The Real Deal New York

While it is clearly too early to do a full autopsy on the Hamptons
rental market, brokers say this season will likely go down as one of
the toughest — and strangest — in recent memory. Though beachgoers just started making their way out to the
Hamptons in force last month, it’s already clear that the Great
Recession has led to double-digit price declines in the Hamptons rental
market, compared to last year. [more]

No one personified the excesses of mid-2000s New York City quite like
Michael Shvo. The slick-haired Israeli émigré burst onto the real
estate scene in 1998, an audacious 20-something who quickly climbed the
ranks of Manhattan’s biggest sales firms before starting his own,
self-titled new development marketing company. Much like the New York City condo market, Shvo’s rise has been followed by an equally spectacular fall. [more]

In New York City real estate, unethical behavior is the elephant in the
room: a subject brokers generally avoid. This month, The Real Deal delved into this most taboo of topics,
shining a light on some of the industry’s most unsavory practices and
examining how the real estate downturn is impacting them in New York. [more]

In some South Florida circles, they are known as “the Other Trumps.”
Brothers Jules and Eddie, the sons of a South African tailor known as
“Willie,” have no financial, philosophical or even familial ties to
Donald Trump. However, the Brothers Trump have quietly built an empire
on luxury real estate development, one which includes Williams Island
(named after their dad), an 82-acre posh preserve for the rich in
Aventura; the 51-story Acqualina Resort & Spa in Sunny Isles; and
Luxuria in Boca Raton, seaside condos that include flat-screen
televisions in the bathrooms. [more]

While troubled projects have dominated the headlines, there are a
number of condos sprinkled across New York City’s skyline that have
actually seen boosts in sales of late. After what was by all accounts a
dead winter, life seems to have returned to the market for some new
condominium buildings this spring — even if the numbers are still
relatively small. [more]

The shuttering of several New York real estate brokerages, including
Coldwell Banker Hunt Kennedy and JC DeNiro & Associates, has set in
motion a game of musical chairs among brokers. While some agents are
still scrambling for their next jobs, many seem to have quickly landed
seats — even if the transition has been a bit hectic. [more]

In this month’s Q & A, brokers, developers and finance specialists told The Real Deal
that despite the fact that distressed asset funds have not been making
the highly anticipated buys everyone was expecting, they will probably
begin doing so at the end of 2009. And, they said, purchasing will
really ramp up in 2010. [more]

When the economy is strong, many landlords turn their noses up at restaurant tenants, fearing unpleasant food odors, vermin and noise. But as retail vacancies proliferate across the city and the recession drags on, the tables have turned and landlords are rethinking their disdain for eateries.

“They used to be sort of perceived as a hassle because of potential odors, but now they are seen as rent-paying tenants,” said Jeffrey Roseman, executive vice president and principal at Newmark Knight Frank, who represented landlords and tenants in a handful of restaurant deals last month. “Landlords who never wanted restaurants in certain spaces now will consider them.”

In fact, not only are landlords welcoming restaurants, they are doing deals at discounts of 20 to 30 percent off the rents from a year ago at this time.

These lower rents — and the increase in the number of restaurant spaces returning to the market as existing eateries shutter — are driving the current crop of deals. Meanwhile, the profile of growth-minded restaurateurs has shifted to smaller entrepreneurs who formerly had been priced out.

“The guy who has three-to-five restaurants is looking to score on the real estate market,” said Spencer Levy, director of hospitality real estate at Robert K. Futterman & Associates.

Reflecting the “doing more with less” recession mantra, brokers expect many deals for around 2,500 square feet or less, with the space taken by ethnic restaurants that offer meals at affordable price points.

The recent 10-year deal for Spice Corner’s space at 236 Eighth Avenue, brokered by Steve Rappaport of Sinvin Realty, exemplifies this trend.

The fifth location for the growing Thai chain, the space is just 2,600 square feet.

“You have a new breed of restaurants opening, smaller and mostly ethnic: Asian, Brazilian, Portuguese or tapas bars,” said Ben Fox, president of Winick Realty Group.

The cloudy climate creates a wider buffet of choices for players such as Adam Eskin, the CEO of Pump Energy Food.

