The Real Deal New York

The New York City residential real estate market has come a long way from the dark days of late 2008 and early 2009. But despite the moderate improvements in the market, succeeding in the current climate remains far from easy. Many brokers and developers left the industry when the economy soured, and those that remain have no choice but to be on their “A” game. This month, The Real Deal is recognizing people and projects in the industry who managed to have stellar years despite the difficult economic conditions. To compile this list, we conducted an online survey, receiving more than 300 responses. We also got input from industry experts, gathered data from real estate listings aggregator StreetEasy, and relied on our judgment as 24/7 industry observers. [more]

Jeff SuttonWhen asked last month about investor Jeff Sutton, a spokesperson for a major commercial brokerage innocently responded: “Who’s that?” The question is a telling one for someone who has in the last two decades built up a portfolio, mostly of New York City retail properties, that may be worth upward of $1 billion. While Sutton is well known to the small community of retail brokers, investment sales players and other high-level executives in the industry, what’s surprising is just how many people in New York City real estate don’t know him, or his company, Wharton Properties. [more]

All indicators are pointing toward this holiday shopping season in New York City outperforming the past two, which were among the worst in decades. At the same time, an increase in leasing activity in the city seen in the past year is expected to continue going into 2011 — especially if retailers have a strong showing this month. Faith Hope Consolo, chairman of retail leasing at Prudential Douglas Elliman, believes that New York City retailers will do at least 2 to 3 percentage points better this holiday season than the past two years. [more]

Kent Swig

Kent Swig says his critics have got his story all wrong. Since the downturn began, few New York developers have taken as big a media shellacking as Swig. A rising star during the boom years, the 48-year-old developer is now routinely described as “embattled” and near-bankrupt. But in an interview with The Real Deal last month, Swig tried to dispel the widespread belief that his empire has “crumbled,” as many news reports have noted, and insisted that his companies, including Swig Equities, are doing fine. [more]

Bruce Mosler

Bruce Mosler was the president and CEO of Cushman & Wakefield from 2005 until March of this year, when former Centro CEO Glenn Rufrano took over. Mosler became co-chairman of the firm, and next month he’ll transition to chairman of global brokerage. In 1987, he founded Riverbank Realty Company, which later merged with Galbreath New York. He joined Cushman & Wakefield as an executive vice president in 1997. [more]

Stuart Elliott

An editor, the politician Adlai Stevenson once was quoted as saying, is the person at a magazine “who separates the wheat from the chaff, and then prints the chaff.”That may be true. But it’s my pleasure to tell you that from time to time, a little wheat does make it through.
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Two record-breaking residential sales took the real estate industry by surprise last month. In early November, a mystery buyer signed a contract to pay a whopping $40 million for William Zeckendorf’s 41st-floor apartment at luxurious 15 Central Park West, the New York Post reported. At more than $10,000 per square foot, the sale will set a new Manhattan record when it closes. Then, entrepreneur Mark Shuttleworth reportedly closed on a $31.5 million penthouse at Superior Ink, setting another record — this one for the priciest apartment sale below 14th Street. [more]

We’re programmed to believe that lying is bad; telling the truth is good. So two years ago, when the economy was in a tailspin and lenders started employing a strategy disparagingly dubbed “extend and pretend” for struggling commercial property loans, it’s no wonder they got a bad rap. Critics painted the banks as liars who were doing little more than kicking the can down the road when they gave borrowers extra time to pay their due. By refusing to write down underwater mortgages, they said, banks were only delaying their inevitable losses and masking the true extent of the crisis. But while the commercial real estate recovery still has a long way to go, it now appears that last year’s apocalyptic predictions were at least somewhat exaggerated. Whatever happened to the proverbial “other shoe” that was supposed to drop? [more]

By the Numbers [more]

David MaundrellIt’s no wonder that David Maundrell’s eight-year-old frm aptsandlofts.com is based in Williamsburg. The 36-year-old grew up in the Brooklyn neighborhood in a brick three-family owned by his grandparents well before the neighborhood was a hipster magnet. Tucked inside a former zipper factory not too far from his grandparents’ home, the frm evokes the dot-com heyday, as many of its 43 employees huddle over computer screens in a largely open 5,000-square-foot space. Sneak a peek at Maundrell’s desk. [more]

