The Real Deal New York

Last month, a more fitting name for Brown Harris Stevens would have been Buy Harris Stevens.

The firm went on a shopping spree whose price tag wasn t disclosed, but which is easily worth in the hundreds of millions of dollars a year in new business. Brown Harris Stevens bought three brokerages and one property management company, expanding its reach in the outer boroughs and in the Hamptons.

The purchases included William B. May s operations in Brooklyn, Hamptons firms Hahn Realty and Resort Properties International and building management firm Heron Ltd.

That, plus a new office at Madison Avenue and 84th Street with at least 20 agents from William B. May s Manhattan operation, means the firm has added more than 115 agents in the last two months or so.

While the buys don t add up to anything like the size of Corcoran s acquisition of Citi Habitats or Cendant s purchase of Sotheby s, they increased the company s size more than 60 percent, from around 186 agents this May to more than 300, according to the firm s Web site.

“We won t be the largest in each area, but we hope to have the most professional brokers there,” said David Burris, co-chairman of Terra Holdings, the parent company of Brown Harris Stevens.

The buys also show further consolidation in an industry that has seen plenty of it lately, and points to a similar trend in property management as well.

“We are substantially consolidated in Manhattan now,” said Frederick Peters, president of Warburg Realty Partnership. On a scale of 1 to 10, he said, “if five years ago we were at a 1, now we re at a 7.”

“Within three or four years it will be pretty much a carbon copy of what you see in California it will be just a few brands,” said Dottie Herman, CEO of Douglas Elliman, adding there will still be plenty of room for small independent brokerages consisting of a few agents each, which number in the hundreds now.

Banks will also get involved in real estate brokerage at some point, Herman predicted. Financial holding companies and subsidiary national banks aren t currently permitted to engage in brokerage because it is defined by the government as a commercial activity, rather than a financial one, a classification they are lobbying to change and real estate trade groups are vehemently fighting.

“I do believe that banks will be in the brokerage business sooner or later,” said Herman.

For Terra, which entered the Hamptons market earlier this year by buying Dunmere Associates, and also has offices in Palm Beach, the plan is to remain focused on those markets.

“We re going to solidify the geographic areas in which our clients live,” said Burris.

Burris contrasted his company with much larger rivals Douglas Elliman and Corcoran, saying the average agent at Brown Harris Stevens grosses double what the average agent at those companies gross, a claim which appears to be generally borne out by a study of listings by The Real Deal earlier this year.

“We don t take brokers that are new to the business,” Burris said.

In Brooklyn, the firm s buy of William B. May s operations in that borough came following a prickly situation that nearly resulted in dueling lawsuits between the two companies.

In April, Terra had purchased a 50 percent stake in William B. May s Brooklyn operations and a 20 percent stake in the company s Manhattan operations from Peter Marra, the former president of William B. May, who also married into the May family.

In the end, Terra Holdings traded Marra s equity in the Manhattan operation of William B. May for the entire Brooklyn operation. It includes offices in Brooklyn Heights and Park Slope and 50 brokers.

Burris said of Marra and the May family, “I think they are back to having very good relations.”

“There were influences outside the family that caused friction at some point,” he said. “Outside employees were pulling the firm in a direction it didn t want to go. At least that was my observation.”

Going forward, Burris said expansion in Brooklyn would be “a logical thing.”

“Williamsburg is one area that comes to mind, and the Fort Greene area is another,” he said.

In the Hamptons, Brown Harris Stevens purchase of Hahn Realty, with offices in Greenport and Cutchogue, marks its first foray onto the North Fork, “an area that has become increasingly popular,” Burris said. The firm has 20 agents, according to its Web site.

On the South Fork, the acquisition of Resort Properties International in Westhampton Beach gives it another 25 agents, according to the firm s Web site.

Hahn s founder Suzanne Hahn and Lawrence Porter, owner of Resort Properties, will join Brown Harris as executive vice presidents.

On the building management side, Terra s buy of Heron Ltd. comes close to doubling its market share in the business. Heron manages 7,000 units in 78 buildings, which will be added to Brown Harris Stevens current roster of 10,000 units in 170 buildings.

The firm will continue to operate under the Heron name and president Ronni Lynn Arougheti will remain in her current post.

“Brown Harris Stevens has a lot of back office capabilities, like technical and accounting expertise, that make for economies of scale,” Burris said. “In terms of physical property management, it s a very personalized thing, and there are no economies of scale, but we don t overload the manager.”

Burris also said Brown Harris Stevens has carved out a niche in serving high-end buildings.

“In term of high-end properties, I think we are the leading company,” he said. “We won t manage non doorman product, or large complexes.”

Here’s a look at retail industry leaders in New York and what they’ve been up to lately:

Newmark New Spectrum

For 15 years, New Spectrum specialized as a thriving boutique firm until its leadership decided it wanted to be part of something bigger. That chance came about five years ago, when it joined forces with Newmark, the profitable office leasing business, which was looking for a retail division to complement its other operations. That merger created Newmark New Spectrum, which now has 50 retail brokers and other support staff. This year, the Newmark division won a REBNY Deal of the Year award for bringing the Guitar Center to a run-down building at 25 West 14th Street.

Although the core of Newmark New Spectrum’s operations is in the New York metro and the tri-state areas, its national operations are growing fast, the company says. It has offices in the Los Angeles and Washington, D.C. areas and services clients in other cities through affiliates.

It represents landlords and tenants in equal proportion, and splits evenly between big chains and small boutiques. But it’s the firm’s ability to engineer a strong market entry for retail clients that grabs the most headlines, it says.

“Our specialty is to help retailers roll out and expand quickly,” says Jeffrey Roseman, an executive vice president and the point man of a four-person team that runs the division.

Recently, Newmark New Spectrum brought Colorado-based Chipotle to the New York market. The McDonald’s Corp. subsidiary has signed seven restaurant leases and plans to have 25 locations within 12 months. In two years, the company has also broadened the reach of Cherry Hill, N.J.- based Commerce Bank, which has signed 20 leases in Manhattan.

Even overseas clients coming into the country have been added to the mix. It is presently working to bring the clothing company Reiss from London to New York. Ten years ago, New Spectrum brought the entire U.S. operations of HMV Records from Britain to New York, Boston and Washington. D.C.

Newmark New Spectrum’s most important deal over the past year was the 35,000-square-foot transaction that brought California-based musical instruments seller Guitar Center to West 14th Street. Changing Guitar Center’s negative opinion of the area and convincing them to become an anchor tenant was a challenge, Roseman says. Roseman and fellow broker Paul Berkman won REBNY’s award for the Transaction that Most Benefits Manhattan’s Retail Market in 2003 for their efforts.

CB Richard Ellis

When CB Richard Ellis acquired Insignia/ESG last July, it not only got many of the city’s top office brokers, but filled what it had always considered a chink in its armor by acquiring Insignia’s retail group in New York.

The formation of CBRE’s New York retail division boosted its global retail operations to about 400 brokers, about a quarter of whom are spread through its overseas locations.

“It was the biggest missing piece of their puzzle,” says Alan Schmerzler, managing director of CBRE’s retail services team for the New York tri-state region, who previously headed the Insignia retail group. After entering the competitive New York market, CBRE has managed to establish itself quickly, amassing a mix of clients from small luxury retailers to superstores. On the landlord side, it counts both large institutional corporate entities like Boston Properties and Tishman Speyer as well smaller owners of individual properties as clients.

With 23 brokers, the New York area retail division accounts for 15 percent of the company’s nationwide retail brokerage revenues.

Schmerzler says the company’s 28,000-square-foot deal on behalf of landlord The New 42nd Street was its most significant transaction of the last year. In the deal, announced last month, Ecko Unlimited took on three levels at the Times Square Theatre at 217 West 42nd Street. The urban clothing company will transform the theater into a four-level retail space.

But CBRE and the other global commercial firms don’t impress broker Robert K. Futterman, who runs a retail-only brokerage.

“Just because a company is a powerhouse, that’s not a reason to hire them,” he said. “Clients want brokers very in tune with the street and their needs and market research.”

Garrick-Aug

Stalwart Garrick-Aug remains one of the city’s leading retail brokers nearly 30 years after founder and chairman Charles Aug entered the business – just as the market for office leasing seemed to ebb during the city’s grim economic decline of the 1970s.

Vice chairman Faith Hope Consolo is strongly identified with Garrick-Aug, and is known as one of the top brokers of retail space in New York. The company has 65 brokers and support staff, and works both nationally and internationally. Luxury retailers are its niche clientele, with brands such as Cartier and Versace high on its list. Operations are balanced evenly between landlord and tenant representation.

In 2002, Garrick-Aug pulled off its biggest square-footage deal, representing the landlord in a 160,000-square-foot transaction with the Sports Club Company at 330 East 61st Street.

Consolo joined the company in 1985 and in 1989 started its international operations, which focus largely on Europe.

Consolo is described by Crain’s as “the city’s reigning maven of retail real estate,” and is part of a powerful pairing with leasing partner, Joseph Aquino.

Despite the big hits of 2002, Consolo said her company’s operations in 2004 will surpass its total for 1999, a banner year in the industry for both retailers and landlords. Already, the company has done more business in the first half of 2004 than in all of 2003, she said.

