The Real Deal New York

Seven years of bad retail leasing luck ended last month when River
Place I, the massive apartment complex at West 42nd Street and 12th
Avenue, filled its commercial space, striking the property from an
unofficial roster of sites that can’t seem to find (or retain) tenants.
Dead retail locations shake off the curse
” class=”read-more-link”>[more]

Designer does interiors at rentals, Jersey condos Starck heads downmarket” class=”read-more-link”>[more]

New York City has weathered the national real estate downturn better
than most American cities, but how have New Yorkers’ favorite vacation
destinations stacked up?
New Yorkers’ vacation homes: A day in paradise clouds over” class=”read-more-link”>[more]

There’s no doubt about it, last year was a roller coaster of a year with extreme highs and lows for real estate. While New York City suffered a slowdown caused by the credit crisis, more pain was felt elsewhere in the country, and there were still plenty of impressive deals that happened here. [more]

As brokers and developers ring in the New Year, they are predicting
even more shifts for New York’s already slowing real estate market. Predictions: A sober look at year ahead” class=”read-more-link”>[more]

Manhattan buyers, concerned about the difficulty of obtaining a
loan in the wake of the subprime mortgage crisis, are more reluctant to
purchase apartments without a mortgage contingency clause in place. Mortgage contingency: Not buying without a net” class=”read-more-link”>[more]

From left: Joe Sitt, 516 Fifth Avenue and 693 Fifth Avenue

Joseph Sitt made his fortune thinking big — and not just in real estate. Back in the early 1990s, Sitt had trouble finding retail tenants for his urban properties. So he decided to open his own upscale apparel chain to serve the most promising urban retail sector he could find: plus-size women.
[more]

St. John’s Center could fetch over $600M

A four-story, 940,000-square-foot commercial building is on the market for sale and is expected to trade for over $600 million, the New York Post reported. St. John’s Center spans an 825-foot stretch of the West Side Highway between Clarkson and Charlton streets. The former New York Railroad terminal boasts Hudson River frontage, a total of 4.2 acres of space and 250,000-square-foot floor plates, the largest in the city. The buyer can build a 275,000-square-foot tower on the site’s north end. A team led by Darcy Stacom of CB Richard Ellis is handling the sale.

UWS apartment building for sale

A six-story, 82,230-square-foot apartment building at 10 West 65th Street is on the market for sale with an asking price of $60 million. The prewar property, built in 1939, includes 75 apartments, of which 28 are vacant and contain a sellable square footage of 39,200 square feet. The average per-square-foot rent for the building’s 45 rent-regulated apartments, including 17 rent-controlled and 28 rent-stabilized units, is $14.70. Robert Knakal and Paul Smadbeck of Massey Knakal are marketing the property.

East Village portfolio on the market

An East Village residential and retail portfolio comprising three buildings is on the market for sale with an asking price of $38.25 million. The properties are located at 111-115 East 7th Street, 213-215 East 4th Street and 244 East 21st Street. There are a total of 97 residential units, of which 42 percent are rent-stabilized, 8 percent are rent-controlled and 50 percent are free-market. There are also five stores totaling 5,000 square feet of retail space. Brian Ezratty and Scott Ellard of Eastern Consolidated are handling the sale.

Midtown loft office building asking $30.75M

A 12-story, 82,000-square-foot loft office building at 29 West 36th Street is on the market for sale with an asking price of $30.75 million. All floors at the property are rented at an average $19.68 per square foot. Each floor is currently occupied by full-floor tenants, except one that has two tenants, with the majority of existing leases expiring between 2013 and 2016. Brian Ezratty and Scott Ellard of Eastern Consolidated are marketing the property.

UES apartment building on the market

A six-story, 14,000-square-foot elevator apartment building at 39 East 72nd Street is on the market for sale with an asking price of $18 million. The property, which includes two commercial units and is 27 feet wide, is being marketed to an owner-user or an investor. J. Guthrie Garvin and Paul Massey Jr. are handling the assignment.

Inwood mixed-use building on the block

A five-story, 52,965-square-foot walk-up apartment building at 101-113 Dyckman Street is on the market for sale with an asking price of $16.97 million. The mixed-use property consists of 60 residential units and 10 retail stores, with 155 feet of frontage. The corner building’s hallways and 10 of the apartments were recently renovated. Ety Lee and Paul Nigido of Eastern Consolidated are handling the sale.

Gramercy apartment building for sale

A five-story, 11,210-square-foot apartment building at 28 East 14th Street is on the market for sale with an asking price of $16.9 million, or $1,509 per square foot. A typical floor in the prewar multifamily property, built in 1930, has 2,240 square feet of space. The property returns a net profit of $900,000 per year. Eric Meyer of GVA Williams is marketing the property.

Flatiron mixed-use building asking $14.75M

A 12-story, 26,976-square-foot apartment building at 11 West 17th Street is on the market for sale with an asking price of $14.75 million. The elevator property, which lies within the Ladies’ Mile Historic District, features ground-floor retail, and all floors but the 10th are floor-through lofts. There are eight free-market and four rent-stabilized apartments, and the retail space can be delivered vacant. John Ciraulo, Jonathan Hageman, Robert Knakal and Craig Waggner of Massey Knakal are handling the sale.

Soho historic district building on the market

A five-story, 11,348-square-foot building at 111 Mercer Street is on the market for sale with an asking price of $14.5 million. Located in the Soho Cast Iron Historic District, the building, which was built in 1900 and has ground-floor retail space, will be delivered completely vacant. The Landmarks Preservation Commission is expected to approve a proposal to build a penthouse unit and make alterations to the storefront. Jeffrey Fishman and David Alani of Robert K. Futterman & Associates are handling the assignment.

Bronx waterfront development site for sale

A 287,688-square-foot development site at 226 Fordham Street in the City Island section of the Bronx is on the market for sale with an asking price of $14 million. The 5.4-acre waterfront property is being marketed as a luxury residential development opportunity. Christoffer Brodhead and Karl Brumback of Massey Knakal are marketing the property.

Recent bad news for Wall Street may mean good news for Manhattan’s congested office markets. Subleasing by troubled Wall Street may ease congestion
” class=”read-more-link”>[more]

It’s the start of a new year, and the Manhattan office market
appears to be standing stoically in the face of predicted slips and
falls. Comments

• Print

Five proposals for Hudson Yards are in. Two of the bids – from the Extell Development Company and Brookfield Properties – have been looked upon favorably by the public and/or architectural critics. Yet it is the other three that are reportedly the favorites. And all three have something in common: High-profile tenants lined up. [more]

Despite the recent slowdown in the real estate market, there are companies and individuals that are finding an upside.
The
current troubled credit market has inspired a number of initiatives on
the part of opportunistic New York City-based companies hoping to make
lemonade from lemons. Investors finding the upside of distress” class=”read-more-link”>[more]

With the hotel business in New York City continuing to boom, a market niche is widening for select-service hotels in mid-block locations. These properties – think of brand offshoots such as Hilton Garden Inn or Holiday Inn Express – fall between the “budget” and “luxury” categories, offering mid-priced beds, decent coffee and wi-fi access.

Hotel developers such as the McSam Hotel Group, the Lam Group and Hersha Hospitality are piling on to build them, encouraged by a real estate market that is favorable to smaller, hotel buildings tucked away on side streets, especially in areas like Midtown South, Midtown West and Chelsea.

Gary Wisinski, chief operating officer of McSam Hotel Group, said that his company has plans for several new select-service mid-block hotels, including three on West 39th Street between Eighth and Ninth avenues (to be branded as a Hampton Inn, a Holiday Inn Express and a Candlewood Suites), all to open in summer 2008, and another Holiday Inn Express on West 43rd Street between 10th and 11th avenues expected to open in 2010.

One primary driver behind the select-service boom is cost. Martin Levine, chairman of Metropolitan Valuation Services, said that in the Plaza District in Midtown, hotel developers face prices of around $800 per square foot, but in Midtown South,
Midtown West and Chelsea, areas where there is available land, $300 per square foot is the norm.

Levine said that in those areas, a small hotel may be a more profitable venture than certain other commercial projects.

“A small office building is going to need rents that are far from achievable because of construction costs,” he said. “If you’re putting up a small office building, you can’t pre-lease it, so it’s built on spec – and then the economics don’t look very good, since the rents have not yet been proven high enough to sustain.

“But a hotel’s rate structure,” he continued, “supports a reasonable return on investments.”

Greater demand, less risk

The strength of the current hotel market has also made opening smaller hotels in non-prime locations less of a risk. “Smaller hotels started opening three or four years ago,” said Roland de Milleret, senior vice president of HVS Global Hospitality Services. “Until then, the numbers for the value of the hotel compared to construction costs didn’t work, but now, because the performance of hotels is so strong, the value is higher than construction cost.”

For one thing, demand for rooms in New York City is currently exceeding supply and has been for some time – even despite the recent boom in hotel construction. As Daniel Lesser, senior managing director of the hospitality and gaming group at CB Richard Ellis, pointed out, “earlier this decade, several thousand hotel rooms converted to residential use. Even with 10,000 new rooms in New York, the needle doesn’t really move.”

According to Smith Travel Research, the average daily rate for New York City hotels (which encompasses everything with 20 or more rooms) through October 2007 was $257.14, an 11.6 percent jump over the year-ago period.

Another draw for hotel developers is that both Chelsea and Midtown West are zoned for commercial use [M zoning], making it more difficult for residential developers to obtain spaces there unless they acquire variances. “Up until two years ago, residential development was the hottest ticket in the market,” says Matthew Slonim, head of investment analysis at Besen and Associates. “On every property, residential developers were outbidding others. But with M zoning, residential developers are not able to bid.”

There is also the simple availability of more vacant land in Chelsea and Midtown South and West that makes those areas ideal for hotels. “It’s almost impossible to find vacant land in Midtown,” says de Milleret. “On the Upper East Side, almost nothing is zoned for commercial use.

“But in Chelsea, the availability of land is relatively easy at the moment, and those hotels can provide a more affordable alternative and get the overflow from Midtown. They have occupancy rates in the high 80s to low 90s.”

This equation has opened the door for brand-name hotels to build their select-service offshoots in Manhattan – such as Hilton Garden Inn, Holiday Inn Express and Comfort Inn, which are among a substantial group already under construction in Midtown West.

“Brands have been looking to find economically viable ways to get into New York over the past few years,” says Mark Gordon, head of the U.S. Hotel Group for Cushman Wakefield Sonnenblick Goldman. “Average daily rates have grown to a level that is allowing the development of select service in the city.”

Mark Owens, managing director of Ackman Ziff Real Estate Group, notes that “there is tons of full-service product, but there has never been a huge supply of limited-service product in New York City.”

He adds, “the mid-price traveler has not been well accommodated historically, so the small hotels are filling a void.”

Growth in new locations

The Chelsea and Midtown South and West areas have the benefit of being close to subways and major traffic areas like 42nd Street, but they’re also well situated to serve future developments, such as increased office space, the High Line project, the expansion of the Jacob Javits Center and the redevelopment of the Hudson Yards.

“Midtown South has lots of new office space. There’s the new New York Times building, and 11 Times Square is under development,” says Owens. “There will be 5 or 6 million square feet of office space opening in the next three or four years. The New York market is continually changing, and hotels fit on smaller footprints can do phenomenally.”

Though the far west locations of the Hudson Yards and the High Line projects may seem remote now, hotel developers seeking space nearby know that will change. “With the High Line and whole West Side Yards redevelopment, in the next 10 years it will be a whole new area,” says Lesser.

The Hotel Gansevoort in the Meatpacking District was cited by several hotel experts as an example of a pioneering hotel in a neighborhood that previously had seemed a highly unlikely location for a hotel. “There are no bad areas left in New York City,” adds Lesser. “We’re seeing a lot of hotels go into submarkets in Manhattan.”

Horizen Global, for example, will open the VU, one of the first Midtown hotels built far to the west of Times Square, in April. (See Taking a Zen approach to building).

Responding to obstacles

There are some challenges for developers who build hotels on crammed side streets. Wisinski of McSam, which was behind the development of both the 150-room Sheraton Four Points on West 25th Street, which opened in December 2003, and the 230-room Holiday Inn Express on West 29th, said that one primary issue is being a good neighbor in a cheek-by-jowl site.

“In many cases, our neighbors want to know what type of neighbor we’re going to be,” Wisinski said. “But we explain to them that we’ll be a great neighbor because we sell a sleep experience, and we’re quiet and well-lit.”

The process of putting up a hotel in Manhattan is also more protracted than putting up the same hotel in the suburbs. “From when we buy the land to the day the hotel opens, it takes twice the amount of time it would in a suburban location,” says Wisinski. “And the overall cost of building takes a much stronger capitalized developer.

The locations for both the Sheraton Four Points and the Holiday Inn Express were chosen for their proximity to Times Square and the Jacob Javits Center, as well as the ability to obtain air rights on both properties and do ground-up construction, Wisinski said.

Because development costs are still substantial, the general trend toward building smaller rooms to maximize space is especially true for smaller-scale projects. “Development prices are so high right now. Small hotels are trying to have smaller rooms to justify how much they’re paying. They’re getting higher rates now, so why not scale back and have more rooms and less square footage?” says Slonim.

Though there is no dispute about the need for additional rooms in Manhattan, opinions differ as to how smaller hotels might be affected in the event that the currently strong tourist market experiences a downturn. “When things slow, it’ll be the hotel operators with marketing expertise and amenities who do better,” says Slonim. Larger hotels may also have an advantage in that they have more to room to be creative – literally. “If you have a larger hotel, you can do different pricing for rooms and spread out your costs during rougher times with lower occupancies,” Slonim notes.

But the glass could potentially be half full for smaller, select-service hotels during a slowdown. “One benefit of having a smaller hotel is that you have fewer rooms to fill, so it’s easier,” says Owens. And those travelers who are used to a more luxe hotel experience would have alternative – and affordable – lodgings in tighter times.

“A higher-paying client could still turn to a smaller hotel if travel budgets are cut,” Owens adds.

Go to chart: Will the city’s hotel market stay strong or stall amid a glut?

Walk west on Charles Street, past Bleecker and Hudson, to the part of the Village where traffic slows and boutiques grow thick. At the corner of Greenwich Street, behind an iron gate and ivy-draped brick wall, you’ll find Manhattan’s only freestanding, privately owned house.

“Typically, a house that survives from 200 or more years ago, a freestanding house, it’s a monument, a museum,” explains Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation. “[This house is] unusual because it’s still in private hands.”

The sight of 121 Charles Street, the centuries-old Cape Cod-style house with its lawn and cobblestone driveway, is not easily forgotten. Unlike Village townhouses, which are attached to each other on the sides, and only have yards in the front and back, this little farmhouse-looking home seems to grow out of its land. On the surface, it seems like it has been there forever – but it hasn’t.

For more than a century, the house sat on 71st Street near York Avenue, where, for a time, it was home to Margaret Wise Brown, author of the hugely popular “Goodnight Moon” and other children’s books. At one point, it was even a pub, where the owner served drinks in the low-ceilinged great room and lived upstairs.

It wasn’t until 1967, when the Archdiocese of New York announced plans to raze the block that the house was on, that the house was moved to the Village. The couple renting the home convinced the owner to sell to them, and, with the help of the borough president and mayor, it was saved from demolition and moved to Charles Street.

The entire structure was loaded onto a flatbed truck and driven down Second Avenue and across 14th Street to the West Side.

In the years after it was moved, the house changed hands multiple times. It wasn’t until the late ’80s that its current owners found it.

As Suri Bieler tells it, when she was a little girl on a vacation to Manhattan, she spotted the house as she peered out her backseat window as her father circled the Village. She fixated on the house, but for years it was just a fantasy. “I thought I had made it up,” she says.

That is, until she happened upon it again years later. This time, in 1998, the house had a “for sale” sign affixed to its gate. Bieler and her husband, Eliot Brodsky, jumped on it.

For nearly a decade, the couple, who own Eclectic Encore Props, a prop rental business, lived comfortably in the house. But when their son Jack was born, they needed to expand. That was when they hired Manhattan-based architect George Boyle to renovate and double the home’s size.

Rather than straighten the home so that all its windows and doors were level, they crafted the additions to echo the original.

Boyle says one of the best compliments he’s received on what they call “Jack’s House” praised the fact that he didn’t correct the windows. Actually, he fixed them to look like they were 200 years old.

The renovation was so well done that Bieler and Brodsky were presented with an award by the GVSHP in 2003.

Curious passersby often ring the bell to inquire about the history of Jack’s House. Sometimes they even make an offer to buy it. “You can’t get more prime than this location,” says Drew Glick, a vice president with Prudential Douglas Elliman.

Bieler has no intention of parting with it. “If we ever left New York, we’d take the house with us,” she says. “The house has legs.”

Foreign press heralds dollar’s fall as opening door to once
elite market NYC for sale in the foreign press
” class=”read-more-link”>[more]

Hotels are getting more competition from New York residents who are acting as innkeepers and opening their doors to tourists looking for a cheaper stay and a more authentic New York experience.

That shift is helped by the role of the Internet in brokering transactions between apartment owners and potential short-term renters. In November 2006, city residents advertised 10,484 apartments as vacation rentals on Craigslist, the general clearinghouse site. A year later, that number spiked to 14,434, a representative for the site said.

A recent survey of the site showed an entry for an Upper East Side property under the headline, “Why pay for a hotel when you can have a great studio for less?” Another advertised a “charming” East Midtown apartment available for Christmas.

According to the city’s marketing and tourism arm, NYC & Company, the average cost of a city hotel room hovers around $300 a night, and occupancy rates run upward of 90 percent. “It is no secret that New York City is one of the world’s most popular tourist destinations,” said Mark Eble, vice president of PKF Consulting, which studies the tourism industry throughout the United States. “Hotel rates are the highest in the nation and among the highest in the world.”

HomeAway.com, a short-term rental site that has acquired main U.S. competitors vrbo.com and vacationrentals.com in the past 18 months, commissioned a recent study that found that city hotels are 61 percent more expensive per square foot than renting a resident’s apartment for a week.

As a result, according to Justin Halloran, vice president of U.S. operations for HomeAway, New Yorkers are receiving more inquiries from tourists than property owners anywhere else in the country. Halloran, who says his site represents 95,000 vacation properties throughout the country, said he has seen a substantial increase in available vacation rentals in the city since June.

Eric Guttridge advertises his 700-square-foot Chelsea apartment on CyberRentals.com, an affiliate of HomeAway. The listing describes the one-bedroom as a “luxury” apartment on the 14th floor of a new building with views of the Empire State Building and an outdoor terrace. He is asking $275 a night and said he has managed to rent it out every weekend while he goes away to his vacation home outside the city.

“We’ve had great people,” said Guttridge. He said his customers come from Europe and the West Coast as well as other regions.

While interest for city vacation rentals continues to increase, the number of available apartments has kept pace, Halloran said. Since June, the number of city rentals available through HomeAway’s 11 affiliated Web sites increased from 125 to 176. That included a doubling of available Manhattan apartments, which numbered 62 in June and is at 124 today.

According to Jim Buckmaster, Craigslist’s chief executive officer, the number of vacation rentals posted on Craigslist has increased at a faster rate than the number of regular apartment rentals or housing swaps.

In the last year, the Web site saw a 40 percent increase in the number of short-term apartment rentals. That compares with a roughly 30 percent increase on longer-term rentals and about a 25 percent increase in the number of posted housing swaps. About 85 percent of the Web site’s vacation rentals and housing swaps are in Manhattan; 10 percent are in Brooklyn, 3 percent are in Queens, 1 percent is in Staten Island and less than 1 percent is in the Bronx.

Part of what has traditionally kept the short-term rental inventory limited here is the obstacles to creating units explicitly for this purpose. Building developers who might be tempted to tap into this growing demand run up against the city’s notoriously high development costs and zoning hurdles.

In other regions in the country, hotel chains have moved into the timeshare market with full force. When customers decide they aren’t going to need an apartment for the entire period they’ve reserved, the hotels will sometimes rent them out in the form of vacation rentals.

In New York City, hotels have been slower to get into the timeshare business and thus the derivative business of vacation rentals.

“It is interesting that none of the major hotel chain timeshare players have yet decided to offer a product in New York,” noted tourism consultant Eble.

Another obstacle to vacation rentals’ growth in the city is the myriad rules that govern co-ops here. Yet another is the city ordinance that prohibits those who live in rent-controlled apartments to rent out their homes for more money than they would pay per month.

New York City Council Member Gale Brewer is pushing for legislation to make it more difficult and costly for landlords who illegally convert residential buildings into hotels. She said she supports the idea of vacation rentals “as long as you don’t lose your home” in the process by bringing in more money than is legal under rent-control guidelines. That, she said, could lead to an eviction.

President of Brown Harris Stevens, a high-end residential brokerage with more than 300 real estate agents in seven New
York City offices. The company has 10 other residential offices in the
Hamptons and Palm Beach, Fla., plus three commercial offices in New
York State. The Closing: Hall Willkie” class=”read-more-link”>[more]

As told to Jen Benepe

In order to understand factors that contributed to the subprime debacle and the mortgage crisis, The Real Deal spoke to a mortgage banker who witnessed shady practices firsthand. In some cases, he said he saw mortgage brokers who evaded punishment for fraud by skipping to another bank; in other instances, loan officers accepted fake verification of employment letters. The banker’s name is being withheld to protect his identity and the identity of his former employers. His words are largely unedited.

“I am a mortgage banker, have been for more than six years. My job was to go to various brokers and solicit loans. My company went out of business this year.

Let me tell you, the mortgage business is fairly transient. A loan officer parks themselves at a shop for a year, and then moves around, you know, to another shop. Especially when things were good they were constantly looking for the best service or cuts, and they would bounce around from shop to shop.

Especially the stinker guys, you know, the crooked ones. It really wouldn’t be fair, the bank would have a pretty good fraud unit, but anyway, it [fraud] would still happen. When it did they would give the guy a warning, and he knew the jig was up and he would leave.

Or, they would say, ‘If you do it again well have to fire you,’ but then the Stinker Guy would leave anyway, and nothing would happen to him, he’d just end up at another bank.

Some banks would report them, but not everyone did. There are a couple of different places, like the New York State Banking Commission, [where] that was the most common. But they were still working, at the new joint.

The stinker guys: They were the loan officers in the broker shops. They would overstate the [borrower’s] income badly. They would do VOE [verification of employment] – instead of doing pay stubs and W-2s, they would just take a written VOE from the employer. They would find someone to say, ‘He is making around $100,000.’ Or ‘He works with me,’ a letter verifying employment. They were fake VOEs.

Let’s say the guy makes socks, and they [the fraudulent loan officers] would get a relationship with someone from the company. [They] would get a couple hundred dollars just to say that the guy was making that money. They would call and verify, and the guy may have never worked a day in his life. They were faking somebody’s job!

Somebody who wanted a better interest rate, they would put down a fake W-2; I think you can go to Staples and do it.

They would also get in bed with an accountant. Let’s say you would have a guy who said he was self-employed. It could be that they have a license, or they would just require a letter from a CPA or an accountant. Now the accountants, they are dying for business. The loan officer would find an accountant who was willing to play ball, throw them a couple of hundred dollars, and that would get through.

I am just telling you the scams I saw and heard. The fake VOE and the accountant’s letter, when they couldn’t do it another way. In the industry it was easy to prove income.

A lot of time they used the job ‘contractor’ to fake the income. You know contractors – half of them are licensed, half are not licensed. There is that whole underground there. Because the banks knew that there was an underground there, they knew contractors have the perfect job, because they are making good money. But some are making $10,000 a month, and some are making $100,000 a month. So they would say they were making good money even when they were not.

I saw a lot of applications where they said a woman was a contractor. Now we all know there are a lot of women who are contractors, but like owners, as in they run the business, [they’re] not builders – that’s ridiculous. Women can be a general contractor, but let’s face it, most women are not contractors.

I knew one shop that did it almost as a religion. They saw the application and said, ‘Well we don’t know what to make it, make it a contractor.’

Like for retired people, you could take a retired person and not put anything down. The rates were not as good, and you could never get 100 percent [financing] on that loan. The top amount was 75 percent… maybe 80.

The programs themselves were ridiculous. Let’s say you were going to take a loan out. There are guidelines, banks did not just loan you money. You know, that income had to fit their monthly debt ratio; under conventional paper you had to have all your bills 27 percent or less of the mortgage. Then they figure about 36 percent of all debt put together, the debt-to-income ratio is fair. To this day that still works… [But] let’s assume you were making $100,000 together… But now you want to buy a house in Astoria, for half a million dollars, or $550,000. But you are only making $100,000, right? Suddenly your debt-to-income [ratio] is more than half. That is when the subprime started.

Wall Street was behind the whole thing, don’t kid yourself – they were behind the whole thing. They gave us the subprime product. I mean you are still showing your income at this point. We know that people are putting half their money, and we know they will be OK.

But now you want a house in Westchester for $800,000. So they came out with this stated income product, you tell us what you make and we believe you if it makes sense, they said. So, you put down that you make $80,000. And let’s say your husband made $70,000. But you are not really using your income, and if your credit score was good enough they gave you the loan. This is what began to happen.

