The Real Deal New York

Manhattan’s residential real estate market might be feeling serious
pain, but many real estate insiders believe the city’s commercial
market will spend a much longer period in the doldrums.
While residential real estate is suffering from an oversupply of
inventory and a bursting price bubble largely spurred by a drop in
lending standards, commercial real estate is confronting obstacles on
the debt side that appear to be more entrenched. What’s more, experts
say the problems on the commercial side are in many ways just getting
started and will require far longer to sort themselves out.
[more]

For most homeowners, foreclosure is like a fatal illness that starts
with losing control of their finances and ends with a sickening feeling
when the bank finally seizes the property. Post-foreclosure, a
homeowner’s credit rating gets trashed and he can be in financial
purgatory for years, making it nearly impossible to buy or rent
property. But while foreclosure typically spells disaster for homeowners, for
some New York City investors, it may actually be a good business
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In both real estate and art circles Aby Rosen’s reputation precedes
him. The 48-year-old, silver-haired Rosen is a legendary art collector
and boldfaced name who has successfully parlayed his flashy style and
social status into a hefty real estate portfolio anchored by the iconic
Lever House and Seagram Building — both on Park Avenue.
Until recently, Rosen has methodically placed smart bets, buying
low and then upgrading his buildings and turning them into some of the
most exclusive properties in New York.
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The summer of 2009 has turned out to be a confusing time for New York
City real estate. While Goldman Sachs reported record earnings and Fed
Chairman Ben Bernanke talked optimistically about green shoots, the
bleakest, leanest winter in recent memory gave way to an uptick in
contract signings, filling brokers with hope that the worst days of the
downturn have passed.
[more]

Not too long ago, New York City real estate brokers were fixtures at
upscale restaurants and, frequently, the buyers of the flashy homes
they marketed. Nowadays, many are trading Hermès for H & M and
scaling back their lavish lifestyles. And while most brokers are euphoric that a tough winter has yielded
to a recent flurry of sales and rental transactions, industry insiders
say the current uptick is raising false hope that business might return
to levels seen in recent years. In reality, those days — along with the
easy cash and flexible schedules that went with them — are long gone,
and unlikely to return anytime soon. [more]

Next month will mark the one-year anniversary of the fall of Lehman
Brothers — a date often referred to in “pre-” and “post-” terms in the
New York City real estate market. With that in mind, The Real Deal zeroed in on the 15 best and worst deals since Wall Street’s collapse and the earlier onset of the credit crunch.
[more]

The Bloomberg Administration’s plan to kick-start commercial construction in New York City’s economically distressed areas was dealt a setback when federal financing for a new city program came in tens of millions of dollars lower than originally expected.

The city’s Economic Development Corporation is overseeing the Recovery Zone Facility Bond Program — part of the federal government’s stimulus plan — and is currently soliciting proposals from developers for a total of $121 million available in the form of triple-tax-exempt private-activity bonds for real estate development projects.

However, that figure is roughly $80 million less than what was unveiled when the program was announced in early June by EDC president Seth Pinsky.

The discrepancy, Pinsky said, is in part due to the original legislation, which was “opaque” on how the calculation for financing would be done.

“The fact that it came in at $120 million is disappointing,” he told The Real Deal during a phone interview last month. “But even $120 million is a very significant amount, especially in this environment.”

Regardless of the reduced sum, the program seems to be a welcome new mechanism for developers who have been struggling for nearly a year to drum up any financing to start commercial or industrial projects.

“Right now there is not a lot of financing around,” said Jay Neveloff, a partner at the firm Kramer Levin, who has consulted with a number of clients about the new bond program.

According to Neveloff, developers and their lawyers are still sifting through the fine print of the plan, weighing the transactional costs with the benefits of getting this type of financing.

“Any time you do a bond financing there are a certain amount of fixed costs and if [the financing] is big enough, it can justify the costs,” Neveloff said.

Only commercial and industrial projects are eligible for the program, and they must be located in designated “recovery zones”— areas within the five boroughs experiencing acute economic distress. (The EDC took what it says was a “conservative” opinion of what constituted a recovery zone, making eligible vast swaths of Brooklyn, the Bronx and Queens, and, even portions of Manhattan.)

Projects must also be “shovel ready” and require bond financing between $20 and $100 million, meaning the program may cover only a small number of projects.

Around a dozen proposals have already been submitted to the EDC, the bulk of which are commercial projects, Pinsky said.

Final recommendations will be made in the fall, and all recommended projects will be subject to public hearings and then voted on by the city’s Industrial Development Agency board. Only then will the proposals be made public.

“Our goal is to encourage transformational projects that wouldn’t otherwise occur, which are spread across the city in the neighborhoods that are hurting the most,” Pinsky said.

The Recovery Zone Facility Bond Program is being likened by analysts to the Liberty Bonds program, which was prevalent in the rebuilding of Lower Manhattan after Sept. 11, 2001. But some have found that an unfortunate analogy.

Bettina Damiani of the watchdog group Good Jobs New York said the Liberty Bonds served only to escalate gentrification and line the pockets of larger financial firms, defeating the whole purpose of the program.

“I would hope that the Industrial Development Agency would have evolved, and recognized that the key is to use resources to diversify the economy and make efforts to create or expand industries that hire locally,” she said.

Jeremy Spector, a public finance attorney at Mintz Levin who has written about the program, expects projects that are more labor-intensive to have an advantage, as well as those that already have a portion of credit lined up.

“It is really beneficial to those companies that have access to credit, but if a company is struggling to get access to any credit at all, then the program is not going to be much help to them,” he said. “But I would think the line would be pretty long.”

Despite the wretched outlook for New York City’s lodging sector,
construction workers in hardhats and neon orange vests gathered with
real estate executives on gritty West 39th Street last month for a
small moment of hotel-related celebration.
They stood gazing upwards in respectful silence as an American flag
zoomed through the blue sky on a pulley, headed for the top of the
hotel, developed by Sam Chang, under construction between Eighth and
Ninth avenues in the shadow of the Port Authority, which had hit a
construction milestone.
[more]

UBS selling stake in 299 Park Avenue

UBS is selling its 49 percent stake in 299 Park Avenue, the 1.16 million-square-foot tower between 48th and 49th streets, according to the New York Post. The bank, which has more than 750,000 square feet in the building, is not planning to sell a set of floors, but rather its ownership interest in the property. Managing partner Fisher Brothers holds a 51 percent ownership in the building. Sources told the Post that Robert Alexander, Darcy Stacom, Pat Murphy and Bill Shanahan of CB Richard Ellis will be fielding offers for UBS. The building is fully leased until 2018, and sources predicted the sale will go for under $700 per square foot.

Bronx multifamily portfolio for sale

A package of five buildings in the Bronx neighborhoods of Parkchester, Mount Hope, Bronx River and Mott Haven is on the market with an asking price of $15.75 million. The properties, which can be purchased as a portfolio or in various combinations, are located at 352 East 141st Street, 1250 Morrison Avenue, 1523 Taylor Avenue, 1812 Clay Avenue and 1501 Leland Avenue. The 177,021-square-foot portfolio has 189 residential units, 187 of which are rent stabilized and two of which are rent controlled. The five buildings have an average monthly rent of $944. Karl Brumback, Nick Burns and David Simone of Massey Knakal are handling the sale.

East Village mixed-use building on the block

A six-story mixed-use building at 179 East 3rd Street is for sale with an asking price of $13.65 million, or $690 per square foot. The 19,784-square-foot walk-up property has three commercial units in the basement, three ground-level stores and 32 residential units above. The apartments include nine one-bedrooms and 23 two-bedrooms. Of these, two units are rent controlled, 13 are rent stabilized and 17 are free market. The asking price represents a capitalization rate of 5.8 percent and a gross rent multiple of 13.9. Robert Knakal, Jonathan Hageman and Joseph Sitt of Massey Knakal are marketing the property.

Staten Island package asking $12 million

A package of 16 apartment buildings at 150, 165 and 220 Trantor Place in Staten Island is on the market with an asking price of $12.2 million. Located in the Port Richmond section of the borough, the portfolio consists of 177 apartments, including 105 three-bedrooms and 72 four-bedrooms. The average monthly rent at the properties is around $880, with a capitalization rate of 8.7 percent and a gross rent multiple of 6.5 at the asking price. Matthew Giordano, Robert Knakal, Jonathan Hageman and Thomas Donovan of Massey Knakal are marketing the portfolio.

Queens apartment building on the market

A six-story apartment building at 110-48 72nd Avenue in the Forest Hills section of Queens is on the market with an asking price of $8.3 million. Located on the south side of 72nd Avenue between 110th and 112th streets, the elevator building contains 48 units, including 29 studios, 11 one-bedrooms, seven two-bedrooms and one three-bedroom. Thomas Donovan of Massey Knakal is marketing the property.

Far Rockaway multifamily property for sale

A six-story apartment building at 2288-2292 Mott Avenue in Far Rockaway, Queens, is on the market with an asking price of $5.95 million. Also known as 1302 Gipson Street, the elevator building has 60 apartments, including 36 three-bedrooms, 18 four-bedrooms and six five-bedrooms. Purchasers can assume existing financing from New York Community Bank, including a first mortgage of $4 million and a second mortgage of $250,000. George Niblock of Friedman-Roth Realty Corp. is handling the assignment.

East Harlem commercial building for sale

The Catholic Museum’s 22,500-square-foot headquarters at 443 East 115th Street is on the market with an asking price of about $5 million, the Post reported. The building is a former church, built in 1884, and according to the museum’s executive director, more than $10 million went into the property’s restoration. Located in an R7B district, the building is being marketed for use as an art gallery, school or community facility by Prudential Douglas Elliman’s Pamela Nichols and Jason Stojkovic. The price has been reduced from just under $8 million, according to StreetEasy.com.

Compiled by Linden Lim

Over the last two years, the dollar volume of distressed commercial
real estate loans at a sampling of New York-based community banks has
risen eightfold. That’s only the beginning of a wave of delinquencies
expected to hit portfolio lenders, analysts said.
Experts predict more red ink in the mid-year earnings reports
released this month from lenders such as New York Community Bank,
Flushing Savings Bank and Astoria Federal Savings. These institutions
are considered stable lenders, but have still seen a steady increase in
failing loans. [more]

Even as the Manhattan office leasing market starts to show some signs
of stability, velocity remains far below normal. To deal with the
pressure of the weak market, some landlords are offering double
commissions to brokers who sign deals in their buildings or are giving
crisp $50 bills to agents to simply show a space.
At the same time, brokers said there are landlords who are having a
hard time paying even a single commission, and who are trying to drag
out payments or reduce broker fees.
[more]

In Stanley Kubrick’s cult classic film “The Shining,” a once-luxurious hotel paradise turns out to be a house of horrors that’s nearly impossible to escape.

Right now, it seems that New York’s hotel investment sector is having its Shining Moment. The hundred or so hotels developed during the last few years are beset by murderous debt levels, credit markets that prevent easy escape via refinancing and the specter of Depression-like economic troubles.

“For the first half of the year, people were hoping we would recover, or they could work out deals with the lenders,” said Bradley Burwell, a senior associate in CBRE’s Capital Markets Group for hotels. “May killed that hope, and June was not much better — and it’s finally gotten to the point where borrowers have run out of money.”

Though only one high-profile Manhattan hotel has become delinquent this year (the Dream Hotel at 210 West 55th), signs of distress are mounting. Burwell estimates that by the end of the third quarter — a full year into the accelerated economic downturn — more than half of New York City hotels will be in technical default on their loans, meaning the debtor has violated terms of the loan such as a minimum working capital requirement.

The hospitality market nationally is certainly getting hammered as hotels are defaulting at higher rates than other real estate sectors.

Those properties in technical default have found that the wildly rosy revenue expectations of the boom years have not panned out, and have been limping along by paying their debt with reserve funds. For their part, banks have had incentives to modify hotel loans rather than foreclose. Foreclosure leads to several messy problems, including a hit to profits from writing down the bad loan, a struggle to find a buyer for the asset and the headaches of actually running the hotel until a buyer is found.

“There are no transactions, and if you take it back, where are you going to sell it?” said Jeff Davis, executive vice president at Jones Lang LaSalle Hotels.

The worst is yet to come, sources said. In the third quarter, a brutal winnowing is expected to begin, separating firms that can afford to keep covering debt from sources other than operations from firms that can’t. As a result, Manhattan hotel experts and dealmakers forecast a series of transactions for distressed hotel development projects and properties through the end of 2009 and into early 2010.

“It’s going to get ugly,” said Alan Miller, senior director and principal at Eastern Consolidated. “Foreclosures haven’t quite happened yet; they’ve been avoiding the inevitable by extending these loans, but they are not filling these rooms at rates needed.”

With the hospitality firm PKF Consulting forecasting that 2009 revenue per available room at metro New York hotels will plunge 30 percent, hoteliers and lenders could face a worsening cash crunch. That means real defaults, when even lenders who want to forebear will not be able to, notes Jeff Bernstein, a partner at real estate investment bank Guild Partners.