It’s the French to the rescue — sort of. In the largest lease deal of the year, Paris-based financial firm Societe Generale last month agreed to take up to 560,000 square feet at 245 Park Avenue, moving east from offices on Sixth Avenue in Rockefeller Center. And also last month, Natixis, a Paris- and Boston-based money manager, signed a 16-year deal for 182,200 square feet on the third, fourth and fifth floors at 1251 Sixth Avenue. A source said the actual starting rent was $59 per foot, and included $60 per foot in landlord improvements and 12 months of free rent. [more]

Turns out the connection between Wall Street bonuses and real estate sales isn’t just broker lore — it’s real. The Real Deal tracked the year-over-year percent change in Wall Street bonuses and Manhattan condo and co-op transactions going back to 1993, using data provided by the city comptroller and appraiser Jonathan Miller, respectively. Besides the volatile period between 1998 and 2005, the leaps and plunges in annual transactions were in lockstep with the bonuses showered on Wall Street at the beginning of that year. [more]

The real estate industry is awash in information, from blogs to market reports, and brokers are increasingly the ones left to figure out what makes sense, for themselves and their clients. It can make them smarter and better brokers — or leave them more confused. “It’s difficult to gauge what’s important, what’s not important, what’s accurate, what’s not accurate,” said Leonard Steinberg, managing director at Prudential Douglas Elliman, who has written about the overload phenomenon in his monthly newsletter, “Luxury Letter.” [more]

When the Federal Reserve recently rolled out its plan to pump $600 billion into the credit markets, many homeowners and buyers might have figured that since mortgage interest rates are now likely to fall again, why not postpone the loan application they were contemplating? Fed Chairman Ben Bernanke offered implicit support for that scenario when, in a Washington Post op-ed on Nov. 4, he wrote that as a by-product of the $600 billion infusion, “lower mortgage rates will make housing more affordable and allow more homeowners to refinance.” But wait a minute: Haven’t 30-year fixed mortgage rates been hovering around 4.25 percent, the lowest level on record since April 1951? Aren’t 15-year mortgages just above 3.6 percent? How much lower could rates possibly go? [more]

Judge rebukes state agency over Atlantic Yards timetable
Judge Marcy Friedman of the State Supreme Court in Brooklyn issued a rebuke to the Empire State Development Corporation, the state agency overseeing the $5 billion Atlantic Yards project, for making “totally incomplete representations” in legal papers about how long it would take to build the project, according to the New York Times. Last month, Friedman ordered the agency to justify its decision to require only a 10-year environmental impact statement. [more]

Some Manhattan landlords are looking to get into the profit-sharing business. While the practice is not widespread in New York, so-called percentage rent is on the rise here, some brokers said. Percentage renting “is definitely growing in New York City,” said Patrick Breslin, president of retail at Grubb & Ellis. The pay structure — in which the landlord takes a base rent plus an additional amount if the retailer achieves a certain sales threshold, or “breakpoint” — has long been used in malls, brokers said. About five years ago, percentage rents started appearing in Manhattan leases. These days, brokers noted that they’re now seeing a slight uptick in these types of deals. [more]

You won’t find Gucci or Prada on this list, but there are plenty of discount apparel stores like Century 21, T.J. Maxx and Syms. This month, The Real Deal collected a list of the largest retail leases inked in Manhattan by square footage. Click here for the full breakdown. [more]

As 2010 draws to a close, it’s time to assess the state of the New York City real estate industry. At this time last year, the real estate market was showing signs of improvement from the disastrous Lehman Brothers aftermath. And throughout 2010, industry professionals were pleased to see that continue, with prices stabilizing and sales activity returning to normal seasonal patterns. “For the real estate community, 2010 was a year of a sense of relief,” said Jonathan Miller, the CEO of appraisal firm Miller Samuel. [more]

