The Real Deal New York

A year ago this month the credit markets erupted, and since then it has
been rough going. While the wheel of fortune always turns — there will
forever be some real estate players on top while others take hits –
this year many of the stories appear to be related to credit market
woes. [more]

Most real estate brokers don’t show up at cocktail parties with a publicist in tow.

But then again, probably only one has been quoted in the press some 75 times since the beginning of the year. Comments

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If the fight over the 421-a tax abatement rules seems like ancient history, guess again.

The new rules enacted by the city and state last year (and bemoaned by many real estate developers) have been in place for just a month. But state legislators are already considering changes that could make many in the industry unhappier.
State considers moving 421-a boundaries again” class=”read-more-link”>[more]

The residential real estate market in New York City is showing
clear chinks in its armor. The average Manhattan apartment sales price
in the second quarter fell for the first time since the fall of 2006,
and some analysts expect the bumpy ride to be a rather long one.

How long will downturn last?” class=”read-more-link”>[more]

If there is a silver lining to be found in the current slower real
estate market, it lies within the brokerage community, which is
experiencing a kinder, gentler working environment as of late. Many brokers have noted
that interactions with their competitors are noticeably less cutthroat
than during the boom times of the past few years. As sales slow, brokers play nice” class=”read-more-link”>[more]

For many New Yorkers, getting out of the city on summer weekends is
an inalienable right. With the Hamptons market hurting but still
pricey, smart investors are evaluating other nearby destinations with
even better deals. This month, The Real Deal checked out the Catskills, the Jersey Shore, Long Island’s North Fork and Montauk to see how they are faring. Hailing other holiday spots” class=”read-more-link”>[more]

While the turmoil on Wall Street has clearly claimed its share of commercial real estate victims in the city, one bright spot may be the office leasing market.

Though the sales side of the business has seen a tremendous drop-off, downsizing and penny pinching on the part of New York City tenants is prompting a game of musical office spaces that has spurred some activity for leasing brokers.

Those interviewed for The Real Deal’s Q & A this month said, while sales brokers can “probably take an 18-month vacation,” leasing brokers will “benefit from the turmoil.”

There are, of course, tenants who are just waiting out the economic slump, but brokers say other companies looking for space recognize that they now have leverage over landlords when it comes to negotiating rents.

Part of the leasing activity can be attributed to the companies that are looking more closely at their bottom lines and downgrading to cheaper office space as their Midtown leases come up for renewal. But, it’s also because investment banks and finance firms like Citigroup, Lehman Brothers and JP Morgan are looking to sublet some of the scarce Class A space in Manhattan and some smaller companies that are still on good financial footing, including some hedge funds and private equity firms, are actually looking to expand.

But brokers note that competition is fiercer and that they expect to go after a higher number of smaller transactions than they have in the past just to stay in the game. They also say that successful brokers will learn to diversify into different areas, including management consulting, to avoid getting pulled down by the market.

For more on this and how retail and hotel brokers are faring, we turn to our experts.

Eugene Giscombe principal, Giscombe Realty Group

What is the most positive trend when it comes to working as a commercial broker in today’s market?

That small to medium-size companies are still in the market for office space despite the downturn in the economy.

What is the most negative trend?

The growing number of retail vacancies throughout Manhattan due in part to the high rents landlords are seeking, coupled with slowing retail sales growth in many sectors.

What area of the commercial real estate market is it best to be working in right now?

Office leasing. Many Midtown firms are finding renewal rents prohibitive, which provides brokers with opportunities to advise and place these firms into alternate space at more acceptable rents. Sublet space entering the market provides additional opportunities to those firms seeking to relocate within [close] proximity to their existing location.

Is the number of people working in the field thinning, staying the same or growing?

Many people leave the business when there is a slowdown. Those who leave usually have little invested in their career or are not yet established in the business.

What is the most successful way brokers are adapting to the changed market?

By diversifying into different areas of real estate such as management consulting.

What is the least successful way?

Continuing to conduct business in the same manner, hoping the market will change.

What’s the best piece of advice you’ve heard when it comes to dealing with down markets like the one New York is facing now?

Real estate brokers should invest in real estate that provides a steady cash flow to carry them through the periodic downturns in the marketplace.

Grant Greenspan principal, Kaufman Organization

What is the most surprising trend when it comes to working as a commercial broker in today’s market?

That there are still pockets of activity in certain fields such as software, medical, home health care and health insurance for office space expansion.

What is the most positive trend when it comes to working as a broker in today’s market?

You have in each neighborhood a micro market. Some of the more entrepreneurial, long-term owners, not the institutional owners, will tend to meet the market ahead of the curve and can make a meeting of the minds with the customer. That owner is willing to break price in order to achieve a tenant in this down market.

What is the most negative trend?

Dealing with the lack of velocity in the market [and] the lack of activity and the indecisiveness of a lot of customers due to where they believe their business is going to be. If they are able to stay in their current location, they will do so.

What area of the commercial real estate market is it best to be working in right now?

I believe all areas are hit by the current economic conditions. I still believe the leasing market will benefit from the turmoil. As space comes on the market, if you are diligent and identify customers, there will be activity. One positive aspect is that there is more sublease activity with built office space coming to the market. If you are able to identify that customer over the next 12 months, they will take four- or five-year leases. That’s where your activity is going to come from.

What area of the commercial real estate market is the worst to be working in right now?

I believe sales and financing. The market is pretty much flat right now.

Is the number of people working in the field thinning, staying the same or growing?

There is a slight thinning, although by the fourth quarter, we will see the most thinning of the industry. After the summer, if they don’t make their numbers by the end of the year, they look to get out of the industry.

What is the least successful way brokers are adapting to the changed market?

Brokers that wait for the phone to ring and do passive advertising, posting potential spaces [rather than] reaching out to the decision makers, and waiting for the decision makers to contact them about getting space [are going to be least successful]. We have reached the point again where the customer is the commodity and not the space.

What do you expect to see going forward when it comes to brokering in Manhattan?

We are going to see a lot of brokers at different firms chasing very little business and significant price-changing with the addition of subleases coming to the market. We’ll see a general philosophy change in how we negotiate with customers. The pendulum has swung. Customers are in the driver’s seat in negotiations. I don’t believe that landlords and building agents are of that mindset just yet.

Amy Fox senior director, Cushman & Wakefield

What is the most surprising trend you’ve seen as a commercial broker in today’s market?

Larger leases sustained leasing activity during the first half of the year. We ended the second quarter with overall leasing activity down just 2 percent from this time last year.

What area of the commercial market is it best to be working in right now?

The office market has seen a slight increase in vacancy, but at 7.1 percent, we are still at relative equilibrium. Surprisingly, rents have actually risen over the past few months. In retail, the primary submarkets continue to see increases in rental rates, particularly in Soho and on Fifth Avenue. Little supply and continued demand from overseas retailers have kept the market from seeing significant increases in vacancy. In the investment sales market, activity is most certainly down from this time last year. However, several transactions that were either closed or put into contract last quarter provided new data points and gave investors some confidence in the Manhattan market. Foreign investors also continue to play a significant role in the investment sales market, having accounted for nearly half of all investment sales activity at mid-year.

What do you expect to see going forward when it comes to brokering in Manhattan?

We expect to see some more space become available and believe that rents will begin to flatten. However, developers have been conservative over the past few years. And, given the short supply of modern, Class A office space, we expect that over the long term, demand will outweigh supply.

Daniel Horowitz executive managing director, Studley

What is the most positive trend when it comes to working as a commercial broker in today’s market?

The tenants’ return to a more disciplined, rational approach to their commercial real estate strategy. Until recently, there was such a dearth of Class A office space available in Manhattan, in the midst of an overheated economy, that many companies were fearful that they wouldn’t have enough office space to support their growth. As a result, many tenants started to bank office space or lease excess space to secure it via direct leases and subleases. Time is now on the side of the tenant. With the large amount of space that has hit the market recently, tenants from those industry sectors that are continuing to grow or that have pent-up demand can now take an appropriate amount of time to do their due diligence and financial analysis to determine what type of deal will best support their short- and long-term business plans.

What is the most successful way brokers are adapting to the changed market?

Landlord agents who want to lease their buildings and maintain high occupancy rates have become more realistic about the market. During the first quarter of this year, there was a definite disconnect between the tenant representative’s perception of the market and the landlord representative’s perception. Today, that gap is significantly smaller, and landlord agents are acting accordingly, agreeing to flexible lease terms that enable transactions to close.

What do you expect to see happen in the near-term future when it comes to brokering in Manhattan?

As the deal flow continues to slow or remains as slow as it’s been throughout the second quarter and into the third, the playing field becomes increasingly competitive. More brokers are pursuing deals that are smaller than they are typically accustomed to. There will also be a thinning of the ranks.

Jeffrey Buslik director, Adams & Co. Real Estate

What is the most surprising trend when it comes to working as a commercial broker in today’s market?

People are really taking their time. They are looking, but they are also looking for an excuse for why they shouldn’t lease. Times are tougher, and tenants are taking time making decisions because they are being cautious.

What is the most negative trend?

Tenant perception that the sky is falling. They read that Citibank has several hundred thousand square feet on the market and they think they should be able to get a 30 percent discount, when in reality, for smaller tenants, the market is still tight.

What do you expect to see going forward when it comes to brokering in Manhattan?

It may be a little while until we get back to the best, but New York will stay a strong market for a long time. People want to be here, and the island is not getting any bigger.

Scott Panzer principal, Newmark Knight Frank

What is the most surprising trend when it comes to working as a commercial broker in today’s market?

How the hedge fund and private equity firms are still chasing the Holy Grail properties to lease, regardless of price.

What is the most negative trend when it comes to working as a broker in today’s market?

The sales brokers should probably take an 18-month vacation since there will be very few deals trading in their arena. Hospitality is the one exception.

What area of the commercial real estate market is it best to be working in right now?

Office leasing, with retail following, and then flex or industrial following behind that.

Is the number of people working in the field thinning, staying the same or growing?

The workforce is changing slightly as younger, less productive brokers are moving out of the sector and older, retirement-age brokers are asking themselves if now is the time to retire. Also, we are seeing a large shift in former corporates coming to the brokerage side of the business.

What’s the best piece of advice you’ve heard when it comes to dealing with down markets like the one now?

If you haven’t been working 100-hour weeks canvassing, sourcing, selling, servicing and following up, do it now before it’s too late.

What do you expect to see going forward when it comes to brokering in Manhattan?

Deals taking forever to close as landlords hold out for higher pricing and tenants wait for the market to drop.

Lori Shabtai director of luxury and brand retail, Winick Realty Group

What is the greatest misconception about being a broker in today’s market?

There’s a misconception that it’s an easy way to make money.

What’s the best piece of advice you’ve heard when it comes to dealing with markets like this one?

If you have a tenant, get leases signed immediately. This is not a market to wait around and see if there is a better deal that will come along. Today, if you have a good tenant and the financials work, get it signed because tenants can go away.

Aaron Jungreis president, Rosewood Realty Group

What is the most surprising trend you’ve seen as a commercial broker in today’s market?

The amount of cash buyers are willing to commit because they are not getting the financing they were before. They are getting about 20 percent less financing.

What area of commercial real estate is it best to be working in right now?

Retail and office sales.

What area is it worst to be working in right now?

Hotel or land development, although today, I have a signing of a contract land deal where the buyer is paying a healthy number.

Is the number of people working in the field thinning, staying the same or growing?

It’s definitely thinning. There is less
financing and fewer deals, so people aren’t hiring as much. Some people that have been doing sales for a couple years are leaving. The saying is that 10 percent of the brokers do 90 percent of the deals. I think 10 percent of the brokers do 95 percent of the deals. It’s very top heavy right now.

What’s the best piece of advice you’ve heard when it comes to dealing with today’s market?

Stay the course, keep going; it’s going to turn around. The market is tight now; it’s rough, but we’ll all get through it. It’s not as busy as last year, but I’m hoping a year from now, things will start changing.

What is the greatest misconception about being a broker in today’s market?

Definitely that there are no deals. There are still deals being done, but most deals are less than $100 million. The number of deals over $100 million are fewer and far between. The banks are still being aggressive on financing those smaller deals.

What do you expect to see going forward when it comes to brokering in Manhattan?

I think there’s going to be a gap between the seller’s price and the buyer’s. Sellers are not adjusting to the change in price from last year. There still needs to be a shakeout to get the sellers to lower their prices. Another cold winter of fuel bills will help that.

Cynthia Wasserberger managing director, Jones Lang LaSalle

What is the most negative trend when it comes to working as a broker in today’s market?

The turmoil in the financial industry has generated quite a bit of uncertainty throughout the New York office market. As a result, clients have become a bit more hesitant to make any decisions. Many are putting their real estate plans on hold for the short term unless they must make a decision due to a lease expiration, for example. Understandably, many clients are adopting a wait-and-see perspective over the next 12 to 18 months.

What area of the commercial real estate market is it best to be working in right now?

It may sound counterintuitive, but the
office leasing market is a great place to be right now. The volatility in the market has created many opportunities for space users that did not exist a year ago.

Is the number of people working in the field thinning, staying the same or growing?

The actual number of commercial brokers working in the Manhattan office market has remained about the same over the past year. What’s changed is that there has been consolidation among the real estate firms. So there are fewer brokerage companies, but about the same amount of brokers. For example, Jones Lang LaSalle just merged with the Staubach Company, so combined, we have a larger team.

What is the most successful way brokers are adapting to the changed market?

You cannot keep all of your eggs in one basket and expect to remain successful in this market. Brokers are representing clients involved in a variety of industries rather than specializing in companies doing business in one field. We are getting involved in different submarkets and a variety of building classes. There is a growing number of brokers becoming LEED accredited to tap a rising desire among our clients to make sustainable real estate decisions.

Any notable statistics or deals that illustrate what it’s like to be a broker in today’s market?

In the Midtown Class A submarket, there is nearly 3 million square feet of large blocks of high-quality office space that could be made available by tenants. There is another 4 million square feet of shadow space that may never officially be put on the market. This means that there are opportunities both for tenants looking for space and for brokers who can help clients dispose of excess space using creative exit strategies.

Something rare is coming to Fifth Avenue: a new, six-star hotel. The hotel could have as many as 250 rooms, as well as residential and retail components. Comments

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Hot soup and ice cream, anyone? While those foods may not seem like an obvious — or even appetizing — combination, for Coldstone Creamery and Original Soup Man, retailers that are opening shared spaces together, the pairing represents an adoption of a strategy pursued by many small stores. The move to shack up — borrowed from partnerships between larger national brands like Barnes & Noble and Starbucks — typically brings in a wider variety of customers and saves money in rent.

“The overall benefits [of shared retail] are traffic and synergy, bringing new customers to new places,” said Faith Hope Consolo, Prudential Douglas Elliman’s chairman of retail leasing and sales. “The trend started slowly because everyone worried about security issues, but now people aren’t so concerned about it as they are [about] attracting more customers. There are less dollars being spent, so there have to be new reasons to come into your store.”

Another local example is New York City Explorers, a childcare center, which brought in the café Blue Marble Ice Cream as a subtenant at a second location that opened in May at 186 Underhill Avenue in Prospect Heights, Brooklyn.

In the fall of 2007, the two businesses had opened stores on Atlantic Avenue within weeks of each other and soon noticed they had something in common.

“We would get the same customers all the time,” Kisha Gandsy, co-owner of New York City Explorers, said. “[Blue Marble] provided coffee for the moms that would then come to our play space.”

When Gandsy and her business partner, Keyanna Murrill, were planning their second NYC Explorers location, they contacted the Blue Marble’s owners, who agreed to open the space together. Blue Marble pays one-third of the rent in the shared space.

To make sure adult customers don’t feel like they are sipping coffee in a play room, the front of the store is Blue Marble’s café, with a wall separating the children’s center from the coffeeshop.

Gandsy said the companies are a good fit because both are focused on eco-friendly living. NYC Explorers offers healthy, organic snacks to their children and uses wooden toys instead of plastic. Blue Marble uses organic ingredients and biodegradable supplies.

“We couldn’t have opened with just any company,” Gandsy noted.

Jennie Dundas, who co-owns Blue Marble with Alexis Miesen, said sales in her two stores are comparable, even though she only has half the space, about 275 square feet, at 186 Underhill Avenue.

“I don’t know whether to credit sharing space with [NYC Explorers], the different neighborhood or our already built reputation,” Dundas said. “We snapped our fingers, opened our doors, and the first day the numbers were almost exactly the same.”

Sometimes, opposites attract. When Daniel Petryszyn bought the Coldstone Creamery franchise on Astor Place in June 2007, he wanted the Original Soup Man to share the store.

“We wanted to offer more of a year-round business,” Petryszyn said. “Coldstone and the Original Soup Man are both seasonal, and by combining them we can have business all year-round and expand our customer base.”

Petryszyn said there are now several Coldstone-Soup Mans around the country, including locations on Long Island, in Chicago and Arizona.

For retailers considering setting up shop together, the devil can be in the details.

As the owner of the store, Petryszyn pays the landlord of 2 Astor Place, as well as royalties to the two franchises, who were skeptical of the ice-cream-and-soup combination when it was first proposed.

“Both franchises wanted to make sure their brand was not affected by the co-brand,” Petryszyn said. “You have to share the exterior sign, and two different schemes are going on inside because of the two totally different products. A lot of my crew were hired for ice cream, and I was throwing soup at them. It was challenging, but we had great support.”

There are other considerations. Retailers have to agree on hours of operation and security for the store and whether customers of one store will be fans of the other. For example, Gandsy wondered if customers of Blue Marble would be annoyed by all the noise the children make.

Then there’s winning over the landlord.

“Most landlords prefer to deal with one person,” said Yitzchok Rosenwasser, a retail specialist for the Brooklyn-based LHI Properties. “And I know some landlords who say they don’t allow sublets.”

But with a faltering economy and steep rents, shared retail spaces are expected to increase, he said.

“Everyone shares the same interest in making money and pulling people into the store,” Rosenwasser said. “I think down the road it will become more popular if the retail market is not going in the right direction. It’s just a matter of saving on rent.”

“You see stores closing every day in Manhattan,” Petryszyn said. “Landlords are charging us crazy rents, so the only way to stay afloat is to come up with an innovative concept.”

NYC Explorers is considering taking its space in yet another direction. When the weather is nice, Blue Marble customers often ask to sit in the outdoor play space as they sip coffee and eat ice cream, so Gandsy is looking into creating a mini-restaurant in the backyard one evening a week.

“It’s a great yard, and the play space closes at six,” Gandsy said.

“For small businesses especially, where space is such a commodity, you have to be a reasonable business person, and you have to figure out the maximum you can do.”

Small spaces continue to shuffle through the market, holding up
Manhattan’s leasing activity. Comments

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Starbucks Corporation’s announcement that it is shuttering 11 stores in the five boroughs by mid-2009 may have left java junkies in something of a caffeine coma. But the question on brokers’ lips now is, what exactly will happen to all that prime retail square footage when the coffee giant takes its Frappuccino makers and white-and-green coffee cups and moves out?

While New York’s closures represent only a tiny fraction of the 600 stores the overstretched Seattle company is putting on the block (there will still be more than 220 stores left in the city), the departure of some outposts could make room for new coffee competitors and other retailers looking to get a toehold in the Manhattan market.

Six of the soon-to-be-closed Starbucks are in Midtown, where, according to a recent report from REBNY, average retail rents are $145 per square foot. But that varies by submarket: Those average rents can soar as high as $1,958 on a stretch of Fifth Avenue from 49th to 59th streets.

The closures slated for Manhattan are at: 340 Madison Avenue, 400 Madison Avenue, 1600 Broadway, 1675 Broadway, 565 Fifth Avenue, and on the third floor of Macy’s in Herald Square — each within a few blocks of another Starbucks franchise. The Macy’s Starbucks, for example, is one of two in the flagship store. The company is also closing one branch on Staten Island, one in Brooklyn and three in Queens.

Some industry experts see the scaleback as a sign of the slowing market, but most said the retail hole would be filled quickly. For more on what the Starbucks void will mean for rents and competition, we turn to our panel:

Andrew Mandell partner, RIPCO Real Estate

What does the departure of Starbucks mean for the retail spots the company is vacating? Are they going to be hard or easy to fill?

I think that Midtown in general is still fairly leased up and remains strong, and I think that smaller stores seem to be easier to rent these days than larger ones. There are just more tenants in that size category. My sense of this is that they’ll probably be leased up quickly.

Will the fact that Starbucks will no longer be as aggressive about looking for sites here have any impact on retail rents?

[Having] a company such as Starbucks sort of sidelined for the moment just decreased the numbers of tenants that are out there. Starbucks is a great amenity for office buildings; office tenants tend to like them as well as landlords, especially in Class A properties. Landlords are very conscious that their retail tenants are desirable — in that respect, it may take a little longer to lease these spaces.

Will Starbucks as a symbol of gentrification and rising property values become a thing of the past?

I think you’re going to see a drop-off in that. I’m aware that the company has said that it will grow into newly developed areas, but I think what you’re going to find is that those areas that pose the most risk are going to be the ones that they tend to shy away from, and areas that have been on their radar, which they may not have been able to penetrate, will be the more likely candidates … if in fact they are still growing.

Richard Skulnik broker, RIPCO Real Estate

Will the fact that the company will no longer be looking for new locations open up more retail spots for its competitors? If so, what kinds of retailers will benefit most from the fact that they will probably no longer have to compete with Starbucks?

If they’re not going to expand, there will be opportunities for other retailers, but I don’t think it’s going to cause panic and drive down the rent.

Bill Melville senior managing director, Lansco Corp.

What kinds of retailers do you expect to benefit from Starbucks’s scaleback?

A number of the [coffee] nationals … may be looking at this and saying ‘This is our chance.’ You’ve got Peet’s Coffee, Tea Leaf & Coffee Bean. Then you’ve got local people like Oren’s and Pret a Manger.

Will Starbucks as a symbol of gentrification and rising property values become a thing of the past?

A Starbucks franchise has always delivered the message that ‘yes, this is a valid neighborhood,’ and I think that will continue. When an area is [not doing as well], Starbucks … has to question whether they should be there.

Neil Dolgin executive vice president, Kalmon Dolgin Affiliates

What do you take away from the combination of closures in Midtown, on Staten Island, in Queens and in Bay Ridge?

They’re downsizing. Closing 12 stores in the metro area is not going to affect anybody. The stores aren’t that big that it’s going to hurt the local economy.

Will the fact that Starbucks will no longer be looking for more sites have any impact on retail rents? Did they help drive up retail rents in the city?

No, not at all. They don’t control the retail operations here.

Reports that consumer prices spiked 1.1 percent in June raise the issue of inflation, which has in the past been advantageous to real estate investors. In the current state of the market, it’s not clear if rising inflation will end up being a boon or a burden on top of the credit crisis.

During the inflationary periods of the 1970s and 1980s, many investors who held real estate made out reasonably well, reinforcing the idea that real estate is a good investment for bad times.

“A lot of people buy real estate during inflationary times with the idea that it would be a hedge against inflation,” said Robert Stella, an executive vice president and principal at Cresa Partners, a commercial real estate brokerage. “Say it cost you $1,000 to build a building. If inflation goes up 10 percent, your building’s probably going to be worth at least 10 percent more, or $1,100, so that’s good.”

Inflation is often thought of as a beneficial phenomenon for real estate investors, agreed Jim Frederick, an executive managing director and principal at Colliers ABR, a commercial real estate services company.

“Hard assets are always more attractive in inflationary times,” Frederick said.

Since inflation, in a sense, can add equity to a building, it can effectively take a bite out of the building’s debt, Stuart Saft, a real estate partner at law firm Dewey & LeBoeuf, said.

“Credit is more significant in real estate than any other aspect of the economy, because real estate is basically an illiquid investment,” Saft said. “Having a period of inflation, if you’re a real estate owner or lender, solves the credit problem, because suddenly, the value of the asset can be in excess of the amount of debt that’s on the asset.”

However, real estate investors in today’s market face other pressures that make it less advantageous to own real estate now. First of all, the absence of cheap and easy financing makes it difficult to sell a building and reap any immediate benefits from inflation, Stella said.

“If people aren’t buying your building because they can’t finance it, the value is only a paper value,” he said. “That’s a new twist that could create some issues for an investor trying to hedge, because if you want to sell it, there may not be many buyers — at least until this credit crisis plays out.”

Paul Fried, a principal at AFC Realty Capital, a national boutique investment bank, said real estate might be a hedge in inflationary environments — as long as it’s not the sector that went through the inflationary period.

“Normally, you would think it would be good to hold real estate in an inflationary period, but you’re assuming real estate is not the asset that’s in the inflationary cycle,” he said. “Right now, real estate values are at historical highs as a result of going through an inflationary cycle caused by cheap monetary policy.”

The Federal Reserve’s reaction to inflation may also determine whether or not real estate investors thrive, or have to struggle to survive. The Fed could decide to increase interest rates.

“What matters to real estate is the real interest rate, which is the nominal interest rate minus inflation,” said Mark Zandi, the chief economist and co-founder of Moody’s Economy.com.

“If you have an acceleration of inflation and interest rates don’t rise, i.e. if the Federal Reserve doesn’t tighten policy, then generally, it’s good for real estate,” he said. “If conversely, though, inflation rises and the Federal Reserve tightens policy, and real rates increase, that’s bad for real estate.”

Zandi said he believes the latter is more likely, with the federal government sacrificing the economy to achieve the goal of stable inflation.

“In the 1970s and early 1980s, inflation increased, but the Federal Reserve did not raise interest rates, so real rates went negative, which was good for real estate,” he said. “That won’t happen this go-around.”