These days, Garrick-Aug is busy in Soho, trying to revitalize a neighborhood market Consolo says was hurt by Sept. 11 and now has the largest amount of vacant retail space in the city. From its 70 Wooster St. office, the company is hard at work promoting its 40 available retail spaces in the area with its ad campaign, “The Soho Specialist.”

But the firm could see changes soon. Charles Aug was reportedly negotiating to merge or sell the company earlier this year, and some reports said Consolo and Aquino were expected to make a separate deal.

“I don’t think they are still in business,” sniped rival broker Robert K. Futterman, commenting on Garrick-Aug.

Cushman & Wakefield

The New York retail side of the mammoth brokerage’s business has only been around for six of its 87 years, but Cushman & Wakefield didn’t start from scratch. Decades of office leasing and investment sales experience informed the retail expansion from the outset, and all three divisions benefit from shared information and tips about possible deals at periodic “market meetings.”

Veterans Gene Spiegelman, Susan Kurland and Joanne Podell – all winners of REBNY Deal of the Year awards – make up the backbone of the retail unit. Kurland won most creative deal in 2002 for her part in bringing American Girl Place, a retail store with a cafeacute; and theater that caters to young girls, to 609 Fifth Avenue. While still at Newmark, Podell won the award for the deal most benefiting Manhattan for her part in bringing Ethan Allan to 101 West End Avenue. Spiegelman won for arranging Crate and Barrel’s lease at 611 Broadway.

“We’re not looking to be a company that does the most amount of deals, but deals of significance as to the client or building,” said Kenneth Krasnow, the company’s executive managing director for the New York area.

With a staff of 17 professionals out of 30 for the entire country, the New York retail leasing division is the company’s largest domestic operation in the U.S., and 90 percent of leasing nationwide is done here. Landlord and retailers are represented about equally.

One client that has benefited is Swedish clothing retailer H & M, whose entry into the U.S. market required more than just doing the deal, including assistance with distribution and other factors. Cushman & Wakefield counts its 50,000-square-foot deal at 640 Fifth Avenue for H & M in 2000 among its largest deals. Over the past year, its largest deal was one for 30,000 square feet at 540 Madison Avenue for Charlotte, N.C.-based Wachovia Bank.

C & W is presently working on a deal to bring a Spanish retailer named Mango to Soho as a first step in its penetration of the U.S. market.

Despite its accomplishments, rival broker Faith Hope Consolo seems to characterize C & W’s retail operation as just an add on to their office leasing.

“The company wants to be all things to all people,” she said. “And most of their leads in retail come from corporate.”

Robert K. Futterman & Associates

Founded in 1998 by Robert Futterman (pictured on cover page), a former Garrick-Aug broker, the company is one of a handful of industry players that focus exclusively on retail leasing.

Although countrywide in outlook, the bulk of its operations are still run from its New York office, where it maintains a staff of around 50. New York area transactions account for 75 percent of the firm’s overall business, with landlords and retailers being represented in equal parts.

The company has often acted as a leasing consultant to large developers, including the Time Warner Center in Columbus Circle, where 375,000 square feet of retail space was up for grabs. The firm’s other recent work in that vein includes consultancy on 700,000 square feet of space at Xanadu in the Meadowlands, an entertainment, office and hotel project in New Jersey, and one million square feet of retail space at the Heartland Town Square in Islip, Long Island.

In 1999, the firm did what was perhaps the largest deal in the Upper East Side at the time when it represented both landlord Milstein Properties and tenant Bed Bath & Beyond in a 90,000 square foot lease at 401 East 61st Street. In January, the firm represented shoe retailer Adidas in a 55,000-square-foot lease at 610 Broadway.

RKF plans to increase its national operations until they make up about 40 percent of its overall business, with another 5 percent coming from its now tiny overseas operations. The firm is opening offices in Los Angeles, Miami and also Las Vegas, where the company is acting as leasing consultant on a 475,000-square-foot shopping center.

“Robert K. Futterman came out of my office,” said broker Faith Hope Consolo, vice chairman of Garrick-Aug Worldwide. “They go more after the mid-range, main and main retailers, like P.C. Richard. I like the luxury retailer, he likes the larger store.”

Lansco

Lansco says it is a strong player in the high-end luxury market, with high-end apparel retailers in Manhattan a particular specialty.

Founded in 1965 as an office and retail leasing company, Lansco has grown its retail operation about as fast as its office side over the years. The company’s retail division, headed by executive vice presidents Alan Victor and Robin Abrams, consists of 20 brokers. Abrams also chairs the REBNY committee that oversees retail leasing.

Over the past year, Lansco’s largest deal was the 40,000-square-foot transaction last March at 105 Wooster Street in Soho for furniture retailer Room & Board Inc. from Minneapolis. But Lansco’s all time largest was the 110,000-square-foot deal at One Times Square for the Warner Brothers Studio in 1996.

The company’s business is split around 50-50 between representing landlords and tenants. Around one-third of Lansco’s work is done in the outer boroughs, and the company’s national work has been increasing.

Rival broker Faith Hope Consolo said it is a negative that the firm’s business is split between office leasing and retail.

“This is an example of, ‘you should know your niche,’” she said. “If I were a doctor, I’d want to be the best plastic surgeon, not a generalist.”

Madison HGCD

“You don’t have to be a deceitful broker to operate in New York City,” says Richard Hodos, president and CEO of Madison HGCD, likening public perception of the profession to the disdain usually felt for, say, dishonest used car salesmen. Hodos takes a different stance, and says that his company won’t make a deal if it will not serve its clients well. “We’re technically brokers but we act like consultants,” he said.

Based in New York, the 14-broker firm has existed in its present form since 2002 following a merger with Washington, D.C.- based developer Madison Marquette. It also has an office in San Francisco and plans to open in Chicago, though New York accounts for 80 percent of the company’s transactions.

So far, the company’s largest deal was in 2002, when it brought bookseller Borders to 35,000 square feet at 100 Broadway, a sizeable transaction by the firm’s standards. Over the past year, the most notable deal the company has done was a 12,000-square-foot transaction at 110 Fifth Avenue for the German apparel company Esprit, which is seeking to re-enter the U.S. market after being bought out by European investors. Madison HGCD is also presently working for the landlord at One Times Square on a 20,000-square-foot deal to bring in an international electronics company.

Overall, Madison HGCD represents more tenants than landlords by a ratio of 80 to 20, but plans to increase the percentage of landlord representation to around 40 percent.

Hodos says expansion is in the cards, with the company planning to double the size of its New York office within the next 18 months and set up a new office in San Francisco.

Mogull Realty

Newcomer Mogull Realty is barely a year old, but quickly established itself in the New York leasing market, becoming a force not to be ignored. The company, founded by Kim Mogull, who also serves as its president, has already amassed a bevy of A-list clients, including the Trump Organization. It claims more than 200,000 square feet of retail exclusives, and says it has already closed deals worth $100 million.

Mogull, a driven, ambitious and sunny character in her thirties, is no stranger to real estate. The New Jersey native was literally born into the industry, riding in the back of her mother’s car as a six-year-old with her two older brothers, as her mother, a struggling real estate broker, had the kids write down the available properties. Mogull’s first job in real estate came 17 years ago at Coldwell Banker Real Estate Services in Manhattan.

The firm has lately been most active in the meatpacking district, where it has done about 10 high-value deals totaling approximately 40,000 square feet. It represents the Hotel Gansevoort plus an entire block of retail space along Washington Street.

Besides the Trump Organization, the firm’s most important clients include the clothing company Scoop Apparel, the developers Jack Parker Corporation, Sherwood Equities and Urban Investments.

Mogull’s operation is small and nimble, with only seven employees, with plans for only a minor expansion. She says there are no hierarchies or titles in the organization, where the central goal is to serve demanding clients like Donald “You’re Fired” Trump “fast and with integrity.”

“We love Kim and think she does a great job,” Trump said earlier this year.

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If residential brokers get a commercial lead, they have a few options when it comes to handling the transaction.

They can be involved in the lease or sale, or give it completely to a commercial broker, often for a significant referral fee.

“Here, at a minimum they get 10 percent off the top. It could be a $100,000 referral fee just for handing over their card,” said Daren Hornig, president and CEO of Dwelling Quest, which has both residential and commercial divisions.

At Fillmore in Brooklyn, which is primarily residential but also has a commercial division, “the typical interoffice referral fee is 25 percent for doing nothing, and if there is a lot of involvement the fee can be 50 percent,” president John Reinhardt said.

Michael Forrest, executive managing director of CH Commercial, which is a part of Citi Habitats, said his company’s referral fees are “generous,” but didn’t provide a number.

“A commercial firm generally speaking will take a referral, but the residential agent who’s referring often loses control of the client,” he said.

“We have a referral system that allows residential agents to be partnered up with an experienced commercial broker who assists them in the transaction. Nearly 99 percent of the time the commercial person can lead the deal.”

There are plenty of opportunities for commercial leads out there for the residential agent. “We are training every residential agent to ask one more question,” Hornig said.

Landlords stuck with old, fading garment factories on the far West Side are turning a former Felt Alley into a modern-day Fleet Street.

These gigantic buildings, once in danger of slipping into underuse and decay, have been refitted for media companies, an appropriate shift as clothing manufacturers have largely fled Manhattan.