The six-store Manhattan chain, which features low-carbohydrate, whole-wheat wraps for under $8 each, debuted a new flagship at 80 Broad Street earlier this year. Eskin is working with broker David Latman of DLL Real Estate, scouting for other long-term lease deals for 2,000-square-foot spaces.

“As more storefronts open up … we have greater opportunity to find the right locations at the right prices,” said Eskin.

Deals for white-tablecloth temples to epicurean indulgence are absent, brokers said. That’s not surprising, given the long list of high-end restaurants that have closed this year, including La Goulue and Lever House.

Steakhouses may prove one exception on the upper end. American red-meat purveyor Morton’s and Brazilian churrascaria Fogo de Chao are each said to be seeking between 5,000 and 10,000 square feet in Midtown or Midtown West.

Futterman’s Levy said his firm is both receiving better deals for restaurateurs and offering lower rates on space RKF is marketing. When RKF clinched a 15,000-square-foot lease for restaurateur Simon Oren’s Tour de France Group at 450 West 33rd Street earlier this year, the rent came in at 50 percent of the asking price, Levy said.

Now, RKF is soliciting tenants for a 100,000-square-foot space at 229 West 42nd Street, with an eye toward making the space a food destination housing several tenants. Asking rent is $250 per square foot, a 30 percent drop from what it would have been when the economy was still strong, Levy said.

Newmark Knight Frank’s Roseman said that in exchange for rent reductions some landlords are seeking a percentage of sales above a given benchmark so both sides can benefit if sales surge once the economy improves.

Meanwhile, conversions are the hottest item on the real estate recession menu, as some landlords are forgoing key money and fixture fees for spaces with fully built kitchens. Consultant Alan Fleischman, a licensed real estate broker and former restaurateur who now runs Restaurant Development Associates, said last month he was close to clinching two such deals. One space, in Midtown East, is 1,500 square feet, while the second, in Midtown West, totals 3,600 square feet on two floors.

This wave of dealmaking is contributing to a jump in applications by food-related businesses. The Department of Health and Mental Hygiene saw a spike in operating permits to 1,411 in the first four months of 2009, up 25 percent from the year-earlier period, according to an April report by Crain’s New York.

At press time, the agency had no additional information on the types of eateries opening or where they are concentrated. But, New York State Liquor Authority data showed that applications by restaurants for licenses to serve wine are about even in Manhattan and Brooklyn from January to mid-June 2009 compared with the same period last year.

“So many restaurants are opening — not because people are so rich and they can open restaurants at will; it’s just that this is an opportunity for people with some knowledge … [who] are taking fully fixtured restaurants and jumping in,” said Fleischman.

Alcohol is said to be recession-proof. Drinkers are just as likely, if not more likely, to indulge in bad times as they are in good.

But what better way to test how that age-old adage is holding up in New York than by looking at real estate prices for watering holes here during one of the worst recessions in decades?

Unlike most citywide retail rents, which have dipped of late, rents for properties that house the city’s taverns, bars and clubs have for the most part only leveled off, according to brokers who work in the nightlife arena.

“People think there are going to be tremendous bargains out there,” said Gary Auslander of Tower Brokerage, which is based on East 10th Street. “The fact is, lease prices have pretty much remained flat.”

One primary reason for the relatively stable rents is that it has become increasingly difficult to obtain new liquor licenses, which makes them more valuable and drives up both rent and sale prices for the establishments that already have them, according to Auslander and other brokers.

Brokers say this is especially true in Downtown neighborhoods that are attractive to bar owners because they tend to lure the lion’s share of the nightlife crowd — areas such as the Lower East Side, the East Village and Soho.

“You find me a bar for sale Downtown where the rent is fair and it costs around $250,000 to purchase, and I’ll have takers lining up around the block,” said Ken Brandman, the owner of New York Commercial Realty Services.

According to Auslander, the going price for a liquor license alone is about $100,000.

While it has become progressively more difficult to obtain liquor licenses in some city neighborhoods, the number of Manhattan license applications accepted by the New York State Liquor Authority hasn’t dropped off, indicating that the economy isn’t deterring entrepreneurs from opening bars.

