deal at the eleventh hour. Instead, Westport took control in a transaction valued at $70.9 million, The Real Deal reported at the time.

building at 39 East 72nd Street is on the market with an asking price of $20.5 million. Located on the north side of East 72nd Street between Park and Madison avenues, the elevator building has a ﬂoor-area ratio of 10 and sits on a 2,760-square-foot lot. Six free-market tenants and one rent-stabilized tenant currently occupy the apartments. Guthrie Garvin of Massey Knakal is marketing the property.

East Village building asking $30 million

Financial District development site for sale

A redevelopment opportunity at a six-story building at 62-74 Avenue B is being marketed with an asking price of $30 million. Eastern Consolidated’s Brian Ezratty and Scott Ellard are marketing the fee interest in the 72,750square-foot property, which is currently occupied by a single tenant whose lease expires next spring. The property could be a candidate for conversion to residential use, dormitories or other nonproﬁt or institutional uses. In addition, a viable redevelopment strategy for the building’s ground ﬂoor would be a conversion to retail space, according to the listing.

UES apartment building on the block

A development site with over 51,000 buildable square feet at 118-120 Fulton Street is on the market with an asking price of $12.9 million. A 15,600square-foot building currently sits on the lot, which measures 4,122 square feet and has 50 feet of frontage on Ful118-120 Fulton Street ton Street. The zoning allows for a development with residential and commercial components. Nick Petkoff of Massey Knakal is handling the assignment.

A six-story, 14,000square-foot apartment

Compiled by Linden Lim

39 East 72nd Street

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Deal Sheet summary Sales

Overview

By type

Property sales Deals Dollars

The Deal Sheet, on pages 74 to 84, covers transactions from 4/11/11 through 5/10/11. Please submit future deals to deals@therealdeal.com.

36 $1,614,310,000

Financing

By dollar volume (in millions)

Development

Hotel

Industrial

Mixed-Use

Multifamily

52.52 36.7 4.8 17.35 205.64

Transactions

Office

1285

Buildings

Retail

12.3

Aggregate value

$285,150,000

Leases Office

116

Retail

Total

186

Leases square feet Office

1,731,578

Retail

226,257

Total

1,957,835

Office leases Office leases by industry Industry

Office leases sf by industry Leases

Advertising & Marketing

Industry

Top tenant reps for office leasing by sf

Square feet leased

Tenant representative

Square feet leased

Advertising & Marketing

40,760

Cushman & Wakefield

Communications

25,000

CB Richard Ellis

146,390

Education

47,405

Richard Berzine & Co.

136,000

Entertainment

81,540

Entertainment

500,785

Colliers International

84,950

Fashion*

233,477

Newmark Knight Frank

83,314

Financial

424,832

Centric Real Estate

77,180

Fine Arts

52,100

Studley

57,740

Government

84,950

Jones Lang LaSalle

50,000

Home Furnishings

28,750

Pinnacle Realty

40,200

Legal

90,658

Murray Hill Properties

33,264

Media

201,089

Cresa Partners

25,600

Other / n/a

133,621

ABS Partners

25,000

Publishing

146,643

Adams & Co.

24,741

Real Estate

44,563

Platinum Brokerage Group

24,700

Science & Technology

49,992

Norman Bobrow & Co.

24,400

Transportation

46,198

Sinvin Real Estate

17,249

Retail leases Top tenant reps for leasing by sf

Retail leases by industry

Broker

Drugstore

Square feet leased

Retail leases sf by industry 2

Drugstore

29,620

Winick Realty

41,829

Food & Beverage

76,728

SRS Real Estate Partners

20,500

Health & Beauty

14,962

JW Burke & Company

14,000

Home Furnishings

15,000

NYCRS

13,860

Hospitality

17,000

Ripco Real Estate

10,026

Other

72,947

Kalmon Dolgin Affiliates

9,300

The Greenberg Group

8,100

Prudential Douglas Elliman

8,000

DiMucci Partners

7,100

Newmark Knight Frank

7,000

JDF Realty

6,200

Cushman & Wakefield

4,200

Robert K. Futterman & Assoc.

3,605

(*includes showroom space)

www.TheRealDeal.com June 2011 73

Deal Sheet

Commercial deals in New York City Deals are listed from largest to smallest in square feet leased or bought. The Deal Sheet covers transactions from 4/11/11 to 5/10/11. Please submit future deals to deals@therealdeal.com.

Office leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

One World Financial Center

204,000

FINRA / J. Cefaly, R. Lowe, C&W

Dow Jones / K. Rapp, Z. Freeman, M. Ann Tighe, C. Mansfield, M. Rizzo, L. Crowley, CBRE

The independent securities regulator signed a long-term sublease on the ninth through 12th floors. The company is consolidating its offices from 14 Wall Street and 20 Broad Street.

75 Ninth Ave (Chelsea Market)

154,489

Scripps Networks / Sam Clark, C&W

Jamestown / David Falk, Newmark Knight Frank

The media company signed a 10-year lease renewal and expansion.

345 Hudson St

136,000

Penguin Group USA / Richard Berzine, Richard Berzine & Co.

Trinity Real Estate / Represented inhouse

The book publisher signed a 15-year lease renewal on the fourth, 14th and 15th floors.

200 Park Ave

90,000

Oppenheimer & Co. Inc. / M. Astrachan, S. Bauer, M. Konsker, C&W

Tishman Speyer / Represented inhouse

The investment bank and financial services firm signed a long-term lease renewal on the 24th and 25th floors.

220 East 42nd St

84,950

United Nations Women / Andrew Roos, Colliers International

SL Green / n/a

The UN agency signed a lease for space on the fourth and 17th through 19th floors.

16 East 34th St

77,180

Komar Company / Gregg Lorberbaum, Centric Real Estate

SL Green / Represented in-house

The sleepwear company signed a lease extension on floors eight through 10 and expanded onto the 14th floor.

510 Madison Ave

66,000

SAC Capital / n/a

n/a / n/a

The hedge fund signed a lease on the second through sixth floors. The company is moving from 540 Madison Avenue.

745 Ninth Ave

55,000

Frommer Lawrence & Haug / Represented in-house

Paramount Group / Represented inhouse

The law firm signed a 10-year lease for additional space on the ninth floor and renewed its lease on the 10th and 11th floors.

980 Madison Ave

50,000

Gagosian Gallery / J. Fischer, S. Panzer, S. Rotter, Jones Lang LaSalle

RFR Realty / Represented in-house

The art gallery signed a 10-year lease on the fourth through sixth floors.

2 Park Ave

46,198

British Airways / J. Meixner, B. Needleman, CBRE

PPF Off Two Park Avenue Owner LLC / T. Stacom, D. Green, M. Arkin, W. Morris, C&W

The British airline signed a 10-year lease for the entire 11th floor.

One Hudson Square

33,000

Horizon Media / M. Sukenik, C. Mongeluzo, B. Cohen, Newmark Knight Frank

Trinity Real Estate / A. Peretz, R. Constable, C&W; J. Pizer, M. Packman, Trinity Real Estate

The media company signed an expansion lease.

100-104 Fifth Ave

32,144

Net-a-Porter / Owen Hane, C&W

Kaufman Organization / G. Greenspan, M. Kaufman, E. Warren, Kaufman Organization

The online fashion retailer signed a 10-year lease on the 11th and 12th floor.

350 Fifth Ave (Empire State Building)

31,742

LinkedIn / Sacha Zarba, CBRE

W&H Properties / W. Cohen, R. Kass, L. Davidson, Newmark Knight Frank

The social networking technology company signed a lease for the entire 25th floor.

408 Broadway

28,000

Professional Business College / Justin DiMare, Newmark Knight Frank

United American Land / Justin DiMare, Newmark Knight Frank

The school signed a 10-year lease on the second and third floors.

141 West 36th St

25,600

Camuto Group / Joseph Armano, Cresa Partners

n/a / Corey Abdo, Winoker Realty

The womenâ&#x20AC;&#x2122;s fashion design company signed a seven-year lease, renewing on two floors and expanding onto an additional two floors. The reported asking rent was $32 per square foot.

304 Hudson St

25,000

3.1 Phillip Lim / J. King, S. Solomon, ABS Partners

Trinity Real Estate / Represented inhouse

The fashion company signed a 10-year lease for most of the eighth floor and part of the fifth floor.

80 Broad St

25,000

Aegis Communciations Group / J. Genovesi, M. Shapses, Studley

Swig Equities / n/a

The communications company signed a lease renewal.

80 Broad St

25,000

HQ Global Solutions / S. Sloves, M. Ravesloot, P. Danna, CBRE

Swig Equities / n/a

The office space rental company signed a lease renewal.

423 West 55th St

24,400

RHI Entertainment / Eric Kahn, Norman Bobrow & Co.

The Winter Organization / S. Schofel, J. Gosin, D. Hasset, Newmark Knight Frank

The television production and distribution firm signed a lease on the 12th floor.

1065 Sixth Ave

23,000

American Association of Advertising Agencies / J. Peck, D. Horowitz, Studley

Blackstone / Newmark Knight Frank

The advertising agency signed a 15-year lease.

3 Park Ave

23,000

ICON Investments / B. Needleman, S. Petriello, CBRE

Cohen Brothers Realty / D. Glassman, C&W; D. Nevins, A. Karafiol, Cohen Brothers Realty

The asset management firm signed a 10-year lease on the 36th floor.

53-06 Grand Ave (Queens)

22,000

AA Broadway Enterprise Inc. / Jean Liu, Pinnacle Realty

n/a / Jean Liu, Pinnacle Realty

The handbag wholesaler signed a lease.

One Bryant Park

15,000

QFR Management / Jared Horowitz, C&W

Durst Organization / n/a

The asset management firm signed a 10-year lease on the 37th floor.

205 Hudson St

13,250

One Kings Lane / Peter Gross, Williamson Picket Gross

Trinity Real Estate / Represented inhouse

The online home furnishings retailer signed a five-year office lease on the seventh floor.

554 Eighth Ave

12,500

Turn On Products / Joseph Melohn, Platinum Brokerage Group

n/a / Joseph Melohn, Platinum Brokerage Group

The apparel company signed a six-year lease on the 19th floor. The reported asking rent was about $20 per square foot.

37-20 Skillman Ave (Queens)

12,000

Brandenburg Industrial Service Companies / Joshua Kleinberg, Pinnacle Realty

n/a / Joshua Kleinberg, Pinnacle Realty

The demolition and wrecking company signed a lease.

3 Park Ave

11,575

Major League Gaming / Gui Tepedino, Roberta Panos

Cohen Brothers Realty / Represented in-house

The professional video game league signed a long-term lease on the 11th floor.

554 Eighth Ave

11,000

Colortex Lining Club / David Nouhian, Manhattan Commercial Realty

n/a / Joseph Melohn, Platinum Prokerage Group

The importing company signed a six-year lease. The reported asking rent was $18 per square foot.

230 Park Ave

10,550

Cornell University / Gere Ricker, MB Real Estate

Monday Properties / Represented inhouse

The university signed a lease.

158 West 27th St

10,000

Gracious Home / Josh Sand, ReCom

Himmel + Meringoff / Represented in-house

The home furnishing company signed an office lease for its corporate headquarters.

632 Broadway

10,000

OMGPOP Inc. / Dennis Someck, George Comfort & Sons

Renaissance Properties / Nora Stats, Tarter Stats Oâ&#x20AC;&#x2122;Toole

The online gaming company signed a seven-year lease on the 11th floor.