The surprising overlap between the needs of news organizations and those of the departed garment manufacturers has been mutually beneficial, and turned the far West Side into an emerging office market, according to area brokers.

“These buildings lend themselves to media companies,” said Michael Forrest, executive managing director at CH Commercial, an affiliate of Citi Habitats.

They have physical attributes that traditional Midtown office towers lack, including large floor plates and high ceilings. Because they were constructed as factories, they can accommodate the high-tech equipment that media companies need, such as recording studios and backup generators in case of another blackout like the epic one last summer, Forrest said.

Because these buildings are already primed to accommodate media tenants, it’s a bonus that the area is significantly less expensive than Midtown. Brokers said space in the far West Side ranges from the mid-$20s to the mid-$30s per square foot, compared to between $35 and $45 per square foot for comparable space in Midtown.

Other key amenities that mean less to, say, financial service companies than to media companies include roof space for satellite dishes and the infrastructure for 24-hour-a-day use, such as all-day air-conditioning, said Mitchell Konsker, an executive vice president at Cushman & Wakefield.

Konsker should know. He brokered one of the biggest deals in the area – representing the Associated Press in its leasing of 280,000 square feet at 450 West 33rd Street, where the news cooperative began moving in July. David Dusek of Cushman & Wakefield also represented the AP in the deal.

“The AP did an exhaustive search of the entire market for two years before settling on this space,” Konsker said. Previously, the world’s largest news organization was spread out in three different buildings in Midtown, including its world headquarters at 50 Rockefeller Center, where it was one of the original tenants, he said. Now it has consolidated into a single space.

Its new roof has room for 10 satellite dishes and can accommodate its staff on three floors of about 100,000 square feet each, making for “better synergies” between departments, he said. Other amenities include a basketball court, gym, cafeteria and outdoor terraces.

The Daily News, U.S News and World Report and the public broadcasting station WNET-TV are already located in the squat building.

The AP felt confident enough in its choice to sign a 15-year lease, the terms of which were not disclosed.

Brokers acknowledge that the area is unlikely to draw law firms and accounting firms, which have little use for the kinds of physical attributes that these buildings offer. They say that as more media companies move in, the companies that service them – such as advertising and public relations firms – are likely to follow suit.

In addition to being close to media companies, these types of creative firms are attracted to the loft-like spaces available in former warehouses, with their abundance of natural light and high ceilings, brokers said.

Of course, the prospect of expanding the Javits Center and a new stadium for the New York Jets football team looms over the whole neighborhood.

If the stadium project goes through, then the neighborhood could see an influx of the same financial companies and law firms that won’t consider the area now. “If the stadium includes new office space looking over it, that will have real panache,” Forrest said.

But for now, the far West Side remains a cheaper alternative to Midtown with particular appeal to a niche segment of tenants.

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Two architecturally ambitious new buildings, both anchoring old media empires, are set to transform Eighth Avenue in Midtown.

Between 40th and 41st streets, across from the Port Authority Bus Terminal, the New York Times Co. headquarters is fulfilling what its architect called “an expression of love” for the city. Several blocks up Eighth Avenue – past other entrenched media headquarters for the likes of Reuters, Conde Nast and Time Warner – the Hearst Tower will realize the dreams of its namesake to loom over Columbus Circle.

Both projects are slated for completion by spring 2006.

The 52-story Times headquarters is under construction on the east side of Eighth Avenue. When architect Renzo Piano unveiled his design for the building in December 2001, he called it “an expression of love for this city and the values it represents.” The 856,000-square-foot Hearst Tower at 959 Eighth Avenue will be the working home for more than 1,800 employees.

New York will need several million more square feet of office space over the next 20 years. The two buildings are not only a step in that practical direction, said Rick Bell, executive director of the New York chapter of the American Institute of Architects, but they also add continued vitality to an area where so many people work.

“Both are, if not iconic, exceptional accretions to the New York skyline,” Bell said. The Times and Forest City Ratner developed the new building for the Times as a joint venture, with ING Real Estate, a subsidiary of ING Group, as FCRC’s financial partner.

Major tenants have yet to be announced, but the Times’ operations are expected to take up more than half of the building’s 1.54 million square feet, occupying floors 2 through 28. The Times has seven office locations in New York, and is expected to concentrate most of its Manhattan-based employees in the new building.

FCRC will own about 600,000 of the remaining gross square feet, including office space on floors 29 through 50 and retail space on the ground floor. The ground floor will include a garden and a 350-seat auditorium for the Times.

Piano’s design will include a glass curtain wall. Thin horizontal ceramic tubes on a steel framework one to two feet in front of the glass will screen much of the double thermal-pane glass wall, retaining heat and helping cool the building as well, with different colors of light bouncing off the tubes at different angles throughout the day.

“At street level, the building will be open, transparent and permeable,” Piano said at the design unveiling. “Each architecture tells a story, and the story this new building proposes to tell is one of lightness and transparency.”

Winner of the 1998 Pritzker Prize, Piano has also designed the Centre Georges Pompidou in Paris and the Kansai Air Terminal in Osaka, Japan.

A stainless steel and glass tower stretching 42 stories, the Hearst Tower fulfills the dreams of the late media baron William Randolph Hearst, who bought up properties around Columbus Circle more than 100 years ago with the idea of making the area a veritable monument to his legacy.

The $500-million tower will rise out of an existing six-story building, which has been torn down except for its façde. The 42-story tower will rise from it, as was the plan all along. The original International Magazine Building was built in 1928 to accommodate a tower on top of it.

But the Great Depression intervened, Hearst’s prospects declined, and the squat building at 56th and Eighth stayed that way until Norman Foster, another Pritzker Prize-winner architect, joined with Tishman Speyer Properties to construct the new tower.

Foster’s recent projects include the reconstructed Reichstag in Berlin, the Independent Television News Headquarters in London, and the headquarters for the Hongkong/Shanghai Banking Corporation in Hong Kong.

The new tower will pull in Hearst employees from several locations around Midtown.

“It really is going to be 100 percent Hearst owned and operated,” said Alex Steinberg, manager of Hearst corporate communications. “It gives us a chance to give back something to the city of New York, which has been so good to us for so long.”

The residential real estate market in Manhattan normally takes a breather in the summer compared to the spring, and this seems to be especially true this year.

After an overheated market in the first and parts of the second quarter, characterized by tight inventory and dramatically rising prices, the market started to slow down in May, and things have remained relatively flat through July.

“There was a one or two month window where there was a 10 to 20 percent jump,” said Jonathan Miller, president of the appraisal firm Miller Samuel Inc. and author of the Douglas Elliman Manhattan Market Overview. “Now we’re seeing a 10 to 15 percent annualized return.”

“Brokers are taking time off, and buyers and sellers are too,” Kenneth Scheff, director of sales for the Downtown and Tribeca offices of Stribling & Associates, said in late July. “My agents are going on some really lovely summer vacations, and taking an extra week off.”

Scheff said it is “hard to know where the market is going.”

He said he is still seeing properties get into bidding wars and overall “it’s a very strong July,” given the fact that “July is never May.”

The market is especially strong at the high end and lower end, which Scheff characterizes as above $3 million and (surprisingly enough) below $1 million, respectively.

At the same time, pricing compared to the month before has been flat for several months. “It would definitely be a mistake to price something above what it was in the spring,” he said.

Jeff Wolk, co-founder and co-principal of Fenwick Keats, also said late last month he “expects to see a fairly stable market for the remainder of the year,” and that the market has reached a “plateau.”

Wolk said most people are biding their time until after the presidential election. “There is a lot of nervousness over world events,” he said, noting that buyers and sellers may be waiting to get through the Democratic and Republican conventions with no major incidents as well.

But if there is uncertainty, Scheff said there is less concern about interest rates than in the past.

“In the spring, people were looking to the election as significant,” he said. “People thought maybe interest rates would shoot up. But that is not the perception now. There is no sense that we are on a precipice.”

Miller agrees. “The economy is improving, but we keep getting periodic setbacks, so there hasn’t been a big rise in rates,” he said.

Still, economists at 18 of Wall Street’s 22 largest bond trading companies expect the Federal Reserve to boost its target overnight lending rate between banks to at least two percent by the end of this year.

One person with a different opinion on the overall state of the market is Gregory Heym, chief economist for Brown Harris Stevens.

“Don’t believe people who say there is a slowdown, ” Heym said in early July.

He said a BHS report on the second quarter (see story “Average Price Tops $1M in 2Q”) showed that there were significant price increases in June, the last month of the quarter. There are no statistics yet for July.

“There was a significant increase – and you can’t have an increase like that in the quarter if you have one or two slow months,” he said.

Several reports on second quarter apartment sales in Manhattan showed the average sales price of a Manhattan apartment breaking through the $1 million threshold.

The Douglas Elliman Manhattan Market Overview, prepared by appraisal company Miller Samuel, showed average prices up 4.9 percent over the record $998,905 average set in the first quarter. Prices were up 20.9 percent over the year before.

The second quarter–which included a frenzied market in April and lower activity in May and June–was also characterized by an increase in the number of sales and a return to more normal levels of inventory.

There were 2,031 sales, up 11.3 percent over the prior quarter. The number of listings jumped 21.2 percent to 5,211, compared to 4,299 listings in the first quarter, the report said. At the onset of the quarter, apartment inventory was at its lowest level in more than two years.