For most of America, spending $44 million on a place to live is mind-boggling, especially in the midst of an economic downturn. So it’s a sign of just how rarified New York real estate is that July’s $44 million Duke Semans mansion sale is an indicator that the residential market, while recovering, is still a shadow of its former self. The sale — the priciest residential deal of 2010 — doesn’t measure up to the $53 million Harkness mansion sale in 2006, or Harry Macklowe’s epic $52 million combination of seven apartments at the Plaza in 2007. To get a sense of how the high-end market fared this year, The Real Deal compiled a list of the 50 priciest sales of 2010 so far, using closed sales data from real estate listings aggregator StreetEasy. [more]

Real estate is not for the tech-phobic. Real estate brokers “need to keep up with what their clients are doing,” said Burke Smith, founder of YourNetCoach, which specializes in Internet marketing strategies for real estate firms and agents. In a city full of BlackBerrys and Androids, that means no ancient flip phones. Still, not all newfangled gadgets are created equal. This month, The Real Deal asked experts to weigh in on which new technologies real estate professionals should embrace — and which ones they shouldn’t bother with — in 2011. [more]

Why is it that the nearly completed 8 Spruce Street, a silvery pylon formerly known as the Beekman Tower, seems so thoroughly sad and unimpressive? Say what you will about Frank Gehry’s previous projects; at least they were never dull — until now. His latest effort, which bids fair to be the tallest residential tower in the city, as well as the eighth-tallest building in the city, beetles above the main campus of Pace University and glowers across the expanse of City Hall Park over at the Woolworth Building. [more]

From left: Grubb & Ellis’ Vincent Carrega and Capin & Associates’ Timour Shafran

When Timour Shafran negotiated the sale of a Midtown building in August, the landlord threw out an interesting, if not entirely new, carrot. If Shafran, a vice president of investment sales at Capin & Associates, and his team secured a certain price, their commission would be bumped up almost two full percentage points — potentially tens of thousands of dollars. “Unfortunately, I got the lower number,” Shafran said. “But I killed myself trying to make it to the bigger fee.” Welcome to “incentive-based fees,” an increasingly common practice that is dividing the brokerage community in New York. The process is as simple as it is time-tested: Contracts, whether oral or written, are negotiated to include commission increases that are triggered when the broker achieves a certain price for the seller. [more]

They dot the cityscape from Uptown to Downtown, refuges for bargain-hunting visitors but annoyances for established hotels: rooms rented — illegally — for the night. But a new state law that takes effect May 1 will make it tougher to rent out New York apartments as short-term hotel rooms. The law, passed last summer, bans rentals for 30 days or less while allowing longer-term rentals. The question is how effective the new law will be. Some nightly room operators show no signs of reining in the practice, or even, it seems, tweaking their business model. And while operators may have the impression that they can do as they please for a few more months, they’re actually wrong: The state’s decades-old housing code already forbids leasing most apartments by the night. [more]

While the first-time homebuyer tax credit propelled sales in Queens through September, business has since cooled. Record-low interest rates are helping to stir sales, but the borough’s brokerage firms are in a still-depressed market — and have been fighting for every closing by hiring top talent from competing firms, beefing up training, and investing in new technology. This month, The Real Deal looked at the biggest residential firms in the borough by number of agents. In the battle, Bayside-based Keller Williams Realty has emerged as the king of Queens. [more]

Big is a relative term in New York City real estate. A roster of agents that might be pint-sized in Manhattan can make a Bronx firm a powerhouse. Century 21 Future Homes has built a team of 74 agents working from three offices throughout the Bronx. With nearly 150 closings under its belt so far this year and another 100 in the pipeline, the firm has experienced a 15 to 20 percent increase in sales over last year (in an admittedly dismal year in real estate). It also topped The Real Deal‘s first-ever ranking of Bronx residential brokerages by number of brokers, followed by ERA Besmatch Real Estate, with 64 agents. [more]

