The Real Deal New York

From left to right: Justin Elghanayan, Jed Walentas, Andrew Sciame, Samantha Rudin, Raphael De Niro and Benjamin Levine

Signs of improvement appeared at the end of the year, but 2009 will be remembered for its epic real estate downturn. In response to the maelstrom of hard times, many longtime industry veterans took the opportunity to scale back their activities rather than tackling what promise to be several more difficult years. For example, Brown Harris Stevens announced plans to take over the 28-year-old Upper East Side boutique firm started by Edward Lee Cave, a fixture of the high-end brokerage scene. And Douglas Durst stepped down as co-president of the Durst Organization, after describing his day-to-day duties as “exhausting.” (He’ll remain chairman). But as some industry leaders recede, new opportunities are being created for young players, new ideas, new buyers and innovative business models. This month, The Real Deal looked at the next generation of New York City real estate, from the people poised to reshape the industry to the strategies that will help them do it. We looked at how the offspring of some of the city’s most established real estate families — including Ivanka Trump, Jed Walentas, Justin Elghanayan and Jamie and Harrison LeFrak — are handling the downturn. Because many old real estate families were conservative during the boom and avoided overleveraging, observers say their sons and daughters are uniquely positioned to profit from distressed opportunities.  More

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It’s no secret that many top-notch New York City sales brokers took on pricey rentals last year because high-end apartments were slow to sell. But with the economy struggling, did the high-end rental market fare any better than the sales market? Were celebrities still willing to pay top dollar for temporary Manhattan pads? And did struggling corporations change their tactics in renting out apartments for top executives? This month, The Real Deal chipped away at the notorious lack of transparency in the rental market (unlike sales, rentals are not publicly recorded) and looked at both the priciest rental listings, which were provided by the real estate Web site StreetEasy, and closed deals, which were supplied by brokerages and agents. According to StreetEasy, the 10 most expensive rental listings on the market in Manhattan late last month ranged from $60,000 to $140,000. Some 38 listings priced over $50,000 per month hit the market at some point in 2009, up from 31 in 2008, suggesting that more high-end sellers are listing their homes for both sale and rent because of the tough economy. The agents who listed these über-expensive rentals reported that wealthy renters, like other consumers, became more price-sensitive as layoffs climbed and the stock market went on a wild ride. Much like the high-end sales market, prices for high-end rentals dropped precipitously in 2009. Brokers estimated that rents across the top of the market have fallen between 15 and 50 percent from the peak, depending on the neighborhood and apartment type.  More
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Veronica Mainetti heads the Sorgente Group’s U.S. office.

For more than a year, foreign investors have been sitting on the
sidelines waiting for a sign that the capital markets were beginning to
thaw and the time was right to invest in New York real estate.
One of the first big tests for them may be coming from an unlikely
source: the Sorgente Group, a Rome-based investment firm that has
already acquired some of the city’s most iconic properties and is
currently negotiating to buy another — the famed Woolworth Building in
Lower Manhattan.
In addition to those Gotham properties, the group, headed by
investor Valter Mainetti, is reportedly in talks to acquire some of the
most sought-after buildings in the United States, including San
Francisco’s TransAmerica Pyramid.  More

[more]

Danny Meyer debuted Maialino at the Gramercy Hotel in November.

Hotel developers are planning to boost business at their Manhattan
restaurants this year with one special ingredient: the glamour of
brand-name chefs. Celebrity chef and hotel pairings have been popular in New York
since the late ’90s, but in the weak economy, the trend is
accelerating.
This month, Jean-Georges Vongerichten’s restaurant Mark
Jean-Georges is set to open in the Mark Hotel. That follows Danny
Meyer’s November debut of Maialino at the Gramercy Hotel, and a report
last month confirming rumors that Todd English will run the food court
at the Plaza. Also late last year, foodies salivated over acclaimed chef April
Bloomfield’s opening of the Breslin at the Ace Hotel on 29th Street. In
addition, the East Side Social Club in the Pod Hotel has been
attracting high-profile guests.  More

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From working-class enclaves in the outer boroughs to glistening new
condo towers in Manhattan, the legions of New Yorkers at risk of losing
their homes has been growing. While the number of foreclosure filings in the state dropped during
the first three quarters of last year compared to the same time in
2008, the filings jumped 14 percent in New York City, according to
RealtyTrac. And no borough — including Manhattan — was spared.
This month, The Real Deal examined foreclosure data provided
by PropertyShark, RealtyTrac and NYU’s Furman Center and found that
across the board — from houses on cul-de-sac streets in Staten Island
to tony co-op apartments on the Upper West Side — foreclosures in the
five boroughs have quietly started creeping into more well-to-do
neighborhoods.  More
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From left: CBRE top broker Mary Ann Tighe; Stephen Siegel, CBRE’s global chairman; Darcy Stacom, vice chairman; Mitchell Rudin, CBRE’s tri-state president and CEO; Robert Alexander, co-chairman of CBRE’s New York tri-state region; and John Powers, also a co-chairman of the tri-state region