“We’ll find that as soon as lenders become less cooperative, we’ll see a bunch of hotels trading,” added John Bralower, president of Carlton’s Hospitality Group.

Still, pricing deals is a problem, because it’s unclear where the bottom of this sinking market lies. The Fairfield Inn New York Manhattan/Times Square South sale in March to Gehr Development is widely regarded as the last major sale this year — and that transaction got started in 2008. There are, however, no widely accepted recent benchmarks for hotel deals.

Dealmakers are doing their best to hype Manhattan’s glittering hotel history as a factor to balance plunging values, but the numbers are grim. According to Burwell from CBRE, values are down 35 to 50 percent from the peak in early 2007, making loans worth 50 to 60 cents on the dollar.

That’s what buyers have been willing to pay for debt over the last year, but banks were trying to get 75 to 80 cents on the dollar.

“I don’t think banks and lenders in general have made up their minds if they are willing to accept that 50 cents on the dollar,” said Burwell. “They are just now beginning to explore it and come to the realization that’s what this is worth.”

Last month talk swirled of deep-pocketed private equity, institutional and international buyers sitting on the sidelines, eager to scoop up Manhattan hotels or development deals for a relative pittance. But it remains unclear who has the interest or capital to buy a distressed New York City hotel in this economic climate.

Several sources said companies that have done deals lately, including RLJ and Gehr Group, could be hungry for more. RLJ, the hotel investment group run by Black Entertainment Television founder Robert Johnson, reportedly closed in February on a Hilton Garden on West 35th Street for $125 million, another deal begun in 2008.

Apple REIT and HEI Hotels are also said to be potential buyers. New York’s Shining Moment is unfolding against a national spike of hotel sector distress, up 216 percent mainly due to the bankruptcy of Extended Stay, according to Real Capital Analytics.

Major firms are walking away from projects, as REIT Sunstone Hotel Investors did with the $96 million W San Diego in June instead of continuing to fund the mortgage, or looking to unload them, as Starwood reportedly is with its W Tuscany in Manhattan. Sources said it’s on the market at a fire-sale price of $200,000 to $250,000 a room — compared to the $500,000 to $600,000 per key luxury hotels had fetched two or three years ago. W declined to comment.
NYC Hotels Get Hammered

The sharp rise in leasing activity in June was a welcome shift from the anemic figures of prior months, but early reports from last month showed that the surge has leveled off, industry experts said.

The amount of square footage leased in Manhattan rose by 50 percent — from just under 1 million square feet, to 1.47 million — in June compared with May, data from commercial firm CB Richard Ellis showed. The June leasing figure was roughly 27 percent lower than the five-year monthly average for Manhattan.

By the middle of last month, about 700,000 square feet had been reported leased, said Steven Coutts, research director and senior vice president at tenant representative firm Studley, citing CoStar data. But Coutts said he did not expect July to end with a strong showing, based on deals in the pipeline for the rest of the month.

“I would expect July to be a drop off from June,” he added.

Tenants, he noted, were holding off signing leases last month for the same reasons as in the past several months — they are trying to time the market and find the best deals.

“This market will be driven by renewals that have to be dealt with,” Coutts said.

Meanwhile, the most recent figures from CBRE showed that average Manhattan asking rents fell in June to $53.35 per square foot, from $54.63 per foot the month earlier.

The rate of availability in June rose 0.1 point, to 14.2 percent.

Peter Riguardi, president of the New York office of Jones Lang LaSalle, said last month’s leveling off still signals market strength, because one would expect the market to decline in the summer.

“I don’t see that the pace has gotten any stronger than it was in June. I think it has stayed the same,” he said. “But that in itself is encouraging, because I was concerned that in the summer months of July and August that would slow down.”

Several large renewal deals were signed in July, including 240,930 square feet by Wachtell Lipton Rosen & Katz at 51 West 52nd Street on the Avenue of the Americas, and 202,495 square feet by Showtime Networks at 1633 Broadway at 51st Street, the New York Post reported.

Although the pace of closed deals remains slow, some landlords said foot traffic is up from large companies who are in the market for space.

Roger Newman, a senior vice president at Paramount Group, a landlord with about 10 million square feet in New York City, including 1633 Broadway, said the number of large tenants has increased and “we are talking to more” of them.

David Falk, president of Newmark Knight Frank for the New York tri-state region, also said leasing velocity appeared to be headed down last month from June. However, he said, his firm has about half a dozen deals in Midtown and Midtown South for 100,000 square feet or larger that will close by the middle of this month.

Falk would not, though, hazard to guess as to what large tenants might pay in the half-vacant Worldwide Plaza at 825 Eighth Avenue, which sold last month for about $600 million.

“The market is not very mature there,” he said. “Worldwide Plaza has to compete with 47 blocks over 100,000 square feet, some on Park Avenue … and some being subsidized by large banks in the low $40s.”

Falk said he hasn’t seen the same increase in large tenants that Newman cited. He pointed out, however, that there are firms out there looking. Accounting firm Deloitte is looking for about 500,000 square feet, Katz Media Group wants about 150,000 square feet and Avon Products is in the market for approximately 200,000 square feet, he said.

Midtown

Average asking rents in Midtown fell another 2.7 percent in June, to $60.45 per square foot, from $62.16 per foot in May. They are down 30 percent from the district’s high point of $86.57 per foot one year ago, CBRE statistics showed.

Studley researcher Coutts noted that in the Plaza District, large tenants were taking advantage of low prices to sign renewals, though still at a higher price than in other areas.

Class A asking rents were down by nearly 50 percent from $125 per square foot in last year’s third quarter to $65 per square foot last quarter, Studley data showed.

“Firms are taking advantage of the pricing in the market to re-up and renew,” Coutts said.

He explained that as of July 1, renewals comprised 47 percent of citywide deals larger than 30,000 square feet. But in the Plaza District, 70 percent of the square feet leased were renewals, Coutts said.

CBRE data showed that the availability rate in Midtown rose slightly to 15.4 percent, from 15.2 percent in May, despite the higher leasing volume, as large blocks of space came on the market, such as 192,000 square feet on several floors at 800 Third Avenue.

And in another sign that Midtown landlords remain eager to make deals, the taking rent index — which tracks the accepted rent as a percentage of the asking rent — which had risen in May for the first time since last fall, fell to a new low, 76.2 percent, in June, the CBRE report said.

As recently as January 2008, the index had been above 95 percent.

Midtown South

Midtown South was the only area to show a decrease in the availability rate in June, falling from 14.4 percent to 14.1 percent. That was due, in part, to the withdrawal of space from the market, CBRE reported.

The market was also home to Manhattan’s largest renewal lease in June. Bonnier, a publishing company, took 98,721 square feet at 2 Park Avenue, CBRE’s data showed.

Despite the increase in activity, average asking rents in Midtown South fell to $44.79 per square foot in June, down from $46.22 per square foot the month earlier, CBRE numbers showed.

Downtown

Average asking rents in June fell slightly to $41.91 per square foot, down from $42.46 per foot the month earlier, and the availability rate increased to 11.1 percent, from 10.8 percent in May, the CBRE data showed.

Rental activity Downtown was the slowest of the three markets. Only 130,000 square feet was leased, 69 percent off the five-year monthly average of 420,000, CBRE numbers said.

Most of the activity Downtown was in the Financial District, where just over 120,000 square feet of space was leased in June. In the City Hall submarket, about 8,000 square feet was leased, while in the World Financial Center area, no leases were signed, CBRE reported.

By the Numbers August 2009

Note: Correction appended

At the Desk of Robert Ivanhoe

Long Island City developers may be dealing with the consequences of
unleashing a wave of new condos into an untested market, but the damage
there is not as bad as it is in its Brooklyn counterpart neighborhood
of Williamsburg. In this month’s Q & A, brokers working in Long Island City told The Real Deal that the Queens neighborhood has hundreds of new, unsold units compared to the thousands that exist in Williamsburg.
But, unlike Williamsburg, Long Island City has yet to really come into its own in terms of amenities — beyond the basics.
[more]

Manhattan

Chelsea

$1.65 million

133 West 22nd Street

2-bed, 2-bath, 1,340 sf condo in a new elevator building; 24-hour doorman; unit has floor-to-ceiling windows, office, hardwood floors; building has roof deck, pool, fitness center, garage, storage, laundry facility; common charges $1,386; taxes $287; last listing price $1.895 million. (Broker: Sylvia Pilar, DJK Residential)

East Village

$1.22 million

38-40 Stuyvesant Street

2-bed, 3-bath, 1,441 sf condo in a prewar building; unit has hardwood floors, washer and dryer, granite countertops, three exposures; common charges $1,007; taxes $481; last listing price $1.599 million; 25 weeks on the market. (Broker: Javier Lattanzio, Time Equities)

Midtown West

$765,000

150 West 56th Street

1-bed, 1.5-bath, 805 sf condo in an elevator building (City Spire); 24-hour concierge; unit has terrace; building has health club, swimming pool, sauna and party room; common charges $649; taxes $668; last listing price $898,000; seven months on the market. (Brokers: Stephen Yoon and Maggie Ocampo, Time Equities)

Upper West Side

$1.31 million

134 West 93rd Street

2-bed, 2-bath, 1,343 sf condo in a prewar elevator building; unit has washer and dryer, western, northern and southern exposures; granite countertops; building has video intercom, storage, outdoor garden; common charges $831; taxes $464; last listing price $1.349 million; eight weeks on the market. (Broker: Mary Sheller, Time Equities)

Upper West Side

$360,000

205 West End Avenue

Studio, 1-bath, 575 sf co-op in an elevator building; 24-hour doorman, concierge; unit has hardwood floors, northern exposure; building has storage, bike room; maintenance $694; 52 percent tax deductible; last listing price $390,000; three weeks on the market. (Brokers: Robert Lombardo, Barak Realty; Matt Clark, Bellmarc Realty)

Uptown

$137,000

478 West 158th Street

1-bed, 1-bath, 450 sf co-op in a prewar walk-up building; unit has hardwood floors, western exposure; building has laundry facility; maintenance $467; 32 percent tax deductible; last listing price $137,000; 14 weeks on the market. (Brokers: Leif Johansson, Barak Realty)

Brooklyn

Boerum Hill

$600,000

480 State Street

1-bed, 1.5-bath, 1,400 sf duplex condo; unit has storage, patio; common charges $200; taxes $134, 15-year tax abatement; last listing price $645,000; seven months on the market. (Broker: Alison Jevremov, Brooklyn Heights Real Estate)

Cobble Hill

$487,000

15 Bergen Street

Studio, 1-bath, 700 sf condo; unit has southern exposure, exposed brick walls, washer and dryer; building has roof deck, live-in superintendent; common charges $304; last listing price $499,000; 121 days on the market. (Broker: Jessica Jones, Brooklyn Heights Real Estate)

Downtown Brooklyn

$273,000

235 Adams Street

1-bed, 1-bath, 734 sf co-op in an elevator building (Concord Village); unit has southern and eastern exposure, storage; maintenance $715; 33 percent tax deductible; last listing price $299,000; one month on the market. (Broker: Jordan Glickstein, Brooklyn Heights Real Estate)

In a bad economy, the plight of the unemployed gets most of the
attention. But as the ranks of New York City’s jobless increase, and
more people downsize apartments or take on roommates to deal with the
economic downturn, they also send their landlords’ utility and
maintenance costs skyrocketing in rental buildings.
“Where you get lots of move-ins and move-outs, you worry about
damage at the building,” said David Picket, president of the Gotham
Organization, which operates more than 1.7 million square feet of
residential and retail real estate in New York and other parts of the
Northeast. [more]

In brokering the sale of a Park Slope apartment this spring, Jessica Buchman learned just how picky potential homeowners can be in the current buyer’s market.

The deal was almost derailed several times by a buyer who insisted — rather, demanded — that his dog receive approval from the co-op board before he would even consider signing a contract for the one-bedroom unit, recalled Buchman, a senior vice president at Corcoran who represented the seller.

After weeks of negotiating, the buyer submitted a full board package on behalf of his pooch, complete with photos and reference letters attesting to the dog’s good behavior.

“It was excruciating,” said Buchman, who typically sees only mentions of pets in buyers’ own board packages. “There was more dealing with the dog than the buyers.”

In fact, the buyer was so emphatic, she recalled, “I found myself having these really combative conversations about a dog. It was really unbelievable.”

The contract was signed early last month, said Buchman, who noted: “The buyer may get turned down, but the dog has been approved to live in the building.”

Although that situation is extreme, buyers not only have a newfound power in this market, their pickiness means that they are making new demands on brokers’ time — and psyches — and many have inflated expectations of what kinds of deals they will get.

“There’s a sense of entitlement of what they want,” Buchman said.

The demands are bordering on outrageous, brokers said, with potential buyers insisting on unrealistic price cuts and passing on apartments for details as small as an unappealing fixture.

