The Real Deal New York

Linking fine art and real estate in new projects [more]

Nikki Field and Gillian Jolis

Company: Sotheby s

Deals: $100 million in sales in 2003

Nikki Field and Gillian Jolis started at Ashforth Warburg Associates in the mid-90s, and quickly became known as the “medical team” there, finding a niche in sales involving doctors moving from Park and Fifth Avenues whose offices were mostly converted to residences. Field was named Ashforth s rookie of the year and was also nominated for the REBNY Rookie of the Year Award. Sotheby s recruited the duo in 1998. “Since then, our business has grown close to 100 percent a year,” said Field. As townhouse specialists, Field said the duo set an industry record in 2002 with the sale of five prestigious townhouses at record-shattering prices. They also achieved the highest dollar amount per square foot for a townhouse in Carnegie Hill – selling 13 East 94th Street for $1,740 a square foot last year (the property went for $11.25 million). “Nikki is the negotiator par excellence,” said Jolis. “Gillian has a good sensibility for the aesthetics of the market,” Field said.

Jo Siegel, Diane Kramer, Matt Siegel

Company: MLBKaye International Realty

Deals: 40 transactions in 2003

Jo Siegel and Diane Kramer of MLBKaye have one of the longest partnerships in the city with their 15-year collaboration. “We were both working at the same company, and at the end of a typically frenetic day a long time ago, we said let s just do it,” said Siegel. It helps that the two are good friends – “call one half, and you can always find the other,” she said. That close relationship extends to business. “People often ask, What sort of contract do you have? ” Siegel said. “There is no contract. We split everything down the middle.” The pair targets all segments of the Manhattan market and benefits from Diane s close association with 360 E. 72nd Street, where she has lived for more than 30 years and has sold more than 90 percent of the apartments. The team has even brought in Jo s husband, Matt Siegel, who handles technology for the team under a separate arrangement.

Bonnie Chajet and Ronnie Lane

Company: Warburg Realty Partnership

Deals: 62 transactions in 2003; average sale $2 million to $4 million

Bonnie Chajet and Ronnie Lane have had the longest running and most successful partnership in the city, having worked side by side for nearly 28 years. “We re both mildly aggressive, have similar-type lifestyles, and we both are motivated to the same degree,” Lane explains.

The two met while they were summering and studying for their licensing exam, first going to work at commercial brokerage Lansco but deciding they liked residential real estate better. They have been at Warburg for 15 years. “We each had young children when we were starting out, so it was a way to not do it full time and split the load,” said Chajet. “But we ve both been very full time for a long while,” she said, “and now I have a daughter [Lisa Chajet, also at Warburg] in the business.” The pair have consistently been among the top producers at the agency, with record-breaking sales in many Park and Fifth Avenue co-ops. Last year was “a wonderful year,” said Lane. The duo currently has a listing for a $10.85 million duplex on Beekman Place, and is getting the exclusive on a $12 million property this month.

Elizabeth Sample and Brenda Powers

Company: Brown Harris Stevens

Deals: Four transactions worth $60 million in first four months of 2004

Working together for the last 10 years, Elizabeth Sample and Brenda Powers have put together some of the biggest deals in Manhattan. They have the listing for what appears to be the highest priced property in the city – $41.5 million for the three top floors of the Ritz Carlton Hotel on Central Park South. The duo also represented the buyer in a deal for the highest price paid for a co-op apartment before 2000 – selling Lady Mary Fairfax s triplex at the Pierre Hotel at 795 Fifth Avenue, reportedly for $21 million. The pair have sold more than $500 million in real estate. Sample has been in real estate for 18 years, and 10 years ago teamed up with Powers, who had been traveling around the world because of her father s position with the Swiss foreign ministry, and was back in New York working in hotel management at the Royalton Hotel. “Brenda speaks five languages and is very strong in marketing and PR, and more creative,” said Sample. “I m a little bit stronger in co-ops and the family aspect.”

Carol Mann and Linda Maloney

Company: Stribling & Associates

Deals: $50 million in sales since August

Carol Mann found herself burned out as a broker and headed into management several years ago before changing course and deciding she was “a broker at heart.” This time around, though, she is doing it differently, as part of a team. “The only way to go is with a partner,” she said.

Last summer, she joined forces with new agent Linda Maloney, who has a Wall Street background and “is one of the nicest people in America,” said Mann. “I said There s the yin to my yang. ” The pair has impressive sales numbers, “especially for a new team,” Mann said. The first deal together was for an $8 million Fifth Avenue co-op, and the pair currently has a listing for a $5.495 million townhouse on East 79th Street.

Leonard Steinberg and Herve Senequier

Company: Douglas Elliman

Deals: $40 million in sales in 2003

Leonard Steinberg and Herve Senequier, partners at work and away from it, paired up together as a real estate team two years ago.

Leonard s real estate business was growing, and Herve, who worked in risk management at Barclays, decided to change careers after Sept. 11. “I thought, Do I want to do the same thing, or do I want to be more entrepreneurial? ” Leonard, who specializes in lofts, was Douglas Elliman s ninth-ranked producer in 2003, and the pair did more than $40 million in sales last year. The two are also developing property upstate, building eight subdivisions in Saugerties, near Woodstock.

Working and living together, said Leonard, means the pair can, “chat over dinner, and bounce ideas off one another. We complement each other. I m more a people person and Herve is more about organization and technology.”

Stephen Kotler and Michael Kotler

Company: Douglas Elliman

Deals: 165 sales and rentals in 2003

Stephen Kotler, Douglas Elliman s fourth biggest producer last year, has closed some $600 million in rental leases and $300 million in sales since joining the company in 1991. By 1994, he had formed the Kotler Group to focus on relocation for Fortune 50 companies.

A year later, brother Michael joined the team, which now includes five agents, and the two partner together on all the deals they do together.

Michael also handles much of the back office work. Real estate is in their blood; their dad was a New York City developer and a third brother works for Cooper Square Realty. “Before we formed, relocation serving top-tier companies was sort of haphazardly done,” said Stephen. Outside of relocation, Stephen and Michael have done some impressive deals – the highest priced apartment they sold was at 730 Park Avenue, for $19.5 million.

Ellen Sussman and Florrie Milan

Company: William B. May

Deals: More than 15 transactions in 2003, all over $1 million each

Ellen Sussman and Florrie Milan had already been working at William B. May for several years when they formed a partnership borne of necessity around five years ago. “Ellen was taking a vacation, and she had customers that had to be serviced,” said Milan.

Beyond convenience, “the idea of forming a partnership was to make three times as much money together,” Sussman said. The pair pulled in more than $15 million in sales last year (“We re not a $20 million team yet,” said Milan), one of their best performances together. Their most recent listing is a $4.2 million full-floor condo on Third Avenue and 81st Street. “I m sort of in your face,” Milan said, “and Ellen is more laid-back.”