Saft agreed with Zandi, asserting that officials in the Federal Reserve, which had been gradually cutting interest rates to aid the struggling housing market, will worry that investors will shift their capital from U.S. securities markets to other markets where they can get a higher return. The federal government will raise interest rates to attempt to make the U.S. securities market more competitive.

“That’s where the real pressure on the Federal Reserve to raise interest rates is going to come from,” he said, adding that it will have a devastating effect on the housing market. “Raising interest rates will make the dollar more competitive as an investment, but on the other hand, it’s going to trigger more defaults here in the U.S.,” he said.

Fried said that if Federal Reserve officials raise interest rates, it will be a “double whammy” to real estate values.

“You know they’ve got to be struggling with this, because the instinct is to raise rates, because that is better for monetary policy,” he said. “If they do raise rates, you’re really going to get squeezed in terms of tightened underwriting standards along with the increased cost of capital.

“So does it feel like real estate is a hedge?” Fried continued. “The answer is ‘no.’ Don’t argue with your gut on this one.”

Still, Fried said, while real estate as a sector may be hurt by increased interest rates, individual assets with either solid fundamentals or strong cash-flow that are being held in the longer term should be “reasonable places to be.”

But real estate owners with floating interest rates — for instance those who took out short-term loans 18 months to three years ago to purchase transitional buildings with a vision of turning them around — may end up losing their properties if the Federal Reserve raises interest rates, Fried said.

Frederick said he thinks the Federal Reserve will be sensitive to the credit problems plaguing the real estate market and forego raising interest rates.

“I don’t think the Fed will be able to raise rates any time soon because of the continuing banking turmoil and most recently the issues with Fannie and Freddie,” he said.

Frederick Peters, the president of Warburg Realty Partnership, a residential brokerage firm, said the looming problem for the mortgage market is not simply more conservative underwriting standards, but a shortage of capital altogether. For that reason, the Federal Reserve won’t raise interest rates.

“On the one hand, you have an economy that’s not zippy, and which to some degree is being stifled by the general lack of credit,” he said. “On the other hand, you have this threat of inflation.

“Ordinarily, you’d try to pump energy into the first problem by lowering rates,” Peters said. “And ordinarily, you’d try to manage the second problem by raising them. So my guess is, at least for the time being, [Federal Reserve Chairman Ben] Bernanke’s not going to do anything.”

In the meantime, price inflation caused by more expensive petrol-based construction materials, along with increased global competition, will make new real estate development less feasible, he said.

And as the rate of inflation increases, the value of payments on longer-term debt decays. Yet many New York City residents are protected simply because the large number of co-ops in the city means many people are no more than 75 percent financed. Still, depending on what happens with real wages, homeowners will most likely pay a larger chunk of their income toward common charges.

In the commercial market, there’s an air of uncertainty because costs are going up due to inflation for both tenants and landlords, said Abraham Hidary, the president of Hidrock Realty, which is a commercial real estate services firm that also serves as a landlord. Landlords often tend to shift excess costs to tenants.

“Tenants are being squeezed, so they are avoiding signing long-term commitments right now; they’re waiting until the last possible second to sign a lease extension or to move,” Hidary said. “And if they do have to sign a lease, they’re keeping it as short as possible — a five- or seven-year lease versus a 10-year lease.

“And if they do have to move, they’d rather be in a quality building a little bit off location to keep their rent down.”

Go to chart: A sobering look at write-downs, job cuts and growth in sublease space on Wall Street

While it has been hailed as the next hot spot, when it comes to
hotels, Long Island City appears to be struggling to live up to the
hype, as new zoning restrictions and the credit crunch appear to be
stymieing some projects.

Thirteen hotels are in
the pipeline for the Dutch Kills section of Long Island City, which
stretches from the Queensboro Bridge to 35th Avenue and from the East
River to 37th Street. The list of projects includes buildings from
established chains like Holiday Inn and Clarion Inn. But so far, only
three hotels have started construction.

At least three proposed hotels have been rejected by the Department of Buildings.

During a recent meeting at The Real Deal,
budget hotel czar Sam Chang, who already has a hotel there, called the
area the “worst” for new hotel development in the city (along with
Williamsburg), saying “you are dependent on overflow business from
Manhattan.”

One developer whose
plans were rejected by the city, Kaushik Patel of Sterling Hospitality,
refused to discuss the specifics of his unnamed project, saying there
were no problems with it. The building proposal “is a process,” he
said. “It takes time.”

Hoteliers whose plans
are rejected are invited to resubmit plans with changes — which Patel
plans to do. His hotel, which is planned for 3830 Crescent Street, has
not declared a franchise affiliation.

Some developers take
the opposite view as Chang and see the gritty neighborhood as having
great potential right now, since it is surrounded by seven major subway
lines and is one stop to Midtown Manhattan.

Most of the hotels
recently proposed for the area, which also include a Courtyard by
Marriott, are less expensive than their Manhattan counterparts. At a
Holiday Inn Express in Long Island City, for example, rates for two
adults range from $152 to $189 per night. At the same hotel in Midtown
near Madison Square Garden, rates range from $280 to $342 per night.
Manhattan’s average rate is currently $268 a night.

Just outside of the
Dutch Kills area, an Aloft Hotel — which, like the W brand, is owned by
Starwood Hotels and Resorts — is planned for 29-43 41st Avenue. Aloft
often builds in emerging markets that could not sustain the W Hotel
model, an Aloft spokesperson told The Real Deal.

Mark
Gordon, principal and head of Sonnenblick Goldman’s U.S. hotel group,
said that there is definitely a need for hotels in New York, but “in
the current environment, some of what’s been proposed probably won’t
get built,” he said.

Bjorn Hanson, former
head of the hospitality practice at PricewaterhouseCoopers and current
New York University hospitality professor, agreed.

For one thing, hotel
developers often announce their intentions before they have the
financing or the franchise agreements to go forward with a project.
Hanson said that the 13 planned hotels were likely in various stages of
planning and securing financing.

But developers are also being tripped up by tighter lending restrictions today.

“Financing
in today’s market is an issue for any type of development,” said Gayle
Baron, director of the Long Island City Business Development
Corporation.

Adding to the pressure:
New zoning restrictions approved by the local Community Board could be
put into place, barring hotels from most of the Dutch Kills area and
restricting hotel development to an area along Northern Boulevard.

The rezoning, which is
up for review by the City Planning Commission, could move forward by
September 23. The City Council would then have 50 days to consider the
proposal.

However, developers
with a completed foundation would be exempt from any changes; as a
result, many hoteliers are racing the clock to finish their
foundations.

Still, the zoning changes for Dutch Kills can’t happen fast enough for some.

City
Councilman Eric Gioia spoke out against overdevelopment in Dutch Kills
in June, calling on the Department of Buildings to halt all hotel
development until the new zoning laws are put in place.

Gioia said the zoning
laws are still not strict enough to protect the low-rise residential
Dutch Kills neighborhood from taller hotel developments.

“We don’t want a
nine-story or 10-story building next to our two-family houses,” said
Jerry Walsh, president of the Dutch Kills Civic Association. “They’re
not good neighbors.”

Manhattan

Chelsea

$1.92 million

214 West 17th Street

2-bedroom, 2-bath, 1,850 sf prewar co-op in elevator building; renovated kitchen and bathrooms, hardwood floors, laundry in unit, fireplace; maintenance $1,488; 65 percent tax-deductible; asking price $1.95 million; 10 weeks on the market. (Brokers: Thomas Croke, Barak Realty; Mark Kennedy, Prudential Douglas Elliman)

Chelsea

$1.295 million

365 West 20th Street

1-bedroom, 1-bath, 850 sf penthouse co-op in prewar building; maisonette-style apartment has fireplace, private roof deck, renovated bathroom; maintenance $1,208; asking price $1.295 million. (Brokers: Darren Sukenik, Prudential Douglas Elliman; Corcoran)

Chelsea

$1.05 million

309 West 20th Street

2-bedroom, 2-bath, 1,000 sf co-op; carriage house apartment overlooks garden; has in-wall AC, newly renovated kitchen with stainless steel appliances, hardwood floors, windowed walk-in closet, stone-tiled bathroom with new fixtures and walnut built-in vanities; maintenance $1,639; asking price $1.095 million; three months on the market. (Broker: Bo Poulsen, Citi Habitats)

Fashion District

$899,000

502 Ninth Avenue

2-bedroom, 2-bath, 950 sf condo in new construction building; open kitchen with full bar, oversize windows; building has virtual doorman and key card entry; asking price $908,000; 21 weeks on the market. (Broker: City Connections Realty)

Gramercy

$1.25 million

205 Third Avenue

2-bedroom, 2-bath, 1,350 sf co-op in postwar elevator building (Gramercy Park Towers); 24-hr doorman, concierge; corner unit has private terrace, southern and western exposures, full city views, walk-in closets; building has landscaped roof deck with chaise lounges, courtyard, fitness center and garage; maintenance $1,568; asking price $1.325 million; two and a half weeks on the market. (Broker: Elaine Mayers, Citi Habitats)

Gramercy

$385,000

235 East 22nd Street

450 sf studio co-op in prewar building (Gramercy House); doorman; building has laundry, storage and roof deck; maintenance $617; 12 weeks on the market; asking price $385,000. (Brokers: John Prince, Prudential Douglas Elliman; Century 21 NY Metro)

Harlem

$1.65 million

78 West 120th Street

16-room, 7-bath postwar brownstone with two duplex units; seven fireplaces, master bedroom with dressing room cabinetry, pocket sliding doors; asking price $1.999 million; seven months on the market. (Brokers: Willie Kathryn Suggs, Willie Kathryn Suggs Real Estate; George van der Ploeg, Prudential Douglas Elliman)

Harlem

$835,000

725 Riverside Drive

3-bedroom, 2-bath, 1,613 sf condo; river and park views, formal dining room, maid’s room, new hardwood floors, granite kitchen counters, stainless steel appliances, walk-in closet, large closet spaces, northern and western exposures; building has central laundry room; maintenance $755; taxes $130; asking price $920,000; 16 weeks on the market. (Brokers: Sandy Edry and Russell Miller, Citi Habitats)

Harlem

$270,000
689 Ft. Washington Avenue

1-bedroom, 1-bath, 600 sf prewar co-op in elevator building; hardwood floors, multiple exposures; maintenance $787; 50 percent tax-deductible; asking price $299,000; nine weeks on the market. (Broker: Francisco Menendez, Barak Realty)

Lower East Side

$4.995 million

15 Rivington Street

4-bedroom, 2.5-bath home; two private terraces, hardwood floors, radiant in-floor heating, open northern, western and southern exposures; common charges $897; taxes $1,522; asking price $4.995 million. (Brokers: Anna Shagalov, Halstead Property; Prudential Douglas Elliman)

Lower Manhattan

$700,000

225 Rector Place

1-bedroom, 1-bath, 687 sf condo; 24-hr doorman; harbor views, roof terrace; summer rooftop lounge, sky-lit pool, sauna, steam rooms, fitness center, screening room; common charges $670; taxes $580; asking price $715,000; 55 weeks on the market. (Broker: Joanna Benigno, Halstead Property)

Lower Manhattan

$515,000

324 Pearl Street

563 sf studio condo in prewar building
(the Bindery); storage, laundry; taxes $225; common charges $284; taxes $2,700; asking price $495,000; five weeks on the market. (Broker: City Connections Realty)

Midtown East

$1.079 million

50 Sutton Place South

2-bedroom, 2-bath, 1,400 sf co-op in postwar elevator building; 24-hr doorman, concierge; windowed eat-in kitchen, hardwood floors, views of the East River from every room; building has gym, laundry, garage and storage; maintenance $1,870; 50 percent tax-deductible; asking price $1.15 million; 20 weeks on the market. (Brokers: Eugene Roddy, Bellmarc; Susan Ingram, Stribling)

Midtown East

$329,000

321 East 45th Street

400 sf studio co-op in postwar building (the Sands); part-time doorman; roof deck, laundry and private storage; maintenance $431; 48 percent tax-deductible; asking price $329,000; 16 weeks on the market. (Broker: Ruth Sobie, Halstead Property)

Midtown West

$1.49 million

635 West 42nd Street

2-bedroom, 2-bath 1,062 sf condo in new construction elevator building; wrap-around terrace; building has basketball and volleyball courts, sky lounge with billiards, landscaped sun deck, fitness and yoga center, indoor swimming pool; common charges $836; taxes $38. (Broker: City Connections Realty)

Murray Hill

$899,999

321 East 48th Street

1-bedroom, 1-bath 900 sf condo in postwar elevator building (the Continental); 24-hr doorman, concierge; two private terraces, windowed kitchen, dining alcove; building has roof deck, laundry, bicycle room, storage; common charges $945; taxes $462; asking price $880,000; seven months on the market. (Broker: Jacky Teplitzky, Prudential Douglas Elliman)

Murray Hill

$399,000

157 East 32nd Street

1-bath, 300 sf studio in postwar condo (L’Isola); doorman; building has laundry, health club, garden; common charges $320; taxes $300; 14 weeks on the market. (Brokers: Lonni Levy, Fenwick Keats Goodstein; Century 21 NY Metro)

Murray Hill

$385,000

320 East 42nd Street

390 sf studio co-op in prewar elevator building; concierge; building has fitness center, courtyard and laundry; maintenance $795; 60 percent tax-deductible; asking price $389,000; 52 weeks on the market. (Brokers: Elliot Adler, Gloria Giese, City Connections Realty)

Tribeca

$4.15 million

17 White Street

4-bedroom, 3-bath, 3,000 sf co-op in
updated 19th-century elevator building; corner loft, contemporary kitchen, separate pantry/wine cellar and laundry room, 12 oversized windows, keyed elevator access, hardwood floors; maintenance $1,277; asking price $4.5 million; six weeks on the market. (Broker: Jeffry Roth, Citi Habitats)

Upper East Side

$3.2 million

900 Park Avenue

2-bedroom, 2.5-bath, 1,272 sf unit in postwar condo; building has driveway, conference room; common charges $1,927; asking price $3.2 million; 28 weeks on the market. (Broker: Melanie Swanson, Century 21 NY Metro)

Upper East Side

$1.235 million

969 Park Avenue

2-bedroom, 2-bath, 1,150 sf co-op in prewar elevator building; 24-hr doorman; hardwood floors, prewar moldings, updated kitchen and marble baths, eastern and southern exposures, large closets, washer and dryer; building has planted roof deck and fitness center: maintenance $1,549; asking price $1.325 million; three weeks on the market. (Brokers: Patricia Cliff, Corcoran; Enid Katze, Bellmarc)

Upper East Side

$618,000

345 East 73rd Street

2-bedroom, 1-bath, 900 sf co-op in modern building; 24-hr doorman; hardwood floors, oversized closets, windowed alcove easily converts to a second bedroom or office; southern and western exposures with open city views; building has roof deck, storage, bike room, garage; maintenance $1,472 per month; asking price $639,000; 16 weeks on the market. (Brokers: Jennifer Wilson, Fred Slavin, Kathy Gulrich, Bellmarc)

Upper West Side

$3.25 million

200 West End Avenue

3-bedroom, 2.5-bath, 1,675 sf condo in new elevator building; concierge; two private terraces; building has gym, wine tasting and parking garage; common charges $1,800; taxes $150; asking price $3.5 million. (Broker: the Clarett Group)

Upper West Side

$545,000

301 West 108th Street

1-bedroom, 1-bath co-op in Beaux-Arts-era elevator building (the Manhasset); newly renovated kitchen, high ceilings; pet-friendly building has laundry; asking price $559,000. (Brokers: Denise Rosner, Halstead Property; Trump)

West Village

$703,000

41 Jane Street

600 sf studio co-op in prewar walk-up building; high ceilings, fireplace, southern views, exposed brick; key access to Jane Street Garden; maintenance $870; 60 percent tax-deductible; four weeks on the market. (Ari Harkov and Victor Cino, Halstead Property)

West Village

$651,000

270 West 11th Street

1-bedroom, 1-bath, 625 sf co-op in prewar building (Tudor Arms); open kitchen, windowed bathroom, northern and eastern exposures, hardwood floors, large closet space; building has live-in super and laundry; maintenance $996; asking price $619,000; 10 weeks on the market. (Broker: Susan Lamia, Citi Habitats)

Brooklyn

Bedford-Stuyvesant

$420,000

273 Clifton Place

1-bedroom, 1-bath duplex condo in new construction building; attic, dining area, hardwood floors, laundry, two private terraces, private storage; common charges $327; taxes $37 (25-year tax abatement); asking price $420,000. (Broker: Sonya Spitznas, the Developers Group)

Boerum Hill

$930,000

480 State Street

2-bedroom, 2-bath penthouse duplex condo in new construction building; storage room, recreation room, open kitchen, four closets, laundry room, balcony; building is pet friendly; common charges $250; taxes $1,968; asking price $930,000; three months on the market. (Brokers: Robert Frye and Alison Jevremov, Brooklyn Heights Real Estate; Ariel Shwedel, Coldwell Banker Previews International)

Brooklyn Heights

$1.09 million

160 Columbia Heights

2-bedroom, 2-bath, 1,051 sf penthouse duplex in Art Deco elevator building; part-time doorman; hardwood floors, dining area, renovated open kitchen, walk-in closet, two exposures, private roof deck with city and harbor views; pet friendly; has laundry room; maintenance $1,650; 50 percent tax-deductible; asking price $1.095 million; one day on the market. (Danielle Mosse, Brooklyn Heights Real Estate)

Crown Heights

$680,000

457 Prospect Place

2-bedroom, 2-bath duplex condo in new construction building; newly renovated eat-in kitchen, central air, terrace, roof deck, laundry, storage, washer/dryer, hardwood floors; common charges $261; taxes $3,850 (15-year tax abatement); asking
price $725,000; 16 weeks on the market. (Broker: Trey Borzillieri, the Developers Group)

Downtown Brooklyn

$350,000

85 Livingston Street

636 sf alcove studio co-op in postwar elevator building (the Robert Livingston); 24-hr doorman; hardwood floors, renovated kitchen, southern exposure with sweeping city and river views; building has laundry, storage, gym and garage; maintenance $823; asking price $379,000; six weeks on the market. (Brokers: Christine Pon Chin, Bellmarc; Andrew Friedman, Halstead Property)

Greenpoint

$615,000

460 Manhattan Avenue

2-bedroom, 2-bath condo in new elevator building; hardwood floors, central air, two exposures; common charges $302; taxes $516 (15-year tax abatement); 24 weeks on the market; asking price $629,000. (Broker: Rachel Poggi, the Developers Group)

Williamsburg

$583,000

134-136 Powers Street

2-bedroom, 2-bath simplex condo in elevator building; dining room, marble baths, hardwood floors, laundry, roof deck; common charges $470; taxes $131; asking price $599,000; 16 weeks on the market. (Nicole DeVincentis, the Developers Group)

Queens

Long Island City

$1.45 million

27-28 Thomson Avenue

2-bedroom, 2-bath, 1,652 sf condo in pre-war elevator building; 24-hr doorman; garage, fitness center, resident lounge, pool, roof deck, screening room, catering kitchen; common charges $989; taxes $64; asking price $1.45 million. (Brokers: Corcoran Sunshine Marketing Group; City Connections Realty)

In 2006, Alex Marshall and his wife, Kristi Barlow, had been living in their Prospect Heights apartment building for over a year — and, like many New Yorkers, still knew almost none of their neighbors.

Being socially inclined people, they thought this was strange, but remediable. They decided to host a holiday party for their fellow tenants and slid invitations under the doors of the building’s 25 other apartments.

Marshall whipped up a batch of eggnog using his great-grandfather’s recipe, strung up colored lights, and, on the day of the party, waited for guests to arrive. But except for the one couple they already knew, no one came.

That lonely party inspired Marshall to begin giving serious thought to his long-held idea of forming a cohousing community in Brooklyn.

First created in Denmark in the late 1960s, cohousing communities are developments where residents live in private homes, but have common areas where social activities like meals are shared with neighbors. Similar to co-ops and condos, cohousing communities make decisions together on issues like building maintenance. But since they have, in general, much more interaction with each other, more personal issues like a parent’s style of discipline, if it’s affecting another child, might also be discussed.

Since Marshall’s epiphany two years ago, plans for the city’s first cohousing community, incorporated with the state in February as Brooklyn Cohousing LLC, have been gaining momentum.

There are now more than 100 cohousing communities across the United States and roughly the same amount in some stage of planning, yet Marshall’s is the only one in New York listed with the Cohousing Association of the United States.

The next step for Marshall’s group is to create a place to live.

Marshall said each of his group’s equity members is looking to spend about $600,000 for a two-bedroom apartment. In total, the community may spend anywhere from $15 to $35 million.

So far, five households are equity members, which means they’ve invested 5 percent of the estimated cost of their new apartments, and 20 additional households are associate members, with a smaller amount invested as expressions of interest. Before joining the group, each member must be preapproved by a bank for a mortgage.

According to the Cohousing Association, statistics indicate that only one-fifth of the people who participate in the design phase of forming a cohousing community ultimately end up living there once it’s built.

The Brooklyn group has looked at
dozens of properties, mainly development sites with approved plans for condos and some warehouses.

Finding the right building hasn’t been easy, yet the city’s stagnant market may favor Marshall and his group. He said several developers are looking to unload preapproved projects they can no longer finance. For their part, banks appreciate that most of the apartments would be sold beforehand.

The equity members, by consensus, would make the ultimate decision of where to buy, with the associated members in an advisory role. Because they would be
buying en masse and most likely acting as
their own developer, members hope to pay about 15 percent less than market rates for individual units.

So far, Marshall said their favorite site is Carlton Mews, a development project in the preliminary stages of construction in Fort Greene. Plans for that building call for roughly 40 apartments. The project is within a historic district a block from Fort Greene Park; a courtyard and two churches built in the 1880s could easily be converted into a dramatic common area.

One of the development partners, Mark Wallach, said, “We’ve only had some very, very preliminary conversations.” He declined to reveal the price discussed but said it would have to be high enough “to compensate us for the stage where we’re at in the development.”

Wallach added, “Frankly, we’re intending to develop the property. We’ve just closed on it a couple weeks ago, and the market for construction financing is getting better.”

Members of the Brooklyn group include singles, couples and families with children. Their ages range from the late 20s to late 60s, and they generally work in high-paying creative fields.

At Brooklyn Cohousing’s May meeting, the group discussed whether Carlton Mews, which has more than the ideal number of apartments for a cohousing community, would need to be reconfigured.

Generally, between 24 and 36 households makes for optimal consensus decision making. However, larger communities have worked in other places, and
the apartments would be less expensive as
currently configured.

Another proposal was to create two separate communities. But the idea has no precedent, and several members said they were saddened by the prospect.

A final option, which would maintain the optimal size of the community and keep costs down, has been dubbed the “fat cat solution.” This plan entails buying the Carlton Mews and then re-selling some of the apartments facing Carlton Avenue and Adelphi Street on the open market for a higher amount than a member would pay.

Regardless of which project is purchased, apartment rates would be 10 percent lower for the first fifth of the members who joined than the last fifth, increasing in increments of 2.5 percent. Marshall said early members pay the least because they take on the greatest risk, do the largest amount of work and have the most expenses.

Dawn Eng attended the May meeting of the group and is wavering about signing on. She said she was attracted to the members’ environmentally friendly beliefs. Eng and her husband, both architects, aren’t sure if they want kids of their own, but Eng said they are attracted to the “intergenerational” makeup of Brooklyn Cohousing.

Eng, who currently owns two apartments in Kensington, said affordability could prohibit her from joining.

Even though they don’t live together yet, the group still meets in Brooklyn each week. Their meetings begin with an assessment of each member’s day. Honest answers like “pissed” and “my teenager is driving me nuts” are expected. While they speak, children weave in and out of the circle.

“It can take a long time for adults to
get used to living in cohousing communities, even extroverts,” said Chris Scott Hanson, a cohousing developer and consultant. “Kids, on the other hand, get it in about
five minutes.”

Hanson said disputes among residents are common and usually have four main sources: parenting styles (strict vs. laissez faire), pets (whether they should be allowed), pesticides (Should communal meals use foods prepared with them?) and parking (how many spots residents should be entitled to).

Marshall didn’t have an answer yet for how those problems would be solved, since this group does not intend to reserve the right to approve or expel residents. That would eventually be discussed and decided on by consensus, he said.

The Real Deal recently visited the Plaza Hotel, which has
been converted into residential units, condo-hotel rooms and hotel
rooms, for a special Webcast segment. Comments

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In what some brokers contend is a sign of a softening rental
market, open houses for rentals, once rare, are now proliferating. Comments

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Many South Americans used to head straight to Miami as a place to plunk down investment money for an apartment. But now they are increasingly shifting their interest northward — because the Miami market is in shambles, and the weak dollar is presenting them with opportunities here that seemed out of reach before.

The uptick of inquiries started late last year.

Gabriel Bedoya, a vice president at Corcoran, said he used to hear from very few South American buyers. But in late 2007, he began receiving two to three calls a week from Brazilians, Chileans, Argentines, Colombians and other South Americans interested in buying apartments in the city.

Also, Sonya Smith, a salesperson for Citi Habitats, said she’s recently started getting inquiries from Brazilians looking for properties in Manhattan. For example, she worked with two separate Brazilian clients — one looking for a loft, another for a one-bedroom — who originally planned to rent but are now hoping to buy.

“They expressed more interest in buying because of the value they were going to get,” Smith said.

Smith said her two Brazilian clients, who both work in finance, will use their New York apartments and keep them as investment properties.

The first explanation for the increased interest from South America in the New York market applies to all foreign investors turning here for real estate: The dollar has been pummeled, so international purchasing power has increased.