As the city’s dominant commercial services firm, CB Richard Ellis has a star-studded roster of brokers and brings in business from around the globe. Top producers in Manhattan include veterans such as Darcy Stacom, who brokered the largest real estate deal in history with the 2006 sale of Stuyvesant Town for $5.4 billion, and Mary Ann Tighe, who led the company with 5.6 million square feet leased in 2008. There’s also Stephen Siegel, the reigning godfather of Manhattan brokerage. That’s not to mention the firm’s corps of junior brokers, and an analysis and research department that is, perhaps, the most sophisticated in the city. But despite all of its cachet, there is evidence that the global real estate giant is in a bit of a slump in Manhattan — even as it’s holding up internationally. While all firms have been battered by the depressed market in New York, CBRE’s challenges seem to go beyond the weak economy. Data indicate smaller competitors such as Newmark Knight Frank (which is just one-fifth of CBRE’s size globally) are eating into the firm’s market share in leasing and landlord representation in Manhattan. And ironically, CBRE may be hobbled by its own strength — and reliance — in doing business with large corporations, many of which are now hurting.  More

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

Office leases
Retail leases
Commercial sales

(Click below to open larger PDF)

A development site at 57-67 Orchard Street is for sale with an asking
price of $25 million. The site includes two block-through lots from
Orchard to Allen streets and a corner lot at Orchard and Grand streets.
The 57 Orchard Street lot contains a two-story commercial building,
while 59-67 Orchard Street has two five-story commercial buildings. The
three lots have a combined footprint of 12,172 square feet, and the
site’s C6-2G zoning allows for a maximum of 73,281 buildable square
feet. Michael DeCheser and Philip Huang of Massey Knakal are handling
the sale. Comments

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Ivanka Trump

There may be no corner of the business world more family-dominated than New York City real estate. Here, names like Rudin, Resnick, LeFrak and Durst carry an almost mythical connotation. And for good reason: The real estate bust has made mincemeat of the army of rookie developers who entered the industry during the mid-aughts. Not so for the young scions of New York’s great real estate families. Working for capital-rich and rarely overleveraged family firms, many of these up-and-coming moguls are well-poised to take advantage of the opportunities generated by the current decline in the marketplace. For the sons and daughters of the city’s reigning real estate families, now is a time to distinguish themselves. “In many instances, this recession mirrors the down cycles during which many of these families truly made their largest investments,” said David Schechtman, a senior director of Eastern Consolidated. “It’s turning out to be a real proving ground and education for many of the sons and daughters. They’re going to capitalize on it like no other.” That said, some families were unable to avoid the pitfalls of the recent real estate bubble, and their children — including Alex Sapir and Billy Macklowe — have been left to pick up the pieces.

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The owner of 420 Fifth Avenue has been waiting the market out before filling retail space there.

Some landlords are waiting out the current down market in an unusual
way. Instead of doing everything in their power to find tenants and
taking lower rents, they’ve decided to sit on unused space.
George Constantin, president and CEO of Heritage Realty Services,
which owns office and retail properties around New York, said the
company used that strategy for one of the largest retail spaces in
Manhattan, at 420 Fifth Avenue.
“What we did is essentially wait to make sure we got the best
tenant at the best rent, because once we commit to a 10-year
transaction, we don’t want to commit to a very low rent,” he said. “And
[in 2008], the rents were quite low.”

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Attorney Len Boxer is a thinking man’s lawyer. And these days he’s finding ways to wring money for development in a capital-starved market. So it’s fitting that a likeness of Auguste Rodin’s “Thinker” adorns his 39th-floor Lower Manhattan aerie. Boxer is chairman of the 50-person real estate practice at Stroock & Stroock & Lavan. His Maiden Lane office looks out on Brooklyn, where he grew up. In the 1970s, he formed a law firm with Robert Olnick, right before Olnick got involved with developing Starrett City. Since then, his deals have only grown, like Larry Silverstein’s $3.2 billion lease in summer 2001 of the World Trade Center. [more]

New York City’s top commercial brokerages have jockeyed for market
share over the past few years, but in a surprise upset, Eastdil Secured
has emerged on top. According to an analysis by The Real Deal — which was based
on data provided by Real Capital Analytics for Manhattan commercial
transactions of $5 million and above — the firm had more than $15
billion in sales from the first quarter of 2007 through the third
quarter of 2009. CB Richard Ellis ranked second with more than $12 billion in
building sales, while Cushman & Wakefield ranked third with more
than $10 billion, according to the RCA data.
But Eastdil’s ranking is largely due to a unique set of circumstances:
The firm handled the $7 billion sale of Equity Office Properties’
Midtown portfolio to Macklowe Properties in 2007. Without that deal,
Eastdil would have slid to third place.  More
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Whether encouraged by declining asking rents or spurred by pent-up
demand, brokers said office tenants finished out the extremely
difficult year of 2009 with a flurry of activity.
Yet few believed the market had found a solid footing, as landlords
continued to cut asking rents to compete amid a landscape of high
unemployment and an uncertain recovery.
“The big question that tenants have today is: ‘How bullish do I
feel about the future?’” said tenant broker Harry Krausman, managing
director at Colliers ABR. “If a tenant feels confident that their
business is going to be better five years from now than it is today,
then they are more likely to want to lock into the cheap rates today.”  More
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The Blackstone Group, headed by CEO Stephen Schwarzman, is well-positioned to take advantage of distressed properties as it looks for opportunities across the U.S. and abroad.