Dianne Van Laer and Carolyn Levitan

Company: Bellmarc

Deals: 45 deals and $100 million in sales in 2003

Cousins Dianne Van Laer and Carolyn Levitan worked together in a family manufacturing business in Manhattan for 15 years before branching out into real estate. Thanks in part to their experience on Upper East Side co-op boards, the pair has a strong footing in the upper end of the market. Dianne has served as president of the co-op board at 870 Fifth Avenue for 13 years. The team currently has listings for three apartments – $3.9 million, $1.49 million and $1.45 million – in the building. The two bring different assets to the partnership. “I m the better organizer,” said Carolyn, “and Dianne is more fly by the seat of her pants.” Last year was “a wonderful year,” said Carolyn. The pair now has 10 exclusives, ranging from $520,000 to $4.9 million. “We ve been out there being very scrappy trying to keep listings up,” Carolyn said.

Sheila Lokitz and Elliott Lokitz

Company: Corcoran

Deals: 45 transactions in 2003; average sale $1 million

Sheila and Elliott Lokitz have worked together as a husband and wife team at Corcoran for seven years, and say having a good marriage isn t enough to be good partners in business. “It takes two people who are very well suited, who have a very good marriage and are also good friends,” said Elliott. “Some marriages have territorial issues, which we don t have.”

The couple started their own successful manufacturing company and retail store in Los Angeles before moving to New York in 1990, and Sheila soon went into real estate. “All the business I was getting, I couldn t handle myself,” she said.

“This time she built the business first, so I said to her, I ll help you,” Elliott explained. Sheila ranks among the top 25 brokers at Corcoran, andécorporate relocation work makes up 40 percent of the couple s business.

June Fitzgerald, Sydney Brooks, Jack Alvo, Randall Liberman

The Premark Group

Company: Goodstein Realty

Deals: 45 transactions in 2003

The Premark Group was formed last year under the umbrella of Goodstein Realty, and includes four agents who operate as equal partners. The setup was the brainchild of June Fitzgerald, a former executive in the fashion industry, who wanted to combine talents from different areas – and go after both residential and commercial business. The group is also a distinctly branded entity within the larger company. “Goodstein is an unusual organization, and very entrepreneurial,” explains partner Sydney Brooks, who has a background in marketing. Work has ranged from finding office space for a group of doctors to a $2.7 million deal for a co-op on Sutton Place, the priciest residential deal the group has done. Other group members are Jack Alvo, who previously worked at Morgan Stanley, and Randall Liberman, who is a few years out of college. “It s a supposed truism that it never works when you split commission four ways,” said Brooks. “But I don t believe that. Sometimes it pays to look at things with a fresh eye.”

Kelly Floyd and Gordon Sokich

Company: Fenwick-Keats

Deals: 10 sales in last six months since forming

Kelly Floyd and Gordon Sokich became friends through mutual acquaintances before either started up in real estate. When Kelly left a career in web design and joined Fenwick-Keats last summer, she immediately knew who would make a good partner, and contacted Gordon, who worked evaluating and selling small businesses. Thanks to a regime that involves four hours of cold-calling a day and targeting expired listings from other firms, the duo have done 10 deals in the last six months ranging from $199,999 to $800,000. They ve also gotten seven listings in the last two months, mostly in the $500,000 to $600,000 range. Kelly, who is 30, said clients “like getting two brokers rather than one.” Gordon, 31, says more agents should take a page from the corporate playbook in forming teams. “In real estate, everyone starts out looking out for themselves,” he said. “Maybe they should take the IBM approach and pool their resources.” He acknowledges, however, that it can be tough to find the right partner. “You got to have the right chemistry with other person,” he said. “It s like a marriage.”

A look at the city s top broker partnerships [more]

When appliance giant P.C. Richard & Son signed a $1.5-million-a-year lease on 40,000 square feet of retail space on West 23rd Street last month, it joined the ranks of such mass retailers as Home Depot, which will open a 100,000-square-foot store across the street this summer, and Burlington Coat Factory and Best Buy, which are already located nearby.

Clearly, retailers have taken a liking to the area on the cusp of Chelsea and the Flatiron district, but analysts say it s not because of the neighborhood s distinctive character. Rather, space is available and convenient to mass transit.

“Very few people go to 23rd Street out of choice,” said Steven B. Greenberg, president of the Greenberg Group, a retail real estate advisory firm in Hewlett, N.Y.

Greenberg said big boxes go wherever in Manhattan there is space because these stores, unlike high-end boutiques, do not need to locate where their target customers live and work. “They are destinations,” he said.

“If you build it, they will come,” agreed Faith Consolo, vice chairman of Garrick-Aug Worldwide, a retail leasing service in Manhattan. “It s an opportunity. People will come from all over the city.”

That s why Target is also eyeing space on West 23rd Street, Consolo said. Calls to Target were not returned by press time. But James Buslik, a principal with Adams & Co Real Estate, which brokered the P.C. Richards deal, said that the quality of the neighborhood does matter somewhat, pointing out that northern Chelsea is now a booming residential area.

Indeed, more than 2,000 rental units have been added to the area between 23rd and 34th Streets since the mid-1990s. “It s becoming a 24-hour neighborhood,” Buslik said. But that s more of a plus than it is a driving factor for retailers, he acknowledged, noting that he expects to see big boxes pick up space on any major thoroughfare that offers the requisite space and access to mass transit – residential boom or not. He pointed to 14th, 34th and 42nd Streets as ideal targets.

Wherever they find space, everyone agrees that when it comes to Manhattan, more and more big boxes want in, even though space is scarce – and expensive.

“In New York City, one store can do more in sales than six suburban stores,” Consolo said. She pointed to Bed, Bath & Beyond on Sixth Avenue and 18th Street, which was one of the first such retailers to enter the area. It took off immediately, and now the strip of Sixth between 18th and 23rd streets is home to such retailers as T.J. Maxx and Old Navy. “The traffic is incredible,” she said.

That s why retailers are willing to pay $50 to $100 a square foot in Manhattan as opposed to $20 to $25 a square foot in the suburbs, Greenberg said.

Any fear that Manhattanites would reject big box stores in favor of small neighborhood stores has not proved justified, they say.

“These stores do incredible numbers,” Consolo said. “The residents have spoken: Bigger is better.”

The Manhattan class A vacancy rate held steady at 10.7 percent in February as additional blocks of available space offset leasing in all three major submarkets, according to a recent report by Colliers ABR.

A CB Richard Ellis report also found little movement in the availability rate in Manhattan. In Downtown and Midtown South, the availability rate rose 0.2 and 0.1 percent, respectively, while Midtown availability dropped 0.1 percent to its lowest level since August, the report said.

Overall, activity remains strong, with Manhattan tenants trading one space for another as leases expire in an attempt to catch what is perceived by many to be the bottom of the market, the Colliers report said.

Midtown

Having reached an inflection point in the fall, the Midtown office market is slowly turning in a healthy direction after a nearly three-year slump, the CBRE report said.