But with South American investors, there are also other forces at play.

For starters, several South American countries have experienced economic booms in the past few years, which have expanded the pools of investors with expendable cash looking for second homes. Fueled by the rising prices of commodities, Brazil, Latin America’s largest economy, is expanding at such a rapid pace that residents there have newfound money to spend and invest. According to the Economist magazine, 2007′s 5.4 percent economic growth in Brazil is expected to be followed by a still robust 4.2 percent annual growth through 2014. Similarly, the economy in Argentina, which grew 8.7 percent in 2007, is expected to grow 6.2 percent this year.

South American buyers have traditionally been attracted to Miami for its Latin flair, warm climate and vibrant beaches. However, now that Miami has seen its real estate values tank — a result of overbuilding and the credit crunch — investments there are more volatile.

According to a recent report by the Mortgage Brokers Association, Miami, which saw home values plummet 19.3 percent, was tied with Las Vegas for the city with the greatest decline in property values between January 2007 and January 2008.

“A lot of South Americans have invested in Florida heavily,” said Jacky Teplitzky, an executive vice president at Prudential Douglas Elliman.

Now, foreign buyers who parked their cash in Miami homes are looking to move to more stable horizons. While the New York market has softened and given buyers more room to negotiate, the city is still widely viewed as a stable investment.

While the motivation driving South Americans to buy Manhattan properties varies depending on the individual and their nationality, a high percentage of them are looking for investments. Bedoya estimated that 70 percent wanted homes as investments, while 30 percent intended their purchase to be a second or third home. He noted that the average price range of the South American clients he is talking to is between $1 million and $2.5 million, and buildings that are commonly requested are the Caledonia, 250 Mercer, 200 Chambers, Worldwide Plaza and the Orion.

“They don’t like small studios, because the studio isn’t common in South America,” Bedoya said. “They love the concept of lofts.”

Teplitzky, who was born in Chile but moved to Israel as a young girl, put the investment home/second home ratio at about 50-50 for her clients.

While she said she hasn’t seen a dramatic increase in South Americans who are pulling the trigger on Manhattan-based deals, she noted, “People are inquiring more. People are calling back.”

Bedoya said one common denominator among most South American buyers is that they often like to look in Midtown and Lower Manhattan.

“One of the reasons is they are familiar with those neighborhoods,” he said. “They sense the comfort level, the familiarity.”

Outside of those two areas, brokers say they see clients gravitate toward different neighborhoods, depending on their nationality. For example, brokers say Brazilians tend to opt for Fifth Avenue and Park Avenue, where many other Brazilians already live, as well as to apartments near Central Park. Colombians, who also like to be near the park, are drawn to more artsy neighborhoods, such as Soho, the West Village and West Chelsea.

Teplitzky said Chileans are willing to venture into Manhattan neighborhoods that are less well-known, such as those in the West 40s and upper 90s.

“I have been very successful with Chileans,” she said, noting that until now they have been among the biggest buyers in Florida. She also has started to see some clients from Uruguay as part of a trend in which foreign buyers are coming from countries that traditionally hadn’t been represented in the Manhattan market. Others said clients are coming from Venezuela, too.

“I think it’s just [that] New York has maintained its own,” said Citi Habitats’ Smith. “It’s not as volatile.”

When sales velocity is slow it can be difficult to accurately price a home.

Typically, real estate brokers look to comparable sales data, or comps, to find out what similar homes in the seller’s building and neighborhood have sold for. But if there is a dearth of sales, as is the case now, the data becomes thin.

“We’re in a whole new world. Pricing right now in this market is very hard,” said Kathy Braddock, co-founder of real estate consulting firm Braddock + Purcell and the New York City real estate company Charles Rutenberg Realty.

Can a broker use closed sales from as far back as a year ago, which reflect deals negotiated before the credit market erupted? What about from six months ago, with those sales going to contract at the end of 2007 in the wake of the meltdown?

Some real estate experts are looking back even further to increase the reliability of their pricing, while others are focusing on current listings.

“We are using the same tools for comps, but also looking at how the prices are comparing to the previous one to two years,” said Eddie Shapiro, president and CEO of Nest Seekers. “The idea is to try and identify inflated values as opposed to legitimate rates of appreciation — with all the relative considerations including location, neighborhood, exposure, presentation and condition.”

In this market, Stacey Max, an executive vice president and sales manager at Bellmarc Realty’s Downtown office, prefers to rely more heavily on listings currently on the market rather than older, completed sales.

“This reflects what the competition is for that property,” Max said. “In the past, we used to be able to assume that we could get a higher price than the previous sale in any particular building, and right now that is no longer the case.”

But not everyone agrees with that approach.

Jonathan Miller, president and CEO of appraisal company Miller Samuel, said that while the data set is smaller today, he prefers not to look at older data or depend more heavily on listings just to accumulate more data.

“We’re spending more time trying to flesh out more recent data just because it’s harder to obtain,” Miller said. “We’ve noticed compared to last year, there are fewer sales. So it’s more challenging.”

By fleshing it out, Miller means talking to the parties involved in a previous sale, getting hold of the actual listing, verifying the square footage, and getting details about all of the amenities beyond what is on the listing.

In rare cases, where little information is available for computing comps, such as in the case of an unusual penthouse, Miller will look back even further.

Miller said his typical methodology includes looking at listings, contracts and closings over the last six months, with emphasis placed on the last month or two.

But relying on listings in this market tends to be less useful than it was a year ago, because “they’re rising in number and the average marketing time is expanding,” Miller said.

As listings increase, so does competition among sellers, making accurate pricing more critical to closing a transaction.

“It’s more challenging now because of the uncertainty, and there’s a lot of misinformation out there,” Miller said. “National housing statistics have nothing to do with the local market.”

As Noah Rosenblatt, a vice president at Halstead Property, pointed out on his site urbandigs.com at the end of June: “If you think you can fool a buyer into paying a 10 percent premium over 2007 comps, think again!”

Still, some real estate pros said they have not altered their approach to testing the market.

Andrew Gerringer, a managing director at Prudential Douglas Elliman who oversees new development marketing, said that his comps approach has not changed.

“The comps we are using are based upon closed sales and current contracts out in a particular market,” Gerringer said. “However, this is no different than how we have always approached this.” He noted that he uses comps from the past three to six months.

Frederick Peters, president of Warburg Realty Partnership, said he continues to focus on the here and now.

“I always tried to use very current comps,” Peters said. “Even if you went back six months, the numbers were never good. Actually, nowadays the comps are easier to use, since we try to persuade sellers in most markets to peg their pricing to the last sale.”

Unlike their colleagues in the suburbs, New York City brokers can’t place signs around the neighborhood pointing to an open house. But now, those brokers can do something their suburban colleagues cannot: place ads on video screens in the back of taxicabs cruising around the city.

Call them property taxis. Taxicab video screens, which arrived late last year, are currently installed in more than 11,000 yellow cabs. The screens offer a continuous video loop, which lasts about 14 to 18 minutes. About a third of that time is devoted to advertising.

And, real estate firms have been among the advertisers to catch this new wave with the hope of reaching affluent New Yorkers and out-of-towners while they are actually sitting still.

Extell Development, the Corcoran Group and Core Group Marketing are among the first real estate firms to sample the new advertising form.

Like all advertisers, they buy either video ads or touch-through banners from content providers, firms like WABC-TV or NBC Universal. The content providers, in turn, have deals with one of three companies that provide the screens to the city’s cabs.

The videos (assuming the passenger doesn’t turn off the screen) last slightly longer than the average 13-minute cab ride. Passengers can also view text feeds in addition to, or instead of, video.

Depending on the content provider, the ads capture an estimated 300,000 to 400,000 viewers per day. More importantly, the taxi delivers an attractive demographic.

“Where in New York do you get a captive audience as well as the right audience?” asks Christina Lowris, Corcoran’s executive vice president for marketing and advertising. She says that Corcoran has been emphasizing its more “approachable” listings.

Corcoran has been employing the touch-through banner ads, each of which focuses on a specific listing. The taxi ads, Lowris says, have been very effective so far, though she wonders whether their impact will be diluted after other brokers start using the medium. Several of Corcoran’s direct competitors are lined up to buy taxi ads, says Michael Mongelluzzo, who directs the Taxi TV project for WABC-TV.

The taxi TV ads are priced on a CPM (cost per thousand) basis, where the advertiser pays only when the screen is on and its ad is aired. While the cost is based on the number of screens and the duration of the contract, Tom Haymond, vice president of NY10, a taxi network run by Clear Channel, says his real estate advertisers spend between $5,000 and $10,000 per week.

Clear Channel says it gives advertisers the option of running their ads only in specific neighborhoods, a feature he says is attractive to brokers looking to make their target audience as narrow as possible.

Core, for instance, touts the Jasper Condominium in cabs traveling on the East Side between 23rd and 42nd streets. The building is on East 32nd Street.

“For that building, it’s the best piece of advertising we’ve done,” says Steve Ganz, an executive vice president at the firm.

The medium is not cheap, the ad sellers concede, because it is so demographically targeted.

While taxi screen ads may be the latest thing, yellow cab riders have long had a jump on the hunt for the city’s real property: All they ever needed to do is look out the window, take a fancy to an address, hop out and make an offer.

President of Halstead Property since 1999. Ramirez and Clark Halstead founded the residential real estate firm in 1984, and Ramirez was a partner until 2001. Comments

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July was hot, and buyers were not bothered — at least when it came to buying Manhattan real estate.

Open house attendance was down, beyond the usual summer ebb, and price adjustments were more frequent — both indicators of a weakened housing market.
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At some point, they’ll have to start labeling the apartments at 15 Central Park West “price upon request.”

The neoclassical Robert A.M. Stern-designed building is home to Denzel Washington, Sting and a host of asking prices that would make even a megastar’s eyes pop.

Last month, penthouse 40B went on
the market for $80 million. That same apartment was purchased for $21.5 million just two months earlier, according to public records.

While asking nearly four times the purchase price might take some moxie, there are reportedly units in the limestone trophy building carrying resale asking prices as high as $150 million.

Which leads to the question, “How high can prices actually go?” Real estate brokers and buyers in the building defend the stratospheric listings, while other real estate experts find the asking prices suspect.

Jessica Armstead, a vice president at the Corcoran Group, said of 40B, “It wouldn’t surprise me if it did sell for $80 million.”

The bulls cite several contributing factors: Prices for units at 15 Central Park West were originally negotiated as far back as three years ago; prices have been climbing in Manhattan overall, despite the slowing sales pace in the wake of the credit crisis, and the high-end market remains strong.

Also, many residents have made significant renovations to their apartments, to the tune of $1,000 to $2,000 a foot, said appraiser Andrew Fautley, a principal at Vanderbilt Appraisal.

Yet some sellers have been dropping prices on resales — and the two most expensive sales to close at the building as of last month were nowhere near $80 million.

Hedge fund manager Daniel S. Loeb paid the most for a unit in the building at $45 million for penthouse 39, followed by Citigroup chairman emeritus Sanford Weill’s $42.4 million penthouse 20. Weill’s unit boasts the most expensive price per square foot on a closed sale, at $6,288 per interior square foot. (The unit also has 2,007 square feet of outdoor space.) If 40B sells for $80 million, it would achieve an astonishing $15,163 per square foot.

“I would say that $6,000 a square foot for a good park view in either the Tower or the House is very achievable, and they have been getting those prices easily,” said Robby Browne, a senior vice president at the Corcoran Group, who bought unit 6J for $2.7 million last November.

“The more special apartments priced at $75 to $90 million are a different breed within the building,” Browne said. “Some have terraces, and others, 14-foot ceilings. That is a different buyer, and it remains to be seen what dollar per square foot they will get.

“I see the building climbing to $10,000 per square foot for park views fairly quickly as more people move in, more people visit friends in the building and see what a
wonderful place it is.”

Still, the asking prices seem out of alignment with buildings of the same ilk. Other units in that price range, such as a $70 million penthouse listing at the Pierre Hotel, can be hard to move. The Pierre penthouse has been on the market for four years; five years earlier, the three-story apartment at the hotel sold for less than one-third of its current asking price.

“The current listings suggest a range of value of $15,000 to $16,000 per square foot based upon current closed data in comparable luxury projects. These numbers appear to be double current market levels,” Fautley said.

“In my opinion it becomes a fashion sale, not a market-derived sale. That is, until one of them sells.”

The developers of 15 Central Park West, Zeckendorf brothers Arthur and William, built what is considered the crème de la crème of condos because of its location, between 61st and 62nd streets and Central Park West and Broadway; its prewar style without the prewar construction; its services, including a swimming pool and private dining room for guests; and the fact that it is a condo, allowing rentals and avoiding the strict board approval process of co-ops.

Dorothy Somekh, a senior vice president at Halstead Property, and a partner bought unit 7J for $2.55 million in November 2007. They sold it at the beginning of March for $4.85 million, almost double what they paid for it. She suspected had she waited until last month, she could have gotten as much as $5.5 million. And if they waited a year, they likely could have received even more because the building would be completed. She said she sold the unit at the urging of her partner.

The pace of rentals has not matched the volume of sales in the building, but the rents have been high. A three-bedroom apartment rented last month for $29,000 per month, according to real estate data site StreetEasy.

Jared Seligman thinks real estate is part of his genetic makeup. “Pretty much everyone in my family is involved in real estate,” said the Corcoran Group vice president. “It’s in my DNA. My grandfather is selling real estate in South Florida at the age of 85. He calls me up on Sunday mornings at the crack of dawn and asks why I’m not in the office.”

At 21 years old, Seligman is rapidly gaining a reputation as a force to be reckoned with in the world of Manhattan luxury
condo sales.

In 2007, he was named Corcoran’s Rookie of the Year after he sold $40 million worth of real estate. He is also a member of the firm’s multi-million dollar club.

Seligman isn’t selling to any old rich Manhattanites, either: The broker is representing Ashley and Mary-Kate Olsen’s $10 million-plus Morton Square listing, and he’s reportedly sold condos to a raft of young bold-faced names, including Adam “DJ AM” Goldstein and Tommy Hilfiger’s daughter.

Seligman said his “young, hip clients” are exclusively interested in Downtown properties.

“The ones who want more privacy look in Tribeca,” he said, “but we have many, many people who want to be in the East Village. Not so much the Financial District.”

While Seligman said he tries “to remain as private as possible,” the real estate blog Curbed.com has, perhaps, been making that task slightly difficult.

Curbed has dubbed Seligman “Lil’ Shvo” after Michael Shvo, the brash broker who became one of Prudential Douglas Elliman’s top-grossing brokers when he was barely out of his 20s and went on to start his own firm.

A post on the site in May was headlined, “Ladies and Gentlemen, Jared Seligman Has Arrived,” and it noted that “this baby-faced 21-year-old is quite the personality.”

“I don’t really have time to pay attention to the press,” said Seligman, who added that his hectic work schedule means he doesn’t have much time for the party circuit, despite the fact that his clients include “so many major people in business, fashion and art who are always entertaining.”

Tresa Hall, Corcoran’s director of sales, said any negative attention that comes Seligman’s way “is just jealousy.”

“It’s a waste of time to try to figure out why people say bad things about good people,” said Hall. “What’s unusual about Jared is that he’s so young. Some of our Rookies of the Year are 35 years old, and most people who come into this business have already had two or three careers.”

Criticisms on blogs generally fall into three categories: young, inexperienced and arrogant. But despite those knocks, he continues to rack up business.

Seligman skipped college and launched his career at Citi Habitats at 18, where
he stayed for nine months before moving to Corcoran. He initially focused primarily on rentals.

“When I turned 18, I said, ‘I’m going to give this a shot, and give it six months to see if it works,’” he said. “Not many people knew I was 18, and I tried to keep it a secret.”

His break came, he said, in the form of a sale of a unit in a building “that my friend had been trying to get into for years. I saw a listing come up, was able to get an appointment, and it turned around incredibly quickly. It was the easiest transaction I’ve ever done, and it all starts with one happy client.”

But after that, he said, it was time for hard work. “When I started, I was in the office 24/7,” he said.

Like Seligman, Timothy Melzer, a senior vice president at Prudential Douglas Elliman, experienced very rapid success at a very young age, and he said a lot of his big sales were a result of spending 12-hour days at the office.

Melzer, who is now 31, was named the Real Estate Board of New York’s Rookie of the Year in 2003, after he’d spent less than two years in the business.

“It’s a big boost of confidence to be able to get notoriety at such a young age, and it gives you sense of drive and makes you want to succeed,” said Melzer. “And, you know, money tends to be a big driving force when you’re young, and the older you get it’s more about being well-rounded and doing things for other people. It’s more about leaving a legacy.”

Seligman, who was raised on the Upper East Side, attributes some of his success to a self-described “outgoing personality.”

“My mom used to call me ‘the mayor,’” he said. “When we were walking home from school, I used to stop and say hello to everyone, every doorman from Fifth to York. I’ve always had the personality where I love talking to people, and word of mouth really spread quickly.”

Crown Heights
1040 East New York Avenue
The 67 units in the new condominium will be fully customizable, with starting prices from $350 to $450 per square foot. Buyers can choose from selected interior design companies, specific countertops, floors, bathtubs, sinks and other features. HQ Marketing Partners is the sales and marketing agency.

East Village
229 East 2nd Street
The development site was approved for a six-story, three-family residence. A Brooklyn developer bought the site for $3.65 million, or $450 per square foot. A triplex and two duplexes are planned for the building, which will also have a rooftop deck, private yard and two parking spaces.

Financial District
99 John Deco Lofts
99 John Street
Rockrose Development Corp.’s luxury condominium plan was declared effective in late June, with closings starting in July. The building is comprised of 85 percent studios and one-bedrooms, with ceilings ranging from 11 to 14 feet. Some units have terraces, home offices, walk-in closets and skylights. Amenities include weekday breakfast, free wireless internet, fitness center, lounge and screening room. Prices start in the $500,000s. Contact:www.99johndecolofts.com.

Gramercy
254 Park Avenue South
The 14-story building was originally built in 1913 and is being modernized for luxury residences. The building’s lobby and French limestone façade will be restored. The units will feature studio, one- and two-bedroom apartments, with interiors designed by Charles Allem. Amenities include a doorman, fitness center and access to the building’s social lounge and bar.

Harlem
Dafina
2137 Adam Clayton Powell Jr. Boulevard
An on-site sales center opened in early July at the new boutique co-op building. The building features studio, one-, two- and three-bedroom homes ranging from 533 to 1,508 square feet, some with terraces. Units are priced at about $600 per square foot, with homes starting at $314,000. Amenities include a concierge, roof deck, club room, fitness center and storage; parking is available for purchase. The building expects initial occupancy to start in December 2008. Contact: www.dafinaharlem.com.

Soho
350 West Broadway
Aby Rosen of RFR Holding is developing the 10-story condominium, designed by Moed de Armas & Shannon. The building has seven full-floor units and one penthouse, with two- to three-bedroom residences ranging from 2,875 to 3,539 square feet. Prices start at around $9.57 million. Each unit has a grand entry foyer, private storage and laundry room. Amenities include a fitness center, doorman and virtual concierge. Stribling Marketing Associates is the exclusive marketing and sales agent. Contact: www.350wbway.com.

Tribeca
56 Leonard Street
Developer Alexico Group announced in July that the new residential tower will be designed by internationally acclaimed architects Herzog & de Meuron. The Switzerland-based architects are recipients of the Pritzker Prize, and designed the Beijing National Stadium for the 2008 Olympic Games in China, Allianz Arena in Munich and the Walker Art Center in Minneapolis, among many other developments. The design for the building is expected to be released in fall 2008.

Upper West Side
63rd and 64th streets between Riverside Boulevard and Freedom Place South
Extell Development Company and the Carlyle Group announced in July they will build two residential towers. A 38-story building will contain sales and rentals, and a 23-story building will be only rentals. The two buildings total 880,000 square feet. Completion is expected in 2010.

Williamsburg
66 North 1st Street
Developer Jonathan Green converted an old factory into a six-story condominium. The 21 units include studio, one-, two- and three-bedroom homes, ranging from 800 to 1,300 square feet, some with private terraces. Prices start at $499,000. Amenities include a roof deck and private gardens. Contact: www.66north1.com.

Construction update

Lower Manhattan
50 West Street
Ground was broken on Time Equities’ 63-story hotel and residential building on June 23. The building is designed by architect Helmut Jahn, and will include a public plaza that connects Battery Park City to Wall Street and Rector Street’s retail corridor. Construction is expected to be completed in 2010.

Tribeca
34 Leonard Street
Construction on the 16-unit residential building is on schedule, with completion expected by the end of the year. The Beyer Blinder Belle-designed building features one-, two- and three-bedroom lofts ranging from 1,541 to 2,792 square feet in size, as well as a 3,086-square-foot penthouse with wraparound terrace and two fireplaces. Amenities include a wine cellar, roof deck, fitness center, pet spa, storage and 24-hour doorman. Contact: www.34leonard.com.

West Village
385 West 12th Street
Developer Flank’s seven-story condominium topped off at the end of June. Seven of the 12 residences are in contract, with two penthouses and three triplexes remaining, priced between $8 and $14 million. The remaining units range between 649 and 4,331 square feet. Amenities include a home automation system in every unit, concierge, fitness center, maid service, storage and common roof deck with pool. Contact: www.385w12.com.

Sales update

Bayside
18-15 215th Street
The Towers at Water’s Edge
As of mid-June, 50 percent of MJH Birchwood’s 157 market-rate units were sold. The units range from 600 to more than 1,400 square feet, and are priced between $300,000 and $795,000. Amenities include a fitness center, basketball and tennis courts, swimming pool, concierge and valet parking. Homes are available for immediate occupancy. Contact: www.towersbythebay.com.

Brooklyn Heights
One Brooklyn Bridge Park
360 Furman Street
The first residents have moved into Robert Levine’s 449-unit condominium in July, and there are still units available. Prices range from $525,000 for a studio to $7.75 million for a triplex. Amenities include private storage, children’s play room, yoga studio, game room and golf simulator. Parking spaces are also available and range from $128,600 to $281,000. Stribling Marketing Associates is the exclusive sales and marketing agent. Completion is expected in fall 2009. Contact: www.onebrooklyn.com.

Downtown Brooklyn
Toren
150 Myrtle Avenue
Sales started on the Skidmore, Owings & Merrill-designed condominium in May. The 38-story building includes 240 units with one-, two- and three-bedroom condos ranging from 442 to 1,967 square feet. Prices are between the mid-$300,000s and $1.7 million. Amenities include a roof garden, outdoor screening area, fitness center with swimming pool and sauna, library, parking garage and concierge. The building is trying to obtain Gold LEED-certification. Contact: www.torencondo.com.

Gramercy
Gramercy Park Towers
205 Third Avenue
In June, 98 percent of the 51 market-rate units were sold. MJH Birchwood’s development contains 326 units, including studios, one- and two-bedrooms, ranging from 800 to more than 1,300 square feet, some with private terraces. Prices range from $525,000 to more than $1.5 million, and residences are available for immediate occupancy. Contact: www.205third.com.

Greenpoint
The Viridian
110 Green Street
Sales at the Meltzer/Mandl Architects-designed building began in June. The six-story condominium features 130 units, ranging from 650-square-foot one-bedrooms to 1,877-square-foot three bedrooms. Amenities include a billiards room, screening room, children’s playroom, storage and fitness center with swimming pool. The building is expected to be ready for occupancy in early 2009. Contact: www.viridianbrooklyn.com.

Kew Gardens
The Classic
83-30 Kew Gardens Road
Sales of the 52 residences in the six-story Queens condominium have begun. The building, developed by the Kamali Organization, features one-, two- and three-bedroom units with prices starting in the mid-$300,000s. Amenities include a fitness center, children’s playroom, lounge, game room, storage and indoor parking. Initial occupancy is expected this fall. Contact: www.classickewgardens.com.

Park Slope
Vue
162 16th Street
Fairmont Capital and Katan Group’s 10-story building was 80 percent sold in the beginning of June. The 45 units include one-, two- and three-bedrooms, ranging from 671 to 1,168 square feet in size, some with balconies. The remaining units are priced between $515,000 and $890,000 and are available for immediate occupancy. Contact: www.vueparkslope.com.

Soho
The Machinery Exchange Lofts
136 Baxter Street
There were only four units left
in the 14-unit building, designed by architect Mark DuBois and
developed by Max Protetch, at the beginning of July. The four remaining units include a 3,437-square-foot triplex, a 2,575-square-foot three-bedroom residence, a 1,600-square-foot two-bedroom residence and a 2,558-square-foot penthouse. Prices range from $2.25 to $4.5 million, or about $1,200 to $1,900 per square foot. Contact: wwwmachineryexchangecondo.com.

Upper East Side
Georgica
305 East 85th Street
Developer Ascent Group’s 20-story condominium was 30 percent sold as of mid-June. The building occupies 134,000 square feet and includes 58 condos ranging in size from 1,237 to 3,000 square feet. Two- , three- and four- bedroom residences are available in the Cetra/Ruddy-designed building. Prices start at $1.75 million. Completion is expected in 2009. Contact: www.georgicalife.com.

Upper West Side
Sheffield57
322 West 57th Street
The 58-story condo was 50 percent sold as of mid-June and starting its second release of sales, which includes residences from the 40th to 56th floors. Studio, one-, two- and three-bedroom homes are available. Remaining units range from 571 to 2,049 square feet. Amenities include a private restaurant, screening room, playroom, health and fitness club and open-air pool. Swig Equities is handling sales. Contact: www.sheffield57.com.

The national mega-builder Toll Brothers lost $93.7 million in the second quarter of 2008 and subsequently had part of its credit rating downgraded to junk status.