74 June 2011 www.TheRealDeal.com

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Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

122 West 27th St

10,000

KarmaloopTV / William Mendelson, Newmark Knight Frank

Sonic Boom Media / Perry Mesmer, Colliers International

The media company subleased the entire seventh floor.

1350 Broadway

9,740

Broadreach Medical Resources / Dan Horowitz, Studley

W&H Properties / R. Silver, J. Fanuzzi, Newmark Knight Frank

The business services firm signed an expansion lease for part of the fourth floor.

253 West 35th St

9,600

A Better Chance / L. Holyfield, M. Torres, Concrete Stories

Shulsky Properties / A. Bonett, N. Zagar, Adams & Co.

The nonprofit signed a 10-year lease. The reported asking rent was $27 per square foot.

253 West 35th St

9,600

USA Studios / A. Bonett, N. Zagar, Adams & Co.

Shulsky Properties / Represented inhouse

The post-production firm signed a 10-year lease. The reported asking rent was $27 per square foot.

80 Broad St

9,500

R.F. Lafferty / David Ofman, The Lawrence Group

Swig Equities / n/a

The stock brokerage firm signed a lease renewal.

120 Broadway

9,345

Foran Glennon Plandech Ponzi & Rudloff PC / P. Sabesan, W. Siegel, CBC Hunter Realty

Silverstein Properties / Represented in-house

The Chicago-based law firm signed a lease. The reported asking rent was $38 per square foot.

551 Fifth Ave

9,000

Kleinberg, Kaplan, Wolff & Cohen PC / Jesse Rubens, Murray Hill Properties

The Feil Organization / Represented in-house

The law firm signed an expansion lease.

38 Greene St

9,000

Men in Black III / n/a

David Zar / Represented in-house

The filmmakers leased the second-floor loft to film a party scene.

205 Lexington Ave

8,000

Vitrue / Greg Kraut, CBRE

Somerset Management / Cassidy Turley

The social media software company signed a four-year lease on the seventh floor.

147 Prince St (Brooklyn)

7,920

Jack Jaffa & Associates / Nick Zweig, Locations Commercial Real Estate

n/a / Nick Zweig, Locations Commercial Real Estate

The real estate consultants signed a lease.

1071 Sixth Ave

7,800

Sharp Entertainment / D. Levy, J. Schwartz, Adams & Co.

Ten Seventy One Associates / D. Levy, J. Schwartz, Adams & Co.

The television production firm signed a nine-year lease to expand onto the fifth floor.

110 West 57th St

7,500

Rabin Partners / M. Toubin, R. Doolittle, W. Rudes, Murray Hill Properties

The Rockport Company LLC / John Moxley, Jones Lang LaSalle

The global management consultancy signed a five-year sublease. The reported asking rent was $42 per square foot.

111 Broadway

7,015

Law Offices of Mark Seitelman / Rick Doolittle, Murray Hill Properties

Trinity Centre LLC / Represented inhouse

The law firm signed a 10-year lease. The reported asking rent was $34 per square foot.

3 Park Ave

6,755

Prophase Training Group / Alanna Martin, Green Buildings NYC

Cohen Brothers Realty / Represented in-house

The mental health education company signed a lease on the 37th floor.

22 Cortlandt St

6,750

The Fund for Public Health / Rob Wizenberg, CBRE

Mayore Estates / Barrett Stern, Grubb & Ellis

The nonprofit signed a five-year lease for part of the 11th floor.

915 Broadway

6,708

AdoTube / J. Costello, T. Jerry, Sinvin Real Estate

915 Broadway Associates LLC / Jay Caseley, ABS Partners

The advertising agency signed a five-year lease on the 13th floor. The reported asking rent was $39 per square foot.

1500 Broadway

6,643

China Daily / J. Hilton, L. Greene, Grubb & Ellis

Zapco 1500 Investment LP / n/a

The Chinese newspaper signed a seven-year lease.

1500 Broadway

6,247

Dai & Associates / Dennis Karr, Newmark Knight Frank

Tamares Real Estate / Daniel Bodner, CBRE

The law firm signed a 10-year lease.

54-08 Vernon Blvd (Queens)

6,200

CAC Industries Inc. / J. Kleinberg, M. Prange, B. Burke, P. Bralower, Pinnacle Realty

n/a / J. Kleinberg, M. Prange, B. Burke, P. Bralower, Pinnacle Realty

The tenant signed a lease.

112 West 34th St

6,067

WeePlay / L. Korman, M. Frantz, B. Waterman, Newmark Knight Frank

W&H Properties / M. Arkin, K. Mekles, H. Klein, C&W

The apparel company inked a lease for part of the 14th floor.

42 Bond St

5,700

Bond No. 9 / F. Consolo, J. Aquino, Prudential Douglas Elliman

Jato Realty / Edmond Levy, Cornerstone Real Estate Investments

The perfume company leased the fifth floor for its corporate headquarters.

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825 Third Avenue

37th Floor

New York, NY 10022

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

259 West 30th St

5,500

Big Apply Style Furniture / Joe McLaughlin, Capstone Realty Advisors

Two Friends Realty LLC / Joe McLaughlin, Capstone Realty Advisors

The furniture company signed a long-term deal.

90 Park Ave

5,500

Welch Capital Partners / Gordon Ogden, Byrnam Wood

Vornado / Represented in-house

The hedge fund signed a five-year lease on the 19th floor.

950 Third Ave

5,431

Anchor Associates / Scott Bloom, Bloom Real Estate

n/a / J. Horowitz, M. Nahmias, C&W

The real estate company signed an expansion lease on the 25th floor.

469 Seventh Ave

5,400

Shindo USA Inc. / Junji Miyake, Cassidy Turley

n/a / Eric Meyer, Colliers International

The supplier of textiles and fabrics signed a 10-year lease. The company relocated from 152 West 36th Street.

30 Broad St

5,335

Hanweck Associates / R. Doolittle, W. Rudes, Murray Hill Properties

Gotham Broad LLC / R. Doolittle, W. Rudes, Murray Hill Properties

The financial services firm signed a 10-year lease. The reported asking rent was $37 per square foot.

26 West 17th St

5,300

GroupMe / Slater Traaen, Kaufman Organization

n/a / Rob Fink, Winter Organization

The digital technology company signed a lease. The reported asking rent was $37 per square foot.

44 Dobbin St (Brooklyn)

5,000

Studio G Brooklyn / Neil Firtle, Kalmon Dolgin Affiliates

n/a / Neil Firtle, Kalmon Dolgin Affiliates

The recording studio signed a lease.

315 Madison Ave

5,000

Natural Source International / Jason Pfeiffer, Bergson Strategies

Abramson Brothers / n/a

The natural supplement company signed a five-year lease for a full floor.

36 Cooper Square

4,500

Urgent Group Inc. / Deborah Steward, NYCRS

n/a / Nora Stats, Tarter Stats O’Toole

The consulting firm signed a lease.

15 West 44th St

4,400

Disco International Inc. / Thomas Sullivan, CBC Hunter Realty

n/a / Andrew Pal, Wiggin and Dana LLP

The Japanese human resources company signed a long-term lease renewal.

360 Lexington Ave

4,051

Sonnenfeld & Richman LLP / Ira Rovitz, Grubb & Ellis

Cassidy Turley / n/a

The law firm signed a seven-year lease.

561 Seventh Ave

4,000

Commentary / M. Pinney, R. Frost, Signature Partners

n/a / S. Galin, P. Simel, Handler Real Estate Organization

The magazine signed a lease on the 16th floor.

554 Eighth Ave

4,000

Green Land NY Corp. / Joseph Melohn, Platinum Prokerage Group

n/a / Joseph Melohn, Platinum Prokerage Group

The women’s apparel maker signed a five-year lease. The reported asking rent was about $19 per square foot.

554 Eighth Ave

4,000

Yoony Corp. / Joseph Melohn, Platinum Brokerage Group

n/a / Joseph Melohn, Platinum Brokerage Group

The women’s apparel company signed a five-year lease. The reported asking rent was about $19 per square foot.

503 Fifth Ave (Brooklyn)

3,750

Services for the Underserved / Locations Commercial Real Estate

n/a / Locations Commercial Real Estate

The service provider for the disabled signed a lease to relocate its offices.

40 Wall St

3,728

Lane McVicker LLC / L. Martin, H. Springer, J. Wechsler, Grubb & Ellis

The Trump Organization / n/a

The insurance company signed a six-year lease.

950 Third Ave

3,712

MKF Realty / n/a

n/a / J. Horowitz, M. Nahmias, C&W

The real estate firm signed a lease renewal on part of the 28th floor.

110 West 40th St

3,610

Gerald E. Hespos PC / D. Levy, B. Maslin, Adams & Co.

One Ten West Fortieth Associates / D. Levy, B. Maslin, Adams & Co.

The tenant signed a lease renewal and expansion. The reported asking rent was $38 per square foot.

665 Broadway

3,601

Flash Ventures / K. Phelan, J. McLaughlin, Capstone Realty Advisors

n/a / John Peters, C&W

The consumer licensing and branding firm inked a deal for part of the third floor.

29 West 38th St

3,600

Buzz Logic Inc. / L. Biller, E. Warren, Kaufman Organization

n/a / A. Maxson, J. Gols, ABS Partners

The digital media company signed a lease. The reported asking rent was $33 per square foot.

80 Broad St

3,500

Relocation.com / n/a

Swig Equities / n/a

The moving-company search engine signed a lease renewal.

554 Eighth Ave

3,500

Axon Inc. / David Youngsworth, Living Real Estate Group

n/a / Joseph Melohn, Platinum Prokerage Group

The outdoor apparel company signed a two-year lease. The reported asking rent was about $21 per square foot.

46-50 Greene St

3,500

GFM Industria Group / David Barreto, Cast Iron Real Estate

n/a / n/a

The Italian fashion company signed a five-year lease.

554 Eighth Ave

3,500

Inno Fashion Inc. / n/a

n/a / Joseph Melohn, Platinum Prokerage Group

The clothing manufacturer inked a five-year lease. The reported asking rent was about $21 per square foot.

545 Fifth Ave (Brooklyn)

3,300

JBGriffin Inc. / Michael Alamo, Ideal Properties Group

545 5th Ave. Realty / Justin Dower, Ideal Properties Group

The marketing company signed a 15-year lease.

554 Eighth Ave

3,200

Jinmei Fashion Inc. / Joseph Melohn, Platinum Prokerage Group

n/a / Joseph Melohn, Platinum Prokerage Group

The women’s apparel company inked a five-year lease. The reported asking rent was about $19 per square foot.

145 Hudson St

3,200

GCAM / Matt Bergey, CBRE

DeSimone/Aviles / Roxanne Betesh, Sinvin Real Estate

The art and design company signed a lease for three years and 2.5 months on the sixth floor. The reported asking rent was $50 per square foot.

107 Grand St

3,150

FuMorton Architects / Ken Fishel, Legacy Real Estate

Straightline International / C. Owles, T. Jerry, Sinvin Real Estate

The architecture firm subleased space on the sixth floor for 20 months and 12 days. The reported asking rent was $40 per square foot.

950 Third Ave

2,769

TPR Holdings / n/a

n/a / J. Horowitz, M. Nahmias, C&W

The investment firm signed an expansion lease on the third floor.

950 Third Ave

2,652

Aldwych Inc. / Robert Gastel, C&W

n/a / J. Horowitz, M. Nahmias, C&W

The consulting firm signed a lease on the 16th floor.

225 West Broadway

2,600

Erin Fetherston / K. McCann, T. Jerry, Sinvin Real Estate

Nur Ashki Jerrahi Community / S. Rappaport, G. Wasserman, Sinvin Real Estate

The fashion company signed a five-year, three-month lease on the second and third floors. The reported asking rent was $42 per square foot.