For the second month in a row, Midtown leasing activity was paced by a “mega-deal” exceeding 750,000 sf. In February, it was Bank of America’s 1.10-million-sf pre-lease transaction as the anchor tenant in the 2.1-million-sf tower at 1 Bryant Park, scheduled for completion in early 2008.

After rising almost continuously since the fourth quarter of 2000 and peaking at 13.6 percent in November, the availability rate in Midtown has declined for three consecutive months. In February it dropped 0.1 percent to 12.9 percent, the CBRE report said. Net absorption has also been positive for three consecutive months, with the market absorbing 1.34 million sf.

Sublease space continues to hang over the market, however. At 9.17 million sf, or 37 percent of available space, it remains well above the 10 percent to 20 percent range seen in a healthier market.

Average asking rents ended February at $50.14 per sf, up $0.30 compared to the month before.

The Colliers report said the class A vacancy rate remained at 10 percent for the second month in a row.

Downtown

Downtown, the availability rate rose 0.2 points in February to 15.6 percent, the highest rate since November 1997, according to CBRE.

Leasing activity was weak at 375,000 sf, and was down compared to the month before, the report said. However, for the first two months of this year, leasing was 68 percent ahead of the 2003 pace for the same period, the report said.

Much of the leasing activity in February involved educational users – the Borough of Manhattan Community College closed a 190,000-sf transaction at 75 Park Place. MetSchools, a for-profit education group, leased the entire 100,000-sf space of 41 Broad Street and plans to open the Claremont Preparatory School there.

The Class A vacancy rate rose to 13.8 percent in February from 13.7 percent the month before, the Colliers report said.

Average asking rents ended February at $32.25 per sf, down $0.53 per square foot from the month before, CBRE said.

Midtown South

After pacing Manhattan’s office leasing recovery in 2003, the Midtown South market has started out 2004 at a tepid pace, the CBRE report said.

February produced 281,000 sf of leasing, which lagged behind the five-year monthly average by 37 percent, the report said.

This year, the only non-renewal transaction larger than 25,000 sf through February was United Cerebral Palsy Association’s 26,000-sf lease at 330 West 34th St. Since the report was released, electronics retailer P.C. Richard & Son signed a deal for 40,000 sf at 53 West 23rd St.

Still, however, Midtown South has the lowest availability rate in Manhattan.

The availability rate stood at 12.5 percent in February, up 0.1 percent from the month before.

Another positive trend is the amount of sublease space on the market. Sublease supply has decreased a dramatic 1.28 million sf over the past 12 months in Midtown South, and now represents 29 percent of total availability, CBRE said.

Average asking rents ended February at $31.72 per sf, up $0.19 per square foot from the month before, the report said.

The Colliers report saw a slightly improved picture in Midtown South in February, with the class A vacancy rate dropping to 6.0 percent from 6.5 percent the month before.

Outlook

Going forward, however, a recent report by CRESA Partners offers a bleak picture of the rest of 2004. The company says a high volume of sublease space, combined with the decline of the financial services sector in Manhattan, the prospect of a jobless economic recovery and growing tenant willingness to move outside the city are all indications that the office leasing market will remain soft in 2004.

The report said sublease space currently accounts for approximately 34 percent of all available space in Manhattan, which will keep overall rents depressed as the economy and demand for space improve.

Bank mergers could also have a significant impact on the amount of subleasing in Manhattan. One industry leader said at a recent Real Estate Board of New York panel discussion that Wachovia and JPMorgan Chase might put additional space in play this year.

However, during the same discussion, Julian J. Studley Inc. chairman and CEO Mitchell Steir said he expects law firms continue to figure heavily in 2004 space leasing.

Much of what transpires will hinge on job growth. Last month saw the release of readjusted employment numbers for 2002 and 2003. There was good and bad news, according to the Colliers report, with fewer losses than originally announced in 2002, but more for 2003.

In January, New York City picked up 20,600 private sector positions with gains in every major industry except manufacturing. At the same time, the city unemployment rate shot up to 8.4 percent from 8.1 percent in December, partially due to the unemployed re-entering the labor pool.

As the Labor Day barbecues broke up and the final jitneys headed back to Manhattan last summer, the Corcoran Group hadn t so much as dipped a toe in the Long Island Sound as it approached the Hamptons real estate market.

Six months and two deals later, Corcoran is among the largest firms on Long Island s East End.

Last month, Corcoran bought Dayton-Halstead, a brokerage with a 98-year history and 44 agents in its three Hamptons offices. Corcoran s acquisition followed recent purchases by Brown Harris Stevens and expansion deals by Prudential Douglas Elliman, which has had a presence there since 1996.

Corcoran now has about 200 agents in 13 offices on the East End, just shy of Dottie Herman s 215 agents in seven offices, according to Prudential s Web site.

Corcoran also now has 13 out of its 23 offices in the Hamptons.

The deal came about in relatively short order, Corcoran president and CEO Pam Liebman said, when she and Dayton-Halstead president Diane Saatchi “struck up a friendship” after Corcoran bought Cook Pony Farm in its first buy in the Hamptons in October.

“We said maybe we should do something together,” Liebman said. “We both made up our minds, and it only took two months for the deal to happen.”

Terms of the deal were not disclosed. Clark Halstead, Halstead s founder and chairman, sold his ownership stake in the company under the terms of the deal.

Dayton-Halstead, which has offices in East Hampton, Bridgehampton and Sag Harbor, did $133 million in closed sales in 2003. Saatchi will now become vice president of sales for the Corcoran Group in the Hamptons.

“It s a great company,” said Liebman. “They ve been around 100 years, and I ve gotten such wonderful feedback about Diane,” who is frequently cited as a real estate authority in the Hamptons.

Herman was not impressed, however, saying independents are a weak and dying breed in the Hamptons and “everyone is for sale for a number.”

“Dayton-Halstead was a little company,” said Herman. “It s inevitable somebody would purchase them. Cook Pony Farm was for sale for five years before they were bought.”

“The Hamptons is done,” she said. “It s all going to be big companies.”

William Lie Zeckendorf, co-chairman of Terra Holdings, parent company of Brown Harris Stevens and Halstead, agreed. “The game is over,” he said.

In January, Terra bought a majority interest in Dunemere Associates, one of the biggest remaining independent firms. Dunemere has five offices and 100 brokers.

“Since we were both Christie s Great Estates affiliates, we couldn t advertise in their market without being a part of them,” acknowledged Zeckendorf. “So it s sort of something we almost had to do.”

Going forward, Zeckendorf said Terra will make a significant investment in the company, which will continue to focus on luxury homes. “We ve never been hesitant to invest in the companies we buy, and the current business plan will take us six months to a year to complete,” he said.