Surprisingly, the bleeding was less than the market had expected. And, helping to slow the plunge was Toll Brothers’ City Living division and its projects in New York and the metro area, including in Williamsburg and Hoboken.

In Williamsburg, the first tower at Northside Piers on the waterfront has begun occupancy with three-quarters of its 180 units pre-sold.

Now, having just broken ground, the second tower at Northside Piers will open for pre-construction sales next month.

Sales at Two Northside Piers will be a telling indicator of the current state of the luxury market in Williamsburg. Containing 270 units, the tower — which is slated for completion in just over 18 months — will be 50 percent larger than One Northside.

And while at 30 stories the second glass tower will be just one story higher than the first, it will have a wider footprint. Because it will be closer to the water and contain proportionally more units with full-on river views than its already completed cousin, prices will be generally higher.

Prices at Tower One have ranged from the low $500,000s to more than $2 million.

The second tower could benefit from the learning curve of the marketing of the first. Buyers for One Northside turned out to be younger than Toll Brothers had expected, prompting the developer to switch the unit mix, building 60 percent studios and one-bedrooms at Tower Two, compared to the 60 percent family-sized two- and three-bedroom residences at Tower One.

“Our people are singles in their late 20s and 30s, with some couples,” said Toll Brothers senior vice president David Von Spreckelsen. “There are not a lot of families so far, which may change as the neighborhood matures.” Most of the unsold units at Tower One are the bigger layouts.

While designed by the same architect as its predecessor, FXFowle, Two Northside Pier’s interiors will be a bit more modern, said Von Spreckelsen. Amenities will include an indoor pool with outdoor seating, hot tub and sauna, fitness center, children’s playroom and a private lounge with wet bar and 675-square-foot terrace overlooking the Manhattan skyline. Residents will also have access to One Northside Pier’s amenities, which include massage and yoga facilities and a screening room.

Designed by interior architect Stephen Alton, the apartments will have floor-to-ceiling windows, walnut hardwood floors, polished marble countertops, glass tile backsplashes, lacquered veneer cabinetry, Sub-Zero refrigerators and Miele appliances. Bathrooms are equipped with Lefroy Brooks fixtures, double sinks, soaking tubs and separate showers with glass tile.

The ground-floor retail will include a bistro-type restaurant with outdoor seating on the water. Von Spreckelsen said Toll is talking with “a number of restaurateurs in Manhattan who have one or two restaurants that have been successful in the Village and think that Williamsburg is a natural extension of the Village.”

Of the City Living projects in the Toll portfolio, noted Von Spreckelsen, “Hoboken is doing slightly better, because they’ve got a corner on the market. If you want a luxury condo on the waterfront, it’s going to be Toll.

“In Williamsburg, there’s quite a bit of competition. We’re sharing the wealth rather than having a corner on it.”

Still, Toll is bullish on Brooklyn. The company is working to rezone a three-acre property on the Gowanus Canal in Carroll Gardens in order to build 460 rental and condo units in six buildings, with a 2,000-square-foot community facility, 2,000 square feet of retail and a public waterfront esplanade.

When was the last time you saw a doorman in a rental building in Williamsburg? Probably never.

But that is changing. What is likely to be the first rental in Williamsburg to have a doorman is scheduled to open in September. Comments

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A new boutique condo is sneaking up fast on the giant residential towers — the Edge and Northside Piers — being constructed along Kent Avenue on the waterfront in Williamsburg.

The developers of the seven-story condo known modestly by its address, 111 Kent Avenue, are betting there are at least 62 buyers willing to forgo the indoor pools, screening rooms and golf simulators offered by the neighboring high-profile towers for a cozy waterside residence selling for about the same price, on average about $1,000 a square foot.

Having topped out in June, the condo will be ready to close way ahead of the Edge, which is scheduled for occupancy next summer, and just after the first of the two Northside Piers towers (see Watching sales at Two Northside Piers), which is already beginning occupancy.

The Edge, a mixed-use project on Kent Avenue between North 5th and 7th streets (see The Edge is smooth, from the January 2008 issue) should be the heavyweight contender on the Williamsburg waterfront, according to Douglaston Development’s long-range plan. Now under construction on a 7.5-acre waterfront site, the Edge will be anchored by three towers containing 1,085 condos with 40,000 square feet of amenity space.

Residents at that Goliath will get an indoor pool with Manhattan views from the outdoor terrace, two fitness facilities, yoga studio, spa with whirlpool, co-ed sauna, Turkish steam bath, heat pit, private treatment rooms, two movie theaters, virtual reality game room with golf simulator, residents’ lounges with demonstration kitchens and billiards tables, private party room, and a children’s playroom. Over 60,000 square feet of retail space is planned, with a public park, waterfront promenade and new piers with a water taxi landing.

“If you want 40,000 square feet of amenity space, the Edge is for you,” said Christine Blackburn, the Prudential Douglas Elliman agent heading the marketing team at 111 Kent. Her buyers, she added, “don’t need the yoga room and instead want custom high-end finishes.”

“We’re not competing with the Edge,” agreed Charles Scharf, one of the developers of 111 Kent. “A different buyer wants to be in a 500-unit building as opposed to a development with 62 units, where you’ll know most of your neighbors on a first-name basis within the first couple of months.”

Blackburn said the developers are targeting “people who want waterfront and views, but want it West Village-style, something that’s a smaller building.

“We’re the Superior Ink of Williamsburg,” she added, referring to the Related Companies’ 69-unit waterfront condo at 70 Bethune Street in the West Village.

The principals claim 111 Kent will contain more refined and stylized finishes than the nearby mega-towers, but their real edge on the Edge, they boast, is the views.

The patch of waterfront between their site and the river has been designated a state park. “Eighty percent of the units have permanently unobstructed park, skyline and river views,” said Blackburn. “In the towers [at the neighboring high-rises], maybe 25 to 30 percent of the buildings have unobstructed views because other towers could obstruct their views. And they’re tall and narrow, so three-quarters of their buildings face the other side. We’re wide along Kent Avenue.”

Of course, 30 percent of the 370 apartments in the initial tower at the Edge would still dwarf the number of units in 111 Kent that will offer views. But, insisted Scharf, “our size is the integral part of what will make this building a success. Massive towers are somewhat overwhelming, almost like walking into someone else’s building until you walk into your apartment.”

“A lot of people move to Brooklyn because they want a more boutique building,” added Blackburn. “They don’t want to feel like they’re in a building that could be in New Jersey.”

Unlike the glass high-rises coming up on the waterfront, 111 Kent will have a brick façade. “There are enough glass towers in Williamsburg,” said Blackburn. “We wanted to do something that incorporated some brick, reflecting more of the surrounding buildings, which are brick and frame. If somebody wants an all-glass tower, that product exists for them.”

Blackburn said 111 Kent interior architect Andre Kikoski “did a lot of scouting work, walking the neighborhood, getting the feel of Williamsburg, which is very eclectic in the culture and visually, containing brick buildings, old frame buildings, loft buildings, different colors, glass towers. It’s not consistent like other parts of brownstone Brooklyn.”

Hallways will contain floor-to-ceiling abstract photographs of the neighborhood.

The lobby will be high-tech modern meets turn-of-the-century rustic, containing sheets of diacrylic glass which change colors from purple to green to blue and go from reflective to opaque to transparent, depending on the viewing angle. The glass is juxtaposed against 10-inch strips of rough, knotty old barn wood bought from a company in Colorado that reclaims wood from barns in Austria. At least, said Scharf, “that’s what they’re telling me.”

Sixty percent of the building’s units are two-bedrooms between 1,100 and 1,200 square feet; there are some one-bedrooms, a handful of ground-floor duplexes between 1,500 and 1,800 square feet, and a few three-bedrooms. The 720-square-foot one-bedroom units on the south side are the apparent value plays, starting at $575,000.

The living rooms in the waterfront two-bedroom units jut out from the building façade, said Blackburn, so residents can position furniture toward the Midtown Manhattan skyline, which is slightly north of the building. The layouts are “winged,” with bedrooms on either side of the living rooms, so all windows face the river. Finishes include textured, leather-like tiles in the bathrooms.

The building is set back at the top floor, so the four penthouses, between 1,200 and 1,300 square feet, have terraces ranging in size from 700 to 1,000 square feet. Though not listed yet, they are “priced like the top floors of Northside Piers,” said Blackburn.

Penthouses at Northside go for upwards of $1,200 per square foot.

The condo will have a rooftop outdoor pool with two south-facing sundecks and private cabanas for sale, a gym, window-walled lounge, underground parking with valet service and a 3,000-square-foot private garden in the back.

Marketing for 111 Kent begins this month, with a sales office opening just across the street from the project. Closings are scheduled for winter 2009.

While the first tower at Northside has sold around 70 percent of its apartments so far, the new contender in the brick trunks is trying to come out swinging.

Scharf reports that one of the units at 111 Kent has already been sold and contracts are out on two others, the result of marketing to Prudential Douglas Elliman’s “friends and family” clients.

Elliman has 1,000 inquires on a waiting list for the project, Blackburn said.

Atlanta
The Perimeter Center business district experienced the greatest positive absorption in the second quarter among all metro Atlanta office markets, according to local commercial real estate firm Richard Bowers & Co. The northern suburb of Atlanta absorbed 303,711 square feet in the latest quarter, with a vacancy rate of 13.2 percent. Perimeter Center also recorded the highest average asking rent among suburban markets, at $22.92 per square foot. Buckhead/Lenox followed Perimeter Center in net absorption with 183,199 square feet, the Atlanta Journal-Constitution reported.

Boston
The downtown Boston office market posted positive net absorption from April through June for the 15th straight quarter, but availability increased as large blocks of space in several buildings came online, according to CB Richard Ellis. Downtown saw just 42,000 square feet of positive absorption, despite several large leases coming from financial services firms, including a 450,000-square-foot lease by Wellington Management and a 196,000-square-foot deal by Bank of America. Office buildings that came to market in the latest quarter include a 517,000-square-foot tower at Atlantic Wharf and two buildings comprising 355,000 square feet at the Christian Science Center.

Hotel occupancy rates are expected to slip next year in Boston as business travelers and tourists tighten their budgets in response to rising airfare and the second-highest average room rates in the country, the Boston Globe reported. The Pinnacle Advisory Group forecasted a 1 percent decline in occupancy for both Boston and its suburbs in 2009, with rates expected to drop to 76 percent in the city and to 62 percent outside Boston. Despite the negative outlook, Starwood last month unveiled two concept hotels in nearby Lexington: the first Aloft hotel in New England, marketed to tech-savvy travelers, and the eco-friendly Element hotel, the first in the country.

Chicago
The Chicago-area retail market took a hit in the second quarter as the vacancy rate rose to its highest level since 2003, according to CB Richard Ellis. Vacancies climbed to 8.65 percent from April through June, up from 7.93 percent in the previous quarter and 7.51 percent in the year-ago period. Vacancies haven’t been this high since the market posted a 9.19 percent vacancy rate in the third quarter of 2003, Crain’s Chicago Business reported. Linens ‘n Things and Sharper Image were among the chain stores to close sites in the second quarter. Steve & Barry’s, which has 12 stores in the Chicago area, filed for Chapter 11 bankruptcy protection last month.

Detroit
Year-over-year home sales climbed in June for the sixth straight month in metro Detroit, driven by a 55 percent increase in sales in the city. A total of 990 homes sold there in June, up from 639 in the year-ago period, the Detroit Free Press reported. Inventory dropped in metro Detroit to 67,888 in June from 74,989 in June 2007, while pending sales increased 32 percent in the same period, according to Farmington Hills-based Realcomp, a multiple listing service. Sales in neighboring Oakland, Livingston and Macomb counties, however, dropped from year to year.

Las Vegas
For the sixth consecutive month, Las Vegas saw an increase in home sales in June as inventory remained stable, the Las Vegas Review-Journal reported. According to the Greater Las Vegas Association of Realtors, 2,226 single-family homes sold in June, a 50 percent increase from June 2007 and up from 2,026 sales in May. Listings remained flat in June, increasing just 0.2 percent from the previous month to 23,388 units and down 1.1 percent from a year ago. The median home sales price, however, declined 4.9 percent from May to $225,000 and 26.2 percent from June 2007.

Los Angeles
Asking rents for Los Angeles County’s Tri-Cities office market fell slightly to $3.01 per square foot in the second quarter from $3.05 per square foot in the prior three-month period, the market’s first quarterly decrease in over two years. According to a Colliers International report, the office market saw a lower vacancy rate of 10.8 percent in the latest quarter, down from 11.5 percent in the first quarter. Leasing activity dropped slightly from the first quarter to 385,400 square feet in the second quarter in the Tri-Cities office market, which includes Burbank, Pasadena and Glendale, the report said.

Philadelphia
Some niches of the Philadelphia area’s housing market are outperforming most of the region, especially in the suburbs where new developments are hatching more moderate-sized homes in proximity to Philadelphia. At Huntingdon Valley’s Woodmont community, 17 homes sold in the first half of the year, at prices ranging from $500,000 to $900,000, the Philadelphia Inquirer reported. Athertyn, a 55-and-over community in Haverford, sold 16 units through May, with prices of up to $1.3 million. Real estate data firm Hanley Wood Market Intelligence reported that townhouse and condo sales accounted for 47.2 percent of the suburbs’ new-home sales by mid-year 2008, up from 32.5 percent three years ago.

Phoenix
Leasing activity in the Phoenix industrial market was down in the second quarter with a negative absorption of more than 1.33 million square feet, compared to 312,000 square feet of negative absorption in the first quarter. The Northwest submarket fared the worst from April through June, with a net absorption of negative 940,421 square feet, according to Colliers International. The Southwest submarket, on the other hand, posted a positive absorption of 131,390 square feet in the latest quarter, capped by a 604,678-square-foot warehouse leased by Amazon.com.

San Francisco
San Francisco’s office market rebounded in the second quarter with 303,542 square feet of positive absorption, a turnaround from the nearly 500,000 square feet of negative absorption posted in the first quarter, according to CB Richard Ellis. Though completed construction projects piled on nearly 450,000 square feet of vacant space to the Mission Bay submarket in early June, Barclay’s occupation of its 335,000-square-foot, build-to-suit headquarters at 400 Howard Street helped create positive absorption in the overall market.

Despite rising retail vacancy rates and flat asking rents in San Francisco’s Union Square shopping district, brokers claim that the market changes reflect natural cycles, the San Francisco Chronicle reported. Union Square’s retail vacancy rate increased to 9.35 percent in June from 5.75 percent at the end of 2007, while ground-floor asking rents remained flat year-over-year at $183 per square foot, according to local retail brokerage firm Terranomics. The Disney Store, CompUSA and Ann Taylor recently shuttered their Union Square outposts; Diesel, Morton’s the Steakhouse and CB2 are moving in.

Seattle
The median sales price for King County condos increased 5.3 percent in June to $295,000 from June 2007, according to the Northwest Multiple Listing Service. Condo sales, however, dropped 45 percent as listings climbed 40.5 percent in the same period. Meanwhile, the median sales price for detached houses in the county, including Seattle, fell 4.3 percent in June to $449,700 from a year ago. Sales of houses dropped 27 percent as inventory rose 25.4 percent in the year-over-year period, the Seattle Times reported.

Washington, D.C.
Demand for office space in Washington, D.C. may not be strong enough to absorb the 8.8 million square feet of new space coming online by 2010. Despite record asking rents of $50.22 per square foot for office space in the first half of the year, the vacancy rate increased to 7.7 percent in the second quarter from 7.3 percent in the first quarter, according to Cushman & Wakefield. New office leases through the first six months of the year fell to 3.3 million square feet from 3.8 million square feet in the year-ago period.

For this month’s supplement, we check out a bunch of markets across the
country that are actually in good shape. Comments

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Longtime businesses shutter. Workers get axed. Neighborhoods turn to ghost towns.

For decades, this story line played out dramatically in cities across upstate New York, which seemed to suffer more than most communities as America’s industrial economy shrank.

But as the rest of the country experiences the pains of a collapsing housing market, longtime Rust Belt mainstays like Rochester and Syracuse are surprisingly showing strength in their housing markets.

In the first quarter of this year, for instance, the median sales price in Rochester was $108,500, up 1.5 percent from $106,900 in the year-ago period, according to the National Association of Realtors.

And Syracuse, with a $110,300 median price, compared with $107,500 in the year-ago quarter, posted an even bigger 2.6 percent jump.

In contrast, the national median price in 2008′s first quarter was $196,300, down from $212,600 in 2007, which represents a 7.7 percent plunge.

Foreclosure numbers were also comparatively low in Syracuse, which in May saw one for every 4,186 households, according to RealtyTrac, which lists foreclosed properties.

In contrast, New York City had one foreclosure for every 1,274 homes, which was in line with Rochester, which had one per 1,064. Those are all a far cry from a housing crash epicenter like Stockton, Calif., which in May saw one homeowner in 75 suffer foreclosure, according to RealtyTrac.

It may seem counterintuitive, but because mortgage payments in Rochester and Syracuse represent a much smaller fraction of monthly expenses than elsewhere, the cities may be better insulated from downturns, according to brokers, developers, community leaders and affordable housing advocates.

In fact, in 2006, the most recent year with data, Rochester residents spent just 9 percent of their incomes servicing mortgages, down from 16 percent two decades earlier.

Syracuse residents, meanwhile, spent 10 percent to pay down their mortgages, down from 17 percent in 1986, according to NAR data.

In comparison, mortgage payments in New York City accounted for a whopping 27 percent of income in 2006, a figure that was essentially unchanged since the 1980s, the data show.

Of course, Syracuse and Rochester “didn’t have the strong price growth between 2000 and 2005 that New York City did,” said Ken Fears, a NAR economist who studies regional trends.

Without a huge run-up, there wasn’t as far to fall, but consequently, “they have much more healthy and stable markets than the rest of the country,” Fears said.

There are other positive forces buoying the economy of these upstate Rust Belt towns, and by extension, their housing markets: According to brokers, jobs are multiplying, as colleges expand and new companies put down roots.

And after years when residents migrated away from core downtown areas, they appear to be returning, as they rediscover the benefits of living within walking distance of theaters and museums.

This trend is boosting downtown property values, even if it’s also putting home ownership farther out of reach of lower-income renters.

Rochester, which is near Lake Ontario, may also benefit from a conservative mindset, especially in terms of loans, said Jeff Scofield, a partner with Re/Max Plus based in the suburb of Brighton.

Indeed, buyers never really took to problem-plagued adjustable-rate mortgages, opting instead for safer 15- or 30-year alternatives. Plus, as a general rule, they buy below their means, said Scofield, who has been selling homes for 16 years.

“You may live next door to a millionaire but might not know it, because he lives in a $250,000 home,” he said, pointing out that just 15 homes over $1 million sold last year in his market, which includes portions of five counties. “We are very traditional.”

Certainly, volume has slackened — Scofield sold 120 homes in 2007, versus 150 at the market’s 2005 height, he said — but values are climbing 3 percent a year in the upper-scale communities east of the Genesee River, such as Pittsford, Henrietta and Victor.

Projections indicate that Rochester’s downtown area, particularly the east side, will see an increase from 3,000 to 5,000 units within the next three years, said Patrick Tobin, a vice president with Victor-based Christa Development.

Last year, the company completed the Sagamore on East, a seven-story, 23-unit luxury condo that was the first ever built downtown. Its two-bedrooms, ranging in size from 2,000 to 3,200 square feet, were priced from $400,000 to $675,000 and sold out in a year, Tobin said.

A new project, which will break ground next year, will also be a condo, but the two-bedroom units will be smaller, ranging from 1,600 to 1,850 square feet. They will be priced from $325,000 to $425,000, Tobin said.

Meanwhile, PAETEC, a telecom company, will build its headquarters in Rochester, and the downtown could also get a boost from a new law school and the $35 million expansion of the Eastman School of Music; those factors could help offset the loss of tens of thousands of jobs in recent years from its Big Three corporations: Xerox, Eastman Kodak and Bausch & Lomb.

Still, last year the median income of city residents was $28,000, versus $64,100 in the greater metro area, said Carolyn Vitale, the COO of the Urban League of Rochester’s economic development arm.

Downtown houses cost around $50,000, but buying them could require nearly $800 in monthly payments, which for many can be a third of a paycheck — a tall order, Vitale said.

That’s why all 67 units at her new project, the Mills at High Falls, are rentals, and targeted as affordable, starting at $600 a month.

Jasmine Widmer, a New York City immigration attorney, and her husband Raul Garcia, a doctor, have lived and traveled all over the world. But last year, the couple sold their home in Queens and moved to Yakima, Washington, a farming town with a population of 72,000, located 150 miles east of Seattle.

The reason for the move was Garcia’s new job as associate dean of the Pacific Northwest University of Health Sciences, the first new medical school to be built in the state in 60 years.

Ten months later, the couple, who have a 3-year-old son, said the stimulating new job is only one of the advantages of living in Yakima. “We’ve been quite impressed with the lifestyle,” said Widmer. “There is a large educated demographic, and the vista is exquisite — snow-capped mountains above and all this vegetation below.”

Famous for its orchards, Yakima is drawing attention for its livability — and a housing market that is bucking national trends. Nationwide, home prices fell 7.7 percent on average compared to a year ago, but not in Yakima. In June 2008, the average housing price was $191,716 — a jump of 7 percent compared to the year before. (The median housing price is $167,000.) Several factors are helping sustain housing prices, including the new medical school, a solid agricultural economy and a burgeoning second home and retirement market.

The area’s slow and steady price appreciation over the past decade — a few percent a year — has also helped insulate Yakima from the nationwide housing bubble.

“Our community didn’t have huge run-ups in price, so we’re not falling on our face,” said Chris Pauling, a broker with Prudential Northwest Realty.
Note: Correction appended

City planners are currently processing about 500 building permits — “considerably higher” than the number processed a few years ago, according to Bill Cook, director of economic development for the City of Yakima. Fueling the boom are eight new housing developments planned or under construction, among them the $100 million Vineyards project, which will include retail shops and tennis courts and 582 condos and homes, as well as a 100-room boutique hotel, golf course, pro shop, restaurant, athletic center, spa and concert amphitheater. Buyers will be able to purchase lots for $250,000 to $700,000.

Another project, the Apple Tree Resort, will feature 650 units along golf course greens selling for $500,000 to $750,000. So far about 90 of the first 100 units have sold, according to project manager Glen Durall. Over 80 percent have sold to out-of-town buyers, he said.

Durall acknowledged that inventory in Yakima is increasing and houses are staying on the market for a longer period of time. “But values are not decreasing,” he said. “The economy is really moving here.”

Ten years ago, Yakima’s unemployment rate was in the double digits, said David McFadden, president of the Yakima County Development Association. “Today it’s at 6 percent and free-falling,” he said. He credits the region’s healthy employment growth to the fruit industry. Yakima is the nation’s No. 1 producer of apples, pears and cherries. “When those commodities are doing well, it trickles down to Main Street, into health care, construction and retail,” McFadden said.

Indeed, signs of diversification are everywhere. Framed by the Cascade Mountains, Yakima’s 50 vineyards beckon wine aficionados; three new hotels have opened in the past year, and the city is in the third phase of a downtown revitalization plan that has invested $7 million in streetscape and lighting improvements. The initiative has helped attract about 30 mostly locally owned businesses to the central core, including the Cascade Wine Shop, Ummelina Spa and the Shopkeeper Art Gallery.

Pacific Northwest University of Health Sciences, which is set to debut this fall, “opens the door to new and different opportunities for us as a city,” said McFadden. So far, the campus has hired about 60 faculty and staff, and many of the faculty will be doing biomedical research with commercial impacts, McFadden said.

Yakima offers other, more basic, amenities — 300 days of sunshine, and “no tornadoes, hurricanes or earthquakes,” said Cook. Downhill skiing at White Pass is less than 40 minutes away, and the Yakima River is home to healthy salmon runs. “How many places can you fish for salmon downtown?” Cook asks.

“Yakima isn’t New York City, ” said Widmer, who paid $660,000 for a 3,800-square-foot house on Yakima’s Scenic Drive, 10 minutes from downtown. “But it’s an absolutely beautiful spot.”

Little Rock, Arkansas, has endured one of the country’s harshest real estate downturns in decades, with home prices gradually increasing even as sales decline.

Home sales have fallen for 28 consecutive months in Pulaski County, where Little Rock is located. For the first quarter of this year, sales in Pulaski County were off 28 percent compared with the corresponding quarter in 2007.

But the median home price rose 3.8 percent over the same period.

“By and large, Little Rock has not participated in the activities that have caused the [real estate] correction in other parts of the country,” said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas in Fayetteville. “Activities like subprime mortgages and unbelievably appreciating housing prices that some other parts of the country have had” have not hit Little Rock.

Metro Little Rock is home to about 250,000, and its median household income is about $37,500, higher than all of Arkansas’ major cities except two in the prosperous northwest corner of the state, which is home to Wal-Mart’s headquarters.

Roddy McCaskill, executive broker for Keller-Williams Realty in Little Rock, has sold real estate in the city for 30 years. During that time, home prices have averaged about a 3 percent increase a year, McCaskill said.

“Some years, it’s 6 to 10 percent, and other years they are just flat, with no appreciation,” McCaskill said.

So why have Little Rock home prices risen while many cities around the country reported double-digit drops?

The reasons vary.

The median home price in Pulaski County is about $170,000 to $175,000, said Scott McElmurry, chief operating officer for Bank of Little Rock Mortgage, the largest mortgage lender in Little Rock. When compared with the city’s median income, the median home is easily affordable, McElmurry said.