1965: CITY PROPOSES GREENWICH VILLAGE LANDMARK DISTRICT

1935: EARLY EFFORT TO HALT FACTORY FLIGHT IN NYC

1903: WILLIAMSBURG BRIDGE OPENS

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Kitchen counters that can barely fit a coffeemaker, doors that swing the wrong way and terrace railings that hide views. These are just a few of the notorious apartment layout mistakes that regularly work their way into blueprints for New York City apartments. But if there is an upside to this long-standing problem, it’s that the downturn is having a corrective effect on floor-plan blunders. Unlike in the heady days of the boom, today there is little room for these sorts of layout and design miscalculations, brokers say. “I think the pressure on the development community to provide marketable product is so high today that people are now being sensitive to every single issue in order to build the best possible product,” said Adrienne Albert, CEO of The Marketing Directors. [more]

It’s the home of major media companies such as Viacom, the New York Times, Condé Nast, Reuters, Bertelsmann and Universal Music Group; broadcast studios for ABC, MTV, NASDAQ and others; headquarters of Morgan Stanley and law firms such as Proskauer Rose, Skadden Arps and Cravath Swaine & Moore. One-quarter of all hotels in Manhattan are there, along with Broadway theaters and some of the best retail in the world. And, oh, tens of millions of visitors annually come by. So before the world’s eyes turn to Times Square for New Year’s Eve, it seemed like a good time to consider the state of the office market in the city’s most famous district. After all, some 200,000 people work in Times Square, 70 percent of them in finance and creative fields. [more]

Ofer YardeniAt times, this city can seem like an ocean of distress without a drop to drink. Half-built or unsold condos abound. Office buildings dot marginal neighborhoods offering low rents to stay full. Loans secured by real estate are in trouble all over. Yet all this distressed commercial inventory can be elusive, kept off-limits by banks waiting for a full recovery and perhaps mindful that in the last downturn, in the early 1990s, they may have let go of valuable real estate too soon. Nonetheless, some are figuring out how to wrest control of these troubled properties, and this month The Real Deal compiled a scorecard of the big private equity funds clearly leading the way. [more]

Morris Moinian, president of Fortuna Realty Group

Shopping for distressed buildings isn’t as easy as pointing and clicking through a listing service — or is it? Investors who have picked up projects that ran out of money before construction was complete or simply couldn’t keep pace with their bank payments — read: distressed assets — shared how-to advice with The Real Deal that contains a surprising amount of common sense. Yes, the average real estate Joe might not be able to waltz into a corner bank and demand to see what troubled notes it holds. Instead, distress investing, like many high-level business propositions, seems to require membership in a clubby circle. Still, picking up a half-built, low-rise rental for a song may be in the realm of possibility. [more]

Steven Spinola

While Democrats took a “shellacking” (President Obama’s words) in last month’s midterm elections nationally, in New York State they captured both the governor’s mansion and attorney general’s office. But the question remains: What will the election results mean for the real estate industry in New York City once these newly minted officials are ushered into office next month? In this month’s Q & A, The Real Deal talked to real estate executives and those in the industry who are keeping an eye on politics and government to find out what they’d like to see, particularly from Governor-elect Andrew Cuomo and Attorney General-elect Eric Schneiderman. [more]

Ultra-luxury “Aquaminiums” attract buyers
Plans are underway for a second “Aquaminium” complex at Thailand’s Royal Phuket Marina, after the successful first phase. An Aquaminium, a term created by property developer Gulu Lalvani, is an apartment complex on the water with an indoor parking garage for a boat. The idea was inspired by James Bond, who always seems to have a boat nearby for a speedy getaway, Lalvani told the Wall Street Journal. The first complex consists of 15 apartments, two penthouses and five villas, 14 of which are currently occupied. [more]

Atlanta
Cox Enterprises, the parent company of the Atlanta Journal-Constitution, has agreed to donate the newspaper’s former downtown headquarters to the city of Atlanta, the Associated Press reported last month. The Atlanta Journal-Constitution moved to a new office in suburban Atlanta eight months ago. The donation includes both the office building and the former printing-press building behind it, which occupy nearly six acres of land. Atlanta mayor Kasim Reed plans to use the buildings for the police and fire training academies, public meetings and a gallery space. Cox estimates the buildings to be worth $50 million. [more]