In a tough market, few brokers said they would turn away an overly picky client, no matter how frustrating they became. But some pointed out that even spending countless hours with a fussy client does not ensure a deal, and some sales only close after dozens of showings and re-showings of the property.

Indeed, some brokers say demanding buyers, fueled by media reports and market savvy, want the incredible deals they’ve heard about — even if it means visiting an endless array of apartments or throwing extras into closing contracts.

Julie Friedman, a senior executive vice president at Bellmarc Realty, noted that brokers are showing buyers three to four times as many units as they used to.

“The first-time homeowner who traditionally would have been OK with just a view … now wants a view, outdoor space, mint condition, extra closets, a washer and dryer,” she said.

Recently, Friedman showed clients a two-bedroom apartment in Gramercy that she described as a “gorgeously renovated, sleek, sophisticated, high-end unit.” But the buyer kept fixating on the window treatments and ultimately walked away. Friedman said buyers are looking for the elusive “better apartment for less money.”

“People are now thinking they can buy something for $999,000 that was $2 million. They can’t.

“When they realize what $999,000 buys, they’re still disappointed,” she said.

As a result, many buyers simply offer less money for apartments out of their price range.

Augustus Moy, a sales associate at the Real Estate Group New York, has been helping a close friend find an apartment since February.

“He’s basically searching out the deal of the century,” said Moy. His friend, who is looking in Bayside, Queens, has a budget of $350,000, but has made several offers for far less.

Recently, he offered $270,000 on a $350,000 one-bedroom at the Bay Club, a luxury condominium. “It’s absolutely absurd,” said Moy, who told his friend at the time, “I wouldn’t be surprised if they flipped us the bird.”

Indeed, the offer was rejected.

Buchman said she has buyers who also are looking for their “perfect” apartment: a two-bedroom condo with outdoor space in Brooklyn, for under $700,000. They consistently make offers almost 25 percent under the asking price, and when those are rejected, Buchman inevitably gets an e-mail saying, “Is it too much to ask, to get a two-bedroom, two-bathroom with outdoor space in Park Slope?”

“Nothing is too much to ask for,” said Buchman, who said she feels too sheepish to tell the buyer otherwise. “But evidently we keep coming to this point.”

Myrel Glick, a vice president at Prudential Douglas Elliman, stressed that buyers should be discerning up to a point because they are making a big investment. But, she noted that fussy buyers know no price limits. And in general, buyers on tighter budgets — and first-time buyers — are looking to take advantage of the market.

“They think this is their time. It was a seller’s market for so many years,” said Glick.

Still, the Brooklyn-based broker has broken the bad news many times to buyers looking for charming homes on quiet, tree-lined streets who think they will find their dream apartment for under $400,000. Recently, she showed a fussy buyer around 100 homes before the buyer compromised on location and found a house in Bedford-Stuyvesant.

Naomi Muramatsu, director of sales at Bond New York, recalled one buyer who kept her agents busy since the fall searching for a two-bedroom apartment in Greenwich Village for under $700,000. They showed him 50 apartments and he bid on three units, but offered 30 to 40 percent lower than the asking price each time. Part of the problem, said Muramatsu, was that the buyer initially wanted a one-bedroom, but after reading media reports about falling prices, decided to spring for a two-bedroom. But his budget remained the same.

There is a Catch-22 for brokers.

“If you put your foot down and you act gruff, you’re not going to make a living,” Buchman said. In the case of the dog-owning buyer in Park Slope, she said in the “old days,” the seller would either dismiss the dog or tell her to find another buyer.

For their part, sellers are willing to comply. “If they let it go, they don’t know when the next buyer is going to come,” Muramatsu said.

Friedman, of Bellmarc, described another kind of “buyer arrogance” that demands repairs as part of the deal. In apartments where flat-screen televisions adorned walls, buyers want walls smoothed over.

“They think Picasso should come in and fix the wall. They want it skim-coated, they want it sponge-painted,” she said.

“I don’t mind discerning,” said Friedman, but she noted that buyers today are “beyond discerning.” She recalled a buyer who passed on a deal because a granite countertop had round corners, not square.

“When people say they’re not buying a house because the corners are rounded, not square, that’s not picky. That’s a buyer who’s not a buyer.”

Edward Milton Cisneros, a real estate agent at New York Living
Solutions, was surprised recently to receive a panicked phone call from
a family he is representing in the purchase of a Long Island City new
construction condo. The buyers said the appraisal for their new home —
a two-bedroom and studio they planned to combine into one unit — had
come in far below the agreed-upon purchase price.

[more]

On a Webcast last month, The Real Deal’s Jovana Rizzo toured the High Line and talked to brokers and developers — including Dan Tubb at Chelsea Modern, Emily Beare for 520 West Chelsea and Cary Tamarkin for 456 West 19th Street — about how they are using the hype surrounding the High Line to market their buildings, which are in close proximity to the park and offer great views of the new public space. Since the first section of the well-publicized former rail line, which runs from Gansevoort to 20th streets, opened last month, prospective homebuyers have been flocking to the West Side to experience the elevated park.

Log on to www.therealdeal.com to see the full segment and to access the archives. Every week, The Real Deal posts a new edition of the Webcast, featuring exclusive interviews with industry insiders.

The Real Deal: The High Line was built as an elevated freight railroad in the 1930s, but trains stopped running on it 50 years later. In 1999, the structure was in danger of being torn down, so the non-profit group Friends of the High Line formed to work with the city and turn the old railroad into a park. The High Line runs for almost one and a half miles from Gansevoort Street to 34th Street, along 10th and 11th avenues, and the first section between Gansevoort and 20th streets opened earlier this month. As the High Line began its transformation, several buildings started rising around it, including the Standard Hotel, the Caledonia, HL 23, Jean Nouvel’s tower, the IAC Building designed by Frank Gehry, Chelsea Modern and 520 West Chelsea. 520 West Chelsea recently sponsored a tour of the High Line followed by a cocktail party in its only remaining unit, which has since gone into contract. The building was designed by Annabelle Selldorf, and every unit has a view of the High Line.
Exclusive broker Emily Beare of Core Group Marketing says the new park was a major selling point for the building.

Beare: When we came here, this street was completely empty, 520 wasn’t even a hole in the ground, Jean Nouvel didn’t exist … it was just desolate. I remember clients coming into the sales office, husbands who were big art collectors who knew the neighborhood. They would bring their wives in and they would say, “Where are you taking me?” And part of the pitch was, you’re going to have the High Line and Hudson River Park. That was the pitch for so long. And now, finally, here it is!

TRD: At Chelsea Modern, many units have views of the High Line. Exclusive broker Dan Tubb of Corcoran Sunshine Marketing Group said there are about 12 units left in the building, and the High Line’s opening is bringing more potential buyers.

Tubb: From the beginning, our sales office was on 20th Street, perched over the High Line in progress. So we looked down 20th Street all the way down to 17th Street during our sales presentations, and it was a very dramatic effect to show this is the neighborhood you are buying at Chelsea Modern. Now that we’re in the building, our residents actually have a view of the park that we saw in progress.

TRD: Since the High Line has opened this month, has there been an increase in activity?

Tubb: There’s no doubt about it. We have definitely seen an uptick in traffic.

TRD: One of the newer buildings in the area is 456 West 19th Street, a condo currently under construction. Before the High Line opened, developer Cary Tamarkin worked with Friends of the High Line to put on a presentation about the new park for potential buyers in the building’s sales office. And while times are tough for new condos in the city, Tamarkin said his building is seeing a healthy amount of activity.

Tamarkin: Obviously, everyone knows the market has been frozen and in a difficult position. There have been some economic realities to contend with that are going on in the world and in NYC real estate. But we’ve gotten tremendous response to the building, we’ve got 10 percent of the units sold, the building will be ready to be delivered by the end of this year, and we feel comfortable that the further along the building gets … the more attractive it gets.

TRD: Have you worked with the High Line developers at all?

Tamarkin: Yes, we are definitely friends of the High Line, both in deed and financially. We’ve been major supporters of the High Line all the way through. We’ve been part of a steering committee helping to figure out ongoing maintenance and security on the High Line and make sure the whole neighborhood rallies together. We’ve done that both for the benefit of our building, and also for the benefit of the city. It’s an amazing new amenity.

Compiled by Victoria DeCarmine

Ask half-a-dozen mortgage and real estate brokers which bank has the
best rates for residential mortgages in New York City right now, and
expect two dozen different answers.
Then check back again, in a week or even a day, for an entirely new set of replies.
Buyers have typically benefited from shopping around for mortgage
rates from various lenders. However, in the wake of a massive
government bailout of ailing banks plus a recessionary deep freeze in
the credit markets, the residential mortgage market is more splintered
than it has been in 15 years. What’s more, it’s only growing more
fractured.
[more]

With unemployment on the rise and prices declining, the New York City
real estate market is still on shaky ground during these dog days of
summer. But morale in the industry has improved markedly as buyers,
sellers and brokers, once shell-shocked by the chaos of the fall’s
financial markets, now see some action. 

[more]

Much attention has been focused lately on the flurry of lawsuits filed
by unsatisfied apartment buyers hoping to get out of their purchase
contracts.
But attorneys say there is another, under-the-radar group of buyers
looking to break their contracts and get their money back. Instead of
suing, these regretful buyers have chosen to pursue the cheaper, more
streamlined option of having their disputes mediated by the state
attorney general’s office.
[more]

One of the most confusing — and contradictory — aspects of the current
real estate market is the dropping supply of available apartments,
which seems inexplicable in the face of slow sales and plummeting
prices. Yet inventory has been declining since the spring, when it peaked
at over 11,000 listings. While the subsequent drop seems to signal a
market turnaround, market analysts told The Real Deal that the current level of inventory has more to do with sellers taking their listings on and off the market. 

[more]

Top 10 Sales Agents of the Month for August

Frances Katzen, an executive vice president at Prudential Douglas
Elliman, was elated when she found a buyer for the one-bedroom she was
representing in a Lower East Side condo conversion.
The transaction went awry, however, when the buyer learned at the
closing table that the financing she had been counting on had fallen
through, thanks to an obscure loophole in guidelines by the Federal
Housing Administration: Loans insured by the FHA currently cannot be
issued in a condo conversion until at least one year after the condo
has been declared effective. 

[more]

Construction update

Downtown Brooklyn

Avalon Willoughby West

Developer AvalonBay communities filed a permit application with the Department of Buildings for a 58-story residential building, the Brooklyn Eagle reported. The 596-foot tower will have 860 rental units, as well as retail space and parking for 345 cars. Demolition of the existing buildings on the site, on Willoughby Street between Bridge and Duffield streets, is expected to begin within a year.

Midtown

Cassa NY

70 West 45th Street

Construction on the combined hotel and condominium is expected to be completed by summer 2010. The Cetra/Ruddy Hospitality Group designed the building and its interiors in collaboration with Enrique Norten’s Ten Arquitectos. The 50-story project currently rising on West 45th Street has a total of 57 residences and 166 hotel rooms.

Williamsburg
90 North 5th Street

A new six-story, 23-unit building on North 5th Street in North Williamsburg opened June 27. The condominiums are convertible one-bedroom lofts, two-bedrooms, duplex garden apartments and triplex penthouses with private rooftop terraces. Units range in size from 630 square feet to 1,200 square feet. Prices range from $425,000 to $995,000.

Sales update

Bedford-Stuyvesant

Gates Cooperative

566 Gates Avenue

Pratt Area Community Council’s 34-unit cooperative opened in early July. The building includes 24 two-bedroom apartments and 10 one-bedroom apartments for low- and moderate-income residents. A percentage of the units are set aside for municipal employees and residents with disabilities. Unit prices range from $87,000 to $167,000.

Harlem

Ellington on the Park

130 Bradhurst Avenue

Seventy-five percent of the units in developer HPD Cornerstone Development’s building are in contract, and 23 additional units have been released for sale. The units for sale are one-, two- and three-bedroom homes that range from 637 to 1,413 square feet. Prices range from $375,000 to $775,000. Warburg Marketing Group is the exclusive sales and marketing agent. Contact: www.Ellingtononthepark.com

Long Island City

The Vere Condominium

26-26 Jackson Avenue

In the past 90 days, over 30 transactions have been negotiated at the 43-unit condominium in Long Island City. Studios in the building are in the $300,000s and one-bedrooms are in the $400,000s. The interiors of the units at the building were designed by Andres Escobar. Nest Seekers International has been assigned as the co-exclusive sales and marketing agent, along with Peter Ashe Real Estate.

Midtown West

Atelier

627 West 42nd Street

The last sponsor unit at the Moinian Group’s Atelier had sold as of late June. Twelve units in the building sold in one month. The 46-story building was designed by Costas Kondylis Architects and has 478 units. According to Streeteasy.com, there are 62 units in the building for resale, and 48 up for rent. The Marketing Directors is the building’s exclusive sales and marketing agent.