Another report, by the Corcoran Group, found buyers paid an average $1.23 million for condominiums and close to $900,000 for co-ops in the first half of 2004.

Those prices represented an increase of 38 percent for condos and 19 percent for co-ops compared to a year ago, the report said.

Brooklyn saw a 16 percent increase in average sale prices compared to the year before, the report said. Increases were especially significant in Boerum Hill and Fort Greene, where average sale prices grew by 30 percent.

Another report by Brown Harris Stevens also found that apartments in Manhattan crossed the $1 million mark, reaching an average of $1,052,435 during the second quarter.

Cooperative prices jumped 20 percent during the three months of the second quarter, and condo prices jumped 12 percent during that period, the report said.

Commercial and residential real estate have long followed parallel tracks in New York, each market rising and falling in its own cycle, and never the twain meeting – at least not in a single brokerage.

Andrew Farkas, the mastermind behind the last attempt to combine residential and commercial real estate, bought commercial brokerage Insignia/ESG and residential brokerage Insignia Douglas Elliman in the late 1990s.

There was talk of synergy between the two, but both companies were sold within a few years.

While residential and commercial brokerage are clearly different cultures, several companies are still willing to try anew to bridge the divide.

This time around, plans for a one-stop real estate shop in New York focus on building integrated operations from the ground up, with residential and commercial brokers assisting and educating each other, an example now underway at Citi Habitats, a division of the Corcoran Group.

Citi Habitats focused on residential real estate exclusively for nine years before starting up a commercial brokerage division last year, and new CH Commercial executive managing director Michael Forrest says that could help the brokerage in many ways.

Forrest, a former Newmark broker, says residential companies give away a lot of business, but having a formal commercial division captures more potential business from each client.

“That’s the name of the game these days, to be one-stop,” Forrest says. “Recently, we brokered a relocation deal that involved office leasing as well as residential leasing for 90 employees. The commercial division was feeding the residential division there.”

Daren Hornig, part of a group that purchased residential brokerage Dwelling Quest 10 months ago, decided several months later to start up a commercial brokerage arm as well.

For residential brokers, there is a significant learning curve in getting to know the commercial side of the business, though there are also significant financial incentives.

“The biggest problem, where most – if not all – residential companies have failed in the commercial arena,” says Hornig, “is they don’t understand the commercial side.”

Hornig says a standard office or retail lease is 20 to 200 pages long and negotiates everything from how much it costs to use freight elevators for shipments, to chilled water services, cleaning specs, air conditioning use time, the hours of operation, growth factor, and proper subleasing options. The deal cycle is also often much longer than for a residential deal.

“There are thousands of elements to negotiate in a commercial lease transaction,” Hornig says. “You need to be a real partner in understanding attorneys, engineers and others, because the impact on a company’s business is so great.”

Hornig, also a former Newmark broker, says it was important to create a combined operation, rather than try to impose it on brokers at a later stage.

“The large residential brokerages could start commercial operations too, if they can create the right culture and environment that enables lead sharing,” he says. “But it would almost be too difficult for them to put that in place. Since we bought this company, we’ve been putting a culture in place. We are smaller and more nimble with 80 people.”

Fillmore, the largest residential company in Brooklyn, has been a player on both sides of the fence for 25 years, after it established a separate commercial office to complement the commercial agents sprinkled throughout Fillmore’s 20 locations.

Fillmore president John Reinhardt says commercial services make up about 25 percent of the company’s business. “A lot of companies in town try to dabble in commercial, but they have no real force or they co-broker with someone like us,” he says.

The challenge, Reinhardt says, is getting brokers trained properly, “because a bad commercial agent can damage your reputation just like a bad residential agent.”

There has also been a perception on the commercial end that those brokers are more corporate and professional than the residential broker, Hornig says.

“Commercial real estate went through a renaissance in the late ’80s and ’90s with computers, and now transactions have in-depth financial analysis,” he says. “Similar to how Eddie Gordon [founder of the Edward S. Gordon Co., later Insignia/ESG] changed the commercial business in the late ’80s, the successful commercial real estate brokers understand that with hard work they can easily make over half a million a year. A commercial broker knows what it takes to make 200 cold calls a week.”

Reinhardt believes the average commercial broker is numbers oriented, but the best also have good people skills. “One great feature about the commercial agent is they are more meticulous in their call backs,” he says.

Reinhardt also says that commercial brokers have “limited patience dealing with the residential broker’s questions about FAR (floor area ratios), zoning and the important information needed for anyone looking to purchase or lease a commercial property.”

But none of that is a bar to residential brokers learning about the commercial side of the business and getting involved.

“We offer the residential broker a commercial training seminar that gives them the ABCs of the business,” says Forrest of Citi Habitats.

“It gives them threshold tools to capture a retail or office deal and they can hand it over to a more experienced broker.” The goal is to turn the broker into a “hybrid broker.”

Fillmore is also training its residential agents. The company recently opened a new location in Brooklyn Heights, and James Clark, the manager of Fillmore’s commercial office, went to the new location to educate brokers.

“Just because they haven’t done a commercial deal doesn’t mean that they couldn’t be wonderful with training,” Reinhardt says. “We have agents that grow into it, fall into good connections and move to our commercial office or they stay where they are and are that office’s only commercial agent.”

Forrest says the goal is to get residential brokers to take part in a deal actively, rather than just providing a referral.

“We try to empower the residential broker with an infrastructure that allows then to capture the business, ask the right questions to get a meeting and win over the business.” says Forrest.

At Dwelling Quest’s office in Midtown, having the two sides of the business in the same location means brokers on both sides of the fence learn from one another, Hornig said.

“When you see people in the office and they are big producers it sets the tone,” he says. “The residential people are getting the financial and presentation skills from the commercial side.”

The pace and stress of the real estate market in New York has over the years created an adversarial relationship between real estate brokers and managing agents.

While many brokers complain that managing agents, who serve as the go-betweens for brokers and the board of a building, do not return their phone calls and are generally unresponsive to their needs, managing agents say they are overworked and resent the enormous commissions paid to brokers.

But the relationship changes – at least a little – when broker and managing agent work for the same employer.

While some residential brokerages shun property management as a not especially lucrative or glamorous business, other brokerages, most notably Douglas Elliman and Brown Harris Stevens, have built up large property management divisions, and they are continuing to grow as the industry consolidates.

Douglas Elliman’s property management division, which covers more than 60,000 units in 240 co-op, condo and rental properties, is a “great standalone business,” said Howard Lorber, an owner of the company.

“We realize there is a lot of upside to property management,” he said earlier this year. “You can’t look at it just for leads; you have to provide great services.”

Douglas Elliman is the largest property manager – with about three times the volume of its closest New York competitor, he said. But Brown Harris Stevens is on its tail, with the company acquiring Heron Ltd. last month, an acquisition that adds 7,000 units to the 10,000 apartments it currently manages. Brown Harris says its managed properties are exclusively doorman buildings.

Hall Willkie, president of Brown Harris Stevens, said there is a natural synergy between the building management and brokerage side – largely because a building management division can provide information about co-op sales.

“The sale of a co-op is not a matter of public record. Because our company manages the building, it gives us tremendous information regarding what specific properties sell for,” he said. “A co-op is a private corporation and one responsibility of a management company is to handle the close of all apartments and help tenant shareholders to evaluate what their property is worth.”

But Neil Binder, principal of brokerage Bellmarc, said the property management business is not particularly attractive to him. He said the start-up costs and meager profits are the reasons his company and other large brokerages, like Corcoran, do not have property management divisions.

“Building a property management company is a long process with thin profit margins and it’s not a generous business to enter,” he said.

“Marketing and salesmanship is not the key to property management. It’s a different mindset.”

Diane Ramirez, president of Halstead, said having a brokerage and management division (the company started its management division three years ago) makes each party more sensitive to how they can serve the other.

“I think having a sister firm that does management makes it less adversarial, so it’s much smoother when you work together,” she said.

“The fact that we speak to each other keeps us in the loop. An independent management agency won’t take the time to educate the broker.”

Jim O’Connor, president of Douglas Elliman Property Management, said, “brokers are demanding and they want the deal to close. It’s unacceptable if someone in their own family does something to make the deal go bad.”

Ramirez maintains brokers don’t get special treatment. “The [building management division] will never put an agency above the building,” she said. “I think they are very fair-minded and we don’t have any trick access to them.”

But Binder believes otherwise. For a seller’s broker, he advises, “never tell a managing agent anything about the deal until the contract is signed.”

“They have the right to refer,” he said. “So they might tell the broker on the team and they will get compensated for their lead.”

Some property managers feel shortchanged in what they earn compared to brokers.

“I wish the fees that we collect for property management were remotely close to the brokerage commissions on some of the apartment sales in our buildings,” said O’Connor. “When a broker makes a sale at one of the better buildings, that commission represents about 10 years worth of management fees.”

Managing agents also say they are very busy with daily building concerns and complain that brokers pepper them with calls and do not accept the information they get, according to Binder.

Real estate educator Esther Muller believes both sides need a better understanding of each other’s role.

“There is a lack of communication that happens before they even speak to each other,” she said. “The common denominator between brokers and property managers is that they both deal with people and they need realistic expectations. Sometimes we act as if we are at war instead of as if we are in the same team.”

