The day Lehman Brothers filed for bankruptcy in 2008, Corcoran Sunshine president Kelly Kennedy Mack was in Tribeca, where her company had just launched sales at the new Herzog & de Meuron–designed condo 56 Leonard Street.
“I remember being in Tribeca on the phone with one of the senior members of my team, talking about what the ramifications were going to be,” recalled Mack, who was 34 at the time. “It took some time to set in.”
Things were about to change drastically for Mack, who had taken the company’s reins just two years before, at a time when the real estate market in New York was reaching new highs.
In the months after the Lehman collapse, however, “sales just virtually stopped,” Mack remembered. “There were months where it felt like there was just not one sale.”
It was a crucial turning point for Mack, a real estate wunderkind who had risen to one of the industry’s top positions during the mid-2000s. From the moment she entered the business as a protégé of legendary new development marketer Louise Sunshine, Mack’s career seemed charmed. But the financial crisis signaled the beginning of a far more challenging period, which would force her to prove herself in a new way.
“I knew we needed to take some serious steps pretty quickly,” Mack said.
Fifty-six Leonard (along with a slew of other projects) stalled soon after the crisis, and with Corcoran Sunshine’s books suddenly looking lighter, Mack was forced to make difficult decisions along with Corcoran Group CEO Pam Liebman. Corcoran Sunshine’s workforce dropped to 150 from 250 over two years, the company scaled back its office space and Mack and Liebman began looking for new sources of revenue, opting to begin consulting for banks and hedge funds.
Four years later, the market has largely recovered, and Corcoran Sunshine has kept its position as the new development marketing firm with more projects than any other city brokerage. The company expects to complete $1.5 billion in sales by the end of the year, Mack told The Real Deal during an interview last month.
Corcoran Sunshine is currently representing 15 active projects and has $7.5 billion worth of projects slated to hit the market over the next three to four years. That includes high-profile projects such as Silverstein Properties’ Four Seasons Private Residences New York at 30 Park Place, and Starwood Capital Partners’ Baccarat Hotel and Residences New York.
And while some boom-time real estate stars have dropped off the industry radar since the downturn, Mack’s handling of the crisis helped establish her even more firmly as a force to be reckoned with.
Mack “was really mature beyond her years” when dealing with the ramifications of the downturn, Liebman said.
Larry Silverstein, president and CEO of Silverstein, said Mack helped his company strategize its way through the financial crisis.
“I find Kelly an indispensible person to have right by my side when we’re in the throes of major considerations,” Silverstein said.
A turning tide
One afternoon last month, Mack surveyed the view from one of the remaining penthouses at the Aldyn, an Extell Development project where Corcoran Sunshine has headed sales since January 2011. (Corcoran Sunshine’s involvement in a new condo project can last up to seven years and often starts before a developer even purchases a site, with Mack giving advice on the appropriate unit mix, design and buyer profile.)
These days, luxury new development condos are staging a comeback. Corcoran Sunshine is serving as the exclusive sales and marketing agency for a stalled plan to build a 1,050-foot tower next to the Museum of Modern Art in Midtown. Few details have emerged about the Hines project so far, though it has been reported that the 78-story, Jean Nouvel–designed building will include 480,000 square feet of apartments atop a 92,000-square-foot hotel.
Corcoran Sunshine is also working on a 605-foot Skidmore, Owings & Merrill–designed condominium at 20 West 53rd Street. The project, a partnership between Starwood Capital Partners and Tribeca Associates, is slated for completion in 2014, but the 61 residential units will likely hit the market next year.
Mack’s firm has also been tapped to lead sales at the Rudin family’s much-anticipated project at the former site of St. Vincent’s Hospital in the West Village. Rudin is bringing to market six buildings — both newly built and conversions — connected by a private central garden. All are being marketed by Corcoran Sunshine.
Many of Corcoran Sunshine’s clients say Mack is a large part of the reason they’ve hired the firm.
She’s “refreshingly direct,” said Hines’ Tommy Craig, who has worked with Corcoran Sunshine on several New York projects.
Silverstein said he often consults Mack before deciding whether or not to buy a property.
“Anytime we find ourselves beginning to consider a particular piece of property for the creation of luxury condominiums, the first call is to Kelly to talk about how she perceives the location in terms of desirability, what she can do with it in terms of sales,” he said.
After suspending construction during the downturn, Silverstein is now actively working to complete a financing agreement for 30 Park Place — the Robert A.M. Stern-designed residential and hotel tower planned for 99 Church Street. It will feature 80 stories of luxury condos, a restaurant and a Four Seasons hotel.