After sitting on the sidelines for the last two years, the Blackstone
Group, the world’s largest private equity firm, is finally starting to
go property shopping. And, as it begins to deploy its $12 billion
distressed asset fund, many in the industry are watching to see exactly
what kind of real estate it’s buying and what else it’s in the market
for. In November, the Manhattan-based firm agreed to pay about $191
million for a 60 percent stake in two malls owned by the Ohio-based
Glimcher Realty Trust, a real estate investment trust with properties
in 13 states. That followed a deal in September giving Blackstone 50 percent of
the Broadgate office development in London, the largest office complex
in the city’s financial district, for about $127 million. Also that
month, Blackstone agreed to buy 148 properties from
assisted-living-home operator Sunwest Management of Salem, Ore. If those three deals are any indication, the firm — which famously
bought mogul Sam Zell’s $39 billion Equity Office Properties portfolio
in 2007 and successfully flipped much of it before the market soured –
will be spending the rest of its $12 billion across multiple sectors of
the market.  More

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They are not easily recognizable, but they are out there all around us, on the streets of Midtown and Lower Manhattan.
They are a growing breed of office towers, not quite alive but not
entirely dead either. They are New York’s City’s zombie buildings. And
within the commercial real estate world, once a building is tagged as a
problem site, it has a difficult time shaking off the negative label,
attracting tenants and finding rental income to nurse itself back to
health.
“It is a super-slow-motion thing that is occurring,” said Glenn
Markman, a commercial broker for Cushman & Wakefield, explaining
the vicious cycle that many Manhattan buildings have gotten stuck in
since the start of the downturn.  More
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Bruce Mosler, outgoing Cushman & Wakefield CEO

By any measure, 2009 was a tough year for commercial services firm Cushman & Wakefield. It suffered through the economic crisis with even greater losses for the first nine months of the year than two of its larger international rivals, CB Richard Ellis and Jones Lang LaSalle. While CBRE is struggling more in New York (see “CB Richard Ellis’ New York woes”), internationally, Cushman saw revenues down 25 percent, while operating expenses fell by just 22 percent, hurting the bottom line. Compounding matters, just two weeks after the third quarter ended, company president and CEO Bruce Mosler announced he would step down from the top spot and this month start “transitioning” into a position as a board co-chairman alongside John Cushman III. (He will remain as CEO until a successor is named.) To find a successor, privately held Cushman & Wakefield, owned by the publicly traded Italian company Exor, made the unusual decision to look both outside and inside the industry for a replacement, hiring executive search firm Spencer Stuart to bring in candidates. Mosler told The Real Deal he had always planned to stay in the CEO post for only five years after taking over in January 2005, and that the change was unrelated to company finances. Yet a senior broker at the firm said Exor, which bought Cushman in 2007, was “not terribly impressed” with his tenure.

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3-bedroom, 2-bathroom, 1,600 sf co-op in a prewar elevator building;
unit has master suite with views of Inwood Hill Park, large sunken
living room with high ceilings and separate dining room; building has
live-in super; maintenance $0 for first six months (paid by seller),
then $1,531 per month; asking price $495,000; five weeks on the market.
(Broker: Aida Kassa, A.C. Lawrence)
[more]

Last month’s big foreclosure legislation was signed in Morris Park, a
middle-class enclave of leafy streets and tidy brick homes in the Bronx
where the bill’s co-sponsor, Senator Jeffrey Klein, grew up.
During the first three quarters of 2009, the Furman Center counted
190 foreclosure filings in the community district — the fourth highest
in the Bronx, where the overall quarterly foreclosure filing rate shot
up by 42 percent last year. In fact, four of the five community
districts in the Bronx that have the highest median incomes also saw
the most foreclosure filings (Riverdale-Soundview is the one
exception). Klein said he’s watched empty homes in his neighborhood become
havens for rats, vandals, druggies and squatters; and has heard stories
of marshals evicting unknowing tenants whose landlords were foreclosed
on.
[more]

Queens has been called the “Ground Zero” of the New York foreclosure
crisis, with the most filings citywide for the past three years. But while areas like Jamaica and Queens Village have garnered the
most attention because of the devastation they’ve endured due to the
sheer number of foreclosures there, the community districts that have
seen the greatest increase in foreclosure filings are some of the
borough’s more well-off areas. The two solidly middle-class community districts that include Fresh
Meadows, Hillcrest, Sunnyside and Woodside saw the greatest spike in
the average number of foreclosure filings per quarter, at 64 percent
during the first three quarters of last year. In contrast, Jamaica and
Queens Village saw increases of 17 percent and 32 percent,
respectively. [more]

With its solid middle class and abundance of single-family homes,
Staten Island is the borough that most closely mirrors the rest of the
nation.
Accordingly, average sale prices fell the furthest of any borough
in the city, 28 percent from peak to trough, according to appraisal
firm Miller Samuel.
As prices began to slide at the end of 2007, the Federal Reserve
Bank of New York found that Staten Island had the city’s highest
percentage of subprime and “Alt-A” loans, which require less
documentation and are available to those with lower credit scores.
Today, those loans have translated into a flood of deeply
discounted short sales, foreclosures and bank-owned properties,
including many in the borough’s higher-end areas.
[more]

Jeffrey Davis, the general manager of Columbus Square, in front of the saltwater pool at 808 Columbus

When history books describe the real estate boom of the mid-2000s, they are likely to mention over-the-top amenities. In the mid-aughts, New Yorkers went mad for buildings with movie screening rooms, roof decks and pet spas. Buyers forked over six-figure down payments, and renters signed pricey yearlong leases, often assuming amenities were included. No more. Amid the hangover of the boom, the next generation of residential buildings will come with a bevy of extra fees and surcharges that New Yorkers aren’t accustomed to paying, often incurred to cover the cost of expensive features designed in more prosperous times. Fees for amenities at rental buildings did exist in some places before, but now are being expanded to include traditionally free features, like roof decks. New condos, meanwhile, are struggling to cover budget shortfalls by implementing transfer fees, special assessments and extra charges for previously included amenities like fitness and party rooms.