“It’s a hell of a job, especially when it’s a hot market,” said Binder.

“It’s a burden because they are handling an enormous amount of transactions with the same resources, which slows the process down.”

“The managing agent is only a conduit and sometimes brokers are overly aggressive,” he said. “They have two different agendas.”

The right package of amenities in a new development can make the difference between how quickly a property is sold and for how much.

In the past five years, amenities have taken on an increasingly prominent role in high-end real estate transactions, often becoming a critical factor in a buyer’s decision to make a purchase in a new development, said Neil Tilbury, a leading broker at Manhattan Apartments, Inc.

While Manhattanites might think of themselves as savvy and cutting-edge, Tilbury, an Englishman, believes that the city has lagged behind other parts of the country in terms of its amenity offerings, even though buyers will spend millions on an apartment.

“In so many ways, the city has been light years behind the rest of the country in terms of what you’ve got in apartments,” he said, citing the general quality of buildings and public areas.

The 1990s boom crowd of dot-commers, advertising moguls and fashionistas helped by bringing a new taste for more modern amenities in buildings, raising the standards and prices of new developments, he said.

That means developers are working harder to come up with new amenities and bring in new buyers. In their new monthly update on the Downtown luxury market, Douglas Elliman brokers Leonard Steinberg and Herv Senequier point out that buyers’ expectations keep rising with regard to kitchen appliances and bathrooms.

“Sub Zero fridges are secondary to Traulsen, La Cornue stoves make Vikings appear inexpensive, Waterworks bathrooms are the standard, and custom everything is the trend,” the report said.

Washer-dryer hook-ups are high on Tilbury’s list of civilized perks.

Jacqueline Urgo, executive vice president at the Marketing Directors, said people never mentioned wine cellars seven years ago, but they are now a selling point in high-end Manhattan apartments. Formal dining rooms are also on buyers’ wish lists, she said.

In the realm of entertainment, the report by Steinberg and Senequier says the trend is towards “home technology systems that cost the equivalent of college educations,” and that plasma televisions are “no longer a novelty, and how many you own determines your status level.”

Andrew Gerringer, managing director of Douglas Elliman’s Development Marketing Group, said apartment sizes in Manhattan have decreased over the past five years, which makes storage space in the basement an item in demand among buyers.

“Now you almost have to have storage in a building because people expect it,” he said.

Louise Phillips Forbes, a senior vice president at Halstead Property who works with new developments, agreed that private basement storage bins are now a “must-have.”

Doormen, another amenity, can now be had all parts of Manhattan,
Forbes said. “Ten years ago, the idea of having a doorman in a condominium in Tribeca was just unheard of,” said Forbes. She said 275 Greenwich Street was the first condo building in the area to provide a doorman in Tribeca, in 1987. Other Tribeca addresses followed suit in the 1990s, she said.

Private, full-service clubs are also a new feature in some developments.

RFR/Davis’ Park Avenue Place, a 45-story condo nearing completion at 60 East 50th Street, will offer its residents preferential access to an exclusive, almost country club-like facility.

Called “The Core Club,” the 23,000-square-foot facility will occupy the first five floors of the building. It will include a new restaurant and bar by chef Tom Colicchio of Craft, as well as a library, lounge, screening room and meeting rooms. There will also be a spa and fitness studio, and changing facilities with butler service. Future members will be able to get into the club for a $25,000 deposit and $1,000 per month, with the deposit fees waived for building residents.

The Chelsea Club condominium, under construction at West 19th Street near Tenth Avenue will also have a club with a gym and entertainment area with a room-length bar behind its two-story lobby for residents.

Gerringer predicts growing acceptance of certain amenities he has already seen in a few places, such as refrigerators in the concierge area, to allow residents to pick up their groceries at the front desk. Another feature is a remote-controlled “cyber doorman” in smaller buildings, standing in for a real doorman – because in Manhattan, space is always at a premium.

CARROLL GARDENS

Boulevard East

53 Boerum Place

Newly constructed 11-story, 99-unit condo building located in between Brooklyn Heights and Cobble and Boerum Hills. The $40 million project includes studio, one- and two- bedroom apartments priced from around $300,000 to $700,000. Each apartment will be wired with home computer networks where residents can share printers and computer files throughout the apartment. Each unit also has maple hardwood floors, satin finish hardware and ample closet space, among other amenities. The building includes 24-hour doorman service, a landscaped courtyard, club room and fitness center. The developer is SDS/Procida and the building was designed by Stephen B. Jacobs Group P.C. The sales office opens in August and the building will be ready for occupancy in September of this year. Contact: The Corcoran Group Brooklyn development division, 718-923-8061.

CHELSEA

678-680 Sixth Avenue

Century-old five-story warehouse being converted into seven luxury, loft-style rental apartments. Five units will have two bedrooms and two baths, several with a separate area that can be used as an office. The two smaller apartments will have two bedrooms, and bath and powder rooms. The upper floors have good views down Sixth Avenue. Monthly rental prices for the 1,200 to 1,600 square foot apartments start at $5,000. Occupancy was scheduled for mid-July. The developer is Rudd Realty. Contact: The Rudd Group, 212-319-2500.

CLINTON HILL

The Kent

970 Kent Avenue

The former Kaiser Underwear factory is being transformed into a 103-unit high-end condo building, one of the few condo conversions in Clinton Hill, which is a landmarked district. The loft-style units range from 941 to 1,327 square feet, and will sell for between $350,00 and $500,000. A duplex penthouse was added on top of the seven-story building. The project will feature a wall of large windows in each apartment, and other amenities include a gym, private courtyard with a running track and a full-time doorman. The building will be finished toward the end of the year, though apartments are for sale now. The developer and architect is Elissa Winzelberg. Contact: The Developers Group, 718-222-1545.

EAST VILLAGE

445 Lafayette Street (Astor Place)

21-story luxury residential tower on Astor Place with 39 loft residences. Two and three bedroom units will range in size from 1,449 to 3,147 square feet and will be priced from approximately $1.995 million to more than $6.5 million. Apartments will feature undulating floor to ceiling glass window walls and high ceilings. There will also be four full-floor penthouses with private elevator entrances, working fireplaces, private terraces and skyline views. The project was designed by architects Gwathmey Siegel and Associates, is currently under construction and will soon be available for purchase. Contact: sales center, 212-473-4445 or astorplace@related.com.

HARLEM

Central Park North and Lenox Ave

Upscale doorman building is being planned with 80 units on northwest corner of Central Park North and Lenox Avenue. The 20-story building will feature one to four bedroom units ranging in price from $500,000 to $1.7 million. Demolition on the site is planned for spring 2005. The developer is The Athena Group

HARLEM

Site 6

145th Street

The project is middle income housing subsidized by HDC with a few market rate apartments. It will be a 10-story building consisting of 180 units; 37,000 square feet of commercial space and 13,000 square feet of parking space. The building will consist mostly of two and three bedroom units ranging from about 700 square feet to 1,700 square feet, some with oversized terraces and patios. Units feature stainless steel appliances and Euro-style kitchens. The building will have a fitness room, bicycle storage and 24-hr attended lobby. The project is a joint venture between The Richman Group of New York and Gotham Organization Inc. The architect is Greenberg Farrow Architects. The development will break ground this fall and is scheduled for completion within 24 months. Manhattan Apartments is the sales agent for the project. Contact: Manhattan Apartments, 212-378-2360

LOWER EAST SIDE

195 Bowery

16-story tower under construction over what was a five-story commercial building. There will be 13 units, nine of which will be floor-through apartments. The first four floors of the building will be retail and commercial space. Apartments will range from 856 to 2,600 square feet, with 10 1/2 foot ceilings. A penthouse will have 12 1/2 foot ceilings, a fireplace and three terraces. Prices run from $825,000 to $2.7 million. The project is being developed by Charles Blaichman and Charles Saulson and designed by Keith Strand. Occupancy is scheduled for spring 2005, and some units are already for sale. Contact: Natalie Rakowski, Douglas Elliman, 212-769-9892.

SALES REPORT:

COLUMBUS CIRCLE

Time Warner Center

60 of the 65 apartments in the Mandarin Oriental, the northern tower of the project, have been sold. 115 of the 135 units in One Central Park, the southern tower, have also been sold, according to the New York Post. Available units run from a $2 million two-bedroom at One Central Park to two remaining 8,400 square foot, $30 million penthouses – one in each tower. Contact: sales center, 212-823-9300.

FINANCIAL DISTRICT

Liberty Plaza

10 Liberty Street

Newly constructed building is already 45 percent leased. Renters will begin moving into the 287-unit building this month. Prices begin at $2,375 for a one-bedroom and range up to $7,295 for a two-bedroom penthouse with terrace. Contact: Glenwood rental office, 212-535-0500.

MURRAY HILL

120 Gramercy Hill

120 East 29th Street

Project is approaching 60 percent sold after the first 60 days of marketing. Restoration of five 1880\’s era contiguous brownstones, with 25 one-to-four bedroom condominiums, priced from $675,000 to $2.4 million. Contact: 120Gramercyhill.com.

NOLITA

60 Spring Street

Ninety percent of the project, which includes one- two- and three-bedrooms, is sold. Still on the market are several two-bedrooms, starting at $2.35 million for 2,032 square feet and three-bedrooms, starting at $2.9 million for 2,154 square feet of space. Also available is the 2,800 square foot four-bedroom penthouse for $7.4 million. Contact: The Sunshine Group, 212-750-0500.

