From left: Knickerbocker Hotel and a rendering of the hotel coming to 136 West 42nd Street

The high-profile block of West 42nd Street between Sixth and Seventh avenues has long needed an upgrade, according to the New York Post, and after tracking developments on the block it’s clear that progress is being made.

The partnership of Highgate Holdings, Crown Acquisitions and Ashkenazy Acquisitions has completed interior demolition work in its bid to revert the former Knickerbocker Hotel, at 1466 Broadway, back to a luxury hotel from Class B office space. [more]

Goldman Sachs, the Blackstone Group and several other notable investors have turned bullish on the U.S. housing market, the Wall Street Journal reported, buying up shares of home building companies, like Pulte Group, Beazer Homes and Hovnanian Enterprises. Those stocks are up 30 percent since the end of the third quarter, according to Dow Jones, far outpacing the 10.5 percent increase recorded by the Standard & Poor’s 500.

In a recent report, Goldman said it expects home prices to decline 3 percent next year, before gaining 30 percent — not taking inflation into account — through 2022 [more]

From left: Tishman Speyer CEO Jerry Speyer, Hines Interests Chairman Gerald Hines and Simon Property Group CEO David SimonAs commercial construction remains stagnant in America, several high-profile American developers have turned to China for new projects, including several with notable ties to New York.

But for all the obstacles these developers are accustomed to encountering in the city, according to the New York Times there are even more hurdles to clear in China.

In addition to the obvious language and cultural barriers — for example, the Chinese do not consider a contract a binding agreement, and disputes with tenants are better settled over dinner than in a court room — unpredictable policy, layers of bureaucracy and the necessity of building local relationships make the prospect of development difficult. [more]

Sam Zell and an Archstone building at 800 Sixth Avenue

Sam Zell’s Equity Residential has emerged as the leading bidder in a race to buy 53 percent of rival Archstone, offering more than $2.5 billion in cash for the stake, currently held by Bank of America and Barclays, the Wall Street Journal reported. The rest of the company, a real estate investment trust, is owned by the bankruptcy estate of Lehman Brothers Holdings.

The proposed sale to Equity Residential would value Archstone at about $16 billion, the Journal said. If sold as a whole company, Archstone currently could be worth as much as $18 billion.

Real estate giants the Blackstone Group, Brookfield Asset Management, Equity Residential and AvalonBay Communities have all submitted bids for Archstone in recent months, it was previously reported. [more]

Equity Office, an affiliate of the Blackstone Group, which just purchased the upper 12 floors of the 15-story former New York Times building at 229 West 43rd Street, has turned the publisher’s dining room into a basketball court in an effort to attract prospective tenants, the Times reported.

The real estate giant has been pulling out all the stops to draw positive attention to the building, most of which has been vacant since the Times moved on in 2007. A 12th floor terrace has also been landscaped in Blackstone’s version of the High Line, Josh Glick, the asset manager for Equity Office, joked.
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Anglo Irish Bank protestFrom the October issue: The auction of Anglo Irish Bank’s troubled $9.5 billion U.S. loan portfolio has surprised some industry observers — and spread fear among some borrowers, who worry about having new lenders take over their troubled projects.

Ben Thypin, a senior market analyst at Real Capital Analytics, said the fact that three lenders divvied up Anglo Irish’s portfolio was” not particularly unexpected.”

“No one but a bank could really afford to buy the performing loans, so the performers and non performers inevitably went to different buyers,” he said.

But what was surprising was who ended up at the winners’ table — Lone Star Funds acquired about $5 billion in sub- and nonperforming loans, while Wells Fargo and JPMorgan Chase acquired the remaining performing loans in separate transactions.
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The Carlyle Group is going ahead with its initial public offering plans, even though its valuation is at $8.5 billion, only a little more than half the valuation of its competitor, Blackstone Group, the New York Post reported.

The reason is that Wall Street doesn’t place as high a value on the money it makes from buying and selling companies, according to the Post. Blackstone has $15.3 billion in enterprise value, although the two private equity firms have roughly the same $150 billion in assets under management.

Steven Schwarzman’s Blackstone has a higher valuation because it has diversified into advisory services such as corporate restructuring, while David Rubenstein’s Carlyle still depends heavily on buyout deals. It has not been able to persuade bankers that it was worth as much as Blackstone because could promise steadier earnings. Carlyle recently placed two Midtown development sites on the market in a joint venture with Extell Development.
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Blackstone Group plans to increase the attractiveness of the public plaza along 42nd Street between Times Square and Bryant Park with new retail space, the Wall Street Journal reported. The plans include new retail in Equity Office’s tower at 1095 Sixth Avenue and in a renovated three-story building at 120 West 42nd Street, that will also have two underground levels.

The entire $25 million project is scheduled to be completed in fall 2012. With the plaza already opened last December, Blackstone hopes that the new retail and the Plaza will complement each other going forward. [more]

The same signs of increasing consumer spending that are expected to boost the retail real estate market are already positively impacting the industrial real estate market.

The New York Times cited Cushman & Wakefield data that shows the vacancy rate in industrial properties declined in the first half of the year to 9.7 percent, year-to-date leasing activity is up 27 percent from a year ago, and sales volume in the first half of the year grew nearly 160 percent compared to the same period a year ago.

Several companies have been especially aggressive in acquiring industrial properties, including Clarion Partners, Terren Realty Corporation, Morgan Stanley, the Cabot Group and CenterPoint Properties. But Blackstone Group may be the most active of all, which added 275 industrial buildings for $2 billion, tripling its portfolio. [more]

CBRE NY Region Chairman Robert Alexander (top left), 1411 Broadway and Cushman & Wakefield Vice Chairman Tara StacomQuidsi, the parent company of e-commerce giants Diapers.com and Soap.com that was purchased by Amazon last year, backed out of an all-but-signed lease at Blackstone Group’s 1411 Broadway. According to the New York Post, the firm was expected to sign for 75,000 square feet on the 32nd, 34th and 35th floors of the building at West 40th Street in Midtown, in a lease brokered by a Cushman & Wakefield team led by Tara Stacom.

But Cushman’s loss, will be CB Richard Ellis’ gain. A team of CBRE brokers including Bernie Weitzman, Rob Stillman, Robert Alexander and Zach Freeman was chosen to replace Cushman and market the remaining space a few months ago. [more]