I laughed all the way to the bank for four years. I was making $30,000 or $40,000 per month. I knew a guy in California who was making about $200,000 a month.

When asked to describe the appeal of Jersey City, one condo shopper summed up his answer in one telling word: convenience.

Indeed, this is where any discussion about Jersey City inevitably begins. Query home buyers or renters on why they’re considering it, or ask brokers how they market it, and their responses will almost always cite the close proximity to Manhattan, the easy access to PATH stations, and the under 30-minute commute to the city.

Based on an informal survey of open house attendees, Jersey City – which once had a reputation for corruption, crime and urban decay, and has more recently attracted some real estate trailblazers – is now seeing a critical mass of young professionals.

And those who are looking for an alternative to the high-priced co-ops and condos in New York City or an upgrade from other nearby New Jersey apartments are finding that they have options, including a soon-to-be-opened Trump building and an area with an increasing number of amenities, including new shops and cafés.

Take Adrian, the condo buyer who invoked the word “convenience” when asked at a recent Saturday afternoon open house why he was looking in Jersey City. He’s an Internet technology professional who has lived in the area since 1997 and is now looking to upgrade from a one-bedroom facing the Hudson River to something even larger.

“I’ve had many opportunities to live in Manhattan,” said Adrian, who declined to give his last name. “But I didn’t want to because Jersey City is quieter, more affordable and cleaner.”

On this particular day, Adrian was browsing at Dixon Mills, a 467-unit former factory complex that began a condo conversion in March 2007. The property’s general manager, Jon Ha, said that 50 percent of his customers are from within Jersey City. He described Dixon Mills’ vicinity, a stone’s throw from Van Vorst Park, as “similar to Park Slope, Carroll Gardens or Brooklyn Heights because it has a neighborhood feel.”

Ha had two open houses. One was a 1,400-square-foot, two-level, two-bedroom penthouse unit for $675,000. The other was a 852-square-foot one-bedroom for $362,000.

“The rental market in downtown Jersey City is sizzling hot, so it makes sense to buy,” Ha added.

David and Meredith, both 26, were looking to do just that as they checked out an open house at 208 Brunswick, close to Hamilton Park. Having rented in the area – he works at a bank in downtown Manhattan, she at a law firm in western New Jersey – they are already Jersey City converts.

Meredith, who also declined to give her last name, said, “There’s a lot more character in the homes” than in Hoboken, where they’ve also looked.

Weichert Realty agent Dan Pelosi said Jersey City’s ability to retain its residents is a fairly recent phenomenon.

“People will rent or buy something here and then trade up,” Pelosi said. “It’s not like when they can afford a house, they move to the suburbs. That’s really a change, and it shows great neighborhood stability.”

Pelosi pointed to quality housing stock, as well as the city’s well-known affordability, for convincing people to drop anchor there.

“They’re not building any more Civil War-era brownstones,” he said.

At the end of 2006, New York Magazine pronounced that Jersey City would be the next “hot” destination for hip homebuyers. A handful of cute, newly opened cafés and boutiques along Grove and Barrow streets are further signs of that ascendance.

But what may raise Jersey City’s profile the most, according to Pelosi and several other realtors, is the imminent arrival of Trump Plaza Jersey City. The first apartments are expected to be available in April 2008.

The project, which includes one 50-story tower and one 55-story tower, will bring nearly 1,000 luxury units to the already-developing waterfront with amenities like a spa, a rooftop pool and a golf simulator.

“Donald Trump is a strong brand,” Pelosi said.

Still, many brokers have predicted that it is places just like Jersey City, which are in the process of major transformations, that will be first to feel the effects of the softening market. They said there could be a real problem in filling all of the new construction that was started during the construction boom, before the subprime crisis hit.

That is less because the Jersey City market had subprime borrowers and more because it draws a lot of young professionals from the city who may have more difficulty borrowing money in this less generous credit environment [see “Jersey City market skirts the housing storm” in the November 2007 issue of The Real Deal].

Some are already seeing the slowdown. “It’s dead across the board,” said Coldwell Banker agent Laura Ann Knecht. But others had a far less gloomy take, describing more of a sense of selectivity and patience than of a lack of interest.

David and Meredith, the banker and lawyer, dismissed the 1,100-square-foot loft-style apartment they saw at 208 Brunswick as “too much like a studio” for their taste. The asking price had already been dropped to $405,000 from $419,000.

Another couple, both mid-20s professionals, concluded that six blocks to the PATH station was just too far for them.

“It used to be that people would look at three properties, and they were ready to sign an offer; now, they want to see over 30, and they’re still not sure,” said another local Coldwell agent, who asked not to be named.

Jason Rowley, a 33-year-old investor who already owns two properties in Jersey City, said he worries “every day” whether this is a bad time to buy in the area. “The risk today is in its being overbuilt,” Rowley said. Nonetheless, there he was on a chilly pre-holiday Saturday scouting potential third properties.

“It’s hard to believe that in the long term, this place won’t retain its value,” he said.

Some popular beliefs about co-ops: They’re found in prewar buildings;
they cost less than condos of the same size; and they don’t usually
throw open their doors to foreigners. If those overseas owners were to
ever miss monthly maintenance payments, the thinking goes, boards would
be hard-pressed to track down their cash reserves. Comments

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Despite early winter doldrums and concerns about smaller bonus payouts, brokers are hoping that things will look up in January.
Residential brokers hang onto hope” class=”read-more-link”>[more]

Developers converting the landmark Apthorp apartment building on Manhattan’s Upper West Side must follow a new playbook that takes into account both a changed real estate market and a spate of court rulings that could bolster the resolve of tenants battling the shift to condos.

After buying the 163-unit rental complex for a record $426 million in March, Maurice Mann and Lev Leviev became the latest investors to ride a wave of massive deals in a Manhattan real estate market that many deemed unstoppable.

But recent court fights waged by rental tenants at Sheffield57 and Manhattan House could mean Mann and Leviev face a highly charged regulatory environment where tenants, lawyers and legislators will fight them at every turn. In late November, a housing court judge dismissed eviction proceedings against a group of tenants at Manhattan House, one of a pair of decisions that could make it harder to convert market-rate rental buildings to condos.

Mann and Leviev will also be operating in a more risk-averse financial climate, which could mean trouble if their plans are delayed.

“The climate politically for condo conversions is a complicated one,” said Kent Swig, president of Swig Equities, a Manhattan-based developer, who is also an owner and co-chairman of Terra Holdings, which owns and operates the brokerages Halstead Property and Brown Harris Stevens. “And the appetite from banks for pure condo conversions that have any risk attached to them is not what it was just six months ago.”

Swig knows better than most. Prior to the subprime debacle in 2007, the market for luxury condo conversions was red hot. From 1997 to 2006, the average price for condos and cooperative apartments tripled from $430,000 to a record $1.3 million, according to appraisal firm Miller Samuel. In 2006, the number of condo and co-op conversions filed with the New York State Attorney General more than tripled from 2002, from 299 to 929.

But even during the boom, the hazards were apparent. A 2005 report by Fitch Ratings said investors nationwide spent about $13.5 billion to buy rental apartments in 2004, an astounding 350 percent one-year jump. More importantly, analyst Deana Treanor predicted that 10 percent of the conversion loans taken out in 2005 would default over the next three to five years.

It was an early comment on a market that was moving more out of control.

“Projects requiring significant construction or in the early stages of the conversion approval process are more likely to be delayed, as evidenced by condo-conversion projects in markets such as New York, Las Vegas and Florida,” the report noted. “The lure of a quick profit is also attracting inexperienced developers, which increases the probability of defaults on condo-conversion loans, especially in an overheated market.”

The Sheffield story

In 2005, Swig led an investor group that acquired the Sheffield, an 845-unit luxury rental tower located near Columbus Circle, from Rose Associates for a record $418 million. Before entering the New York real estate market, Swig had lost a $173 million conversion project in San Francisco after he defaulted on payments. Prudential Insurance Co. foreclosed on that project in April 2001, after Swig was unable to secure construction financing.

The Sheffield57 project, which included 109,000 square feet of office space and 6,900 square feet of retail, seemed perfect for a condo conversion. More than 80 percent of the building consisted of market-rate apartments.

However, relations quickly soured between Swig and the Sheffield tenants, who filed numerous complaints with the New York City Buildings Department about hallways being stripped of fixtures, wallpaper and carpeting, asbestos contamination and frequent shutdowns of heat, hot water and elevator service. Hundreds of tenants have either been forced out or abandoned their apartments in frustration over conditions at the building, which critics charge were horrific.

“The developer thus far has not been responsive and has been completely antagonistic,” said Micah Lasher, an aide to Rep. Jerry Nadler, whose congressional district includes the Sheffield. “Whatever the motivation, the developer has shown a clear lack of concern for the quality of life.”

Swig emphatically denies that the building has any asbestos problem and says that weekend construction has only taken place on lower floors where the building has commercial office space.

Court rulings

Further compounding Swig’s problems are a couple of rulings issued last year by Housing Court Judge David Cohen. In a mid-March decision, Judge Cohen ruled that Swig could not force 23 market-rate rental tenants to vacate the Sheffield57 condo conversion.

Judge Cohen said that even though the tenants paid market-rate rents and were not covered by rent-stabilization laws, they were protected against eviction by the state’s 1982 Martin Act, a New York law that regulates the conversion of residential rental buildings into condominiums.

In his Nov. 28 ruling, the judge said that the 31 market-rate tenants at Manhattan House, the landmark 583-unit luxury tower on East 66th Street, were also protected from eviction under the Martin Act and could not be evicted unless a tenant refuses to pay rent or violates a lease agreement.

The ruling bucks a two-decade old interpretation of the state’s Martin Act, which was formerly interpreted to mean that market-rate tenants had virtually no rights to prevent evictions due to a condo conversion.

“Market-rate tenants are ordinarily protected only to the extent of their lease,” said City Councilman David Garodnick, who is sponsoring a bill that would punish landlords who harass tenants into leaving their apartments.

Since the initial March 2007 ruling in the Sheffield57 case, Swig has refused to accept rent payments from his 23 remaining market-rate tenants, and many of the building’s 90 rent-stabilized tenants have stopped paying rent due to frustration over living conditions, according to Rovelli.

Swig has sold six commercial floors to Hearst for $93 million and 53 condo apartments at prices ranging from $635,000 to $1.4 million, according to city records. However, due to the extensive complaints about the renovation, he had been unable to move many tenants into renovated units, despite gaining approval for the offering plan in March 2007.

Real estate lawyer Jamie Heiberger-Jacobsen said that she believes the rulings are erroneous and will be overturned on appeal.

“If people are in these apartments and their lease is up prior to the time that the conversion plan is accepted, they do not have any rights,” she said. She conceded that if the decision is upheld, it could force landlords to make a choice between selling an apartment on the open market and accepting market-rate rents.

Manhattan House headache

After settling a bitter legal dispute with former co-owner Richard Kalikow, developer Jerry O’Connor put together an ambitious plan to convert Manhattan House into a hotel-quality luxury residence, with spa facilities, a resident manager with 65 on-site concierge staff, valet parking, a children’s play center and a 10,000-square-foot rooftop lounge.

But that conversion isn’t moving as smoothly as the developer would like, due in part to tenant complaints. Manhattan House tenants complain that the building suffers from extensive flooding, asbestos contamination, rodents and other problems that the management is trying to cover up. In an amended filing, Manhattan House officials boosted the insider discount to tenants by 10 points to 25 percent. Only three of the first 15 sales came from insiders, according to the tenants’ group.

Prudential Douglas Elliman placed about 90 of Manhattan House’s 584 apartments, or 15 percent of its units, on the condo market with asking prices ranging from $722,000 for a studio to more than $6 million for a five-bedroom, five-bath apartment.

According to Manhattan House’s amended conversion plan, the building must sell 15 percent of its units by June 1, 2008, under the terms of a $750 million loan from HSH Nordbank AG of Germany.

Howard Margolis, executive vice president and director of sales at Prudential Douglas Elliman, said Manhattan House has 15 executed contracts and another 35 signed offers for apartments that range from about $600,000 for a studio to $7.5 million for a 3,300 square foot penthouse.

Margolis, who is directing sales for both Manhattan House and the Apthorp, said that sales are averaging about $1,600 per square foot, but he expects sales to “do much better” as the conversion moves forward.

Market watchers are skeptical, said Susan Hewitt, a principal at the Cheshire Group, a real estate investor.

“Purchasers are far less panic-stricken, from the standpoint of ‘Oh my God, I have to buy this apartment tomorrow,’” she said.

“It’s not where it was three years ago when you could build anything and it would sell,” said Elan Padeh, president and chief executive of the Developers Group, a Brooklyn-based marketing firm. “Developers have to realize that buyers are very savvy today.”

Tenants at the Apthorp fear that the same tactics allegedly used on Sheffield and Manhattan House tenants will force many of them out of their homes. Nearly 100 tenants at the Apthorp are either in rent-stabilized or rent-controlled units. However, tenant leaders claim that the developers are using a variety of tactics to harass people into giving up their apartments.

Angst at the Apthorp

Paul Nickolatos, co-chairman of the Apthorp Tenants Association, says residents have been offered hundreds of thousands of dollars to give up their units, while other tenants are being asked to pay monthly rents exceeding $50,000 or being hauled into court over eviction notices.

When Mann bought the Apthorp, he paid about $2.4 million per apartment, which means condo prices must average about $2,500 a square foot just to ensure he recoups his costs.

Mann said the Apthorp isn’t a speculative market play and insists that he considers this property a long-term asset.

“Most people felt we were very fair in terms of our initial offering price,” said Mann. “We are very long-term holders.”

Sam Merrin, who moved his family into a 3,000-square-foot apartment at the Apthorp in mid-2007 as a rental tenant, said he looks forward to the conversion and hopes to buy a new apartment.

“Mann bought this building to make a big profit, and everybody knows it,” he said. “That’s just business. It’s also a question of whether the rents will hold up.”

Landmark status

Details of the conversion are limited, but one provision allows the new owners to exercise air rights, which would allow the construction of new penthouse apartments. However, due to the Apthorp’s landmark status, such construction would require approval of the Landmarks Preservation Commission.

Apthorp officials did confirm that the building’s second entranceway on West End Avenue will be restored and that all individual apartments will be renovated, but would give no further details on the timeline, except to say they are aiming for the 100th anniversary celebration in September 2008.

Streamlining condo conversion plans

Nearly all parties in the real estate industry agree that a major problem in converting condos has been a lack of responsiveness by government regulators, whether it involves tenants complaining about the harassment and repair problems, or developers complaining about red tape from regulators.

Last month, Attorney General Andrew Cuomo announced a bill to streamline approval of condo-conversion plans and give his office more tools to respond to complaints. The bill would raise the cap on conversion plan filing fees to $30,000 from $20,000, which would cover additional staffing for the Real Estate Finance Bureau, led by Assistant AG Kenneth Demario.

Demario’s office has already begun taking steps to address the enforcement problem. At an extraordinary November meeting between Swig, local political officials and residents of the Sheffield, Demario hammered out an agreement to resolve the health and safety concerns brought on by the conversion.

The AG’s office was not available for comment; however, Nancy Rovelli, president of the tenants association, says the parties will have to agree on an arbitrator to negotiate protocols for any future construction inside the building.

“Let’s hope that Mr. Cuomo will more vigorously prosecute developers that are harming tenants,” said Kevin McConnell, lawyer for the Sheffield and Manhattan House tenants.

With foreclosures on the rise, particularly in the outer boroughs, the distressed properties market is expanding and giving investors an opportunity to buy at a discount. But while foreclosures have received the lion’s share of attention in the wake of the subprime mortgage crisis, real estate experts said that making an offer on a property in lis pendens – a stage of pre-foreclosure that a home enters after its owner has defaulted on mortgage payments – is an even better option.

In a recent webcast, The Real Deal’s Jen Benepe spoke with Bill Staniford, a partner at Property Shark, as part of a regular “Shark Report” installment on the program. Property Shark tracks homes in lis pendens, and Staniford said that despite the popular misconception that foreclosures are where all the action is, most distressed properties are being purchased in lis pendens. Staniford said not only is it possible to physically enter a property in lis pendens – which cannot be done for a property in foreclosure – but that once you make contact with the owner, you can make an offer and proceed just like any other normal sale.

And, he said it’s reasonable to expect a discount of 20 percent off market rate. Here’s more of Staniford’s tips on how to proceed when pursuing a home in lis pendens.

The Real Deal: We know it’s not nice to be a shark, but tell me how a person in today’s distressed market can take advantage of all the great deals out there.

Bill Staniford: In the distressed property industry, there are really three different ways that you can make money. The first one is the lis pendens stage; those are the pre-foreclosures. Then you have the foreclosure stage, and then the REOs, which is real estate owned by the bank.

TRD: So tell us a little about lis pendens. You said that they were your favorite. Why is that?

BS: I think that lis pendens is the most interesting for a couple of reasons. It’s certainly the most active. There are more lis pendens out there than foreclosures – probably about double. Most of the deals that are getting done today are done through lis pendens, and the real reason that’s occurring is because information is available.

TRD: Foreclosures were the great thing yesterday, and lis pendens is the great thing today. What’s the difference between them?

BS: When a property is in foreclosure, you’re not able to enter that property, and it’s very awkward. You’re never able to see what it looks like. It doesn’t look like a normal sale. In lis pendens, the real job is to contact the homeowner, and once you can contact the homeowner, then you can walk into the property, take a look at it and get an appraiser in there. It becomes much more of a normal sale.

TRD: How do you contact a homeowner to do that?

BS: Well, it can be difficult. That is a challenge. I would say that is where you need expertise when dealing with a lis pendens. But really, the way to do it is pick up the telephone, knock on the door or send a letter.

TRD: So the first thing you do is, you get a list of the lis pendens, right? You look down the list and see what looks interesting to you, and then what?

BS: Well actually, you’re really not using a list. Property Shark delivers maps where you can pinpoint different properties that are in distress by region or by area. You can also generate a list and then sort it by the building classes. So you can specifically go after three-family properties, for example, if that’s what you want.

TRD: So you contact them, you go and see the house, and then what do you do?

BS: Then you can make an offer on the property, and once an offer is accepted, it’s really just like a normal sale.

TRD: What kind of an offer would you make? What would you base your price on?

BS: Well, the real reason that we’re in this industry is to get a discount off the market rate. And we know that the homeowner is in distress. So I think that anything down to 20 percent off of market rate is reasonable. Going beyond that is a little unreasonable.

TRD: You make an offer to the owner, and then what
happens?

BS: Well, if the owner has enough equity, then he can make that transaction. If the owner does not have enough equity, then really you have to get his approval, go to the bank, and then you’ll do what’s called a short sale. Then, whether or not the bank is willing to accept your offer, that’s the question.

TRD: Tell us again what a short sale is.

BS: A short sale is simply when you have the approval of the owner, you go to the bank, and let’s say the owner owes more than the property is worth – then you can offer the bank less than what is owed, and they may be willing to accept it, depending upon a couple of different factors.

TRD: Tell us some of the factors. Why would a bank accept less than they were owed?

BS: Banks don’t like to have properties on their balance sheet. That’s something that’s going to hurt their credit rating.
Also, if the person is not paying the mortgage, then they’re not getting any cash flow from that either. So it really does behoove them to go ahead and make the transaction.

It’s been eight years since construction began on Richard Meier’s West Side residential towers, ushering in the era of the celebrity architect – or, as it is more popularly known – “starchitect.” Luxury buildings charge a premium for being associated with brand-name designers, and the buildings themselves are often known not by their address, but by their starchitects: the Annabelle Seldorf building, the Jean Nouvel building.
Flipping starchitecture” class=”read-more-link”>[more]

The five proposals on the table to remake the Hudson Yards area, the biggest remaining frontier of undeveloped Manhattan land, have been described as pie-in-the-sky by many who think there’s no chance the MTA will award the project to any one bidder.

This month, The Real Deal’s C. J. Hughes talked to urban planners, architects, developers and New York historians to get their take on the current proposals and what the bids have failed to address.

One of the experts raised concerns that the proposals “are turning Manhattan into a monoculture of office towers and residential towers.” Another praised the proposals, noting that nothing would get torn down, nobody would be displaced, and the addition of housing would help lower residential costs across the city.

While Phoenix or Dallas might shrug off a 26-acre site, in dense Manhattan, its size and empty, blank-slate status make it a developer’s dream. The possibilities of what to do with it are endless. And although these proposals blend elements from earlier large-scale New York developments like Rockefeller Center, Riverside South and Battery Park City, the final version will likely look a bit different.

Here’s what our panel of experts had to say about a project that is going to reshape the far West Side and leave this generation’s development mark on the city’s landscape.

André Balazs hotelier, the Standard New York, which straddles the High Line

Some of the proposals would scrap much of the elevated High Line. Thoughts?

To allow people to travel from the future Whitney Museum on West 11th Street up to the Hudson Yards is a wildly unique urban opportunity. It’s important to circulate people through the site to avoid ghettoizing it, so you don’t end up with something isolated and monolithic, like Trump’s development over the other West Side railyards. Also, anything that has a singular use risks turning into a ghetto.

One aspect of the plans that perhaps hasn’t gotten as much attention is how much affordable housing there should be.

I think in general, any neighborhood that gets discovered already has an organic element of affordable housing, like Soho or the Meatpacking District, [with] people who are pioneers. When they get pushed out, that’s when the neighborhood really collapses. For a socially interesting urban setting, affordable housing is very important.

Elliott Sclar head of Columbia University’s Center for Sustainable Urban Development

What are your general concerns about the five proposals?

These types of mega-developments are turning Manhattan into a monoculture of office towers and residential towers, but the strength of New York is that it was always diverse. New York needs to be a place where it can incubate ideas, where artists and writers can come and [support] small businesses.

What would you put there?

It depends on what I paid for it. [But] I would put up buildings that gradually step up from the river, unlike Riverside South, where they’ve done it the other way around. In Rockefeller Center, they added open space to make it a penetrable part of Midtown; you can walk in and out from many angles.

Will Hudson Yards come to fruition?

We are playing a game of beat the clock in terms of the economy, and it seems like all the huge projects come at the end of a cycle, like the Empire State Building. They are like a fireworks finale, and we’re probably at that finale point right now.

Jeff Katz CEO, Sherwood Equities; planning 2.3 million-square-foot commercial tower at Tenth Avenue and West 35th Street

You assembled lots in this area more than a decade ago. Why did you bet on this neighborhood?

It’s a natural continuation of the city’s central business district, which is New York’s golden goose. Times Square’s revival had to happen first, and this area required rezoning and subway extension. It’s not going to take 10 minutes to happen. When Lincoln Center was developed, they said it was going to take five years, and it took much longer. But Hudson Yards could be like London’s Canary Wharf, though even better.

Do you have any concerns how Hudson Yards will connect to the rest of the city?

The planning department has been superb in determining the density of the project and the size of the street wall. In general, there’s a terrific mix of commercial and residential here. And we’re starting from scratch. This is not a neighborhood in transition like the Upper West Side was at one time. This is a blank slate.

Kenneth Jackson history professor, Columbia University; editor, The Encyclopedia of New York City; co-editor, Robert Moses and the Modern City; author of Crabgrass Frontier: The Suburbanization of the United States

Do you believe in the gist of the five proposals?

Definitely. Nothing’s getting torn down here and no one will be displaced. And more housing units should lead to lower prices across the city; it’s a basic supply-and-demand relationship. Whatever ends up there, it’s bound to be an improvement over a railroad yard.

How would you improve the plans?

I think there needs to be an extra stop for the 7 train. [It currently stops at Times Square, and would be extended to Eleventh Avenue and West 34th Street, with no stops in between.] This is a problem in Chicago: too much space between stops. Another challenge is to create street life with delis, grocery stores and movie theaters, the kinds of things that Jane Jacobs talked about. Trump’s Riverside South project doesn’t have that. Where do I walk in and buy a Pepsi over there?

Dean Maltz partner, Shigeru Ban Architects, a firm that has vied in design competitions for the World Trade Center Memorial and the Olympic Games

What would you build over the railyards?

In the 1980s I used to work at 38th and Tenth, but never gave the area much thought until the stadium proposal. These new developments could be like Rockefeller Center, where they took 11 acres and created a fantastic civic space. That needs to be there. It’s not in Times Square, so people have to walk their dogs in Bryant Park. If the open space is more commercial in nature than residential, it will be a missed opportunity.

The Tishman/Morgan Stanley plan calls for 10 million square feet of office space, while Durst/Vornado would build 5.4 million. What’s your call?

I would say 6 to 8 million square feet of office space, plus another few million of retail. I think big-box tenants will probably come in – not Wal-Mart, but the kinds of stores you see in Herald Square, like H & M. I would also keep the High Line intact.

Mitchell Moss urban planning professor, NYU; co-chaired the Group of 35 in 2001, which recommended developing a far West Side business district

With much talk of a recession, is the time right to build here?

The mere fact that two major media companies [News Corporation and Condé Nast] are willing to relocate to the Hudson Yards is an indication of how strong New York is as a global provider of information. Even while the financial sector is going through its own mini-crisis, the information industries are thriving.

What do you think of the roughly 50-50 ratio between apartments and offices?

Midtown has residential mixed with commercial. People like to live near where they work. We don’t want spend 45 minutes each morning on the highway.