Between January 1 and June 10 of this year, 184 standard bar license applications were accepted, compared to 182 during the same period last year and 205 in 2007, according to statistics provided by the state liquor authority to The Real Deal.

Also, with retail lease prices dropping and retail tenants harder to find, landlords who in the past wouldn’t have considered bringing in a bar tenant are now more willing to do so, according to Rob Frischman, president of JDF Realty.

Faye Fisher, the vice president of Advance Restaurant Finance, which works with small and medium-sized merchants, said this year she has given out at least 35 percent more loans to bars than she did last year.

Bars in the city also appear to be more resilient in the down economy than restaurants, with significantly fewer closings over the last few months, according to Amanda Kludt, the editor of Eater.com, a popular Internet blog that monitors openings and closing of bars and restaurants citywide.

And while restaurateurs are trending toward opening eateries with moderately priced menus, high-end club owners remain active, said Kludt.

For example, she said, a new exclusive bar/club called the Gates opened in May in Chelsea. She also pointed out that the owners of the exclusive clubs Oak 1 in Chelsea and Butter in Noho are opening a new spot in the West Village space formerly occupied by the Plumm. In addition, Matt Levine of the Eldridge is spearheading a high-end project called LevantEast at Thor, the restaurant and bar in the Hotel on Rivington on the Lower East Side.

Still, bars that serve beer at inexpensive prices are likely attracting more customers than the high-end places in these economic times, nightlife experts said.

Eric McManus, the owner of Epstein’s Bar on Allen Street in the Lower East Side, said his business is good (note to reader: this reporter earned extra bread tending bar there until last year ).

“In this day and age, people would rather take the hundred dollars they would have spent in one night at a high-end place and spread it over three nights at a place like mine,” McManus said.

Worldwide plaza on the market

Worldwide Plaza, the last piece of Macklowe Properties’ portfolio, is for sale. The lender in control of the 1.7 million-square-foot building, Deutsche Bank, wants to retain an ownership stake, but is also prepared to write down the current $1.02 billion in outstanding principal to an $800 million mortgage. The buyer of the building at 825 Eighth Avenue, at 50th Street, is expected to contribute $200 million in equity, and the deal would be valued between $300 and $350 per foot. The leading potential buyer had been George Comfort & Sons, but the deal reportedly fell apart. According to CoStar Group, 639,540 square feet is available in the building.

East Village apartment buildings for sale

Four apartment buildings on Second Avenue between East 9th and East 10th streets are being marketed individually. A six-story elevator building at 156 Second Avenue with 31 apartments and five stores is listed at $25 million; a seven-story elevator building with 24 apartments and three stores at 145 Second Avenue has an asking price of $15 million; a six-story walkup at 151-153 Second Avenue with 27 apartments and two stores is asking $15 million; and a six-story walkup with 20 apartments and two stores at 141-143 Second Avenue is asking $11 million. Debrah Lee Charatan and Victoria Fisher of Debrah Lee Charatan Realty are handling the sale.

Brooklyn bank ground lease available

The ground lease for a Bank of America branch at 4701-4703 13th Avenue in the Borough Park section of Brooklyn is on the market with an asking price of $14.17 million. Constructed in 2009, the 4,920-square-foot bank is operating under a new 15-year, triple-net ground lease, expiring on May 1, 2024. Bank of America has three 10-year options to extend the lease with 10 percent rental increases. A sale at the asking price would represent a capitalization rate of 6 percent. Marcus & Millichap is marketing the property.


Brooklyn commercial condos on the block

A package of 44 units at Greenpoint Lofts, a commercial condo development at 229-231 Norman Avenue, is on the market with an asking price of $8.9 million, or $271 per square foot. The five-story, 32,812-square-foot building was originally built in 1913 and was renovated in 2007; the annex was built from the ground up in 2007. The property, which contains a total of 68 units, features 10- to 16-foot ceilings, 24/7 access and private and rooftop terraces. Marcus & Millichap is marketing the package.