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Jessica Cohen of Prudential Douglas Elliman

When Core’s Kirk Rundhaug started marketing 32 Clinton Street, a four-unit boutique condo in a far-flung corner of the Lower East Side, he was somewhat surprised at who showed up at his open houses. In addition to the young hipsters generally associated with the edgy neighborhood, Rundhaug fielded inquiries from empty nesters from the suburbs of New Jersey and Connecticut. “They were Lower East Side people when they lived in New York,” he said of one 60-something Westchester couple who are eyeing a two-bedroom unit. “They want to come back.” Manhattan’s population of people aged 65 and older is expected to surge nearly 60 percent by 2030 as the baby boom generation ages. And while boomers had largely disappeared from the city’s real estate market in the wake of the financial crisis, brokers say this all-important demographic is now becoming active again. With prices no longer in free fall, many of the city’s boomers are now putting their sprawling apartments and townhouses on the market as they look to downsize to one- and two-bedroom homes. Meanwhile, suburban empty nesters are also reentering the market with an eye toward eventually retiring in the city, exchanging large, labor-intensive houses for apartments rich in services.

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Amongst a handful of onlookers huddled around an auctioneer in the
rotunda of the New York State Supreme Courthouse last month, a real
estate investor placed the winning bid on an alcove studio for what
seemed like the deal of the century. The price: $28,000.
Yes, that’s right, $28,000 for an apartment in a pristine Upper
West Side co-op building across from the Museum of Natural History. By comparison, a similar studio in the 100 West 81st Street
building sold for $460,000 in 2005, the most recent comparable sale. The shockingly low sale price — more on par with a car than a
Manhattan home — was just $600 more than the amount owed on the
apartment. [more]

For some buyers’ brokers, it’s their greatest fear come to pass. More and more apartment hunters, armed with listing information gleaned from the Web, are representing themselves rather than using a real estate agent. “I have buyers coming at me [at open houses], unrepresented, clutching fistfuls of paper,” said Halstead Property senior vice president Charles Homet, who primarily works with sellers. “They pride themselves on their Internet acumen and they feel they have enough information.” This is the long-feared bogeyman of the Internet era for buyers’ brokers: the idea that buyers will no longer need them because they can find listings online and deal directly with the seller’s agent.And while buyers’ brokers clearly have an advantage right now in the soft market, the long term is a different story. In some ways, the changes are already afoot. Prudential Douglas Elliman vice chairman Dolly Lenz said she is doing “a lot more direct deals,” estimating that she may be working with twice as many unrepresented buyers now as in past years. [more]

Minority and working-class Brooklyn neighborhoods like Bed-Stuy,
Canarsie and East New York have been suffering from high concentrations
of foreclosures since before 2007.
But recent statistics indicate that distress is creeping into
gentrified neighborhoods like Williamsburg, Greenpoint, Fort Greene and
Brooklyn Heights now, too. The Williamsburg-Greenpoint area saw a 141 percent quarterly
increase in foreclosure filings during the first three quarters of 2009
compared to 2008, while Fort Greene and Brooklyn Heights saw a 71
percent jump. Brooklyn-based appraiser Sam Heskel counted 99 distressed real
estate listings in Williamsburg, including 44 condominiums that are in
“pre-foreclosure.” Comments