What about the project’s vertical scale?

Look, the same people who criticize the tall scale are the same people who were unhappy with a 300-foot stadium. It’s ironic. Now they will end up with taller structures. The problem with Jane Jacobs is that the model she had in mind was Greenwich Village, but most people don’t live in Greenwich Village. There are three things that make New York special: the energy on the sidewalk, the quality of the food and the height of the buildings.

Thirteen months after the Bloomberg administration announced an ambitious plan to remake 24 acres of Long Island City’s waterfront into a haven for middle-income New Yorkers, no money has changed hands – and the proposal’s initial selling point has taken on a far more modest tone.

In October 2006, the city announced plans to buy the largely vacant site from the Port Authority, and to turn the area into what would amount to an enclave on the East River for cops, firefighters, teachers, and other middle-income workers who are getting financially squeezed out of the real estate market in New York City.

The plan would have in effect reshaped the area, providing for as many as six high rises ranging from 250 to 400 feet tall and, possibly, another four to seven buildings ranging from 40 to 120 feet in height.

The sale was approved by the Port Authority at the time, but the deal is still not finalized – and the project, which is known as Hunters Point South, has many more hurdles to clear, including required land use approvals and the selection of a developer.

If the project is further delayed, it could put a wrinkle in Mayor Michael Bloomberg’s larger affordable housing plans.

“I would like to see the pace pick up,” said New York City Council member Eric Gioia, whose district includes the development. “The city has long promised this area a school and a library. There will also have to be improvements to the 7 line and the addition of water taxis. And, I’m frustrated that it isn’t moving forward.”

According to the Economic Development Corporation, the city is conducting a draft environmental impact study on the land and expects to enter into the required land use approval process in the summer of 2008. City officials say the deal with the Port Authority should be finalized soon.

REBNY involvement

In May, The New York Times reported that the Real Estate Board of New York wanted to convene some of the biggest city developers to form a non-profit entity to build the development. But the idea sparked opposition from community advocates and elected officials who said the city should not be turning over the land to the group and that it needed to be more open with the process.

Opposition has centered on fears of overcrowding and a lack of commercial amenities, transportation infrastructure, and plans for dealing with the pollution residue from Newtown Creek. All parking for the new project must be above ground, since the site lies below the water table.

Stephen Ross, REBNY’s chairman and head of the Related Companies, spearheaded the idea of a public-private partnership. And, REBNY officials say their only intention is to help build more affordable housing. They also note that no deals have been made.

“There are community suspicions, but our members are putting forth a pro bono effort to employ experts who can follow the city’s lead and help define the scope of the project and keep construction keep costs down,” said Steven Spinola, president of the trade group. “We have gone over initial site plans and construction layouts and we continue to talk on a regular basis. It’s something we don’t normally do, but our members believe they ought to contribute to easing the housing shortage.”

Meanwhile, the tentative blueprint for the project – which is part of the mayor’s larger $7.5 billion plan to build and preserve 165,000 units of affordable housing by 2013 – has changed significantly since it was announced in 2006.

While the mayor never officially committed to earmarking a certain number of units to affordable housing, he initially suggested that middle income renters could qualify for all 5,000 units. Bloomberg called it a “landmark moment in affordable housing,” and said it would provide housing for the middle-income earners who are the “real backbone of our city.”

But, the proposal now calls for 40 percent of the apartments to rent at market rate and the remaining 60 percent to be reserved for families of four making between $50,000 to $145,000 a year, with rent set at 25 percent of pre-tax income. In addition to housing, it will also include commercial space, a new school, and up to 10 acres of parkland.

Brad Lander, director of the Pratt Center for Community Development, criticized the city for suggesting it would reserve the entire development for middle-income housing and then backpedaling.

He and others have also publicly blasted the city’s proposal to finance the project with federal tax-exempt bonds. They say the city should not be able to access that perk if it is not providing low-income housing. City officials note that the financing mechanism may offer a creative way to tap into scarce resources and that they are still looking at other financing options.

Meanwhile, a spokeswoman for the EDC, Janel Patterson, denied the city ever made a commitment to devote the entire project to middle-income housing.

But, the city’s news release dated October 19, 2006, notes that “up to 5,000 units” of housing primarily designed for that purpose is “expected to be developed.”

“The mayor said he would make as much of the project affordable as possible,” Patterson said.

While many affordable housing advocates praised the city for seizing the chance to turn a long-fallow site into a dedicated middle-income community, there have been protesters on both sides. Some questioned whether the Port Authority could get more money for the site by putting it out to bid, while others said the income standards were too high for average Queens families.

A complicated history

The site’s history is long and controversial. Hunters Point South, targeted for revitalization since Governor Mario Cuomo was in office decades ago, is part of the Queens West development, stretching from Newtown Creek to the canal north of 46th Avenue.

A.J. Carter, a spokesman at the New York State Empire State Development Corporation, said the state’s portion, which lies north of 50th Avenue, is about halfway complete and will cost between $1.5 and $1.8 billion.

The city, which controls the rest, never put forth a plan until the Bloomberg administration, as part of its bid to host the 2012 Olympics, proposed turning it into an Olympic village. When those plans were dashed, officials went back to the drawing board.

The 30-acre Hunters Point South project, also known as Queens West South at one point, includes the 24-acre parcel to be used for middle-income housing. It sits along the East River with spectacular views of Manhattan. To the east the parcel is bounded by 2nd Street, which city planners envision becoming a bustling shopping strip.

Since development began in the late 1990s in the northern portion of Queens West, five luxury skyscrapers have been built along the East River’s edge. Another is under construction. The finished buildings, which have been derided by some community activists for their tombstone-like appearance, include the Rockrose Development Corporation’s East Coast project, two complexes by the AvalonBay real estate group, and the Citylights cond-op building, which opened in 1997. Another five high-rises, along with a school and a library, are scheduled for completion by 2014, Carter said.

All told, those buildings will add 4,850 apartments to the area – and that is not the only construction in the vicinity. Across the street from the Hunters Point South site, the Powerhouse condo project is underway, as is work on a venting station for the Amtrak tunnel into Penn Station. A privately-owned 7.5 acre parcel nearby, which is now occupied by several businesses, including a beer distributor, may also become home to 1,500 market-rate apartments. Many other smaller-scale projects are under way in the area, said Carter.

Some predict that the affordable housing component will shrink again before the shovels are in the ground because waterfront land has become so valuable citywide.

“If done correctly, waterfront property like this could be worth a fortune,” said Paul Graziano, an independent planning consultant who has advised several council members. “What will probably happen is that during the next administration, there will be an upturn in real estate, they’ll sell it to the highest bidder and the percentage of affordable housing will shrink.”

He pointed out that other major projects have gone through severe changes before being built. “Battery Park City was supposed to be one-third low income, one-third middle class and one-third luxury and when it all got thrown out the window, no one made a peep,” he said. “The same thing happened in Williamsburg, where they offered incentives to build affordable housing and there’s not a lick being built.”

Go to site plan for Hunter’s Point

As the New York City condo boom matures, no one wants to be left holding the bag. In a departure from practice in recent years, according to one New York City real estate attorney, the major brokerages are unwilling to function as listing brokers on new projects, a change in the way some commission agreements are handled that may have repercussions throughout the New York City new development community.

The change has to do with co-brokerage and may in part stem from a 2005 lawsuit, Fischer v. RWSP Realty, which basically indemnified property sellers.

According to Douglas P. Heller, a partner at Herrick, Feinstein LLP, in accepted practice prior to the lawsuit, when a firm, often the marketing firm, also functioned as the building’s listing broker, that firm was responsible when the time came to hand out commissions or police disputes between brokers.

Now, however, new development buildings are finding that the major brokerages are all unwilling to function as listing brokers.

The alternative arrangement can be complicated. The developer or sponsor hires a marketing firm that registers co-brokers as they bring their clients to their building. The process of registration generally involves signing a form and attaching a business card, but the form that co-brokers fill out is an agreement between the co-broker and the developer.

That agreement puts the developer on the hook to pay the commissions of any co-brokers who close sales, and puts the developer in the line of fire if a commission war breaks out.

It also means that if there is a problem with the deal and the developer decides not to pay the co-broker’s commission, only the developer can be sued by the co-broker.

The marketing firm and the co-broker never actually sign a contract with each other.

Limiting exposure

As a result, Heller, a former deputy attorney general with the New York State attorney general’s office, is asking the developers he represents to sign a specific commission agreement with each co-broker for each unit in a new development project before it is sold. In other words, “developer X agrees that co-broker A has brought in John Doe to buy penthouse B, and agrees to be responsible for the brokerage commission on unit penthouse B.”

Such an agreement would protect the sponsor, but would also create extra paperwork for the selling agents on the projects, who are being asked to facilitate the signing of each of the commission agreements. If a building has 500 units, that’s 500 commission agreements to be signed.

“The sales brokers hate this, not because of the liability, but because there’s so much extra work,” Heller said. “They’re saying, ‘I already registered this [co-broker], and now I have to have something else signed by him?’

“By now, am I making it so difficult on the outside brokers that they’re not going to bother with this project?’ ”

Heller said that he has used the commission agreements on three projects in recent months.

He said the co-brokers, who don’t get paid until they sign the commission agreements, appear to have no problem with the process, but the selling agents are not happy due to the extra work involved.

“But I haven’t really found a smooth, easy way to solve the problem,” Heller continued.

The problem, he said, is that the current brokerage agreements signed by the selling agents and the developer typically make the latter responsible for paying the commissions of any co-brokers who close sales.

While development marketers argue that the co-brokerage agreement protects the developer, Heller said he doesn’t agree.

“What’s scary to me, and I don’t know if this has happened or not, is that the developer is relying on the sales agent to monitor these [co-brokers], but the sales agent has no liability for doing it, so he could screw up,” he said.

“It seems to me likely that a couple of things may happen,” Heller said. “No. 1, the same buyer is going to be brought in by two different agents. No. 2, somebody’s going to walk in the door who says, ‘I work with such-and-such registered broker,’ and he’s lying … but he’s going to be entitled to a commission.”

If the developer refuses to pay, he or she could be sued. Heller said that his recommendation for developer clients to sign commission agreements is a labor-intensive way of avoiding a lawsuit.

“People have said, ‘You’re just imagining things – nothing could go wrong,’” he said. “But the way it’s done currently, I say that something has to go wrong. The developer is signing an agreement with a [co-broker] who he’s never even met.”

The response

Most development marketers interviewed for this article said they hadn’t been asked to sign commission agreements between the co-brokers and the developer for each unit sold.

“It doesn’t sound very practical from a business standpoint,” said Shaun Osher, the founder and chief executive officer of Core Group Marketing. “I haven’t consulted my attorney on this, but I don’t think my company would do it. As far as I’m concerned, the documents we have protect developers. I represent developers, and I don’t see a situation where the developer is at risk.”

Andrew Gerringer, an executive vice president and head of the development marketing group at Prudential Douglas Elliman, said he had never encountered the individual commission agreements.

“Usually, I would hear of something like this, unless it’s something new, and this lawyer’s one of the guys on the forefront, and it hasn’t reached critical mass yet,” he said. “And that’s entirely possible.”

Angela Ferrara, a director and vice president of sales at the Marketing Directors, said the group was asked by the developer to sign the individual commission agreements on one development.

“We had this happen on one project, and it’s because the attorney – I wanted to kill him – convinced his client that he should do it that way,” she said.

Ferrara said that she believed the current brokerage agreements used by the Marketing Directors protect the developer, even from cases where the purchaser brings another co-broker into the picture.

“In those cases where we think there’s something funny going on, we actually have the purchaser sign an outside, separate indemnification should anybody come forward,” Ferrara said. “That’s to protect us and to protect the developer.”

Part of the problem may be that all the companies that do new development marketing use different brokerage agreements, said Karen Duncan, director of sales for Brown Harris Stevens at the Apple Bank Building Condominium.

“There are so many new developments coming on line, and there is so much confusion, because every single outside brokerage agreement is different,” she said.

Duncan said she is the co-chairwoman of the new development committee formed in November by the Real Estate Board of New York to launch an initiative to come up with a generic outside brokerage agreement for new development projects.

“We’re working on a universal outside brokerage agreement that sponsors would agree to sign with the selling agency that would protect the sponsor, the selling agent and the outside brokerage company bringing a buyer to a new development,” Duncan said.

Duncan said that she and others on the committee feel it may be appropriate to have a lawyer involved in the process.

“I understand what this lawyer is saying in terms of protecting his clients,” she said. “This is the perfect reason why it would be a good idea to have an attorney involved.”

A proposal by St. Vincent’s Catholic Medical Centers to demolish a landmark building in the heart of Greenwich Village has set the stage for a showdown among some of the most powerful players in New York’s real estate community.

The hospital has already publicly unveiled plans that would make way for the demolition of eight buildings between 11th and 13th streets, including the O’Toole Building, a landmark contemporary white building that occupies more than half the block on Seventh Avenue South between 12th and 13th streets. The institution and its development partner, Rudin Management, planned to file a formal request to move forward with the demolition late last month – a move that will undoubtedly intensify the debate.

The initial proposal, which has been the subject of several daily newspaper stories, could trigger the biggest landmark battle of the year. The debate centers largely on the proposed replacement buildings, which include a new 321-foot-high hospital building that would be the tallest tower in the Greenwich Village Historic District, and a 21-story luxury condo tower.

The luxury condominium units, especially, are being planned for an area that has not had a blank spot for this type of development in a long while.

Rob Gross, a broker with Douglas Elliman, said he expects any replacement condos to compare with nearby One Jackson Square and Superior Ink, luxury buildings that command an average of $2,000 a square foot.

“By virtue of its location, it might be a little less chic,” Gross said, noting One Jackson Square’s position at the “gateway” to the West Village and Superior Ink’s river views.

But the area’s low density still makes it highly desirable, he said. “Who doesn’t want to live in the West Village?”

Making the showdown even more compelling is that it brings together St. Vincent’s, one of the largest hospital networks in the city; Rudin Management, which is run by one of the most prominent real estate families in the city; the Greenwich Village Society for Historic Preservation; and the Bloomberg administration.

It also centers on what has become a love-it-or-hate-it building, a low-slung scalloped box designed by famed architect Albert Ledner, who also designed the Maritime Hotel. And it involves a hospital that only recently emerged from Chapter 11 bankruptcy and is banking on the facility it hopes to erect in place of the O’Toole Building for its survival.

Hospital officials said the dated O’Toole Building is largely unusable and that a new, more modern building will enhance services for the very community that is resisting its construction.

The plan hinges on a partnership with Rudin, which is to buy the seven buildings that make up the hospital’s campus just to the south, on Seventh Avenue between 11th and 12th streets. In their place, Rudin plans to construct 450 units of luxury housing along with 15,000 square feet of ground-floor retail space and an underground parking garage.

According to John Gilbert, Rudin’s chief operating officer, the company would buy the site for about $325 million and build a 21-story, 265-foot luxury condo tower fronting Seventh Avenue, as well as 19 mid-block townhouses split between 11th and 12th streets.

Gilbert acknowledged that this would be a rare opportunity to build residential units in a historic landmark district. He also noted the challenge of ensuring that whatever is built fits into the context of the surrounding area.

“Really, the philosophy of the design was to focus in on, ‘What would this block have looked like if St. Vincent’s wasn’t there?’ ” he said.

Local preservationists agree that St. Vincent’s needs more modern facilities, but are upset about the luxury residential tower and the lack of affordable housing being earmarked.

As the New York Times recently pointed out, however, cash-poor hospitals in New York are increasingly turning to the land they sit on as a primary asset to help bail them out of financial troubles.

Bernadette Kingham-Bez, the hospital’s senior vice president for strategic planning and communications, said St. Vincent’s considered a series of bridges across Seventh Avenue to connect existing facilities, but dismissed the idea as impractical and aesthetically displeasing.

Ultimately, Kingham-Bez said, renovating isn’t feasible because the hospital needs the revenue from its sale to Rudin. Without that revenue, she said, “it doesn’t end up where we need to be.”

Meanwhile, the St. Vincent’s proposal will put the city’s Landmarks Preservation Commission in a sticky situation. The body will have to balance St. Vincent’s argument, which is likely to center on its ability to thrive as the largest hospital in Lower Manhattan, with the LPC’s primary mission of preserving historically significant structures.

While rare, demolition requests in historic districts are not unheard of. In fact, St. Vincent’s has turned over these stones before. In 1979, the LPC approved the demolition of the hospital’s Lowenstein and Seton buildings at West 11th Street and Seventh Avenue, as well as the design of the new, 16-story Coleman building at the site, said Lisi de Bourbon, a spokeswoman for the commission.

A New York Times headline at the time read, “St. Vincent’s Hospital Plan Stirs Anger.” Now, less than 30 years later, the hospital is asking for permission to knock down the Coleman building.

De Bourbon said she could not comment on the proposal because St. Vincent’s had not yet filed an application.

Ian Bader, the chief architect with the firm Pei Cobb Freed and Partners, which has been hired by St. Vincent’s to design the new hospital, called the hospital’s location a “fairly idiosyncratic site” because of its position right at an intersection of the city’s numbered street grid and the diagonal streets of Lower Manhattan. The challenge, he said, was to design a building in tune with both streetscapes.

The prospect of the new buildings vexes preservationists. Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation, said his organization’s recommendations about the hospital’s plan have not asked for any reduction to the hospital space. “In fact,” he said, “we would gladly have more hospital.”

But Berman said the wholesale demolition of eight buildings in a historic district, followed by the construction of the tallest building in the same district, would amount to a galling disregard for precedent.

“We’d like them to hold onto maybe one more property, so instead of having one huge building, they could have two reasonably sized buildings that would fit in with the neighborhood a little better,” he said.

At press time, a community task force unveiled an alternative plan that proposes significantly reducing the height of the new hospital and eliminating Rudin’s new residential tower. And, rather than demolish the hospital’s current buildings, the group wants the hospital to adapt four of its buildings for residential use. It’s still unclear what impact that plan will have on St. Vincent’s actual proposals.

Most of the largest-scale developments in New York City, the kind that
will change the face of their neighborhoods when they get built, have
been hopelessly bogged down by warring interests — from the Hudson
Yards in Manhattan to the Atlantic Yards in Brooklyn to that massive
hole in the ground in the Financial District too painfully embarrassing
for its monumental delays to mention by name. [more]

Given the credit crunch and the rash of new units coming online in
Manhattan, the coming year may cause a shakeout among condo developers. [more]

The biggest obstacle to building schools in New York City now is not money or political will – it’s simply finding the real estate.

Of the 63,000 desks proposed in Mayor Michael Bloomberg’s plan to construct new schools, the city has yet to find sites for about a fifth – nearly 13,000 – of them. The School Construction Authority has four real estate firms – Cornerstone, Newmark, Colliers and Cushman & Wakefield – under contract to scout potential school sites.

While in most cases the city develops schools on land it purchases or already owns, school construction officials are returning to an older strategy of joining with private developers to build schools as part of new residential projects. The model, pioneered during the fiscal crisis of the 1970s as a way to build schools at a lower cost to the city, has rarely been used since. But the Bloomberg administration revived the process, run through a public benefit corporation known as the Educational Construction Fund.

The World-Wide Group, for example, was tapped by the ECF in a 2006 deal to build new space for the High School of Art and Design and P.S. 59 in return for rights to build a 59-story residential tower at 57th Street and Second Avenue. Now with available space tighter than ever, some see the idea gaining more currency with developers and school construction officials alike.

“I thought way back in the late ’70s and early ’80s that this was the way to go for the future,” says John Caiazzo, former head of the Educational Construction Fund and now the director of real estate development for the DeMatteis Organizations, one of the city’s largest school builders. “The city would probably want to develop as many sites as possible where they can develop a combined occupancy facility.”

That’s the framework that DeMatteis, in partnership with the Mattone Group, is using to build a new 32-story tower on First Avenue at 91st Street. The developers won a 75-year ground lease from the city to build on the site of an old, vacant school. Under the deal, they will build a new five-story, 72,000-square-foot middle school adjacent to their residential development, dubbed Azure.

The developers will pay the cost of both the $45.5 million school and the $103.5 million tower, which is set to be complete in 2009.

The tower will include 205,000 residential square feet and 4,000 square feet of commercial space. The deal will allow the developers to sell 127 co-op units starting around $1,100 per square foot. Leasing the property rather than buying it outright reduced their costs, Caiazzo says, giving the project a competitive price for the Upper East Side. They also benefited from buying the air rights over the school, adding about 23,000 square feet to the residential project.

“All the unused floor area above the school is transferred to the tower,” he says. “A lot of schools sit on valuable property, and they do not take advantage of all the floor area you can build on the site.”

The school plot is an L-shaped strip of land between 91st and 92nd streets in the middle of the block, next to the planned residential tower, which will front on First Avenue. While the desirable location may be a boon to developers, it also demonstrates the difficulty school builders are having in finding adequate space for their budgets. “It’s on an extremely constrained site,” says Paul Broches, a partner at Mitchell/Giurgola Architects, which designed the school. “We were able to slide the school next to the apartment building.”

He adds, “what makes it complicated is the kinds of sites [we have] to work with.” He cited the small or oddly shaped lots, brownfields and other tough spaces that school builders consider. “They weren’t built on for a reason,” he says.

The space crunch is also evident at Millennium High School, which has occupied the 11th, 12th and 13th floors of 75 Broad Street in the Financial District since the city leased the space from JEMB Realty in 2003.

Reading, writing, renderings

Despite the scarcity of land, building schools is a booming business in New York City. The city’s current building plan calls for 110 new schools to start construction between 2005 and 2009. The capital plan, budgeted at $13.1 billion over the five years, is by far the city’s largest.

A large chunk of the spending, $4.7 billion, is slated for new school buildings. The rest goes to renovations, expanding existing schools and leasing space. The expansion outpaces what previous administrations had committed. The prior five-year capital plan, which covered 2000 to 2004, only spent $2 billion on building capacity, according to an assessment by the Independent Budget Office, the city’s fiscal watchdog. (Of that, $1.4 billion went to new school buildings.)

Bloomberg, who won direct control of the city’s schools from the Board of Education in 2002, proposed his ambitious construction plan the next year. The current plan has been expanded dramatically even since the first draft was released in 2003. Although the number of proposed seats remains at 63,000, the number of proposed new school buildings had ballooned from 76 to 110. That’s because many of the sites were too small to accommodate larger buildings. “We are committed to creating 63,305 seats,” says SCA spokesperson Margie Feinberg. “As locations are sited and the optimal number of seats is defined for each location, the number of buildings will fluctuate.”

The building plans come despite enrollment declines that school officials predict will continue into the next decade. New York’s public schools shed 49,000 students between 2000 and 2005, dropping from over 1.1 million to about 1.05 million, according to the SCA’s latest demographic data. In an annual document known as the Grier Report, demographers estimated that the public school population will drop below 900,000 by 2015.

The city is also in the process of closing schools that it says are failing; at least a dozen closures have been announced this year. Some of the schools will be phased out slowly. Others will be closed immediately and reconfigured in the same building – sometimes several smaller schools will share a building that once housed one large school.

Even with dropping enrollments, though, Feinberg says the current expansion is intended to relieve overcrowding that has persisted in many neighborhood schools for years. “While we project overall decline in enrollment, there are and will continue to be pockets of overcrowding and areas of enrollment growth,” she says.

Public/private partnerships may be the key to building schools in the future. Officials are already eyeing a 630-seat school near 37th Street and 10th Avenue in anticipation of the Hudson Yards redevelopment. The city is also reviewing the potential needs around developments on East 25th Street, Queens West and the Atlantic Yards, according to a memo in the latest version of the capital plan.

The school building boom isn’t exclusive to New York City. Nationwide spending on school construction projects completed in 2007 was expected to reach $21.8 billion, with $13.9 billion going to new schools, according to the annual School Construction Report by School Planning & Management, an industry trade magazine. The figure, up from $20.1 billion in 2006, eclipses school construction spending in any previous year.

“Educational facilities generally in a city are expanding due to the increased growth of a city. The city’s getting larger, [with] more people, more children, and it’s a number of seats the Board of Education has to provide,” says Robert Purcell, partner at Bostwick Purcell Architects in Port Chester, N.Y. His firm currently has four school designs under construction in New York City, including Gregorio Luperon High School at 165th Street and Amsterdam Avenue and three elementary schools.

The demographic pressures are evident in New York, but other factors have driven the school building boom as well. For Bloomberg to make his building plan a reality, the city needed an infusion of money from the state. That came in 2006, when the state agreed to pay for half the $13.1 billion plan as part of the settlement to a 13-year lawsuit that charged the state with shortchanging city schools for decades.

Another factor behind the flurry of school building is a reform that greatly cut the per-square-foot cost of new schools: In 2002, the city consolidated responsibility for such projects under the School Construction Authority. Before then, the SCA had shared its duties with the city’s Division of School Facilities. Work was plagued with cost overruns and delays, with no single agency held responsible for getting shovels in the ground, according to reports at the time. The merger, combined with more competitive bidding practices, cut the cost of building new schools (in 2007 dollars) from $590 per square foot in fiscal 2002 to $440 per square foot in fiscal 2007, according to the SCA’s Feinberg.