Bronx development site asking $8 million

A waterfront development site in the City Island section of the Bronx is on the market with an asking price of $8 million. The 5.4-acre parcel at 226 Fordham Street is zoned M1-1/CD for industrial use, but the site is awaiting approval for residential development permits. The New York City Department of City Planning recently certified the ULURP application as complete, initiating the formal public review process. The lot has a two-story, 27,000-square-foot building on site, built in 1950. Karl Brumback and Chris Brodhead of Massey Knakal are handling the sale.

Noho retail building on the market

A three-story retail building at 337-45 Lafayette Street is on the market with an asking price of $5.95 million, or around $600 per square foot. The 9,917-square-foot property has 130 feet of frontage on the corner of Lafayette and Bleecker streets and offices above, with 15 commercial units total. The property also has an additional 6,500 square feet of air rights, pending Landmarks Preservation Commission approval. Brendan Gotch and James Nelson of Massey Knakal are handling the assignment.

Bronx multifamily portfolio on the block

A package of two walk-up apartment buildings in the Little Italy section of the Bronx is on the market for $4.4 million, or roughly $101 per square foot. Located at 2405 Crotona Avenue and 2203 Belmont Avenue, the prewar buildings have four ground-level stores and 53 apartments, including four rent-controlled units. A sale at the asking price would represent a capitalization rate of 7.7 percent and a gross rent multiple of about 6.6. The buildings have been owned and managed by the same partnership for over 20 years. Marcus & Millichap is marketing the properties.

Compiled by Linden Lim

Before the economy collapsed last September, hotel developers rushed to
do deals in almost any Manhattan neighborhood, from the Financial
District to the Lower East Side to the far West Side, trying to cash in
on the surging demand for rooms. Now, as the local market suffers a double squeeze of plunging occupancy
levels and thousands of additional rooms coming online, hoteliers and
developers are facing the brutal reality that neighborhoods still
matter a great deal in the Manhattan hotel business. [more]

The city is mulling over a proposal from the Real Estate Board of New
York that would increase the value of 421-a negotiable certificates
that are part of an affordable housing incentive program that gives
10-year tax abatements to owners and developers of residential
apartments.
[more]

While the downturn has led to cheaper rents for office tenants, the decline in expenses is clearly not enough to prevent some companies from going out of business and vacating their spaces before their leases expire.

Those early move-outs are now testing some lease provisions, called “good-guy guarantees,” which were designed to avoid bitter disputes in landlord-tenant court, but were written during more plentiful times.

While overall office asking rents in Manhattan are off 24 percent from their peak of $71.92 per square foot in July 2008 (down to an average of $54.63 this past May, according to commercial firm CB Richard Ellis), some failing businesses cannot take advantage of the discounts. As a result, they have begun exercising their good-guy guarantees.

The guarantees, most often written by a landlord for tenants with weaker credit ratings, generally put a principal on the hook for unpaid rent, but if there’s nothing owed when the tenant leaves, the principal is free and clear and does not need to pay a penalty. All future obligations are laid on the tenant corporate entity which, if the tenant is going out of business, likely has no assets.

The purpose of the good-guy provision is to provide an incentive for a tenant to leave the space instead of holding on and forcing the landlords to seek an eviction, said David Hoffman, executive managing director at commercial brokerage Colliers ABR.

James Wacht, president of brokerage and management firm Sierra Realty, said he had two tenants this year that were seeking to extricate themselves from leases using the good-guy guarantees.

“It gives you a measure of protection that normally you don’t have against a non-credit tenant,” he said.

But Wacht said he generally tries to work out some form of rent relief and keep the tenant: “I don’t want vacancies,” he said.

“Not one of the properties I run has avoided being touched by tenant defaults,” said Hoffman, “whether because a law firm dissolved or a not-for-profit saw the value of its endowment decline in the stock market.”

The efforts to avoid landlord-tenant court seem to have worked over the past several years. In Manhattan, the number of tenants forced out of their commercial spaces fell in 2008, even as the economy soured. In fact, cases in which the courts ordered a tenant to vacate its premises through eviction proceedings have consistently declined in Manhattan, from 851 in 2005 to 720 in 2008, according to the most recent data available from the city’s Department of Investigation, which compiles the number of evictions.

The most recent data, however, only covers 2008 so the impact of 2009′s continued economic decline on the number of evictions was unknown.