“Contrast that with the areas having the most trouble,” McElmurry said. “If the median home price is $450,000 in San Diego, let’s say, but the median income is $75,000, it is very difficult to find a house you can afford.”

Bankers and mortgage lenders in Little Rock are financially conservative, McElmurry added, noting that few got involved in subprime lending.

The affordability of homes in Little Rock allowed lenders to use more conventional products to finance homes, decreasing the need for subprime products, noted Bill Roehrenbeck, chief executive officer for Arvest Mortgage. Arvest is the third-largest mortgage lender in the Little Rock market and the largest in the state.

Only 2.4 percent of all mortgage loans in Pulaski County last year were subprime, according to data on the Federal Reserve Bank of New York’s Web site. That is below the national average of 2.6 percent.

Roehrenbeck said that most mortgage lending in Little Rock follows guidelines set by Fannie Mae and Freddie Mac because most mortgages are sold into the secondary market.

Most borrowers also are conservative and historically have sought fixed-rate mortgages, McElmurry said.

“And the majority of mortgage financing done in Arkansas is done by ‘A’ paper mortgage companies,” McElmurry said. “Most [Arkansas mortgage companies] are bank-owned, meaning they are highly regulated.”

The conservative lending practices have paid off. Only 200 of the 3,900 subprime loans in Pulaski County were in foreclosure last year, according to the Federal Reserve statistics, which were supplied by First American Core Logic of Santa Ana, Calif. That is 1.2 subprime loans in foreclosure for every 1,000 homes, about half the national average.

While statistics were not available for Little Rock only, Core Logic, which gathers public information on mortgages from 99 percent of the 3,100 counties in the country, estimates that 64 percent of Arkansas’ 1.17 million homes — about 750,000 — are paid in full and don’t have a mortgage.

“It is impossible to get foreclosed on if you don’t even have a mortgage,” added Mark Fleming, chief economist for Core Logic.

Still, the stability of the Little Rock housing market may be tested in the coming months.

Because home sales are declining, a drop in home prices almost certainly will follow at some point, said Deck, the University of Arkansas economist.

“A price decline usually follows a quantity decline like we’ve been seeing,” she noted.

McElmurry points out, however, that prices have to decline only if homeowners are forced to sell their homes for various reasons.

“Because if I don’t have to sell my house, and I don’t like the offers I’m getting, I can just take my house off the market,” McElmurry said. “Then I go back in the market when it gets better.”

Little Rock is not a city of transient residents who move in, live for a few years and move out, McElmurry said. And no major employer has laid off a large number of employees, so there haven’t been a large number of homeowners being forced to sell.

Still, Alltell Corp., one of the largest employers in Pulaski County, announced in June that it is being acquired by Verizon Wireless.

Alltel employs about 2,900 people in Pulaski County. While no details have been released about job losses, it is possible that hundreds of residents could get handed pink slips and be forced to sell their homes and find work outside the state.

That would dramatically affect the city’s housing market, McElmurry said.

David Smith is a real estate reporter for the Arkansas Democrat Gazette.

More than 70,000 Army soldiers and their families are expected to march into El Paso, Texas, in the next five years.

That prospect has boosted El Paso’s housing market in the past three years, and it’s expected to lift it again. Although the number of homes sold in El Paso has declined this year, prices continue to rise — counter to what’s happening in many other metro markets around the country.

“To a certain degree we’ve been insulated from the rest of the country, and part of that is the government investing $5 billion in infrastructure at Fort Bliss and the growth of Fort Bliss,” said Dan Olivas, president of the Greater El Paso Association of Realtors.

Fort Bliss, an Army post with 17,600 soldiers, has always been an important component of El Paso’s economy, but its influence should grow as the post’s military population is scheduled to more than double in the next five years.

El Paso, with more than 730,000 people, is also helped by growth across the Rio Grande in Juarez, Mexico. That area has a population of more than 1.3 million and still enjoys a healthy manufacturing economy despite the economic woes in the United States.

Attracted by El Paso’s low home prices and the promise of growth, out-of-town investors pumped up the housing market in 2005 and 2006. That’s when home prices increased 18 percent and 14 percent respectively, according to National Association of Realtors data.

“Historically, this city has never had huge appreciations or depreciations. It’s been a real steady market for decades” with appreciation of around 3 percent a year, said Charles de Wetter, president of Coldwell Banker de Wetter Hovious, one of El Paso’s largest real estate firms. “When there’s a slower economy nationally, it’s good to be in a place like this.”

The median, or market midpoint, price for single-family resale homes in El Paso increased 8.5 percent in the first three months of the year — the sixth-largest percentage increase among 149 metro areas surveyed by NAR. The median sales price in the first quarter was $134,600, compared to $124,000 a year ago.

In 2007, the median price increase was 3.4 percent.

As far as trouble goes, El Paso home foreclosures decreased 52 percent in the first quarter, while foreclosures more than doubled nationwide, according to RealtyTrac, a California company that tracks foreclosures nationally.

One thing that’s helped keep El Paso foreclosures down is the fact that adjustable-rate mortgages and other creative financing vehicles are not used much in the city, El Paso mortage experts said. Conventional 30-year mortgages are the most popular forms of home financing here.

“A lot of areas of the United States where real estate markets have collapsed are areas where prices rose excessively. In El Paso, that type of market condition did not materialize,” said Tom Fullerton, an economics professor at the University of Texas at El Paso.

“The local economy has remained in good shape throughout 2008, and whenever job creation is strong, it helps support good real estate fundamentals,” Fullerton added.

El Paso home prices have continued to increase, even though inventory has risen; the more than 5,100 resale and new homes on the market in early July were substantially above the more than 3,200 homes on the market a year ago.

“Houses are selling in El Paso, but at a slower rate than a year, two years ago,” said de Wetter, the real estate broker. “There is demand out there. A lot of sellers in the marketplace are not realistic about pricing, but are getting more so.”

New home starts in El Paso are slower this year than last year, noted Ray Adauto, executive vice president of the El Paso Association of Builders.

“We’ll be fortunate to hit 3,000 [home starts] this year,” Adauto said. “People are having a harder time qualifying for mortgages.”

Home builders have spent part of this year trying to get rid of high-end homes above $250,000; some are offering substantial discounts to sell their inventory. Builders have shifted to constructing more affordable homes, at prices below $200,000.

Eugenio Aleman, senior economist for Wells Fargo Bank in Minneapolis, said in a recent report that El Paso’s economic performance since mid-2006 has been “impressive.” Even so, El Paso’s housing market is “suffering the consequences of the national credit crunch,” and home sales will “remain weak for the rest of the year,” he predicted.

Olivas, the El Paso Realtors’ Association president, doesn’t see it that way.

“I don’t think we’ll see the market dragging for the rest of the year,” he said.

He said more troops are expected at Fort Bliss later this year, doctors are going to be moving in for the new Texas Tech University medical school scheduled to open next year , and more home buyers from Mexico are looking in El Paso as violence in Juarez and other Mexican border cities increases.

Olivas added, “We’re not going to follow the pattern of the rest of the nation. I think we’re ahead of that curve.”

Vic Kolenc is a business reporter for the El Paso Times.

Back in the fall of 2004, real estate agent Colleen Kulikowski was at a title attorney’s office in Florida’s booming Marco Island, helping close a deal on a $725,000 home.

Actually, it was the first of two closings she’d be attending that day — on that same property. The next was just down the hall, where another buyer offered $795,000. Kulikowski would find out later that the home would close a third time that day for $925,000, a same-day increase of 27 percent.

These days, Kulikowski has a calmer life, and a more low-key portfolio, in Western New York. Her hometown region missed out on the upward-spiraling prices she came to know in Southwest Florida, where prices are now plummeting and foreclosures are reaching record levels.

Here homes sell in 60 to 90 days, at reasonable prices to buyers who usually plan on moving their families into them. That slow-but-sustainable growth, once just another reason to look South and be shamed, has left the Buffalo Niagara region ranked 12th in the nation for growth, according to the National Association of Realtors.

“We’re not doing super-fabulous, we’re not booming, we’re just doing well,” said Kulikowski, now an agent with Hunt ERA in Wheatfield, a suburb north of Buffalo.

There were five fewer homes sold in April 2008 than April 2007, for a total of 808, according to the Buffalo Niagara Association of Realtors. And permits for new homes and condos have dropped, with just 240 permits here in the first quarter of 2008, a 16 percent decrease from the same period in 2007.

Yet median sale prices across the region, which includes the cities of Buffalo and Niagara Falls along with their suburbs, rose 5.5 percent to $101,000 in April, while national median prices fell 11 percent.

So how did Buffalo keep its housing attractively affordable, yet mostly secret from over-extended prospectors and quick-fix flippers?

A big part of the answer lies in the city’s slow transition to a fast-paced service economy. Most of the city’s neighborhoods are still tightly knit and rooted in blue-collar families and traditions — properties are seen as homes, much more than growth investments, realtors said.

While there are sprawling new buildings in outer-ring suburbs, the vast majority of the area’s housing stock is more than a century old, and any potential speculator has to contend with Buffalo’s trademark winters.

Susan Lenahan, a veteran agent at MJ Peterson focused on city properties, said that in the last few years she’s had dozens of out-of-towners call about multi-unit properties for sale.

“A lot of novices, rookies, [were] drawn in by the prices they [saw] … but they realized, especially with these lower-priced houses and rents, that management fees ate up whatever profits there were,” Lenahan said. “In the end, I didn’t have too many takers.”

That’s not to say Buffalo doesn’t have attractive buy-ins, especially for young professionals, empty-nesters and anyone looking to escape the current costs of car travel. Almost every developer in town has a condo conversion project on deck.

And developers aren’t just converting vacant apartment buildings: There’s the former TV-dinner factory in the outer Lake Erie harbor priced at about $200 million; a federal office building, priced at about $63.6 million, with a hotel and office space; and a 23-story tower, built on the site of an iconic restaurant, priced at about $55 million.

Even inner harbor development, long the economic counterpart to the city’s maybe-this-year sports championship drought, is getting a kick start, with a $30 million mixed townhouse/condo project slated for completion this year.

But loft conversions aren’t the real story behind Buffalo’s seemingly effortless ducking of the housing crunch.

James Knight, president of the Buffalo Niagara Association of Realtors and a commercial agent with MJ Peterson, said the subprime mortgage crash didn’t take root in Buffalo, mostly because subprime mortgages weren’t necessary for most buyers.

“You take a $70,000, $80,000 Cape Cod in [neighboring suburb] Cheektowaga, and it goes for $120,000 or $130,000 in markets that were once booming, if not more,” Knight said. “A family making $30,000 a year would really have to stretch to buy that home elsewhere, especially when you factor in cost of living. Here, they can just about afford it … they don’t need an artificially big mortgage out of the box to get it.”

But while the numbers may partially explain Buffalo’s respectable gains, Lenahan and others believe there’s a reality-checking character to Western New York that keeps the market steady. She remembers telling two southern California teachers in February not to visit if they were looking for cheap rental properties to turn around, but the duo flew out anyway. Lenahan took them around to tour some multi-unit properties.

“They had a total of $60,000 and wanted to buy two, or maybe three properties,” Lenahan said. “It was February in Buffalo. Ten degrees, snow on the ground … They knew right away it wasn’t like they’d probably thought.”

The investors found the cheaper properties needed real work, and the two-family houses they did like had realistic prices, Lenahan said. So she gave them directions to the famous birthplace of the chicken wing, Frank & Theresa’s Anchor Bar, as well as the modern art Albright-Knox gallery.

“I told them to consider it an unplanned getaway to Buffalo, to forget about finding a ‘steal,’” Lenahan said. “Later on, they e-mailed to say ‘thank you,’ that they were glad I did that.”

Kevin Purdy is a business reporter for the Buffalo News.

Charlotte’s up-and-coming downtown, older neighborhoods canopied with trees and thriving new suburbs draw a flood of newcomers to the largest city in North Carolina.

Last year, 50,000 people migrated into Charlotte-dominated Mecklenburg County. Many came seeking jobs, lifestyle changes, moderate weather and Southern hospitality.

But this year, the city is gaining national recognition for what isn’t happening.

Charlotte, with a metro population of 900,000, is among the few cities of its size to avoid a devastating housing bubble. As home sellers in other cities agonize over double-digit declines in home prices, Charlotte is recording modest gains, up 2 percent at the end of the second quarter of 2008.

“We never saw the price surge — the rise in speculation that occurred in other cities,” said Mark Vitner, a senior economist at Charlotte-based Wachovia Corp. “Over the past 10 years, appreciation in Charlotte has averaged between 5 and 7 percent.”

Price escalation has been tempered by strong competition among builders, said Charlotte housing analyst Chuck Graham of Newton Graham Consultants. The average residential closing price in Charlotte was $223,946 in May, compared with $193,864 five years earlier.

That doesn’t mean there isn’t weakness in the market. Graham said Charlotte-area residential permits fell to 18,633 in the 12 months ending in March — down 29 percent from the same period in 2007. The annual closings rate declined 14 percent, to 20,881 in the first quarter, from 24,296 in the first quarter of 2007.

Real estate brokers say tighter lending standards are making home buying more difficult. Still, Mark Baldwin, executive director of the Home Builders Association of Charlotte, said, “We are not as worried about mortgages as we are about the perception that if they wait longer to buy, prices are going to be less.”

Said Graham: “Basically, what’s happening nationally is about 15 months late arriving in Charlotte. I’m not sure how much longer we are going to be able to avoid it.”

A diversity of employers and steady business expansion (last year 35,000 jobs were added in the region) have helped mitigate two decades of manufacturing job losses in the Carolinas.

While the textile and furniture industries have suffered, nine Fortune 500 corporations, from steel producer Nucor Corp. to home improvement retailer Lowe’s Companies, have headquarters in the Charlotte area.

“We aren’t dominated by any one industry,” said Tony Crumbley, research vice president for the Charlotte Chamber of Commerce. “We have 50,000 banking and insurance jobs in the county, but we also have 34,000 people in manufacturing.”

Charlotte has also evolved into the nation’s second largest banking center (behind New York City) with $2.5 trillion in assets. Bank of America, the nation’s second largest in assets, employs 15,000 people in the city, and Wachovia Corp., American’s fourth-largest bank, employs 21,000. Their center-city headquarters dominate the skyline.

As in many cities across the country, there is a renewed emphasis on downtown residential developments. Still, what makes Charlotte unusual is its suburbs also are flourishing, as surrounding counties open new areas to development.

“Charlotte is probably the most geographically balanced city in the United States,” said housing analyst Graham. “Housing development goes out 360 degrees from the center.” He noted that young couples and singles tend to concentrate in the center of the county, while families flee to outlying counties seeking lower taxes and less-crowded school systems.

In the urban core, developers have completed four condo towers over the past four years, and announced plans for several more. So far, only about 11,000 people live in the center city, but analysts say this could grow to 25,000 by 2020.

Last year, the city, in an effort to reduce auto usage and improve air quality, launched the Lynx Blue Line, the 9.6-mile initial leg of a light-rail transit system linking the center city and the suburbs.

Business expansion isn’t the only explanation for Charlotte’s growth: The area is becoming something of a mecca for the elderly, too. Sun City Carolina Lakes, a Del Webb community just south of Charlotte in Lancaster County, S.C., is building homes for more than 4,000 active adults.

Still, experts say despite the city’s diversity and growth, trouble could lie ahead. “We’re not immune from what’s happening in the market,” Wachovia’s Vitner said. “I think the influx of newcomers will fall off because of the difficulty for people to sell their homes in other markets.”

Furthermore, the subprime lending crisis and turmoil in the financial markets have weakened the city’s two big banks. “If a major employer were to relocate or be purchased, it would be difficult to absorb the resulting job losses,” said Charlotte-based real estate analyst Frank Warren.

Doug Smith is a real estate reporter for the Charlotte Observer

Miami’s real estate sector has been in a slump for nearly two years. According to a July report by data provider RealtyTrac, the Miami area ranks 10th in the country in percentage of foreclosures. About one house in 62 is in foreclosure.

Currently, because of continuing oversupply of units, tightened lending standards and would-be buyers waiting for further price declines, the overall picture has become even more muddied. So what do experts on the spot think it will take for the market to rebound?

Opinions vary widely: Some of South Florida’s best-known analysts say the worst is already over and that the market is showing signs of recovery right now. Others think the recovery won’t happen until 2015.

“It seems that people are starting to get some confidence,” said Peter Zalewski, founder of Condo Vultures, a market analysis firm in Bal Harbour. “There are more buyers in the market, and these buyers are going after the quality stuff.”

A report released by Zalewski in June noted that the volume of condo resales in South Florida rose in May, the fourth consecutive month of sales increases. In May, South Florida (Miami-Dade, Broward and Palm Beach counties) had 1,714 closed resales of condos, up from 1,576 closings in April.

Those numbers were up from 1,536 resale condo closings in March, 1,132 in February and 1,012 closings in January, according to data from the Florida Association of Realtors.

While sales figures are still below those set in 2007, Zalewski feels the month-over-month upswing is significant.

“In 2007, there was still some credit available,” he said. “Today, there’s no credit.”

As elsewhere in the country, the lack of credit is acting as a drag on sales.

“Credit in South Florida has gotten much more stringent,” said Lee Eisenberg, president of Leading Edge Mortgage Corp. in Boca Raton.

Eisenberg noted that the South Florida market has been labeled a “declining market” by Fannie Mae, which reduces some of the maximum acceptable loan-to-value ratios. In addition, he said that private mortgage insurance has become harder to obtain in South Florida.

Michael Cannon, executive director of Integra Realty Resources in Miami, considers himself an optimist, but still thinks a recovery is 12 to 18 months away.

According to Cannon, Miami’s problems aren’t limited to a vast oversupply of units — presently 25,000 resale units are listed in the MLS and another 25,000 new units are slated for completion by the end of 2009 — and the credit crunch. The city’s real estate market is also marred by affordability issues resulting from property taxes and homeowners-insurance rates that have skyrocketed. There is also an ever-rising number of exotic loans under foreclosure.

Still, Cannon did note that he’s seen an increase in contracts as well as closings since December. “If that continues, we may be seeing the beginning of the bottom,” he said.

Mark Zilbert, a real estate broker in Miami Beach, thinks a South Florida-wide recovery may be several years away, but believes that some neighborhoods will begin to rebound much sooner than others.

“Popular markets, like the beachfront communities of South Beach, Bal Harbour, Sunny Isles and Fort Lauderdale, will take 12 to 24 months to recover because buyers will happily embrace well-priced oceanfront properties,” he said.

“Downtown Miami and other communities around Miami-Dade and Broward Counties will take four to six years to recover, due mainly to an oversupply.”

Zilbert said buyers are also concerned about community stability and tend to seek out projects or neighborhoods with minimal foreclosures, like the South of Fifth (SoFi) area of Miami. Downtown Miami, on the other hand, has been hit hard by foreclosures and buyer defaults, so buyers are wary, he said.

Perhaps the most pessimistic local analyst is Jack McCabe, chief executive officer of McCabe Research and Consulting. Back in 2004, McCabe was one of the first industry analysts to predict an imminent bust. These days he thinks the single-family market in Miami will recover more quickly than the condo market — by the end of 2009, after prices drop another 20 percent or so.

As of May, there were 17,065 single-family homes for sale in Miami-Dade County, McCabe said, compared to 25,555 multifamily units. “There is more demand for single-family homes,” he said. “And there is limited supply because Miami-Dade County … is mostly built out.”

On the other hand, McCabe said there is a 57-month supply of condos based on the number of units presently being closed each month.

Before any rebound in the condo market, McCabe said there has to be real demand by buyers, not speculators.

And for that to occur, housing has to be affordable — meaning that prices, taxes and insurance need to drop, so more buyers will enter the market — and the glut of excess inventory needs to dwindle.

“Reduced prices equate to greater buyer demand, and greater buyer demand equates to a shrinking supply and more balanced ratio,” he said. “That’s how the market corrects itself.”

These are dark times in Sacramento. According to a National Association of Realtors survey from the first quarter of this year, Sacramento’s housing market lost 29 percent of its value in the past year, the steepest drop of any metropolitan area in the United States.

As bad as that sounds, further price declines are expected. The plummeting prices have shown the resilience of Sacramento, according to brokers who have become adept at detecting silver linings.

“I think the hard days are almost over,” said Bob Bronswick, president and CEO of Coldwell Banker Sacramento/Tahoe. “Right now I think we’ve hit bottom, and we’re looking at a bounce … I think things are starting to look up.”

Unfortunately, that bounce stems from both a positive and negative place. While there has been a small spike in sales in Sacramento since April, those sales are largely the result of banks selling off homes that have been foreclosed, according to figures released in June by industry tracker DataQuick Information Services.

The sales bump may last a while longer as more homes get foreclosed and then sold, but prices, meanwhile, are still declining.

According to the Web site Foreclosures.com, so far this year banks in the Sacramento area have foreclosed on 10,224 homes. At the same time, DataQuick reported that only about 5,448 repossessed homes were sold.

How did it come to this?

“Many of the problems in Sacramento were brought on by overbuilding, because there was land for houses and it was inexpensive,” said Delores Conway, director of the Casden Forecast at the University of Southern California Lusk Center for Real Estate. “The good news is that they’ve stopped building. But more than 40 percent of home loans were financed with subprime loans in 2006 — and many Hispanic and other ethnic groups who couldn’t normally afford to buy found the money.”

Analysts say before any rebound can begin, the Sacramento area needs to work on its so-called REO inventory of real estate owned by banks.

Some brokers welcome the challenge.

“From about 1996 to 2006, the REO market in Sacramento was almost non-existent, and most of those homes were purchased on the steps of the courthouse,” said Carlos Kozlowski, a broker with Coldwell Banker. “In 2006 there was a shift, and foreclosed properties skyrocketed to double-digits. At this point I have about 80 REOs in escrow. Anyone with expertise in selling these types of homes is doing well, and the buyers who can qualify and have a down payment are going to get a great deal.”

Still, for thousands of homeowners in Sacramento, woes in the area’s housing market are going from bad to wretched.

Margaret Ketwig, for example, is typical of many in Sacramento’s middle class. Ketwig, 48, bought her four-bedroom home in 2006 for $590,000. Yet recently she lost her job. She hasn’t been able to afford a payment since January. While Ketwig would like to sell, she acknowledges that she may just have to walk away.

“There are so many homes on my block that are owned by the bank, that I can’t compete with the prices,” she said. “I can’t even come close to making the house payments. I think I’ll be moving in with family and starting from scratch.”

The economic picture in the Sacramento area remains grim: The unemployment rate, which presently sits at about 6.4 percent, is rising — the first time that figure has gone up since 1993.

Given the bad news, it’s no surprise that the number of brokers in the area is shrinking too. The California Association of Realtors reports 15 percent fewer members now than in 2006, when membership peaked at 199,168.

So far only 1,482 people have taken the state’s real estate licensing exam this year. That’s down 93 percent from April 2005, when a record-high 19,795 people took that exam, according to the state Department of Real Estate.

“What we lost in brokerage was made up by the experienced agents having a greater number of sales,” Bronswick said. “This area has lost about 20 percent of their brokers, but those still in the business know what they’re doing. If they survive 2008, we will all be better for it.”

Local market-watchers expect at least another year of declining prices. “Things should start picking up next year,” said Conway. “As long as the national economy doesn’t take a nosedive, by 2010 the housing market should be returning to some sort of normalcy.”

Candice Reed is a California-based business reporter.

There was a time when one month’s rent was enough to pay a broker to close a deal on a rental apartment in Williamsburg. But times are changing.

As more Manhattanites cross the river, brokers in that Brooklyn neighborhood have capitalized on their new clientele’s bred-in-Manhattan willingness to shell out cash for finding a prime rental. Comments

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While residential development on the far West Side has generated significant buzz thanks to the planned redevelopment of the Hudson Yards, a lower-profile stretch of land just to the east appears to be quietly undergoing its own renaissance.

A handful of developers are working on a number of large-scale residential projects on the western periphery of the Garment District, a gritty swath of the city marked mostly by small factories, parking garages and nondescript showrooms.

Since most of the Garment District is zoned for manufacturing use only, developers have zeroed in on a five-block stretch, sandwiched between Eighth and Ninth avenues, that runs from 35th to 39th streets. The push to develop there comes three years after the area was incorporated into the Hudson Yards Land Use Plan, which permits residential building that was not allowed in the past.

Glenwood Management and Lalezarian Developers, both firms that predominantly work in New York City, have scooped up multiple buildings in the area to develop residential towers. In addition, several other residential projects appear to be on the horizon.

The big-time real estate players that have gobbled up properties on the far West Side in the vicinity of the Hudson Yards — Vornado Realty Trust, the Related Companies, Brookfield Properties and the Moinian Group — have so far not made investments in the area.

“Even though this neighborhood is walking distance from Times Square, it’s not on the radar screen of the bigger firms,” the chief economist at Eastern Consolidated, Barbara Byrne Denham, said. “Some firms are more willing to be pioneers than others.”

Glenwood worked with Eastern Consolidated to purchase a parking garage, a parking lot and three walk-up buildings on 37th and 38th streets between Eighth and Ninth avenues, in a deal valued at around $80 million that closed in the beginning of 2007, according to Eric Anton, an executive managing director at Eastern Consolidated. Now, buildings have gone from the transaction phase to the brick-and-mortar phase, which is visibly starting to change the makeup of the neighborhood.

Construction has already begun on two 24-story towers, one on 37th Street and the other on 38th Street, that will have a total of 569 rental units made up of studio, one- and two-bedroom apartments. The towers, which are slated to open in June 2009, will each have their own lobby levels that will connect in the middle.

Glenwood’s executive vice president, Gary Jacob, said despite the neighborhood’s low profile, his company was drawn to the Garment District because of the value.