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Hope springs eternal in the New York City residential market, especially now that 2009 — the worst year in recent memory — is over. “If you survived 2009, you can survive anything,” said Yael Dunayer, an executive vice president at Barak Realty. Like many other brokers, he pointed to strong activity in the second half of last year as an indicator of a possible 2010 recovery. “The last six months of 2009 have been very active and brokers should look forward to riding this trend well into 2010,” Dunayer said. One reason for this optimism is that December — usually one of the slowest months of the year — saw more activity than usual, brokers said. As the holidays approach, New Yorkers — and would-be New Yorkers — usually take a break from real estate shopping, preferring to gift-shop instead. But this year, low prices continued to lure buyers into the marketplace and prompted them to sign on the dotted line much later than usual. “Last year, the brokers didn’t show around the holidays. It’s different this year,” said Marilyn Harra Kaye, president of MLBKaye International Realty. “We even canceled an [office] meeting this month because the brokers were very busy.” Of course, December 2008 was much slower than usual, since it arrived in the aftermath of the Lehman Brothers collapse. But brokers said last month was busier than most holiday seasons, thanks in part to the perception that there are deals in the marketplace.  More
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Richard Bouchner, who co-founded real estate and mortgage brokerage
Commodore Property Group in 2003, thought last month that business was
returning after a tough year for mortgage brokers.
He’d gotten a referral for a borrower he described as a
well-qualified, financially savvy New Yorker buying her first
apartment. He’d arranged a 30-year fixed mortgage of around $480,000,
at 5.125 percent with no points. Then his client read the fine print, saw that he’d make $4,800 on the deal, and opted to get her loan from the bank instead.
“She said, ‘Rich, I don’t feel comfortable with this yield-spread
premium,’” Bouchner recalled, referring to the money a mortgage broker
makes for locking in an interest rate above par on a loan for a
borrower. Banks don’t have to provide similar disclosure on their
profit on a loan.  More
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They’re giving it away. Hundreds of buildings these days tout one, two
and sometimes three months of free rent on new leases. But most of the
time, the “base rent” stays the same, even as rental agents talk about
“net effective” rents — the apartment’s cost once the free rent is
amortized over the life of the lease. It’s sort of like a no-money-down
offer. Brokers say that despite their popularity, net effective rents are
something of a gamble for landlords: Lower the initial sticker prices,
fill apartments and pray that the market rebounds and tenants stay
after their lease expires.
But there are signs that lenders may be allowing landlords to lower
the base rent instead of relying on concessions, thus recognizing that
market-rate rent levels have lowered.  More
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Rose Associates started a rent-to-own program for the 40-story luxury
condo that allows 50 percent or more of the monthly rental costs to go
toward a down payment for up to 13 months. Those who sign rent-to-own
contracts are not required to buy the home at the end of the term. The
Greenfield Partners development, which slashed prices by as much as 25
percent in October, has nearly 50 percent of its 303 units sold and
move-ins have started. Studios start at $295,000; one- and two-bedrooms
start in the $500,000 to $700,000 range; and three-bedrooms are priced
at just over $1 million. Contact: www.orocondos.com.
[more]

The CEO of DDG Partners, Joe McMillan, at 41 Bond Street, which is under construction.

A development team on Bond Street is placing a $34 million bet on the market.
The savvy new investment partnership is making the risky gamble
that by the time they are ready to sell, the condo units they are
building at 41 Bond Street will fetch at least around what comparable
apartments did at the top of the market in 2007. In one of the few high-profile land acquisitions of the downturn,
in September, DDG Partners bought the vacant land on which the firm is
now erecting a nine-story condo, for just over $9 million. The firm is
planning to spend approximately $25 million more on construction,
according to Joe McMillan, the CEO of DDG.
The project will add to the string of boutique buildings already
lining the street, including its most high-profile condo, 40 Bond
Street by Ian Schrager, along with the Deborah Berke-designed 48 Bond
and the stone-and-glass 25 Bond.

[more]

Related CEO Stephen Ross

While the pipeline for condos has slowed to a near-stop, there are a few daring developers out there picking up land and buildings in this tough market. But those who are making purchases and starting up projects now are doing so with revised cost projections — faced with the reality that expenses must be contained in a weak sales market. The Related Companies, for example, restarted construction in the fall on a long-delayed skyscraper at 440 West 42nd Street, which includes a Frank Gehry-designed theater, a hotel and 800 apartments, including market-rate rentals, affordable units and condos. The deal was made possible with the help of $25 million from the city for the theater and a citywide agreement between developers and more than 40 labor unions to trim construction costs up to 20 percent. The project had been on hold for months amid the downturn and limited financing. “This development was unique in that the foundation work had been completed and the financing was in place, but it offers valuable lessons that can be applied to future projects on how we reduce the price of construction in New York,” Bruce Beal, executive vice president of Related, said when construction restarted.  More

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Developers have rethought their original plan for Seaport Square, a
proposed South Boston mixed-use complex. The development team,
including Gale International, Morgan Stanley and W/S Associates, has
decided to keep the total planned square footage of the development the
same at 6.5 million square feet, while upping the number of buildings
in the complex from 19 to 23, the Boston Globe reported. The plan to
increase the number of structures comes as developers decided to reduce
the overall height of the proposed buildings. The height of the
structures in the complex, which includes residential, office and
retail space, will match the height of surrounding buildings, according
to the Globe.
[more]

David Levinson

David Levinson is the chairman and CEO of L&L Holding Company, which he co-founded with Robert Lapidus in 2000. The company owns some 5 million square feet of commercial office space valued at around $3 billion, including 142 West 57th Street, 150 Fifth Avenue, 195 Broadway, 2 Park Avenue and the former International Toy Center at 200 Fifth Avenue. Before forming L&L, Levinson was the vice chairman of CB Richard Ellis.  More

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Ken Freeman, senior vice president of sales with Massey Knakal, left, and Lee Soloman, a director with Brown Harris Stevens

If ever there were a Brooklyn neighborhood to lead the way for a rebound, it would be Park Slope. With its well-kept brownstones and its proximity to Prospect Park, Park Slope is routinely cited as one of the most desirable neighborhoods in the borough. But while it has seen a recent uptick in activity, even Park Slope has felt the market slide. Brokers interviewed for this month’s Q & A told The Real Deal that they saw more transactions in the final months of last year compared to the abysmal lack of trades before that. But they said that even properties that were “marginally overpriced” were still not getting the time of day from buyers. Part of the improvement can be traced back to the fact that inventory is down. That’s because Park Slope sellers who can avoid putting their properties on the market for the low prices are holding back. As one source put it, that low inventory is “an advantage for those that are currently listed.” For more on what’s happening with prices, sales volume and buyers in Park Slope, we turn to our panel of experts.  More