Midtown West

The 505

505 West 47th Street

Parkview Developers’ condominium is 93 percent sold, and the developer is expected to close on the first unit by the end of July. All engineering and building inspections for the first phase of the building’s construction are complete. The seven-story, 108-residence condominium has a landscaped courtyard, finished roof terrace and fitness center. Halstead Property Development Marketing and Nest Seekers International are the co-exclusive marketing and sales agents. Contact: www.the505hk.com.

Park Slope

Argyle Park Slope

Closings have commenced at the Argyle Park Slope, which is 70 percent sold. One-, two- and three-bedroom residences are available for immediate move-in and are priced from $459,000 to $1 million. The Argyle has also put its Garden Collection, a group of homes with outdoor space, on the market. Building amenities include a fitness center, storage units and indoor parking. The Corcoran Group is the exclusive sales and marketing agent. Contact: www.argyleparkslope.com.

Compiled by Victoria DeCarmine

Atlanta

The economic downturn has been particularly challenging for local property owner Inman Park Properties, the Atlanta Journal-Constitution reported. Over the past several months, many of the company’s properties, including the Clermont Hotel and the Hilan Theatre, have gone into foreclosure or onto the market. The company’s headquarters is also in foreclosure. Business owners in East Atlanta, where Inman Park Properties is a significant property owner, said they were worried that banks would hang on to foreclosed Inman buildings until the market improves, leaving vacant stores dotting the neighborhood.

Boston

Nearly one quarter of the 7,747 applications for mortgage origination licenses in Massachusetts were rejected or withdrawn this year because they failed to meet the state’s new licensing requirements for mortgage professionals, the Boston Globe reported. The regulations, instituted in 2008 as a result of the subprime crisis, prevent felons, those convicted of fraud-related misdemeanors and individuals with records of financial mismanagement from obtaining licenses. Most of those who were rejected had already been working as mortgage brokers or loan officers in the state. Another 1,323 applications were withdrawn or terminated after being red-flagged by officials.

Boston Mayor Thomas Menino has been urging brokers and retailers to fill vacant storefronts on Newbury Street and in the Fenway area. Menino took brokers and retailers on his second annual Retail Opportunities Tour, a bus tour to 20 vacant storefronts, to encourage them to sign leases, the Boston Globe reported. Tenants who sign leases in the next six months will receive advertising space on two outdoor displays in downtown Boston. At least one tour attendee, Nicki Doggart, said she planned to lease one of the spaces shown. She expects to open a chocolatier at 141B Newbury Street.

Chicago

Two-flats, or buildings in which the owner rents out one floor to help pay the mortgage, are making a comeback in Chicago thanks to the recession. Many speculative buyers purchased two-flats in the late 1990s, and they were some of the first properties to fall into foreclosure when the market crashed, the Chicago Tribune reported. Today, two-flats are on the market for the same prices they fetched in 2000 or 2001, and financing is feasible because the properties qualify for Federal Housing Administration loans. Those loans allow a property owner to apply the property’s projected rental income to his or her income to qualify for a higher loan.

Chicago’s Alderman Brendan Reilly in early July introduced a City Council ordinance to stop illegal hotels, or the practice by high-rise condo owners of renting out their units to short-term visitors, the Chicago Sun-Times reported. The ordinance would require condo owners to get approval from their associations for hotels, obtain a $500 vacation rental license, good for two years, and get at least $1 million in liability insurance. Rental fees would have to include the city’s 3.5 percent hotel tax, and the ordinance would require owners to keep guest registration records.

Las Vegas

Tower Realty and Development has put a plot of land in downtown Las Vegas back on the market because it was unable to move a historic house off of the site, the Las Vegas Review-Journal reported. Tower Realty and Development had planned to build a 52,500-square-foot building on the South Seventh Street site, but moving the 1931 house that occupied the space proved to be too expensive, said Wayne Tew, CEO and president of landowner Clark County Credit Union. The house belonged to Charles “Pop” Squires, one of Las Vegas’ founders, who purchased the land in 1905.

Los Angeles

Real estate investor Fred Sands, founder of Vintage Capital and former owner of Fred Sands Realtors, which he sold to Coldwell Banker, was expected to purchase the SouthBay Pavilion Shopping Center in Carson in early July. The sale price was $50 million, half the $100 million asking price when the center went on the market in 2005, the Los Angeles Times reported. Owner Hopkins Real Estate Group paid $34.4 million for it in 2003 and then spent $30 million on renovations. Sands said he planned to add a 16-screen theater, up to six restaurants and, perhaps, a hotel to the mall.

Los Angeles had $4.5 billion in troubled commercial properties as of the end of June, according to a report from Real Capital Analytics. The Los Angeles Times reported that 263 properties were in default, foreclosure or bankruptcy, a 133 percent increase from the 113 properties in default at the beginning of this year. The high unemployment rate and a decrease in consumer spending are factors in the commercial market’s troubles, a local real estate consultant said. Compared to the 5,315 troubled commercial properties RCA recorded for the rest of the country, Los Angeles’ market is doing relatively well.

Philadelphia

All 40 of the units at Philadelphia’s luxury Murano condominium that were put up for auction in late June were sold, the Philadelphia Inquirer reported. The units in the 43-story tower at 21st and Market streets sold in under two hours. The winning bids ranged from $335,000 for a one-bedroom unit to $796,000 for a two-bedroom unit. Accelerated Marketing Partners auctioned the units for developer Thomas Properties Group. Local real estate experts said they were surprised that all of the units sold, but took it as an encouraging sign for the market, since inventory needs to be sold off before the market can bottom out.

Phoenix
An Arcadia house designed by Frank Lloyd Wright sold for $2.8 million in an all cash deal, the Arizona Republic reported. The architect built the 2,250-square-foot, spiral-shaped home 60 years ago for his son David. JT Morning Glory Enterprises, a limited partnership, bought the home and plans to restore it to its original condition. The property has a guesthouse, a pool, a ramp to the second floor and a rooftop deck with views of Camelback Mountain. The home was originally put on the market in August for $3.99 million.

San Francisco

Keck Seng Investments, a Hong Kong investment company, was expected to close on the purchase of the W Hotel in San Francisco at the end of July, the San Francisco Chronicle reported. The company was expected to pay $90 million for the property, owned by Starwood Hotels & Resorts Worldwide. Starwood, which opened the hotel in 1999 and will continue to operate it after the sale, said it wanted to sell the property to reduce company debt. Hotel occupancy rates in the San Francisco area have fallen 12.6 percent since last year, and room rates have declined 11.7 percent, according to hotel advisory firm PKF Capital.

Seattle
Closed sales of single-family homes in King County increased 4 percent in June of this year compared to June 2008, the Northwest Multiple Listing Service said in early July. It was the first year-over-year increase in two years, according to the Seattle Times, and the highest number of sales seen in a month since October 2007. One local broker said that many of the recent buyers were “trickle-up buyers,” or those who may have sold their previous properties to first-time home purchasers. Pending home sales were also up in June by almost 25 percent year-over-year.

Washington, D.C.

The city’s notable Watergate Hotel could end up in foreclosure unless developer Monument Realty and lender PB Capital decide on new terms, the Washington Post reported. The owners of the hotel, which has been closed for five years, defaulted on a $70 million loan. Lehman Brothers had been a partner and equity investor in the property. The property’s landmark status — it is part of the complex where a 1972 burglary that led to President Richard Nixon’s resignation took place — may save it, said Kurt Sachs, a PB Capital senior managing director.

Compiled by Sara Polsky

While it seemed to start well, 2009 has been a rough year thus far for
the Sapir Organization, the family-owned real estate empire led by Alex
Sapir and his enigmatic father Tamir. After months of legal wrangling with the city, the company
announced plans to open their trophy hotel project Trump Soho by the
fall of 2009.
In addition, in February, the Sapir Organization signed Claremont
Preparatory High School to a multi-year agreement to lease 255,000
square feet of space at 100 Church Street, marking one of the year’s
biggest commercial lease agreements in the city. [more]

In the Hamptons, as high-end builder Joe Farrell can attest, $5 million
is the new $10 million. Farrell, who founded his Bridgehampton-based
Farrell Construction in 1996, has built homes for talk show host Kelly
Ripa, actor Kelsey Grammer and former New York City mayor and
presidential candidate Rudy Giuliani. Indeed, he has recently made headlines for “Sandcastle,” the
30,000-square-foot home he built on Halsey Lane in Bridgehampton, which
is on the market for $59.5 million. [more]

Miki Naftali is CEO and president of the Elad Group — a real estate
and hotel development conglomerate based in Israel — and its New
York-based subsidiary, Elad Properties. Naftali’s signature project is
the Plaza Hotel, which Elad purchased in 2004 for $675 million and
spent $500 million to renovate. Elad is also planning to erect a
3,000-room Plaza Hotel in Las Vegas. And along with its partners, the
firm is in the midst of building a $1.1 billion hotel, residential and
retail development in Singapore called Beach Road.
[more]

For more than a century, Tribeca was a de facto pantry, as its
industrial blocks warehoused fruit, spices, vegetables, and most
notably, butter and eggs.
But starting in the 1960s, the Downtown neighborhood — which is
bounded by Canal Street, Broadway, the former World Trade Center site
and the Hudson River — began to give up its perishable goods for
people, in a profound way. Brick and Beaux Arts lofts located along
wide cobblestone streets began to be converted into apartments.
In fact, those historic buildings, which sit in the 10007 and 10013
zip codes, became some of the priciest homes in New York City.
[more]

From one of the penthouse terraces at the Element, a condo on West 59th Street a block and a half from the Hudson River, marketer Shlomi Reuveni gives a bird’s eye tour of the changes to the surrounding area over the past few years.

Immediately to the north, he points out, there’s the new condo 10 West End Avenue. Across the street, John Jay College is building a new facility. A couple blocks north, the Extell Development Company has broken ground on the latest buildings in its massive Riverside South project.

Further south, Fordham University is planning its expansion. The surrounding blocks — which were largely industrial until a few years ago — are dotted with several other new condos and rentals.

“When the developer [of the Element] first looked at the site in 2004 and 2005, the area was mostly industrial and lined with garages, gas stations and warehouses,” says Reuveni, an executive managing director with Brown Harris Stevens Select who began marketing the Element while he worked at Corcoran Sunshine, and continued to do so after he switched brokerages a couple years ago.

Reuveni continues: “There was the perception of the neighborhood as being far from everything, but that disappeared as residents and buyers soon realized the close proximity to Columbus Circle, Lincoln Center and Central Park.”

The neighborhood in question — roughly west of Columbus Avenue from 59th to 72nd streets — is alternatively referred to as Columbus Circle West, Lincoln Square and the foot of the Upper West Side. Whatever its name, the neighborhood has seen a remarkable concentration of development over the past few years, and most of the new condos have sold briskly.

Unsurprisingly, sales have not been as strong in buildings that hit the market right around the fall of Lehman Brothers, but most of the projects went on sale more than a year before Black September and clocked boom-era volume and prices.

Brokers and developers say activity has picked up in recent weeks, and that, in general, the neighborhood’s future appears quite bright.

The Element, which has 184 units and went on sale mid-2006, only has a few units left on the market. Its neighboring new-construction condo, 10 West End Avenue, went on sale at around the same time and now has just two condos left that aren’t spoken for according to the projects’ developers and brokers.

Prices at the Element averaged around $1,400 a foot, while at 10 West End Avenue they averaged around $1,200 a foot.

At the Element, prices were amended on five units during the past two months, according to Reuveni. As of last month, 98 percent of the condo’s units were either closed or in contract, he says.

Similarly, the two unsold units at 10 West End Avenue were reduced in price a few times beginning in September, but the condo’s developer says it’s “in no rush to sell” the final apartments.

“Our big regret is that we didn’t do more in the area,” says Richard Mack, a partner at AREA (formerly Apollo Real Estate Advisors), which developed 10 West End Avenue.

Mack says that when Apollo bought the development site at 10 West End, “some people thought it was a very risky proposition … but long-term, you can’t stop the development around Columbus Circle. There’s proximity to the park, the water and public transportation.”

At the Adagio, a 41-unit condo at 243 West 60th Street that went on sale late in 2007, there have been 30 closings, according to Kim Shepard-Fabrizi, a vice president with Prudential Douglas Elliman, who has worked on the project since its inception.

Shepard-Fabrizi says condos in the building have sold in the $1,150- to $1,250-a-foot range, and that three contracts went out last month, ending the stagnant selling season that began last September.

The Adagio is part of a three-building development that includes two rental towers named the Sessanta.

The Sessanta has 301 units, and rents in its first building started at $1,800 for studios and went up to $5,500 for three-bedrooms. Leasing in the Sessanta’s first building began in mid-April, according to Sha Dinour, the president of Triumph Property Group, which heads up the property’s leasing office.

Dinour says that as of the middle of last month, the first building was completely rented. Leasing on the second building, which is scheduled to be move-in ready by the middle of next month, was set to begin late last month.

The second tower’s building will have slightly higher rents than the first, says Dinour, because it has larger units.

Triumph is offering renters one month free if they sign a 13-month lease, and in some instances covering brokers’ fees.