With available space as tight as ever, some expect the SCA to increasingly join with developers to incorporate schools into their projects. “The city is so in need of seats that they’re really open to any kind of collaboration where they can get land to put seats,” says Mark Lippi, a principal architect at RMJM Hillier, which currently has two city school projects underway. “They’re willing to sit down and work out the contracts and make these things happen.”

North Stamford, CT

Windermere on the Lake

NRDC Residential is developing a 24-home, LEED-certified planned community in Connecticut. The four- to six-bedroom homes sit on 75 acres and include porches, stone walls, cedar roofs and three-car garages. The gated community includes a swimming pool, tennis court, fishing dock and clubhouse with a fitness room. Contact: www.windermereonthelake.com.

Weehawken, NJ

Henley on the Hudson

The waterfront community includes 78 duplex condos, 16 penthouses and 64 four-level townhouses. The residences are priced from the upper $700,000s to just over $3 million. Contact: www.henleyonhudson.com.

New Rochelle, NY

Trump Plaza, New Rochelle

The 40-story, 194-unit luxury condominium tower, being developed by Louis Cappelli and Donald Trump, is offering the option to rent an apartment and buy it at the end of the lease for its current price. The one-, two- and three-bedroom homes range in price from the mid-$500,000s to $1.7 million, and were 70 percent sold as of November. The average rent for a two-bedroom is $3,600 per month. Residences are available for immediate occupancy.

Port Chester, NY

Brookchester Court

342 Westchester Avenue

The offering plan has been declared effective at R.A.L. Companies & Affiliates’ luxury condominium development; residences are available for immediate occupancy. Prices for the one-, two- and three-bedroom homes start at $276,200. Units include washer/dryer and individual climate control. Residents receive an indoor parking space and access to a landscaped garden courtyard. Houlihan Lawrence Project Marketing is the project’s exclusive sales and marketing agency. Contact: www.brookchestercourt.com.

Yonkers, NY

1171 and 1189 Warburton Avenue

Jose Espinal purchased the development site from GDC Properties for $6 million, with plans to build luxury condominiums and rental units.

Sales update

Stamford, CT

Trump Parc Stamford

7 Broad Street

The 37-story, 171-unit luxury condominium was more than 30 percent sold as of the end of November. Donald Trump, Thomas Rich and Louis Cappelli are developing the tower, which will be the tallest building in Stamford. Prices at the development range from $670,000 for a one-bedroom to more than $3 million for a three-bedroom duplex. Amenities will include an indoor swimming pool, health club, wireless lounge, billiards, screening room and roof deck. Occupancy is slated for early 2009. Cappelli Enterprises is handling sales and marketing for the project. Contact: www.trumpparcstamford.com.

Montclair, NJ

The Siena at Montclair

Church and South Park streets

The 101-unit luxury condominium community, developed by the Pinnacle Companies, was over 70 percent sold as of mid-December. The development’s one-, two- and three-bedroom homes range from 770 to 2,800 square feet in size, and are priced from the low $400,000s to $1.3 million. The project will have 40,000 square feet of street-level retail space, including a Starbucks and New York Sports Club. The homes are available for immediate occupancy. Contact: www.sienaatmontclair.com.

Carroll Gardens

Court Street Lofts

505 Court Street

Developer Urban Residential has launched sales for the project’s top-floor homes. The building’s three-bedroom, single-floor homes are 1,400 square feet and priced at $885,000. Four duplexes, ranging from 1,100 to 1,350 square feet in size, are priced from $715,000. Amenities include an outdoor landscaped park and a full-time lobby attendant. Corcoran Group Marketing is the exclusive sales and marketing agent for the project. Contact: www.courtstreetlofts.com.

Chelsea

Metal Shutter Houses

524 West 19th Street

The 11-story, nine-unit development is starchitect Shigeru Ban’s first condominium project in the U.S. The building, developed by HEEA Development LLC, consists of three- and four-bedroom duplexes ranging in size from 1,950 to 3,200 square feet. Three units, priced from $3.85 million to $5.2 million, were remaining as of mid-December. Completion is expected by fall 2008. Corcoran Sunshine Marketing Group is the exclusive sales and marketing agent. Contact: www.metalshutterhouses.com.

Chelsea

Yves

Corner of 18th Street and Seventh Avenue

Sales are underway at the 14-story, 41-unit luxury condominium. Magnum Real Estate Group is developing the building, which was designed by Ismael Leyva Architects. The one- to four-bedroom apartments range in size from 701 to 3,500 square feet, and prices start at $950,000. Amenities include a fitness center, spa, indoor pool and landscaped roof deck. Occupancy is slated for spring 2008. Cantor Pecorella is the exclusive sales and marketing firm. Contact: www.yveschelsea.com.

Ditmas Park

Alvora

34 Crooke Avenue

Ore International is developing the six-story, 22-unit luxury condominium. Prices for the one- and two-bedroom homes begin under $500,000. Amenities include a lounge, roof deck, fitness center and parking. The Corcoran Group is the exclusive sales agent for the project. Contact:www.alvoracondos.com.

East Williamsburg

4M

4 Monitor Street

Developers David Bander and Cheskie Weisz have hired architect Peter Gee to design an eight-unit condominium. Four apartments sold in the first six weeks for over $615 per square foot. The building’s remaining homes are one-bedrooms ranging in size from 680 to 970 square feet, and priced from $455,000 to $589,000. Ground-floor apartments have private patios, and fourth-floor apartments have private rooftop terraces. The project’s interiors were designed by Funda Duruk. Aptsandlofts.com is handling sales. Contact: www.4monitorcondos.com.

Fort Greene

29 Flatbush Avenue

The Dermot Company and Grosvenor Investment Management U.S. have teamed up to purchase a 16,575-square-foot parking lot, with plans for construction of a high-rise rental tower to begin in 2009, the Post reported. Dermot is developing the conversion of the nearby Williamsburg Savings Bank into luxury condominiums.

Greenpoint

Northpoint Towers

76 and 84 Engert Avenue

The sales office has opened for Tahoe Development’s 32-unit condominium at 76 and 84 Engert Avenue. The project contains one- and two-bedroom homes ranging in size from 770 to 1,248 square feet. Apartments are priced from $529,000 to $1.15 million. On-site parking spaces are available for purchase. Amenities include storage, central heat and cooling and a key-operated private elevator entrance to each unit. Occupancy is expected to begin in early 2008. The Developers Group is the exclusive sales and marketing agent. Contact:www.thedevelopersgroup.com.

Harlem

The Bridges NYC

2279 and 2283 Third Avenue

Developer North Manhattan Construction Corporation is building two seven-story buildings with a total of 31 units. The sales office is open for the mixed-use project, which will include one-, two- and three-bedroom homes, selling for $495,000, $695,000 and $895,000 respectively. Each building will have basement storage, a common terrace and private terraces and roof deck areas. Halstead Property Development Marketing is the exclusive sales brokerage for the project. Contact: www.thebridgesnyc.com.

Murray Hill

Jasper

114 East 32nd Street

Sales have begun at PHH Realty’s 18-story, 80-unit condominium conversion of a 1927 office building. The 120,850-square-foot building will contain studio, one, two- and three-bedroom units ranging in size from 591 to 2,079 square feet. The apartments are priced from $795,000 to $3.9 million. The building will contain a swimming pool with fireside lounge, fitness center and playroom. Ismael Leyva Architects designed the conversion, which is expected to be ready for occupancy in fall 2008. Core Group Marketing is the exclusive sales and marketing brokerage. Contact:www.jaspernewyork.com.

Upper West Side

Corner of West 72nd Street and Broadway

The 19-story mixed-use tower will contain rental apartments owned by Philips International, Gotham International and Rhodes NY. The first five floors will contain 48,000 square feet of retail. Handel Architects designed the $200 million tower. Completion is scheduled for 2009.

Williamsburg

471 Keap Street

TreeTop Development is converting the four-story warehouse into condominiums. The project’s one- and two-bedroom homes will range from 650 to 950 square feet in size; three duplex units will have private roof decks and views of Manhattan. Prices start in the mid $400,000s. Sales are expected to begin in January 2008. Contact:www.treetopdev.com.

Construction update

Long Island City

Queens West Site 5

Rockrose Development Corporation’s 18-story, 184-unit condominium tower topped out in November. The project will include ground-floor retail, a fitness club and 24,000 square feet of private outdoor space. Handel Architects designed the building.

Soho

Trump Soho Hotel Condominium

Developers Bayrock Group LLC and The Sapir Organization announced the building’s topping out at 46 floors in December. The 400-unit hotel condominium, designed by Handel Architects, will have suites ranging in size from 422 to 905 square feet. The glass tower will have a restaurant, 24-hour room service, library, wine cellar, business center, rooftop bar, fitness center, spa and garden. The building offers views of the Hudson River and the Statue of Liberty. Prodigy International Development Sales and Core Group Marketing are the co-exclusive sales and marketing agents for the project. Contact: www.trumpsoho.com.

Tribeca

Sky Lofts

145 Hudson Street

Construction of the penthouse unit at the converted loft condominium project has been completed, in place of two penthouse units the Landmarks Preservation Commission forced developer Stanley Scott to tear down. The 7,493-square-foot penthouse, designed by Rogers Marvel Architects, will go on the market in February, the Sun reported. Sales will begin for an additional 12 apartments in spring 2008. Stribling is the exclusive sales and marketing agent. Contact: www.145hudson.com.

Williamsburg

144 North 8th Street

The Board of Standards and Appeals has issued a final determination that construction on the project will continue to 10 stories, Curbed reported. The original 16-story plans, developed by Mendel Brach and designed by Robert Scarano, were in violation of local zoning regulations.

Financing

Upper West Side

164-168 West 75th Street

Cushman & Wakefield Sonnenblick Goldman has arranged $44.4 million in financing for the acquisition and redevelopment of the residential building, which originally housed the Parc Lincoln Hotel. Merrill Lynch provided $35.9 million of the financing. The new owner of the 214-unit building plans to convert it into 175 studio and one-bedroom rental homes.

Sales update

Chelsea

Indigo Condominium

125 West 21st Street

Alchemy Properties’ 13-story, 52-unit luxury condominium was 65 percent sold as of early November. FXFowle Architects designed the project, which features a zinc façade with an indigo-colored strip. The building contains studio, one, two- and three-bedroom homes ranging in size from 605 to 1,758 square feet. It will have common terraces on the second floor and roof. Completion is slated for January 2008. Contact: www.indigo-21.com.

Lower Manhattan

45 John Street

The conversion of a 12-story, 1907 office building was around 50 percent sold as of early December, according to the Sun. Manhattan Capital LLC and RREEF Opportunities Funds Group are developing the 84-unit, loft condominium project. Daniel Goldner Architects designed the building, which will have one- and two-bedroom lofts ranging from 590 to 1,360 square feet in size. The homes are priced between $600,000 and $1.5 million. Amenities include a fitness center, roof deck and concierge. Corcoran Group Marketing is handling sales. Contact: www.45john.com.

Lower Manhattan

W New York-Downtown Hotel & Residences

123 Washington Street

The Moinian Group sold 72 units in the 58-story, 159-unit building on its opening day of sales. Prices began at $2,000 per square foot. Resident-only amenities include a digital lounge, screening room, café, gym, spa and rooftop terrace. Gwathmey Siegel Architects designed the glass curtain-walled building, and GRAFT is the interior designer. Completion is slated for 2009. Shvo is the exclusive sales and marketing agent for the project. Contact: www.wnyresidences.com.

Development in brief

Manhattan

415 Eighth Avenue

Savanna Real Estate Fund purchased the development site with plans for a 100,000-square-foot residential and retail project.

99 John Street

Rockrose is converting the 442 rental units into condominiums, the Sun reported. The building’s amenities include a concierge, fitness center, roof deck and garage with valet.

Brooklyn

150 Fourth Avenue

Architect Ismael Leyva is designing the 11-story, 94-unit building, according to Brownstoner.

New Developments from Previous Month

When Marc Shaw was at City Hall he was a veteran advisor who Mayor
Michael Bloomberg relied on to solve complex financial puzzles and pull
off bold deals. Marc Shaw: Extell’s in with City Hall
” class=”read-more-link”>[more]

Atlanta

Downtown Atlanta could be poised for resurgence as the number of residences and the average annual household income continue their upward trend. There were 9,101 households downtown in 2000, the year in which residential development began to surge; by 2007, that number ballooned to 15,790. People relocating downtown are more affluent than the area’s longtime dwellers, the Atlanta Journal-Constitution reported. The average annual household income climbed from $25,364 in 2000 to $43,944 in 2007.

Like in other slower markets throughout the U.S., residential property owners in the Atlanta metro area are advertising unique amenities to attract buyers. At Oakland Park in Atlanta, one- to two-bedrooms cost between $190,000 and $450,000; on-site recycling and other green touches are offered to residents. At Blue Valley in Alpharetta, five-bedrooms start at $1.64 million; a three-mile horse-riding trail is available. At Silver Oak in Acworth, four-bedrooms start at $670,000; residents can fish at the 3.8-acre lake.

Boston

The Boston office market was on pace for another record year, with $7.3 billion in sales by the middle of the summer of 2007, until the credit crisis in August brought transaction activity to a standstill. Some properties have sold since for below asking price and others fell through, while many buildings continue to sit on the market or have been withdrawn, the Boston Globe reported. Third-quarter commercial property sales plunged from $2.5 billion in 2006 to under $1 billion in 2007.

A report issued by Boston real estate and publishing firm Warren Group said single-family home sales dropped 15.4 percent statewide in November from the year-ago period. The 3,538 single-family home sales recorded were the lowest for November since the recession of 1991, the Boston Globe reported. Sales had fallen 17.1 percent in October and 18.7 percent in the previous month. The median price for a single-family home in November fell 5.8 percent for the month, to $295,000. Condo sales declined 23.2 percent for the month.

Chicago

A record 8.4 million square feet of new retail space was developed in the Chicago metro area in 2007, according to a Mid-America Real Estate Corp survey. The pace of new construction, however, fell short of the 11.7 million square feet expected when 2007 began, the Chicago Tribune reported. Major projects completed in 2007 include the 350,000-square-foot Southgate Market in the South Loop and the 650,000-square-foot Bolingbrook Promenade. The previous record of 6.8 million square feet was set in 1994.

Foreclosures in the Chicago metro area dropped nearly 22 percent in November from the previous month, the Chicago Tribune reported. The Windy City ranked 59th among the country’s 229 metro areas for foreclosure filings in November, with one filing for every 488 households. Meanwhile, Illinois posted 8,238 foreclosure filings for the month, a 36 percent increase from last November, but a 15 percent decrease from October 2007. The state ranked 10th in the nation, with a foreclosure rate of one for every 624 households.

Las Vegas

The $17.1 billion deal to take American gaming giant Harrah’s Entertainment private went before the Gaming Control Board last month. The $90 per share buyout by a joint venture between Texas Pacific Group and Apollo Management would make it the largest casino buyout in history. Renovation problems forced Harrah’s to close down hundreds of rooms at the Rio and Harrah’s hotel-casinos, but Board members said this should not have any bearing on the deal’s suitability, the Las Vegas Review-Journal reported.

Las Vegas’ foreclosure auctions business is thriving as Nevada leads the nation with a pre-foreclosure rate of 40.5 filings per 1,000 households through October, the Las Vegas Review-Journal reported. Hudson & Marshall real estate auction house recently put 200 foreclosed homes on the auction block, and Real Estate Disposition Corp. advertised over 300 foreclosed homes for auction last month. Nevada is one of four states that together hold more than one-third of the country’s subprime adjustable-rate mortgages.

Los Angeles

The largest office landlord in downtown Los Angeles could soon be on the market for sale, with a corporate battle for control picking up steam and the company’s shares having fallen substantially in 2007. New York-based Brookfield Properties is believed to be the likely frontrunner to buy the firm, the Los Angeles Times reported. Maguire Properties Inc., owner of the US Bank Tower, the tallest building in the West, went public as a real estate investment trust in 2003; its stock has languished ever since.

Los Angeles office properties are being sold less frequently, and prices are declining, but the local commercial real estate market is fairing better than the housing market, the Los Angeles Times reported. Office vacancy rates are low, and rents are reportedly hitting record levels on the west side of Los Angeles County. Average sales prices for office buildings are back to last January’s levels; an additional drop-off of 5 percent will return prices to levels from the third quarter of 2006, according to CBRE Torto Wheaton Research.

Philadelphia

Asking rents for Class A office space in Philadelphia have increased at roughly the rate of inflation in 2007 and are lower than rents for comparable space in other major cities on the east coast. The city’s marquee office properties are asking $32 per square foot, compared to $50 in Washington, $60 in Boston and $90 in New York, according to Grubb & Ellis. Office space in Philadelphia’s suburbs has expanded from 60 million square feet in 2001 to nearly 90 million today, the Philadelphia Inquirer reported.

Phoenix

The fall Phoenix Commercial Real Estate Trends newsletter said investors paid more for area office properties in 2007 than they had in recent years. The quarterly report, issued by real estate analyst Bob Kammrath, said the average sales price for office buildings through the first three quarters of 2007 was $201 per square foot, up from $174 per square foot in 2006. The average sales price in 2005 was $157 per square foot. The report said rent growth may slow in 2008, the Arizona Republic reported.

San Francisco

A sizeable portion of the Bay Area’s foreclosed homes through the first three quarters of 2007 were owned by real estate investors, the San Francisco Chronicle reported. Public records compiled by DataQuick Information Systems show that among the 6,557 homes that went into foreclosure from January through September, one-fifth belonged to local investors. One out of six properties repossessed by lenders were reportedly owned by investors who had at least two foreclosures in their names.

San Francisco’s newest luxury residential developments are bringing in renowned chefs to open in-house restaurants – and their cachet is attracting buyers, the San Francisco Chronicle reported. At the 419-unit Millennium Tower, restaurateur Michael Mina is opening RN74, a restaurant and wine bar; $100 million worth of condos have reportedly sold there already. The Fairmont Heritage in Ghirardelli Square boasts the famed Danko, while the 246-unit Soma Grand could soon be home to the Slanted Door’s Charles Phan.

Seattle

A joint venture between two West Coast developers announced plans for a $1.5 billion mixed-use development in Bellevue’s Bel-Red Corridor. The 36-acre Spring District would bring 800 apartments, more than 3 million square feet of office space and 16 acres of open space. Seattle developer Wright Runstad and San Francisco’s Shorenstein Properties hope to convert the 900-acre aging warehouse center into a dense urban center, the Seattle Times reported. The developers paid $68 million for the land in early 2007.

Rents for Class A office space in downtown Seattle are expected to continue climbing in 2008, while low apartment vacancy rates could also lead to rent hikes, the Seattle Times reported. Seattle developer Martin Selig predicted that top-end office properties could ask $65 per square foot by late 2008, nearly double the rates from previous years. In the local housing market, the number of apartments available for rent is expected to fall this year, since new construction is reportedly falling behind the rate of condominium conversions.

Washington, D.C.

A study by the National Center for Smart Growth Research and Education and the University of Maryland found that the federal government allocates only 4 percent of its office leasing dollars for Prince George’s County, even though it holds 33 percent of the Washington area’s land mass and 23 percent of its population. Arlington County, by comparison, has 5 percent of the area’s population and 2 percent of its land mass but gets 19 percent of the government’s leasing money, the Washington Post reported.

Mayor Adrian Fenty announced an $850 million mixed-use project, to be spearheaded by Archstone-Smith and Hines Interests, that could become the District’s big new retail center. The complex would be built on two-thirds of a 10-acre parcel where the city’s former convention center stood, one of the District’s largest undeveloped properties, the Washington Post reported. The development would include two office buildings, four residential buildings and 250,000 square feet of retail space.

The Fried Frank holiday party is a lot like attending the after-party of a year-long awards show, where the best players in the game congratulate one another for brokering the year’s biggest real estate deals.

In 2007, which started off with a blockbuster first half and then tamped down after the credit crunch, the drinks flowed because everybody needed one. The hugs were a little tighter because the guests there realized how grateful they were to be in New York, which has become something of an automated teller machine for the international investment crowd.

The big names were there in force, from Paul Ingrassia, managing director at Citigroup Global Markets, to Kent Swig, the owner of Terra Holdings and president of Swig Equities.

The event has been such a gathering place for New York’s real estate establishment that some developers flew in for the party. Vince Graham, founder of the I’On Group in Mount Pleasant, S.C., attended as part of an overnight business trip to New York.

Official estimates had the crowd at just under 1,000, and Fried Frank seemed to have spared little expense. The buffet table included enough tuna tartar, veal ravioli, sushi and seafood to feed an arena, and two full bars flowed with an assortment of fine wine, beer and cocktails.

And while the commercial market has significantly slowed and brokers are feeling a tightening in certain parts of the market, the crowd at the Fried Frank party remained upbeat about 2008, with most of the guests predicting that the city will withstand whatever comes its way in the next few months.

Louis Somoza, senior vice president of Rudin Management, caught up with a bunch of friends from the real estate scene, including John Maher, executive managing director at CB Richard Ellis.

The two men share several decades of experience on the local real estate scene.

“Most people are pretty optimistic,” said Somoza.

“For the most part, we stayed on the sidelines in 2007,” said Jonathan Lemle, an associate at Scott-Lawrence, a Manhattan-based real estate development firm that is
raising funds for the new year. “We’re going to want to do enough due diligence to make sure each deal is the right thing to do.”

In a room full of industry heavyweights, the vibe felt a little bit like the release party for “Glengarry Glen Ross,” though there was diversity in gender, age and race. And the new generation of lawyers, brokers and developers added a bit of flair.

Yerelyn Cortez of Pace Advertising brought a sense of style to the festivities, in a Calvin Klein navy blue satin jacket over a white Tadashi top, accented with a David Yurman bracelet and blue Swarovski crystal ring.

Cortez spent much of the evening huddled with Corcoran associate broker Mary Venezia and Iris Rossano, director at Eastern Consolidated.

Local executives said the Fried Frank party was the best place for them to make up for lost time.

“It was good to see a lot of the people we’ve been working with over the years,” said Scott Ellard, a principal at Eastern Consolidated. “You obviously see a lot of people that you know. Sometimes, you actually worked on a couple of deals while you were there.”

“The only mistake I made was I got there late and missed a few hundred people that got there earlier,” said James Orphanides, chairman at First American Title Insurance. “The Fried Frank real estate holiday party is a real estate event. It should be treated as one.”

Spare the forecasts of gloom and doom in 2008. At Prudential Douglas Elliman’s holiday fête, held in the Upper East Side’s Pierre Hotel on Dec. 19, it was time to celebrate the year past, which in Manhattan, by many measures, produced record-setting prices.

And rejoice the partygoers did. Under a pair of status-affirming chandeliers in the Cotillion Room, women in pearls and men with pocket squares — some of the hundreds of invited brokers, bankers, developers, appraisers and attorneys — beamed and dined on lobster tails and cuts of prime rib.

Wearing a dark suit and power-red tie, the firm’s chairman, Howard Lorber, descended a pair of marble steps while a pianist vamped on “Winter Wonderland.” He greeted Donald Trump Jr., whose print tie and checked shirt, with charcoal suit, was a brash counterpoint to the more staid apparel around him.

Under the din of music and the hum of conversation, not to mention the chorus of well-wishers congratulating Lorber on a commission-generous 12 months, their 15-minute talk was all but inaudible. Holiday greetings, though, radiated toward president and CEO Dottie Herman when she swooped into the room in an understated black dress, high heels and gold bracelet. Afterward, poses were struck, pictures were taken and the piano slid into “Luck Be a Lady Tonight.”

Later, by a table heaped with lilies and strawberries, Faith Hope Consolo, known for matching trendy shops and hip neighborhoods, and sporting a diamond-studded gold choker, was overheard saying that Prudential would hand out double bonuses for employees this year. (And her team, she hoped, would be at the top of the nice, not naughty, list.)

Can a company party’s size determine a business’s health? If so, Prudential has enjoyed a 25 percent boost; last year’s party, at Cipirani 42nd Street, saw 1,200 invitees, but there were 1,500 revelers this go-around. And unlike the year-ago venue, the Pierre’s multi-chambered layout — with blue-sky trompe l’oeil ceilings recalling a Gilded Age spin on the Petit Trianon — offered plenty of private space for one-on-one chats.

Over spool-size hamburgers in the rotunda, which showcased a 25-foot gold-lit Christmas tree, for example, two brokers tried to come up with the word to describe a stingy third colleague, who “wasn’t pulling his weight,” before settling on “curmudgeon.”

But the new year was also a decorative theme. In the ballroom, next to risers set off by thick balusters and under eight winking disco balls, revelers boogied to a band thumping through a Barry White song.

“Welcome to Our Rockin’ New Year’s Eve,” read a black-scripted placard by the door, in an ode to Dick Clark,
although the feathered tiaras sported by some spaghetti-strapped women seemed distinctly Jazz Age.

At the end, by the coat check, one last treat awaited: a table of bins (grab a scoop! fill a bag!) teemed with chocolate-covered pretzels and marshmallow snowmen. “I feel like we’re like kids in a candy store,” one guest gushed while shoveling Hershey’s Kisses. Indeed.