All in the family
Compared with some of her peers, Mack is actually fairly new to the world of real estate.
A native New Yorker, she grew up in Downtown Manhattan. Her mother did casting for television commercials and now has a broker’s license with Corcoran in the Hamptons. Her father was in the travel industry, first working on the marketing side for now defunct Trans World Airlines and then for Hertz, the rental car company.
The young Kelly Kennedy attended the prestigious Dalton School on the Upper East Side, where she was captain of the basketball and volleyball teams. That’s where she met now-husband Stephen Mack, scion of a prominent New York real estate family. The high-school sweethearts married in 2001 after a long courtship that began with dinner at burger joint Jackson Hole when Kelly was just 16.
“I had a crush on him for the entire year before he finally asked me out,” Mack recalled.
The pair lives at the Park Imperial on 56th Street, where rapper Diddy also owns an apartment. (“I think I keep slightly different hours than Puff Daddy,” Mack quipped.)
Mack never envisioned getting into real estate. After graduating from Georgetown University, she took a job at Turner broadcasting, doing advertising sales and marketing for the Cartoon Network.
Later, she got her MBA at New York University “with the intention of going back to media and entertainment,” Mack said. “I thought when I graduated I wanted to go into something like corporate strategy for Viacom, or one of those companies.”
But her plans changed after the dotcom bubble burst and advertising revenues “took a nosedive,” Mack recalled. “People weren’t really hiring.”
In conversations with her father-in-law — William Mack, the founder of global real estate investment and asset management firm AREA Property Partners — she mentioned that she’d always been interested in architecture and design.
“I was at the age where a lot of my friends were buying their first apartments,” she said. “Somehow or another, I always found myself as the person who was with them looking at apartments and helping them find something.”
Her father-in-law suggested she meet Louise Sunshine, head of the eponymous new development marketing company. Sunshine launched her firm in 1986, and is consistently hailed as a pioneer in pre-development planning and marketing for new condos.
The two women sat down together in 2002 at Sunshine’s Madison Avenue office, and hit it off right away.
“I thought she was outstanding in every way,” Sunshine said of meeting Mack. “She was extremely intelligent, extremely credible and had a very good understanding of real estate principles, even though she had very little experience in the field. I guess she absorbed it by osmosis.”
Sunshine offered the young woman a job on the spot, but Mack wasn’t quite ready to commit. So she made a deal with Sunshine to work for a few months for free, in return for “living and breathing” Sunshine’s world. The pair went to every meeting together for several months.
“There was a long-running joke in the office that I was the most overqualified intern the company had ever had,” Mack recalled. “After 30 or 45 days, [Sunshine] turned to me in a meeting and said ‘this is just ridiculous. You have to just start full-time.’”
Mack officially joined the Sunshine Group in 2002 as a vice president of business development, and was later promoted to executive vice president.
During that time, Sunshine recalled, Mack acted like her “alter-ego.”
“There was no one who understood the business like she did, or understood me,” Sunshine said.
For her part, Mack credits Sunshine with setting her on the path to success.
“I owe a lot to her,” Mack said. “She taught me that it’s okay to speak your mind, to be confident in your opinions and your recommendations, to question everything and anything.”
Navigating the downturn
In 2002, Sunshine sold her company to NRT Inc., the parent company of the Corcoran Group. The two companies officially merged in 2005, and with Sunshine leaving the company to do consulting, Mack, then 32, was tapped to head the newly formed Corcoran Sunshine.
“Bruce Zipf, the president of NRT, called me on a weekend at home,” Mack recalled. “He was the first to ask me if I would step in as part of Louise’s departure. I don’t know if I was surprised as much as terrified. My first response was, ‘No.’ My second response was, ‘No.’ My third response was, ‘Yes, absolutely.’”
Sunshine had been grooming Mack as her replacement for years, so the promotion was no surprise to others in the industry, despite her relative youth.
Mack was viewed as having Sunshine’s directness and creativity, but without her mentor’s rough edges.
Sunshine “was very tough,” recalled competitor Stephen Kliegerman, president of development marketing at Terra Holdings, the parent company of Halstead Property and Brown Harris Stevens. “She was not looking to score points with you. She had a clear vision of what her developments should be and she was not going to waver regardless of anyone else’s opinion. Kelly’s not any less decisive, but she has a warmer, softer approach.”