39 Broadway

2,600

The Advance Group / Annie Yao, Buchbinder & Warren

Cammeby’s Management Company LLC / The Lawrence Group

The lobbying and political organization signed a 10-year lease. The reported asking rent was $30 per square foot.

10 East 33rd St

2,500

HopStop Inc. / B. Harvey, D. Segal, CBRE

Berik Management Corp. / Represented in-house

The navigation website signed a five-year lease on the sixth floor.

767 Fifth Ave

2,500

Hovnanian Enterprises / C&W

Boston Properties / n/a

The home builder signed a lease renewal on the 46th floor of the General Motors Building.

146 West 29th St

2,415

Done and Dusted / Trisha Jerry, Sinvin Real Estate

Teresharan Land Company of Manhattan LLC / Represented inhouse

The production firm signed a three-year lease on the fourth floor. The reported asking rent was $27 per square foot.

2027 Williamsbridge Rd (The Bronx)

2,350

East Tremont Medical Group / Jesse Rubens, Murray Hill Properties

Anzalone & Leschins / Jesse Rubens, Murray Hill Properties

The medical office signed a five-year lease. The reported asking rent was $23 per square foot.

101 East Burnside Ave (The Bronx)

2,100

Services for the Underserved / Locations Commercial Real Estate

n/a / Locations Commercial Real Estate

The service provider for the disabled signed a lease to relocate its offices.

333 West 39th St

2,100

Educators for Excellence / Alex Baumol, Sinvin Real Estate

333 W. 39 Realty LLC / A. Steinberg, B. Craig, N. Joffee, Newmark Knight Frank

The education reform company signed a five-year lease on the seventh floor. The reported asking rent was $30 per square foot.

474 Broadway

2,100

Steve Clark / Robert Neborak, PBS Real Estate

474 Broadway Realty Corp. / Alex Baumol, Sinvin Real Estate

The artist signed a three-year lease on the fourth floor. The reported asking rent was about $29 per square foot.

137 Varick St

2,085

View Imaging / R. Kornblatt, T. Jerry, Sinvin Real Estate

Rector, Church-Wardens and Vestrymen of Trinity Church / Peter Fontanetta, Trinity Real Estate

The photo retouching company signed a seven-year office lease on the sixth floor. The reported asking rent was $34 per square foot.

www.TheRealDeal.com June 2011 77

Office leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

530 West 25th St

2,064

Modern Shoe Company / Pamela Title, Murray Hill Properties

Tan Holding Corp. / Pamela Title, Murray Hill Properties

The shoe maker signed a three-year office lease. The reported asking rent was $35 per square foot.

950 Third Ave

2,033

Frankhill Associates / Richard Pugatch, CBC Hunter Realty

n/a / J. Horowitz, M. Nahmias, C&W

The tenant signed a lease on the 26th floor.

110 West 40th St

2,012

DA Global Group Inc. / Best One Realty

One Ten West Fortieth Associates / D. Levy, B. Maslin, Adams & Co.

The tenant signed a five-year office lease. The reported asking rent was $38 per square foot.

554 Eighth Ave

2,000

JM 66 Inc. / Arnold Shlansky, Ideal NYC

n/a / Joseph Melohn, Platinum Prokerage Group

The women’s clothing designer signed a six-year lease. The reported asking rent was about $20 per square foot.

554 Eighth Ave

2,000

Gemma Khang / David Nouhian, Manhattan Commercial Realty

n/a / Joseph Melohn, Platinum Prokerage Group

The designer signed a five-year lease. The reported asking rent was about $21 per square foot.

31 West 46th St

2,000

Bayshore Health Spa / Renard Suggs, Glenmark Realty

31 West 46th Realty LLC / Abraham Kassin, Kassin Sabbagh Realty

The health spa signed a 10-year lease on the third floor. The reported asking rent was $40 per square foot.

347 West 36th St

1,950

NY Fashion Connect / J. Winter, J. McLaughlin, Capstone Realty Advisors

347 West 36th St. LLC / Barry Bernstein, Winoker Realty

The online department store signed a lease for part of the third floor.

107 West 82nd St

1,876

n/a / Betty Posner, NYCRS

Marin Management / n/a

A doctor signed a lease.

52 Greene St

1,800

Ignition Inc. / Monica Breiland, MoniCo. Real Estate

n/a / Richard Kent, Conquest Advisors

The marketing firm signed a three-year lease. The reported asking rent was $32 per square foot.

115 West 30th St

1,750

Woo Art / T. Murtha, J. Winter, Capstone Realty Advisors

n/a / Sam Stein, Justin Management

The film and production firm signed a deal for part of the seventh floor.

10 West 33rd St

1,645

Broadway Sun Ben Trading Inc. / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The accessories wholesaler signed a four-year lease. The reported asking rent was $36 per square foot.

10 West 33rd St

1,527

SA & E International Bag & Accessories LLC / Hidrock Realty

Ten West Third Third Associates / David Levy, Adams & Co.

The baggage manufacturer signed an eight-year lease. The reported asking rent was $36 per square foot.

37 West 20th St

1,450

Making Ideas Work / Adam Mu, NYCRS

n/a / n/a

The web development firm signed a lease.

511 West 25th St

1,341

Firefly Branding LLC / Simone Lillian, Sinvin Real Estate

25th Street Art Partners LLC / Simone Lillian, Sinvin Real Estate

The advertising firm signed a 10-year lease on the seventh floor. The reported asking rent was about $48 per square foot.

430 West 14th St

1,154

Clinic LLC / n/a

Madison Tower NY LLC / F. Mancini, A. Weisman, S. Seigel, Grubb & Ellis

The image retouching laboratory signed a five-year lease.

110 West 40th St

1,010

Glow Media and Marketing Inc. / NSNYRE LLC

One Ten West Fortieth Associates / D. Levy, B. Maslin, Adams & Co.

The marketing firm signed a six-year lease. The reported asking rent was $36 per square foot.

584 Broadway

1,000

Brightwork Capital Partners / Kathleen Perkins, NYCRS

Olmstead Properties / n/a

The tenant leased office space.

554 Eighth Ave

1,000

Kimmiekakes LLC / Joseph Melohn, Platinum Prokerage Group

n/a / Joseph Melohn, Platinum Prokerage Group

The uniform designer signed a three-year lease. The reported asking rent was about $19 per square foot.

135 West 29th St

1,000

PGC Group / Tim Parkkila, NYCRS

MFM Properties / n/a

The tenant leased office space.

10 West 33rd St

988

Buxton Acquisition LLC / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The wholesaler signed a four-year lease.

420 Lexington Ave

773

Podravka International USA / David Toran, Bergson Strategies

SL Green / n/a

The Croatian food company signed a five-year office lease.

110 West 40th St

648

Hattmanan Brook LLC / D. Levy, B. Maslin, Adams & Co.

One Ten West Fortieth Associates / D. Levy, B. Maslin, Adams & Co.

The tenant signed a three-year office lease. The reported asking rent was $36 per square foot.

10 West 33rd St

450

Daniel M. Friedman & Associates / David Levy, Adams & Co.

Ten West Thirty Third Associates / David Levy, Adams & Co.

The accessories manufacturer signed a four-year expansion lease. The reported asking rent was $36 per square foot.

115 West 29th St

400

That Project Inc. / Jason Mezydlo, NYCRS

Berik Management / n/a

The tenant signed an office lease.

Retail leases Address

Size

Tenant / Representative

Landlord / Representative

Notes

1657 Broadway

18,975

Duane Reade / Ann La Centra, Winick Realty

Madison 1657 Realty LLC / n/a

The drugstore signed a lease renewal and expansion.

218-220 Bowery

17,000

Alessandro Zampedri / n/a

n/a / Robert Burton, Massey Knakal

The tenant signed a lease, with an option to purchase, for an affordable hospitality concept with a coffee bar on the ground floor.

754-778 Manor Road (Staten Island)

14,262

Key Food Fresh & Save Marketplace / n/a

Muss Development / n/a

The supermarket signed a long-term lease at the Manor Road Shopping Center.

100 West 93rd St

13,000

Party City / P. Smith, M. Ogle, SRS Real Estate Partners

Starrett Development / A. Yunis, J. Lack, Newmark Knight Frank

The party supplies retailer signed a new, 15-year lease.

290 Madison Ave

11,000

BNP Foods / L. Roth, J. Burke, JW Burke & Company

Yadidi Group / Hal Shapiro, Winick Realty

The gourmet eatery signed a lease for a three-level space.

401 Park Ave South

10,645

Duane Reade / Ann La Centra, Winick Realty

Meringoff Properties / Represented in-house

The drugstore signed a lease renewal.

1765 Townsend Ave (The Bronx)

9,500

HELP-PSI / n/a

Townsend Ave Realty Corp. / Kathy Zamechansky, NAI Friedland Realty

The drug treatment services provider signed a retail lease.

32-32 49th St (Queens)

8,100

Lumber Liquidators Inc. / The Greenberg Group

n/a / Joshua Kleinberg, Pinnacle Realty

The hardwood retailer signed a lease.

206-208 Canal St

7,500

East West Bank / Matt Ogle, SRS Real Estate Partners

n/a / n/a

The bank signed a retail lease.

901 Broadway

7,100

Brooks Brothers / Frank DiMucci, DiMucci Partners

Karass Broadway LLC / J. Podell, M. Seigel, C&W

The men’s fashion retailer signed a lease for another location.

99 Second Ave

7,000

Brick Lane Curry House / J. Lack, A. Yunis, Newmark Knight Frank

n/a / J. Lack, A. Yunis, Newmark Knight Frank

The Indian restaurant signed a 10-year lease for another location.

120 East 86th St

6,926

Panera Bread / A. Mandell, R. Skulnik, Ripco Real Estate

Red Apple Real Estate / M. Ogle, C. Zolcinski, SRS Real Estate Partners

The bakery and café signed a lease for another location.

213 North 10th St (Brooklyn)

6,500

Brooklyn Moto Too LLC / J. Wadler, V. Lopez, Kalmon Dolgin Affiliates

n/a / J. Wadler, V. Lopez, Kalmon Dolgin Affiliates

The motorcycle garage and service center signed a lease for its second Brooklyn location.

78 June 2011 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

41 West 57th St

6,200

Café Pushkin / L. Siben, B. Kahr, JDF Realty

Kamran Hakim, 41 West 57 Street LLC / C. Owles, S. Rappaport, Sinvin Real Estate

The Russian eatery signed a 12-year lease for a triplex space. The reported asking rent for the ground floor was $400 per square foot.

2036 Amsterdam Ave

4,500

AIDS Service Center / F. Consolo, J. Aquino, A. Maglio, Prudential Douglas Elliman

n/a / F. Consolo, J. Aquino, A. Maglio, Prudential Douglas Elliman

The center for New Yorkers living with HIV/AIDS signed a lease on the ground floor.

2432 Grand Concourse (The Bronx)

4,000

A M Business Services Inc. / n/a

Pal Affiliates LP / Kathy Zamechansky, NAI Friedland Realty

The business services provider leased retail space.

207 Ninth Ave

3,930

An Pure Spa / Michael Gleicher, Winick Realty

Ninth Avenue LLC / Michael Gleicher, Winick Realty

The nail salon and spa signed a lease.

115 East 57th St

3,605

Pipino / P. Haber, B. Rosen, RKF

The Moinian Group / Represented in-house

The celebrity stylist signed a long-term lease.