Mott Street mixed-use apartment buildings for sale
A package of four adjacent apartment buildings encompassing a total of 40,788 square feet is on sale for $40 million at 246-252 Mott Street in the Little Italy Historic District. The six-story walk-up properties were renovated in 1987. The buildings include 87 apartment units — 10 of which are rent-stabilized — as well as eight retail stores, plus basements. John Ciraulo, Robert Burton, Craig Waggner and Clyde McGraw of Massey Knakal Realty Services are marketing the property. [more]

View all the commercial deals printed in The Real Deal’s December issue and browse the archives here:

Office leases
Retail leases
Commercial sales

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092TRD1210 [more]

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Construction Update
Upper East Side
132 East 65th Street
Toll Brothers has started construction on a 15-story, 23-unit condo. The finished project, which is expected to hit the market next summer or fall, will feature several full-floor units at the top of the building and ground-floor retail. Toll, which purchased the distressed site from developer Trevor Davis, has also developed Northside Piers in Brooklyn and 303 East 33rd Street in Murray Hill. [more]

Upper Manhattan
$260,000
604 Riverside Drive
1-bedroom, 1-bathroom, 670 sf co-op in a prewar elevator building; part-time doorman; concierge; unit has windowed kitchen, home office, hardwood floors; building has roof deck, laundry and storage facilities; maintenance: $542 per month; 34 percent tax-deductible; asking price: $260,000; 51 weeks on the market. (Broker: Gordon Voight, Barak Realty) [more]

Five years after starting as a four-person residential rental firm in New York, Platinum Properties has announced its latest expansion: opening offices in Miami and Los Angeles early next year. “We have a lot of our clients [who] own properties in both those locations,” Khashy Eyn, Platinum’s CEO and president, said, adding that Platinum will consider “buy[ing] a firm that’s already started and changing the name.” [more]

Just two years ago, during the onset of the fiscal meltdown, experts were bemoaning the flight of the New York City legal industry. One report suggested that law firm profits per partner were set to drop by up to 15 percent in the city, while decades-old mainstays like Heller Ehrman dissolved and left their offices. But now, with legal hiring on the rise, more than a few noteworthy leases are being signed, in what could perhaps be a legal leasing rebound.
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Residential property management group Cooper Square Realty has added 2,300 units to its portfolio. The company, which manages more than 60,000 residences, announced the new additions to its client list, spread across 11 different buildings, including the Artisan Lofts condo at 143 Reade Street and the Mirada condo at 161 East 110th Street. It is also expanding its presence in the rental market, taking over management at buildings such as 34 Leonard Street and 90 Pinehurst Avenue. [more]

Residential
Charles Rutenberg Realty
Michael Cook joined the firm as an associate broker.

Phipps Group
Robert Pigott has joined the affordable housing developer as corporate vice president and general counsel for the Phipps Houses Group of Companies. Dianne Morales was named the new executive director and CEO of social services affiliate Phipps Community Development Corporation. [more]

From left: Warburg brokers Leslie Rosenthal, Deborah Lupard, Richard Steinberg and firm president Frederick Peters

If the casting for season two of HGTV’s “Selling New York” is to be believed, experienced actors, singers and models have an inside edge on the popular real estate-themed reality show. Producers went on the hunt for more brokers in the spring, choosing, so far, three Warburg Realty brokers (along with company president Frederick Peters) to join colleagues from Core and Gumley Haft Kleier. During her audition, Warburg broker Leslie Rosenthal broke into an impromptu “Somewhere Over the Rainbow.” “The performance aspect definitely intrigued them,” said Rosenthal, who was an actor and singer before she started selling homes. “They wanted people who are natural, who wouldn’t get intimidated by the process, and who can do the takes, too.” [more]

Northside Piers

With the market creeping back, developers now can start to figure out
what saved some of them from ruin. Rent-to-own programs likely won’t be on that list. The buzzworthy idea of 2008 seems to have produced little sales for struggling condos during the depths of the recession. A few leases, sure, but not the kind that turned into sales contracts. Rent-to-own, which allows renters to put their monthly payments toward the cost of buying their home, seemed like a way for developers to turn renters into buyers. Toll Brothers’ Adam Gottlieb, the project manager at the Northside Piers condo in Williamsburg, said that while the strategy did bring in foot traffic, a lot of the potential deals never materialized. [more]