“It’s hard to find land that’s affordable,” said Jacob, whose company has also invested in Yorkville on the Upper East Side and in the Financial District. “The neighborhood was about the only one where we could buy land that worked for our numbers.”

Anton, who brokered the deal, said Glenwood purchased the properties for a little over $200 a square foot, which is about half the going rate in neighborhoods like Soho and Tribeca.

The second major development under way in the area is in the beginning phases of construction roughly across the street from the Glenwood tower on 37th Street.

Tower 37 LLC, an affiliate of Lalezarian Developers, received $94.5 million in financing from the New York State Housing Finance Agency to build a 27-story apartment building with 207 units, of which 42 will be reserved for low-income residents.

Even though zoning regulations restrict residential development to the western periphery of the Garment District, there is still potential for even more projects in the neighborhood, sources said.

Eastern Consolidated, which has done a lot of work on the perimeter of the Garment District, recently brokered a deal at 313-321 West 37th Street that Anton said has the makings for residential development. He would not identify the name of the buyer, saying only that he was a “wealthy individual.”

Property records show that in November 2007, a company by the name of 313 LLC purchased a deed for $26.5 million and assumed a mortgage of $11.75 million for the properties. Building permit records show that the owner of the property is Morry Kalimian, who reports identify as a partner at Elk Investors, a company that also owns an office tower at 489 Fifth Avenue.

A phone call to Kalimian was not immediately returned.

Meanwhile, Massey Knakal Realty is shopping around another site in the area — a parking garage that cuts through 35th and 36th streets. The garage’s owner is currently accepting proposals.

“There has been a decent level of interest in the site,” the firm’s chairman, Robert Knakal, said. “The biggest variable as to what is going to get built and what is going to get sold will be predicated on the financing that is available.”

Knakal said because of the increasing difficulty smaller developers are facing when it comes to financing projects, the future of the neighborhood will likely depend on whether or not more firms with proven track records get in on development there.

A senior vice president at Corcoran, Susan Sears, who has been representing apartments in the area for 20 years, said that new development would raise awareness of the neighborhood’s currently undervalued loft spaces.

Sears said loft spaces often sell for between $700 and $1,000 a square foot, which is roughly 25 to 40 percent less than similar spaces in more fashionable Manhattan neighborhoods, like neighboring Chelsea.

But even as some developers have looked to the west end of the Garment District as an increasingly plausible investment, prices appear to be dipping. Land values in the area have dropped by 10 to 15 percent since the height of the market, according to Knakal.

Still, residential developers aren’t the only ones getting into the action in the Garment District’s western end. A cluster of mid-priced hotels have either recently opened or are under construction. McSam Hotel Group and the Lam Group have plans this fall to open a combined five new hotels on 39th and 40th streets.

Whether or not more developers decide to build in the Garment District’s west end, many believe the current projects alone will drastically change the neighborhood.

“This is a neighborhood that was, frankly, pretty crappy,” said Anton. “In a couple of years you’re going to see bunches of young people walking around, and [you're] going to see new restaurants.”

In April 2006, Coalco New York was awarded a 30-year tax abatement to help transform the former American Can Company site in Jersey City into a sprawling complex of loft residences.

The abatement was designed to allow the developer to pay 16 percent of its annual gross revenue, or the amount it earned before taxes and other expenses have been deducted, over 30 years.

But the market has changed dramatically in the past two years, and when Canco Lofts debuted in February, Coalco officials feared that buyers would be reluctant to purchase two miles from the waterfront, when prices were starting to drop in so many emerging neighborhoods in the area.

As a result of the weakening market, Canco was awarded an even more lucrative tax abatement arrangement by the City Council in Jersey City. The council reduced the annual payments to 10 percent for the first 10 years, 12 percent for the next decade, and 14 percent for the final 10 years.

“It is a tough location, and it is in a location where the city wants to spur development, so we went back,” said James McCann, a law partner at Connell Foley, who negotiated the original tax abatement for Canco Lofts in 2006.

Looking for more sugar

Few of the major developers in Jersey City would discuss the Canco abatement, but government sources said the council has been approached about sweetening existing abatement agreements for other developers and is also negotiating more generous first-time abatements for new projects.

Even before the Canco deal, a number of developers had requested changes to their abatements; however, nearly all of those deals were for proposed residential buildings, instead of for completed projects.

After rejecting a change in January, the City Council did an about-face in May and agreed to a request by Short Hills-based Roseland Property Co. to restructure a 2006 abatement for its proposed Monaco Towers project, which would create 524 market-rate apartments in two buildings on Jersey City’s waterfront.

Roseland initially wanted to trim the annual payments to 12 percent of gross income from 16 percent, and reduce the abatement term to 15 years from 20 years. But by the time the May vote rolled around, the market had weakened significantly, and Roseland got an even better deal. The new arrangement cuts the payments to 10 percent and the abatement term to 10 years.

Meanwhile, the city is also wielding its tax policy on new abatements to incentivize more building.

It is, for example, continuing to negotiate an abatement deal with MEPT Journal Square, a partnership that is developing a $500 million rental apartment and retail project designed to help revitalize the Journal Square section of Jersey City.

The partnership, led by Jersey City-based Harwood Properties and Bethesda, Md.-based Multi-Employer Property Trust, is negotiating a deal that would create a payment in lieu of taxes of 10 percent, based on a 30-year master lease agreement with the city.

“There is a lot of enthusiasm for the project both on the part of the developer and the city,” said MEPT spokesman Alan Marcus. “There is the anticipation of a structure of a tax agreement.”

However, the Jersey Journal recently reported that a memo written by a key city government official warned that the city would lose $500,000 in the first year of such an agreement.
Note: Correction appended

Opponents have blasted sweeter abatement deals like Coalco’s because of the city’s growing budget gap. They have also accused some city council members of engaging in quid pro quo politics by giving developers better deals in exchange for relatively symbolic gestures for the community.

“Rather than use the tax abatements as an incentive to build, they’re using it as a plug for a budget gap,” said Steve Fulop, a city councilman. “We need some more kind of professionalism around it.”

Fulop, who represents downtown Jersey City, said that he appreciates the need for tax incentives, but that they have given the appearance of political payoffs and do not have any uniform criteria that determine which projects qualify.

Daniel Levin, former president of Civic JC, a local government watchdog group, says Jersey City residents are concerned that the subsidies for large development projects are driving up their real estate taxes without providing any benefit to them.

“Tax abatements have become a bad word in Jersey City because the public has lost confidence in the city’s ability to negotiate fair agreements,” said Levin.

Indeed, tax abatements have become the hottest of potatoes in Jersey City politics.

Nonetheless, officials at K. Hovnanian Cos., the Edison, N.J.-based developer of 77 Hudson in Jersey City, said they would not have built the 420-unit condo without the 20-year tax abatement they received.

“Generally without a tax abatement, you’re not going to touch a property, because it won’t make sense financially,” said Thomas Graham, senior community manager at the property.

The abatement also applies to the sister property of 77 Hudson, an adjacent 481-unit luxury rental tower being developed by Equity Residential. Graham rejects the notion that homeowners are subsidizing new developments, noting that his company paid $7 million up front to Jersey City under the tax abatement deal, which was used to help plug a budget shortfall.

Appealing to first-timers

Jersey City brokers said that tax abatements can influence purchasing decisions, particularly among first-time homebuyers looking for a bargain.

“This isn’t brain surgery,” said Larry Perlaki, a broker at Joseph A. Delforno in Jersey City. “When it comes to attracting buyers from other markets, aside from being across the river from Manhattan, if the taxes are reasonable it would certainly attract a higher volume of people to the area.”

He noted that properties like Canco Lofts are far more sensitive to sales prices and taxes, because the further away from the waterfront you go, the tougher it is to use location as a selling point.

“It makes a huge difference in someone’s monthly payment,” said Kristen Hurd, broker manager at Weichert Realtors Exchange Place in Jersey City. “It can make or break a deal.”

Rosemary McFadden, deputy mayor, defends the use of tax abatements as a tool to stimulate development and encourage developers to revitalize parts of the city that are suffering from neglect.

“When you think of the development and the revenues that are going to be added, it’s only going to add to the tax base,” she said. “Granting developers some type of certainty as to what their taxes are going to be over a defined period of time encourages further development in this city.”

Offering plans slow down

The New York State attorney general’s office is receiving fewer offering plans for apartment buildings. Offering plans were down 19 percent in the first several months of 2008 compared to last year. If that trend continues, the attorney general’s office expects an 11 percent decrease for the year. Last year, there was a 4.5 percent decrease in offering plans compared to 2006, the first drop since 1999, the New York Sun reported.

West Chelsea gets landmark status

The Landmarks Preservation Commission designated the West Chelsea Historic District last month, landmarking an area from West 25th to West 28th streets between 10th and 12th avenues. The district is made up of 30 buildings that recall the area’s manufacturing era.

Investigation of former PA head possible

State Senator John Flanagan recently called for an SEC investigation of former Port Authority head Anthony Shorris’ statements about the World Trade Center redevelopment, the New York Post reported. He says Shorris may have violated federal securities rules by misleading investors about the project’s schedule. Shorris’ replacement, Christopher Ward, revealed almost every aspect of the project is over-budget and behind schedule. Last month, the Port Authority named David Tweedy its new chief of capital planning. Tweedy was previously deputy commissioner at the Department of Environmental Protection.

DOB increases stop-work orders

The Department of Buildings issued 5,948 stop-work orders citywide in the first half of the year, 44.8 percent more than in the same period last year. There were 67.2 percent more stop-work orders in Queens, 65.6 percent more in Brooklyn and 25.7 percent more in Manhattan. The number of stop-work orders in the Bronx fell by 45 percent. The overall rise comes following increased scrutiny by the Department of Buildings over construction safety following several fatal accidents. Inspectors can order a job site shut down because of safety issues, unauthorized work and even paperwork violations.

City acquires fourth Willets Point parcel

A Willets Point property owner with 4,000 square feet of land within the proposed 62-acre development site became the fourth business owner to agree to sell to the city and relocate. Flushing Towing owner Carlos Canal said his company will relocate from 126-28 35th Avenue to a property in Flushing that is vacant and zoned for industrial use but not owned by the city. Neither Canal nor EDC would comment on the price. Three other companies owning a total of 95,500 square feet signed agreements with the city over the past two months.

Brownfields program clamps down on tax credits

New York State’s Brownfield Cleanup Program has been revamped again, this time by a new bill passed by the Legislature in the last hours of its 2008 session. The bill, which was set to be signed by Governor David Paterson, aims to encourage the cleanup of brownfields, abandoned or under-utilized properties where development is impaired by a risk of environmental contamination. It increases the subsidies for cleanups, while at the same time placing stricter controls on tax credits for subsequent developments that had been widely criticized for mostly enriching a few big builders.

New York City’s population grows

According to the latest U.S. census, New York City grew by 23,960 people over the past year, as its population reached 8.27 million. In upstate New York, however, cities showed losses in the annual estimate. Buffalo’s population was down 0.93 percent, Albany was down 0.46 percent, and Syracuse lost 0.78 percent.

If you’re thinking about buying a home or refinancing — even if you’ve got excellent credit — you may want to avail yourself of a forthcoming free service that could help you get a better mortgage rate.

Under the terms of a national class action settlement, you may qualify for six or nine months of daily monitoring of your credit file plus unrestricted access to your credit report and score. To be eligible, you need to have had any form of open credit account — a charge card, student loan, auto loan or a mortgage — at any time between Jan. 1, 1987, and this past May 28.

An estimated 160 million American consumers can meet that criterion, though eligibility expires Sept. 24.

The free monitoring services could prove especially useful for homebuyers who need to keep a sharp eye on their credit reports in the months immediately preceding their loan applications. Any significant glitch, inaccurate negative information
or missing positive information in their files could depress their credit scores dramatically.

That, in turn, could make it tougher for them to obtain the best rates in today’s market, where lenders are demanding higher credit scores for their standard rates, and often won’t touch applicants who have
low scores.

For homebuyers with minimal down payments, there’s a double whammy: Mortgage insurers have imposed strict new minimum credit scores for applicants with less than 20 percent down payment cash.

Here’s a quick overview of the class action and how it might be valuable to you. Under the terms of a settlement agreed to by TransUnion — one of the three dominant credit repositories — you can visit a special Web site, www.listclassaction.com, or you can call a toll-free number (1-866-416-3470) to register a claim.

The litigation against TransUnion dates back to 1998, when plaintiffs first charged that the company sold consumers’ personal data to marketers in violation of federal law. Sixteen class action suits from around the country were later consolidated into a single case against TransUnion filed in U.S. District Court in Chicago.

TransUnion denied all wrongdoing, but as part of the settlement agreed to create a $75 million fund to compensate affected class members. Since the class was defined as virtually anyone who had an open credit account any time during the past 21 years, there’s a good chance you’re a member.

The settlement sets up a tiered menu
of remedies for you to choose from, including:

• Nine months of free credit file monitoring services if you agree not to file an individual lawsuit against TransUnion seeking damages. In addition to monitoring — where the bureau alerts you by e-mail within 24 hours of any significant change in your credit data — you can also lock your entire file so that lenders, insurance companies and others cannot access your TransUnion report without your permission.

On top of this, you can receive “unlimited daily access” to your credit report and TransUnion credit score, plus a “suite of insurance scores and a mortgage simulator service” to help you qualify for a better home loan rate. TransUnion estimates the current retail value of this option at $115.50.

• Six months of free credit monitoring, credit lock privileges and unlimited access to your credit report and score. This option, valued at $59.75, allows you to receive a possible cash payment out of the $75 million fund if any money is left over after paying lawyers’ fees, notification costs, and priority payouts to named plaintiffs.

• Even if you opt to file an individual lawsuit against the company, you are still eligible to receive six months of free credit monitoring.

One downside for mortgage applicants: The credit score you receive from the settlement agreement will not be a FICO score, which is the dominant score used by mortgage lenders. It will be TransUnion’s proprietary score, which may be roughly comparable to your FICO score but sometimes can differ substantially.

The key value of the settlement options is the unlimited access you can get to your credit file, with none of the usual costs. Plus with the monitoring service, you’ll be able to spot any monkey business going on in your files, such as unauthorized use of your credit cards or identity theft.

Think of this remarkable settlement this way: It’s free and it’s educational, at the very least. If you’re serious about getting a mortgage in the months ahead, this is a rare slam dunk.

Ken Harney is a real estate columnist with the Washington Post.

Starck’s Yoo comes to the Black Sea

International property investment firm Unique Developments and designer Philippe Starck’s interior design firm Yoo have been developing luxury buildings on the coast of the Black Sea in Bulgaria, part of a wave of development transforming the vacation destination since the country obtained European Union membership.

After Bulgaria became an EU member in 2007, its real estate prices and tourism increased. Bulgaria’s State Agency for Tourism saw a 16.6 percent increase in tourism in the first five months of 2008 compared to the same period in 2007, and expects a 12 percent increase overall for the year, according to the Bulgarian online newspaper, Sofia News Agency.

The team’s complex in the city of Obzor — named yooBulgaria Obzor — is comprised of six buildings, named Alta, Compass, Neptune, Maritime, Seton and Tide, situated around a courtyard facing the Black Sea.

The complex started its second phase of sales in July after its first phase, selling four buildings, was 85 percent sold out.

The complex’s one-, two- and three-bedroom residences have terraces, and buyers can choose among different décor packages.

The complex has private gardens and a swimming pool, spa, tennis courts and fitness center. Apartments are priced between 138,000 and 364,200 euros, or $217,000 to $574,000.

Spain restricts golf course development

The government of Andalusia, the autonomous region in southern Spain, has approved a law restricting the development of golf courses in the area.

Andalusia is home to Costa del Sol, a region along the coast of southern Spain nicknamed “Costa del Golf.” There are 118 golf courses in the area, nine of which opened in the past four years, according to the industry group Real Federación Española de Golf.

The new regulations control the number of houses a developer can build around a course, and require the courses to use recycled water for irrigation, according to the International Herald Tribune.

Critics argue that developers have used the development of golf courses to build homes on environmentally sensitive land, the Herald Tribune reported.

Thai property stocks fall

Property stocks in Thailand may have hit a peak, some analysts say.

Property stocks in the country rose 7 percent in the first quarter of 2008, after the newly elected government slashed land ownership and transfer fees to assist developers.

The stocks reached a high point in April, but have since declined 19 percent as fund managers pulled out of the sector because of increasing construction costs, inflation and interest rates.

An analyst at Thanachart Securities told the International Herald Tribune she originally expected home sales to grow 5 percent in 2008, but now thinks they will stay flat.

The second quarter began with the Thai stock market down 4 percent as inflation rose. Top developers have seen decreases in the value of shares: Land & Houses shares dropped 28 percent since March, and Asian Property saw stocks fall 32 percent.

Asian Property has 16 new developments this year and had originally expected at least a 30 percent growth in profit.

The central bank of Thailand agreed to raise rates to battle inflation, which rose to 7.6 percent in May because of increasing oil and food prices.

This summer’s Jersey Shore rental market is lagging more than usual, and surprisingly, it has not gotten a big boost from the drop-off in prices on the sales side, a phenomenon that often takes hold when the economy sours.

Agents and brokers at the shore said they have seen a drop in rental traffic in some areas and an increase in the number of renters securing last-minute deals for the peak periods of late July and August.

Nonetheless, they insist that the market remains strong compared to the rest of the state, because of interest in living by the ocean and because some people have opted to spend their vacation time there this summer instead of traveling farther from home.

Donn O’Brien, a sales associate at Ager Realty on Long Beach Island, said more middle-income vacationers have opted to spend time at the shore this summer. But he added that many of the vacations have been shortened to day trips from week-long trips of the past.

O’Brien attributed that to the rising price of gas and food that has left many pinching pennies.

“Expendable income is a problem,” he said. “The middle-class people who made up our rental market are having problems.”

O’Brien said the downgrades are hitting several categories of renters. In addition to the day trippers, he said more regular shore-goers who in the past have rented for several weeks or even the entire summer are taking one-week rentals this season. And, he said, more rental houses are packed with grandparents, aunts, uncles and cousins in order to bring costs down. That is despite that fact that rental prices are down 15 percent compared to last year on LBI.

Ed Kohlmeir, a broker with Newbern Realty who specializes in LBI, said the island’s sales market has been very similar to the rental market, with the middle-income being priced out this year.

Kohlmeir said the higher-priced homes (which he classified in the high six-figure and low seven-figure range) have been selling well, but that homes priced in the midrange have seen sluggish sales both this year and last year.

The impact of the skittish economy has also reached the real estate market in shore communities off of LBI.

Ron Giordano, a broker with Atlantic Beach Realty who specializes in Avalon and Stone Harbor, said he has been seeing a similar dynamic at play: The middle-income vacationers have been skipping summer rentals, while the high-end sales market has remained strong, even in recent months.

“The high end is reaching new levels; the middle range is staying the same,” Giordano said. “The rich are getting richer. Beachfronts are hitting $13.5 million.”

Giordano said the rental market struggled in June, prompting many owners to slash prices in order to secure takers. He said July and August prices have remained the same as last year because they are still peak beach times.

Other brokers said the doom and gloom is overblown and that the sales market has been steady at the shore.

Judy Appleby, owner of Appleby Realty in Seaside Park, said the spring sales market was pretty good. She said she expects the fall market to remain steady. And, she said, for the summer, she has been concentrating on rentals.

“My rentals have been pretty decent,” Appleby said. “They are now filling up. The weather has been cooperating. The majority of our [renters] are from New Jersey.”

Appleby said prices have remained level compared to last year, around $600,000 for a single-family home in Seaside Park and the surrounding communities. But she noted that homes closer to the water are actually seeing price boosts in some cases. Meanwhile, she said two-bedroom rentals have been going for between $1,200 and $2,800 a week — the same as they were last year.

However, O’Brien of Ager Realty noted that he has been seeing a 10 percent price drop on homes for sale on LBI.

Meanwhile, developers are still selling and renting some new-construction homes and condos along the Jersey shore.

Applied Development Company recently launched the second phase of its Pier
Village development in Long Branch, which is about 60 miles from Manhattan in Monmouth County.

Built on the site of a former boardwalk amusement park, Pier Village’s first phase opened three years ago with a mix of rental units and beachfront retail space. The second phase will open later this year with 215 rental units and a 24-room boutique hotel. The third phase is scheduled to launch next year with 200 rental units, 100 condos and a 100-room hotel.

Pier Village is leasing residential space at $26 a foot. Greg Russo, a principal with Applied, said the first phase has been entirely leased out for both the residential and retail space, and 30 apartments in the second phase have been leased.

The project is part of a major redevelopment project Long Branch’s city government has been implementing. Russo said that while the company, which has been doing several projects in Jersey City and Hoboken, is interested in doing other projects at the Shore, it is not an area of the state conducive to new development projects
going forward. The shaky economy aside, he said: “There is not a lot of available
land left.”

The 1960s live on in Woodstock, where peace signs and psychedelic designs abound in the quaint downtown.

But real estate in Woodstock, and in the other surrounding Catskills towns, is not exactly in a peaceful place at the moment.

While the area is still dotted with New York City residents who own second homes — or are in the market for them — in many cases, sellers are dropping their prices, and buyers are bargain hunting.

On a gray weekend last month, open houses in the mid-level price range bustled with traffic; one house on the market for $299,000 received an offer at the asking price the night before the showing.

On the high end, however, Randy Florke, who owns Rural Connection, a Greenwich Village-based agency that specializes in upstate properties, summed up the market this way: “It sucks.”

He rarely holds open houses because it’s a roughly 100-mile trek between Manhattan and Kingston, N.Y., the gateway to Ulster County, home to Woodstock.

But for many other brokers, open houses are still a sales staple — and the signs advertising them sit at key intersections along Route 212, the main thoroughfare of the village of Woodstock.

At 51 Cottonwood Lane, a three-bedroom contemporary listed at $439,000, broker Beverly Davis served rugelach and tea. The owners, a couple that use it as their primary residence, plan to move to California to be with their grandchildren. They reduced the price from $450,000 after putting it on the market in mid-May.

Coming off a market in which home prices doubled from 2002 through this year, “too many sellers think they’re still in the heyday,” Davis said, estimating that the market is down around 15 percent from last year.

The house, located at the end of a wooded dirt road, stands next to another home that is obscured by a row of trees. The kitchen features granite countertops and a ceramic tile floor.

The house should appeal to “city-based professionals with a child or two,” Davis said. Though the bedrooms are small, the house is well made, said a prospective buyer named Christina, who declined to give her last name. She was the first of 20 visitors during the three-hour open house.

Christina said her home in nearby Stone Ridge is under contract and that she is moving closer to her daughter, who bought a house near the Cottonwood Lane home.

“It’s a really nice house,” she said, adding that she had seen about two dozen homes in the area that fell within her price range, but few with this one’s quality.

Upper West Side residents Jeff and Lil Feuer also dropped in. Eight years ago, they bought a home in nearby Saugerties.

“We’re looking for something big and open,” said Jeff, a broker for Prudential Douglas Elliman. “We’d buy for investment or, if we found the ideal place, we’d look
to upgrade.”

“We love it up here because there are so many artistic people who fit with the Upper West Side ethos,” said Lil, who is in the apparel business and was wearing a black dress. Entering the kitchen, she commented on the stainless steel appliances: “You have to have that to sell to New Yorkers.”

About two miles away, in the heart of downtown Woodstock, Paula Chandler at Coldwell Banker Village Green welcomed visitors for three hours at 39 Millstream Road, even though she had accepted an
offer at the $299,000 asking price the
night before.

“It had already been advertised, and it’s good to be here, because you meet plenty of potential future clients,” she said.

Gerard Sanzi and his wife live along a busy road in the area, but were out looking for a bargain on a quieter street. They are considering keeping their current house and renting it if they can find a home with two bedrooms and two bathrooms on at least a half acre for under $300,000.

The Millstream house, which features hardwood floors and a detached garage, is across the street from a swimmable stream. The home’s disadvantages: It has only one bathroom, and the rooms are cramped.

At the lowest-priced open house, a weather-beaten shack built in 1950, Michael Lowery, an agent with Win Morrison Realty, played Billie Holiday tunes and served fruit and cheese.

Despite the spate of new luxury homes in the woods off the major thoroughfares in the Catskills, there are plenty of old ranches, converted trailers and whimsical structures like this one dotting the roads.

Five potential buyers came to check out the property, which is being sold by an estate and is located at 259 Silver Hollow Road in Willow, about 8 miles east of Woodstock off of Route 212.

“Last year at this time, I had four or five closings,” said Lowery, who sells tie-dyed shirts when he’s not selling real estate. “This year, I had one.” He cited high gas prices as
a factor contributing to the slow summer.

The 600-square-foot structure was first listed at $159,000, but had been knocked down to $139,900 for the open house.

The seller would probably settle for $125,000, Lowery said.

Toward the end of the three-hour open house, Nancy Rowe pulled up in a Subaru station wagon. Rowe, who lives nearby, is scouting out a second home for a friend who lives in California. “It’s cute, but you’d need the right person,” she said.

Meanwhile, on the other end of the Catskills price spectrum, a $599,000 two-story contemporary at 12 Wiedy Lane in Shokan presented plenty of standout amenities, including a soapstone fireplace, a nine-zone heating system in the floors and ample closet space in the four bedrooms.

Still, at an open house held by Terry Spiesman of Weichert Realtors’ Kingston office, no prospective buyers stopped in
during the four-hour window.

“Four years ago, this house would’ve been gone in two weeks; now, it’ll take a while to sell,” she said.

Spiesman, a full-time agent, said she is willing to handle homes priced “from $100,000 to whatever.”