142 West 26th St

3,500

Ercole Inc. / L. Puopolo, D. Marco, Prudential Douglas Elliman

142 W. 26th Street Owners Corp. / A. Gavios, C. Delevante, Square Foot Realty

The furniture retailer signed a 10-year lease.

330 Seventh Ave

3,100

Panera Bread / A. Mandell, R. Skulnik, Ripco Real Estate

n/a / P. Berkman, D. Berke, Newmark Knight Frank

The bakery and café signed a lease for its first Manhattan location.

150 East 39th St

3,000

D2 Office Furniture / Jonathan Burke, JW Burke & Company

Carlyle Construction / Mike Doetsch, Williamson Picket Gross

The furniture retailer signed a lease.

1400 Fifth Ave

3,000

Sunrose Group LLC / Elizabeth Martin, E.L. Martin

Full Spectrum NY / M. Gorman, J. Gettler, New Street Realty Advisors

The restaurant signed a long-term lease.

201 East 69th St

3,000

Verizon Wireless / Robert Gibson, C&W

TF Cornerstone / n/a

The wireless communications retailer signed a 10-year lease.

42 Dobbin St (Brooklyn)

2,800

Williamsburg Brazilian Jiu Jitsu / Grant Dolgin, Kalmon Dolgin Affiliates

Flour and Sugar LLC / Grant Dolgin, Kalmon Dolgin Affiliates

The martial arts studio signed a lease.

235 East 4th St

2,000

n/a / J. Famularo, C. Nadler, NYCRS

The tenant signed a lease for a restaurant.

106 Forsyth St

2,000

Mexicue / Max Dylan Lu, M Properties

Warren L / Meg Harvey, Prudential Douglas Elliman

The restaurant signed a 10-year lease for another location.

147 West 36th St

2,000

Fashion Terminal Inc. / Manoj Tewari, Rutenberg Realty

Foremost Realty / R. Smith, Tatiana, Jung, Winick Realty

The women’s apparel retailer signed a 10-year lease.

43-46 Ditmars Blvd (Queens)

2,000

Berry Fresh Farm Inc. / William O’Brien, M.C. O’Brien

LaGuardia Center Realty LLC / J. Rubens, B. Varricchio, Murray Hill Properties

The fruit and vegetable store signed a 20-year lease. The reported asking rent was about $21 per square foot.

42 East 21st St

2,000

Diana Warner Studio / Elliot Forest, Crosstown Commercial Properties

Hall Partnership / K. Fishel, A. Weston, Legacy Real Estate

The jewelry design firm signed a seven-year lease. The space will be used for retail as well as offices.

161 Ludlow St

1,800

n/a / Ken Brandman, NYCRS

The tenant signed a lease for a bar and restaurant.

360 Furman St (Brooklyn)

1,760

Brooklyn Bridge Bark / D. Boutross, L. Block, Winick Realty

Spandrel Property Services / D. Boutross, L. Block, Winick Realty

The pet shop signed a lease at the One Brooklyn Bridge Park development.

68 West 3rd St

1,700

Sigma Burger Pie / R. Panos, G. Tepedino, Hakimian Organization

68 West 3 LLC / Joshua Salon, Salon Realty Corp.

The burger restaurant signed a 10-year lease.

149 Essex St

1,500

Convenience store / K. Lin, F. Frank, Misrahi Realty

149 Essex Corp. / n/a

The convenience store signed a lease.

One Jackson Square

1,470

Starbucks / n/a

Hines / K. Bellantoni, P. Haber, RKF

The coffee chain signed a lease for another location.

243 West 60th St

1,427

Stephanie Xue, Adagio Salon / Josh Bowling, Sinvin Real Estate

n/a / S. Baker, S. Mann, Winick Realty

The salon and spa signed a 10-year lease. The reported asking rent was $65 per square foot.

120 St. Marks Pl

1,400

n/a / Ken Brandman, NYCRS

The tenant signed a lease for a Thai spa.

3033 Third Ave (The Bronx)

1,400

Rincon Musical / Alexander Hill, Winick Realty

156 Third Holding / Alexander Hill, Winick Realty

The Latin music and musical instruments retailer signed a lease.

132 Orchard St

1,300

Ice cream shop / J. Frank, K. Lin, Misrahi Realty

132 Orchard LLC / J. Frank, K. Lin, Misrahi Realty

The ice cream shop signed a lease.

104 Eighth Ave

1,250

Wrapido / Lee Block, Winick Realty

Brodsky Organization / S. Baker, S. Mann, Winick Realty

The wrap shop signed a lease.

162 Avenue A

1,200

The Beagle / A. Baumol, G. Wasserman, Sinvin Real Estate

Italian Mother Corporation / J. Famularo, C. Nadler, NYCRS

The restaurant signed a 13-year lease. The reported asking rent was about $82 per square foot.

1457 Third Ave

1,200

RJW LLC / Simone Lillian, Sinvin Real Estate

Aryeh Realty Corporation / Jonathan Stern, Empire Real Estate

The café signed a seven-year lease. The reported asking rent was $135 per square foot.

501 Hudson St

1,200

n/a / Bertrand de Soultrait, NYCRS

Time Equities / n/a

The tenant signed a lease for a dessert shop.

16 Avenue B

1,200

Discovery Wines / Ken Brandman, NYCRS

n/a / Ken Brandman, NYCRS

The wine shop signed a lease.

264 Bowery

1,200

Dagny & Barstow / Alex Cohen, C&W

Estate of William Gottlieb / Richard Skulnik, Ripco Real Estate

The women’s fashion boutique signed a 10-year lease.

One Bryant Park

1,200

Starbucks / David Firestein, Northwest Atlantic Partners

The Durst Organization / Represented in-house

The coffee chain signed a lease for another location.

360 Furman St (Brooklyn)

1,170

Waterfront Wines / D. Boutross, L. Block, Winick Realty

Spandrel Property Services / D. Boutross, L. Block, Winick Realty

The wine shop signed a lease at the One Brooklyn Bridge Park development.

422 Amsterdam Ave

1,100

Amelia B 1 Corp. / Alexander Hill, Winick Realty

420-428 Amsterdam / n/a

The retailer signed a lease.

1331 Third Ave

1,000

Yumi Kim / P. Weisman, D. Mandel, Lansco Corp.

Mautner-Glick Corp. / Represented in-house

The women’s apparel retailer signed a lease for its second Manhattan location.

112 West 87th St

1,000

n/a / Betty Posner, NYCRS

n/a / n/a

The dental office leased retail space.

3250 Westchester Ave (The Bronx)

908

Quest Diagnostics / n/a

The Hampshire Companies / S. Lorenzo, D. Scotto, NAI Friedland Realty

The lab testing services provider signed a retail lease.

279 East 10th St

900

Juice Press / K. Brandman, NYCRS; H. Bojarsky, 9300 Realty

n/a / K. Brandman, NYCRS; H. Bojarsky, 9300 Realty

The organic food and juice shop signed a lease.

683 Ninth Ave

900

Fuel Energy / James Famularo, NYCRS

n/a / James Famularo, NYCRS

The tenant signed a lease for a new health food concept.

26 West 8th St

820

Textile Arts Center / Cho Sung Goo, Midtown Commercial

Return to Home LLC / E. Diaz, W. Abramson, Buchbinder & Warren

The textiles education center signed a 10-year retail lease for its first Manhattan location. The reported asking rent was $92 per square foot.

80 June 2011 www.TheRealDeal.com

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Retail leases continued Address

Size

Tenant / Representative

Landlord / Representative

Notes

2664 Broadway

800

Rave PCS / Morris Sabbagh, Kassin Sabbagh Realty

Niev Realty / Morris Sabbagh, Kassin Sabbagh Realty

The wireless phone retailer signed a long-term lease. The reported asking rent was $150 per square foot.

1302 Second Ave

799

T&K Cleaners Corp. / Hal Shapiro, Winick Realty

315 East 68th Street / Hal Shapiro, Winick Realty

The dry cleaners signed a lease.

179 Essex St

600

Masawala / K. Brandman, J. Famularo, N. Valencia, NYCRS

n/a / K. Brandman, J. Famularo, N. Valencia, NYCRS

The Indian restaurant signed a lease.

98 Christopher St

550

Paul Common, Uncorked Wine Company LLC / Gregory Tannor, CBRE

Michael Chalan / K. McCann, J. Bowling, Sinvin Real Estate

The wine shop signed a seven-year sublease. The reported asking rent was about $185 per square foot.

1584 First Ave

550

Metro Spa / J. Isa, B. Tregerman, Winick Realty

1584 1st Avenue / J. Isa, B. Tregerman, Winick Realty

The spa signed a lease.

90 William St

500

Expo Barber Shop / S. Elhadad, A. Berger, Global Realty Opportunities

90 William Holdings / Debbi Hildreth, Global Realty Opportunities

The barber shop signed a 10-year lease.

123 Essex St

500

Hakki Pizza / K. Lin, J. Frank, Misrahi Realty

123 Essex Corp. / K. Lin, J. Frank, Misrahi Realty

The pizzeria signed a lease.

232 Elizabeth St

500

Aesop / Nick Cowan, Isaacs & Co.

n/a / Ken Brandman, NYCRS

The skincare specialist signed a lease.

31 Carmine St

500

Victory Garden NYC LLC / James Costello, Sinvin Real Estate

3133 CA LLC / James Costello, Sinvin Real Estate

The frozen yogurt shop signed a 10-year lease. The reported asking rent was $150 per square foot.

107 West 86th St

460

Class Carpet Inc. / E. Voss, B. Bongar, NYCRS

Blue Woods Management Inc. / J. Gold, A. Gamberg, Murray Hill Properties

The real estate management services firm signed a 10-year retail lease. The reported asking rent was $140 per square foot.

338 East 11th St

400

Ladies & Gentlemen / Ken Brandman, NYCRS

n/a / Ken Brandman, NYCRS

The fashion retailer signed a lease.

107 West 86th St

400

Classic Carpet Inc. / B. Bongar, E. Voss, NYCRS

Murray Hill Properties / n/a

The carpet store signed a lease.

55 Clinton St

400

n/a / K. Brandman, M. Borell, NYCRS

The women’s clothing designer signed a retail lease.

172 Prince St

300

Xocolatti / Josh Bowling, Sinvin Real Estate

n/a / Jonathan Nagin, Superior Management

The chocolate shop signed a 10-year lease. The reported asking rent was $200 per square foot.

221 East Broadway

300

BR Wireless / Morris Sabbagh, Kassin Sabbagh Realty

Redbrick Properties / Morris Sabbagh, Kassin Sabbagh Realty

The cell phone retailer signed a 10-year lease. The reported asking rent was $150 per square foot.

Grand Central Terminal

300

Beer Table / n/a

Metropolitan Transportation Authority / n/a

The beer retailer signed a seven-year lease for space in Grand Central’s Graybar Passage.

1213 Lexington Ave

250

Barber Shop / Sam Mann, Winick Realty

Trans World Equities / n/a

The barber shop signed a lease.

Buys Address

Size

Buyer / Representative

Seller / Representative

Notes

601 West 26th St

2.2 million sf office bldg

RXR Realty / n/a

Shorenstein Properties / n/a

The Starrett-Leigh building sold for $900 million, or about $409 per square foot.

229 West 43rd St

Office condo portion

Blackstone Group affiliates / n/a

Africa Israel USA; Five Mile Capital Partners / n/a

The office-condo portion of the building sold for $160 million. The office space includes floors five through 16 and a portion of the fourth floor.

189 West 89th St

20-story apt. bldg

LaSalle Investments / n/a

Related Companies / Douglas Harmon, Eastdil Secured

The Sagamore sold for $140 million.