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In the incredibly dense neighborhood of Flushing in northeast Queens, a new crop of luxury condos has quietly sprouted.
Unlike other parts of the city, where developments conceived during
the boom have been converted to rentals, these new condos remain sales
developments. And they seem to be holding up better than other parts of
the borough, thanks, in part, to demand from a vibrant local Asian
community and recession-friendly prices. Although upscale condos still remain a fraction of Flushing’s
housing stock, new developments such as Sky View Parc, Residence 8, and
the Sequoia are slowly starting to reshape the neighborhood, the last
stop on the number 7 subway line.  More
[more]

Compiled by Linden Lim

(Click below to view larger PDF)

The effort to increase affordable housing in the city has remained in
high gear despite budget cuts elsewhere. The city’s Department of
Housing Preservation and Development, led by Commissioner Rafael
Cestero, was on track to complete its 100,000th unit of either
rehabilitated or new public housing at the end of last year, Crain’s
reported. The agency’s goal is 165,000 affordable apartments by 2014.
The city is also helping to refinance overleveraged affordable
properties. The sale early last month of 14 South Bronx buildings to
Omni New York, headed by former Mets first baseman Mo Vaughn, is cited
as a successful example of this. Omni replaced Ocelot Capital Group,
which had abandoned the buildings and defaulted on the mortgage. The
city, which had already overseen $1.3 million in repairs there, worked
with the $29 million loan holder Fannie Mae to arrange the sale.
[more]

The eastern façade of the new Goldman Sachs building at 200 West Street

What follows is, in part, a tale of two skyscrapers. We must hope that
a firm as sober as Goldman Sachs doesn’t do things without a very good
reason. And yet it is not clear exactly why the firm needed a new
corporate headquarters at 200 West Street, near Battery Park, given
that it had a perfectly decent skyscraper directly across the Hudson in
Jersey City. Perhaps there was a purely aesthetic, or even emotional,
reason. The New York Times reported in 2004 that plans to transfer
traders to the 42-story, $1.3 billion tower in Jersey City “had to be
scuttled after the proposal touched off an insurrection inside the
bank.” Even among financial types, there is just something about
Manhattan.

[more]

Often at the beginning of the New Year, business leaders seek out the
Amazing Kreskin, who for some six decades has served as a bona fide
mentalist on his predictions for the coming year. Instead of seeking
the advice of Kreskin, or my cloudy crystal ball, I’ve asked a who’s
who of the New York commercial real estate industry for their insights
on 2010.
Last year, the difference between asking and net effective rents
was down by close to 50 percent and few office leases were struck at
prices over $100 per square foot. Yet industry leaders like Bruce
Mosler, co-chairman and CEO of Cushman & Wakefield, believe we have
reached the bottom on pricing. “In 2010, I expect rents to rise, concessions to level off and strong landlords to control the marketplace,” he said.
[more]

New retail is trickling into Long Island City to catch up with the
luxury condo and rental building boom of the last four years. Tony restaurants and stores — from spas to gourmet food shops –
are filling in among the waterfront properties and along Jackson Avenue
and Vernon Boulevard.
Despite the struggles Long Island City has seen on the residential
side of the market because of large amounts of new inventory, retail in
the area has seen a growth spurt, even as it has been slowed somewhat
by the recession. The area still has one of the largest concentrations of industrial
businesses in New York City, but now old lumberyards, electrical shops
and food processors commingle with trendy cafés and boutiques.
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Sam Zell, chairman of Equity International Properties, has looked to
South America for his latest real estate venture. The billionaire real
estate mogul and owner of the Tribune Company announced that he will
purchase an 8.5 percent stake in Brazilian Finance & Real Estate
Participacoes SA, a Sao Paulo-based holding company.
This involvement in Participacoes reflects Zell’s increasing
interest in tapping the Brazilian real estate market, Bloomberg News
reported. Zell’s company has already invested in one of the country’s
largest real estate developers, Gafisa SA, and BR Malls Participacoes
SA, the largest Brazilian shopping mall owner.
[more]

(Click below to view PDF)

Martin Burger joined Silverstein Properties last month as a new executive vice president, part of the company’s effort to extend its influence abroad. Burger has served as executive vice president at the Related Companies, been vice president at the Blackstone Group and worked in a Goldman Sachs real estate fund. He joins Silverstein after serving as founder and CEO of Artisan Real Estate Ventures, a three-year-old real estate group based in New York City and Las Vegas that focuses on acquisitions, development, property management and financial services. Burger told The Real Deal that he will be based at 7 World Trade Center, Silverstein’s headquarters, where his job will be to “figure out how to expand in this environment.” Although Silverstein Properties said in a written statement that Burger will be brought on to expand the company’s international scope, Burger’s background is based in the U.S. “Look, [I don't have] a lot of experience in international affairs,” Burger said, adding, however, that “should we come across an opportunity to be a developer for a great project outside the U.S., that’s something [we'll pursue].” [more]

In a fiercely competitive (and lackluster) new development market, two real estate veterans are teaming up to gain an upper hand. Kevin Kurland, CEO of Kurland Realty, and Jan Sasson, head of E Property Group, have formed Kurland/Sasson Development Marketing Services group, which aims to shape developments from start to finish. The merger was announced early last month. Kurland and Sasson said their differing expertise — Kurland has a brokerage background, while Sasson has worked more in development — led them to join forces. The team plans to assist developers in planning everything from mapping out floor plans to choosing kitchen cabinets. Kurland argued that their business will save developers money: Rather than having to hire separate designers and marketers, developers could use the firm as a one-stop shop. “Value’s the name of the game,” Kurland added. “We offer very competitive commission structures for developers.” [more]

Residential

AC Lawrence & Company

Canan Aktas and Nikki Goldberg joined the company as sales associates.