The single biggest force in terms of getting people into the area has arguably been Extell’s Riverside South development, the mega-project running from 59th to 64th streets.

Extell’s second condo in Riverside South, the 271-unit Rushmore, went on sale two years ago.

As of last month, 172 units in the mostly complete building were either closed or in contract.

Riverside South’s first condo, the Avery, may have initially stolen some of the Rushmore’s sales thunder.

Donna Gargano, a senior vice president for development at Extell, said the company has been pleased with sales at both sites. But she noted that when the Rushmore opened, “we still had a significant number of units available at the Avery next door, offering the attractive proposition of immediate occupancy.”

“Since receiving our [temporary certificate of occupancy] earlier this year at the Rushmore, we’ve done $45 million in new signed contracts, which is probably one of the strongest showings in the city.”

Prices on remaining units in the building run from $1.025 million to $7.85 million.

Ground has also been broken on the next phase of Riverside South, which Gargano says is slated to be finished by late 2010 and will be comprised of two buildings, adding 350 rental apartments and 150 condo units to the neighborhood.

After that, plans call for a five-building complex called Riverside Center to be put up on an eight-acre parcel. Gargano says plans for the super-block include a school, retail, a hotel and a cinema, as well as 2,500 more residential units. Pritzker-prize winning architect Christian de Portzamparc is the architect for that phase, which still needs to go through the public review process known as ULURP (Uniform Land Use Review Procedure).

Several blocks south of the Extell developments, another new condo that hit the market in May has had to adjust its prices in light of the recession and deflated real estate bubble. Hudson Hill, a 67-unit building at 462 West 58th Street, reduced its asking prices by about 15 percent before launching, according to developer Kenneth Horn, the president of Alchemy Properties.

“We’ve had around 25 percent of the units spoken for in the first two months,” says Horn, noting that he isn’t dissatisfied with the project’s sales volume.

Nevertheless, “two years ago the prices would have been slightly higher, and we could have sold more off a less-completed building,” he says.

Manhattan new building permits drop 70 percent

New building permits issued in the first five months of 2009 showed a year-over-year drop in all five boroughs for the second year in a row, according to data prepared by the Department of Buildings for The Real Deal. Citywide, permits were down 48.5 percent from the same period last year to 720, and were down 69 percent from the first half of 2007, when the building boom was still in full force. Of the five boroughs, Manhattan saw the biggest drop from last year, with 18 building permits filed between January and May, or 72.3 percent fewer than in the same period of 2008. This number was off 71.9 percent from 2007.

Twenty-five indicted for $100 million fraud

Thirteen individuals and one mortgage origination company were indicted last month in a mortgage fraud scheme involving more than $100 million, according to a press release from Manhattan District Attorney Robert Morgenthau’s office. Twelve other people have already pleaded guilty to felonies in the case. The defendants include principals and employees of the mortgage company AFG Financial Group, bank employees, appraisers and attorneys. The crimes took place between June 2004 and April 2009, and the fraudulent closings took place between mid-2005 and the end of 2007, according to the press release. AFG allegedly paid people to find distressed properties and straw buyers for them. AFG is accused of failing to make mortgage payments on the properties, ruining the straw buyers’ credit ratings and sending the sellers’ homes into foreclosure.

City program turns vacancies into affordable homes

In response to the glut of unsold condominiums and stalled residential construction sites, city officials last month unveiled a $20 million pilot program, which will turn vacant buildings into as many as 400 affordable housing units for low- to middle-income families. Funding for the Housing Asset Renewal Program, which the city hopes will prevent neighborhoods from deteriorating as more buildings are left vacant, will come from the City Council and the Department of Housing Preservation and Development.
 
New 421-a rule could save stalled projects

A policy change last month affecting applications for 421-a tax exemption could help save the tax rebates for a lot of projects that got into the ground last year. The Department of Housing Preservation and Development has revised the rules such that developers can maintain their eligibility for 421-a benefits even if work stops at a project, or if it takes longer than three years to complete, as long as the developer can prove that the delay was caused by an inability to obtain financing. The rules for obtaining the tax abatement have always required that a project be completed within 36 months from when the developer broke ground and that throughout construction there was continuously work performed at the site.

Mayor launches initiatives for media industry

Mayor Michael Bloomberg last month announced several initiatives involving real estate meant to help New York City’s media professionals. The Media Tech Bond Program aims to help companies purchase new manufacturing, research or production facilities or renovate existing buildings to better accommodate new technology. The media tech bonds can be used to finance projects between $1 million and $10 million, according to a press release from the mayor’s office. The city is also working with the Downtown Alliance to lease and set up Hive@55, a workspace for media freelancers at 55 Broad Street. The 5,000-square-foot space will accommodate 50 freelancers and up to 1,850 part-time and drop-in workers.

In late June, tenants and property owners in the Atlantic Yards footprint received a letter stating that reps from a company called Cornerstone Group Real Estate Services would soon be paying them a visit.

The letter, which was sent by the Empire State Development Corporation’s eminent domain counsel, said Cornerstone would “explain the relocation advisory services and relocation assistance that they will provide.”

While Cornerstone has been in the business for decades, it does not maintain a Web site. Sources who have worked with the firm say its principals, Gary Curry and Stuart Polinsky, are publicity shy.

Nevertheless, Cornerstone is a familiar name to property owners and residents across the city who have faced eminent domain.

The relocation company currently has an 18-month, $750,000 contract with the city’s Economic Development Corporation to aid property owners in Willets Point who will be displaced if plans to redevelop the area are ultimately successful.

In the past, Cornerstone has had contracts with the EDC and the Metropolitan Transportation Authority for redevelopment projects such as the Gateway Center at Bronx Terminal Market, Hudson Yards on the Far West Side and the Fulton Street Transit Center in Lower Manhattan.

The company, which did not return repeated calls and e-mails for this story, also has a contract with the EDC for $650,000 for the Downtown Brooklyn revitalization project, a far-reaching program announced in 2003 that was meant to spur commercial and residential development.

“[Cornerstone is] involved in almost every case we’ve worked on,” says Michael Rikon, a partner in the law firm Goldstein, Goldstein, Rikon & Gottlieb, which specializes in condemnation proceedings. “What they do is try to talk to people who are on the site and offer them other locations to move to.”

Rikon, who says that he’s known Gary Curry for around two decades, currently works on behalf of residents and property owners who have been threatened with displacement by the Willets Point and Atlantic Yards projects.

Rikon, who characterizes his relationship with Curry as “warm,” says Cornerstone “had no business talking to tenants” in the Atlantic Yards footprint before the site is legally condemned, and says that the company jumped the gun by reaching out to residents and owners in late June.

Aside from the Empire State Development Corporation letter mentioning Cornerstone, which was reprinted on the watchdog blog Atlantic Yards Report, Rikon says one of his clients called him up in June to tell him Curry was visiting his property.

By visiting the resident, Rikon says, Curry was potentially engaging in an “affirmative value depressing act,” since the condemnation has not yet been vested.

Indeed, eminent domain on the would-be Atlantic Yards land is not a fait accompli — shortly after the letter was sent out, the New York State Court of Appeals announced it would hear a case brought by opponents of the mega-project whose properties are being targeted for seizure.

Also, while EDC officials say Cornerstone is a leader in its field, some who have had dealings with the company say it has not been helpful in terms of finding them new places to live or run their businesses.

“I toured the Bronx with Gary Curry, and he was very nice and cooperative, but a lot of the properties he showed me just wouldn’t work for my business,” says Stanley Mayer, the president of the Bronx Terminal Market Preservation Association, a group that represented more than 20 businesses in the West Haven section of the Bronx that were evicted in 2006 in order to make way for the Gateway Mall project.

“I think Cornerstone helped a handful of businesses find new spaces,” adds Mayer, who says he found a new space for his business without the help of the firm. “They tried to be helpful, but most of the places I was shown were in bad locations.”

In 2004, Cornerstone had a $152,000 contract with the EDC to provide relocation assistance for the Bronx Terminal Market businesses, according to EDC officials.

In one of the few published interviews that Gary Curry has given, he told the Willets Point blog Iron Triangle Tracker in November that “this is a job that a lot of people don’t like to do, but we do it and we like to do it.”

He also described some of the work Cornerstone would do for Willets Point businesses: “We’ll go back in and start finding out the square footages of the businesses … We’ll see what they have there and what they want to do, where they want to go. If they want to relocate together we’ll try to put them together.”

Some Willets Point business owners say, however, that while they’ve had contact with Cornerstone, they are not sure what the firm does.

“All I know is that they walked around and gave business cards around. They gave one to one of my workers,” says Jake Bono, the third-generation owner of Bono Sawdust and Supply Co. and spokesperson for Willets Point United Against Eminent Domain, a group representing property owners and tenants that do not want to leave Willets Point to make way for the EDC’s redevelopment plans.

Bono continues: “The city hires these companies to accumulate a paper trail. They’re not doing anything to help anyone.”

He argues, “They let the city say in court, ‘On such-and-such date Cornerstone went to the site and gave out 50 business cards.’”

Cornerstone’s low profile is a fairly remarkable feat given the boldface projects it has had a hand in.

One instance in which the company gained some no-doubt-unwelcome publicity was in 2006, when Manhattan Borough President Scott Stringer and Congressman Jerrold Nadler took the MTA and Cornerstone to task for not providing adequate relocation assistance to businesses displaced for the construction of the Fulton Street Transit Center.

A press release Stringer’s office sent out about the $750 million, federally funded project said the following about Cornerstone: “The small business owners claim that the Cornerstone Group, an MTA subcontractor charged with assisting in relocation, has continuously failed to provide helpful rental listings for those forced to relocate. Many of the businesses require less than 1,000 square feet of office space and are constantly referred to available space that is too large and too expensive … In some cases, local entrepreneurs claim that the Cornerstone Group directed them to space in buildings that were allegedly scheduled to be sold in the near future.”

The press release quoted one business owner as saying that “at best Cornerstone has been incompetent.”

Satire, George S. Kaufman famously quipped, is what closes on Saturday
night. In a similar vein, we can define deconstructivist architecture,
the regnant building fad of the moment, as what is always being
proposed and never actually built in the city of New York. In the past few years, starting with those fanciful projects for
ground zero and now culminating with Cooper Union’s new academic
building, architects both local and international have proposed all
manner of deconstructed blobs and fractured facets, only to see the
finished product reduced to something far tamer. [more]

If you’re applying for a loan to purchase a primary or secondary home, or planning to refinance, you should be aware of a little-publicized new set of federal consumer-protection rules that took effect July 30.

Among other key changes, the new Federal Reserve guidelines require lenders to provide you initial disclosures of your mortgage costs within three business days of your loan application. If you don’t get them, you can pull the plug.

The rule also prohibits lenders from collecting any fees — except a reasonable charge for checking your credit — until you’ve been given the loan-cost disclosures. This means no more out-of-pocket upfront application charges until you’ve received the truth-in-lending disclosures and an annual percentage rate (APR) calculation of those loan costs.

Since many mortgage brokers and lenders traditionally have collected fees covering appraisal, credit and various other charges at the time of application — sometimes amounting to hundreds of dollars — this will be a significant change in procedure for the lending industry.

The rule also prohibits quickie closings on loans by requiring a seven-day waiting period after applicants are handed their early disclosures or the disclosures are mailed. You’ll now have up to a week to think about the transaction and to decide whether it’s right for you. Final truth-in-lending disclosures are due three business days before closing.

Here’s an even more sweeping change for applications filed on or after July 30: The new Fed rules require lenders to deliver a copy of the real estate appraisal to you three business days before the scheduled closing on the loan.

In the past, even though federal regulations guaranteed that consumers could request and obtain a copy of the appraisal, lenders and homebuyers frequently ignored that right. In fact, many consumers had no knowledge of this right because no one in the home purchase, financing or settlement process told them about it.

Now, the timing of the loan closing itself — which is the financial ballgame for loan officers, realty agents, title and escrow officials — will be dependent upon your receipt of the appraisal in advance. The exception here will be that the three-day rule can be waived if you don’t think receiving the appraisal is necessary.

Another significant change under the new rules: If the APR on the early truth-in-lending disclosure increases by more than one-eighth of a percentage point (0.125), the lender will now be required to “redisclose” — provide you a corrected version and allow you an additional seven business days to consider the transaction before settlement.

What might cause the APR to increase following the initial, early disclosure? Lots of things: Say you left your initial rate on the loan to float with the market, but rates increase. You’ll need to get an amended truth-in-lending disclosure. Or say the lender got inaccurate estimates of costs from third-party participants in the transaction, such as the settlement or escrow company. Or say that unexpected, 11th-hour junk fees materialize.

All these events — which have been frequent sources of consumer complaints this decade — could force the lender to redisclose loan costs and set back timing for the settlement.

What are some of the likely repercussions of the Fed’s new mandates? Number one, the traditional approach of aiming in advance for a date-certain settlement target for home loan transactions almost certainly will be affected. Actual closing dates will be more closely tied to lenders’ and settlement agents’ accurate estimates and their ability to deliver disclosures and appraisals by the required dates. For example, if appraisers are backlogged and can’t produce valuation reports quickly enough, settlements will have to be postponed.