But she can’t escape the fact that the market is showing signs of trouble.

“Every night I go over the MLS hot sheet, and out of maybe 750 properties on the
market, I see 70 price drops every day,” she said.

While much of the fuss this season in East End real estate has zeroed in on the slowdown in the tony Hamptons, its lower-profile neighbor to the north is on a similar real estate rollercoaster. Brokers said that while Long Island’s North Fork was taking off a few years ago, the momentum on the residential side has taken a hit since the economy turned.

But after a rocky first quarter — which was marked by a nearly 38 percent drop in sales compared to the same time last year and a nearly 45 percent increase in the number of days homes were staying on the market — the North Fork seems to have rebounded somewhat in the second quarter.

New numbers, which were released late last month by appraisal firm Miller Samuel and brokerage Prudential Douglas Elliman, show that the median sale price on the North Fork was up 13.1 percent to $605,000 from last year and that the number of sales shot up by 28.6 percent to 189. While the vineyard-dotted North Fork saw more of an uptick than the more swanky Hamptons market did (numbers there were down across the board), not all of the figures were positive. Listing inventory was up 12.7 percent, and discounts between final listing prices and sales prices also saw a spike.

“There are contradictions in the numbers because inventory is trending up, but at the same time, sales activity has increased,” Jonathan Miller, president and CEO of Miller Samuel, said.

Miller said that while the North Fork sales and price increases were the most positive part of the East End report, they might be a “statistical anomaly” based on data timing and a well-performing high-end market. He also noted that the North Fork market is far smaller than the South Fork market and is therefore more easily skewed.

“It doesn’t match my expectations,” he said. “On the front lines, I don’t think there is any expectation that prices are rising on the North Fork.”

Indeed, brokers on the North Fork — which stretches from Riverhead to Orient — said discerning investors and bargain-hunting homebuyers are increasingly scouring the area for deals because of the economic slump. And while they are seeing a sluggish residential market, they said there are bright spots on the commercial side and in summer rentals.

This month, The Real Deal set out to examine the state of the market on the North Fork beyond the numbers to see how it’s holding up compared to the Hamptons, and to see which buyers and sellers are taking chances there.

While brokers said that prices of coveted waterfront properties on the North Fork have risen, or at least stayed flat since last year, they noted that inland homes are seriously hurting.

The CEO of Town & Country, Judi Desiderio, said inland properties on the North Fork, which have dipped in price between 20 to 25 percent since 2005, are still far harder to sell than their waterfront counterparts. She said the bulk of the price drop has occurred since the slowdown hit last year.

As the economy has worsened, many investors who had hoped to capitalize on the North Fork’s heyday by flipping homes for a profit are instead selling at a low point, brokers said.

One broker described a “beautiful creek-front home” in Southold that first went on the market for $1.5 million after being built in 2006. A deal is currently being worked out for $599,000. The broker asked not to be identified because the sale hasn’t closed yet.

Others said that the market has indisputably taken a hit, but that many sellers are still asking for the prices their neighbors got during the boom times, a factor that has slowed sales.

“You can’t think like in the days of 2005 and 2006. It used to be that people could just throw out prices. Buyers are a bit more savvy, so sellers need to be savvier as well,” a senior vice president for the Corcoran Group, Sheri Winter Clarry, said.

Looking for deals

Some are looking to the North Fork for investment opportunities.

In a phenomenon that heated up about two years ago when prices first began to dip, a growing number of twenty- and thirtysomething Manhattanites are buying starter homes in the under-$500,000 range while continuing to rent in the city.

A North Fork broker for Prudential Douglas Elliman, Gayle Marriner-Smith, described the buyers as young professionals who cannot afford to buy in Manhattan, and so are instead turning to the North Fork to make their first real estate purchases. She said a drop in asking prices has actually prompted more of those young buyers to look to the North Fork than ever before.

Meanwhile, with the stock market in flux, some local agents said the North Fork is also attracting a growing number of investors interested in high-end properties, which can be found at significantly more affordable prices than in the Hamptons. And, in fact, the second quarter report shows that the top fifth of the market on the North Fork saw a 6.8 percent jump in price.

“I’ve been working with several investors who are pulling their money out of the stock market. They see they can buy beautiful waterfront properties and wait for the market to turn around in five to seven years,” Marriner-Smith said.

Marriner-Smith described one wealthy couple from Manhattan, who she said has divested much of its stock portfolio and purchased three properties in the $1 to $2 million range — sound-front, bay-front and creek-front homes. The couple is now mulling over a fourth plot on a saltwater pond. However, they are more of the exception than the rule.

The North Fork’s waterfront properties are drawing the eye of European investors, several brokers said. Desiderio said she is privately showing a $12 million sound-front property on the eastern end of the fork — a property which would run between $40 and $50 million in the Hamptons — almost exclusively to Europeans.

She declined to identify the exact location of the property at the owner’s request.

Rentals and commercial

Brokers say that while the rental market has changed, it is generally seeing a boost.

Carol Tintle, a senior vice president at Daniel Gale Sotheby’s International Realty, said the North Fork’s lower prices have attracted a growing number of renters who would otherwise stay in the Hamptons. She said a three-bedroom home near the beach in the Hamptons would rent for roughly $80,000 a season, while a similar property on the North Fork costs about $20,000 for the same stretch of time.

“A lot of people are scaling down,” she said. “They felt like they could get a whole season here for the price of two weeks in East Hampton.”

Desiderio said the North Fork’s rental market is the strongest she’s seen it in 15 years.

Nonetheless, some brokers said they have seen old-time North Fork renters go for weekly and monthly rentals. Marriner-Smith said several of her clients, who normally rent homes for the season, downgraded this year.

As for the commercial side of things on the North Fork, brokers said the market is surprisingly strong, largely because it is catching up with the residential growth that’s already taken place.

Chase Bank is building two new locations, one in Mattituck and another in Southold, according to Thomas McCarthy, who is the president of a self-named real estate firm in Southold. McCarthy recently brokered a roughly $585,000 deal for an old real estate office on Main Street in Southold that is slated to become a hardware store.

Kristopher Pilles, managing partner of North Fork Commercial, a company that specializes in commercial real estate and investments, said that Hudson City Bank is building a new location in Mattituck and that an old firehouse in Greenport is under contract to become a microbrewery.

But the highest-profile commercial transaction on the North Fork occurred several months ago when Nello Balan, the restaurateur behind fashionable eateries on the Upper East Side and in Southampton, reportedly purchased two rundown buildings on Main Street in Greenport, with plans to open a restaurant and a boutique hotel.

What happens when a multi-million-dollar Hamptons spec home gets caught in the crosshairs of an economic downturn and ends up sitting on the market? Naturally, the developer looks to rent it out for the season.

With more speculative homes going on the rental block as buyers become scarce, spec builders are facing a new challenge: interior design.

Brokers, developers and decorators in the Hamptons say they are increasingly in the market for sofas, coffee tables, armoires and beds to fill their empty spec homes.

Diane Saatchi, a broker at Corcoran, explained that furnishing an ultra-high-end Hamptons house can be a pricey proposition.

“[If] it’s a 6,000-square-foot multi-million-dollar house, it’s probably going to cost half a million to furnish,” Saatchi said.

She said furnishing a high-end home also helps make it more attractive to a potential buyer. But, she said, if the home is scooped up for the season as a rental, it often makes it logistically harder to show and effectively tougher to sell — at least temporarily.

Ed Brody, a broker at Devlin McNiff Real Estate and a developer, works with his partner, interior designer Jeffrey Santonastasi, developing and furnishing homes. Together, they furnished a spec home at 37 Hunting Avenue in East Hampton to stage it as a turnkey and give it a better chance of selling in a down market.

The property went on the market around Memorial Day, but when it didn’t sell, Brody decided to rent it out from August through Labor Day, listing it at $85,000 — $25,000 more than it cost to decorate the four-bedroom, 7,000-square-foot home. Brody put the property on the market around mid-July and said he’s already found an interested renter.

“We feel we have to do everything a little bit extra in this
market to make people pull the trigger,” Brody said. “It would have sold prior to completion in a stronger market.”

“The rental will more than cover the cost of furnishings,” Brody added. “We had that in mind when we made the decision to furnish it.”

Santonastasi, who works for Devlin McNiff and has an interior design firm called Along the Way in East Hampton, said that when choosing the decor, he tried to offend the least number of people.

“Anyone could walk in there and be comfortable,” he said.

The pair hopes to sell the home with the furniture, but if they can’t, they said they’ll use it in another spec home.

“Everything is nice enough and easy enough on the eyes that I don’t think I’m going to be stuck with a white elephant,” Santonastasi said. He shopped mostly at local stores, especially English Country Antiques in Bridgehampton.

Santonastasi said he is seeing more spec homes being furnished, either to sell or rent out.

Prudential Douglas Elliman’s regional manager for the Hamptons, Paul Brennan, said if done correctly, spec builders “sell the furniture they stage it with [as a part of the house].” And it can be a selling point if the buyer actually shares the same taste as the developer in upholstery and design.

Barbara Feldman, an interior designer who works in the Hamptons through her company, BF Designs, said that furnishing an average home in the Hamptons costs approximately $50,000, with an additional $4,500 for each bedroom. She said an average cost of furnishing a five-bedroom house would be $75,000 — less than what Saatchi put the figure at.

Feldman, who has been designing for 35 years with a focus on spec homes, gets paid a fee of 35 percent of the cost of furniture. She said that many developers are wary of renting out homes.

“The minute they do that, they are no longer new construction,” she said.

The phenomenon that is the Surf Lodge — a new hotel, restaurant and bar that is bringing young professionals to the South Fork’s easternmost enclave — could prove to be a boon for the Montauk real estate market.

Some East End brokers say the venue, which was written up on the front page of the New York Times’ Sunday Styles section last month, is bringing a new generation of prospective entrepreneurs and summer residents to Montauk, a community that prides itself on being more rustic, laid back and affordable than its neighbors to the west.

Backed by a group of five investors and transformed into an upscale space with chef Sam Talbot of reality TV fame heading up the kitchen, the Surf Lodge has already established a reputation as this summer’s Hamptons seen-and-be-seen hangout.

But now, many brokers are wondering what spillover effect this trendy new nightspot will have on Montauk real estate values. Some say new interest from buyers could help blunt the impact of the downturn in the market.

“The success they’re having this dramatically, this early on, is going to attract new investors — no question about it,” said Joan Hegner, a senior vice president at Corcoran who works out of the brokerage firm’s Montauk office.

A residential rental broker for two of the hotel’s investors, Hegner said that she has already been approached by Surf Lodge patrons who have expressed interest in buying in Montauk.

She said sales at the highest and lowest ends of the residential market in Montauk — properties being sold for more than $5 million and those with mid- to high-six-figure price tags, respectively — have been strong. However, sales of homes listed at between $1 and $5 million, and especially those in the $1 to $2 million range, have suffered in the past year amid the downturn in the
housing market.

“There is much more inventory than there was last year, and there have been a lot of price readjustments,” she said.

She noted that the current climate could very well prompt more residents of
ritzier Hamptons communities to come to Montauk in search of housing deals. In addition to the softening market in the Hamptons, prices in Montauk tend to be significantly lower.

“It’s an exciting time,” said Kathleen G. Beckmann, a veteran real estate broker who owns an eponymous Montauk-based firm. “Surf Lodge’s club atmosphere is bringing a new clientele to town: younger people who are finding and falling in love with Montauk. Some of them will become buyers.”

A partner in Surf Lodge, Steven Kamali, predicted that the Surf Lodge would also bring to Montauk “an uptick in commercial sales and retail development.” He added, “Any time you create something unique, you inspire others to follow suit.”

Kamali’s fellow investors are Robert McKinley, Jamie Mulholland, Jayma Cardosa and Steve Kasuba; these backers are also behind the Cain and GoldBar clubs in Manhattan.

Retail leases in Montauk range from $25 to $50 square foot, according to brokers familiar with the commercial landscape there. By contrast, retail space can exceed $200 a square foot in the prime areas of East Hampton village, said Lee Minetree, a vice president at Corcoran.

The prospect of growth in Montauk’s commercial sector, which already has a Calypso and several other high-end boutiques, has elicited skepticism from some locals who worry that their relatively tranquil community — there are no stoplights, or Starbucks — will go the way of flashier East End areas, explained Lexa DiSpirito, a real estate broker and a lifelong Montauk resident.

“Surf Lodge is attracting a different crowd,” she said. “Different isn’t bad — as long as people come here and appreciate it, and they don’t chew it up.”

DiSpirito, who works for the Tuma Agency —the real estate firm started by her father in 1952 — said the publicity that the Surf Lodge has brought to Montauk “comes at a very good time,” given the downturn in the housing market. She said that Montauk’s increasingly stylish status could help blunt the impact of the softening real estate market there.

“It’s nice to see that there is new energy coming in, that Montauk is no longer the red-headed stepchild of the Hamptons,” she said.

To be sure, the Surf Lodge is neither the pioneering nor the sole force that is transforming Montauk’s image. In recent years, several other tired motel properties have been renovated and reopened as residences or chic hotel lodging: A portion of the former Panoramic View Hotel has been converted into two- to five-bedroom residences, with prices starting in the $2 million range; and the Shepherd’s Neck Inn has been remade as the Solé East, a 67-room hotel with rates ranging from $240 to $600 a night.

Meanwhile Andrew Farkas, the department store scion who purchased the Montauk Yacht Club for $34 million in 2007, has already spent million of dollars refurbishing the 35-acre resort and marina. Also last year, a 5.6-acre portion of artist Andy Warhol’s estate sold for $27 million, a record-breaking price for a Montauk residence, according to brokers.

The hype surrounding Surf Lodge and other developments in Montauk has been good for business, said an owner and the general manager of Solé East, David Ceva.

“It’s bringing a lot of people who didn’t even know about Montauk,” said Ceva, who predicted that the hamlet’s high-end hospitality industry would continue to grow in the coming years.

Every year The Real Deal has the pleasure of hosting thousands of our readers at our annual forum, which will be held this year on Sept. 10 at Lincoln Center’s Avery Fisher Hall. We gather the best in the industry for our panel discussions, and this year we are honored to have Larry Silverstein on the eve of the seventh anniversary of Sept. 11 to share his thoughts on Downtown and on the overall New York real estate market. We’re also gratified to host Charles Kushner, Steve Witkoff, Don Peebles and several other speakers who are making a big impact on today’s real estate landscape. For more details, check out our Web site and ads in this issue of The Real Deal.

As the publisher of a real estate magazine, I’m often asked about the best place and the best time to buy. While I am no expert, I always quote Sid Miller, an old-school, Uptown Manhattan broker who I could imagine being played by Woody Allen in a movie. Miller says, “The best time is now, and the best place is New York City, and the right amount is what you can afford.”

Timing, of course, can be everything, as our cover story on the winners and the losers in the credit crunch points out. The turmoil in the market has upended some of the plans of the biggest players, like Robert Toll and Harry Macklowe, while benefiting others, like Mortimer Zuckerman and Stephen Ross. You’ll want to check out this story to see on which side the biggest names fall.

But sometimes things are not so clear-cut, as our profile on Faith Hope Consolo points out. Consolo, who’s been called the queen of retail, among other things, inspires strong reactions. Love her or hate her, you’ll find this a fascinating read.

While it’s not a time to be timid and run for cover, the New York City real estate market is feeling some pain. Brokers have to work harder to get deals done (some are even returning their competitors’ phone calls, one of our stories reveals) and they are seeing fewer transactions. The weaker links are abandoning ship and looking for their next career.

High oil prices, a sinking dollar and increasing food prices point to rising inflation, which in the past has been good to real estate investors. But this time may be different, another one of our reporters points out, because of the difficulty investors have accessing credit. While the forecast is gloomy, we know our city has survived worse times.

On that note I bid you farewell, as The Real Deal moves its offices to the Hamptons for the month of August, where, as every year, the magazine rents a vacation house for work and play. I hope to see all of you at the annual forum. For ticket information go to lincolncenter.org/therealdeal.

Read on,

Amir Korangy

Trump Jr. to launch $1 billion India fund

Donald Trump Jr. plans to launch a $1 billion fund to invest in real estate in India, Bloomberg reported. The privately held fund will draw from Indian investors. “The marketplace is beginning to understand and appreciate luxury, so there is a great opening for us there as well as in resorts,” Trump said. The Trump Organization also plans a mixed-use tower in Mumbai with an Indian partner.

Industry veterans form ID Real Estate Partners

A newly formed commercial real estate firm, ID Real Estate Partners, will focus on the acquisition and leasing of properties in Manhattan. The new venture will be led by Ira Fishman and Dana Moskowitz, both of whom will serve as executive vice presidents. Fishman, previously of Winoker Realty and a 31-year industry veteran, will direct the acquisitions department; Moskowitz, a former director of Chicago-based Bradford Allen Realty Services, will spearhead the leasing division. Clifford Moskowitz, a former associate at Winoker, will round out the firm’s management as director.

Is your rent fair? Check the Rentometer

A new Web site, Rentometer.com, allows you to compare your rent with others in your neighborhood. The Web site is part of Rentomatic, an online property management service. The Rentometer has had 2 million visitors since January. It works by aggregating listings data from landlords who are members, along with other real estate Web sites, the New York Sun reported.

PropertyShark to offer residential listings

Real estate data Web site PropertyShark.com plans to unveil a consumer residential listing Web site by Sept. 1, Crain’s reported. “We have conquered delivering difficult-to-find information to professionals,” said PropertyShark CEO Bill Staniford. “We’re ready to add another tool.” PropertyShark will have to compete with sites like StreetEasy.com and ResidentialNYC.com, both big players in PropertyShark’s biggest market, New York City. PropertyShark recently teamed up with Corcoran to provide residential market reports covering Manhattan and Brooklyn (see Web firms get into market report game).

Brokers help build affordable housing

Members of Brokers Build donned hard hats and tool belts at a Brooklyn construction site on July 30 to help Habitat for Humanity build its largest project ever. Stan Ponte, president of the previews marketing division of Coldwell Banker Hunt Kennedy, launched Brokers Build last year to raise money for affordable housing. By the end of this year, the group aims to raise $1 million for Habitat-NYC’s 41-unit affordable housing complex, which is already under construction at 1870 Eastern Parkway in Crown Heights. Brokers Build is contributing to the funding of 11 of the 41 condos.

Shvo sends interns to the moon

Michael Shvo’s interns are conceptualizing the first residential property on the moon. Eight interns have to develop a plan and marketing campaign, as well as handle the design and sales of the residences, and then present it to a panel of real estate experts. The Shvo interns are teaming up with Grey Advertising’s G2 interns to design graphics and a digital ad campaign, the New York Post reported.

Carlton, Prudential launch $500 million vulture fund

A joint venture between the Carlton Group’s investment arm, Carlton Strategic Ventures, and financial services firm Prudential plans to acquire distressed loans over the next 12 months with a total value of $500 million. The vulture fund, to be called CSV Capital, will target loans ranging from $25 to $50 million for individual properties, and up to $150 million for large portfolios. CSV Capital will focus on floating-rate loans but will also consider purchasing fixed-rate loans with a maturity rate of 10 years or less.

Former mayor and Republican presidential candidate Rudolph Giuliani revealed late last month that he is entering the real estate investment world.

Giuliani announced that the management and consulting firm he formed in 2002, Giuliani Partners, will be raising a real estate investment fund to be called the Berman Enterprises Opportunity Fund, after the firm’s partner, Rockland, Md.-based Berman Enterprises.

The Berman Enterprises Opportunity Fund aims to raise $500 to $750 million for investment in residential and commercial properties in New York and Washington, D.C. It will largely seek investment from foreign investors, according to published reports.

Managing director at Giuliani Partners, Anthony Carbonetti, and managing partner Geoffrey Hess will oversee the fund. Carbonetti told the New York Times that Giuliani Partners had some real estate dealings in the past, including a failed bid on behalf of the government of Qatar to buy Stuyvesant Town and Peter Cooper Village in 2006.

Benjamin Levine, the son of Douglaston Development founder and chairman Jeffrey Levine, has been hired to the company as project manager. In the position, Ben Levine, who is in his mid-20s, will be overseeing development work at the Edge condo project in Williamsburg and a rental project at 316 11th Avenue, among others.

The younger Levine has been involved with the family company since high school. During his college years, he began working construction at Douglaston projects as a summer job, and later acted as assistant super at a condo building at 325 Fifth Avenue. Levine majored in urban studies at the University of Pennsylvania and interned at Cushman & Wakefield.

Most recently, he spent about a year as an analyst for the real estate finance group at Credit Suisse, underwriting deals in the U.S. and abroad, doing work in London and Germany.

In his new position, Levine said he has been more “hands-on” with projects. He visits the sites of Douglaston Development projects several times a week. “I think [working as project manager] is very different in the types of decisions you make, and the impact you can make with those decisions,” Levine said.

Amidst the already well-populated field of New York City real estate market reports, two of the most well respected Web sites for residential market data — Streeteasy and Property Shark — entered the fray at the end of the second quarter.

Property Shark has teamed up with Corcoran to help widen the scope of research for the brokerage, which has been publishing its own report for about a decade. Meanwhile, Streeteasy has published a market report by itself.

Property Shark contributed data to the condo and co-op sections of the company’s most recent report, while leaving analysis of the townhouse market to Corcoran.

Recorded sales from the public database ACRIS were collected by Property Shark, which checked them against the RealPlus Online Listings Exchange (ROLEX), a shared listing database that is the closest thing New York City has to a Multiple Listing Service, and which has historically served as the chief source of sales information for brokerages’ market reports in the city, according to Property Shark founder Matthew Haines.

Haines claims that with the combination of sources, the two companies found more sales transactions than any other market researcher in the second quarter.

Another interesting aspect of the Property Shark-prepared Corcoran report: The new residential development data was broken out from resales data to dispel the myth that new, high-priced projects hitting the market are inflating the average sales price. “We found out that existing condo prices are holding steady on their own,” Haines said.

Streeteasy, meanwhile, says it stands out as the only Manhattan residential market report preparer that is independent of a brokerage. Sofia Kim, vice president of research, says that this relieves the company’s researchers from a conflict of interest, allowing for an honest view of the market.

“There’s always some skepticism by readers that [brokerage-prepared] market reports are providing a very sunny view of the market because brokers have kind of an agenda,” Kim said. “We don’t have an agenda. We just want to provide a transparent view for our readers.”

Residential

The Corcoran Group

Steven Glick was appointed director of advertising for the firm’s East End offices. He was previously senior graphic designer in the company’s executive office in Manhattan.

Halstead Property

Francine Schwartz joined as operations director. She was previously chief operating officer at Fox Residential Group. Fritz Frigan was promoted to executive director of sales and leasing for the Midtown office from director of sales and leasing.

Commercial

Blackrock

Paul Audet was promoted to vice chairman of the company’s global real estate and cash management businesses from acting chief financial officer. Ann Marie Petach will succeed Audet as chief financial officer.

Capstone Equities

John Rhim joined as vice president of acquisitions. Jonathan Scheinberg joined as vice president and general counsel.

Community Preservation Corporation

Alice Dunn joined as senior vice president and director of human resources. Harry Fried joined as director of treasury operations.

Cresa Partners

Keith Keppler and Kent Holliday joined the firm as principals. They were formerly principals at real estate consulting firm Horizon.

Helmsley-Spear

David Schneck joined as senior vice president. He was previously executive managing director at Grubb & Ellis.

Itzhaki Properties

Joseph Armano joined as a managing partner. He was previously a principal at Joseph Armano Real Estate.

Jones Lang LaSalle

Noble Carpenter was appointed head of the firm’s advance loan sale advisory service from managing director of the international capital group.

Massey Knakal

Mitchell Levine joined the firm as an analyst. Jeffrey Jakob joined as an associate.

Stonehenge Management

Steven Vissichelli was promoted to chief executive officer. Ofer Shaul was appointed chief operating officer. Richard Cohen joined as general counsel. Steven Sikora joined as vice president of asset management.

Studley

Beverly Boker joined the firm as vice president of human resources. She was formerly with Parker Global Strategies. Gary Kerper joined as assistant director. He was previously with Murray Hill Properties.

Vanguard Title Agency

Marc Israel was named executive vice president.

Puzzle: Real estate magic

Answer key

Polsinelli jumps ship to Marcus & Millichap

One of the top-producing brokers at investment services firm Besen & Associates has moved over to Marcus & Millichap Real Estate Investment Services.

After a decade at Besen, Adelaide Polsinelli started at Marcus & Millichap late last month as an associate vice president of investments at the company’s Manhattan office at 270 Madison Avenue and 40th Street.

Polsinelli, 48, said the firm’s national platform and its ability to access investment capital attracted her.

“This platform, along with the firm’s commitment to providing the business development tools necessary to grow my business, were very enticing,” said Polsinelli, who has been in the business for over 20 years.

Polsinelli closed over 200 investment sales deals in her 10 years at Besen & Associates. Her client base includes pension funds, institutions and high-net worth individuals.

“Several local real estate firms were pursuing Adelaide for her many talents, including her excellent negotiating skills, her long-term relationships with many of New York City’s high-profile investors and her impressive track record of investment sales,” said Edward Jordan, regional manger of the Manhattan office. By Lauren Elkies

Swig technically defaulted, but may have broken even on UWS sale

Six months before selling his Upper West Side tenement buildings for $61 million, developer Kent Swig was sued by the lender after technically defaulting on the property’s mortgage, according to documents obtained by The Real Deal.

Swig, president of New York-based Swig Equities, had originally acquired 201 West 92nd Street and 200 West 93rd Street in 2005 for $54 million, with plans to add a total of 56 condo units atop the roofs of the two six-story buildings and convert the complex into condos. By selling the property for $7 million more than he paid for it, Swig might have been able to break even after carrying costs.