Neighborhood on the rim of Park Slope sees prices slip Windsor Terrace on edge” class=”read-more-link”>[more]

Like other outer-borough neighborhoods on the cusp of becoming hot
spots, brokers are concerned the real estate slowdown is causing
Windsor Terrace to wobble. But unlike some other up-and-coming
neighborhoods, Windsor Terrace has the distinction of being on the
border of upscale Park Slope, and the proximity that helped in the past
may hurt now. [more]

Maybe Sunset Park is aptly named. The real estate market in the Brooklyn neighborhood is softening and prices are on the decline, making it one of the first neighborhoods in the city to be registering the lingering effects of the credit crunch.

“What I’m seeing in the third and fourth quarters so far is that the Sunset Park market is good for buyers,” said Sam Heskel, executive vice president at HMS Associates, an appraisal firm that measures prices and transaction volumes.

HMS found that more homes sold between October 1 and the middle of December than in the period right before that, but it also found that prices were down.

The neighborhood is located in south Brooklyn and named for the small park between 41st and 44th streets and Fifth and Seventh avenues. It is home to a bustling mix of Asian and Latino immigrants, and is one of the dozens of formerly fringe neighborhoods that have been on the upswing for some time. Young professionals who have gotten priced out of other areas have turned to it as an alternative – and developers have been feverishly building high-end condos there.

But one broker said he wouldn’t invest in the neighborhood now, while others said they expected much of the development activity to be put on hold until market forces become clearer.

The HMS appraisal data is supported by information collected through StreetEasy.com, which captures and analyzes large brokerage-firm listings in New York City. For Sunset Park, StreetEasy.com data found that prices continued to drop for newly constructed condos, albeit at a slower pace than they had been a few months ago.

“Prices are still coming down, but not as fast as they were in the 60 days to October,” said Derrick Gross, business analyst at StreetEasy.com. He compared the two-month period from mid-October to mid-December with the stretch from August 1 to September 30.

He added: “There’s definitely a condo glut in Sunset Park. It’s definitely a soft market.” He said he expected prices to drop even further this year, but said that would end up making the area even more attractive to buyers.

In November, Gross told The Real Deal that Sunset Park/Greenwood was the only area in Brooklyn where prices had dropped across the board on new developments. At the time, 14 percent of the listings dropped their prices 5 percent, while 5.5 percent of the listings dropped their prices 10 percent.

Last month, Gross said that between mid-October and mid-December, prices on 6.7 percent of the listings in Sunset Park saw a 5 percent drop, while 4.4 percent of the listings saw a drop of 10 percent.

About 90 percent of the listings in the StreetEasy database for Sunset Park are new condo developments; the company does not include many re-sales in the neighborhood.

Gross pointed out that other neighborhoods have seen price cuts, but that they are on a case-by-case basis.

“I believe this [price drop] is mainly because Sunset Park is not as attractive as Park Slope or other Brooklyn neighborhoods that are closer to Manhattan,” Gross said. “Also, developers’ asking prices were too high.”

According to his data, the median prices on new units have fallen 8 percent since December 2006. The median price of a condo a year ago was $598,000 for the unit and $577 per square foot. Now, the median prices are $549,000 and $530 per square foot, respectively.

Prices on the single- and multi-family homes that make up a good portion of the housing stock in the neighborhood saw the most notable declines between the most recent quarters on record. The prices of single-family homes dropped 8 percent in the fourth quarter to mid-December, compared to the prior quarter; prices, meanwhile, fell 9 percent for three-family homes.

But while prices dropped, the number of single-family homes that sold increased to six in the fourth quarter to mid-December, up from two in the previous quarter. Three-family sales volumes more than doubled, to 11 from five during the same time.

According to HMS, Sunset Park is simply adjusting to a much more reasonable pricing level.

“What I think has happened is that sellers have become more realistic and have finally lowered prices to sell properties,” Heskel said. “Sellers are beginning to capitulate, and buyers have been patient waiting for the market to come down. Now we’re seeing a healthier dynamic.”

The boon for buyers may come at the expense of more development.

“Come January, the market may be more of a fire sale situation, but it’s not yet,” Gross says, adding that if the new condos still don’t sell, developers may turn the units into rentals in order to generate income that would pay back their loans.

Sherman Mui, associate broker at Prudential Douglas Elliman, said the area is “flooded with new condos,” but that the development has been a mixed blessing for an area that was not as developed as nearby Park Slope. The new condo development in the area has been well documented. According to state Attorney General Andrew Cuomo’s office, 180 new condominium offering plans were submitted for Sunset Park in 2006, compared to just 59 in 2005. As of November 2007, there were 169 submissions.

Mui, who’s lived in Sunset Park for the last 10 years, said the neighborhood was like a best-kept secret until developers started to rename it in order to market their properties. Mui pointed out that until a few years ago when things got hot in Park Slope, Sunset Park was never marketed as a destination for young professionals. “Then, developers started to refer to Sunset Park/Greenwood as South Slope.”

He noted that later in the year, as the sales pace slowed, it was being called Sunset Park again.

Ritz Realty broker Denny Chen, a 15-year veteran, says he “wouldn’t take the chance on investing in Sunset Park, because I don’t know what the picture is over the next three or four months.” He said he expects activity for developers to be put on hold from now until July or August of 2008.

Gross agrees, saying “I can’t believe any smart developer would actually go ahead and build right now. They’re better off collecting rents, because putting up a new development in Sunset Park is not worth the risk.”

With almost every inch in Hoboken accounted for by new development, and prices rising in both Hoboken and Jersey City, developers and residents have been looking north in Hudson County for the next hot spot.

Union City, a densely populated community located on a bluff above the Lincoln Tunnel, has been attracting new development as the Hudson County boom spreads. Several hundred new units have been constructed or are planned for the community, which started seeing its first signs of new development in 2000.

The Park Hudson Group is working on a six-building complex, with 400 planned units, on the Union City-Weehawken line. The developer opened the project’s first building, the Park City, a 30-unit structure, in 2005, when it was just half-complete. The project’s Park City Grand, a 70-unit complex, opened earlier this year and is almost sold out. Hudson View, which sits next to the Park City Grand, will have 64 units and is scheduled to open in February.

Michael Cherit, marketing director for the Park Hudson Group, said the developer started looking at Union City after building four buildings in Hoboken earlier this decade. He said the developer began to look north as Hoboken prices began to rise.

Union City, which is two miles from Midtown Manhattan, offered close proximity along with cheaper prices for land, which translated into cheaper unit offerings.

“It’s like a sixth borough,” Cherit said, “You can get a real two-bedroom, two-bathroom here.”

Union City prices are currently some 35 percent to 40 percent lower than Hoboken. Hoboken prices have been running between $450 a foot to $550 a foot for a one-bedroom, while Union City prices start at $300 a foot. The prices in downtown Jersey City, which have traditionally been lower than those of Hoboken, have been jumping as more high-rises are developed along the waterfront.

Cherit said the Park Hudson projects have proven popular with buyers, who have begun to look in Union City in recent years. He noted the developer has worked to make the projects similar in style to what can be found in Hoboken and Jersey City, which has been of interest to buyers looking to cross the Hudson from Manhattan.

“It’s mainly been people who have been priced out of New York,” Cherit said of the buyers. “It’s someone who works in New York, or who lives in New Jersey and wants to be closer in.”

One of the most densely populated communities in the country, Union City has been known for over four decades as the home to the New Jersey Cuban community. (It is the hometown of U.S. Sen. Robert Menendez, [D-New Jersey], a former mayor.) Prior to this decade, Union City had only one building targeting the yuppie population, a tower sitting above the Lincoln Tunnel with panoramic Manhattan views.

According to Union City Planner Dave Spatz, the city has created several redevelopment zones in order to spur development. In addition, the extension of the Hudson-Bergen Light Rail to Union City last year helped bring more people up to the cliff town. The light rail connects Hudson County from Bayonne to North Bergen, and provides quick access to the Hoboken PATH Station. In addition, ferry service from neighboring Weehawken and a seven-minute bus trip via the Lincoln Tunnel have been used as selling points.

“As Hoboken built out, and the waterfront in West New York and Weehawken has filled up, we have become the next thing,” Spatz said.

Spatz pointed to the Swisstown redevelopment zone, which will bring a new 12-story, 151-unit building to Union City, to open next year. Unlike Jersey City, which has targeted the construction of waterfront high-rises, including buildings which will be among New Jersey’s largest, Union City development plans run more along the lines of Hoboken and the rest of northern Hudson County, with smaller-scale buildings.

Spatz said much of the development has been centered on four- and five-story buildings, along with luxury rehabs of smaller buildings containing no more than four units. Buildings taller than 10 stories are rare in Union City.

As the city has redeveloped, the downtown business strip has changed, with more upscale cafés and stores coming in to cater to the new population.

Francesco Mazzaferro, a sales agent with Coldwell Banker in Hoboken, said he has seen more clients beginning to look at Union City because of the views and lower prices. “It’s the same buyer as Hoboken,” Mazzaferro said. “They feel they will get more value there. At the end of the day, in Hoboken prices are higher. By traveling five minutes, then you can buy a much bigger place.”

Mazzaferro pointed to several smaller projects as catching on with the buyers he is working with. He noted that the Park West, being developed by Raffi Arfanian, is a 14-unit building that is almost sold out, and Central Plaza, a 12-unit building developed by Nelson Lopez, has sold all but one unit since opening earlier this year. This year, Arfanian will start sales on the Ardan House, another 12-unit condo building in Union City.

With the expansion of Union City continuing as vacant lots remain, along with former industrial sites the city government has targeted for redevelopment, experts remain excited about the potential scope of the boom. In addition, they note that Union City is beginning to take on more similarities to its more expensive neighbor.

“It looks a lot like Hoboken,” Cherit said.

Land use Council chair Melinda Katz gears up for comptroller’s race Katz gets help from industry heavy hitters
” class=”read-more-link”>[more]

City Council approves Columbia rezoning

The City Council last month voted 35 to 5 to rezone a 35-acre section of Harlem, clearing the way for Columbia University’s $7 billion expansion. The vote to rezone the area from light industrial to mixed-use came a month earlier than expected. Columbia plans to expand onto 17 of the rezoned acres, bounded by Broadway, Riverside Drive, West 129th Street and West 133rd Street.

Dumbo gets landmark designation

The Landmarks Preservation Commission unanimously voted last month to designate Dumbo as a historic district. The Brooklyn waterfront district includes 91 buildings and is bounded by John Street, York Street, Main Street and Bridge Street. Most of the buildings were constructed between 1880 and 1920.

City Council kills landlord rights bill

The City Council last month killed a bill that would have empowered landlords to sue tenants for harassment. Bronx Council Member Maria Baez withdrew the bill after tenants’ rights activists protested, the Daily News reported. Baez now supports a bill introduced by Council Speaker Christine Quinn that only allows tenants to sue landlords.

Washington Square Park redesign approved

Manhattan Supreme Court Judge Joan Madden ruled last month that the Bloomberg administration can proceed with the long-delayed redesign of Washington Square Park. Two lawsuits against the city were dropped on the grounds that the Parks Department had taken a “hard look” at the renovation’s environmental impact. A construction date and a full plan have not been disclosed, but Parks spokesperson Jama Adams said the city has a $11.2 million contract for the first of the project’s three phases. The first phase of the project calls for moving the park’s fountain 23 feet and shrinking the central plaza, Metro newspaper reported.

Governors Island design team announced

Governor Eliot Spitzer and Mayor Michael Bloomberg last month announced the winning design team at Governors Island. Officials talked up the “whimsical” plan, which proposes tearing down the island’s barracks and converting them to hills. West 8, a Rotterdam firm, will lead the design team for the island’s western-facing half with a grand 2.2-mile promenade and three public spaces.

Work on Finger Building resumes

The Board of Standards and Appeals has allowed construction on the Williamsburg condominium known as the Finger Building to continue. A judge had ruled back in February that the Robert Scarano-designed building, between North 7th and North 8th streets, could not rise to 16 stories because the developers weren’t allowed to use adjacent buildings’ rooftop space. While the developers await a final decision on that case, they may resume work on the building, which was stopped at 10 stories.

If you’re about to become a mortgage loan originator for residential real estate in New York State – whether you work for a company as a loan officer, or match customers to loans as a mortgage broker – there are some new rules to follow. Starting Jan. 1, 2008, new mortgage loan officers must now apply to be authorized by the New York State Banking Department. If you’re already a practicing mortgage loan officer, you must file for authorization by July 1, 2008.

The new regulations seek to weed out brokers who overindulged in subprime lending, which resulted in soaring foreclosure rates and had a worldwide ripple effect. In a Dec. 20th announcement, the superintendent of the New York State Banking Department, Richard H. Neiman, said the new rules were about reducing mortgage fraud and finding brokers who were evading enforcement. “We are creating a heightened level of protection for consumers and generating a greater sense of stability in an industry that has been significantly impacted by the recent subprime crisis,” Neiman said.

The application will ask for a full description of educational and professional experience, credit history, fingerprints and financial and criminal disclosures.

“On our end, we will be going through the actual application and doing a background check,” explained Jackie McCormack, director of communications for the banking department.

Brokers can still work while their application is being processed, McCormack said. “For beginning MLOs [mortgage loan originators], the sponsoring entity must receive notification from the banking department that a complete application has been received. [But] we don’t want to hold people up getting their approval.”

Still, some feel the new system puts an unwarranted cloud over mortgage brokers. “Mortgage brokers, even the best of the bunch, are getting a bad rep,” said Cynthia Saxman, a senior loan officer at Preferred Empire Mortgage Company in Manhattan.

Saxman, who has been in the business for 17 years and owned her own company for 13, ultimately blames the banks and investors for the brokers’ new plight. “The banks and investors created the vehicles – and mortgage brokers took the deals, and the banks were rewarded,” she said.

Saxman is hoping the new regulations can find the few “bad apples” – brokers who became too lax with lending standards and made subprime loans to homebuyers who were unable to pay them back.

The state banking department estimated about 40,000 applications will be received through its new online system in the next two years.

“By Jan. 2, 2008, there will be an online system for MLOs to submit their applications and get a confirmation number,” said McCormack. “Until April 1, we are accepting applications from new entities. They cannot begin to originate loans until we receive their application.”

McCormack said new mortgage loan officers will be processed first. All brokers must be authorized by January 2010; they can continue to work up until that date unless their application has been denied.

An application can be denied if a
loan originator has a prior conviction for a felony connected to loan originating, or if their license has been revoked in another state that regulates mortgage loan originators.

A new national fraud registry called the NMLS will be launched this month. The registry will cover licensing and enforcement actions in the mortgage brokerage business and is designed to catch brokers working over state lines. Forty-two state agencies from across the country will funnel mortgage loan officer applications to this system, said Bill Matthews, president of the State Regulatory Registry LLC, a non-profit organization that will operate the database.

“The database will house all of the licensee’s information from the states and will reveal any publicly adjudicated enforcement actions,” said Matthews. “This system will have a profound impact on the way the industry is regulated.”

Matthews said by 2009 the public will be able to look up a broker or lender on the online database.

Most states will take the applications; the ones that have not are California, Maine, Minnesota, Missouri, Nevada, Ohio, South Carolina, Texas, Virginia and Wisconsin.

“These other states haven’t said no; it’s just a state-by-state decision. We anticipate all 50 will be on there,” he said.

Oversight for the lending community is creating many new levels of bureaucracy; the state banking department has already added staff to process the applications.
Investors are hoping that the result will be a more assured lending community.

“You can’t just give people money without knowing if they have the ability to pay you back,” said Todd E. Soloway, the chair of Pryor Cashman’s Real Estate Litigation Group. “The new regulations will ultimately restore confidence in the investment communities who are buying the mortgages. They’ll know lenders are being responsible by underwriting loans, and lenders are better served because they are more likely to get repaid.”

In late December, the Federal Reserve also proposed new rules affecting the entire mortgage market, including banks and non-bank lenders, mortgage brokers and mortgage-servicing companies.

The proposed rules, now going through a 90-day public comment period, would prohibit lenders from making high-cost loans to people without verifying their income or assets. Also, lenders would be required to set up escrow accounts ensuring subprime borrowers’ property taxes and home insurance were paid, a safety measure many subprime lenders avoided.

Back on the state level, to keep their licenses, brokers will be required to take 18 hours of education courses every two years, including classes in ethics.

“The courses have to be approved by the banking department,” said McCormack. “Teachers will be from different local colleges and industry organizations.”

Many brokers say the rules shouldn’t apply to everyone. “There are many more good brokers out there than there are bad,” Saxman said. “The New York City foreclosure market is not like it is in Middle America or other parts of New York State. But the rules should weed out all the good from the bad, and if you have nothing to hide, it shouldn’t be a big deal.”

When Mayor Michael Bloomberg unveils his preliminary budget in the next few weeks, property owners and brokers will no doubt be flipping past the allocations for snow removal and pothole repairs to see whether the bound document includes an extension of the past year’s property tax relief.

The 7 percent cut was passed as a one-shot reprieve, at a time when the city had amassed an estimated $4 billion surplus, fueled by record profits on Wall Street and a real estate market that refused to cool off.

Now, many brokers and property owners are holding their breath and waiting to see whether Bloomberg is going to extend the relief for another year, despite the current economic uncertainty, or if he is going to make what would surely be a politically unpopular move – and let it sunset.

Brokers said any increase in real estate taxes could dissuade buyers at a time when the market is at a crossroads.

“The tax benefits keep people in the city, and may also encourage renters to be first-time homebuyers,” said Iris Shorin, a broker at DJK Residential in Manhattan. “It’s an enormous boost to the city for people who come here and would otherwise not think about buying.”

Michael Goldenberg, executive director of sales for Halstead Property’s West Side office, agreed. He indicated that buyers consider “two things” when they buy real estate: “How much cash they put down and what their monthly nut is going to be.

“Anything that goes into that equation,” Goldenberg continued, “has to be looked at as an increase in costs.”

Doug Turetsky, the chief of staff at the Independent Budget Office, said given the fact that Bloomberg has been talking about the downturn in the economy, “it will be interesting to see if he proposes continuing the rate cut.”

Turetsky also pointed out that while Bloomberg billed the 7 percent property tax cut as a one-year reduction that would only continue if the city could afford it, he also built the reduction into every year of the city’s four-year financial plan.

“It doesn’t mean it can’t be reversed,” Turetsky said. “But one would think you’ve created an expectation.”

Complicating matters is that most property owners did not see the 7 percent cut in their bills because the tax formula is tied to assessments. When assessments go up, there is more money to levy taxes on.

According to the Department of Finance, the city’s total real estate value jumped 19 percent to $802.4 billion in fiscal 2008 from $674.1 billion in fiscal 2007. The assessment for fiscal 2009 is set to come out
Jan. 5.

Bloomberg’s budget officials recently revised the city’s revenue projections for real-estate related taxes, another factor that could go into the mayor’s decision.

The city is now predicting that it will take in an average of $242 million less per year in real estate taxes through fiscal 2011 because of factors including a slowdown in real estate transactions, a dip in sales prices, the tighter credit market and higher lending standards on large commercial deals. For fiscal 2008 specifically, the city cut its revenue estimates from the mortgage recording tax by $174 million and the real property transfer tax by $82 million.

The revised figures could bolster Bloomberg’s case for rolling back the cut if he chooses to do so. He has not shied away from tax increases in the past.

In 2002, he pushed through an 18.5 percent property tax hike as the city was recovering from the World Trade Center attacks. While that did not win him brownie points with property owners, it did generate record revenues for the city.

“One of the reasons we had a $4 billion surplus was the fact that we had an escalation in [revenues generated from] property taxes and real estate transfer taxes,” said Steven Spinola, president of the Real Estate Board of New York.

Budget experts are now warning of more fiscal clouds. State Comptroller Thomas DiNapoli stated in a report last month that the subprime crisis and the fallout on Wall Street will create a $2.7 billion budget gap for the city in fiscal 2009.

If the New York real estate market and the national economy slow down, as expected, the gap for fiscal 2011 will grow from $2.1 billion to about $6.5 billion, he predicted.

City Comptroller William Thompson Jr. said last month that the real estate market continued to show strength through the first nine months of the year, but that the outer boroughs showed signs of slippage.

Commercial real estate vacancies tightened to 5.5 percent during the first nine months of 2007, compared with 7.7 percent in 2006, the report noted, citing Cushman & Wakefield data.

It also said the number of real estate sales in Manhattan rose by two-thirds in the third quarter compared with a year ago, but that residential sales in Queens fell 20 percent in between the second and third quarters.

The latest property tax cut came on top of the annual $400 property tax rebate. City Council Member David Weprin, the chairman of the finance committee, said, “It was wise to [cut taxes] because we had a huge budget surplus. Obviously, [this] year may not be the same case.”

Still, Weprin said he would like to see an extension of the property tax cut because the city cannot afford to lose middle-class taxpayers to the suburbs. “In general, I don’t want to see property taxes rising,” he said. “That’s something that keeps middle-class residents in the city.”

A Bloomberg spokesperson said he could not comment on the property tax until the mayor announces his budget plans. However, real estate and elected officials said they are hoping the mayor can find a way to balance the budget with the cut still in place.

“There are times when I’m glad that I’m not the mayor,” said Adrian Zuckerman, a real estate attorney at Epstein Becker & Green in Manhattan. “To the extent there is somebody who is able to truly create a solution as good as possible, Bloomberg is the guy.”

Reversing months of inaction in a single day, the Senate passed two major bills last month that could help thousands of homeowners now struggling with unaffordable mortgages or heading for foreclosure.

The long-stalled FHA Modernization Act – which would reduce down payments and raise maximum mortgage amounts for Federal Housing Administration-insured loans – passed the Senate by an overwhelming 93-1 vote. Senators also approved the Mortgage Forgiveness Debt Relief Act, which would remove the controversial tax on “phantom income” when lenders forgive portions of the balances on mortgages of financially stressed homeowners.

Versions of both measures had already passed the House. On Dec. 19, the House adopted the Senate version of the mortgage debt relief bill and sent it to the president, who signed it Dec. 20. The differences between House and Senate versions of the FHA Modernization Act will need to be resolved by a conference committee in the new year.

Besides eliminating the phantom income tax for three years, the Senate’s debt relief bill also extends the tax deductibility of private and FHA mortgage insurance premiums through 2010. That benefit had been scheduled to expire at the end of this month.

The bill also provides capital gains tax relief to surviving spouses who sell houses at substantial profits. Under current law, surviving spouses who have not wed again can only qualify for the full $500,000 tax-free capital gains exclusion if they sell during the tax year in which their husband or wife died. Otherwise, they qualify only for the $250,000 exclusion.

Under the Senate’s bill, however, if a sale occurs no later than two years after the death of the spouse, and the residence met the eligibility tests for the full $500,000 “immediately before” the spouse’s date of death, the survivor would still be eligible for the full $500,000 exclusion. Since surviving spouses typically receive the deceased spouse’s stepped-up tax “basis” in the property, it was not immediately clear why the Senate bill’s change to the tax code is needed.

The FHA modernization bill – once Congress agrees on a final version – should provide critical help to large numbers of homeowners stuck with subprime mortgages heading for payment jumps. Most important, the range of consumers assisted will extend to higher-cost areas of the country like California and the Northeast.

The Senate bill raises the FHA’s statutory loan amount limits to $417,000 – the same ceiling as Fannie Mae and Freddie Mac. But the House version would tie the limits to median home prices and could authorize FHA-insured loans in excess of $700,000 in expensive markets such as San Francisco.

The House bill also would allow FHA applicants to obtain loans with zero down payments; currently the minimum is 3 percent down. The Senate’s version would require down payments of at least 1.5 percent. The House bill authorizes the FHA to vary insurance premium levels by applicant risk categories; borrowers who make minimal or no down payments could be charged higher premiums. The Senate bill would impose a one-year moratorium on a risk-based pricing system developed by FHA and currently scheduled to take effect Jan. 1.

FHA loans, which faded in popularity during the subprime boom years, are now regaining their market share. Not only do FHA’s fixed-rate loans cost much less than subprime alternatives – often by 3 to 4 percentage points or more – but they also come without prepayment penalties and have relatively flexible and generous underwriting terms.

Paul E. Skeens, head broker at Carteret Mortgage Corp. in Waldorf, Md., says FHA is far more lenient on credit history than any of its competitors, and routinely funds applicants who have prior bankruptcies and foreclosures in their files. With a zero down payment option as in the House-passed bill, “FHA will be the best solution anywhere in the market” for people with moderate incomes, first-time purchasers and those with less-than-perfect credit, Skeens said. He believes even buyers with prime credit will apply for fixed-rate, FHA-insured mortgages once the higher loan limits kick in.

In a head-to-head comparison of a hypothetical new $417,000 mortgage with zero down payment and 6.25 percent fixed rate for 30 years, Skeens said an FHA-insured loan would have lower monthly payments than either Fannie Mae’s or Freddie Mac’s directly competitive nothing-down programs.

On such a loan, according to Skeens’ estimates, FHA borrowers would pay $2,779.80 a month – including insurance and fees – versus $2,877.57 a month for a Fannie Mae mortgage.