Second, the purposes of the rules are to afford consumers better access to, and more time to consider, key elements of what are major financial transactions for most people. There might be fewer instances of last-minute closing-date surprises on fees, where buyers are slammed with hundreds of dollars of charges they’d never expected. But nobody can say that for sure.

Finally, the rules may well trigger new waves of litigation if lenders and their business partners are not scrupulous in their compliance. There is an active and aggressive segment of the legal profession that specializes in going after banks and mortgage companies for truth-in-lending violations. Don’t be surprised if you hear of lawsuits seeking cancellation of mortgage deals because timing deadlines were not met, appraisals not received.

As David Berenbaum, executive vice president of the National Community Reinvestment Coalition, put it in an e-mail comment: “Consumer advocates will closely monitor” compliance with the new Fed regulations, and the lending industry can expect “civil litigation against bad actors.”

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

The stretch of Eighth Avenue between 40th and 56th streets just 18 months ago was a mecca of residential and commercial activity, fetching prices of $400 to $450 per buildable square foot. Today, a large majority of developments have been put on hold, and sites are lucky to fetch $100 to $150 per square foot.

Lower rents have led developers to swipe up distressed assets, rather than pay for the labor costs required to develop new infrastructure.

A prime example is the 750,000-square-foot New York Times Building, which in November 2007 had its grand opening ceremony. At the time, tenants were paying rents of $80 to $90 per square foot to have an office in the brand new tower, at 40th and Eighth, across from the Port Authority Bus Terminal.

Fast forward a year and a half: The New York Times sells the space it occupies in its Manhattan headquarters for $225 million to W. P. Carey to pay off debt. It is hard to imagine that the office condominium portion of the building, which probably cost close to $1,000 per square foot to acquire and develop, sold for a mere $300 per square foot.

Directly across the street, rents are not being realized at the 800,000-square-foot office tower at 11 Times Square. Although construction is progressing on the joint venture of SJP Properties and the Prudential Insurance Company and the tower is expected to be completed in 2010, the initial prospects of office rents over $100 per square foot have yet to be fulfilled. To date, no lease has been signed for the office or retail component of the property.

Industry leaders expect financial service companies and users who are seeking the latest and most innovative Class A office space to evaluate leasing space in the tower. In today’s environment, members of the brokerage community feel that the property could fetch between $75 and $85 per square foot for the office space. However, the site’s greatest profitability prospect lies in its excellent retail location and fantastic opportunities for signage.

Not only are rents lower, but construction is all but stalled along this once-bustling Midtown strip. One of the numerous halted developments on Eighth Avenue includes the joint venture between the Related Companies and Boston Properties for a mixed-use development site of a Champion Parking garage between 45th and 46th streets. The joint venture was in contract with Champion Parking to acquire the site and to purchase the theatrical art rights from the Shubert Organization. But with little need for additional new office space, the project has been placed on hold indefinitely.

Similarly, a joint venture of Vornado Realty Trust and the Lawrence Ruben Company had announced plans to erect a 40-story office tower over the north wing of the Port Authority West Side bus terminal, located on West 41st Street. But with financing at a standstill for new buildings without any signed leases, this project has been put on hold indefinitely.

On the west side of 42nd and 43rd streets the story is the same. The 1199 SEIU United Healthcare Workers were in negotiations to select a developer to build a tower on its site, but it will be many years before that project ever rises — without financing the project was put on hold.

And in February, Boston Properties, an owner and operator of Class A office buildings, suspended construction on its $980 million, 1 million-square-foot office tower at 250 West 55th Street at Eighth Avenue. According to financial filings of Boston Properties, it had invested $401.7 million in the project as of Sept. 30, 2008.

Boston had signed a lease with the law firm of Gibson Dunn & Crutcher LLP for about 22 percent of the tower. In the official press release by the company, it announced that it suspended construction as a result of its inability to conclude a lease transaction with a major law firm (which according to sources was the firm of Proskauer Rose) with which it had been negotiating over the last year. Agreement on the financial terms had been reached with the firm within the last year, but recently the law firm informed the company that it could not proceed on those terms, thereby rendering the project economically infeasible in today’s environment.

A prominent owner of office buildings in Manhattan said on condition of anonymity, “With the increasing supply of office space coming to the market, combined with limited or no financing available for new development, it will be at least three to five years before Boston Properties resumes construction on its Eighth Avenue development [on] 55th Street.”

The wait is expected to be somewhat shorter for TriBeach Holdings on the northwest corner of 46th Street, the latest casualty on Eighth Avenue. The site is approved for a large-scale hotel development with luxury residential condominiums, street-level retail and below-grade parking. Yet with little or no financing for hotels or condominium towers, industry leaders expect the developers to sit on the project until 2010 or 2011.

Down the street, Local 6 of the Hotel Employees workers owns nearly the entire block between 44th and 45th streets. In 2006 the union had retained an adviser to sell the property to a developer for either an office or residential tower. Unfortunately, negotiations were never completed and the union will continue to maintain their office at the site without selling the asset to beef up its funds.

Last month, a joint venture of DRA Advisors, George Comfort & Sons and RCG Longview closed on the purchase of the 1.75 million-square-foot Worldwide Plaza at 825 Eighth Avenue at roughly one-third of the original purchase cost. The joint venture is paying $605 million, or $345 per square foot. It was only two years ago when Macklowe Properties paid $1.74 billion for the property.

There is, however, some movement for development on Eighth, although in a different form than originally planned. On the southwest corner of West 44th Street and Eighth Avenue, Steve Witkoff and Harwood Properties owned a site where they were planning to construct a 250,000-square-residential tower at 693-699 Eighth Avenue and 307-321 West 43rd Street. But in the fall of 2007, Tishman Asset Corporation purchased the site and assembled it, paying about $128 million. Construction is under way on the site for the 22-story, 600-room InterContinental Times Square, the second InterContinental Hotel in Manhattan, with a scheduled opening of fall 2010.

With limited prospects for capital for new office and residential developments, the future is bleak for developments on Eighth Avenue.

When political newcomer Doug Biviano wanted to increase his visibility as a City Council candidate, he looked no further than one of the most prime retail strips in his Brooklyn Heights district: Montague Street. While in more flush times a new political candidate’s war chest might not have had enough cash to pay for such a premier, high-traffic location, Biviano took advantage of the strip’s nearly 10 vacant storefronts and the area’s dropping retail rents. And he is not alone. [more]

Finding new tenants for many of Circuit City’s old stores is proving to
be a challenge for the brokers and landlords who are marketing sites in
Manhattan and Brooklyn.
After filing for bankruptcy at the end of last year, the
electronics giant announced in January that it was going out of
business, and by March it had shuttered all 567 of its stores
nationwide, including nearly a dozen in New York. Now, five months after that shutdown, four sites in Manhattan and three in Brooklyn remain vacant.
The spaces formerly occupied by Circuit City, which entered the New
York market in 1997 and was one of a number of national mega-retailers
to go belly up this year, are something of a case study of the New York
City retail market. [more]

The “At the Desk of” story on Robert Ivanhoe in the August issue incorrectly stated that Greenberg Traurig represented the buyer, Tishman Speyer, in the $5.4 billion purchase of Stuyvesant Town. Greenberg Traurig represented the seller, MetLife.

Vietnam plays host to real estate expo

An exhibition scheduled for this fall aims to give the Vietnamese real estate market a boost, according to news reports.

The International Real Estate Exhibition, scheduled for Sept. 20 and 24 in Ho Chi Minh City, will feature 1,500 international and domestic showcase booths. It is being held by the Vietnam Real Estate Association in conjunction with the Housing Management Department of the Ministry of Construction and the Foreign Investment Agency of the Ministry of Planning and Investment.

CB Richard Ellis recently rated the country’s real estate market as very promising. Ho Chi Minh City is also looking to expand business in the housing, urban development and tourism fields.

This is the first time the exhibition will be held in Vietnam.

Change to foreign land law nixed by Czech Republic

Social Democratic and communist representatives in the Czech Republic voted against an amendment to the foreign exchange law that would allow foreigners to buy real estate for housing purposes without limitations, the Czech News Agency reported.

But imposing limitations on foreigners’ real estate purchases is against the laws of the European Union, which the Czech Republic joined five years ago. Eduard Janota, the Czech Republic Finance minister, said he doesn’t understand why officials refuse to remove the law, which he called a formality.

When the Czech Republic joined the E.U., an agreement was signed to remove all discriminatory elements from real estate laws. Czech lawmakers opposed the agreement, arguing that wealthy foreigners would offer higher prices for real estate, making housing unaffordable to Czech citizens. Now, the lawmakers are returning to those sentiments.

“The proposal seemed to us to be endangering Czech interests and interests of Czech citizens,” said Pavel Kovacik, chairman of communist deputies.

Others see the removal of the law as a chance to fully revive the Czech real estate market. “Buyers from eastern Europe and Asia would welcome the new conditions,” said Klara Vanourkova of international consulting company Jones Lang LaSalle.

Housing prices stabilizing in some U.K. regions

Home prices and consumer confidence levels are rising in the Conventry and Warwickshire regions of central England, local real estate experts say. The latest Land Registry figures, which include all completed transactions, showed home prices up slightly in the Conventry region and no change in prices in the Warwickshire region for June 2009, according to the Coventry Telegraph.

Regional brokers and analysts for Conventry and Warwickshire are confident in the region’s resilience. Harvey Williams, Coventry and Warwickshire regional spokesman for the Royal Institution of Chartered Surveyors, said these numbers are proof that Conventry and Warwickshire are faring better than other regions in the U.K. In fact, Peter Hudson, sales manager of Conventry’s Castle Estate Agents in New Union Street, believes demand for homes in these regions will soon outstrip supply. “The main restriction now is the low number of properties coming on to the market and, with few new homes being built, demand will surely surpass supply,” he said.

Compiled by Victoria DeCarmine

Residential

AC Lawrence & Company

Antonio del Rosario joined the firm as a partner and president of the sales division. He was previously with Barak Realty.

Barak Realty

Shyrel Gaskey and Silvia Reyero joined the company as sales associates.

Brown Harris Stevens

Chris Leavitt joined the company’s Edward Lee Cave division as senior vice president and director. He was previously with the Corcoran Group.

DJK Residential

Maria Manuel and Natalie Primus Fewsmith joined the firm as sales agents.

Commercial

Buchbinder & Warren

Marjorie Borell joined the firm as an agent. She was previously with Manhattan Commercial Realty.

Colliers ABR

Eric Thomas joined the company as a director.

Dune Capital Management

David Oliner joined the company’s Dune Real Estate Partners division as a partner. He was previously with Morgan Stanley.

Eastern Consolidated

Evan Schlecker and Travis Talmadge joined the company as associates.

FirstService Williams

James Raso joined as chief financial officer. He was previously senior vice president of accounting operations with SL Green Realty Corp.

Greiner-Maltz

Jonathan Fischer joined the company’s New Jersey office as a managing director. He was previously director of acquisitions and sales for Weiss Realty.

Jones Lang LaSalle

Vincent Lottefier was appointed head of international business for the New York tri-state region. He was previously chief executive officer of the company’s operations in India.

Massey Knakal

Hall Oster was promoted to first vice president of sales from director of sales. Gregory Postyn joined the company’s Manhattan office as an associate. Christopher Phillips was promoted to first vice president of sales from senior associate in the company’s New Jersey division.

RFR Holding

Gregg Popkin joined as executive vice president of real estate operations. He was previously a managing director at Beacon Capital Partners.

Savitt Partners

Tim Bennett joined the firm as a managing director. He was previously a director at Hunter Realty.

Tishman Construction Corporation

Peter Marchetto joined the company as president of construction operations.

W & H Properties

Jonathan Fales was appointed leasing director at 501 Seventh Avenue.

Compiled by Linden Lim

Urban Sanctuary and Sedona Realty have joined forces to create Urban Marketing, a new development marketing and sales company. A few weeks after launching, the company had already picked up several projects.

These buildings include Downtown Club at 20 West Street, 85 John Street and District at 111 Fulton Street, said Stephen McArdle, founder of Sedona Realty and a partner at Urban Marketing. Elie Pariente, a partner at brokerage Urban Sanctuary, which will continue its operations in addition to launching the new venture, and Issac Krispin, Urban Sanctuary’s founder and president, are the other two leaders of the new company.

“In these times, it’s a combination of real brokerage skills that are needed coupled with very creative marketing strategies,” McArdle said. He said he brings to the table experience with the design and development process, as well as sales and marketing, while Urban Sanctuary has been “much more on the front line of both sales and leasing.” Urban Marketing is also handling a successful project at 552 West 43rd Street, where five contracts in the eight-unit building had been signed as of June.

McArdle said the projects the company had signed onto as of mid-July each required a different business model. At Downtown Club, an existing, sold-out condo conversion, Urban Marketing will be the project’s preferred on-site sales and leasing agent for owners who want to sell or investors who want to rent.