While consolidation is nearly complete, say Zeckendorf and Herman, some notable independent firms do remain. Herman said Allan M. Schneider Associates, which has 180 agents in 11 offices, is “a good company.” Other independents she mentioned were Tina S. Fredericks and Norma Reynolds Realty, each of which has only a handful of agents.

Liebman also said Corcoran might pick up another company in the Hamptons if there is a good fit. “NRT is a very acquisitive company,” she said.

Herman said she welcomed the fact that the Hamptons market seems destined to consist of large brokerages. “It s better for me,” she said. “They are real businesses.”

Herman said a lot of small owners typically make money by earning commissions, as well as by running their own businesses, so running a profitable company isn t necessarily their main focus.

“When I first came out here [in 1996], New York magazine called me a Broker From Another Planet, ” she said. “But it s a bigger playing field now. It s better for the consumer. I think I ve been proved right.”

Foxtons North America chief executive Glenn Cohen will resign and sell his stake in the discount brokerage after a controversy over its television advertising and a New Jersey investigation into its business practices.

Foxtons, its London-based parent company, announced last month it would acquire Cohen’s interest in the company known for its signature 2 percent commissions, and said that Cohen would be leaving the firm.

Foxtons founder and CEO Jon Hunt assumed control of the North American unit of the company, based in West Branch, N.J. Terms of the deal were not disclosed.

Cohen said he hadn’t decided whether he would establish a new real estate business and was coy about his next venture.

“I’m not ready to divulge that,” Cohen told a reporter. “I’m still focusing on popping open the champagne. I started the company in my second bedroom and built it up to have 400 employees.”

Hunt said that he plans to expand the 2 percent model nationwide.

While inventory remains low throughout Manhattan, the residential real estate market continues to experience significant price jumps, and the luxury segment has been particularly active in recent weeks.

Jonathan Miller, president of the appraisal firm Miller Samuel Inc. and author of the Douglas Elliman Manhattan Market Overview, called the lack of inventory a “chronic” situation, with supply contracting nearly every month of the last year.

The limited supply has created “significant price jumps” since December, Miller said. With multiple bids on properties, “it feels like 1999 again,” he said.

More recently, the luxury market, comprising properties priced over $4 million, has also become more active, Miller said in mid-March.

“In the last four to six weeks, we ve seen a little surge in properties north of $5 or $6 million going to contract,” he said. “The market over $4 million only represents 2 percent of total transactions, but we re seeing more sales activity there.”

He described the preceding months of the luxury market as “pretty much in neutral” since the second quarter of 2003, when there was renewed activity following the war in Iraq.

“I think the upper end of the market now reflects more of a long-term optimism,” Miller said. “It s also a reflection of Wall Street doing better.”

Kathy Korte, manager of Sotheby s midtown office, agreed. “I ve had more $5 million deals go to contract since early-to-mid-December than in the six months prior to that,” she said.

She also said the main reason for the increased activity is Wall Street. “Corporates are reporting strong profits again,” she said. “Before, you might have had a bank president who didn t want to move because there were layoffs at his company, and that would be sending the wrong message.”

A recent report released by Stribling & Associates put the luxury market uptick a little bit earlier, saying that market activity increased dramatically in the fall of 2003, with several high profile sales on Fifth and Park Avenues, including at least one over $20 million.

“This past year evidenced significant gains in luxury real estate sales, particularly in the latter part of the year,” said Kirk Henckels, director of private brokerage at Stribling and the author of the report. “Prices have increased, some by as much as 28 percent since last August.”

Ken Malian, senior vice president and sales director of Douglas Elliman s Tribeca office, said he is seeing properties that were once overpriced get snatched up at all price points, including those in the luxury market.

“Things that have been on the market a long time are selling,” he said. “We had a property that was in the low $6 million range and it a took a price reduction, and then we got four offers.”

Malian had a similar story about an exclusive priced at $2.5 million for four months, which recently sold for $3 million. “Six months ago these properties were priced at a point where the broker said they wouldn t fly, but now the market is catching up to them,” he said.

While the higher prices are a definite positive, Mailian said he is spending a lot of time these days dealing with the inventory situation. “It s frustrating a lot of buyers,” he said, “and I m doing a lot of talking to brokers about preparing buyers expectations and I m spending a lot of time on the phone with buyers.”

“Buyers need to know that there will be multiple offers, and even if you have an accepted offer, it may not go through,” Malian said. “You ve got to have everything ready. And when your agent calls you, run.”

In the current market, Mailian said downsizing is a little easier than upgrading, though still no cakewalk. “Downsizing is a little easier, but still, it s not so easy,” he said.

One seller Malian s company dealt with had a three-bedroom apartment in Chelsea that sold for $2.2 million – which actually represented a $1 million appreciation in the two years since purchasing it – and was looking to downsize. “They wanted to take that money off the table and buy something in the $1.6 million range, but there aren t a lot of those, either,” Malian said.

Brokers, of course, are actively seeking inventory that is not yet on the market. “At the high end, that mostly involves word of mouth,” Korte said.

The low inventory situation nationally, which is affecting most major metro areas, is also leading agents to urge buyers to pen personal letters to sellers, eliminate appraisal or inspection contingencies, and agree to escalation clauses, according to a recent story in the Wall Street Journal.

When and whether the inventory situation in New York will change remains to be seen.

“With prices where they are, there have been a lot of people considering that now might be the right time to sell,” said Korte. “There has been a little pickup in sellers that have been questioning that.”

Miller said the inventory shortage looks to continue in the short-term future, given the balance of supply and demand.

“If you look at demand, the economy is limping along, and there s not a lot of job creation,” he said. “You have very low rates, and you continue to stimulate demand.”

“On the supply side, there is limited conversion activity,” Miller said.

“The lead time on a project is 18 months to 2 years, so I don t see supply changing in the short-term.”

With the arrival of spring – traditionally the most active season for buyers and sellers – that could change. But there will likely be more sellers – and more buyers.

“Part of the issue is that no one wants to sell without buying first,” which further drives down supply, according to Miller.

Miller himself is currently shopping for a home in Connecticut.

“I m trying to buy a house right now and there s no way I m going to sell without buying first,” he said.

Fast-growing Long Island fee-for-service company looks to Manhattan; luxury FSBO grows [more]

Lower Manhattan will be getting a much needed new 1,000-student private school, under a deal announced last month.

MetSchools Inc. struck a deal to take 100,000 square feet at 41 Broad Street as the site for the new school.

The for-profit company, which operates several other schools throughout the city, plans to open the Claremont Preparatory School in fall 2005.

“It will be the largest K-8 private school that serves Brooklyn and Manhattan,” said MetSchools CEO Michael Koffler.

A $25-million renovation project has already begun, and the admission process will start at the end of 2004.

Koffler said there are no other private schools, except for one parochial school in Chinatown, below Canal Street.

“It shows incredible foresight,” said Louise Phillips Forbes, a senior vice president at Halstead. “It’s so desired and so needed.”