Barak Realty

Gordon D. Voight II joined the firm as a vice president. He was previously with DJK Residential. James Miller joined as an associate broker. Heidi Nauleau joined as a sales associate.

Brown Harris Stevens

Catherine Zito joined the company’s Brooklyn Heights office as a salesperson.

Charles Rutenberg Realty

Janique Svedberg joined the company. She was previously with Prudential Douglas Elliman.

The Corcoran Group

Mary Pat Dowhy and Christopher Mantione joined the company’s Chelsea office as sales agents.

DJK Residential

Frank Assini joined the company as a sales agent. He was previously with Urban Sanctuary.

Harlem Lofts Inc.

Belynda M’Baye, Holly Williams, Kellie Madden, Jerome Jackson and Valon Nikci joined the company’s recently opened third office at 272 Lenox Avenue.

Commercial

Arbor Commercial Mortgage

Charles Ostroff was appointed chief underwriter. Louis Sarube was appointed vice president of asset management. He was previously with UBS Investment Bank/Dillon Read Capital Management.

Newmark Knight Frank

Richard Cassin and Jeffrey Rosenblatt joined the company’s capital group as senior managing directors. Cassin was previously with Commerce Bank as a senior vice president and head of the commercial real estate division. Rosenblatt was most recently with Grubb & Ellis.


RHYS Commercial

Jon Sabrowski and Dominick Musilli joined the newly launched company as principals and executive vice presidents. Sabrowski will head the investment sales division, and Musilli will head the retail services division.


Sierra Realty Corp.

Shane Neuringer joined the company as senior vice president of acquisitions and finance. He was previously with CB Developers.


The Vortex Group

Jordan Mandel joined the company as a principal. He was previously with UGL Equis.

Compiled by Linden Lim

George Pierson, new CEO of Parsons Brinckerhoff

Parsons Brinckerhoff — the 125-year-old, New York City-based planning, engineering and construction management firm — has appointed a new CEO, George Pierson. The selection was made official Jan. 1 of this year. Company CEO Keith Hawksworth will become chairperson. Pierson was the company’s American division chief operating officer and, before that, was the general counsel for Parsons Brinckerhoff, a role he took on in February 2006. Hawksworth described the succession of roles as “a logical progression” and praised Pierson’s past service to the firm. “George has performed brilliantly in progressively responsible leadership positions.” Pierson will be the first new CEO to take the helm since Parsons Brinckerhoff was acquired by Balfour Beatty, a professional services and investment group, in October. News of the U.K.-based company’s $626 million acquisition of the firm came in September. Pierson will report to Ian Tyler, chief executive of Balfour Beatty. Parsons Brinckerhoff has 15,000 employees and maintains 150 offices across the globe.

[more]

Developers aren’t the only ones hurting as hundreds of construction
sites citywide sit dormant. The scaffolding companies that provide the
pipe frames around those stalled projects are facing tough times too,
and are expecting things to worsen in the New Year. “There is less work out there than there was a year ago, and there
is less than two years ago,” said Kenneth Buettner, president of the
Long Island City-based York Scaffold Equipment Corp. “2009 was a year
about which to be concerned, but 2010 is a year of which to be afraid.”

[more]

These days, firms don’t downsize, they “rightsize.” Companies no longer make budget cuts, they “reduce to competitive levels.”
The current downturn has ushered in a new wave of vocabulary for real estate firms that are trying to spin bad news.
Lenders may be asking for 25 percent or more of the purchase price
on a new apartment up front, but rather than referring to it as a down
payment, many have recently started calling it an “investment.”
Meanwhile, that deed in lieu of foreclosure was really just a “loss
mitigation technique.” And no, that wasn’t a price cut. It was a “price
correction.”
As the Web site Cityfile recently observed, restaurants across New
York have been “closing for renovations,” until, after a few weeks or
months, they’re finally ready to reveal what insiders knew all along:
Reopening was never in the plans.
[more]

After months of trying to keep his Williamsburg condominium project
afloat on rental income, developer Isaac Hager threw 20 Bayard into
bankruptcy after he was unable to refinance the building loan or
support the building’s monthly debt with outside funds, according to
court documents obtained by The Real Deal.
According to an affidavit filed in U.S. Bankruptcy Court by Martin
Ehrenfeld — director of sales and marketing at North Development and
restructuring officer of 20 Bayard Views LLC, the entity that controls
the condo — Hager was unable to refinance a $17 million mortgage loan
from Manhattan-based lender W Financial Fund. He was also unable to
make a $170,000 interest payment and $85,000 extension fee that would
have extended the loan until Jan. 13, 2010.
[more]

