Stuart Saft, a partner at law firm Dewey & LeBeouf, was tapped in January to lead the firm’s global real estate practice. Saft represents some of the city’s highest-profile owners in complex cases involving residential properties such as conversions at Manhattan House and the Apthorp. He also works on deals at commercial properties, for example working recently on the development of Mt. Sinai’s new Center for Science and Medicine in East Harlem. In addition, Saft has written 15 books.
Has there been more activity in the residential market?
We have seen an increase in activity in preliminary offering plans [filed with the attorney general’s office] to convert [rental] buildings [to condominiums]. We probably have started on three just in the last month and we are getting a great many inquiries from landlords.
Why are landlords considering conversions in this weak market?
We are now out of the recession. Existing co-ops and condos held their price point very well during the recession and there seems to be interest in the landlords getting out of the rental business because of concerns that it is just going to become more difficult to make a profit.
Why are owners considering conversions as opposed to new construction?
There is going to be a paucity of new buildings commenced because the banks are not going to be making the construction loans the way they did before. So the inventory of new construction will shrink but there still are a great many rental buildings that can be converted.
How long does the entire process of conversion from a rental to a condo take?
You are probably looking at a minimum of two years to two and a half years before closings can actually occur. And from the landlord’s perspective, the market will be much tighter two, two and a half years from now than it is today.
Part of your practice is due diligence and risk assessment for commercial real estate transactions. How do you see Manhattan’s office market?
We all [in the industry] generally believe that we have pretty much seen the bottom of the rental market although probably not the bottom of the purchase market.
When will prices begin rising again and how quickly will they increase?
I don’t think the rents are going to jump up in the next 12 or 18 months… until there is large-scale hiring. I don’t think we are going to jump up as quickly as we fell down.