Manhattan investment sales by quarter (source: Massey Knakal)

New York City investment sales fell a sharp 25 percent in the third quarter from the prior three-month period, but commercial property trades are still expected to top 2010 activity and reach $24 billion by the end of the year, executives at brokerage firm Massey Knakal Realty Services said.

Total third-quarter sales in the city hit $6.5 billion, down from $8.7 billion in the second quarter of the year, according to figures the company released at its quarterly media briefing in Midtown this morning. For the first nine months of the year, commercial property sales including multi-family, office, retail and development, reached $19.2 billion citywide, the firm reported.

But Robert Knakal, the company’s chairman, did not see the quarterly falloff as a permanent pullback. [more]

From the September issue: In the last few weeks, as many of the city’s big banks have been besieged by bad news, and the stock market has seesawed sharply in a short span of time, the question on many analysts’ minds is: Could a new round of pain on Wall Street trickle down to New York’s already vulnerable commercial and residential real estate markets?

Indeed, the thinking goes, the financial services industry and its numerous offices keep commercial occupancy rates high in Manhattan, while its well-paid executives buoy the high-end residential market. Meanwhile, its lower-rung workers drive demand for rental units, sources say. Wall Street has served as an economic engine of the city for decades,
ever since major manufacturing and energy companies — like Mobil, Exxon
and chemical company Union Carbide — abandoned their New York
corporate headquarters in the 1970s and 1980s for other (cheaper)
addresses. [more]
[more]

From left: Adam Spies, Robert Knakal, Woody Heller, Richard Baxter and Harry Krausman

Sources: CoStar Group, PropertyShark.com and The Real Deal.
Footnotes: Sales data is for Manhattan deals published on the city property record site Acris in September and provided by PropertyShark.com. Brokers and additional information is from CoStar Group and The Real Deal.

The top commercial deal to be recorded in city property records in September
was JPMorgan Chase Asset Management closing on the $719 million acquisition of the 14-story office and commercial building
200 Fifth Avenue, (part of the former International Toy Center buildings),
PropertyShark.com data shows. Eastdil Secured’s Adam Spies and Douglas
Harmon brokered the sale (see chart above). The purchase drove much of the
monthly total transfer value, which was $2.9 billion in commercial deals reported
on the city property record site Acris, an analysis of PropertyShark.com figures
show. [more]

From left: Kenneth Krasnow of CB Richard Ellis, Daniel Hagan, Cory Rosenthal, Michael Wlody, Robert Knakal and
Paul Massey, all of Massey Knakal and Steven Spinola of REBNY

Massey Knakal Realty Services paid a $4,000 penalty to resolve a complaint brought by the New York State Department of State that alleges that the influential commercial brokerage firm violated the state’s real estate licensing laws.

In the agreement finalized last Thursday, Massey Knakal CEO Paul Massey and chairman Robert Knakal each agreed to pay $2,000 in fines after admitting that Kenneth Krasnow, former managing director of the Brooklyn office, was not licensed while managing real estate agents, and that three other company officers were licensed as salespersons, not brokers, as required by the law.

The agreement, known as a consent order, says, in part: “By allowing respondent Krasnow to act as a broker in a supervisory role without insuring that he was property licensed, [Massey and Knakal] failed to properly supervise respondent Krasnow, and [has] violated [state law].” The fines have been paid, the document says. [more]

From left: Kenneth Krasnow of CB Richard Ellis and Daniel Hagan, Cory Rosenthal, Michael Wlody, Robert Knakal and Paul Massey, all of Massey Knakal

The New York State agency tasked with overseeing real estate licenses, the
Department of State, served commercial real estate firm Massey Knakal Realty
Services this week with a complaint alleging violations including failure to
supervise a former managing director of the Brooklyn office and for failing to
properly license three corporate officers as real estate brokers, according to the
complaint provided by the agency (see complaint below).

The complaint seeks penalties including the revocation or suspension of the
company’s licenses held by Paul Massey, the CEO, and Robert Knakal, the chairman, as well as fines, although
an amount was not stated. Insiders noted that despite the complaint stating a
demand for a revocation or suspension of licenses, the actual penalties often
wind up being far less severe.

Massey Knakal, founded in 1988 by Massey and Knakal, has one of the largest
investment sales forces in the city with 76 brokers, agents and associates and
earlier this year branched into retail leasing and commercial mortgage brokerage, with additional personnel.

The complaint follows an investigation opened after a February 2011
article in The Real Deal reported that Kenneth Krasnow, then the company’s
managing director of the Brooklyn office, did not hold a real estate license in New
York.

The complaint, dated May 9, 2011, but served Aug. 1 alleges that Krasnow was
managing director of the Brooklyn and Queens offices despite not holding a
license between Oct. 6, 2008 and Feb. 14, 2011. An individual who supervises
agents in brokerage matters is required to have a real estate license, according
to the DOS.