1140 Sixth Ave

22-story, 236,000 sf office bldg

Blackstone Group affiliates / n/a

Landesbank BadenWürttemberg / A. Scandalios, W. Wilcox, J. Julien, HFF

The loan secured by the property’s leasehold interest sold for $98.25 million.

15 Little West 12th St

5-story, 70,000 sf office bldg

Epic / n/a

Taconic Investment Partners; Square Mile Capital / n/a

The property sold for $70 million. A furniture firm occupies 32,000 square feet at the building’s base, and Palantir Technologies has the penthouse.

126 Water St

26-story hotel, 112 rooms total

Hersha Hospitality subsidiary / n/a

McSam Hotel Group / n/a

The Holiday Inn Express sold for $36.7 million.

408 Broadway

70,000 sf office bldg

United American Land / Justin DiMare, Newmark Knight Frank

Capmark Bank; Vanick Properties / Nat Rockett, C&W

The mortgage and deed on the property sold for $28.7 million.

62 Wooster St

Development site

Jeff Greene, Florida Sunshine Investments / n/a

n/a / n/a

The building sold for $26.27 million. A conversion had been planned for the property but the lender foreclosed on it last year.

114 West 86th St

16-story apt. bldg

Robert Gilardian / n/a

n/a / n/a

The property sold for $20.1 million, or about $400 per square foot, in a bankruptcy auction. The price represents a gross rent multiple of about 20.

82 June 2011 www.TheRealDeal.com

Buys continued Address

Size

Buyer/ Representative

Seller / Representative

Notes

521 Amsterdam Ave

7-story, 20,370 sf apt. bldg, 30 units total

175 West 85 Realty LLC / Matthew Slonim, Besen & Associates

Touro College / Michael Besen, Besen & Associates

The elevator building sold for $13 million, or $638 per square foot. The price represents a gross rent multiple of 12 and a capitalization rate of about 5.8 percent.

1800 Park Ave

Development site

Vornado / n/a

California Urban Investment Partners / n/a

Vornado bought out its partners in the stalled Harlem Park development site for $11.85 million.

1032-1034 Lexington Ave

3-story, 11,960 sf retail bldg

n/a / n/a

n/a / Guthrie Garvin, Massey Knakal

The property sold for $10.2 million, or $1,187 per square foot.

182-184 Spring St

2-story comm. bldg

Foreign buyer / n/a

n/a / Nick Spanos, Bapple Real Estate

The property sold for $10.1 million.

137-139 West 25th St

5 office condos, 29,700 sf total

Micropower USA / n/a

Publicly traded Fortune 500 company / R. Burton, B. Emmetsberger, Massey Knakal

The five vacant, contiguous office condo units on floors five through nine sold for $10 million, or $337 per square foot.

909 Avenue T and 2530 Ocean Ave (Brooklyn)

Two 4-story apt. bldgs, 76 units total

n/a / J. Blatter, A. Jungreis, Rosewood Realty

Skyline NYC LLC / J. Blatter, A. Jungreis, Rosewood Realty

The walk-up buildings sold for $8.45 million. The price represents a gross rent multiple of 9.5.

508 West 20th St

Development site

Sherwood Equities / n/a

n/a / n/a

The stalled development site sold for $7.3 million. The buyer is looking to take advantage of a special city zoning rule that would allow the transfer of the air rights to other West Chelsea properties.

25 West 23rd St

7,100 sf mixed-use bldg

Pan Brothers Associates / Anand Melwani, ARM Real Estate Group

Regal Investments / Jasper Socia, Independent Properties

The property sold for $5.65 million.

1104 Carroll Pl (The Bronx)

5-story, 70,220 sf apt. bldg, 79 units total

n/a / Lynda Blumberg, Besen & Associates

1104 Carroll Place Associates LLC / Amit Doshi, Besen & Associates

The walk-up building sold for $5.55 million, or $79 per square foot. The price represents a gross rent multiple of 7.6.

252-54 10th Ave

Two 4-story mixeduse bldgs, 7,584 sf total

n/a / n/a

n/a / B. Emmetsberger, J. Nelson, Massey Knakal

The properties sold for $5.15 million, or $679 per square foot.

207 West 75th St

2-story, 5,025 sf comm. bldg

n/a / n/a

n/a / Paul Smadbeck, Massey Knakal

The property sold for $5.03 million, or about $1,000 per square foot.

112-20 14th Ave (Queens)

2-story, 35,570 sf warehouse bldg

n/a / n/a

n/a / Stephen Preuss, Massey Knakal

The property sold for $4.8 million, or $135 per square foot.

1901 Grand Concourse (The Bronx)

6-story, 46,437 sf apt. bldg, 57 units total

Stuart Morgan / Aaron Jungreis, Rosewood Realty

1901 GC Corp. / Aaron Jungreis, Rosewood Realty

The elevator building sold for $4.65 million. The price represents a gross rent multiple of 7.6.

1973 Amsterdam Ave

34-unit apt. bldg

n/a / n/a

Private investor / P. Vond Der Ahe, S. Edelstein, Marcus & Millichap

The property sold for $4.3 million. The price represents a gross rent multiple of 8.6 and a capitalization rate of 6.4.

65-69 North 6th St (Brooklyn)

Development site

Silverstone Property Group / n/a

n/a / n/a

The stalled development site sold for $4.3 million. The property will be developed into a 40,000-square-foot building with 28 residential units and 4,100 square feet of retail space.

171-173 West Broadway

5-story, 6,500 sf mixed-use bldg

International buyer / n/a

n/a / Nick Petkoff, Massey Knakal

The property sold for $4.2 million, or $640 per square foot.

105 Avenue C

5-story apt. bldg, 9 units total

n/a / George Niblock, FriedmanRoth Realty Services

n/a / Nadeem Haque, Friedman-Roth Realty Services

The property sold for $2.82 million.

397 1st St (Brooklyn)

4-story, 8,800 sf apt. bldg, 9 units total

n/a / n/a

n/a / K. Freeman, M. Flanagan, Massey Knakal

The property sold for $2.58 million, or $293 per square foot.

45 Canal St

2,800-sf mixed-use bldg

n/a / n/a

Private investor / P. Von Der Ahe, C. Sjurset, M. Fotis, Marcus & Millichap

The property sold for $2.35 million.

87 Hudson St

Retail condo

Seong Ji America Inc. / Ben Ryu, Exit Realty Landmark

Girolle Inc. / Lansco Corp.

The commercial condo sold for $2.1 million. The space will be used for an ethnic restaurant concept.

26-07 18th St (Queens)

4.5-story apt. bldg, 7 units total

Plata LLC / n/a

Kevin Hernandez / Rubin Isak, Falco & Isak Realty Services

The property sold for $2 million. The price represents a gross rent multiple of 14.1 and a capitalization rate of 6.1 percent.

167 West 21st St

4-story, 2,400 sf office bldg

n/a / n/a

n/a / Brock Emmetsberger, Massey Knakal

The commercial loft building sold for $1.92 million, or $800 per square foot.

531 Graham Ave and 106 Engert Ave (Brooklyn)

Two 3-story bldgs

n/a / n/a

n/a / M. Lively, B. Maddigan, Massey Knakal

The properties sold for $1.75 million, or $197 per square foot.

2000 Grand Concourse (The Bronx)

5-story apt. bldg, 16 units total

n/a / n/a

n/a / Richard Guarino, ERG Property Advisors

The walk-up building sold for $1.14 million.

474 60th St (Brooklyn)

8-unit apt. bldg

Private investor / Bruce Thomsen, Marcus & Millichap

The property sold for $1.05 million, or $155 per square foot.

191-193 Huron St (Brooklyn)

11,000 buildable sf development site

Local developer / n/a

n/a / Melissa DiBella, TerraCRG

The residential development site sold for $1.05 million, or about $105 per buildable square foot.

70 West 36th St

Office condo

Golden Horse Enterprise / Esther Zar, Murray Hill Properties

Condominium Board of Directors / Time Equities

The office condo unit sold for just under $1 million.

Financing Address

Size

Borrower / Representative

Lender / Representative

Notes

3 Columbus Circle

26-story, 768,565 sf office bldg

SL Green / n/a

The Bank of China / n/a

A new five-year $260 million loan was provided to refinance the building. The mortgage has an earn-out option that increases the loan up to $300 million after certain performance thresholds are reached. The $250 million acquisition bridge loan originated in January 2011 by SL Green and Deutsche Bank was also repaid.

West 60s and West 80s

Apt. bldg portfolio

n/a / Doug Chitel, Winter & Co.

n/a / n/a

An $8.5 million first mortgage was arranged to refinance the properties.

419 East 57th St

91-unit apt. bldg

419 Apartment Corp. / n/a

NCB / n/a

A $3 million line of credit was arranged for the building.

250 West 103rd St

76-unit apt. bldg

Alexandria House Inc. / n/a

NCB / n/a

A $2.5 million first mortgage and a $500,000 line of credit were arranged for the building.

396 Bleecker St

36-unit apt. bldg

Bleecker and 11th Owners Corp. / n/a

NCB / n/a

A $1.2 million first mortgage and an $800,000 line of credit were arranged for the building.

www.TheRealDeal.com June 2011 83

Financing continued Address

Size

Borrower / Representative

Lender / Representative

Notes

84-49 168th St (Queens)

120-unit apt. bldg

84-49 Owners Corp. / n/a

NCB / n/a

A $1.7 million second mortgage was arranged for the building.

2390 Palisade Ave (The Bronx)

59-unit apt. bldg

2390 Palisade Avenue Owners Corp. / n/a

NCB / n/a

A $1.4 million first mortgage and a $300,000 line of credit were arranged for the building.

84-51 Beverly Rd (Queens)

129-unit apt. bldg

The Beverly House Inc. / n/a

NCB / n/a

A $1.5 million line of credit was arranged for the building.

39-75 56th St (Queens)

51-unit apt. bldg

39-75 56th Street Owners Corp. / n/a

NCB / n/a

A $1.3 million first mortgage and a $150,000 line of credit were arranged for the building.

177-179 Columbia Heights (Brooklyn)

29-unit apt. bldg

177 Columbia Owners Corp. / n/a

NCB / n/a

A $1 million first mortgage and a $300,000 line of credit were arranged for the building.

184 Columbia Heights (Brooklyn)

17-unit apt. bldg

184 Columbia Heights Inc. / n/a

NCB / n/a

A $900,000 first mortgage and a $100,000 line of credit were arranged for the building.

Other Deals Condé Nast finalizes $2B lease for 1 WTC Condé Nast finalized its lease of 1 million square feet of office space at One World Trade Center, guaranteeing the 1,776-foot-tall tower an anchor tenant. According to the New York Times, Condé Nast’s annual rent for the 20th through 41st floors in the building will start in 2014 at a little more than $60 per square foot, about equal to what it currently pays at 4 Times Square. Over the course of the 25-year lease, the publisher will pay the Port Authority of New York & New Jersey, which owns the site, $2 billion. But the Port Authority offered several incentives — including agreeing to pay the rent between 2014 and 2019 on Condé Nast’s current lease and promising $46 million in rent rebates over 17 years — to land the media giant. (The deal was announced after the deadline for the Deal Sheet.)

SL Green takes back 110 East 42nd Street SL Green last month took back control of a 207,000square-foot office building at 110 East 42nd Street between

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Lexington and Park avenues that it sold to Gotham Realty Holdings for $111.5 million in 2007, according to Crain’s. It acquired a minority stake in the property for an undisclosed figure as part of a debt restructuring process, a spokesperson for SL Green said. It’s possible that the building could expand to connect with adjacent 125 Park Avenue, an SL Green-owned property since 2010. Two floors are already connected, providing tenants with more flexible open plan floors. (The deal was announced after the deadline for the Deal Sheet.)