Mack “does not mince her words at all, nor should she,” Silverstein noted.
These qualities helped Mack hold her own in dealings with Sunshine and Liebman, who are both, in the words of Liebman herself, “strong personalities.”
“It takes someone of Kelly’s caliber to be able to survive in a world where Pam Liebman and Louise Sunshine have just done this merger,” Liebman said.
When Mack first took the reins, times were good, and Corcoran Sunshine had exclusives on all the hottest new developments in town, including the Time Warner Center, the Hubert and One Beacon Court.
“In 2007 and 2008, when the new development market exploded, there were 8,000 new development units coming on the market,” Mack said. At that time, she added, “people, right or wrong, felt that you could almost do no wrong. Buyers weren’t asking a lot of questions.”
But that all changed after the financial crisis. Construction halted at 56 Leonard, and there was only a trickle of transactions at the 53-unit Chelsea Enclave at 177 Ninth Avenue, which Corcoran Sunshine had also launched just before the Lehman collapse.
With far fewer new condos selling, Liebman and Mack eliminated a number of jobs, most of which were on-site sales positions.
“There were a lot of unanswered questions, and the future of new development was uncertain,” Mack said.
They also discussed the possibility of representing some new development rentals, in addition to condos. But ultimately they decided that they had just enough condo product to make it through the cycle.
One saving grace for Corcoran Sunshine was its research team, which Mack had dedicated herself to building upon taking control of the firm. The team’s access to several years’ worth of market data — gathered not just from the company’s own projects but from the Corcoran Group’s transactions — became an asset to developers looking to reposition their projects to suit the new climate.
“The banks and the lenders were now calling the shots and we were able to communicate with them in a way that, frankly, I don’t think any of our competitors were,” Mack said. “They didn’t have access to the data.”
Kliegerman argued it was Corcoran Sunshine’s reputation, more so than its research team, which kept the projects coming.
“We all bring very strong data and research capabilities to the table. I think it’s their reputation that precedes them,” he said. “They were really the first company to offer a full-service development marketing brand. They have that legacy behind them.”
Corcoran Sunshine took on high-profile new accounts even in the darkest days of the financial crisis.
In 2009, Corcoran Sunshine was hired to take over for Prudential Douglas Elliman in handling sales at the 581-unit Manhattan House on the Upper East Side, and at the Georgica, a 58-unit condo by the Ascend Group. The firm was also brought in to reposition the building formerly known as Miraval Living at 515 East 72nd Street. A year later, Corcoran Sunshine also took over sales and marketing of the iconic Upper West Side condo conversion, the Apthorp, from Elliman.
“There were many developers who were not working with us who then came to us during those difficult days … to reposition their assets,” Mack said. “Despite the fact that there weren’t a lot of sales happening or new building introductions, we were actually taking on new accounts.”
Georgica is now sold out, and in the second quarter of 2012, 515 East 72nd Street was “one of our top-selling buildings,” Mack said.
On the flip side, Corcoran Sunshine was replaced earlier this year as the exclusive marketing agent on two properties developed by SDS Procida: The Dillon, an 83-unit condo in Hell’s Kitchen, and On Prospect Park, the Richard Meier–designed project at One Grand Army Plaza in Brooklyn, which has been on the market since 2008.
SDS’s Louis Greco told The Real Deal he had not been unhappy with Corcoran Sunshine’s work at the projects. Rather, the decision to switch to Brown Harris Stevens Development Marketing was made by his investors.
“Those decisions were made basically because our investors wanted a change of pace,” he said. “They wanted us to try a new horse, so to speak.”
Liebman, however, said that Corcoran Sunshine had not been dismissed from the project, but in fact chose to end its relationship with SDS.
“Corcoran Sunshine does not lose projects that we don’t want to lose,” she claimed. “When we’re off a project, it’s usually because we want to be off it.”
Meanwhile, Chelsea Enclave sold out in February 2011, and Corcoran Sunshine is now gearing up to put 56 Leonard back on the market.
Still, Mack’s job is far different from what it was before the crisis. Though the market has improved and there are more projects coming on the market, Mack said she still spends a large amount of her time dealing with banks and lenders, working to restart stalled projects and arranging lending terms for new ones.
“In 2006, maybe 5 percent of my time was spent having conversations with lenders and banks,” she said. “Today, it’s as much as 50 percent.”
But Mack said her enthusiasm for the business is undimmed.
“When there comes a day when I wake up and don’t want to go to the office,” she said, “that’s when I’ll think about doing something else.”