At 85 John Street, a rental building, Urban Marketing will also be the exclusive agent on-site.

At District, Urban Marketing has been retained to complete sales at the building, which is more than 70 percent sold, said Ricky Cohen, a managing partner on the project with co-developer Urban Equities NY. McArdle said he had been a consultant on the building’s original design and development team, and Cohen said that was the reason for bringing Urban Marketing onto the project. “When it became clear that Stephen could make his energies available to us again, we felt it was the right step for us.”

After three generations in Manhattan real estate, Rose Associates is crossing the bridge into Brooklyn. The firm has been named the exclusive leasing agent for three Williamsburg properties: 184 Kent Avenue, 34 Berry and 309 Wythe Avenue. Rose will also be managing the latter two buildings, along with Oro at 306 Gold Street in Downtown Brooklyn and 80 DeKalb in Fort Greene. The assignments mean Rose will be the leasing agent for more than 500 Brooklyn units.

“Rose hasn’t made the decision to go to Brooklyn specifically,” said Robert Scaglion, senior managing director of residential marketing at Rose. “Our clients are expanding into Brooklyn and have asked us to provide the Rose level of service for developments in Brooklyn.”

Rose has been managing and marketing projects for third parties for about 10 years, something Scaglion said is unique among New York’s “old-line” real estate dynasty families.

In Brooklyn, Rose is looking for projects “of a certain size and a certain substance and a certain level,” Scaglion said, not small buildings. “The developments that we’re involved in are luxury, high-rise doorman properties.” Scaglion said he believes amenities-heavy projects in Williamsburg, for example, can attract Manhattan buyers.

The company is also looking at opportunities in Queens, he said, and is open to projects in New Jersey and Westchester.

The recession has been good for Rose’s business, Scaglion said. “Developers and their lenders are looking for proven, successful name operations,” which makes Rose more popular with developers, he said.

Rose’s buildings have also remained popular with residents through the recession so far, Scaglion said, with an occupancy rate of 97 percent. “There are people that were priced out of better locations and better properties that can [now] trade up into better properties because prices have gone down.”

Taking a cue from other real estate companies, Benjamin James Real Estate has cut staff and closed offices amid a still-ailing real estate market.

The company is down to one office, located at 120 West 21st Street, down from three a year ago, according to Douglas Wagner, the company’s president and general manager.

The company closed its Soho office, at 96 West Houston Street at LaGuardia Place, around a year ago, Wagner said, then closed its Union Square branch, at 900 Broadway, May 1. Fitting into one 1,000-square-foot office required the company to reduce its workforce by about 14 people during a “very unpleasant Friday afternoon” in April, Wagner said.

“Given the current climate, you do what you have to do to survive,” Wagner said. “I felt that the best strategy for our short-term sustenance and growth is a very back-to-basics approach.”

The company, whose chairman is James Benjamin Ferrari, now has 20 agents working in the 21st Street office and 12 virtual employees who do business remotely, Wagner said.

This story first appeared on The Real Deal’s daily blog.

Crossword August 2009

In today’s down market, some real estate brokers are going above and beyond their job descriptions in order to secure scarce deals.

In the past, Kirsten Nelson, a broker with Platinum Properties, has brought the customary bottle of wine to clients after they’ve moved into a new place, and has even taken clients out for drinks and meals to celebrate a new apartment and introduce them to the neighborhood.

This spring, however, he took things to the next level and helped shape one couple’s wedding, which saved them money and allowed them to move into a bigger place.

The couple, a hairstylist for Rachael Ray and a photographer, were in the market for a one-bedroom rental. As Nelson showed them around two dozen buildings, they told him about their May wedding plans, which consisted of a Central Park ceremony followed by a reception at a swanky hotel.

As he was showing them an apartment at 10 Hanover Square in the Financial District, he offhandedly suggested that if they moved into the building, they could hold their reception in the common room and save thousands of dollars.

Nelson noted that the money saved could be put toward their living space.

“This was a unique circumstance that happened pretty fast,” Nelson said. “I made a few suggestions and they just lit up when they realized what it meant.”

The couple ended up renting an even larger unit at 10 Hanover, a one bedroom with a home office. They negotiated a few months of free rent as well.

Also wearing his wedding planner hat, Nelson suggested the two have an after-party at nearby Joseph’s restaurant, whose owner he knows well. The couple did that, too.

For his services, Nelson received the customary fee of one month’s rent (which came from the owner of the building), and a bunch of good referrals.

More importantly, perhaps, he got a rental deal done in a tough market.

“They got a much bigger place in a nicer building, and what struck me was that it worked because they weren’t having a 500-person party,” said Nelson. “It greased the deal but didn’t seal it.”

The suburban convenience store 7-Eleven, which put the Slurpee frozen drink on the map, is ramping up expansion in New York City, with plans for 100 to 150 new stores across the five boroughs over the next three to five years.

Emboldened by higher retail vacancy rates and lower rents due to the recession, 7-Eleven, which currently operates 46 stores in the city, plans to open 10 new locations this year alone: three in Manhattan, three in Queens, three in Staten Island and one in Brooklyn, said Ken Barnes, real estate manager for the retailer’s northeast division.

These include a Manhattan store at 103 West 14th Street, and one in Greenpoint, Brooklyn, at 883-885 Manhattan Avenue, both scheduled to open next month.

Other leases are in the negotiation phase.

Asking rents in the city have dropped 10 to 15 percent, and signing rents are 20 percent lower than last year, said Barnes in explaining the decision, which runs counter to the contractions that a lot of other retailers are currently going through.

“Other retailers have scaled back their growth programs, allowing more opportunities for 7-Eleven. Besides vacancies, you have a decline in overall rents in New York City, making it more attractive to grow our stores.”

Barnes said the Dallas-based retailer is underdeveloped here and is still performing well despite the recession. The expansion, he said, will be weighted toward Manhattan and Queens, based on population density and number of existing 7-Elevens in the market.

The company’s New York plan is part of a larger nationwide push for the retailer, which operates and franchises more than 6,200 stores in the U.S. and Canada. It is scheduled to open 200 stores nationwide this year, and 350 in 2010.

“People are looking for value,” said Greg Covey, an associate with Robert K. Futterman & Associates who is working on the leases for a number of the retailer’s locations in the city. “Apparel [retailers] are struggling, home goods are struggling; [but] 7-Eleven caters to the everyday needs of consumers, particularly New Yorkers.

“They offer coffee, food and a brand people know from their youth — particularly those from the suburbs,” he said.

The convenience store likes to open stores in heavy traffic areas, Covey noted.

“They’re very smart in the way they’re expanding and taking advantage of market conditions,” by signing long-term leases and locking in lower rents, said Ariel Schuster, executive vice president of Robert K. Futterman.

Of course, 7-Eleven isn’t the only convenience store benefiting from lower rents. Schuster noted that “it’s become easier” for local bodegas and gourmet markets that had been priced out of the city in the past five years to expand as well.

After exiting the Manhattan market in the 1980s, when cigarettes and beer were a substantial part of its merchandise mix and competing bodegas were offering more food, the retailer tweaked its concept in the early 1990s, adding sandwiches, hot food and salads.

Today, 7-Eleven’s New York City stores “outperform the national average,” Porter said.

When the U.S. Open kicks off at the end of this month, hundreds of thousands of fans will flock to Flushing Meadows to watch the world’s tennis greats battle it out.

But while New York has long been home to the Grand Slam tournament, it is not the most hospitable place for tennis aficionados: Because of the high cost of land, tennis courts are few and far between. In addition, several high-profile courts, such as Long Island City’s Tennisport and the facilities above Grand Central Station, are scheduled to close soon.

Although there are still courts in private clubs and public parks, the building boom of the past five years that resulted in the construction of luxury amenities — from pools to waterfalls — rarely involved the erection of tennis facilities.

A rare exception is the Sessanta, a 301-unit, two-tower rental complex on West 60th Street that will have a regulation-sized tennis court in its courtyard. The complex, which residents started moving into at the beginning of June, is scheduled to open the tennis court by the end of this month, according to Sha Dinour, the president of Triumph Property Group, which heads up the Sessanta’s leasing office. Rents at the building start at $1,800 for studios and go up to $5,500 for three-bedrooms.

Dinour says the court has been a lure for some of the property’s prospective tenants and that the Sessanta’s target demographic is young professionals and young families.

Adam Disick, another Triumph principal, says the Sessanta’s developer, Algin Management, decided to put in the tennis court partially because the parcel the complex was built on “had a large swath of outdoor space” that needed to be part of the development under zoning regulations in order for the towers to be built high.

Disick said that since courts are such a rarity in residential buildings, it helps the Sessanta stand out from other projects laden with luxury trappings.

Another recent West Side rental, Larry Silverstein’s One River Place, which opened in 2000, also has tennis courts.

Dan Robinson, the project director for the Towers at Water’s Edge in Bayside, Queens —an 832-unit co-op in which his firm, MJH Birchwood, owns 228 sponsor residences — says the Towers’ five tennis courts, which were recently resurfaced, are increasingly a big draw for younger buyers.

“There’s a little generational gap with the tennis courts … for people in their late 30s, 40s and 50s, tennis is not as popular,” says Robinson. “What we’re finding is our younger buyers moving from urban areas who want a relaxed lifestyle have a growing interest in tennis courts as an amenity.”

While tennis courts in outer-borough buildings are far from the norm, they are even more unusual in Manhattan. Brokers say there are fewer than 20 buildings in Manhattan with courts, and almost none are in new developments.

Older buildings that have tennis courts include co-ops such as 1725 York Avenue and 435 East 52nd Street. A smattering of other buildings such as Sutton Manor on East 56th Street, meanwhile, allow residents access to on-site private tennis clubs.

Use of tennis courts is not free at most buildings that have them. At the Sessanta, for example, booking the court for an hour costs $40, and at the Towers at Water’s Edge, residents pay a $200 yearly fee for access.

Chelsea’s Milan goes from rental to condo back to rental

The Milan Condo on 23rd Street in Chelsea is going to need a new name. Joining the ranks of New York City’s many “nondos,” the 42-unit conversion will remain a rental building rather than going condominium as planned.

The Milan, which hit the market in June 2008, failed to sell enough units in time for its condo offering plan to be declared effective, according to Douglas Wagner, president of Benjamin James Real Estate, the exclusive marketing and sales agent at the building. Instead, the now-vacant units will be leased out, said Wagner, whose company has already started marketing rentals there.

The credit crisis and stringent lending requirements have stalled sales for new condo projects all over the city. Still, the Milan’s situation is rare because it’s one of only a few residential conversions, which have a time limit for declaring the offering plan effective, unlike new-construction condos, according to real estate lawyer Meg Goble, a partner at Hanley & Goble, who is not involved with the building.

Located at 120 West 23rd Street between Sixth and Seventh avenues, the Milan was constructed as a rental building in 1987. The owner, Manhattan-based Milan Associates, has since renovated the building with condo-quality finishes, like hardwood floors, sandstone tiles and mahogany cabinetry. The asking price of a 575-square-foot junior one-bedroom there was $515,000, according to Streeteasy.com, while a two-bedroom, two-bath unit was priced at $1.285 million.

Now, one-bedrooms in the vacant doorman building, where each apartment has a balcony, rent for $2,700, Wagner said, while two-bedroom units start at $4,100.
By Candace Taylor

Independent broker sues Massey Knakal for unpaid commissions

An independent broker is suing investment sales brokerage Massey Knakal Realty Services for nearly $200,000 in commission fees for a 66-unit Queens apartment building sold in 2006.

S. David Jagarnauth is seeking $184,000 plus interest from Massey Knakal for the buyer’s commission on the $12 million sale of 44-30 Macnish Street in Elmhurst, Queens, in September 2006, a complaint filed July 2 in New York State Supreme Court said.

The lawsuit, with charges including breach of contract and unjust enrichment, comes three years after the sale closed. Jagarnauth’s attorney, John Desiderio of law firm Adam Leitman Bailey, said the broker tried for two years to obtain the payment through phone calls and letters, but was rebuffed.

Paul Massey, CEO of Massey Knakal, said the money has been put aside and conceded a commission needed to be paid. He said the confusion was over who was owed the commission and whether Jagarnauth was a licensed broker. It is illegal to pay a brokerage fee to an unlicensed broker.

“From the outset we suspected we owed someone a brokerage fee related to this transaction. We have set aside the money, but there are many questions of fact related to who the buyer was and who the broker was and we hope to resolve those expeditiously,” Massey said. He said the parties were attempting to reach a settlement last month.

Jagarnauth was included as the co-broker in a 2003 contract of sale for the property but that contract was abandoned. His name was improperly removed from the 2006 sale contract that was ultimately used in the sale, the complaint said.