In the current tenant-friendly market, good-guy guarantees for newly signed leases are on the decline, said real estate attorney Adam Leitman Bailey.

“We are finding in the last couple of months, more and more tenants have gained the courage to refuse to sign leases in their personal names, as well as sign any guarantees such as a personal or good-guy guarantee,” Bailey said.

Midtown

In terms of statistics for the commercial market, the availability rate in Midtown reached its highest level since 1994 in May, as large blocks of space continued to hit the market while leasing volume remained at about half its historical average, according to CBRE.

But in a positive sign, the taking rent index, which measures the taking rent as a percentage of the asking rent, increased for the first time in seven months, showing the gap between what landlords were asking and what they were getting was finally beginning to narrow.

The availability rate, which CBRE uses to track space that is being marketed and is available within 12 months for tenant build-out, rose to 15.2 percent in May, up 0.4 points from a month earlier. At the same time, asking rents fell by $1.41 per square foot to $62.16 per square foot in May.

That’s now down 28 percent from a year ago when average rents were $86.52 per foot, CBRE said.

The taking rent index, which has fallen rapidly and steeply from 91.6 percent in September 2008 to 76.5 percent in April, showed its first recent improvement in May when it rose slightly to 77.1 percent, the report showed.

But leasing remained at about half its normal level, with the Times Square/West Side submarket performing the worst. Normally that submarket would have seen about 120,000 square feet leased in May, but this year less than 5,000 square feet was leased during that month, the report showed.

Midtown South

The only market that did not see the taking rent index turn up last month was Midtown South. There, the index has been on a steady decline since reaching a 12-month high of 94.8 percent in November 2008. It fell 0.5 points to 87 percent last month, its lowest level since July 2005.

The average asking rent in Midtown South was $46.22 per square foot in May, a drop of $0.75 from the month earlier and off 13 percent from last May, according to the CBRE report.

The availability rate in the district hit 14.4 percent, up 0.3 points from April, with just 180,000 square feet leased.

The Chelsea submarket, which generally averages over 70,000 square feet leased in the month of May — the second-highest average volume in Midtown South — saw just 5,000 square feet leased this May.

And Noho/Soho, which typically has an average of just 20,000 square feet leased in the month of May, was the most active submarket, recording 50,000 square feet leased this May, the firm’s data showed. The spike was attributed, in part, to a 24,000-square-foot lease by women’s apparel chain Coldwater Creek at 575 Broadway, the largest deal in May in Midtown South.

Downtown

The Downtown market saw a 0.5 point uptick in the taking rent index to 75 percent, changing direction after being on a near-constant decline since June 2008 when it neared 95 percent.

The availability rate in the district rose 0.2 points to 10.8 percent, while the average asking rent fell by $0.49 per square foot to $42.46 per square foot in April, CBRE said.

The district saw a total of 170,000 square feet leased in May, representing about 40 percent of its five-year average.

Still, Downtown was the only one of Manhattan’s three major submarkets that to date has leased more this year than in 2008.

There have been 980,000 square feet leased Downtown through May this year, compared to 830,000 at the same point last year, the CBRE report said.

With construction on hold at many New York projects, a growing number of developers and brokers are getting into the business of running properties for someone else.

The growth of the so-called “asset management business” comes as an increased number of properties have turned into virtual zombies — either unable to complete condominium sales or, in the case of commercial buildings, unable to retain or even find tenants.

Unlike receivers, which are appointed by the court during foreclosure proceedings and are often lawyers, asset managers can be hired by a wide range of players — from lenders to institutional owners to the court-appointed receivers themselves — at any time. And, while receivers are charged with overseeing finances and administrative duties, sometimes they farm out those jobs to asset managers who, as real estate professionals, will handle property maintenance, construction, rent collection and accounting.

In one of the most high-profile asset management cases in New York, the Related Companies was selected as the new managing agent at Rector Square, a troubled condo project that was foreclosed on by Anglo Irish Bank.

The company was hired by the Battery Park City building’s court-appointed receiver, attorney Michael Miller, to handle the renovation of common areas at the property, to deal with administrative functions like collecting rents and common charges, and to find new rental tenants until the court allows the building to renew sales activity.