UPPER WEST SIDE

455 Central Park West

A 26-story condo tower between 105th and 106th Streets with 53 apartments, as well as a renovated landmark French Renaissance chateau at the front of the property. More than 67 percent of the homes have already been sold in both the tower and landmark portion of the development. Apartments at the condo tower went on the market in December at prices ranging from $1.35 million to $4.5 million. Contact: The Marketing Directors, 212-826-8822.

OTHER NEWS:

BATTERY PARK CITY

The Sheldrake Organization, Plaza Construction Corporation and RW Consultants have been selected to erect a \”green\” residential tower on the last waterfront site in Battery Park City. The building will be approximately 30 stories tall and contain more than 300 residential units. The new 537,400 square foot building, slated for Site 16/17, is located on the Hudson River, bordered on the north by Murray Street, the east by North End Avenue, the South by Vesey Street, and on the west by River Terrace. Plaza Construction Corp. is owned by the Fisher family and RW Consultants is a firm run by former deputy mayor Rudy Washington.

TRIBECA

The Loft Residences at 116 Hudson

116 Hudson Street

Stribling & Associates has been appointed the exclusive sales agent for The Loft Residences at 116 Hudson, the latest of actor Robert DeNiro\’s TriBeCa developments. The project involves combining an existing vacant 19th century brick structure with a new glass and metal curtain wall structure. There will be 4 full-floor, two-bedroom apartments as well as a duplex penthouse and 4,000 square feet of retail space. Sales began earlier this month with prices starting at $2.3 million. Contact: Sean Murphy Turner, Stribling Associates, 646-613-2619.

New Developments From Previous Months

Atlanta

Residential

Palatial new mansions are springing up all over Atlanta. The number of houses for sale in the 23-county metro area priced at or above $1 million has more than tripled since 1998, according to an annual homes report by The Atlanta Journal-Constitution. There were just 116 houses for sale for $1 million or more in 1998, but last year there were 392 homes in that price range. The majority of the upscale homes are located in Fulton County, but Northside counties such as Gwinnett, Cherokee, Cobb and Forsyth have seen an increase in the number of houses priced over $1 million as well. In Buckhead, the upscale Atlanta neighborhood, a majority of the homes surpass the $1 million mark.

Commercial

Atlanta’s office market may finally be coming out of its slumber. Metro area office users leased 355,400 square feet more space than they gave up in the first half of 2004, according to the Dorey Market Analysis Group. That’s a sharp contrast to 2003, when there was 1 million square feet of negative absorption. Class A office space saw the biggest improvement, with companies taking advantage of market conditions to upgrade their space.

Boston

Residential

Home prices in the Boston area have risen 64.4 percent over the past five years, among the steepest increases in the country. Last year, prices rose 8.4 percent. But rising interest rates and a slowing economy could mean prices will flatten or decline, some experts say. That could be offset by recent economic data that shows Massachusetts adding 20,000 jobs in the last three months, after a long period of no growth.

Residential/Commercial

The battle over the Rose Kennedy Greenway – 27 acres of open space Downtown created by the Big Dig-is officially over. Previously feuding parties from the city, the state, and the Massachusetts Turnpike Authority agreed to establish a private, non-profit organization to govern the mile-long strip of largely open space where the Central Artery roadway, now underground, once stood. A few buildings, including a visitor center and cafeacute;, will likely be built on the site.

Chicago

Residential/Commercial

In other park news, Chicago saw the opening last month of a 24.5-acre Downtown park that will give the city’s “front yard” a bold makeover. Located on Michigan Avenue between Randolph and Monroe Streets, its designers include star architect Frank Gehry. The park was largely the vision of Mayor Richard Daley, and cost $475 million, more than three times the original estimate. Plans were first announced in 1998.

Commercial

Sam Zell’s Equity Office Properties Trust, the nation’s largest REIT, was downgraded last month by Moody’s Investors Service, which cited recent poor operating performance. Cash positions at the Chicago-based trust have fallen short of levels needed to cover dividend obligations, Moody’s said. Despite the downgrade, it said bondholders of the REIT are still in a strong position, because of sound levels of liquidity, unencumbered assets and moderate debt levels.

Detroit

Residential

Overextended credit, job cuts and real estate appraised at higher than market value are driving increased foreclosures in metro Detroit. Foreclosure listings nearly tripled from January 2003 to January 2004 for the five-county area, according to Foreclosure.com, a national subscription database of foreclosed properties.

Commercial

The Detroit Lions will soon be getting a new neighbor. Etkin Equities plans to build a $40-million office building and parking deck adjacent to Ford Field in Detroit, according to globest.com. The 115,000-square-foot office building will house 400 PriceWaterhouseCoopers employees and other tenants. An upscale hotel with 200 rooms is also planned for the area, and both projects are targeted to be completed by 2006, when the stadium will host the Super Bowl.

Los Angelos

Residential/Commercial

With L.A.’s once forsaken downtown returning to favor, more than 3,500 residential units, mostly condominiums and mostly conversions, are now under construction, in addition to the 2,500 units completed since 1999. Several thousand more are in the pipeline, according to theslatinreport.com.

Residential

The number of home sales in Southern California rose by 11.5 percent in June compared to the month before. Prices in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties rose 2.5 percent compared to the previous month, with the median price at $406,000. Brokers say inventory has increased compared to earlier this year, and they expect appreciation rates to ease during the new few months.

Miami

Residential/Commercial

Brooklyn developer Shaya Boymelgreen and the Israeli company Africa-Israel Investments announced last month that they intend to develop six projects within two years as part of a massive $1.5 billion plan for residential, commercial and office development in downtown Miami. The first project will be a 55-story high-rise condo and hotel at Biscayne Boulevard and 11th Street. Future projects include redevelopment of the Miami Arena site, contingent on winning the land during an auction this month. The partnership has already spent $130 million to acquire 25 parcels across the city, they said.

Philadelphia

Commercial

A bill that would give tax breaks to Comcast Corp. as the anchor tenant in a new Center City skyscraper is still under consideration, but is being contested by a group of area landlords in a bitter fight. They have protested by turning off all but the safety lighting in their Downtown buildings at night. Comcast executive vice president David Cohen has called the landlord group “whackos,” according to the Philadelphia Business Journal. He said efforts to derail tax-free status for the 17th Street tower are akin to being anti-growth.

Residential

Buyers are flocking to the less congested parts of New Jersey in the south, within commuting distance of Philadelphia. In Cumberland County, one of the state’s up-and-coming areas, home prices have risen 5 percent to 10 percent in the last six months and most sales are now in the $150,000 to $175,000 range, local brokers say. Most buyers are coming from outside the area, with rising prices squeezing out local people who’d like to trade up. Houses that sold four years ago for $120,000 are now going for $180,000, according to brokers.

San Francisco

Commercial

San Francisco is the most expensive city in America for corporate headquarters, based on executive salaries, office rents, utilities, and corporate travel, according to corporate consulting firm Boyd Co. The annual cost of operating a San Francisco corporate headquarters with 350 employees and 50,000 square feet of Class A space is about $22.4 million. New York placed second at $22.3 million; Santa Clara County, Calif. was third at $21.8 million; and Stamford, Conn. was listed fourth.

Commercial

Office buildings worth more than $2 billion are for sale in the city, a tenfold increase from a year ago. They include a half-dozen downtown skyscrapers, comprising about 2 million square feet of rentable office space. Among the offerings are three buildings co-owned by developer Hines Properties and CalPERS, the state employee pension fund, and two South of Market office towers built and owned by the Cousins-Myers development group. In one of the biggest buys this year, David Werner, a Brooklyn investor, and his partners agreed to buy half of the landmark Bank of America Center for $400 million last month. The Werner group paid about $444 per square foot for the 1.8-million-square-foot complex.

Seattle

Residential

North of Seattle, a suburban seaside mansion has been sold for $12 million, setting a record for real estate in British Columbia. The four-year-old West Vancouver mansion has a sweeping view of the Lion’s Gate Bridge to Vancouver, rests on more than 1.2 acres with about 200 feet of shoreline and has five bedrooms, a swimming pool, media room, wine cellar and boathouse with ramp.

Commercial

Microsoft is buying the Redmond headquarters of Eddie Bauer for $38 million, pending court approval. The sale is part of the Chapter 11 bankruptcy reorganization of Eddie Bauer’s parent company. The 20-acre property includes three buildings totaling more than 232,000 square feet.

Washington, D.C.

Commercial

With the nation’s top office market, developers are not shying away from Washington D.C. Roughly 5 million square feet of office space is under construction today downtown, and 3.1 million square feet of that is speculative, according to the National Real Estate Investor magazine. The vacancy rate in D.C was 8 percent at the end of 2003, according to Grubb & Ellis.

Residential

Small towns scattered along Maryland’s Eastern Shore such as Denton, Cambridge, Easton and Queenstown are gearing up for a real estate explosion that promises to overwhelm them with new residents, doubling their populations in some cases. In the 1990s, retirees discovered the Eastern Shore-within driving distance of family in Washington, Baltimore and Philadelphia. The level of residential development planned for the area, also known as the Delmarva Peninsula, could mean a turnaround in communities that have suffered through years of declining fortunes.