In addition, the state’s inquiry discovered that three individuals — Daniel Hagan,
vice president of special assets; Cory Rosenthal, vice president of executive
operations; and Michael Wlody, CFO — held corporate offices at Massey Knakal
with salesperson’s licenses, not brokers’ licenses, as required. Hagan, Rosenthal and Wlody weren’t immediately available for comment.

“By allowing respondent Krasnow to act as a broker in a supervisory role without
being properly licensed, respondent Knakal and respondent Massey have…
demonstrated untrustworthiness and/or incompetency,” the agency complaint
said, following standard language used in such documents.

The next step in the process is a hearing, but a spokesperson for the state did
not immediately know if a date had been set.

Knakal referred questions to Massey, who declined to comment. Krasnow did not
immediately respond to a request for comment.

In June 2010, the DOS fined the Corcoran Group $70,000 for allowing 79 brokers and agents to work despite licensing irregularities. Since
2009, the state has fined firms more than $200,000.

In May, CB Richard Ellis announced that Krasnow was tapped to lead its offices
in Palm Beach and Fort Lauderdale. CBRE did not immediately
respond to a request for comment.

Massey Knakal DOS complaint [more]

From left: Steven Spinola, president of the REBNY; Eric Anton, executive managing director at Eastern Consolidated; Debra Shultz, managing director at Manhattan Mortgage; David Heiden, a principal at W Financial and Barry Sternlicht, chairman and CEO of Starwood Capital Group

As the debt ceiling debate nears a critical juncture in Washington D.C., real estate executives in New
York are concerned that absent a final resolution, the fragile recovery will be short circuited by a sudden
spike in interest rates.

Steven Spinola, president of the Real Estate Board of New York, the 12,000-member trade organization,
said the industry’s main concern is the impact a debt ceiling default could have on projects financed
with tax exempt bonds.

“If there is no agreement and our credit rating goes down, what will that do to interest rates?” Spinola
said. [more]

The family of former Gov. Eliot Spitzer has sold a medial office condominium at 345 East 37th Street for $31 million, Crain’s reported. The 81,000-square-foot space was purchased by medical property investment firm ProMed, which plans to renovate. The 57-story building, also known as the Corinthian, has upwards of 860 residential condos in addition to the medical offices. Last year, the Spitzer family sold off the building’s 186-space parking garage to Alliance Parking owner Gregg Reuben for $10.2 million. [more]

The total amount of new commercial debt issued in the city’s three most
populous boroughs fell slightly in the first half of the year compared with the
same period in 2010, new data provided by PropertyShark.com to The Real Deal
shows, even as commercial sales have rebounded strongly from the recession.
There were $5.2 billion in new commercial mortgages filed with the city through
June 27 of this year for Manhattan, Brooklyn and Queens. That’s down 7 percent
from the same six-month period in 2010, when $5.6 billion in new mortgages
were inked, but up from the first half of 2009, when $4.8 billion in new mortgages
were filed (see chart above).
The anemic rate over the past three years represents an approximately 60
percent decline from the level of the $13.2 billion in new mortgages filed in the
first half of 2008.
In contrast, investment sales in the five boroughs fell from $19 billion in 2008 to
$4 billion in 2009, then rebounded to $12 billion in 2010, data from investment
sales firm Massey Knakal Realty Services shows (see chart comparing mortgage and sales data after the jump). [more]

Clockwise from top left: 345 Schermerhorn Street, 325 Schermerhorn Street, 350 Livingston Street (building credits: PropertyShark) and 62 Flatbush Avenue. Center: Paul Massey

[Updated 4:40 p.m.] Massey Knakal Realty Services has filed a lawsuit against Nevins Realty
and its president, alleging he directly negotiated a $30 million sale of
four downtown Brooklyn parcels to Steiner Studios, costing the commercial
real estate brokerage $900,000 in lost commissions.

Massey Knakal, in the suit, filed June 22 in Manhattan Supreme Court,
alleges fraud and breach of contract against Nevins and asked the court for
an injunction to prevent the transfer of the $900,000 commission fee at the
closing, which is scheduled for tomorrow. [more]

Although developers Larry Silverstein and Harry Macklowe headlined the impressive list of speakers at Massey Knakal’s Commercial Real Estate Investment today, it was developer Sharif El-Gamal who jazzed up the audience at the second-floor auditorium in the McGraw-Hill Building in Midtown.

Speaking as part of a panel that included Brookfield Properties CEO Richard Clark, George Comfort & Sons CEO Peter Duncan and Himmel + Meringoff Properties’ managing partner Stephen Meningoff, El-Gamal talked about his company’s competitive advantages. [more]