Bridging Neighborhoods concept shows developers where to build next to reap returns [more]

While it might take a few years, Lower Manhattan seems solidly on its way to becoming a 24/7 neighborhood.

By 2005, 12,000 units are expected to be added to the current total of 30,000. There will be more luxury, and the new developments will feature more built-in amenities – such as swimming pools and basketball courts – than in other parts in the city.

Many new condos in the Financial District are catering to families, who are drawn by prices 15 to 20 percent less than Tribeca and tax abatements on new buildings.

And it’s not just the big name projects – condos at the Ritz-Carlton Hotel in Battery Park City, Santiago Calatrava’s cube-design tower at South Street, or 15 Broad and 90 West Street. Smaller three or four-story “boutique” buildings are being converted in increasing numbers as well.

“There are a number of projects in the early stages,” said Shaun Osher, executive vice president at Douglas Elliman. “And in the next five years you’re going to see a lot more coming to market. There’s going to be a nice cross mix of small loft buildings, with little or no services, and the high-end projects.”

Among the big projects, The Residences at The Ritz-Carlton are already complete, and the next major development to come online in the area will be 15 Broad Street, opening in May.

At the Ritz-Carlton, developer Millennium Partners changed course midstream to account for more families moving to Lower Manhattan.

They originally planned to build 150 units with a large number of one-bedrooms, but ended up with 114 units and more two- and three-bedrooms.

“The Ritz Carlton has become an anchor building filled with families,” said Louise Phillips Forbes, a senior vice president at Halstead. “Units are still available, and are selling for around $1,000 to $1,100 a square foot.”

In a neighborhood with a reputation for few amenities (a mischaracterization, according to Osher), extensive in-house amenities will be in supply at 15 Broad Street.

The former home of J.P. Morgan is being converted to 250 condos, and will include basketball courts, a swimming pool and a bowling alley developed by Boymelgreen Developers.

“We understand the needs of an extensive amenities package,” said Louise Sunshine, whose firm The Sunshine Group is marketing the site. “The building will take on a life of its own. All the services you need will be right there.”

Sunshine added that Philippe Starck – in his first New York City residential project – has designed the building to be “very modern and young spirited.”

Sunshine, whose recent work includes the Time Warner Center, is also working on two other still top-secret projects in Lower Manhattan.

“If I have anything to do with it, I see Wall Street and the Financial District as the next residential corridor in Manhattan,” she said.

Donald Trump may be working on a project downtown, too.

In an interview in February with <i>The Real Deal</i>, developer Tamir Sapir said he had plans to work with Trump on a residential project in Lower Manhattan that will involve one of Sapir’s buildings. Details of the project haven’t been confirmed.

There is also the Spanish architect Calatrava’s design for a stunning 835-foot tall residential tower at 80 South Street, near the South Street Seaport.

The F.J. Sciame Construction project is slated for completion in 2006 or 2007, but some have questioned whether it will be too expensive to build. Dubbed “Townhouses in the Sky,” each of the 12 cubes will be four stories high, and will contain a duplex, triplex or four-story townhouse.

Little boutique condos are also sprouting up.

Forbes said 25 Ann Street, a small building with only 2,500 square feet per floor, was “one of the only small condo conversions four years ago. Now there are so many of them.”

“Those little boutique buildings are becoming great choices for people to benefit from some of the larger-scale projects that will be coming in,” Forbes said.

Forbes said a $1,000 to $1,200 per square foot space in a doorman building in Tribeca would be around $800 per square foot in the Financial District.

Simliarly, Osher said prices are about 15 percent less than in Tribeca.

He also noted that tax abatements for new buildings can bring down costs, and “brought down taxes at least 50 percent” at 15 Nassau, a relatively new project in the City Hall area north of the Financial Distrct.

Overall, while there is much development in the works, Osher said, “there is not that much on the market now.”

He said he doesn’t find Battery Park an ideal destination, where most co-ops have maintenance costs “through the roof,” and only a few buildings have great views.

But Lower Manhattan in general, he said, benefits from its close access to nearly all subway lines and highways in Manhattan. “Everything comes together down there,” he said.

Going forward, Osher said the most promising areas for development will be east of Broadway, south of City Hall and north of Battery Park.

Outside of condos, rental development has been booming, fueled by the federal government’s Liberty Bond Program, which doesn’t apply to condo development.

Developers Nathan Berman and Ronny Bruckner are turning the former Brown Brothers Harriman & Company headquarters at 63 Wall Street into 476 rental units, with leasing to begin this month. They also just bought 67 Wall Street and 20 Exchange Place and plan to convert those buildings.

Richard Born and Ira Drukier are converting 90 West Street, a 1902 Cass Gilbert office building next to Ground Zero, into a 410-unit rental building. The Ocean at 17 Battery Place is another rental conversion, and Rockrose is currently completing Liberty-Bond-financed 2 Gold Street, with 50 floors and 650 units to be finished in 2005.

Finally, 100 Maiden Lane, the 325,000-square-foot former headquarters of law firm Cadwalader, Wickersham & Taft is also being turned into a 400-unit rental building. The building was recently purchased by developer Frank Lalezarian for $57 million.

A January court ruling that said individual condominium owners can be held liable for defects in their building\’s common areas continues to raise concern.

\”People are definitely talking about it,\” said Marc Luxemburg, president of the Council of New York Cooperatives and Condominiums. \”I think the first fallout has been insurance. They have been alert to recognize the implications to insuring condo owners.\”

Until this ruling, there was no reported New York case of a condo owner being held liable for damage outside his or her unit. The condo board or association got insurance for the common areas, which were owned collectively. Owners held percentages of common areas, but that didn\’t mean they were liable for a judgment individually.

Now a January ruling, from a New York Supreme Court Justice seems to have changed that, and may send condo owners scrambling to assess their insurance.

The suit, first reported in The New York Times, was filed by Michael Taratuta, who suffered serious head injuries in July 2001 when a piece of chain-link fence fell from the roof of a building at 69 West 106th Street. In a $50 million suit filed in 2002 – after discovering that the condominium association only had $2 million in liability insurance – the plaintiffs filed suit against each unit owner, according to Wayne Batcheler, a lawyer for one of the condo unit owners.

In January, Supreme Court Justice Sherry Klein Heitler ruled against a motion from the unit owners to have the case against them dismissed. She decided that the case could proceed against the unit owners, in part because they had not relinquished ownership of common areas and therefore faced liability. \”Whether or not the board is also liable to plaintiffs is independent of whether or not the defendants are liable to plaintiffs,\” Heitler wrote.

As it stands, the case is slated for trial with the unit owners as defendants. If Taratuta prevails, the unit owners could be held liable for any amount over the $2 million in coverage. In an interview, Batcheler said Heitler\’s ruling is being appealed. If upheld, he said it could affect several areas of the condo industry, particularly insurance.