A person named Sookdeo Jagarnauth was first licensed as a broker in 2003 and is currently licensed, according to the state Department of State. Desiderio said Jagarnauth is a licensed broker. By Adam Pincus

Bruce Willis, wife scope out apartments in the Apthorp

The celebrity buzz around the Apthorp continues. Bruce Willis and his new bride, 31-year-old model and actress Emma Heming, checked out apartments in the iconic Upper West Side condominium conversion last month, sources confirmed.

Willis, 54, and Heming, who wed in March in Turks and Caicos, looked at the 101-year-old building’s interior garden courtyard and units, the sources said.

After a recent price reduction, apartments in the building start at $1.535 million, with the developers under a deadline to sell at least 25 apartments before September so the condo plan can be declared effective.

The “Die Hard” star, who has three children from his previous marriage to Demi Moore and divides his time between New York and Los Angeles, is no stranger to the Upper West Side. In 2007, he purchased a 2,318-square-foot Trump Place apartment at 220 Riverside Boulevard at 70th Street for $4.26 million.

Prior to that, he reportedly rented an apartment in the Trump International on Central Park West at a cost of $55,000 per month while working on the film “Perfect Stranger,” which also featured Heming. By Candace Taylor

Former CBHK agents leave Realogy nest, join competition

In the wake of Coldwell Banker Hunt Kennedy’s closure, many of the firm’s former agents have joined the competition rather than staying within the Realogy family.

Halstead Property nabbed 27 former CBHK agents, while its sister company, Brown Harris Stevens, hired four, according to spokespeople at the two companies. Meanwhile, Prudential Douglas Elliman snagged 22 agents from the independently owned Coldwell Banker franchise, founded in 1988. Charles Rutenberg Realty in New York also hired several agents.

That alone represents roughly a quarter of the agents at CBHK, which had 214 agents at the time it closed. That means that at most, only 73 percent of CBHK’s agents went to Realogy brands the Corcoran Group and Sotheby’s International Realty.

That’s far fewer than the percentage quoted by co-founder David Michonski, CBHK’s former CEO, who told The Real Deal as the firm prepared to close that agents were encouraged to go to Corcoran or Sotheby’s, and that “90 percent” would do so.

Corcoran and Sotheby’s are owned by NRT, a subsidiary of New Jersey-based Realogy, which operates Coldwell Banker franchises.

The percentage of former CBHK agents that stayed within Realogy could be even less, since it’s unknown how many agents left the business or went to smaller firms like Bond New York, Warburg Realty or Bellmarc Realty.

Residential firms Century 21 NY Metro, Core Group Marketing and Barak Realty confirmed that they have not hired any former CBHK agents, while the heads of Bond, Warburg and Bellmarc Realty did not respond to requests for comment. By Candace Taylor

Hamptons home sees $3 million price increase

Even as the Hamptons real estate market seems to be trending downward, a Southampton property returned to the market last month with a nearly $3 million price increase in the space of one month. The 2,750-square-foot property, at 450 Gin Lane, is on the market for $19.9 million. Harald Grant of Sotheby’s International Realty has the exclusive listing for the four-bedroom, five-bath property with views of the ocean and Old Town Pond, according to Streeteasy.com.

Grant called the $19.9 million price “ambitious.” But in this market, he said, “people are going to put in for what they think it’s worth anyway.”

The property was originally listed in June with Prudential Douglas Elliman for $17 million. The price was increased by 17 percent at the end of June before being relisted with Sotheby’s. According to the listing, the property has room to build a bigger 12,000-square-foot home. TRD

Manhattan mixed-use property values fall by half

A buyer could get twice as much mixed-use space in Manhattan in the first half of 2009 than in the same period the year earlier, according to a new citywide mid-year report from commercial sales firm Massey Knakal Realty Services.

The prices for mixed-use properties fell 53 percent to $535 per square foot from $1,135 per square foot in the first half of 2008, the firm’s data show.

The dramatic reduction highlights the changes in the market from a year earlier as credit tightened and the economy weakened.

Overall sales in the first six months of the year in Manhattan in all categories of buildings priced higher than $500,000 were down 82 percent to $1.9 billion, from $11 billion in 2008, and $30.8 billion in 2007, the firm reported. The transaction volume fell 74 percent from the first half of 2008 to 95 sales, totaling 122 buildings.

Company Chairman Robert Knakal said he expected prices would continue to fall even as the number of transactions increased.

“Even with a significant increase in volume, we expect prices to continue to drop as fundamentals deteriorate, caused by continuing increases in unemployment,” he said in a statement.

In Manhattan, the 15 mixed-use sales in the first half of the year included 81 Baxter Street, which sold for $3.57 million, and 102 Charles Street with a sales price of $6.5 million, city records show.

In other segments of the Manhattan market, the price of multi-family walk-up apartment sales fell 17 percent to $494 per square foot in 2009 from $599 per square foot in the same period in 2008, and elevator building prices fell to $468 per square foot from $532 per foot last year, the company reported.

In northern Manhattan and the outer boroughs, walk-up prices fell as much as 41 percent. In Northern Manhattan, which last year had the top price per square foot for multi-family walk-up buildings, prices dropped 41 percent, to $124 per square foot, from $211 per foot.

Queens, which now has the most expensive walk-up prices in the outer boroughs, saw prices decline 13 percent, the smallest percentage drop in the city. The sale prices fell to $176 per square foot this year from $204 per square foot in the first half of 2008, the Massey Knakal figures show.

Prices for walk-up apartment buildings in Brooklyn fell 18 percent to $148 per square foot, while in the Bronx they dropped 23 percent to $76 per square foot. By Adam Pincus

Intuit exec’s ex-wife pays $17.5 million at 15 CPW

The ex-wife of the chairman of the board of software giant Intuit recently bought a four-bedroom apartment at 15 Central Park West for $17.5 million, about $3 million more than the seller paid for the condominium 16 months earlier.

Roberta Campbell, formerly married to William Campbell, current chairman of the board and former CEO of the California-based company, is the only buyer named on the purchase, which closed July 15, according to city property records made public last month.

There was no mortgage filed for the 11th-floor unit in the House building of the development, indicating the purchase was all cash.

Campbell bought the 3,840-square-foot unit, with views to the east and west, from Paula Lascano, who paid $14.2 million in March 2008 for the sponsor unit.

Lascano first put the apartment on the market in April 2008 for $22.95 million, and its price was cut five times to $18.5 million in March 2009, before going into contract in May, data from Streeteasy.com show. By Adam Pincus

1975: Foreclosure begins on Chrysler Building

The lender of a $12.7 million second mortgage began foreclosure proceedings on the Art Deco Chrysler Building 34 years ago this month during an economic recession.

The borrowers of the note, partners Sol Goldman and Alex DiLorenzo Jr., at the time were the biggest private landlords in the city. DiLorenzo died of a heart attack in the building a week after defaulting on the note.

The lender, Massachusetts Mutual Life Insurance, took over the property, at 405 Lexington Avenue, in 1978.

Goldman and DiLorenzo acquired the building in 1957 for about $42 million, but Goldman admitted early on the partners were concerned. He told a reporter in 1965 the purchase “was a big gamble for us.”

The 1.2 million-square-foot Chrysler Building, at 1,046 feet, was the tallest building in the world when it opened in 1930, but was surpassed by the Empire State Building the following year.

The ownership of the property has always been complex. The land below the building since before it was constructed has been owned by Cooper Union, and that has never changed hands.

In 2008, a sovereign wealth fund, the Abu Dhabi Investment Council, bought a 90 percent interest in the building for $800 million from a German real estate fund, TMW, which sold its entire 75 percent interest, and Tishman Speyer Properties, which sold a 15 interest.

The property today is still managed and controlled by Tishman Speyer Properties.

1957: New office space created in postwar construction surge

More than 19 million square feet of office space was constructed in Manhattan in the dozen years following the end of World War II, according to a report issued 52 years ago this month.

The survey, by the Real Estate Board of New York, showed 73 buildings with 19.3 million square feet of office space had been built since 1945, with the majority in Midtown.

There were 22 buildings constructed north of 50th Street containing 4.9 million square feet, and 21 office towers built in the Grand Central area with 7.5 million square feet. The remainder was built Downtown or in other areas of the borough. New office towers included the Bank of New York Building at 530 Fifth Avenue between 44th and 45th streets in 1957 and the Colgate-Palmolive Building at 300 Park Avenue between 49th and 50th streets, built in 1955.

The new space represented an approximately 19 percent increase in total office space, which was about 100 million square feet before World War II.

Today there is about 445 million square feet of office space in Manhattan, according to commercial realty firm Colliers ABR.

1927: Board of estimate approves slum clearance bill

The city’s Board of Estimate approved a bill fiercely opposed by the real estate industry that permitted the condemnation of old tenement buildings and the leasing of the land for development of affordable apartment housing 82 years ago this month.

The law, backed by scandal-plagued mayor James Walker, was an expansion of city powers for condemning land for widening streets or creating parks. The new powers allowed the city to lease the excess land taken but not used for the park or street improvement to developers to build affordable, modern apartments.

The New York Times quoted leaders of the Real Estate Board of New York and the United Real Estate Owners’ Association saying that while they supported building improved housing, the bill was illegal and impractical.

The legislation won final approval after passing by a wide margin in a referendum in November that year.

But one of the most significant projects undertaken using the new law never resulted in the development of promised housing.

Walker used the new powers to pay about $4.8 million to condemn some 200 buildings for the widening of Chrystie and Forsyth streets on the Lower East Side with the promise of building affordable housing with as many as 9,000 rooms.

Although he negotiated with builders and philanthropists, the housing plans collapsed and the Sara D. Roosevelt Park was opened there instead in 1934.

While I’ve been the editor of The Real Deal from the time it started more than six years ago, this is my first editor’s note, and I’d like to introduce myself.

I have usually worked behind the scenes, at first writing stories, and then editing and assigning them as the magazine grew.

But now, thanks to our crackerjack staff of deputy editors, I’ve
found the time to write this note, and I imagine you’ll be hearing more
from me in the coming months.

And for those of you who miss our publisher Amir Korangy’s name on
this page, you can still catch his views as a market commentator by
tuning into news outlets like MSNBC, CNBC and CBS, and by reading the
New York Times, the New York Post, the New York Observer, the Los
Angeles Times and Bloomberg News. He has been quite busy recently
helping readers and audiences make sense of the turbulent real estate
market.

One thing that has been on TRD’s radar lately is more reports
filtering in of business practices that went awry during the boom, and
that came back to bite us, leaving us in the predicament we are in now.

I just read Paul Muolo and Mathew Padilla’s excellent book about the mortgage meltdown, “Chain of Blame.”

Together, with Richard Bitner’s “Confessions of a Subprime
Lender,” the book does the best job I’ve seen of getting into the
nitty-gritty of what was happening in parts of the mortgage industry
during the boom. For example, it includes a mortgage executive with a
penchant for throwing knives around the office.

“Chain of Blame” describes how the pressure from Wall Street and
mortgage originators to continue making money hand over fist during
that period was so strong that arguments as to why borrowers could be
classified as kosher and not a credit risk were comical:

• On one of the loans an underwriter reviewed, instead of a
professional appraisal, there was a statement from the borrower saying
what he thought the property was worth.

• One underwriter was told by his superior that a loan should be
approved because the house had “curb appeal,” which the underwriter
found amusing because, after all, it’s the borrower that pays the
mortgage, not the house.

• Yet another underwriter was asked to leave his job after raising
a stink about a lender who encouraged asset-poor borrowers to take out
cash advances on their credit cards and use them as money for their
down payments.

And so on.

It was these kinds of insane practices that led to a real estate bubble that was popped.

Lies and half-truths always take a while to unwind once they are
exposed, whether they are the shady practices of a mortgage executive
or the massive fraud of Bernard Madoff. And now, we are in the middle
of the great unwinding.

If there had been more transparency in the real estate sector, and
these practices had been detected earlier, the crisis we are in today
might not be so dire. Transparency is something that has generally been
lacking in real estate, and The Real Deal’s mission, now as
always, is to bring greater transparency to New York real estate, and
to show how business is done and what really goes on. Transparent
markets are efficient markets.

Currently, since the bubble has deflated for a while, falling
prices have meant great deals for a few investors. Reporter Sarah Ryley
highlights who the winners and losers are as part of an insightful
package about the best and worst deals in New York real estate since
the credit crunch, beginning on page 55.

For instance, Young Woo’s recent purchase of AIG’s 70 Pine Street
and 72 Wall Street for $140 million seems a masterstroke. The deal set
a new basement benchmark of $100 per square foot for a Manhattan office
building, and it’s hard to see how Woo won’t make money on this
investment. George Comfort & Sons’ purchase of Worldwide Plaza for
roughly $600 million — which works out to a very low $365 a square foot
— is another “best” deal on our list.

In another big feature in this issue starting on page 35, Candace
Taylor takes a look at the recent uptick in activity in the residential
market in a series of stories, separating what is fleeting from any
truly changed market fundamentals that would indicate a recovery. It’s
the kind of reporting that is central to what we do: trying to separate
true economic growth from speculation, fact from fiction, and reality
from hype.

Enjoy the issue and enjoy the rest of your summer.