In addition to Rector Square, another high-profile case involves 1330 Avenue of the Americas, where Jones Lang LaSalle is managing a former Macklowe Properties office tower that was acquired by Otera Capital in a foreclosure auction. Meanwhile, the number of asset managers is expected to increase in the coming months.

Compensation varies widely depending on the level of services provided by the asset management company. Related, for example, is being paid a flat-project fee of $100,000 to manage Rector Square, not including fees to oversee construction and to rent out units, according to sources familiar with that situation. But pay often hinges on what kind of expertise the asset manager has. Some are professional property managers; others are developers or commercial brokerage firms with asset management divisions.

On the precipice

According to first-quarter data from the Mortgage Bankers Association, the number of multifamily and commercial delinquencies has risen to levels not seen since the 2001 recession.

As many lenders (including the Petra Fund, Guggenheim Structured Real Estate, iStar Financial and others) face rising delinquencies in the New York area, there will be increased pressure to not only foreclose on properties, but to find professional property managers to keep income flowing and prepare the assets for the eventual thaw in the real estate markets.

“We’re on the precipice where you’re going to see a huge demand for this expertise,” said Steve Herman, a partner at Cadwalader, Wickersham and Taft, a Manhattan-based law firm.

Rosen Associates Management Corp., a Jericho, N.Y.-based real estate firm, is seeing a big increase in requests for asset management services, mainly in commercial real estate.

“We’re seeing a huge rise in the variety of firms looking for professsional management,” said David Rosen, executive vice president of the firm. “When the economy was good, everybody looked like a rock star.”

The company is managing a shopping mall for a pension fund in Queens and recently managed another mall anchored by Kmart on the Bruckner Expressway in the Bronx.

Firms are already beginning to expand into asset managing because the rest of the market is so dead. Blesso Properties, a Manhattan-based developer of boutique residential loft buildings, is attempting to do so as the slowdown in construction and condominium financing has impacted its core business.

“The traditional model of development where you buy a piece of land, redevelop it and sell it, that’s not something that’s going to happen for a minimum of three years, and maybe longer,” said Matthew Blesso, president of the company. “That leaves companies like mine to find new things to do or go out of business.”

Blesso has approached several lenders about taking over management of distressed condos and operating them as rentals. He has not, however, finalized any new business because he has not yet come to any agreements on compensation.

“A lot of lenders have not fully accepted the gravity of their situations on some of their loans,” said Blesso. “Someone was offering us the equivalent of a typical property management fee, where we would have to do something well beyond [the normal duties].”

Unraveling a mess

Bob Billingsley, vice chairman at Colliers ABR, says the requirements of asset managers are far more complicated in the current market than they were in the past, as many boom-era property owners intended to flip their acquisitions to a new buyer, and therefore made few provisions for long-term management of these buildings.

“A lot of people bought buildings and figured they would sell it in two years, so they would say, ‘I don’t have to worry about that boiler,’” he said. “Now the chickens have come home to roost.”

At Rector Square, Related has to unravel one of the city’s most complicated foreclosures. The property includes a mix of first-time unit owners, affordable housing tenants and millions of dollars in unpaid construction contracts. Since it sits on land held by the Battery Park City Authority, the condo sponsor must pay monthly rent to Battery Park, which makes the monthly common charges more expensive and less predictable than for a building that owns its land and does not have a ground lease.

In March, meanwhile, Short Hills, N.J.-based Roseland Property Co. launched a new consulting unit to help property owners and financial institutions manage assets.

Roseland’s primary business is the development and management of luxury apartment communities and boutique shopping centers in the city, New Jersey, and other Northeast locations.

The new division provides everything from management and leasing of commercial properties to completing construction at unfinished project sites.

“We’re seeing very complicated, sophisticated assets with a series of issues that are impairing their value,” said Carl Goldberg, co-founder and principal of Roseland.

Goldberg said the company is looking at a variety of properties up and down the Eastern Seaboard, ranging from residential rental buildings to mixed-use projects.

The business is not entirely new for Roseland. It managed more than $2 billion worth of non-performing real estate assets during the last real estate downturn, from the late 1980s to the early 1990s, Goldberg said.