\”Condo boards will start reviewing the insurance that they carry,\” he said. \”And I don\’t know what individuals can do. I don\’t know how much is enough.\”

Batcheler and Luxemburg said the ruling also creates a difference between condos and co-ops. Condos are attractive because people believe they can sell them faster, but now they might have greater legal risk. Since a co-op is owned by a corporation with shareholders who have limited liability, a co-op owner might lose is his or her apartment at worst, but couldn\’t be personally liable for a multimillion-dollar judgment.

\”All of a sudden in the twinkling of an eye, the equation has flipped,\” said Luxemburg.

Still, one lawyer disputed that the ruling created a new legal precedent.

\”My view is that it\’s not a very significant decision,\” said Richard Siegler, who practices condo and co-op law for Stroock Stroock & Levan in Manhattan.

Siegler said New York condo law has always held that \”common elements\” are owned \”jointly and severally,\” and this case just shows one of the exposures of having ownership in a condo. He said there have been unsuccessful proposals to revise state law so that liability is proportionate to common area ownership share.

The real problem, Siegler said, is that the building in Taratuta\’s case did not have adequate insurance. Batcheler disputed this, pointing out that the plaintiff plans to seek $50 million in the suit. \”What is adequate insurance?\”

The decision does not appear to be affecting condo buyers. Representatives for two large Manhattan brokerages had not heard of the ruling as of mid-March. A spokesman for a large condo managing agent was also not familiar with the case.

Amy Lee, a sales associate for Coldwell Banker Hunt Kennedy and a condo owner herself, said the decision may put pressure on condo boards to help individual owners get the proper insurance. Lee was not aware of ruling, but quickly called her lawyer after being asked about it.

Damian Testa, president of Kaye Insurance Associates in Mannhattan, said the ruling unfairly removes the corporate veil for condo owners. Now, even if the building has liability insurance, that may not protect an individual owner, and a plaintiff could theoretically settle a claim with a condo association but keep pursuing an individual owner.

\”It just becomes burdensome, stupid and adds deep pockets to the plaintiffs,\” Testa said.

Between general liability for a building, and homeowner\’s insurance, Testa said the insurance is probably on the market to cover condo owners if the ruling stands. But he said it could add costs that may push more carriers out of the market. \”This is salt in the wound,\” he said.

ATLANTA

Commercial

The largest retail project to come online in 2004 is the 1 million sf retail and entertainment component of Atlantic Station, part of a $2 billion, 138-acre development in Midtown. Marcus & Millichap predicts existing retail vacancies of 9.5 percent in Atlanta will drop to 9 percent by year-end.

Plans were recently announced for Perimeter Place, a 1.1 million sf mini-city encompassing retail, restaurants and residences on 42 acres at Perimeter Center Parkway. Demolition of two former BellSouth office towers totaling 600,000 sf on the site begins in April.

Residential

Buyers of high-end homes in the Greater Atlanta market have been particularly active in the last two quarters, according to Metrostudy Inc. Demand is strong for new homes priced $300,000 to $400,000. As for the region’s highest-priced homes, at $800,000-plus, demand also remains strong, the study said.

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BOSTON

Residential

Massachusetts experienced the nation’s largest overall percentage increase in housing prices between 1980 and 2003, according to a new study by the University of Massachusetts Donahue Institute. In the decade leading up to 2000, the number of Massachusetts households that spent more than 30 percent of their income on housing rose from 11,000 to more than 600,000, a rate of increase that far surpasses all other states.

Commercial

A shaky local economy and delivery of over 1 million sf of new office supply in 2004 will push vacancy close to the 20 percent level and depress rents tremendously, according to a report by Wachovia Bank released last month. But the report said retail remains strong. “Due to high barriers of entry, heavy population density, and high household incomes, Boston has one of the healthiest retail markets in the United States,” the report said. Wachovia predicts 3 percent to 4 percent growth in the retail sector over the next 24 months.

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CHICAGO

Commercial

Insurance firm MetLife Inc. last month agreed to sell the 110-story Sears Tower in Chicago, the tallest building in North America. World Trade Center equity investors Lloyd Goldman and Joseph Cayre, as well as Joseph Chetrit and Stanley Chera, were among the buyers, according to theslatinreport.com. The sales price was reported as $835 million, and will result in a $90 million after-tax gain for MetLife. The 3.7 million sf tower is 90 percent occupied.

Residential

Construction is underway on the 29-story Michigan Avenue Tower, the first new condominium high-rise to be built on Michigan Avenue in more than a decade. North Side condo veterans Jacob Bletnitsky and Alex Vaisman of Russland Capital Group are developing the building, and 85 percent of the units have already been sold. One-bedroom units range in price from $259,800 to $282,000. Four-bedroom penthouses with 3,339 to 3,716 sf are priced from $1.5 million.

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DETROIT

Commercial

Downtown’s first brand new hotel in more than a decade was opened last month by Crestline Hotels & Resorts, the 198-room Hilton Garden Inn in Harmonie Park. While some observers have said the city can’t keep another hotel busy, it is already sold out for the Super Bowl in 2006, the Ryder Cup this September, and Major League Baseball’s All-Star Game in 2005. The average daily rate is expected to be $118.

Residential/Commercial

A huge metamorphosis is transforming Midtown, a part of Detroit known for blight and despair, according to a series of stories in the Detroit Free Press. Projects along the Cass, Woodward and Brush corridors are bringing upscale apartments and more retail stores to the area.

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LOS ANGELES

Residential

Residential property prices in Southern California posted double-digit gains in January as the statewide supply of for-sale existing homes shrunk to two months. The median price skyrocketed 27 percent to $390,830 in Los Angeles last month and 18.7 percent to $523,380 in Orange County, versus a modest 5 percent jump in the national median to $168,700. Buyers are engaging in bidding wars and losing even after reportedly offering $50,000 to $100,000 more than the asking price. With a significant decline in listings, many of the region’s real estate practitioners have been forced out of business, according to reports.

A median-priced home in California was out of financial reach for more than three-quarters of the state’s residents in January, according to a report by the California Association of Realtors. Only 23 percent of Californians residents earned the $94,020 or higher annual income needed to purchase a property at the median price of $405,720 in January, down from 29 percent the year before.

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MIAMI

Commercial

Developers are looking to secure waterfront property in South Florida by purchasing and demolishing aging condominium complexes. The Trump Group, for instance, recently purchased the 30-unit Villa Del Mar in Boca Raton for $20 million, with plans to replace the structure with another 30 units priced from $3 million each. Most developers are focusing on structures with fewer than 100 units because they must work out deals with individual owners and condominium associations.

Residential

While Los Angeles, Houston, and San Diego are traditional favorites of wealthy Mexican homebuyers, the past two years has seen more of these customers purchasing high-end condominiums in South Florida locations such as Miami, Key Biscayne, and Aventura. According to one broker in Miami, about 50 percent of Mexican clients buying homes in South Florida are seeking a vacation property while the other half consists of young families and professionals who are relocating to the region for work or business-oriented reasons. The shift has influenced marketing efforts for developments, including more direct advertising in Mexico.