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

It may be the only test you flunk if you score too high: It’s called the “FICO Test,” and it is a key element of the sometimes arcane new guidelines governing which homeowners qualify for “fast track” interest rate freezes on their subprime mortgages, and those who don’t.

The rate freeze and loan modification program, announced Dec. 6 at the White House, is a voluntary, nongovernmental effort by major lenders, mortgage servicers and bond investors to provide alternatives to foreclosure for homeowners facing unaffordable payment resets during the coming two years.

Of the estimated 1.8 million subprime borrowers facing payment jumps, the plan is expected to help 1.2 million of them into an expedited rate freeze, a refinancing or a modification that makes their current loans more affordable. The rate freeze aspect of the program has attracted much media attention, but the precise details of how it works and who is eligible have been less widely publicized.

Here is a quick overview of the tests that subprime borrowers will need to pass to qualify for an interest rate freeze, generally for five years. Tops on the list is the FICO test. In this particular exercise, scoring high is bad. Scoring low keeps you in the game. If your FICO credit score was under 660 when you applied for your loan, and – here’s the kicker – it hasn’t improved by more than 10 percent in the meantime, you pass the test.

In other words, if you’ve got a FICO of 675, which in a traditional mortgage application context should qualify you for reasonably good terms, forget about a fast-track rate freeze. Your credit is too good, and you flunk. On the other hand, if you’ve got a FICO score of 610 or 620 – subprime credit territory by most lenders’ standards – then you pass.

The idea, according to Tom Deutsch, deputy executive director of the American Securitization Forum and one of the principal drafters of the plan, is to weed out borrowers who may be creditworthy enough to successfully pursue a refinancing, i.e., those with FICOs above 660. The fast-track rate freeze plan, Deutsch said, is aimed at pinpointing borrowers whose credit probably won’t qualify them for a refinancing, and who are also unlikely to afford future payments on their current mortgages.

Now for the second test: If you want an expedited rate freeze on your mortgage, you must be “current” on your loan payments. That sounds fairly clear, but “current” in this context does not mean you always pay on time. Rather, it means that you’re not more than 30 days behind right now, and you haven’t been more than 60 days late any time during the past 12 months.

An alternative, and more generous, standard used in the program allows homeowners to be no more than 60 days late at the moment, and no more than 90 days late during the past year. That may not be everybody’s definition of “current,” but it works for a fast-track rate freeze.

Next comes the LTV Test. LTV stands for loan-to-value ratio – essentially a measure of how much equity you’ve got or the size of the down payment you made. Here again, doing “better” gets you busted.

To succeed on the LTV test, you should have minimal equity in the house – under 3 percent. If you have more equity than that, goes the reasoning, you are less likely to default on the loan, and you’re more likely to qualify for a refinancing. So you’re out.

There are two final tests, both relatively straightforward: You have to occupy the house as your principal residence, and your monthly payment must be scheduled to increase by more than 10 percent after the scheduled reset. Assuming you pass these tests, and your mortgage servicer believes there is a “reasonably foreseeable” prospect that you would default on your loan without a rate freeze, you are in. The rate freeze you receive, by the way, won’t necessarily be limited to just five years. It all depends on your mortgage servicer’s evaluation of your financial situation.

But what if you’re part of the expected majority of subprime borrowers who flunk one or more of the tests to get a fast-track rate freeze? There’s good news: You’re still in the game. You may qualify for some other form of customized loan modification – a payment restructuring plan, a partial forgiveness of past arrears, a postponement of part of your debt or, in rare cases, even a rate reduction. For more information, contact your loan servicer or call 1-888-995-HOPE.

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

In the December issue of The Real Deal, the article “Building jails like junior colleges” incorrectly stated the cost of a juvenile facility in Linden, N.J. The correct figure is $30 million.

A chart listing leases 100,000 square feet and over in 2007 omitted Herrick, Feinstein’s 190,625- square-foot renewal and expansion at 2 Park Avenue.

An article, “Seeing foreclosures in black and white,” requires several corrections for citations from a study by NYU’s Furman Center for Real Estate and Urban Policy. The article incorrectly listed borrower demographics for two neighborhoods. Borrower demographics were not a part of the study. The figures, which described ethnic groups, are as follows: Fordham/University Heights is 57 percent Latino, 35 percent black and 3.78 percent white. The study also found that in
Jamaica, Queens, 77 percent of residents are black, and 2 percent are white. Comments by Vicki Been, director of the Furman Center, also require clarification. She said the study shows that the rate of subprime lending for white borrowers is higher in the 10 neighborhoods with the highest rates of subprime lending than the rate of subprime lending for white borrowers citywide, not “a disproportionate share,” as the article states. A second point in the article, that “blacks receive a disproportionate number of subprime loans in higher-income white neighborhoods,” was not covered directly by the report.

Listings for new developments included inaccurate information for the Foundry in Long Island City. The correct address for the building is 2-40 51st Avenue, and the correct Web site is www.thefoundrylic.com.

A photo accompanying the article “Chicago’s Cabrini-Green site gets second chance” erroneously identified housing with solar panels. The building with solar panels is located down the street from the building shown and is called Clybourn Point.

Berlin gets townhouses

Townhouses, a new architectural trend for Berlin, are spreading in the city. Five townhouse developments are either under way or recently completed, the International Herald Tribune reported. This is Berlin’s first wave of these buildings, which borrow from the style of Brooklyn brownstones and townhouses in London’s Kensington district. They are roughly 1,200 to 3,300 square feet, with frontages of around 20 feet.

These five projects are benefitting from historically cheap land in a city where families and the creative class are eager to move downtown. One developer has turned a 3.8-acre site into a neighborhood of 61 townhouse homes and 49 apartments in the hip, young district of Prenzlauer Berg. The development, called Prenzlauer Gardens, has sold all of its four-story townhouses since opening in fall 2006, at prices of around $580,000. The Gardens’ developer is planning a second, 60-townhouse project several miles away.

A similar building boom has happened in the nearby family-oriented district Mitte, where four years ago the city sold 4.2 acres to private developers in 47 parcels. The area has become a development of 54 townhouses called Berlin Townhouses, which will be completed in 2008. The houses cost $881,100 to $1.46 million. To prevent investor speculation on the properties, the government banned resale on the development’s land or buildings for 10 years from the time of initial purchase.

High-end retail boom for Moscow

A spur of retail building and refurbishment is spreading through Moscow. And while high retail rents and the strengthening ruble have raised the prices of goods, making them too expensive for many tourists, the city’s growing incomes and expanding middle class more than compensate to keep the market thriving.

Leading the continent in new shopping center space, Russia is expected to open over 1,130 acres by the end of 2008.

In Moscow’s center, new retail developments include a $120 million luxury department store and office venture by a South Korea-based developer called the Lotte Group and a 3.55 million-square-foot retail and office project, to be called Metropolis, slated to open in 2008.

Shopping destinations have popped up outside the city, too, like Barvikha Luxury Village in the suburban town of Rublyovka. Opened in 2005, the center holds Ferrari and Harley Davidson dealerships, as well as gourmet food and designer clothing.

Meanwhile, an appetite for high-end retail also prompted makeovers of Soviet-era retailers, like the department store TSUM. The store has doubled in size since 2005. TSUM’s central Moscow rival, GUM, transformed from a flea-market-like establishment in the early 1990s to a collection of tony boutique stores today.

Spain sees slow home sales, tightened credit

After skyrocketing real estate values and economic growth since 2000, Spain is seeing a slowdown in housing sales and tightened lending, viewed widely as fallout from the U.S. credit crisis. A third of the nation’s banks reduced financing in the third quarter of 2007, compared to only 4 percent in the entire euro region, although experts predict Spanish banks’ prudence will spread through the continent.

In the past seven years home values in Spain have risen by 176 percent, and construction has accounted for one in five of the country’s new jobs. But this October the International Monetary Fund cut its prediction for Spain’s 2007 growth to 2.7 percent from 3.4 percent earlier in the year.

However, many remain bullish on the country’s housing market, noting that an influx of immigration is creating new demand, and that the largest Spanish builders are insulated from a crash by recent expansions overseas.

International media reports frequently portray Beirut as a city on the verge of a breakdown. In the past two years the capital city of Lebanon has been at the center of a ruinous war with Israel and has suffered a slew of political assassinations.

Meanwhile, a year of massive protests has hobbled downtown, a former luxury retail hub and home to the country’s most valuable property. Looking around the city in the summer of 2006, one United Nations spokesman offered this grave assessment: “Fifteen years of reconstruction and rehabilitation – [gone] in a month.”

It would be logical to conclude that Beirut’s real estate market would be in the doldrums as a result of the violence. Yet that’s not exactly what’s happening.

Immediately after the war, high-end property sales did indeed shrink. Some high-profile projects, like the 29-story La Residence collaboration between Damac, a Middle-Eastern firm, and Ivana Trump, ex-wife of New York City’s flamboyant developer Donald, stalled. Since the official groundbreaking 18 months ago, when at least 30 percent of units were pre-sold, there’s been no activity at the building site. (However, the company has pledged the project is moving forward.)

Nonetheless, Beirut’s real estate market is picking up again. These days over 200 apartment complexes are in various stages of development, including luxury high-rises. Also, prices of prime residential property have risen steadily since the war in 2006.

It’s a turnaround sparked by investment from abroad, including the loyal Lebanese Diaspora population, estimated to number 3.7 million spread across the Middle East and U.S. But the story of the capital’s latest revival also reflects the struggle between the United States and Iran for Middle Eastern hearts and minds, which is playing itself out through the city’s latest round of post-war reconstruction.

The reconstruction

Outside of the luxury residential niche, entirely different, and political, dynamics are structuring Lebanon’s property markets.

To spur private development, a year ago the U.S. government pledged $230 million worth of rebuilding assistance. So far, 80 bridges and 94 roads have been repaired. The most high-profile U.S.-sponsored project has been the construction of the Mdeiraj Bridge on the road between Beirut and Damascus.

To bolster public support for Fouad Siniora, Lebanon’s prime minister, the U.S. is also financing infrastructure and technical assistance projects in Beirut’s Christian and Sunni suburbs.

Defending reconstruction projects in Beirut, a U.S. diplomat recently said, “Our involvement aims to undermine Hezbollah [the radical military-politcal group] influence; accordingly, the U.S. believes that the costs of not being involved in Lebanon outweigh the potential negative risks.”

Iran, meanwhile, has dispatched its own team of engineers to restore infrastructure in South Lebanon. Observers say the aim of these projects is to shore up control of the Shiite-Muslim neighborhood of Dahiyeh on the southern outskirts of the capital.

Immediately after the war, Hezbollah’s engineering wing, which was added to the U.S. terror watch list last fall, established a special branch to oversee the rebuilding of about 4 million square feet of damaged commercial and residential buildings in Dahiyeh.

According to Beirut real estate brokerages, prices have spiked nearly 50 percent in the last two years. The 2006 war slowed sales, but prices have risen between 15 and 20 percent in Christian and Muslim neighborhoods since then.

The number of property transactions throughout the country also increased, from about 29,200 in the third quarter of 2006 to 36,600 during the same period in 2007. Beirut accounted for 33 percent of total sales, according to figures from the Lebanese Order of Architects and Engineers, the body responsible for granting building permits across the country.

Still, luxury stores, nightclubs and five-star restaurants that were once packed with Gulf tourists stand vacant behind five-foot-tall coils of barbed wire and machine-gun-toting Army patrols.

For the past 15 months, thousands of Hezbollah demonstrators have camped out in protest of Siniora’s Western-backed administration, just a few blocks from the sites of La Residence and planned skyscrapers set to house global hotel chains like the Hilton and Four Seasons.

While the ranks of government opponents have dwindled, the so-called “tent city” has taken on the signs of permanence, with plain-clothes Hezbollah security guards manning the makeshift checkpoints surrounding the tent city, now fitted with temporary water pumps, bathrooms and street vendors to accommodate protestors.

A makeshift soccer league has even been established that plays weekly games in the empty plot that was to be the site of a $600 million mixed-use development. Yet land still runs between $8,000 to $10,000 per square meter, making it the most expensive real estate in the capital.

The average price of new 650 to 750 square foot units in prime locations of the capital is about $610 per square foot, according to estimates from Ramco, a Beirut-based real estate company. In practice, that means a Beirut pied-à-terre costs between $400,000 to $600,000, whether in the well-heeled, Sunni neighborhood of Verdun or across town in the more bohemian areas like Tabaris, a Christian neighborhood where residents primarily speak French.

Guillaume Boudisseau, a consultant for Ramco, estimates that the Lebanese Diaspora, including many Americans, initiated between 50 to 60 percent of all real estate transactions in Beirut in 2007.

“In the prime residential segment, especially the Beirut seafront, many projects have been suffering, as Arab would-be buyers and wealthy Lebanese customers have decided to postpone their previous plans to buy an apartment,” he said in a phone interview.

“But contrary to expectations, real estate prices have not been negatively affected by the political and security situation, and have actually increased by 15 percent to between $400 to up to $1,800 per square foot in new residential buildings.

“Nobody is selling land right now, [because] people know that no one is benefiting from the situation, so it cannot last like this. I’m receiving calls from investors in Lebanon, the Gulf and Middle East every week asking if I want to sell.”

Sustained demand for real estate in Lebanon also stems from the relative stability of residential prices compared to neighboring countries, said Central Bank governor Riad Salameh in October.

A steady influx of Iraqi refugees in Syria and Jordan has sent prices there skyrocketing, making real estate in Beirut, what was once one of the glitziest destinations in the Middle East, look surprisingly affordable.

In recent years, global warming, discount flights to the tropics, and competition from large resorts in Quebec have all taken their toll on business at Vermont’s ski towns. But two holiday destinations, Stowe and Smugglers’ Notch, are fighting back.

The two resorts are investing in residential developments and amenities to increase tourism and draw more vacation homebuyers.

Located in central Vermont about an hour east of Burlington, Stowe Mountain Resort and Smugglers’ Notch Resort are perched on different sides of the same mountain range. Both were created as ski resorts, and for years, new construction was focused on creating amenities like restaurants, spas and lodging with easy access to ski lifts.

In Lamoille County, where the resorts are located, the average price of vacation homes with less than six acres has dropped 12 percent to $304,830 through November 2007, compared to the year before, according to Economic and Policy Resources, a Vermont think tank that tracks real estate.

Yet both resorts have been drawing surprising numbers of visitors after the ski season ends. They are aided by the discount airline JetBlue, which operates frequent daily flights to Burlington.

To capitalize on this interest, both resorts have deployed differing strategies to keep real estate prices buoyant and tourist interest high even after the snow melts. Presently, Stowe is nearing the end of $400 million in upgrades, featuring a development called Spruce Peak at Stowe. The project features new lifts, mountain cabins, a 139-unit hotel, a lodge, a health spa, a performance center and an 18-hole golf course.

The development also includes a number of vacation homes. Stowe Mountain Lodge, a new hotel/condo hybrid expected to open in May 2008, is selling 108 units, at prices from $395,000 to $1.51 million. Fractional ownerships are available for several dozen units. The development also boasts 38 mountain cabins, selling for between $2.39 million to $3 million, and 17 home-sites, which have sold for as much as $3.95 million.

“Spruce Peak is a unique property because nothing has even been offered slope-side at the resort before,” said Stowe Mountain spokesperson Jeff Wise.

The investment by the resort has helped Stowe, a town of roughly 4,800, dodge the sluggish second-home market seen elsewhere in the state, said Jeff Carr, president of Economic and Policy Resources Inc., a Vermont think tank.

Stowe’s second-home market is mostly healthy, said Peggy Smith of Coldwell Banker Carlson Real Estate in Stowe. Only homes in the $500,000 to $1 million range have seen declines in prices, and only of about 5 percent, she said. The median price of Stowe’s second homes is $440,000, and the average price is $634,000, according to Smith. Most buyers are from Boston, Greenwich, Conn., New York City, New Jersey and Florida.

“We are very fortunate here in Stowe, because people who invested here have invested because they want to live here. They really aren’t buying for speculation,” Smith said.

The vacation home market in Smugglers’ Notch, a few miles north of Stowe, has an altogether different feel. Smugglers’ has no aspirations to challenge Stowe on luxury, said spokesperson Karen Boushie. Instead, developments in the resort have focused on bolstering its image as an inviting environment for vacation homeowners with families. For the past nine years, the 78-trail resort has been ranked “No. 1 for family programs in North America” by the SKI Magazine Reader Survey.

“We share a mountain, but there are really two separate identities,” said Boushie. “The focus on families has really stayed true throughout the history of the resort.”

Thus Smugglers’ does not have its own premiere golf course, though it does have a mini-golf course and extensive daycare facilities that give parents some time to themselves. In the summer, Smugglers’ operates day camps that are attended by about 700 children each week.

Unlike Stowe Mountain, Smugglers’ Notch does not have a quaint Vermont town to compliment its offerings. Instead, four nearby clusters of condos are within walking distance of the ski lift. In total, Smugglers’ Notch has about 650 units. Full-capacity, these facilities can accommodate about 2,800 guests.

Since the 1970s, only 12 new units have been added to the housing stock each year. By limiting growth, however, the resort has avoided the price slowdown that has hit the rest of the county. While prices for one-week timeshares, which range from $14,000 for a week in June to $58,000 for Christmas week, have only risen with inflation, the cost of one-third ownership of a unit has gone up about 30 percent since 2005, according to Bob Mulcahy, president of Smugglers’ Notch.

“Our approach towards development is, I think, unique among ski resorts,” said Mulcahy. “It’s slow and steady.”

The vacation home market in the United States appears to be divided into two areas – traditional and unstoppable.

In many traditional vacation home regions, the credit crunch and the subprime mortgage collapse that have damaged real estate values across the country are also sabotaging the second-home market. But luxury homes – which are sometimes third or fourth homes – appear to be holding up well.

“Prices are coming down even more on second homes than primary homes, unless you’re in an affluent area like the Hamptons or Nantucket,” said Alan Rosenbaum, president of New York City-based mortgage firm GuardHill Financial Corp.

Current data for second home sales are scarce because they are not separated from other housing transactions in most monthly or quarterly reports. However, weakness in most second home markets had become evident more than a year ago in a 2006 survey of buyers conducted by the National Association of Realtors (NAR).

The median price of a vacation home – one that typically is lived in by the owner – was $200,000, according to the NAR’s 2006 data, down 2 percent from 2005. The typical investment second home in 2006 cost $150,000, down 18.3 percent, according to the survey.

Sales also were off almost 29 percent for investment homes, but up just under 5 percent for vacation homes.

Professionals who deal in the second home market say that except for some enclaves that are popular with foreign buyers (see story on page 82), sales worsened in 2007.

“In some markets, like Florida, the second home market is off as much as 80 percent,” said Richard M. Gollis, president of the Concord Group, a real estate advisory firm. “It’s off about 50 percent in California.”

James Chung, president of the real estate marketing and research firm Reach Advisors, agreed that California and Florida are especially troubled, mainly because of the large proportion of speculative investments in resort areas of the two states.

“Western resorts tended to have a higher percentage of people buying second homes for investment purposes,” said Chung. “In other parts of the country, where people bought for their own usage, prices are doing better.”

NAR divides the second home market between investment properties, which are rented or purchased with the intention to re-sell, and vacation homes, which are used by owners or their family and friends.

David Lereah, the former chief economist for NAR who last year moved to Move Inc., which operates real estate Web sites, said that values of vacation homes appear to have been hurt by problems in the investment real estate market. In many regions, investors with troubled loans have dumped inventory, creating a glut that has led prices to decline.

Some resort areas of Florida that attracted speculative investors have been hard hit, according to Wayne Archer, director of the University of Florida’s Bergstrom Center for Real Estate Studies.

“They are the areas experiencing high degrees of stress,” he said. “People who bought homes for their own use are probably not as affected by all of this.”

High-end luxury homes also have been spared steep declines in prices and sales, according to industry specialists. Individuals who can afford homes that cost well over a million dollars tend not to be dependent on credit markets.

“The luxury market is discretionary and mobile,” said Gollis. “It’s not affected by mortgages. For many buyers it’s not really second homes, but third and fourth homes.”

The overall decline in home prices nationally is dragging down the market for second homes in other ways. That’s because many buyers used the equity in their primary residences to acquire second homes. Falling home values combined with rising interest payments turned many of these loans bad.

The surge in second home sales and prices that occurred earlier in this decade was fueled, in part, by a small number of professions that saw huge windfalls, according to Chung. He cited private equity fund managers who received millions of dollars in payouts.

“The private equity world descended on resort communities like locusts,” said Chung. “Those guys are gone now.”

Second homes have risen slightly as a percentage of total homes sold in the United States since the NAR began surveying buyers five years ago. In 2003, 33 percent of all homes sold were second homes, while in 2006, the share of second homes was up to 36 percent.

In 2006, approximately one-quarter of vacation homes were purchased in the Northeast, 13 percent in the Midwest, 38 percent in the South and 25 percent in the West.

The typical vacation-home buyer in 2006 was 44 years old, had a median household income of $102,200, and purchased a property that was an average of 215 miles from their primary residence.

Developers who target vacation home-buyers and other sections of the market, such as foreigners, are surviving in these difficult times, according to Chung. “There are still second home communities being built and bought and sold,” he said.

Ben Inglis said that when he was hunting for a vacation home two years ago, he wasn’t looking for just a retreat away from Boston’s rat race. The 51-year-old mutual fund executive said he wanted a home where he felt like he could unwind entirely from city life.

“My criteria were essentially: a place with no phone, no loud neighbors, no cold weather,” said Inglis.

In 2005, while on holiday in Belize, Inglis visited some properties with a broker, but their search concentrated on waterfront properties near established resorts. For several days, he considered making an offer on a 20-acre spread. He decided against it, he said, when he came upon a group of Scandinavian tourists riding horses across his would-be beach.

Then, snorkeling near a reef adjacent to a private island, Inglis spotted what he was looking for. Using a rented seaplane and a motorboat, and accompanied by a broker from Coldwell Banker, Inglis visited about a half-dozen private islands. At the end of his 10-day holiday, he’d put in an offer of around $1.5 million on a five-acre private island about 20 minutes’ flight from Belmopan, Belize’s capital. The island features a dock, a long sandy beach and a 1,400-square-foot, single-story home.

“When I’m down there, my secretary knows to only give out the number of my satellite phone in extreme emergencies,” Inglis said.

Buying vacation homes around the Caribbean and Central America is a relatively straightforward procedure and a consistently popular option for Americans. Many locales, like the Virgin Islands, Costa Rica and the Bahamas, have in the past decade added thousands of units of both condos and timeshare properties targeted explicitly at wealthy North Americans.

But for those like Inglis, for whom a traditional second home in a different hemisphere isn’t secluded enough, there exists a vibrant market in the region for private islands.

About 1,000 private islands are sold around the world each year, according to Private Islands, a Toronto-based boutique real estate firm. No figures exist on the total value of transactions; although many of the islands for sale are listed for above $1 million, brokers say that sellers seldom get their asking price. Depending on the location of the island and how long it has been on the market, owners routinely accept bids 20 to 30 percent less than the listed price, brokers said.

“Islands can take a very long time to sell, and they take a lot of work to develop,” noted Alexis Pappas, director of operations for Private Islands. “Prices sometimes are within reach of middle-class buyers, but it takes a very driven and entrepreneurial person to make an island liveable.”

The liveliest real estate market for private islands is for properties on the coasts of Australia or Canada. The lakes dotting northern Ontario, where Hollywood celebrities like Steven Spielberg have second homes, are also busy with sales.

Conversely, the Caribbean and the waters around Central America abound with islands, yet brokers say that each year, fewer than a hundred come on the market. While those all offer isolated beaches and tropical forests, they vary considerably in size, amenities and development potential.

“Ever since Pablo Escobar used a runway on his private island to smuggle drugs to Florida, ownership and development rules in the Bahamas for islands over five acres have become much stricter,” said Pappas. “In Belize and Panama, there are hardly any restrictions at all.”

In general, brokers said, Caribbean and Central American islands for sale are small, usually a reef ranging in size from 1 to 15 acres. Larger islands can be found in the Bahamas and the Virgin Islands.

The largest islands presently for sale are two undeveloped islands in the U.S. Virgin Islands: Great Hans Lollik and Little Hans Lollik, which combined measure 611 acres, or just under one square mile. The larger island, which contains 511 acres, is for sale by itself for $33.7 million. The smaller island can be purchased for about $11.2 million. Both are listed with Private Islands, and presently, neither has any residents.

Descriptions of the islands read like notes of an explorer discovering some tropical paradise. The islands contain numerous white sandy beaches, palm forests and verdant valleys and are said to be untouched. “One of the few undeveloped tropical islands left in the world,” gushes the advertising copy.

The islands are zoned for anything from a single residential compound to a resort of up to 150 residences with a heliport. A third of Great Hans Lollik is reserved as an environmentally protected area.

More popular with American buyers are small islands in the Bahamas, Belize, Costa Rica and Panama. Prices vary depending on factors like size, proximity to cities, potential exposure to hurricanes, topography and what kind of buildings are on the island, yet brokers say appraising the price of an island is tricky.

“Accessibility is a big thing, and in the Bahamas, many buyers want islands where they can put in an airstrip,” said Alex Alexiou, a broker for luxury properties with Lowes Real Estate in the Bahamas. “We get a lot of celebrities looking for total seclusion.”