CW Financial acquires Rockwood CW Financial Services, best known in the city as the parent company of CWCapital Asset Management, will acquire Manhattan-based boutique investment bank Rockwood Real Estate Advisors, sources told Crain’s last month. Formerly known as DTZ Rockwood, the firm provides real estate advisory services, portfolio brokerage and debt and equity restructuring, according to its website. As The Real

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Deal previously reported, Rockwood filed for Chapter 11 bankruptcy in 2009, two years after advising Mann Realty Associates on its $426 million purchase of the Apthorp. Over the last three years the firm has been involved in about $20 billion worth of real estate assets. Crain’s said the move helps CW expand its reach while providing the cash needed to help Rockwood become more competitive. The deal was not final as of mid-May and the terms remain undisclosed.

Radisson Lexington sells for $335 million DiamondRock Hospitality last month was finalizing a deal to purchase the 712-room Radisson Lexington Hotel at 511 Lexington Avenue between 47th and 48th Streets for $335 million, or $470,000 a room, according to the Wall Street Journal. That’s a step up from the $443,700 per room that RLJ Development paid for the 775-room Double Tree Metropolitan hotel three blocks north in December. (The deal was announced after the deadline for the Deal Sheet.) TRD

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Like a fine Bordeaux, The Real Deal has only gotten more robust with age. However, you don’t need to be an expert to recognize our perfect blend of commercial, residential, new development and financial news, but you may be by the time you’re done. It’s also a widely known fact that the average reader of The Real Deal has an excellent palate.

Real estate news for the smart and savvy. 84 June 2011 www.TheRealDeal.com

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Owner/Manager:

Savanna

from page 24

office building that Savanna acquired in December 2010. As part of that deal, Savanna bought the fee ownership from Chedward for $89 million, and the long-term net lease from Statecourt Enterprises for $46 million, according to real estate data provider Propertyshark.com. Savanna, with a relatively small staff of 17 professionals, looks and acts like few other real estate funds in the business today. “They’re unusual because not only are they private equity fund managers, but they’re also long-term owners and operators, and they understand what that means,” said Herrick, Feinstein attorney Laurie Grasso, who has represented Savanna for the past 15 years. Instead of simply foreclosing on the debt they’ve acquired, she noted, Savanna tries to work out deals with the prior owners and operators to keep them in the property as managers, in part because judicial foreclosures can take 18 to 24 months in New York, wasting precious time and money. Schlank, 44, and Bienstock, 45, first met each other as teenagers growing up in Manhattan, and both received master’s degrees from Columbia University’s School of Architecture. Schlank then became a project manager at the Westside Federation for senior housing, a nonprofit developer for low-income residents. He founded Savanna Partners at the height of the early-1990s real estate crash in New York, focusing on developing and repositioning small- to medium-size residential buildings. Bienstock, meanwhile, got his MBA and worked for Chemical Bank and Capital Trust before joining his old friend Schlank at Savanna in 1999. In 2006, Savanna launched its first private equity fund, a $313 million vehicle, with plans to buy more than $1 billion in new investment and development projects. The fund focused on a range of mezzanine debt purchases, joint-venture deals and direct acquisitions. Savanna and a joint-venture partner, New York-based Hudson Realty Capital, in 2008 sold their 1.3 million-square-

foot Bristol Business Center in Bristol, Conn., for a record $60.5 million, doubling the purchase price after just one year of ownership. The owners had extended 600,000 square feet of long-term leases to tenants ranging from Firestone Building Products and Arett Sales to Clark Steel. But in an increasingly frothy market, the firm decided to put the brakes on potential new deals. In 2008, Savanna agreed to buy 282 acres of land near Stewart International Airport in Newburgh, N.Y., with plans to develop a project called Hudson International Business Center, a 1 million-square-foot distribution complex plus a 60-room hotel. The deal, which was contingent on obtaining regulatory approvals from the local municipality, never closed. Bienstock said Savanna is now in talks with the property’s current owners to restructure the terms of the deal if they are able to get those government approvals. One of Savanna’s most innovative deals, industry insiders said, was 104 West 40th Street. The firm acquired the defaulted first mortgage from ING USA, and waded through a minefield of legal disputes between the previous owners, Manhattan-based Mermel & McClain and Principal Real Estate of Iowa, which bought the building in 2007 for $140 million, according to court records. According to documents filed in New York State Supreme Court, Mermel & McClain accused Principal of failing to make a $14 million capital contribution and working out a secret deal to sell the 210,000-square-foot property and orchestrate a “short sale” to Savanna. Principal, in court documents, alleged that its partner never submitted a valid business plan. Lawyers for Mermel & McClain declined comment. The loan-to-own acquisition, led by Kevin Chisolm, managing director of the Savanna Real Estate Fund, was considered so innovative that he provided a case study to college students at the Columbia Business School in December 2010. Savanna is now offering a full floor of pre-built office space, designed by architect Robert Finger of the firm Fogarty Fin-

ger, in the building for lease. The 6,610-square-foot space on the 19th floor includes eight full suites, two executive offices overlooking Bryant Park, a conference room, reception area and pantry. Mitchell Konsker, vice chairman at Jones Lang Lasalle, says that Savanna is very hands-on in their approach to working with tenants and investing in new acquisitions, noting that Schlank and Bienstock will personally sit down with the principals of a prospective tenant to get a deal done. “They infuse capital into the buildings, and they always have a long-term view,” Konsker told The Real Deal. “They’re in with the tenants; they’re in with the brokerage community.” Savanna has also recently acquired 2 Rector Square, where developer Laurence Gluck of Stellar Management faced a $110 million foreclosure suit from Bank of America in July 2010, a year after the city’s Department of Transportation vacated a 72,000-square-foot space in the building. Savanna “purchased a B-note at a discount from Wachovia when they were trying to generate cash at a moment of financial crisis,” Schlank said. Savanna provided Gluck a mezzanine loan to help Stellar pay for the costs of bringing new tenants into the building. More than 65,000 square feet of leases have been signed since then, with asking rents in the mid-$30s per square foot. New tenants include Five Star Electrical, which agreed to lease 18,000 square feet, and NEE Consulting, a Manhattan-based accounting firm, which agreed to relocate from 40 Rector under a 4,000-square-foot lease that runs for more than 10 years. “Having worked with Savanna to successfully recap 2 Rector Street, we have firsthand knowledge of their technical skills and ability to bolster the financial stability of an individual asset,” Gluck said in an e-mail. “Beyond 2 Rector, Savanna has also proven to be one of the most opportunistic investment and development firms in the New York City market today by identifying and unlocking value from a host of complex deals.” TRD

and events, as well as residential sales and rental listings. “Our approach is more targeted than most brokerages,” Gellin said. “We believe that engaging people on social media platforms encompasses more than simply driving unintentional traffic, and attracting artificial followers or fans.” They’ve also incorporated technology, science, mathematics and even physics into the venture. “When we take buyers or clients into apartments, we are able to tell them things that no other company can,” Shemel said. For example, he said, the firm directed its agents to keep track of sunlight in the apartments they market, to give clients “reasonable estimates” of how much direct sunlight they can expect to receive.

“We chart sunlight so that they may know how much sun they will really get,” Shemel noted. The firm also assesses traffic patterns and decibel counts so clients will know how noisy their apartments may be. Plus, “we teach our agents about the physical structure of apartments and buildings, and how to research buildings for hidden issues that may present issues to the client down the road,” he said. The firm has recently been expanding its ranks, hiring Jaclyn Boulan, formerly of the Related Companies, as president of sales. (Think’s Florida project is named for her.) The company now employs a total of 16 people between New York and Miami, Vardi said. TRD

dos can’t impose ﬂip taxes, but some do charge something similar. Cholst says he calls these fees, which go to the building’s reserve fund, the “‘Welcome, Stranger’ tax,” and that they’re becoming more and more common thanks to the downturn.) Even a couple thousand dollars’ worth of additional fees probably isn’t going to derail a sale, but rising fees can certainly cause renters and subletters to reconsider. Donna Olshan, president of Olshan Realty, said she recently placed a client in the Biltmore rental tower in Times Square after discovering that the application fee for renting in the Upper East Side’s Continental Towers condo was upward of $2,000 — not to mention that the application was also going to take at least a month to process. Because inﬂated up-front fees shrink the pool of po-

tential tenants, apartments in condos and co-ops are taking longer to rent than in the past, Levan said, adding that studios are getting hit particularly hard because their occupants tend to have less disposable income. “This phenomenon puts a further rift between occupying owners and investor-owners, by making renting more difﬁcult,” Levan said. In some cases, though, that’s the intention — or at least a welcome side effect. “I’m starting to see condominium [boards] coming to me and asking how they can increase fees to diminish the likelihood that somebody will use the apartment like a hotel,” Wagner said. “There are apartments where there seems to be a turnover every several weeks in Midtown , and they don’t want that anymore.” TRD

Think Properties from page 52 plex booking algorithm. … This allows us to achieve much higher occupancies and greater revenues.” Think also offers concierge services through a partnership with Abigail Michaels Concierge, and all clients who complete a rental or sales transaction with Think receive a free one-year Abigail Michaels membership. But the company’s approach has other unconventional elements. The four partners, who now range in age from 27 to 31, wanted a slice of the youth market, so they launched the website Think DCN Realty for college communities around the country. The social media-based site, which they call “a lifestyle platform,” lures students with information about sports, music

Management fees from page 62 “Move-in fees, move-out fees, administrative fees, processing fees, call-it-what-you-will fees, but they’re fees,” Shmulewitz said. “It’s sort of like what banks did when interest rates started to fall for financing transactions. They started imposing all sorts of different fees, in different names, on borrowers.” According to Shmulewitz, a move-in or move-out fee can be as high as $1,000 and is little more than a “revenue-raising device” for the board — unlike refundable deposits, which are used to cover any building damage caused by the move. Bruce Cholst, a partner at Rosen Livingston & Cholst, said co-op boards are also considering increasing flip taxes — a transfer fee paid by sellers — as a way to raise revenue, while condo boards are now showing a renewed interest in imposing flip taxes for the first time. (Technically, con86 June 2011 www.TheRealDeal.com