Stretching to the northern tip of Manhattan, Washington Heights and Inwood cover the last three square miles of the island from 155th Street to the Harlem River. They are arguably the city’s oldest neighborhoods – the Dutch supposedly bought Manhattan Island from the Lenape tribe in 1626 in what is now Inwood Hill Park. Both areas are among the fastest-growing and the least expensive on the island, drawing people fleeing the pricier digs farther south.

Washington Heights and Inwood – sometimes dubbed WaHI by locals – added nearly 30,000 residents in the past quarter-century, according to the city planning department. Most of its more than 208,000 residents live in apartment buildings along streets with wide sidewalks. The area is more than half open space and parkland – and less than 12 percent commercial.

These land-use numbers, coupled with the neighborhoods’ lower rents, make WaHI a bargain for that certain breed of Manhattanite who wouldn’t think of skipping the island for an outer borough, but who can’t quite swing $2,500 a month for a Chelsea studio.

“The rental market and the buying market is still much lower than the market below 110th Street,” said Klara Madlin, owner of Klara Madlin Real Estate. “However, it has gone up significantly in the last year or two, and I believe this will definitely continue.”

More than 94 percent of the residential units in WaHI are rentals, according to the city planning department, and their average monthly rents are generally half what they would be in other Manhattan neighborhoods. A one- or two-bedroom in WaHI rents for between $800 and $1,500, according to various sources. A one-bedroom generally costs $100,000, according to Manhattan Apartments Inc., and a three-bedroom can start at $200,000 – this during a year when the average price of a Manhattan apartment cleared $1 million for the first time.

This real estate landscape pulls in a mix of second-generation Latinos, recent immigrants, young professionals, and struggling artists. The Latino population of WaHI increased 16.3 percent during the 1990s, and the neighborhoods are now nearly three-quarters Latino, the majority with origins in the Dominican Republic.

WaHI is also young: Forty-one percent of its residents are ages 20 to 44. Post-collegiate professionals taking those first tentative steps into the real world and couples with young children are taking advantage of the lower prices, particularly for rentals with bedrooms. Artists, particularly musicians, have staked a claim to Inwood as a cheaper alternative to the lower Manhattan neighborhoods like Soho and the East Village, which welcomed their artistic predecessors.

The area’s first real boom came in the early 1930s, after the completion of the George Washington Bridge, and the Eighth Avenue subway line reached 207th Street. For decades, WaHI remained a northern stretch that lower Manhattan residents rarely considered, let alone visited, and the city often neglected the area. By the 1970s, the area was known more for crime than anything else. However, over the last decade, WaHI has seen a steady decline in violent crime and drug dealing, opening it up to a larger number of new arrivals.

Robert Kleinbardt has lived in WaHI for a quarter-century. About 13 years ago he founded New Heights Realty in Inwood, giving him a keen view of the changes in both neighborhoods. He said the single biggest groups of recent WaHI arrivals hail from the Upper West Side, noting that the neighborhood itself was once a destination for those looking for an inexpensive Manhattan address.

WaHI might not be cheap much longer. Recent legislation is freeing its landlords from rent stabilization, and long-time tenants are being priced out of many WaHI buildings. The vacant apartments are selling for prices unheard of a decade ago, and the free-market land rush has made WaHI a broker’s delight.

“There’s just so little available,” Kleinbardt said. “Everything that comes on the market lately goes fairly quickly, and often there’s bidding wars.”

Since the late 1980s, co-ops have been on the rise in WaHI, according to brokers, with demand outstripping supply. Many landlords are also looking to convert their rental buildings soon into co-ops, Madlin said.

The northward creep of people seeking cheaper rentals and purchases in WaHI is starting to transform the neighborhoods from predominantly Latino enclaves of affordable living into a younger version of the Upper West Side and its smaller cousin, Morningside Heights, the neighborhood around Columbia University, which has rents similar to WaHI.

“The housing in Washington Heights and Inwood consists of many prewar building which are similar to the Upper West Side,” Madlin says. “I think that the area will be undergoing conversions similar to what happened on the Upper West Side 20 years ago.”

Cobble Hill has ceased to be a bargain for most New Yorkers, but the quaintest and quietest of Brooklyn neighborhoods continues to see some residential development to meet high demand.

A landmark district of late Federal-era buildings and Victorian homes distinguished by their Italianate detailing, the tiny neighborhood bounded by Atlantic Avenue and Court, DeGraw and Hicks streets, is now an enclave of wealthy families spilling over from Brooklyn Heights and young urban professionals getting established in a picturesque setting.

Prices have risen as Cobble Hill has gentrified, and the area is now known for high prices and low turnover, making it comparable to Brooklyn Heights and even parts of Manhattan. For real estate professionals, Cobble Hill and other neighborhoods in the borough have come a long way.

“Brooklyn is no longer an alternative. It’s now a destination,” said Frank Percesepe, managing director of the Corcoran Group’s Brooklyn Heights office. “From Manhattan prices, you have to figure that maybe you’re down 20 to 25 percent, but it depends on the property.”

When they are available, condominiums go for about $650 a square foot and co-ops go for about $575 a square foot, said Christopher Thomas, executive vice president of Brown Harris Stevens Brooklyn.

Those prices are reflected in the demand for scarce space in and around Cobble Hill. Only a handful of luxury condos remain unsold in the latest large-scale development to go on the market, the 59-unit Arches at Cobble Hill, located at Hicks and Warren streets. The units range in size from 874 to 3,044 square feet.

A few condos are still available at the 21-unit Dean Boerum Condominiums, at Dean and Boerum Streets, and at the 14-unit Warren Street Court, Thomas said.

“Because the neighborhood is so small, that amount of development represents a fair increase in the total number of available units in the neighborhood,” Thomas said.

But the hallmark of Cobble Hill is its antique brownstone townhouses, most of which hover at four stories or less. Part of the neighborhood’s charm is right out on its streets, as wide-open skies peek through oak-lined boulevards, while picturesque stone stoops and tranquil rear courtyards give residents ideal locations from which to survey their domain.

“When they say ‘downtown brownstone Brooklyn,’ Cobble Hill is the epitome of that,” Percesepe said.

In the 19th century, Gowanus Bay lapped at the shore of Cobble Hill at Smith Street, and cheap brown stone from the New Jersey marshlands was shipped into Brooklyn on a network of canals. At the time, Cobble Hill was home to Italian longshoremen and other laborers.

The neighborhood was most likely dubbed “Cobble Hill” by a broker in the early 1970s when she noticed that property values in Brooklyn Heights shot up after its 1965 designation as a landmark district – the first in the country.

The ploy was an evident success. Townhouses in Cobble Hill now range in price from $1.6 to $2.5 million, the latter being a four- or five-story townhouse in mint condition.

Hannah Armer, 29, was born in Cobble Hill. Her parents bought a run-down, three-story townhouse with a garden apartment on Strong Place in 1971 for $60,000, and after a recent renovation, it was valued at more than $1 million.

“Growing up, we spent our lives scraping woodwork and sanding molding,” she said.

Armer loves her old neighborhood, where she grew up playing in pastoral Cobble Hill Park alongside old carriage houses and attended Public School 29, one of the best in New York City. Despite the threat of creeping gentrification and chain stores to the neighborhood’s Italian bakeries and privately owned shops, Armer stayed close to home. Five years ago, she rented a floor-through, one-bedroom apartment on Baltic Street for $1,200 a month, making the most of the differences in Manhattan and Brooklyn townhouse layouts.

She has a spacious living room, dining room and eat-in kitchen, with a bathroom and what she calls a tiny “hall bedroom.”

Armer is far from alone – there is a healthy rental market in Cobble Hill attracting young people from Manhattan and other parts of Brooklyn, said Marko Pankovich, a broker with Cobble Heights Realty. He said rents for a one-bedroom range from $1,400 to $2,300, and that they will increase in the near future.

“Prices came down considerably after Sept. 11, so there probably will be a slight swing back up, especially if interest rates go up,” he said.

And if brokers can come up with creative ways to market the fringes of districts like Cobble Hill – for instance, by calling the area between Hicks and Columbia streets “West Cobble Hill” – they may be able to sustain sales for a while.

The strip between Court Street and the popular restaurant row, Smith Street, is considered to be the less trendy Boerum Hill by old-timers but is being renamed by brokers eager to cash in on the Cobble Hill name. In fact, creating niches appears to be the defining sales principle of what was once the amorphously named South Brooklyn region.

“Two people working in my office live in that strip between Court and Smith, and they refer to it as CoBo” for Cobble and Boerum hills, Thomas chuckled. “That’s half joking – but FYI.”

Not many neighborhoods in New York carry so much glamour with their names alone that they merit a soap opera in their honor. Central Park West stands alone, though the eponymously titled drama about the beautiful people in the neighborhood only ran from 1995 to 1996. Mariel Hemingway’s star may have faded, but the neighborhood’s cachet remains very much intact.

The proximity to the park and its stunning views make the majestic apartment buildings designed by renowned architect Emery Roth in the 1920s and 1930s some of the city’s gems, and the central location appeals to more than architecture fans.

What’s not to like? Very little, except for the prices and limited supply of apartments.