The statewide median sales price in Florida rose 15 percent to $168,100 in January, up from $146,500 a year ago. In the Miami metro area, the median sales price rose 24 percent to $246,200 compared to $197,900 a year ago.

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PHILADELPHIA

Commercial

A team known for having a lock on investment sales in the city left Cushman & Wakefield to join CB Richard Ellis. Robert Fahey, Michael Hines, Michael Blunt and Lizann McGowan have become part of the firm’s investment properties group in a surprise move that stunned Cushman and the local real estate community. The group has had a hand in just about every major office sale in Philadelphia, from One Liberty Place to the Meridian site to 1700 and 1818 Market and others. Fahey has been among C&W’s highest-ranking national producers, completing transactions valued at more than $6 billion over the past decade. Hines has closed transactions in excess of $3 billion.

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SAN FRANCISCO

Residential

Fresno, 175 miles south of San Francisco, had the highest housing price increases in the country in 2003, according to a new federal report. Fresno and Riverside-San Bernardino ranked first and fifth nationally in home price appreciation rates at 20.6 percent and 18.2 percent respectively. Home prices throughout much of Central and Southern California have surged in the last several years, buoyed by a stronger, more diverse economy.

Commercial

A Market Street building in the heart of downtown San Francisco, Pacific Place, sold last month for $185 million, fanning hopes that the city’s distressed commercial real estate market may be on the road to recovery. But many observers say it will take at least five years to bring the vacancy rate down to 10 percent. There are about 16 million square feet of empty space in the city, a record high, according to BT Commercial. Overall rental rates are about $28 per square foot.

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SEATTLE

Residential

The median price in western Washington jumped 7.7 percent to $225,000 this February, up from $209,000 the year before. San Juan County had the highest median price for February with $367,750, followed by King County at $275,000. Homes sat on the market an average of 71 days in both King and Pierce counties.

Commercial

Five new retailers are leasing space from Vulcan Inc. and will open in the South Lake Union neighborhood being redeveloped by Paul Allen’s company over the next few months. The owners of Irish Emigrant in the University District will launch another restaurant, Paddy Coyne’s Irish Pub, in May. A bistro called Henry’s will open that same month, started by the owners of Still Life Bistro in Fremont, among other ventures. Vulcan’s office buildings will soon take in about 600 employees from the Seattle Biomedical Research Institute, Children’s Hospital and Regional Medical Center and Rosetta Inpharmatics/Merck. That number of office workers will more than double later this year when Tommy Bahama’s headquarters and University of Washington medical labs move into the area. A new 162-unit apartment complex is also set to open on Vulcan property in May.

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WASHINGTON, D.C.

Commercial/Residential

Due to an overbuilt apartment market in Washington, D.C., the number of homes going up in the city and inner-ring counties is winding down, according to the Washington Post. At the same time, homebuilders are cranking out more product in Prince George’s County and outer Virginia suburbs as low interest rates and other factors boost residential prices. A total of 38,696 housing permits were issued in the metro area last year, off 5 percent from 2002 but still solid by historical norms.

Residential

Home-price appreciation in the D.C. area outperformed the national average last year, based on new federal statistics. Housing prices in the nation’s capital shot up 13.6 percent in 2003, according to the report, and practically doubled over the past five years. D.C.’s 90.1 percent rate of growth from 1998 to 2003 was the highest in the country.

Multi-million dollar condos start to rise; some fear SoHoization [more]

Despite its petite dimensions, Hoboken – the Square Mile City – has room to grow.

Several new projects, including plans to transform a former Maxwell House coffee plant into an 800-unit residential development, are drawing Manhattan yuppies and New Jersey natives alike.

The skyline views, plentiful transit links, proximity to Manhattan, bustling nightlife, tree-lined streets and historic brownstones don t hurt, either.

“Hoboken has become a destination, and it s not just about convenience,” said Dean Geibel, managing partner of Metro Homes in Hoboken. “Just like people want to say I live in Manhattan, a lot of people in New Jersey want to say, I live in Hoboken. ”

Buyers are apparently willing to put their money where their mouths are. Metro Homes has already sold out the 110 units in The Huntington, a property slated to open next month. Studios were snapped up for approximately $200,000 and the larger three-bedroom duplexes fetched $650,000.

Hoboken is considered relatively pricey for New Jersey but is still viewed as somewhat of a bargain compared to Manhattan. For city slickers priced out of the Big Apple, Hoboken offers a more savory alternative than the suburbs. “It s not Manhattan, obviously,” said Geibel, “but it s a very cool place to live, a very hip place.” For those with separation anxiety leaving Manhattan, the city offers a quick connection to buses, ferries, PATH trains, a light rail system, and the Lincoln and Holland tunnels.

Plans to transform the former coffee manufacturing plant into Maxwell Place on the Hudson, an 832-unit condominium complex on a prime parcel along the city s waterfront was recently announced by Toll Brothers and Pinnacle Downtown. The developers hope breathtaking skyline views of Manhattan will lure prospective tenants to the high-rise and mid-rise luxury apartments. Amenities will include a full-service spa, concierge service, and parking. The development will also incorporate more than 200,000 square feet of commercial space.

According to Brian M. Stolar, president and chief executive officer of Pinnacle, “Pinnacle Downtown believes that this project is a once-in-a-lifetime opportunity to bring a new standard of excellence to the urban marketplace and build a new center of commerce for Hoboken.”

Louis Reynolds lives in a three bedroom, two-and-a-half bath, brownstone apartment one block away from the future Maxwell Place complex. He believes the construction will further improve the northeastern section of the city.

“You ll have more shops and you re going to have more park space. They re going to open up that beach that is on the Maxwell property.”

Reynolds is both a resident and real estate investor. He moved into his apartment on the city s main thoroughfare, Washington Street, four years ago.

Reynolds home is situated within walking distance of Hoboken s waterfront park, built by the city and the Port Authority on what was once a shipping pier. Since moving, Reynolds has seen improved transportation on his side of the city, particularly the introduction of a ferry service complementing the existing service out of Hoboken Terminal on the city s southeast end. Reynolds recently put up his apartment for sale. He is seeking $550,000 for the fourth-floor walk-up. He hopes to buy a new home for himself in town. “In four years, our place has doubled in value,” Reynolds said. “Pretty much everything has been steadily rising more than 20 percent per year.”

Approximately 10 months ago, Reynolds bought a one-bedroom, one-bathroom, investment property in a converted brownstone. After gutting it and redesigning the floor plan, he put it up for rent at $1,400 a month. The apartment sits on the west side of the city, an area that used to be considered too sketchy to consider. It is in that part of town that Metro Homes is developing several properties. “We ve been one of the frontier people who said we re going to bet our chips on this part of town because we believe in it,” said Geibel of Metro Homes.