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Shadow inventory

from page 16

sales manager. But only 36 of the remaining units are listed as available on the building’s website, which means some 180 units could be considered shadow units. Berzak said the building doesn’t stagger releases of the units, but is instead converting the units as renters leave, which has a similar effect. Deborah DeMaria, a Warburg Realty sales director representing 20 Pine: the Collection, said some 93 percent of the units at the condo have been sold, leaving 28 units — eight of which are in contract. Of the remaining 20, DeMaria noted that only 10 are on the market. Confusing matters further, brokers in some neighborhoods are complaining because they feel there’s too little inventory on the market to satisfy apartment-hunting clients. In Greenwich Village, the Upper West Side, Brooklyn Heights, Cobble Hill and Park Slope, brokers feel there is “no inventory,” Kliegerman said. Even in some neighborhoods assumed to have high amounts of shadow inventory, like Williamsburg, prices are back up to 2007 levels, he said. “Look at Williamsburg — everyone talked about how overbuilt it was,” Kliegerman said, but noted that Two Northside Piers is “selling in the mid- to upper-$600s to

almost $900 per square foot. The Edge is even higher.” As of press time, there were 434 new development units listed as available for sale in Williamsburg, according to StreetEasy, but Miller said there are likely a lot more. To see evidence of Williamsburg’s shadow inventory, “all you have to do is drive at night,” Miller said. Highlyann Krasnow, a partner at the brokerage MNS who is heading sales at the Edge, said 57 percent of the building’s 565 units have been sold. That leaves around 243 units still available. At Northside Piers, the ﬁrst tower’s 180 units are completely sold, according to David Von Spreckelsen, a senior vice president at Toll Brothers, the building’s developer. The second tower’s 270 units are approximately 65 percent sold, he said, leaving around 100 units of inventory. Yet from this combined unsold inventory of roughly 343 units, StreetEasy lists just 58 units on the market — 25 at Two Northside Piers and 33 at the Edge. This perceived inventory shortage is partially responsible for driving prices back up in Brooklyn, particularly in Williamsburg, according to David Behin of MNS. “It’s not up to the peak [prices of 2008], but Williamsburg has

gone a lot higher than anybody expected it to,” he said. More confusingly, some of the shadow inventory is still being sold. Krasnow noted that though the building’s website lists only some of the available units, their team shows prospective buyers any available unit. The uncertainty about inventory makes it difficult to plan for the future. The last phase of the Two Northside Piers development, for example, is for a third tower with 400 units. Though Toll Brothers had the option to develop this tower in their initial agreement, Von Spreckelsen said they have decided not to because of concerns about Williamsburg’s inventory levels. A third tower is also planned for the Edge, but development won’t begin until the second tower is completely sold, Krasnow said. With so many factors in flux, consumers, brokers and developers will have to continue guessing how many New York apartments are really available. Shadow inventory is “definitely one of the things that a buyer should be aware of,” said Sofia Song, head of research at StreetEasy. Unfortunately, the concept is, by its nature, “murky and nebulous and … shadowy,” she added. “If we really knew how much was out there, it wouldn’t be shadow inventory.” TRD

“Generally, there are not a lot of options for large spaces [in Midtown South],” he said. In Midtown South, the average asking rent rose by $0.69 per square foot in April to $43.41 per foot, and the availability rate dropped sharply by .4 points to 11.1 percent, CBRE statistics showed.

Keeping downward pressure on rents are still-significant blocks that Merrill Lynch is expected to give up in the World Financial Center, as well as Goldman Sachs’ former headquarters at 85 Broad Street, which remain mostly vacant. “Downtown still has more inventory. There is still a lot of lower-cost bulk space that has to be taken,” Goldstein said. “It takes a lot of absorption to move the needle.” However, in a mark of confidence in the market, Jones Lang LaSalle recently listed an asking rent at 85 Broad Street of $47 per square foot, Fiddle said. The average asking rent Downtown was $38.68 per square foot, down $0.65 per foot in April from the prior month, but in a positive sign, the availability rate fell by .2 points to 13 percent. That is the lowest level since peaking at 15 percent in June 2010, CBRE figures show. TRD

Commercial market from page 22 Newmark Knight Frank, and is listing ﬂoors ﬁve, seven, eight and nine, as well as 14 through 18. Other large blocks on the market are 132 West 31st Street, where about 127,000 square feet was listed earlier this year, and 320 West 31st Street, where about 173,000 square feet was listed in the first quarter of the year. John Picco, executive director at Cushman & Wakefield and part of a team leasing the space at 132 West 31st Street, said the five floors were not yet available. Instead, he noted that the landlord was working to assemble them as a large block composed of 25,300square-foot floors, which are now occupied by several different tenants. The landlord has also been in negotiations with a possible tenant, but Picco would not elaborate. He said the space was attractive to schools and office users, among others.

Downtown While the move by Condé Nast to the World Trade Center will have repercussions beyond the office space from its style-setting tenant, the lease in itself does not have a large impact on the market, still the weakest in Manhattan. The discount between asking rents Downtown and in Midtown makes the move attractive, Picco said, noting recent deals like law firm WilmerHale at 7 World Trade Center, and American Media at 4 New York Plaza. “I think we’ll see more of that,” Picco noted.

Zell from page 36 looking to cut corners on their projects in New York.”

Neighborhood hot spot Zell is only the latest big-time New York developer to bet on the area around the High Line. Iman Bacodari, vice president and associate broker for the Jacky Teplitzky team at Prudential Douglas Elliman, said many of the boutique condos in the West Village and Chelsea markets have sold out, and there are relatively few options for renters in the area. “A building like 500 West is a welcome addition,” said Bacodari. Janine Young, a salesperson at Bond New York, said demand for rental apartments along the High Line has been strong since last summer, as landlords have attracted new tenants with generous concessions. (Equity Residential declined to say whether it plans to offer concessions at 500 West 23rd Street.) “The apartments at the Caledonia and other buildings just ﬂy off the market,” Young said. “It’s kind of like a new frontier in a lot of ways for Manhattan.”

88 June 2011 www.TheRealDeal.com

Equity Residential, the biggest residential landlord in the U.S., has been on an acquisition spree in Manhattan, rapidly increasing its presence to compete with some of the dominant residential players in New York, including the Related Companies, Extell Development Company, TF Cornerstone and others. Weeks after acquiring 500 West 23rd, Equity closed on two acquisitions and agreed to buy a third property from real estate mogul Harry Macklowe for a total of $475 million. The two closed acquisitions included River Tower, a 38-story property at 420 East 54th Street, and 777 Sixth Avenue, a 294-unit tower at the corner of 27th Street. As part of the third acquisition, Equity agreed to buy Longacre House, a 293-unit tower on 50th Street in Manhattan. Those acquisitions gave Equity Residential a total of 26 residential buildings in New York, including some 7,320 units. Equity is still trying to recover from the economic slump, however. Recent ﬁlings with federal regulators show that the company’s net operating income in the New York market is down 3.1 percent from last year, based on an average

rent of $2,928, and average occupancy of 95 percent. Still, despite the lingering concerns about the economy, Equity officials say the New York market is gaining in strength. Mark Parrell, chief financial officer at Equity Residential, told analysts during the first-quarter conference call that concessions are down citywide due to increased demand from prospective tenants. “There’s little new supply coming into New York this year or next; the brokers’ fees [paid by building owners] are pretty much all gone,” Parrell told analysts. TRD CORRECTIONS A N D C L A R I F I C AT I O N S An article in the May issue, “A new ‘Reade’ on the market,” incorrectly stated that a building neighboring Reade57 collapsed in 2009. That building was down the street and did not impact Reade57.

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Elliman

from page 47

“our costs to agents are less than the competition.” Indeed, Corcoran’s fees are slightly higher on an annual basis — more than $2,000 a year, versus just under $2,000 a year for Elliman, brokers familiar with both firms said. However, brokers complained that Elliman’s fees can seem randomly applied. For example, large teams of agents pay the same desk fee as brokers who work alone, which unfairly punishes those without teams, brokers point out. Also, these fees might be small change for top producers, but many say it’s the principle that counts. Brokers noted that some other agencies, like Brown Harris Stevens, don’t charge extra fees at all. At the same time, brokers said they have seen budgets sliced. One former agent said that he was told the firm would no longer pay for his two assistants and “blamed it on sales dynamics and sales volumes and Lehman Brothers.” He ended up shelling out for most of the assistants’ salaries out of his own pocket, which prompted some self-reflection. “I thought, ‘What the hell am I doing here?’” he said.

High-profile defections Though frequently the subject of rumors about her own exit, Elliman’s top agent, Lenz, said she is staying put. But other brokers who have recently left Elliman are also names that often grace top-producer lists. They include Bracha; Shemesh, who went to Corcoran; and Vickey Barron, who departed for the boutique brokerage Core, headed by Elliman alum Shaun Osher. Efraim Tessler, the son of Yitzchak Tessler, developer of 240 and 260 Park Avenue South, joined Bracha at Keller Williams last month. Many of these agents regularly cracked Elliman’s top 10, either as individuals or as teams. Bracha was No. 1 and Tessler No. 2 in terms of commissions in 2008, for example. These brokers mostly stayed mum about conditions at Elliman and cited boilerplate “new opportunities” as their reason for leaving. “Sometimes when you are in the same place for many years, you want to try something else,” said Shemesh, who took his six-member team with him. In response to questions about problems at Elliman, he said: “You will always see happy and unhappy people. I see it at Corcoran, too.” Other agents who have departed in the last few months include Laurie Bloomfield, who went to Corcoran, and Robert Dvorin, who went to Town Residential. Ronald Tardanico, an executive vice president and manager of Elliman’s 980 Madison Avenue office, also confirmed to The Real Deal that he has left, though he declined to talk about his reasons. Some said personality clashes between agents and higher-up managers have played a part in some departures, like that of Jay Flagg, the erstwhile manager of Elliman’s Southampton office. After 11 years with the firm, Flagg left last year after he was demoted for running a magazine advertisement he was told didn’t conform to company standards. Flagg said the ad was approved by the firm before it ran, and attributed the demotion to a personality dispute with Lorber. Elliman, for its part, has denied this. Flagg, who is now with Hamptons brokerage Saunders & Associates, said that Elliman takes an inconsistent approach to supporting its agents, noting that the firm pays for pricey print ads for some agents and forces others to cover advertising costs themselves. In addition, he was responsible for finding his own photographers for those ads, which was a chore, said Flagg, whom the Wall Street Journal once listed as among the country’s top 50 agents. At Saunders, on the other hand, there are three photographers on staff. Finally, a remodel of Elliman’s Southampton office had been promised since 2008, but never happened, Flagg not90 June 2011 www.TheRealDeal.com