Prices can be as high as $3,000 a square foot for a high-floor apartment facing the park, said Daniel Douglas, one of the founding members of the Corcoran Group’s West Side office. A 3,000-square-foot apartment with views might go for $4 million on Riverside Drive, but something comparable would go for $8 million on Central Park West, he said.

There’s just no comparison, he said. “These are grand apartments, trophy apartments,” Douglas said.

Much of the charm is attributable to Roth’s signature romantic style, showcased in such elegant towered buildings as the San Remo at 145 Central Park West, The Beresford at 211 Central Park West and to the north, at 90th Street, the El Dorado, a Roth collaboration.

The grandeur of these buildings is mirrored in many of the other less famous buildings lining the park, not only in terms of elegant exteriors, but also the apartments within.

“They have gracious elegant layouts and six- to seven-room apartments, in which you can accommodate families with two children,” said Abbie Gellert, director of West Side sales for Halstead Property.

Between Columbus Circle and 72nd Street, there are only two postwar buildings, including the Trump Hotel and Tower at 1 Central Park West, Gellert said. The others are all prewar co-ops.

There may be another condo on the way, eventually, with the sale of the 15-story Mayflower Hotel and a vacant lot behind it on an entire block bounded by Central Park West and Broadway, between 61st and 62nd Streets, in May. The buyers, a joint venture of the Zeckendorfs and others, said they don’t plan to develop the site, bought for $401 million, immediately.

Although the size of so many apartments here ensures that this remains a family neighborhood – home to couples who have committed to raising their children in the city-unlike less tony neighborhoods, the quality of the public schools is not much of a factor, brokers say. That’s because Central Park West residents generally send their children to private schools.

The neighborhood naturally attracts people with a great deal of money, but also, typically, people who have their heart set on living there.

“People realize there are a limited number of apartments at any given time, and very often they will wait years for an apartment of the right price range and size to come available,” Gellert said.

“Then they will take it right away. But for brokers, years of work went into the sale, staying on top of the market.”

Because many of the co-op boards ask for 50 percent down payments, this market is less sensitive to changes in interest rates, she added.

The prewar buildings have also been adding services that are comparable to those offered in newer condo buildings, including playrooms and gyms, said broker Christine Driscoll of Brown Harris Stevens.

Between 59th and 72nd, there is only one rental building, Douglas said. At the Langham at 135 Central Park West, apartments may rent for $35,000 a month.

But there are bargains to be found even within this ritzy area. Douglas said a small, low-floor studio in the back of a building – with very little light – might sell in the high $100,000s. Not bad for such a swank address.

 Real Estate Licensing Now Slower

The New York Department of State changed the licensing exam for real estate agents and brokers in New York City. The same-day licensing program has been replaced in July with a different licensing exam system, which means applicants who take the walk-in exam will have results mailed to them within 24 hours of scoring. For more information, go to: dos.state.ny.us

Luxury Fee in NJ

The New Jersey Legislature recently passed a bill that adds a 1 percent fee – to be paid by the buyer – on the full purchase price of residential property in excess of $1 million. The bill also adds a general purpose fee on top of the current realty transfer fee for homes sold for more than $350,000. Gov. James McGreevey signed the bill, which took effect Aug. 1.

In this column, I’ve consistently emphasized how important it is to have an investment strategy for yourself, whether it’s to build your career or safeguard your future. You need to plan how to put your money to work for you, because Social Security is no longer a guarantee for a secure retirement.

But investment strategies for your time have a greater impact on your career, and a smart real estate professional neglects them at his or her peril. Many brokers get so caught up in their day-to-day business operations that they don’t take the time to consider less traditional ways to build those businesses. Believe it or not, leaving the office for a few days – or even for a few hours – can help you generate additional listings.

“Getting out of the office is one of the most important things that you can do to grow your business,” says Pamela Liebman, president and chief executive officer of the Corcoran Group.

That time away can be spent at seminars, industry trade shows or charitable functions. Or you can take a vacation and escape from the daily grind. “If you spend all your time at work, you’ll burn out and get stale,” says Ms. Liebman.

“Out of the office, you’ll expose yourself to fresh ideas, meet new people and come back to work energized, armed with new concepts that will help you get to the next level,” she said.

Ms. Liebman should know. She estimates that she spends about a third of her time away from the office. She is involved in several charities, is a member of various professional organizations, attends golf outings, and speaks at numerous business and alumni clubs.

Never underestimate the value of personal contact. “Outside the office, you get to connect with people on a totally different level,” she says.

“You learn about each other’s commonalities. You begin a relationship and build trust. And the person will remember you when he or a friend or a family member is looking to buy or sell a property.” She says you’re building a new client network in the easiest possible way.

I religiously attend trade shows and conferences on both coasts. I’m always trying to absorb information like a sponge and network with other business professionals, many of whom I might not have ordinarily met – or who would not have met me – if I were back in the office. By “working” a conference, I get a solid grasp of emerging trends and what’s happening in markets outside of New York – all of which I use to my advantage or my client’s.

Many brokers are resistant to taking time off, fearful they will lose business. “I tell this to everyone – if you take time off from business, a deal will happen,” says Ms. Liebman. You need to empower your assistant or team members by allowing them to operate the business while you’re away.

Everyone will win in this situation – you create a healthier balance between life and work, and your staff can stretch their talents and build up of professional self-confidence. And through the joys of technology, you’re always only a mouse click or a phone call away. I promise you that your business will not collapse if you are away from it for a couple of days.

So, it’s August. What are you waiting for? Grow your business by getting away from it – everyone will prosper.

What do American home sellers and buyers really pay to real estate agents in commissions? Though every market and region in the country has its own typically quoted set of norms – often 6 percent to 7 percent- most consumers never learn what commission rates actually get paid in their areas.

Commission rates are the single most sensitive subject in the real estate industry. Brokers or agents from competing firms can be charged with antitrust law violations for even whispering about rate structures among themselves. It’s the ultimate no-no topic for Realtors.

But there is hard data on what home buyers and sellers pay. There is a national average real estate commission rate. And there is data on average commission rates region by region. It’s just that nobody ever tells consumers what the numbers are.

Now you’re going to find out: Based on internal financial data supplied by nearly 900 of the largest real estate brokerage firms across the country, the average commission paid by consumers in connection with home sales last year in the United States was (drumroll): 5.06 percent.

The highest average commissions were in the Southeastern and Midwestern states – 5.38 percent. By far the lowest were paid in the mid-Atlantic states, 4.78 percent. New England consumers paid an average of 5.14 percent. West Coast, Hawaii and Alaska consumers paid an average 5 percent, and Southwest and Mountain region consumers paid 5.26 percent. The commission data comes from the realty industry’s only comprehensive annual survey, where firms voluntarily provide their internal financial data, cost structures, subsidiary income, commission income, sales agent compensation and other corporate data to an independent research firm, Littleton, Colo.-based REAL Trends Inc., co-founded by Steve Murray.

Murray’s annual study accepts only verified financial statements, and promises each contributing firm that its private financial reports never will be shared with anyone or published. Instead the data is used in aggregate form to analyze what’s happening in the realty brokerage industry overall, from giant nationwide companies with thousands of sales agents to modest-sized, locally focused real estate offices.

For several years, the survey has documented declining average commission rates, pushed by aggressive competition among realty firms, booming sellers’ markets in large swaths of the country, and the rapid spread of discount and limited-service realty listing firms, both online and offline.

Last year, however, average commission rates stabilized, according to Murray. Apparently some firms decided to exit the commission bidding wars with discounters, and to emphasize their far more extensive marketing services to clients, in exchange for slightly higher rates. Many traditional, full-service firms have never cut their rates much.

Though brokers generally are reluctant to discuss their pricing philosophies publicly, Washington, D.C.-based independent broker Donna Evers of Evers & Co. Real Estate Inc. recently agreed to share some insights on the record.

As a general guideline, she said, her agents quote 6 percent to prospective sellers when making listing presentations on resale houses. For renovated homes or new construction, the target rate is 5 percent.

But in some cases, when the company potentially has both “sides” of the transaction in hand – with an Evers & Co. agent already representing a ready and willing buyer for the house – the commission may well be lower than the target rate.

One of Evers’ top agents, who asked not to be identified, said “other subjective considerations” sometimes enter into the picture as well. For instance, if the prospective listing client was referred by a previous client or friend of the agent, the commission quote might be below the standard rate.

Also, most listing agents may respond to highly competitive situations, where contending firms drop their negotiated rates in a battle to land the listing.

The point here for sellers and buyers is that whatever you may think, commission rates are absolutely negotiable – and surprisingly variable-across the realty firm spectrum. Discount, limited-service listing firms may charge minimal commission rates or flat fees to get your house into the local multiple listing service (MLS).

But they’re also likely to perform fewer marketing functions for you, and leave certain advertising, purchaser appointments and open house responsibilities to you.

Full service firms probably will charge you more, but do more and spend more, to sell your property. In a sizzling seller’s market, you may not need all the heft of a traditional broker to sell successfully, and can get away with more limited marketing. Or you can simply negotiate for a lower commission rate from a full-service broker, given the likely ease of the sale. In a soft, slow-moving market, you may want the highest-power firm or agent-and maybe agree to the full asking commission rate – to get the sale closed quickly andécorrectly.

It’s all yours to negotiate.
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Ken Harney is a real estate columnist for the Washington Post.

Dear Editor,