Stars who are said to have recently bought private islands include Leonardo DiCaprio in Belize, and Nicolas Cage, Sean Connery, Johnny Depp, Michael Jordan and Shakira in the Bahamas.

Think of Florida as the pop star of vacation destinations: both popular and cheap. While the market there is in a profound rut, it remains the most popular second-home market among American buyers, and the weak dollar is attracting Europeans, Canadians and South Americans.

To understand how the Sunshine State developed as the nation’s No. 1 vacation home spot for Americans, just glance at a map of the U.S. interstate system. Florida’s main west coast highway, I-75, runs straight into the heart of the Midwest; its east coast counterpart, I-95, runs directly north to Washington, D.C., Philadelphia, New York and New England.

Before air travel became the transportation mode of choice, families drove or took the train to Florida. Those old settlement patterns, some established nearly a hundred years ago, still hold true. New Yorkers and those from the northeast still predominantly travel to east coast cities, like Palm Beach, and Midwesterners visit Gulf Coast beaches on Florida’s west side.

“The Sarasota area has been getting vacation home buyers from the Midwest since at least 1910,” said Harold Bubil, real estate editor of the Sarasota Herald-Tribune and host of a television show on Florida real estate. “Real estate firms on the west coast even do marketing or have offices in Chicago and Minneapolis, whereas firms in south Florida or the east coast focus on New York, Boston and Canada.”

According to the National Association of Realtors, 15 percent of total real estate transactions in Florida involve foreign buyers.

Nearly a million Canadians stream down to Florida during the peak winter season, and 300,000 of them spend an average of more than four months under the sun, the longest they are allowed to be continuously outside the country and remain covered by the national health insurance program.

They bring with them their national differences. Whereas wealthy English Canadians congregate along the Gulf Coast and in Palm Beach (Conrad Black and a handful of Toronto billionaires own properties there), French-speaking Québécois cluster in Hollywood, north of Miami, where a 15-block stretch of oceanfront properties is thick with French signs and bars that televise hockey games.

Brokers there said they’ve seen an uptick of interest this year. All across the state, Canadians, enjoying the best exchange rate in 30 years, are snatching up second homes in Florida. As with U.S. buyers, Canadians from the east, including Montreal, tend to buy more along Florida’s east coast, while Toronto and Ottawa buyers are more often locating on the west coast.

Florida realtors are also selling second homes to a growing number of Europeans, whose buying confidence has been bolstered by favorable exchange rates.

Europeans have become so vital to the Florida market that some realtors from the state have begun pitching directly to them.

“When it became clear that the European buyer was important in restoring some of the luster to the real estate market, we bent over backwards to up the number of affiliations we have with prominent European groups,” said Tom Heatherman, a broker with Michael Saunders & Company, a real estate firm in Sarasota.

Several large real estate companies, including Michael Saunders & Company and Esslinger-Wooten-Maxwell (EWM) in Miami, have set up listing partnerships with Mayfair International Realty in the United Kingdom.

Some forty percent of foreign sales in Sarasota are to British buyers. According to Ron Shuffield, president and CEO of EWM, 55 percent of foreigners buying in Florida are from Europe, and the largest percentage of those buyers in the state are British.

“They walk into our offices all the time, especially the beaches where they’re vacationing. They truly have the ability to surprise. The British are more likely to buy more expensive listings than anyone else,” said Heatherman.

Germans also feel at home in Florida and buy properties in substantial numbers along both coasts, according to Shuffield and Heatherman.

Despite the increase in buyers from Canada and Europe, it was Latin Americans who shaped the cultural development of southern Florida. In addition to Brazilians, Argentines and Colombians, Shuffield said he’s seeing an increase in Venezuelans buying properties in the Miami area, a trend he attributes to Venezuela’s turbulent political situation.

Yet because over the years foreign buyers have created their own enclaves throughout Florida, experts said international money alone won’t lift overall prices. A glut of speculative building – frequently paid for with risky mortgages – has made the problem worse, especially in the condo market, where builders can overbuild by many units at once, compared to the single family-home market, which can be built at a pace more in line with the market.

Not so long ago, Mexico was regarded as a cheaper – and less glamorous – alternative to South Florida or the Mediterranean for vacation homes. Now, that’s changing. These days, real estate markets in Mexican resort towns are decidedly hot.

What’s driving the change is the recent introduction of mortgage financing. Until only several years ago, customers looking to buy property in Mexico had few financing choices. Most transactions were paid in full in cash; in rare instances, developers of larger projects provided internal financing.

All in all, mortgages were rare, not just for vacation homes, but for all Mexican residential properties.

By opening Mexico’s closed banking sector to outsiders, NAFTA changed all that. Within the past few years, a growing number of lenders, mostly from the U.S., Canada and Europe, have entered the market, changing the ground rules of property transactions. In the process, they have opened the door to millions of prospective buyers, domestic and foreign.

The overall Mexican real estate market has taken off, and so too has the country’s vast market for vacation homes.

While the minimum down payment is high by American standards (usually 30 percent), and interest rates are typically two to three points higher than in the U.S., the mere availability of mortgages has contributed to a sharp rise in prices and set off a wave of development.

“We’ve had an incredible boom here the past three years,” said Sam Skidmore, owner of Puerto Vallarta Luxury Properties in Puerto Vallarta. “The availability of mortgages has been a definite benefit. Oceanfront property has appreciated from 30 to 40 percent in about three years.”

Despite the hurried pace of development in some cities, much of Mexico’s coastal area remains untouched. Patsy Chilson, co-owner of Chilson & Associates Real Estate Co. in Playa del Carmen on the Yucatán Peninsula, noted that even though construction has been intense along the Costa Maya between Cancún and Belize, development has barely spread inland.

“If you look from above, it’s just this tiny strip of land right along the water that’s built. You look across the peninsula, and it’s nothing but green,” said Chilson.

Like Puerto Vallarta to the west, the Yucatán has experienced significant appreciation in the past three to four years. According to brokers, condos that sold for $650,000 to $850,000 two years ago now sell for $950,000 to $1.3 million.

“On the beach in Playa, you’ll pay $650,000 to $2 million. One block in, it’s $500,000 to $1 million. Seven or eight blocks back, it’s $150,000 to $250,000,” said Chilson.

Brokers say the credit crisis in the U.S. isn’t slowing sales in resort towns. Canadians, Europeans and South Americans are all active buyers, particularly in the Yucatán.

“It’s mainly Canadians and West Coasters on the other side of Mexico, but people come to the Yucatán from all over the world,” said Chilson. “I’d guess 30 percent of Playa del Carmen’s population is from Italy. There’s also a lot of French, German, Argentineans, Chileans and even Eastern Europeans. The euro is driving the market, not the dollar.”

With beachfront prices soaring in these established communities, many buyers are seeking new opportunities. Popular up-and-coming locations are typically adjacent to existing hot spots.

For example, the coastal towns in the state of Nayarit north of Puerto Vallarta have attracted a raft of developments, as well as individual buyers looking to acquire either individual lots or Mexican family homes to upgrade to U.S. standards.

In the Yucatán, buyers and developers are looking south of Tulum or on the peninsula’s western coast from Campeche to Progreso. They’re also looking 30 miles inland to the colonial city of Mérida.

Pacific Coast resort towns that have languished in recent years, like Mazatlán and Manzanillo, whose popularity peaked after Dudley Moore chased Bo Derek across its sands in the 1979 movie “10,” are also making comebacks. Prices for vacation homes there have gone up about 30 percent in three years, according to brokers.

“We’ll continue to see activity at the luxury price point, with more branded luxury product like Ritz-Carlton, Four Seasons and Fairmont. But there’s also a lot of room at the mid-market and active retirement level. We see that as being a huge long-term opportunity,” said Embree Bedsole, a managing director of Alvarez & Marsal, a real estate development consultancy.

The potential for development in connection with new mortgages has yet to be fully tapped, according to Bedsole.

“Mortgages still represent a very small piece of the pie; I’d be shocked if it were more than 10 or 15 percent. But I see more lenders coming in all the time. That’s going to open up a big market,” he said.

Most important of all, said Chris Snell, owner of Snell Real Estate in Cabo San Lucas, is that while prices have risen significantly, for now, at least, they remain below those of comparable vacation home destinations.

“Our prices are still reasonable compared to Hawaii,” he said. “And for most people, we’re a lot closer. Those two things alone should keep the market going strong.”

Gordon Brown, the British prime minister, may have been cold toward President George Bush at Camp
David, but that didn’t prevent him from warming up to real estate farther north on Cape Cod. Recently, Brown snapped up a vacation home of his own in Chatham, where he often spends his summer vacations.

Brown may be this season’s most high-profile foreign purchaser of a vacation home in the U.S., but he’s certainly not the only one. Numerous articles have noted how a weakening dollar has kept Manhattan’s real estate market buoyant by stimulating purchases by wealthy foreigners.

A survey from the National Association of Realtors (NAR), as well as widespread anecdotal evidence from brokers, suggests that the same phenomenon is also very much alive in traditional vacation home markets.

“Particularly in Florida, Texas and the Northeast, foreigners are buying vacation homes in numbers,” said Walter Molony, a spokesman for the National Association of Realtors.

A recent survey by the NAR noted that while all real estate is local, not all buyers are. Among international clients, the top five countries of origin are Mexico (13 percent of all foreign buyers), the United Kingdom (12 percent), Canada (11 percent), India (6 percent) and China (5 percent).

The median price of a home purchased was $299,500, significantly higher than the median price of $221,000 paid by U.S. homebuyers.

The NAR survey also sheds light on which states are seeing the biggest influx of foreign buyers. Florida leads with 26 percent
of all international transactions, followed by California (16 percent), Texas (10 percent), Arizona (6 percent) and New York (4 percent).

“We’re seeing wealthy people from Spain, Italy, Switzerland, China, South America, even Turkey, all over the Hamptons,” said Gary DePersia, senior vice president of the Corcoran Group. Of course, the Brits are there, too. “I sold a house to Heather Mills [the estranged wife of former Beatle Paul McCartney] in East Hampton just this summer,” DePersia noted.

Brokers in Aspen, Colo., and Jackson Hole, Wyo., said the market for vacation homes in both towns remains exceptionally strong. Indeed, brokers say their resorts will set real estate sales records this year.

“From mid-December until February, the Aspen airport is so stockpiled with jets, it looks like an air-show,” said Kent Schuler, an owner of Aspen Real Estate, a local brokerage. “Besides wealthy Americans, we get a lot of Germans, Austrians and Swiss.”

The obvious explanation for the surge in foreign buyers is the steep decline of the dollar, which increases the purchasing
power of many foreigners. But it is not the only reason.

Brokers said that some foreigners are buying into the U.S. market because they like the atmosphere created by the Republican administration.

“One reason foreigners are buying here is because they say they feel safe in America,” said DePersia.

While many international buyers use vacation homes for just that, the NAR survey sketches a few other motivations for their purchases. About 22 percent buy vacation homes as an investment. Since U.S. visa rules allow most foreigners to only spend six months out of every year in the country, 31 percent use their properties at least in part to earn a rental income.

Agents said that the surging interest of foreigners in U.S. vacation homes is changing the way brokering gets done. For instance, ads for vacation homes in the U.S. are being placed in magazines throughout Europe. High-end companies like Sotheby’s International Realty, for example, have been carrying out vigorous global marketing pushes, sometimes visiting foreign countries to find foreign buyers.

“I think our brokers [here in America] are the pioneers in doing a very unique type of marketing and selling of residential real estate,” said Ellie Johnson, vice president and brokerage manager at Sotheby’s International Realty in Manhattan. “They travel to the countries and destinations of where our clients come from. We will travel to where our clients are.”

Nowhere has the legalization of same-sex marriage in Massachusetts had more of an impact than in Provincetown, a small town on Cape Cod, which for decades has been a popular vacation destination for gays.

After the May 2004 State Supreme Court ruling legalizing same-sex marriage, hundreds of gay couples flocked to Provincetown to get hitched. With its picturesque waterfront and unspoiled beaches, the town is an ideal setting for an outdoor wedding. By the end of December 2004, the town of about 3,400 permanent residents had issued 1,647 marriage licenses to same-sex couples.

These days the legalization of gay marriage – and Provincetown’s place at the center of the issue – are having a spin-off impact on the local real estate market as more gay couples buy vacation homes.

“Gay marriage caused a bit of a boom for businesses generally. More and more people were coming down here, and that supports rents and home prices,” says Tom Schoepfer, a broker for RE/MAX Classic. “Our primary markets have been New York, New Jersey, Connecticut and Massachusetts.”

Indeed, many brokers are promoting their friendliness to the gay community. Many include the tag “gay-owned” in their advertising; some also belong to one of the national promotional networks, including Gay Realty Network or GayRealEstate.com. These organizations have a combined national membership of about 2,000 real estate and mortgage brokers who are charged a fee for inclusion in a list of professionals friendly to gays.

“It makes sense for us because so much of our market – buyers and sellers – is gay men and women,” says Jim Sheehan, a broker at Coldwell Banker Pat Shultz Real Estate who is also a member of the Gay Realty Network.

Second homes make up the majority of properties in Provincetown, which sees its population spike to around 60,000 in summer. Each year, about 320 vacation homes are sold. No figures are kept on the number of those bought by gays, but several local brokers say gay buyers make up about 90 percent of Provincetown’s vacation home market. These buyers use these properties as both vacation homes and investment properties which they frequently rent to other gay visitors.

The town is so popular with gay vacationers, including those on honeymoons, that it’s often called the “gay Niagara Falls.” Indeed, some observers claim that during the summer, rainbow flags, a symbol of gay tolerance, are more ubiquitous than American flags.

Downtown Provincetown, which is devoid of big national chain stores, is characterized by quirky and quaint shops. The seasonal residents typically arrive from anywhere within 300 miles, according to people familiar with local real estate.

Provincetown also has a smattering of straight buyers, especially people who enjoy the town’s widespread tolerance. Artists and writers are a strong presence.

“It’s a very open and welcoming place [where] everyone is accepted,” says Dan Hochman, an agent with Pied Piper Realty in Provincetown.

Since 2000, the housing market in Provincetown has been on a roller coaster. When the decade began, the median sale price for a single-family home was $350,000, according to data collected by the Warren Group real estate firm. By 2005, it had jumped to $680,000, but plunged to $530,000 the next year.

In 2007, it started climbing again and was up to $594,500 as of the end of October.

There is very little new construction in the town; two-thirds of Provincetown’s land is part of the protected Cape Cod National Seashore. In recent years, there has been a growing trend toward conversion of guest homes and motels to condominiums and second homes.

Condo prices start at around $225,000 for 300-square-foot studios, increasing to between $300,000 to $350,000 for one-bedrooms and $375,000 to $500,000 for two-bedrooms, according to Rick Tourgee, an agent with Century 21 Shoreland in Provincetown.

While Provincetown is becoming increasingly a community of second homeowners and part-time residents, the rest of Cape Cod is shifting in the other direction. The Cape is attracting more year-round residents, both retirees and people who commute to metropolitan Boston.

According to the Warren Group’s data, home prices on Cape Cod have generally followed the rest of Massachusetts downward in the past year. For Cape Cod, sales were down 2.51 percent for the first 10 months of last year, while prices fell 6.67 percent. Statewide, sales were down 6.9 percent, and prices 4.41 percent.

“The moderation in price has provided a lot of opportunity,” says Doug Azarian, the 2007 president of the Massachusetts Association of Realtors and a broker on Cape Cod. “There are more homes available for under $300,000. It has helped first-time buyers and first-time investors.”

During the 1970s, the population of vacation-home owners in Litchfield County quickly began to grow. The growth was fed by a stream of artists and intellectuals, many of them supposedly on the run from the Hamptons, where they recognized that preppy coeds, grating disco music and gridlocked weekend traffic signaled the end of their quiet way of life.

Many first became acquainted with Litchfield County through Carolyn Klemm, a former buyer for Bergdorf Goodman in Manhattan who along with husband David, co-founded Klemm Real Estate. Longtime residents said Klemm’s weekend garden parties were a gateway for the county’s transformation into a quiet retreat for the city’s intelligentsia.

Klemm said selling real estate wasn’t the only motivation for hosting those parties, but recognized that her soft-sell approach could pay dividends. Understanding that her clients sought solitude but not total anonymity, Klemm invited friends, and then friends of friends, to her home in Washington, Conn. Over the years, her clients have included Tom Brokaw, George Soros, former U.S. ambassador to the United Nations Richard Holbrooke and Henry Kravis.

“Klemm is an extraordinary person in a complicated field, and she’s had as much influence on the community as any single person,” said William J. vanden Heuvel, a Litchfield resident who is chairman of the Franklin and Eleanor Roosevelt Institute in nearby Hyde Park, N.Y. “When we arrived 20 years ago, we dined with [author William] Styron and [sculptor Alexander] Calder and the most important cross-section of the community. She brought an important element of community into the process of buying real estate.”

A stream of artists like Arthur Miller and Jasper Johns and power brokers like Henry Kissinger began buying homes in this hilly region of northern Connecticut. What they found were acres of forests, rolling hills and a raft of grand country homes only two hours north of New York City.

At the time, Litchfield was going through a shift as many descendants of old New England families and gentleman farmers sold off family holdings.

“Back then, you had a lot of owners holed up in the slightly decaying family mansion, clipping coupons,” said Seymour Surnow, a longtime broker for Sotheby’s in Litchfield County.

These days, buyers don’t need garden parties to see the merits of owning vacation homes in Litchfield County; the area has established itself as a kind of anti-Hamptons.

Horseback riding is an enduring feature of Litchfield County. The county has at least a dozen equestrian centers, and brokers said it’s not uncommon for houses to have garages for cars adjacent to stalls for horses. And whereas parties in the Hamptons are seen as opportunities to show off high fashion, residents said that at social functions in Litchfield, muck boots are more common than high heels.

According to the Connecticut Multiple Listing Service, the average price for a home in the county is $797,500. Brokers said lot sizes typically vary between four and six acres.

Brokers like to tell buyers that whereas $2 million in the Hamptons will buy a small home several blocks from the beach, the same amount in Litchfield County gets buyers a home on several acres of lakefront property.

There is a virtual moratorium on new developments since land trusts own about 10 percent of the land in Litchfield County, according to brokers. The mandate of these trusts is to protect views for residents, hikers and equestrians. Due to the constrictions on supply, prices are stable.

“Inventory is not that high,” said Stacey Matthews, a broker at Klemm Realty. “We don’t get any developments, which helps keep it that way.”

One exception is a residential community called the Club at River Oaks, which is built around an 18-hole golf course in the town of Sherman. The development was originally proposed in the early 1990s, but local residents opposed to the plan stalled development for 10 years. Nineteen of the original 66 lots are for sale, and each two-acre lot sells for $275,000.

Brokers said sales were strong throughout the county in 2007, especially for properties above $2 million. Still, these days, second homes are getting bought as primary homes, particularly by young families who work for financial companies in Fairfield County.

When young professionals who have been renting want to buy a home in New York City but can’t afford one, they typically start to look beyond the city. Some wind up looking way beyond – to the Catskills, a rural vacation land north of the Big Apple and west of the Hudson.

“We get young couples from New York and Brooklyn,” said Joe Freda, a broker for Freda Real Estate in Callicoon in Sullivan County. “They are people who have good incomes, but don’t have a million dollars for an apartment in Manhattan – but they can buy a farmhouse for $300,000. They are buying their second home first.”

The phenomenon of vacation homeowners whose primary residence is a New York City rental apartment is increasingly common in the Catskills, which is just an hour-and-a-half drive from the city.

“The second-home buyers are often first-time buyers,” noted David Knudsen, a buyer’s agent in Sullivan County.

While some Catskills properties do sell for over $1.12 million – the average price of a Manhattan co-op – most are in the $300,000 range, and some are even in the vicinity of $150,000.

And unlike real estate in the city, in the Catskills, there is plenty of space between your home and your neighbor’s. For under $200,000, a buyer can find a modest house on a couple of acres, while $300,000 might fetch a farmhouse on five acres.

Knudsen said he tries to ascertain early in his discussions how much privacy buyers want. Some just want to be set back from the road, while others don’t want to see another house. Still others want “run around naked in your backyard” privacy, Knudsen said.

“One of the selling points of the Catskills is that you get a lot more elbow room for your dollar,” he noted. “The sweet spot now is five or more acres.”

The Catskills area, which has long been an escape for city dwellers, is made up of several different regions. Ulster County, closest to New York City, is a mountainous area with good access to skiing and hiking. Sullivan County, which was home to many of the so-called Borscht Belt resorts, has lakes, rivers and farms, though not many downhill ski slopes. Delaware County and Greene County are to the north, farther from the city; they both have excellent skiing and quaint towns.

The Catskills used to draw its vacationers from the outer boroughs of New York City, as well as New Jersey and Long Island.

“The real shift is that the buyers have moved to being more Manhattan-focused,” said Knudsen. “They are looking for something rural.”

Mary Collins of Mary Collins Real Estate in High Falls, Ulster County, said, “People that come here have high-stress jobs. They want to get away and relax.”

Of all of the traditional vacation spots for New Yorkers, the Catskills offers the sharpest contrast to city life for the least amount of money. For the price of a lot with a small tree in the Hamptons, a second home-buyer in the Catskills could get an entire orchard.

Yet like real estate in most places, the second home market in the Catskills has softened in recent months. Prices have slipped, homes stay on the market longer, and new construction has slowed.

“The market is inconsistent,” said Randy Florke, owner of the Rural Connection, a real estate agency in Greenwich Village that deals strictly in Catskills properties. “The numbers are up and down. You can go days without a call; then on a good stock market day, you’ll get a lot of them.”

The Rural Connection specializes in Sullivan County. Second-home buyers in this area tend to look for old farmhouses set on good-sized lots, perhaps with ponds.

“Sullivan County is the most ‘farmy’ part of the Catskills,” said Florke, who is also the author of the home-
decorating book “Your House, Your Home.” “It’s still a huge agricultural area.”

In Sullivan County, a two-bedroom, one-bath ranch on two acres could probably be found for $175,000, Knudsen said. A 1,500-square-foot farmhouse on five acres, perhaps with a pond, would sell for around $300,000, he said.

“Our properties are all over the board,” said Susan Doig, sales manager for Coldwell Banker Timberland in Margaretville, Delaware County. “You can buy a building site for $80,000 or a fabulous estate in the $1.3 million range.”

Among the über-wealthy who frequent the Hamptons, they’re sometimes called “playstations,” like the video game system. Yet despite declines in real estate values elsewhere on Long Island, there’s nothing childlike about the prices of these vacation homes.

Indeed, real estate professionals said the prices of vacation homes, particularly at the very top of the market, remain robust and that demand is strong. Like other sectors of the luxury end of the economy, this market seems to be largely insulated from the subprime fallout.

Times aren’t as heady as in 2005, when the Hamptons racked up nearly $4 billion in vacation home sales. But 2007 saw a number of record transactions. For instance, in May, Ron Baron paid $103 million for a 40-acre estate on East Hampton’s Further Lane. The amount was one of the highest prices ever paid for a property in the United States.

“In the first half of 2007, there were more deals over $10 million than there were in the first half of 2006,” said Kevin Sneddon, CEO of the boutique real estate brokerage Project Real Estate. He said that figures for the second part of the year, when the credit woes first began, were not available.

“If you look at the Hamptons overall, the ultra-high-end, which starts at about $8 million, carried the entire market in 2007,” Sneddon added.

Up and down the Hamptons, brokers agreed. Noel Berk, co-owner of the boutique real estate firm Mercedes/Berk, said many high-end buyers pay cash for their properties. “There aren’t that many homes on the market for $20 million to $50 million, so they are bought quickly,” Berk said.

The race to pay premium prices for coveted properties is attributed to an unusual combination of factors that make the Hamptons the playground for New York’s conspicuous consumers.

The first factor has been strong interest from European buyers.

“The ace this year is that the euro is so strong,” Berk said last month. “Many more Europeans are looking in Manhattan and the Hamptons.”

The second factor, according to brokers, is the social value that some wealthy New Yorkers place on owning prime beach-front property. For these people, usually based in Manhattan or Los Angeles, the value of being able to entertain throughout the summer on their own property is so strong that buyers are willing to invest more in their secondary residence than in their primary home.

“If someone has property in both places,” said Sneddon, “the Hamptons property probably costs more, and they are living larger in the Hamptons. If they have, say, $20 million, they may spend $8 million for an apartment in the city and $12 million for the vacation home.”

Or they may spend even more.

Southampton’s Meadow Lane is a prime example. Three properties there sold for more than $30 million this past year, a record for the street. In the last couple months, two more properties there have been listed, for $31 million and $35 million.

“There were eight deals in the vicinity for more than $20 million, and there are three other properties on Meadow Lane that are listed for more than $20 million,” Sneddon says.

But some very high-priced properties may linger on the market, so the volume of sales could drop. Still, that doesn’t necessarily translate into price dips. Sneddon points out that in 2006, even though the total sales volume dropped in the Hamptons by 30 percent, the average sale price increased.