The deal was financed by a $52.49 million acquisition and development loan taken out with Fremont Investment & Loan in March 2005. The 18-month loan was based on Swig’s ability to build two nine-story structures atop the 134-unit complex.

In January, a subsidiary of New York-based iStar Financial filed suit against Swig in New York State Supreme Court seeking to foreclose on the property. Records from PropertyShark.com show a lis pendens filed against the building on the same date as the suit.

Swig, who originally put the buildings up for sale in early 2007, denied any connection between the bank proceedings and the sale price. “We sold the buildings at the highest price we could achieve,” said Swig, who said he would not discuss the building’s finances, citing a confidentiality pact with the new owners.

The suit alleged that Swig failed to make an interest payment of $392,033 on Oct. 1, 2007. When the loan came due Nov. 1, he failed to pay the principal of nearly $52.5 million, the records show. By December 2007, Swig owed the lender iStar Financial more than $61.3 million, including principal, interest and penalties.

The lender, which had acquired Fremont’s commercial real estate portfolio for $1.9 billion in 2007, reached an agreement with Swig that would extend his deadline to respond to the complaint until March 24 of this year, according to court records.

A source familiar with Swig, who asked to remain anonymous, said that all issues with iStar were resolved prior to the sale of the complex to Adorama affiliate 92nd Street Equities. The firm is led by Eugene Mendlowits, whose family owns Adorama Camera and is a veteran landlord in Brooklyn and Manhattan.

Swig, along with partners Yair Levy and Charles Dayan, had submitted an offering plan in June 2006 to then Attorney General Eliot Spitzer, to sell the 56 newly built condo units for $145.5 million. The plan called for Swig to continue renting the existing 134 units and generate revenue from 14 retail stores and restaurants. By David Jones

Columbia to acquire city Manhattanville parcel

Columbia University is poised to acquire a 15,000-square-foot, city-owned Metropolitan Transportation Authority parcel on 131st Street in the footprint of its Manhattanville expansion plan.

The $3 million transfer, worth $200 per square foot, should occur sometime in the spring of 2009, city Law Department spokeswoman Laura Postiglione said.

The university will not pay the $3 million in cash, but will be credited for work performed at a park called Hudson River Piers that is under development in West Harlem, a source said. By Adam Pincus

Gore’s daughter sells UES co-op for $6 million

Al Gore’s eldest daughter Karenna Gore Schiff and her husband sold an Upper East Side co-op apartment for $6.35 million to a top executive at the beauty company Estée Lauder.

Gore Schiff, a writer and attorney, and her husband Andrew Schiff, a biotech venture capitalist with Aisling Capital, sold the unit at 137 East 66th Street to Fabrizio Freda, Estée Lauder’s chief operating officer, according to property records. The four-bedroom, 4,000-square-foot apartment in Lennox Hill was listed on StreetEasy.com for $6.99 million.

The apartment also includes two separate maids rooms, which were being used as a gym and guest room, the listing said. By Adam Pincus

Core expands beyond its core location

Core Group Marketing is slated to build out its second office at the glassy condo tower Yves Chelsea rising at 166 West 18th Street.

The permanent space on the tower’s ground floor and lower level will be “right in the heart of Chelsea, which is where we have one of our stronger markets,” said Jack Cayre, who co-founded the boutique real estate sales and marketing firm with CEO Shaun Osher.

Along with marketing new development projects in the area, Core has done plenty of buyer and seller rep business in Chelsea, including selling a handful of units in Yves. Magnum Real Estate Group is developing the 14-story luxury building, and Cantor Pecorella is its exclusive sales and marketing firm.

“We thought it would be a good way to grow our presence,” Cayre said.

Core, which has 45 agents, signed a 10-year lease for the 4,000-square-foot space in Yves, which is on Seventh Avenue. Cayre would not indicate the rent. The retail office will house around 40 agents, mostly new hires.

“We’re going to need another place for them,” Cayre said. By Lauren Elkies

Bush cousin buys Village townhouse for $14 million

George Herbert Walker IV, President Bush’s second cousin, paid $13.95 million for a townhouse at 6 East 10th Street in Greenwich Village.

Walker became a partner at Goldman Sachs at age 29. He raised enough money for his famous cousin to earn the rank of a Bush Pioneer.

“I’m very proud of my family, but I don’t talk about them,” he told the Village Voice in 2003. “That’s not something that is going to make our clients money.”

After serving as the head of Goldman’s Hedge Fund Strategies, Walker left in 2006 to become head of Lehman Brothers’ $188 billion Investment Management Division. He currently lives at 45 Greene Street in Soho.

The 7,000-square-foot, seven-bedroom townhouse at 6 East 10th Street has a swimming pool and an elevator. It had previously been divided into separate apartments.

The sellers, Anthony Oldfield and Jennifer Lister Oldfield, bought the century-old building for just $7.5 million two years ago. By Adam Pincus

Shorenstein buys at 15 Central Park West

Sales recorded recently at Robert A.M. Stern’s 15 Central Park West included one for $19.4 million and another that sold for $10.28 million to Shorenstein Properties, one of the country’s oldest owners and operators of office buildings.

Shorenstein, based in San Francisco, bought unit 29A from Stephen and Laurie Vogel. The 3,105-square-foot, three-bedroom, three-and-a half-bath apartment was purchased for corporate use, said company spokesman Andrew Neilly of Gallen, Neilly & Associates.

An entity called Cristina Partners LLC purchased penthouse 41A for $19.4 million, according to city records. Penthouse 41A is a 4,271-square-foot, three-bedroom, four-and-a-half-bath unit with 1,910 square feet of outdoor space. That deal closed June 18.

New San Francisco Investments purchased unit 23C, a two-bedroom, two-and-a half-bath unit for $4.65 million, according to city records. By Lauren Elkies

Extell abandons UWS condo plans

Extell Development has abandoned plans to convert a six-story pre-war building on the Upper West Side to condos and instead has sold the residential building for $44 million, nearly doubling its investment in four years.

Extell sold the 86-unit apartment building at 10 West 65th Street to Touro College, according to city property records. A school spokeswoman said it would be used for rental housing for students attending its Lander College for Women/the Anna Ruth and Mark Hasten School, located at 227 West 60th Street.

Gary Barnett, Extell’s president, said the company had floated two proposals for the building: either upgrading it and keeping it as a rental or converting it to condos. After receiving several offers for the building it decided to sell, he said.

“It was a simple real estate deal,” Barnett said. “You buy something for something and you get a good offer for more and you sell it. It saved us a lot of hard work.”

Extell bought the building, on Central Park and near Lincoln Center, in 2004 for $23 million. Masskey Knakal listed the property for $60 million.

Residents said the proposed condo conversion failed after not enough tenants supported the plan. Barnett, however, said the residents had nothing to do with the sale.

Tenant Fred Beckhardt, who has lived in the building for 50 years, said most tenants were rent-stabilized or rent-controlled, so he did not fear a dramatic rise in rents would come along with the high sales price.

But Beckhardt said Extell had not renewed leases over the past few years, leaving more than a third of the apartments empty.

Barnett said most of the empty apartments had been undergoing substantial renovations.

“The tenants would have gotten a really beautiful building if we had completed our plans, but that is the way it goes,” he said. By Adam Pincus

Amy Sedaris buys Village co-op

Actress and writer Amy Sedaris bought a 900-square-foot Greenwich Village co-op for $1.3 million. The one-bedroom apartment, in a pre-war doorman building at 50 West 9th Street, includes a wood-burning fireplace.

Sedaris, the author of “I Like You: Hospitality Under the Influence,” also starred in the Comedy Central program “Strangers with Candy.” She is the sister of humorist David Sedaris.

Her previous apartment was a rental on Christopher Street.

The co-op in the six-story building was listed on Corcoran’s Web site for $1.25 million as recently as February. By Adam Pincus

NYC demolition review gains support in City Council

A preservationist group’s proposal for a 90-day review period for demolitions of historically significant buildings that are more than 50 years old might have a new friend on the City Council.

City Council Member Tony Avella, an outspoken critic of big development who is planning a bid for mayor, said he likes the idea but still needs to review it thoroughly.

“Clearly something needs to be done,” said Avella, a Queens Democrat. “A slight delay before a building is demolished and the investigation of an alternative use can only be in the public interest.”

Meanwhile, the Real Estate Board of New York is on the other side of the debate and is sharply criticizing the idea, which was first reported on Curbed.com.

The proposal was drafted by the 93rd Street Beautification Association, which is behind a drive to extend the Carnegie Hill Historic District and preserve the Marx Brothers’ home at 179 East 93rd Street between Lexington and Third avenues.

Susan Hefti, the group’s co-chair, said the proposal — which would need to be approved by the City Council and signed by the mayor to become law — is modeled on a Boston ordinance that helps preserve historic homes.

“There is nothing radical here. It has been done before,” she said. “I can’t understand why anyone would oppose this.”

Similar legislation has been enacted in Chicago, San Antonio, Boulder, Colo., and a handful of smaller cities, according to the National Trust for Historic Preservation.

Michael Slattery, a REBNY senior vice president, said the proposal was blatantly anti-development.

“The [demolition] permits are public information available on the city Web site,” he said, adding that he saw the proposal as “an attempt to stop development.”

Slattery said other attempts over the years to place reviews on demolitions have all failed.

“If the City Council thinks about it carefully, they would see the proposal really doesn’t have merit,” he said.

Under the Beautification Association’s plan, the Landmarks Preservation Commission could declare a property historically significant, which would trigger a 90-day review before a demolition could happen. By Adam Pincus

Knitting Factory building sells

The 27,000-square-foot Tribeca building that has been home to the famed Knitting Factory music venue since 1994 has sold for $12 million to members of the Laboz family.

The building, which also has 18 apartments, was expected to sell for more than $15 million when it went on the market in April 2007.

The Knitting Factory first opened in 1987 at a different location, 48 Houston Street.

Gothamist.com reported in February that the club might be looking at 504-508 East 14th Street as a possible new location.

The New York Sun reported that the club could be moving to Brooklyn, to the former Luna Lounge site on Grand Street in Williamsburg. By Adam Pincus

Alexico buys half of Brack’s UWS condo conversion

Alexico Group, developer of the Laurel on the East Side, has purchased about half of a condo conversion at 230 Riverside Drive on the Upper West Side.
Alexico bought about 123 apartments in the 261-unit building from Brack Capital, paying prices ranging from $137,000 to $555,000 for each home, according to city property records.
The deal, worth a total of $41.14 million, was brokered by Massey Knakal. By James Kelly

Ralph Fiennes buys in Village

Actor Ralph Fiennes paid $2 million for a 1,220-square-foot condo unit in the Gansevoort building in Greenwich Village.

The actor, nominated for an Academy Award for “Schindler’s List” and “The English Patient,” bought unit 6B at 321 West 13th Street from interior designer Joseph Lembo. The loft-style building was constructed about a century ago.

Although Fiennes listed his address in London, he used the Queens-based Ridgewood Savings Bank for his $1.5 million mortgage. By Adam Pincus

The top 10 most commented-on stories from The Real Deal’s daily blog:

1. Swig technically defaulted, but may have broken even on UWS sale

2. Swig sells UWS rental buildings

3. Craigslist rental ‘agency’ charged with fraud

4. Shvo sends interns to the moon

5. Halstead awards top brokers

6. Broker lashes out at blog

7. Banker buys on Upper East Side

8. Bush cousin buys Village townhouse for $14M

9. Real World could be moving

10. Report shows Manhattan rents still rising

Compiled on July 25, 2008. Visit therealdeal.com to post comments on any story.

Though the financial networks and local news channels regularly
cover real estate, brokers at Prudential Douglas Elliman can now flip
on their computers to get their boss’s take on the market at any time.

Dottie Herman has begun
sitting down for a series of quarterly in-house video talks with
ubiquitous appraiser Jonathan Miller, president and CEO of Miller
Samuel, to analyze trends in New York City real estate.

The videos, dubbed PDE
TV, launched in April for the first quarter and are available on
Herman’s public Web site and the company’s intranet. In addition, every
day, Elliman posts a video message on its private Web portal for
staffers in the city and on Long Island with reminders about meetings
and deadlines.

“We’re a big company
and we need to communicate in a variety of ways,” said Herman. “A lot
of papers spin the facts and I want my agents to have the data and know
what the numbers mean so that our customers can be educated.”

In the video for the
second quarter, Herman said her bullish view of the long-term market is
sometimes disregarded by those who perceive her as biased. Obviously,
it’s in her interest to put on a happy face to sell properties.

Miller’s role is to
provide objectivity. Since 1994, Miller has supplied quarterly reports
to Douglas Elliman and continued when Herman and partner Howard Lorber
bought the firm in 2003.

“The goal is to bring
the message and pull no punches, but when I go to the public, my whole
focus is about neutrality,” said Miller. “I’m not selling, I’m
providing clarity.”

Herman got the video
bug during the firm’s fifth anniversary celebration in February, when
it produced a video time-capsule and a montage in which brokers
discussed their work over a swelling musical soundtrack.

Some scenes show
brokers getting makeup applied, sometimes at odd camera angles. One
nice touch: the closing song snippet from “Our House” by Crosby,
Stills, Nash and Young, which ends with the line “now everything is
easy ’cause of you.”

Herman’s informal chats
with Miller, filmed on her office couch, crunch the numbers and offer
perspective. The pair’s chemistry has evolved from the first quarter
video, which ran about two minutes.

The second quarter
video has a short version recapping the numbers, and a longer one where
Herman expressed some concern over the credit crunch, but also stressed
that brokers should “kiss the ground they walk on in New York City.”

The pair note that
comparisons with last year are tough, since 2007 recorded the highest
number of transactions in history. And, of course, though the
percentage of foreclosures is up in Manhattan, the overall numbers of
properties involved is miniscule.

Though she could easily
fit in on “the View,” Herman disavows any aspiration to be on broadcast
TV. “Could I do it? I’m capable of it, but that’s not why we do these
segments.”

When David Farrell decided to conduct bus tours of foreclosed homes on Long Island, he figured that he had
hit upon a unique way to tap the public’s interest in benefiting from others’
misfortunes and to showcase his properties more efficiently.

Farrell, broker-owner of RE/MAX Village Properties in Mineola on Long Island and a former tour guide at the Museum of Natural History, was right about everything but the singularity of his brainstorming: a buddy told him that foreclosure
tours had become popular in California, New Mexico and Florida.

A 47-seat motorcoach dubbed the “Foreclosure Express” toured a dozen homes in Palm Beach, for instance, and in the spring, the Duluth, Minn., branch of mortgage giant Countrywide Financial held a “Parade of Foreclosures” tour.

Still, Farrell’s jaunt is a hit on Long Island, and he has also shuttled buyers and the curious to ogle foreclosed assets in Manhattan, which has been relatively immune from the snowballing crisis. He will have another one this month.

Farrell is the exclusive broker for a block of 12 foreclosed properties in Manhattan now owned by ABC Equities. His first tour visited seven apartments; one of them,
located in the 80s on the West Side, is in contract. He also sold a foreclosed 1/52 time share in the Manhattan Club, across the street from Carnegie Hall.

He expects his Manhattan tour roster to expand over the next six months to around 70 properties as foreclosures move through the legal process.

While Farrell shows many more properties on his Long Island tours (100 in Nassau County, 80 in Suffolk County), he has high standards.

“We’re not going to neighborhoods where half the homes on a block are in foreclosure,” he said. “We’re looking for homes that are in move-in condition and cost around $100,000 to $200,000 below comparable market value. For example, I had one in Garden City in an area of $600,000 houses selling for $439,000, and it was the only [foreclosed property] in the neighborhood.”

Farrell, who also auctions foreclosed homes on behalf of Nassau County, said he’s often asked to explain ways to capitalize on the foreclosure market. He always cautions against dabbling in the market because of its complications, especially when auctions are involved. But he admits the foreclosure market is alluring.

“There are people who work 70 hours a week doing this; it’s not a part-time thing,” he said. “You’re either all in or all out.”

Farrell has plans to expand the franchise to Hoboken, Stamford, Baltimore, Washington, D.C., and even Greensboro, N.C. And he plans to ditch the motorcoaches in favor of a convoy of Yukons
or Suburbans to shuttle customers more efficiently.

Though the tours ease his life as a broker and can net him a lot more in commissions, he still plans to charge for seats.

“That way, you weed out the tire-kickers,” he said. “The people on our tours have an average credit score of 770.”

1987: Downtown rents near Midtown levels

Average asking rents in Downtown office buildings, which had historically lagged behind those of Midtown properties, came to within a few dollars of their Midtown counterparts for the first time in years, a report from August 1987 showed.

The asking prices in Downtown buildings in the second quarter of 1987 were $34.59 per square foot, 13 percent below the $39.85 a foot average in Midtown office towers. Seven years earlier, the average Downtown rent was $15.79 a foot, just half of Midtown’s average of $32.83.

Executives at brokerage firm Edward S. Gordon Company, which conducted the survey, said a rising stock market and strong economy led to a construction boom Downtown, where new buildings with more amenities were commanding higher rent. ”I have never seen the rates between Midtown and Downtown this close,” Henry Gallin, a senior executive vice president of the firm, told the New York Times.

The relative increase in Downtown prices did not hold. In June of 2000, Midtown rents were $54.44 per foot, and in Downtown were just over $40 a foot. After Sept. 11, the rush to Midtown pushed rents higher in that zone.

This June, a report from brokerage CB Richard Ellis showed average Downtown rents were 42 percent lower than Midtown, at $49.53 a foot compared with $86.57 a foot.

1955: Removal of Third Avenue El begins

The removal of the elevated IRT train along Third Avenue began 53 years ago this month, sparking a rise in real estate values after the noisy steel structure came down. With the development of underground subways in the city, the elevated line, which began in South Ferry and continued up the Bowery and Third Avenue to Harlem, grew to be seen as an outdated and unsightly blight on the neighborhoods it passed through.

Land values rose sharply in the two years before demolition began, especially along the avenue’s Midtown stretch where office towers were planned, the New York Times reported. In the ’40s and ’50s, for example, prices rose from about $30 per square foot to $60 per square foot by 1955.

New, larger and more luxurious apartment buildings replaced earlier structures, pushing up land values in neighborhoods such as Yorkville.

By 1962, land values on parcels along Third Avenue had risen tenfold since 1944, and nearly 30 apartment buildings were completed or under construction between 14th and 40th streets since the railway was completely torn down in 1956.

1930: Spike in building demolitions

Building demolitions hit their highest level in decades as nearly 3,000 structures were razed or slated for destruction in the first eight months of 1930, according to a survey from August of that year.

Some 2,863 buildings were expected to or had already been taken down during that time, often for public works projects, said Allen Beals of the Dow Service Daily Building Reports.

The number of demolitions was far higher than in the years
between 1913 and 1922, when 5,736 structures were demolished, an average of 637 per year. “Street widenings, subways, parks and playgrounds are taking an increasing toll each year on outworn housing to make way for wider streets, recreation space and many other improvements,” Beals told the New York Times.

There were 365 buildings torn down to widen Chrystie and Forsyth streets on the Lower East Side, and 625 structures were slated to be wrecked for the West Side freight terminal, including 219 apartment buildings. Between 81st and 82nd streets on the Upper East Side, 240 buildings mostly used as rentals were leveled for a large development. On the East River between 52nd and 53rd streets, demolition of buildings was nearing completion in August 1930, to make way for the 26-floor River House cooperative that opened the following year.

The number of demolitions in recent times has outstripped those of 1930, mostly for new home development. In 2002, there were 3,386 demolition permits. That figure rose during the recent boom to 5,582 last year, according to the Department of Buildings.

In Hezekiah Beers Pierrepont’s day, New York City was confined to Lower Manhattan, horse-drawn
carriages were the only way to get around and Brooklyn was just some farmland across a river.

But Pierrepont, a member of a prominent New York family, saw great potential in that Brooklyn farmland, especially in the Brooklyn Heights lots that he bought up. Thanks to his vision, when a steamboat ferry started running between Manhattan and Brooklyn in 1814, Brooklyn Heights became New York’s first commuter suburb.

“When New York City was only growing in a northward direction up the island, Pierrepont had the foresight to see it could also grow
across the river,” said historian and author Francis Morrone.

This success was arguably rooted in past failures. Pierrpont had tried his hand at a couple of different enterprises, but after the last one, a gin business, failed, he realized the key to his fortune wasn’t his distillery but the ground it stood on.

Pierrepont started purchasing lots in Brooklyn Heights to expand his real estate holdings, buying up the Benson, Robert De Bevoise and part of the Joris Remsen farms. He bought 60 acres in the area, with 800 feet along the New York Harbor.

Setting a precedent followed by future developers, Pierrepont got involved in Brooklyn politics to make sure his property retained value. He was able to use his influence to make sure that local streets were created with wide lanes, and then he divided his property into 25-by-100-foot lots.

“He saw real estate as more than one house or two houses, but a broader conception of what a suburb might look like. He envisioned whole streets and blocks,” said historian Kenneth Jackson. “As opposed to [the] crowded inner-city lifestyle, he saw it better to escape the city and find a more green, quiet neighborhood.”

As Pierrepont focused on real estate, his friend Robert Fulton was developing the steamboat; its successful runs between Beekman Slip (now Fulton Street) in Manhattan and Fulton Street in Brooklyn gave rise to the first New York suburb.

According to Jackson’s book, “Crabgrass Frontier,” an advertisement for Brooklyn Heights properties called the area “the nearest country retreat, [with] easiest of access from the center of business” in Manhattan.

As soon as people began coming across the river, Pierrepont’s properties started to sell.

“It was generally prosperous people who put up very substantial houses [in Brooklyn Heights],” said Morrone. “Manhattan professionals and business people, the yuppies of 1820.”

Pierrepont, born in Brooklyn in 1768, was the grandson of one of the founders of Yale College.

“Pierrepont was from a very distinguished family going back many generations,” Morrone said. “Brooklyn Heights families tended to have roots in Massachusetts and Connecticut, and came down to New York when New England businesses were fanning out
across America.”

While he came from a comfortable family, Pierrepont was uninterested in scholarly pursuits like the study
of Greek and Latin, and instead set out to become
an entrepreneur.

At the age of 25, he moved to Paris and began importing provisions to France with his cousin, according to “Crabgrass Frontier.” He expanded his business to India and China, but it all came to an end when pirates took over his ship, the Confederacy, in 1797.

Only 29 years old and bankrupt, Pierrepont decided it was time to go home.

Back in New York, Pierrepont got married in
1802 to the daughter of William Constable, one of the
richest men in America and the largest landowner in New York.

As a wedding present, Constable gave Pierrepont and his daughter, Anna Marie, half a million acres of land in upstate New York. To this day, there is a town called Pierrepont in St. Lawrence County.

Pierrepont bought a gin distillery on Joralemon Street in Brooklyn Heights, figuring alcohol was always in demand and
that he would be a guaranteed success. He wasn’t, but his real estate savvy proved far more prescient.

His legacy

Pierrepont had plans to build a public promenade along the waterfront in Brooklyn Heights, but passed away in 1838 before he could implement them. The promenade was finally built by Robert Moses more than 100 years later.

According to Jackson’s book, Pierrepont’s descendants kept up his real estate business by continuing to divide and sell the land. By 1841, 39 of the 84 homes on Pierrepont’s estate in Brooklyn Heights were owned by commuters who worked in Manhattan.

The houses varied from Federal-style row houses on Montague and Remsen streets, to larger homes designed in the Greek Revival style, three stories tall with high ceilings, columns and ornamental stair railings. According to the book “Old Brooklyn Heights: New York’s First Suburb” by Clay Lancaster, some of those homes could be seen on Cranberry, Clark, State and Henry streets.

“A lot of them do still stand,” Morrone said. “Many houses built in the 1830s and 1840s are original Brooklyn Heights houses, the first built on the site.”

Because of Brooklyn Heights’ rich history, New York City’s Landmarks Preservation Commission named the area a historic district in 1965. The district is bound north and south by Cadman Plaza West and Atlantic Avenue, the Brooklyn-Queens Expressway on the west and between Henry and Court streets on the east.

Pierrepont Street, named in honor of the developer, runs east to west in the historic district. It is also home to the Brooklyn Historical Society, at 128 Pierrepont Street.

“Pierrepont is considered the first suburban real estate developer in the United States and arguably the world,” Jackson said. “He set the model for William Levitt on through.”

In the August issue of The Real Deal, the story “Sweetening development deals in Jersey City” incorrectly stated the potential cost of a tax abatement agreement. Jersey City could lose up to $500,000 from the agreement, according to a city government official.

The story “Holding open houses for rentals” incorrectly identified 10 Hanover Square as a condominium. It is a rental building.

The story “Yakima blossoms” gave the incorrect name of the brokerage for which Chris Pauling works. The company’s name is Pacific Northwest Realty.

“Who got crunched — and who didn’t” stated incorrectly that Darcy Stacom did not broker Harry Macklowe’s sale of three buildings to Boston Properties. In addition to the sale of the General Motors Building, Stacom did in fact broker the sale of 540 Madison Avenue, 125 West 55th Street and Two Grand Central Tower.

An August 8 article posted on The Real Deal Web site, headlined “Former Massey Knakal Brooklyn head sues,” incorrectly stated the amount of money sought in the lawsuit. It is $3 million, not $12 million.

An article posted August 21 on The Real Deal Web site headlined “Developer Faces Foreclosure” identified RWO Acquisitions as currently partnering with General Electric on a project. In fact, an affiliate of Manhattan-based XE Capital Management has managed the project since March 2008.