The recent addition of the Hudson-Bergen Light Rail is making the west side of the city more accessible and helping engender a revival of the once forbidden part of town. The light rail shuttles passengers from Bayonne through Jersey City to Hoboken and will eventually reach north into Bergen County. It will soon connect residents of Hoboken s west side to the city s train and ferry terminals.

Not everyone is pleased with the rapid development across the city.

Some community groups are concerned about overbuilding and they ve demanded City Hall check growth.

The agency that hears tax assessment appeals wants to start charging New York taxpayers for its services. The independent Tax Commission will be proposing that it charge all but Class I homeowners between $50 and $125 to review challenges to the assessments that are set by the New York City Finance Department.

The sliding fees would be based on the assessed value of the property, said president Glenn Newman.

The fee would not be collected with the application but be billed later as part of the real estate tax bill. “It would not be seemly to put a check in with the application,” Newman explained. “Frankly, we are interested in raising money for training and increasing our technological ability.”

Because of budget and personnel cuts, the commission wants to spend its time on meritorious reviews, where it says its attentions are most needed.

People who do not want a Tax Commission hearing but need to preserve their access to the courts would not be charged. “We don t want to place a barrier in the way of people going to court, so if we are not reaching the merits, there would not be a fee,” Newman said.

This year, applications are flat with between 41,000 and 42,000 received by the March cutoff date. Last year, the agency received 42,294 applications to review 134,014 tax lots and eventually held hearings or reviewed papers on over 21,600 applications covering 90,364 tax lots. The Tax Commission prepared another 12,538 cases involving 28,764 tax lots that were not pursued at the hearing.

Michael Lippman, President of the Real Estate Tax Review Bar Association and a partner with Lippman, Krasnow & Kelton, LLP, said, “I agree the Tax Commission needs more money to function but I m not sure that a fee to challenge one s assessment is the proper way to raise the money. At this point,” Lippman continued, “it s all discussion and when it is formally proposed the Association will have to discuss it. It is likely that we will have to oppose it because it could open up an administrative Pandora s Box.”

In addition to billing mistakes that could show up as a tax lien, Lippman said there are currently fees for programs, including 421a and J-51 applications that were initially targeted to those programs, but turned into just another revenue stream for the city.

Rising prices erase real estate gains [more]

It wasn’t long ago – last year, perhaps – that the idea of apartment or condominium architecture in New York City was an oxymoron, as it had been for decades.

High-rise residential design meant a pile of bricks or a sheet of glass and concrete. All the design has historically, and with some justification, focused on the inside, with two goals: realizing the maximum number of units for sale, and using design finishes to elicit the highest price for the intended market.

Suddenly, this longstanding paradigm is being challenged. I believe that challenge will begin to resonate across the country.

In early March, New York contractor-turned-developer Frank Sciame unveiled a condominium building designed by famed Spanish architect Santiago Calatrava.

Calatrava had just made a huge splash in the city with the unveiling of his plans for the new mass-transit hub at the site of the World Trade Center. The condo design, of twisting, cantilevered individual residential cubes, proposed for a site at the historic heart of Manhattan’s seaport and the financial district – rising to a height of 835 feet – electrified the city’s residential real estate and architecture communities. (Conspiracy numerologists take note: that’s the number of millions that Lloyd Goldman, Joseph Cayre, Joe Chetrit and Stanley Chera are paying for the Sears Tower in Chicago.)

There is much speculation on whether or not the complex project is buildable at an earthbound price; even the most ardent architecture fans are skeptical.

Even before Sciame, developer Forest City Ratner put forward its huge mixed-use development in Brooklyn, master-planned by Los Angeles design guru Frank Gehry, which will include some 2,000 housing units. Another high-rise is also in the works for the financial district, this one designed by acclaimed British architect Sir Norman Foster.

And then, in mid-March, the private-public committee that is boosting New York City’s bid to host the 2012 Olympic Games unveiled yet another residential stunner: five competing master plans for the Olympic Village, which would house 16,000 athletes during the games and 20,000 residents thereafter. Each plan was prepared by an internationally acclaimed team of architects, with representatives from Copenhagen, Rotterdam, London, New York and Los Angeles.

Each was more inventive, more exciting and more worthwhile than the one before. Each would make an enormous statement about New York’s place in the culture of 21st century America. And each of these diverse projects, whether in downtown or in Queens, will go a long way toward refreshing our lackluster stretches of skyline.

What’s come over the development community? Are we to believe our eyes and ears? If so, it would seem that developers no longer number architecture among their four-letter words.

There are a few reasons for this new horizon. One is that the return of baby boomers to downtown living across the U.S. has been raising the bar for living standards. Historic buildings are being refurbished, and newer buildings often don’t match up in grandeur and quality, forcing developers to be more creative in their offerings.

There is no denying that design has seeped into the public consciousness as the world has watched the rebuilding debate at Ground Zero, where design – of buildings, memorials, infrastructure and public space – is of critical importance.

This debate has informed all of us about why we care about where we live and what it looks and feels like. Builders have not been immune to that, and as each reaches for a new level, one-upmanship will follow. That’s a good thing.

There is one more driver for this trend, which is not, unfortunately, the fact that developers have suddenly embraced the notion, no matter how true and important, that good design is value added to the nth degree. Rather, the source is one that could easily turn in on itself and choke the pleasing prospect of architecture becoming a staple in the development diet.

What would that driver be? Cheap money. Cheap money makes it so much easier for developers to pay for those extra costs that real design supposedly incurs. After all, the Sciame-Calatrava project may have sky-high construction costs and similarly high condo prices, but only a handful of willing buyers are needed to make it work.

But cheap money can disappear in the blink of a Fed meeting, and no doubt it will. Where will that leave us? Will developers, once impressed with themselves for selecting the right brand-name architect, now be annoyed with themselves for having splurged on such a foolish bauble? Will lenders demand a return to bricks and mortar – or brickface and drywall?

Smart builders and money folk often talk about keeping their powder dry, even when the pickings are plentiful. Now, with design in fashion, it’s time to show that it’s not just about spending money, and not just about making money. Instead, it’s about making choices that will enable all participants, from builder to user and everyone in between, to maintain the new urban benchmark even when design has again become a bad habit rather than a good idea.

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Peter Slatin is the founder and editor of TheSlatinReport.com, a Web-based commercial real estate newsletter.

Boston-sized development to serve as hub for U.S. companies [more]

From left: Sam Zell, Jeff Blau and Jerry Speyer

Until a few years ago, Brazil was but a Plan B among America’s real estate investors. Now they increasingly view South America’s largest nation as a lucrative, and safe, haven for commercial property investment.

“Brazil is a democracy, Brazil has a free press, Brazil elected a left-wing president back in 2002,” Hines Interests senior vice president Doug Munro told The Real Deal by phone last month from his São Paulo office. “Brazil [now] has control over its inflation concerns of the past. In the 1980s, Brazil was just a basket case in terms of the management of its economy. [more]