they’re a team culture,” she said. Moving away from the top-producer strata, meanwhile, critics complain that the firm hires lackluster agents merely to fill its large offices and ensure that the rent is paid. Some statistical evidence does appear to support that trend. According to The Real Deal’s analysis, the number of Elliman Sifting the data agents with at least one $10 million-plus listing dropped 26 By the overall numbers, Elliman doesn’t seem to be doing badly. In fact, it posted a 3 percent gain in the number of percent between 2010 and 2011. agents in the last year, from 1,462 to 1,506, after a 3 percent Meanwhile, 70 percent of Elliman’s brokers have no active drop from 2009 to 2010. residential listings, which is up 15 percent from a year ago. And in The Real Deal’s 2011 rankings of East End firms, Certainly there are firms with far more brokers in this Elliman is number one in the Hamptons; it had 320 agents category: At Bond New York, for example, 97 percent of brolast year, versus 319 this year. kers have no active sales listings, the data shows. Of course, But the fact that so many of the departed agents were since many of Bond’s agents focus on rentals, the contrast may not be the most apt; a fairer point of refThe Big Two, by the numbers erence might be Corcoran, where 48 percent of the brokers currently have no active sales Elliman Corcoran listings. No. of agents 1,506 (+3%) 1,057 (+1%) The differential, sources said, indicates Aggregate listing value $2.6 billion (-30%) $3.5 billion (-12%) that Corcoran is choosier about the brokers it hires (or at least more likely to fire nonproNo. of Manhattan listings 1,320 (-34%) 1,815 (+2%) ducing brokers). Source: TRD analysis as of May 2011; percentage changes are compared to May 2010. Elliman, meanwhile, defended its numbers top producers, who often took home awards from Elliman’s as reflecting a new strategy: encouraging brokers to avoid annual February dinner, is what counts, industry observ- taking on overpriced listings with little chance of selling. ers said. What’s more, their leaving is worrisome to those con- Image change cerned about the firm’s drop in listing volume. Herman does not dispute that her firm is in the midst of Besides its 34 percent drop from 2010 to 2011, Elliman changing its image. It hired an outside marketing team and spent more than saw a 14 percent drop in total listings between 2009 and $1 million to redesign Elliman’s website, which launched to 2010, from 2,342 to 2,010, according to The Real Deal’s analmuch fanfare last fall. To boost Elliman’s social media presysis. Corcoran also saw a 10 percent drop during that time ence, it hired Doherty, an alum of StreetEasy, the online listperiod, from 1,981 to 1,784 listings. However, as pointed out ings service. above, it posted a gain from 2010 to 2011, rebounding 2 perAlso, last month, the company’s quarterly market reports cent to 1,815 listings, currently the most in the city. bore the title “The Douglas Elliman Report” for the first time. Indeed, Bracha alone had hundreds of millions of dollars The word “Prudential” appears only lower down on the title of listings when he left Elliman, though not all of those list- page, adding to rampant suspicion that Elliman is planning ings moved with him to Keller Williams. to dump its national parent. Herman, meanwhile, said that the talk about defections is Herman said such speculation is premature, since the overblown, because brokers come and go all the time. She also firm’s licensing agreement with Prudential, an insurance suggested that she hadn’t seen the last of some of them. company, is firmly in place through 2014. “I wish everybody well, and if they are happy with where “Prudential Douglas Elliman is such a long name,” she they are, so be it,” Herman said. “I don’t want to buy agents — said, by way of explanation for the report title change. Casting off national ties and refocusing on local markets I want them to want to be here,” she added. “I put my money on the fact that some of those people will be back.” might help Elliman shore up its ranks, say critics, who argue the firm has spread itself too thin with offices in Westchester Moving from mega and Florida. Changes in the industry may also be also responsible for the While Elliman’s image may be undergoing a retooling, turnover at Elliman. the makeover is not necessarily going smoothly. Critics have Olga Alexakos, who left Elliman in March 2010 after an blasted the firm’s new website, whose launch was delayed for eight-year stint, touched down briefly at Core, and is now months, as being too unwieldy. at Keller Williams, which gives all of its agents a 70 percent “It’s not easy to navigate and there are lots of bugs in it,” commission split and opportunities for profit-sharing. said a former broker. “And since this is where most of [the] When she began her career in the 1990s at the now-de- leads come from, that’s a problem.” funct Greenwich Village firm Swift and Watson, Alexakos Of course, not all of Elliman’s top producers are jumping recalled, the city was full of mom-and-pop-type boutiques, ship. And the recent big-gun hires — like Bolla, from Luxury which vanished with the rise of the Corcoran Group. Lofts & Homes, Eklund and Gomes from Core, and Mangone “There were no mega-companies until Barbara Corcoran from Brown Harris Stevens — are already bringing on business. As of late last month, the brokers had a combined 36 came around,” she said. These mega-companies have ruled the roost for the past listings valued at $167 million. decade. But Alexakos, who holds a Ph.D. in economics, arMangone, who started at Elliman in February, said he gued that the industry is undergoing a profound shift away joined the firm for precisely the same reasons that others from that model, which could explain Elliman’s current slam it: It’s big, it’s national, and it’s not a startup. Though tests. some brokers have criticized the firm’s new offices, Mangone “The real estate firms as we know them are changing,” approves. “They have a great distribution network,” he said, adding that Lorber is a “make-it-happen guy.” she noted. Though her commissions promise to be larger at Keller Also, he likes the vibe of the place. “I am driven,” said Williams than they were at Elliman, Alexakos said she feels Mangone, who denied his move had anything to do with a that it’s also a more nurturing environment than the larg- larger commission split. “And I like to work for people who er firm. “It’s very supportive, they’re big on education, and are constantly striving to be better.” TRD ed. “I think it’s an extremely dysfunctional organization,” said Flagg, who added that four other agents left Elliman’s Southampton office over the winter, which is a relatively large percentage.

Couples

from page 28

Harris Stevens, have been responsible for some of the priciest residential sales in the city’s history. For example, the duo was responsible for selling a triplex co-op at the Pierre in 1999 for $21.5 million, which Powers says was the biggest residential deal in New York in the 20th century. The pair’s big-ticket deals beyond that are legion, and include scores of multimillion-dollar sales at some of Manhattan’s premier addresses, such as the Plaza and the Time Warner Center. Powers says she came from a hotel management background before going into residential real estate; she says she and Sample, who became a couple and started working together at Brown Harris in the early ’90s, were drawn together in part because of their “mutual passion for real estate.” She says both of them are “very hands-on” with every deal they work on, and that there isn’t necessarily a division of labor with their clients. “If they’re European, maybe I’ll deal with them more,” she says. Powers traveled extensively while growing up and speaks ﬁve languages. She also says that outside of work, she and Sample share

similar hobbies: “She loves to work out, and I love to work out. Last year, we started learning how to surf.”

tephen Kliegerman, who heads up development marketing for Halstead, and Allie Baldassari, a mortgage banker at Wells Fargo, met after a speaking engagement she had at the Real Estate Board of New York. Baldassari had given a talk on long-term rate-lock products for new developments, and afterward, a broker who works with Kliegerman in his ofﬁce suggested Baldassari reach out to him, which led to the two working together on the Normandie, a condo in Harlem that Halstead was mar-

keting at the time. “She was out there dating, and I was thinking of friends of mine I could introduce her to, but then I was like, ‘Why should I introduce her to my friends? I should just date her myself,’” says Kliegerman. When they did marry, in 2007, a lot of their real estate colleagues attended, and Baldassari jokingly asked Wells Fargo if she could expense it. “Without hesitation, they said ‘no,’” she recalls. Both say that recounting their professional experiences to each other enhances their relationship, since they see different sides of deals, but they often have to maintain conﬁdentiality. Wells Fargo and Halstead formed a corporate partnership shortly after the two began dating, which means that Baldassari has been assigned to some of the projects Halstead has marketed since then. In those cases, “Allie gets conﬁdential information from her clients that she can’t discuss,” he says. Still, “we can have lively conversations about challenging situations” without naming names, Kliegerman says. TRD

mission on the deal at 24th and 10th, though he did acknowledge that he knew many of the owners personally in Chelsea, and that might have caused some confusion. Laurence Kaiser IV, the president of Key-Ventures Realty, says that Naman is a “gentleman.” “He is proper, he is knowledgeable, and he is a handshake type of guy,” Kaiser says. Despite any criticism, Zohar credits Naman with “having a vision.” “There are very few properties that he doesn’t know,” Zohar says. “He was aggressive, showing other people’s money in terms of trying to buy properties. … He was involved in the game way before the game started, so he knew the people.” Like the rest of the city, West Chelsea saw its share of ﬁnancial setbacks during the downturn. Just down the street from HL23 at 245 10th Avenue, the owners of a stainlesssteel 11-story condo were forced to bring in new investors after Citigroup ﬁled a foreclosure action amid lawsuits from unpaid contractors.

Greg Winter, president of W Financial — which records show gave Naman a $10 million mortgage on HL23 in 2008 — says the property, too, has “had some challenges,” but declined to elaborate. “I felt that the team of developers of Alf and his partners would be able to overcome any obstacles that they face, and in fact they [did],” Winter says. Naman downplays any talk of difﬁculties, noting that downturns are “just the nature of the business.” “I was very lucky to have a phenomenal partner who really believed in the project,” he says of Heher. Since the project was “built mostly with equity, we were able to withstand” the downturn. Any such setbacks, however, now seem like ancient history, with demand in Chelsea now red-hot. One 20,500square-foot building on the High Line sold for $7.4 million last month, a tidy spoke over the $6.2 million paid by buyers in 2007, says Zohar, who brokered the deal. But Naman is already looking ahead. He says he is close to closing deals on a new project in the neighborhood. TRD

8. 435 East 52nd Street

at $15 million, have had an even tougher go of it, possibly because of the litmus test buyers must undergo; it has sat on the market for two years. Still, there does seem to be enough demand to keep prices strong. In April, a two-bedroom sold for $4.775 million, according to StreetEasy, which was actually slightly more than its list price of $4.75 million. In general, for this kind of elite building, debt levels can matter as much as salary, brokers say. “If somebody has a house in the Hamptons with a $1 million mortgage, but they make $5 million a year, the board won’t care. But if someone has many properties, with $30 million in debt, they will care,” says Inez Wade of Stribling, who frequently sells in Uptown co-ops. Buyers should clean up any liens in advance, she adds. “If there’s some kind of legal judgment, that would characterize them negatively.” TRD Additional reporting by Kaitlin Ugolik

Stephen Kliegerman, president of development marketing, Halstead Property, and Allie Baldassari, private mortgage banker at Wells Fargo

Naman from page 34 that he is unethical, “but gets things done.” “I don’t think he is broker-friendly,” said one broker, who asked not to be identiﬁed. “He is really difﬁcult to work with.” Yaron Zohar, of Zohar Properties, notes that Naman attempted to bypass the brokers representing the owners of buildings he wished to buy, in order to avoid paying commissions. “I know he was trying to go after properties where I was strictly representing the owners, everybody knew it,” Zohar says. “But he would still approach the owner and try and deal directly with them, even if the owners said I was representing them.” Naman vehemently denies that. “We would never knowingly cut any broker out of a property, because that is how I made my living,” he says, “and if anything, I made sure brokers were given generous fees on buildings.” Naman noted that he paid a broker a $650,000 com-

Co-op boards from page 57 [see 2 East 67th Street] for $33 million. To finance that purchase, Safra, a Brazilian heiress, sold her penthouse apartment to Kenneth Griffin, a hedge-fund executive, for $40 million. Another financier who calls 820 Fifth Avenue home is Nils Tcheyan, a director at the World Bank. In the end, whom you rub elbows with on the cocktail-party circuit might be the factor that puts you over the top (or perhaps dashes your hopes), brokers say. Blau, whose employer is very close to Mayor Bloomberg, could have been sunk because he is too New York. In a twist, brokers say, co-ops sometimes like people who are far outside the city’s social orbits. “I think in some of the buildings, if the buyer ran a bank in Missouri, and were nice and quiet, they would be better off,” Kaiser says. “They don’t have to know every person in the Social Register.”

ar from Central Park’s leafy paths, River House, at 435 East 52nd Street, has held its own for years against Fifth Avenue’s castles. Apartments in the 260-plus-unit, 1931 Art Deco building have wood-burning ﬁreplaces and both butlers’ pantries and maids’ rooms, and many enjoy East River views. What it takes to buy here, where Henry Kissinger is a resident but Gloria Vanderbilt was rejected, is so particular, perhaps, it’s shrouded in secrecy, in what might be the tightest application of the Fight Club rule in Manhattan. Indeed, Eva Mohr, a Sotheby’s broker who is marketing a four-bedroom there for $14.5 million, declined to provide any purchasing ground rules, even though her listing has been on the market for more than a year. “I just can’t talk about this building,” she said. “I’m really sorry.” Other units, like a ﬁve-bedroom with private elevator vestibule, listed

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Troubled Williamsburg development the Modern sells for $2.9M By AdAm PinCus The slick Williamsburg residential building known as the Modern, originally designed by controversial architect Robert Scarano, sold last month for $2.9 million to a group of investors. The buying entity, called North 7 Acquisition LLC, paid $2.35 million for the note held by Hudson Valley Bank, which had a $3.3 million face value, and paid $575,000 for the property, according to Jonathan Wachtel, managing member of the seller, Lucky Boy Development. There was no broker in the deal. Brooklyn-based Lucky Boy developed the four-story building, located at 205 North 7th Street in Williamsburg, but ran into trouble as the economy soured. The seven-unit condominium building is about 65 percent completed and should be finished in early 2012, Wachtel said. The Modern Sales are expected to begin in late 2011.

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