There are some exceptions in the highest echelon of pricey properties, examples of sales stalling for years and prices getting slashed. One of these best-known “white elephants” was Andy Warhol’s Eothen estate, which sold in January for $27 million after spending six years on the market at $50 million, before dropping to $40 million in June 2006.

If there is a weak spot in the Hamptons vacation home market, it’s in the middle market, where prices hover between $2 million to $7 million. The so-called low-end of the market, which starts at $1 to $2 million, is extremely strong because the properties, often on small lots near but not next to the beach, have become exceedingly rare.

While vacation home markets throughout the country have been battered by the subprime mortgage meltdown, which has led to a tightening of credit for homebuyers, brokers in the Hamptons say they haven’t noticed big changes yet.

“You have to jump more hurdles to qualify for a mortgage, so it slows the process down for some people because some of the big mortgage [lenders] don’t have the liquidity they did before the turmoil,” Manger says. “This only affects the lower end of the market because when you get above $4 million, people typically buy with all cash.”

To illustrate the strong interest in the Hamptons, Berk tells the story of an open house held in December for a newly constructed home with walls of glass on a one-acre lot in East Hampton. The home was listed for $5.2 million. Because it was the off-season, brokers weren’t sure if they would get a good turnout. But by the end of the afternoon, nearly 400 people traipsed through the house.

Although nearly half the visitors were brokers, the overwhelming consensus was that by the Hamptons’ gilded standards, the property had been priced to sell quickly.

New York City has weathered the national real estate downturn better than most American cities, but how have New Yorkers’ favorite vacation destinations stacked up? New Yorkers’ vacation homes: A day in paradise clouds over” class=”read-more-link”>[more]

A small real estate firm recently asked us to stop delivering The Real Deal to its office. Surprised and wanting to know what was behind the request, I called the principal of the firm. Her answer was essentially that we had been “too informative.” She didn’t want her agents “to know what’s going on out there.”

I couldn’t believe it. I asked how agents at her firm were expected to understand their markets. She said the firm had an in-house newsletter – but it turns out this newsletter is filled with more fiction than fact, tailored to falsely flatter and mislead salespeople.

While disappointed with her response, I was happy because this means we are getting our job done. For those who like non-fiction news, we’ll continue to turn out a magazine stocked with research and articles on what matters most to the market and its key players. If we don’t get invited to every little tea party because of our focus, so be it.

As for this holiday season, it was once again filled with several gala events. If you are a real estate player in this city, parties held by powerhouse law firm Fried Frank and behemoth brokerage Prudential Douglas Elliman rank at the top of the list in importance. In this issue, we’re introducing some social coverage and reporting on what it was like to attend these affairs (See Giving thanks for being in NYC and A lavish affair to remember).

Our cover story this month is about the real estate records set in 2007. Our editorial staff was divided on the wording of the headline. One side said yes, 2007 was a record year for residential and commercial markets in New York City, regardless of the national downturn. The opposing side argued that while 2007 was a record year in many aspects, we couldn’t ignore the bumps and bruises suffered here. While the commercial market outdid itself again – which was hard to believe – it did limp a bit over the finish line toward the end of the year. The residential market, too, had its ups and downs, but in sum had a tremendous year. The average sales price and price per square foot in Manhattan hit an all-time high earlier in the year.

In addition to looking back, we look ahead and present a spread on predictions for 2008. The Real Deal asked its panel of experts to look at market indicators and tell us how to prepare for shifts in the market. The result is a candid and sobering view of what lies ahead.

This January issue marks The Real Deal’s sixth volume in circulation. In keeping with the tradition of New Year’s resolutions, we present a few of our own:

1. Launching a new Web site with more original, daily content,
including video and the return of our podcast.

2. Introducing The Real Deal’s South Florida edition, which will start publishing in February.

3. Unveiling the third annual Data Book, which will be loaded with market charts and stats, and is also due out in February.

We wish you a very happy New Year! Enjoy the issue.

In the wake of the departure of Christopher Mathieson, the president and partner who left JC DeNiro in September, the firm has created a new position called “gallery manager” – and given three of its brokers the new title.

Steven Kopstein, Greg Leveridge and S. Hunie Kwon have been promoted from associate brokers in DeNiro’s three Manhattan offices (Upper West Side, Chelsea and West Village). The company, which refers to its offices as “galleries,” made the promotions in mid-November.

The gallery managers will make up a new on-the-ground team to supplement company president Jack DeNiro, who works out of his Miami office, while visiting the Manhattan outposts at least once every two weeks.

Kopstein told The Real Deal that DeNiro believes the new three-pronged structure is more effective than having one general manager in New York, partially because each of the new gallery managers has already worked closely with the brokers in his office and is familiar with their styles.

“We’re not a churn-and-burn company,” Kwon said. “We really make agents into the best type of agents they can be.”

The company’s Upper West Side office has five brokers, its Chelsea office has 10 and its West Village office has another 10.

Kopstein said he is working with the brokers in his office to help them increase production, but is still taking on his own listings.

Greg Leveridge said his new position includes training and hiring agents, as well as acting as a liaison between the New York agents and DeNiro. “Everyone can’t just run to Florida to seek management,” Leveridge said.

Richard B. Hodos took a position as executive vice president at CB Richard Ellis in early December, leaving his post as president of Madison HGCD Retail Group, which he helped found seven years ago.

In 2002, the company, then called HGCD Retail Services, merged with a San Francisco-based retail leasing agency, Madison Marquette, to become Madison HGCD.

Hodos has partnered with senior vice president David LaPierre at CBRE to start a team that will handle tenant representation nationally. So far, the duo has hired an associate director, and is looking to grow their team to a staff of six to eight people.

A seasoned tenant representative, Hodos will bring with him the many clients he represented during his time at HGCD. The big-name clients he plans to bring over include high-end health club Equinox, J. Crew, Limited Brands and fashion designer Michael Kors.

Hodos said his departure from Madison HGCD was amicable, and that the company is not bitter about the loss of business. Madison HGCD declined to comment.

Hodos refers to himself as a consultant first and broker second, advising clients on overall strategy and “not just plopping a store down here and there.”

He said he is looking forward to working at an international company and hopes to represent retailers coming to the U.S. market from Europe or Japan.

His experience with international retailers started when he reintroduced Esprit to the New York market after the clothing company was purchased by a German company in the 1990s and shuttered all of its U.S. locations.

Hodos brokered the deal for Esprit when it reopened its first U.S. store, in the Flatiron district. Since then, he has helped the company open several new spaces, and it is once again a known name in New York. “There are 600 cabs driving around Manhattan with Esprit ads on top of them,” he said.

Former GFI Realty presidents Aaron Jungreis and David Berger are already locking in deals with their new venture, Rosewood Realty Firm, a building sales brokerage they started in November after departing from GFI.

Rosewood Realty completed one building sale in November and was going to contract with two deals in late December, at press time. The new firm has six brokers but plans to double its staff by the end of 2008.

“Even though I was president there of the firm, I wanted to have my own firm, on my own terms,” said Jungreis, who started his career at GFI 14 years ago and became president in 2001. When he left, he had about 30 brokers working under him.

Berger, who held both the president and senior director title at GFI Realty, had been there for five years. GFI declined to comment for this article.

Jungreis brokered in excess of $5 billion in building sales in his time at GFI, and was named one of the top 10 brokers in New York City twice by commercial real estate information company CoStar. He said he represented around 45 to 50 transactions per year. Despite the recent slowdown in high-priced building transactions, Jungreis is hopeful about the market. He and Berger have enjoyed success with a lot of off-market transactions, which they “don’t see going away anytime soon.”

“We get a lot of deals where the sellers don’t want to go on the market, because they don’t want people harassing them or they don’t want their tenants to find out,” Jungreis said. “[Brokers] only have one or two shots to do it, and it’s based on expertise.”

Residential

Bond New York

Fernanda Forman joined as managing director. She was previously a managing agent at Starwood Hotels and Resorts Worldwide.

Note: Correction appended

Century 21 NY Metro

Jay and David Siller joined the firm as rental agents. They were previously with Prince Properties.

Cooper Square Realty

Petra Bergstrand was promoted to general manager for the private residences at The Plaza from property manager.

Halstead Property

Barbara Licalzi, Peter Martin, Kathleen Moosher, Susan Ruttner, Barry Silverman, Michael Spodek, Dean Feldman, Barbara Godson, Barbara Good and Norman Horowitz were promoted to executive vice president from senior vice president. Julia Boland and B.J. Engler were named senior vice presidents. They were previously with Brown Harris Stevens.

Note: Correction appended

Commercial

Carlton Advisory Services

John Jackson joined as senior vice president of the firm’s Loan Sale Advisory Group. He was previously with the Office of Federal Housing Enterprise Oversight.

CB Richard Ellis

Annette Healey and Jason Pollen were promoted to senior vice president from first vice president. Michele Freeman, David Kleinhandler, James Robbins and Sacha Zarba were promoted to first vice president from vice president. Matthew Van Buren was promoted to senior managing director from managing director.

CitySites Commercial Group

Elliott Rackman joined as executive vice president, director of leasing and sales. He was previously with Sitt Asset Management.

Grubb & Ellis

Stuart Siegel was promoted to executive managing director from managing director.

The Kaufman Organization

Sommer Scafidi joined as associate salesperson. She was previously a marketing director and showroom manager for Echo Design Group and Monsac International.

Massey Knakal

Yonaton Pielet joined the firm’s Queens office as an associate. He was previously a project engineer at Tribble & Stephens in Austin, Texas.

NAI Global

Bobbi Jean Formosa was promoted to executive vice president of operations. Edward Finn was promoted to executive vice president and general counsel. Both were previously senior vice presidents. Margaret Smith was promoted to senior vice president of finance and controller.

Rose Associates

James Hedden joined as senior managing director of development. He was previously at Bank of America’s Commercial Real Estate Banking Group.

The Staubach Company

Chris Kraus was promoted to principal from senior managing director. Drew Saunders was promoted to senior managing director from director. Eric Thomas joined as director of the Corporate Services Group. He was previously with Studley.

Tiki Barber, Related launch affordable housing

Former New York Giants star Tiki Barber has launched a program with the Related Companies to buy and restore older affordable housing developments around the country. Called Tiki Ventures, the program plans to begin by refurbishing more than 3,500 residential units in Virginia and North Carolina. Centerline Capital Group will provide about $150 million in financing. Most of the units that will be rehabbed could otherwise be converted to market-rate housing. Tiki Ventures plans to do extensive work in New York and New Jersey as well.

REBNY offers new course

The Real Estate Board of New York is looking to give brokers another notch on their belt with a new REBNY-designated course and title — New York Residential Specialist. Graduates will receive REBNY’s honorary NYRS degree and gain the right to use the NYRS logo on marketing materials. The course will put brokers on more equal footing with brokers in other states that have more rigorous continuing education requirements.

Wyndham plans NYC expansion

One of the last big hotel chains is spreading its wings in New York City and revamping its image with at least four full-service, upscale hotels. Wyndham Hotels and Resorts, the high-end hotel brand of Wyndham Worldwide, is foraying into the city with a hotel in Chelsea at 119-121 West 24th Street, slated to open in February or March. One or two months later, the franchise is opening another hotel at 20 Maiden Lane. Three months after that, 341 West 36th Street will open its doors and eight months later, in March 2009, a fourth hotel will be completed at 93 Bowery.

Carlton to invest $1 billion in distressed mortgage debt

Carlton Strategic Ventures announced a program to acquire $1 billion in high yield commercial and residential distressed mortgage debt. The principal transaction group of The Carlton Group, in addition to investing its own capital, has formed a joint venture with a major hedge fund with whom it is co-investing. The distressed debt group is led by chairman Howard Michaels, partner Michael Campbell, and Keith Stein, a former Weil Gotshal attorney who ran Kimco’s Opportunity Fund (see related story on page TK).

Brokers Build joins Habitat NYC to build housing

Brokers Build, an organization of New York City real estate professionals that supports Habitat for Humanity New York City, will help build an affordable housing complex in Brooklyn. The development at 1870 Eastern Parkway will consist of three four-story buildings totaling 41 homes, making this Habitat NYC’s largest project to date. The project by Dattner Architects is being constructed energy-efficiently and is designed to qualify for a Leadership in Energy and Environmental Design rating (LEED).

Monthly Property Shark foreclosure report debuts

As residential foreclosures rise in New York City, Property Shark has released its first monthly report with those statistics for four real estate markets including New York City. The property research data firm created the report after being inundated with requests for the latest foreclosure information in between its quarterly reports, said Brian Scully, vice president of marketing for Property Shark.

Sometimes developers are unavailable because they’re out of the country. But rarely are they off doing advanced martial arts training.

But that was the recently the case with Eran Conforty, co-founder of Horizen Global LLC, who with his partner Michael Yanko runs the boutique real estate development company responsible for such New York City residential properties as Soma and Hudson Blue, as well as the Horizen Tower Hotel and the VU Hotel.

Conforty, the president, was training in Japan. He is a black belt with a sixth degree ranking thanks to many years of training and teaching. And Horizen isn’t a spelling error; it’s a mission statement.

Said Yanko, the CEO, of his business partner: “This is a complete lifestyle with him. The way he operates on the dojo mat is how he does business – that means always finding the best way before a situation becomes a problem; avoiding conflict; being respectful, disciplined, non-confrontational, strong and responsible – legally, socially and all ways.”

Yet they don’t hesitate to call themselves opportunistic: “We’re young, aggressive and still creating wealth,” said Yanko. “We’re not an insurance company – we deal with hundreds and thousands of percentages. We haven’t taken a wrong turn yet, but I’m sure we will. And then we’ll deal with it.”

So far, their business has included Soma – an 11-story, 10-unit Chelsea luxury condo loft building with a bamboo grove in the lobby – completed and at full occupancy. The group just broke ground for Horizen Tower, a 100,000-square-foot, boutique hotel on 23rd Street in the Chelsea-Flatiron district; just opened the sales office for Hudson Blue (a sliver building at 423 West Street where Leonardo DiCaprio is reportedly buying an apartment), and is preparing for the opening of the VU (one of the first Midtown hotels being built far to the west of Times Square) in April of this year.

They are also involved in the creation of Punta Patilla in the Dominican Republic, a $500 million, 275-acre coastal resort focusing on luxury and being in harmony with the landscape. “We will build schools there, teach English, provide 5,000 jobs just in the resort,” claims Yanko. “We will teach them how to create a sustainable, green resort for years to come,” he said.

Balance is at the very top of the team’s priorities. Yanko has two sons, ages 12 and nine, and is a dedicated youth athletics coach, along with his own yoga and running regimens. If there’s a game in the evening, he leaves work at 5 p.m., even if it means leaving a meeting – even a closing – in someone else’s hands.

“To have a complete life, I have to have a healthy, happy me, wife and children,” he says. “I want to be happy and whole at the end of the day.”

Both Yanko and Conforty are natives of Israel. Yanko came here to attend Baruch College and while in school started working in 1989 as a broker of Manhattan rentals. Conforty – whose family is a major development force in El Salvador – arrived in New York City just five years ago when the family expanded its operations here. The two met through a mutual friend and launched Horizen Global shortly after meeting, claiming “instant recognition” of kindred spirits in their approach to business and lifestyle.

“We find the local strengths and create synergies – we use and leverage what’s there,” said Yanko. “We don’t dislodge people – we try to hire for the hotel, people in the neighborhood. We form alliances with businesses in the neighborhood, rather than bringing in someone from the outside to get a better deal.”

Yanko said that “even sub-contractors benefit from our environment,” pointing, as one example, to Conforty’s visits to building sites to hand out copies of the book “212?: The Extra Degree” by S.L. Parker. The book’s thesis is that at 211? water is hot, but at 212? it boils, so it pays to go the extra degree. Copies of the book go to workers – “painters, mirror polishers, everybody” on the work site, says Yanko.

Fancy buildings with lavish amenities are nothing new, but as Manhattan developers try to one-up each other by building bigger, more extravagant buildings, they are including amenities that appeal to a younger, more social and seemingly more physically active resident.

Typical amenities like doormen, concierges, valet parking, rooftop terraces and high-end health clubs are old news. The latest offerings will attract the triathlete in training (The Laurel) or golfer (Platinum) or pick-up basketball player (Ariel East and West, William Beaver House).

Other bells and whistles will appeal to residents seeking luxe locales for relaxation and camaraderie like a sand beach (75 Wall Street) or coffee bar (Silver Towers).

It seems that the more unusual, the better.

“The buildings that have good or interesting amenity packages are memorable,” said Clifford Finn, managing director of new development marketing for Citi Habitats.

How far are developers willing to go to pamper buyers and, yes, even their dogs? And with all of the buildings in the pipeline, who can keep track of who offers what?

Brett Grabel, a senior associate broker at the Corcoran Group, said he keeps good notes and his company’s database is pretty accurate, particularly with new buildings.

“Most times though,” Grabel said, “amenities that are great selling points are easy to remember because brokers, owners and buyers are always talking about them.” For example, “the health club at the Bromley or the inexpensive garage at 60 Sutton Place South were two of the first amenities I heard people rave about when I first got into the business in 1997.”

Following is a short list of some of the more unusual amenities new buildings — all condominiums except for the Silver Towers rental building — are planning to offer:

Adiago at 243 West 60th Street: English garden and tennis court.

The Laurel at 400 East 67th Street: Triathlon training center, toddler’s craft clubhouse, video game arcade and dining room with catering kitchen.

Platinum at 247 West 46th Street: Sound-proof room with full-body massage chairs and audio and video; golf simulator room; and wrap-around terrace with outdoor fireplace and cool misting area.

75 Wall Street: Sunning beach with sand and cabanas and rooftop dining area with barbecue and hammock.

Riverhouse at One Rockefeller Park: Dog and pet spa; tree house lounge — a lounge with swings, bookcases and a carpet of grass.

The Setai New York at 40 Broad Street: Rooftop lounge with log-burning fireplace, gas-fire grill pits for campfires and cabanas with oversized daybeds; and rooftop room service.

Ariel East & West at 2628 Broadway and 245 West 99th Street: Pet salon, theater and basketball court.

William Beaver House at 15 William Street: Rooftop lounge with catering kitchen; private dining room and entertainment terrace; screening room with wet bar; terrace hot tub and outdoor shower; and outdoor basketball court with bleachers and squash court.

Avery Condominiums at 100 Riverside Boulevard: Stadium-seating screening room.

15 Central Park West: Private dining room and fully-equipped professional kitchen with full-time private chef.

100 West 18th Street: Landscaped roof deck with outdoor shower, gas fireplace and gas barbecue grill.
Silver Towers at 610-620 West 42nd Street: Coffee bar.

Being a broker isn’t always easy. Supposedly loyal clients can dump you, a million dollar commission can slip through your fingers or an eagerly anticipated open house can go horrendously wrong. But it is usually the latter that provides the most entertaining stories – at least for those not directly involved.

A recent cluster of thefts at open houses on the Upper East Side illustrated just how vulnerable sellers can be and underscored the need for broker vigilance. In this case, two women wearing disguises slipped into high-end open houses and made off with expensive jewelry, luggage and even a bottle of champagne. Needless to say, brokers at those open houses did not have a good day.

Here are the tales of other brokers who have also had less-than-stellar experiences at open houses.

Maid to order

Lawrence Rich, a vice president with Prudential Douglas Elliman, recently hosted an open house in a two-bedroom, two-bathroom apartment on the East Side. When he got there, “the owner was out, the music was playing, the lights were on and everything was in its place,” he said.

The first set of potential buyers soon arrived. He showed them the living room and kitchen, pointing out all the charms. When they reached the master bedroom, everything was right on schedule.

“But then, I opened the unlocked master bath door and saw the maid sitting on the toilet going to the bathroom,” said Rich. “She screamed, and the two men ran out of the apartment.”

Needless to say, they did not make an offer. Now, whenever Rich holds an open house, he makes a point of knocking on closed doors.

Sexy back

Holly Sose, a City Connections Realty senior associate, knew that the fourth-floor walk-up she was showing was the perfect apartment for someone who wanted to do a little redesigning.

When a gregarious client arrived, he immediately took to Sose’s boots, which he called “fierce,” and to the bathroom, which he called “sexy.”

“He said he wanted to knock out all the walls there and replace them with glass,” said Sose. “He then held onto the sink as if he was holding onto the hips of a person, began thrusting, moaning and screamed, ‘This is going to be a sexy bathroom.’” When he came out of the bathroom, he told her he would be in touch with his offer.

A week later, he called Sose and made her an offer – for a date. She declined.

Hide and seek

When DG Neary real estate agent Alison Rogers held an open house, hiding the tenant’s “bong-like sculpture” was like being in a Marx Brothers movie. Rogers, who works as a consultant for The Real Deal, put it away in one of the kitchen cabinets. “When buyers would go to open that cabinet, I had to make sure I opened another one first,” she said.

Marotta group principal broker Tamara Marotta had a similar game of open house hide-and-seek. Before hosting an open house for her client, a doctor, she had to make sure she hid his prominently displayed medical jars that included fetuses and brains.

Another broker, who asked to remain anonymous, took his client to an open house and saw an enormous roach in the doorway. “I lunged for the door trying to pretend like I was being a gentleman by opening the door,” he said. As he opened the door, he smashed the bug. His client was none the wiser.

Bad client

Sometimes, even if you’re the broker bringing your client to an open house, there is still an opportunity for mishaps.

Sose took her client to the open house of a $2.5 million loft in Chelsea. They had been in the apartment less than five minutes when they went into the bathroom, where the owner’s Labrador was sleeping near a mink footstool. “My client sat down on the floor Indian style and began playing with and riling up the dog, completely ignoring the broker’s speech for over five minutes,” said Sose.

“Then, all of a sudden, the dog peed on the mink footstool.” Sose’s client stood up, shocked, and said to the listing broker, “Dude, the dog just peed on the floor.” The client said nothing more and left the apartment.

1982: Largest mortgage for an office building

Twenty-six years ago this month, Corporate Property Investors granted the General Motors Corporation a $500 million mortgage on the G.M. Building at 767 Fifth Avenue – the largest loan ever placed on an existing office property in the city. In return, G.M. agreed to pay the private real estate company $50 million in interest per year on the loan for 10 years, and gave C.P.I. the option to purchase the building at the end of the loan period, which it did.

The transaction stirred controversy, because while C.P.I. paid $500 million up front for its future purchase of the building, G.M. avoided paying capital gains tax. This prompted unsubstantiated threats of litigation from Mayor Ed Koch.

Crude estimates at the time put the building’s actual value closer to $200 million, according to one New York Times article. The article suggested that the record mortgage had been inflated to compensate for the small interest rate of 10 percent.

The 50-story building broke another record in 2003 when Harry Macklowe purchased it from Donald Trump for $1.4 billion, what was then the highest amount paid for an office building in the United States. Then, in 2006, the 1.9 million-square-foot building tied with 9 West 57th Street for the city’s highest office rents at $175 per square foot, according to the July 2006 edition of The Real Deal.

1951: Oldest building renovated

A special service on St. Paul’s Day, January 25, 1951, commemorated the restoration of St. Paul’s Chapel on Broadway, between Fulton and Vesey streets. The chapel is the oldest building in continuous use in Manhattan and the only remaining pre-Revolutionary church.

The project, completed in 1951, included the repainting of the chapel’s interior with a color scheme of white, blue and gold, restoring the building’s Colonial period appearance, as well as the rebuilding of the chapel’s organ and the restoration of its 14 Waterford crystal chandeliers to their original condition when installed in 1802. Floodlights were also installed to illuminate the church’s spire at night.

Built in 1766, the chapel is part of the Trinity Church parish, an Anglican church formed by a royal charter from William III in 1697.

At the time of its construction, St. Paul’s Chapel sat on the northern border of the city, and was built as a “Chapel of Ease” for parishioners of Trinity Church who lived farther north. What is today the church’s front entrance on Broadway was originally the rear of the structure, as it was built to face the Hudson River. The church was also the site of the Thanksgiving service that followed George Washington’s presidential inauguration in 1789. The chapel and its churchyard were designated landmarks in 1966.

1930: Chrysler honors builders

In January 1930, Walter P. Chrysler, founder and president of the Chrysler Corporation, spoke at a New York Building Congress event to honor those working on the nearly completed Chrysler Building. When it was opened to tenants in May of that year it was the tallest building in the world, standing at 1,046 feet. It retained this distinction for only a few months before being surpassed by the Empire State Building.

The art deco building at 405 Lexington Avenue began as a project by William H. Reynolds, the developer of Dreamland at Coney Island. Then in 1927, Chrysler purchased the entire project, including the architectural plans and preconstruction lease agreements.

Chrysler broke ground on the project in September 1928. The tower was erected at the same time as 40 Wall Street, with which it competed for the title of tallest building.

Chrysler added decorative details to the plans, including stainless steel eagle heads and the signature spire, known as the vertex. The building’s top floors were reserved for the Cloud Club, a private dining hall, and a visitor center that served as an observation room. The tower’s original plans also called for lighting in the vertex to illuminate the exterior, but the feature wasn’t installed until 1981.

The Chrysler Building’s façade and lobby were landmarked in 1978. Tishman Speyer Properties and the Travelers Insurance Group bought the tower in 1998, and in 2001 the German investment group TMW purchased a 75 percent stake in the ownership of the building.

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