In an audacious attempt to circumvent more-restrictive building laws
set to take effect two days later, the Macklowe Corp. sent contractors
overnight to demolish four Times Square structures 25 years ago this
month.
On Jan. 7, workers partially brought down four buildings at 143-149
West 44th Street between Broadway and Sixth Avenue. The demolition
included two single-room-occupancy hotels. The work was done without
disconnecting the gas lines or obtaining the required permits. While no
one was injured, the next morning the street was blocked with bricks
and broken glass. The firm, headed by developer Harry Macklowe and later renamed
Macklowe Properties, hastily took down the buildings to avoid a
moratorium on the demolition of SROs proposed by the administration of
Mayor Ed Koch that was set to go into effect on Jan. 9. Elected
officials and housing activists were outraged by the demolition,
particularly because at the time, SROs housed many of the city’s
homeless.
[more]

Yikes! What a year. Clearly we are not out of the woods yet, but while many are rehashing the gloom-and-doom events of 2009 when it comes to the economy and real estate, it might be worth taking a minute to look at how bad it could have been. If you remember the first months of 2009, if you haven’t blocked them out, the term “Depression” was being bandied about quite a bit. How many companies would go under, people asked themselves, and would my company fold? Would we see a 25 percent joblessness rate? I edited a story in March loosely comparing our plight to the Depression of the 1930s, mentioning in the headline how there of course wouldn’t be any “tent cities” this time around. A few days later, a bad sign, there it was — a photo of a tent city in California on the cover of the New York Times. There was dinner-table discussion (at my dinner table, anyway) about how frozen the credit markets would get and, say, would you suddenly be unable to withdraw money from ATM machines? But the worst never did come to pass (which is not to say that some major pain doesn’t lie ahead).

[more]

Resilient. That’s the word for Lower Manhattan’s commercial real estate
market for the past 12 months. In the aftermath of the greatest
financial meltdown in recent history, Lower Manhattan boasts the lowest
vacancy rate of any market in the city at 7.3 percent, according to CB
Richard Ellis data for November. Midtown and Midtown South had rates of
10.2 percent and 9.8 percent, respectively, in the same month. Sounds like good news, right?
Not so fast. There’s a looming cloud.
“In many instances it is always calm before the storm,” said Hal Stein,
who heads up Newmark Knight Frank’s Downtown office. “Here is the
issue: [In 2010] there is going to be substantial space hitting the
market from some of the financial firms and that is going to be a
telltale sign.” [more]

The narrow blocks surrounding the South Street Seaport are dominated by
cobblestone streets and 19th-century brick buildings constructed when
the area was a hub of maritime trade. The city’s recent condo boom bypassed the micro-neighborhood –
which is bounded by the Brooklyn Bridge to the north, Fletcher Street
to the south, Pearl and Water streets to the west, and the East River.
Plans to develop condos in recent years have amounted to little, and
development has been dominated by conversions of commercial buildings
into rentals. Nevertheless, brokers who work in the area say it has growing
cachet, and that some of their clients are seeking out Seaport-area
apartments as an alternative to living in the West Village. They also
say many renters they work with are eager to buy, indicating a built-in
market for condo inventory. [more]

Darrell Rubens brokered the deals for high-end fashion stores Thomas
Pink and Canali in early 2007 during the luxury rush Downtown.
Last fall, however, he inked leases for Korean chicken chain
BonChon Chicken at 104 John Street and nail salon Spring Sun Nail at
119 Fulton Street. “Obviously, it’s slowed,” said Rubens, senior managing director at Winick Realty Group.
Four years after BMW touched off a luxury boom that brought Tiffany
& Co. and Hermès to Lower Manhattan’s Wall and Broad Street
corridors, the district’s upscale aspirations have collided with the
hard reality of the Great Recession.
[more]

(Click chart below to view larger PDF)

(Click chart below to view larger PDF)

(Click chart below to view larger PDF)

Click here to view The Real Deal’s map of new condos and rentals shaping the Downtown landscape

Click image for larger version

Like a stampede of bulls, developers thundered into the Financial
District during the boom to snap up dusty offices and fashion them into
luxury apartments. And the city cheered them on, doling out generous
tax breaks to encourage conversions that directly resulted in a dozen
high-profile new condos, and more than 3,000 units, in the last five
years. But now FiDi is glutted with inventory, even more so than most
Manhattan neighborhoods, as hundreds of new units sit unsold. And it
could be more than a year before the apartments find buyers, according
to developers, city officials and brokers.
[more]

The WTC Memorial and One World Trade Center are underway, but the fate of other Ground Zero projects remains unclear.

Development in Lower Manhattan, perhaps more than anywhere else in the
city, is characterized by big ideas. The biggest and most obvious
developments are related to Ground Zero, a site that at present is more
notable for its building delays than its progress. Still, prominent
World Trade Center-related projects, including the September 11th
Memorial, are expected to be finished within the next few years. Beyond the World Trade Center, big Lower Manhattan projects
underway include the construction of the tallest residential tower in
the city and work on the East River Waterfront. Other developments,
such as towers near the Battery Tunnel and the redevelopment of the
South Street Seaport, have fallen victim to the down market. Here are some of the plans floating around that, if brought to fruition, would fundamentally alter Lower Manhattan. [more]