Meanwhile, in May, Centerline Holdings, a Manhattan-based lender for multifamily and affordable housing developments, launched a new asset management unit called Centerline Real Estate Solutions. Centerline, a long-time affiliate of Related, made millions of dollars in bad loans over the past two years, and was one of the nation’s hardest hit commercial lenders at the height of the subprime crisis.

The new asset management unit will help lenders and third-party property owners manage their real estate portfolios, dealing with everything from construction to property administration.

Commercial lenders are facing reality — but not all at once. In addition to reluctance to admit they have bad loans on commercial properties, lenders have been trying to avoid taking large losses in a single quarter, industry experts said.

In many cases, they are holding onto underwater real estate loans not only because they don’t want to accept low-ball offers, but also because they cannot afford the appearance of a large single-quarter loss, said real estate insiders.

Alan Miller, senior director of commercial real estate brokerage Eastern Consolidated, offered a wry phrase to describe lenders extending a loan past its maturity date to keep it from being considered non-performing: “extend and pretend.”

That’s a riff on the popular leasing jargon “blend and extend,” which refers to common renewal strategy with leases with a few years remaining.

Also, since banks are wary of reporting large writedowns in a single quarter, they are instead marking properties down little by little, with the expectation that by this fall or next spring the loans will finally be marked down to true market values, said Peter Hauspurg, Eastern Consolidated’s chairman and CEO.

At that point they can be sold without a large hit to the bank’s quarterly report, or may even be able to be sold at a profit.

“A lot of times [with] that kind of writedown, a bank may not be able to take it that quarter because it will kill their numbers,” said Hauspurg, who also is a board member of the mortgage review committee of Buffalo-based M&T Bank, referring to a bank’s quarterly profit report.

“So they chip away a little at it each quarter until you are finally at the quarter when you are at the market level.”

He expected a flood of sales starting in 2010, in part because the values will have been written down significantly by then.

Hauspurg used 475 Fifth Avenue as an example of a lender appearing reluctant to sell after taking over the loan. A division of Barclays Capital lent $157 million to developer Moinian Group and investors Westbrook Partners to buy the building, but in March it was reported it would take back the property in a deed in lieu of foreclosure.

Hauspurg said it was unlikely Barclays would sell the property because they could get only about $60 million in today’s market, forcing them to write down nearly $100 million at once.

“That is a huge hit that Barclays may not want to take in one quarter,” Hauspurg said.

A spokesman for Barclays declined to comment for this article.

Blackrock announced last month that it would purchase Barclays for $13.5 billion. Banks do not want to be caught selling too cheaply either, Hauspurg noted.

In fact, some banks are asking why they should sell now and let others reap profits when they can just hold the loan until the market recovers.

“Why sell and take a writedown? [Banks] will just hold” the loans, said Andrew Jagoda, a partner at law firm Katten Muchin Rosenman.

“Instead of dumping them, they will foreclose. We are doing a bunch of foreclosures.”

Once a loan is sold, the sale price of the note is deducted from the original value, and the difference is deducted from the bank’s capital account, said Jagoda.

So a loss is not only charged against earnings, hurting profit numbers, but it also thins the bank’s capital account — and federal banking guidelines require banks to maintain a certain amount of capital in relation to their loans.

“So that [the loss] is deducted from the capital they raised and the earnings they haven’t paid out to shareholders, which is additional capital,” Jagoda said. Meanwhile, regulators are looking to make sure banks maintain capital levels, he added.

Leonard Boxer, a partner and chairman of the real estate practice at Stroock & Stroock & Lavan, said in the last downturn, lenders profited mightily after writing down loans and then selling them at prices higher than the written-down valuation.

“If they have taken the writedowns already, they can make a deal — hopefully — at the amount they have written it down to and probably in excess of that amount the following year, and they can make a profit,” he said.

Banks also view the financial strength of their own assets differently from assets of other lenders, said Patrick O’Malley, managing director for capital markets at DTZ Rockwood, a real estate finance firm.

“One bank will say, ‘Our portfolio is fine but XYZ [lender] has a problem.’ But then when you ask XYZ, they say, ‘No, we are fine, but ABC has a problem,’” he said.

Kasirer Consulting’s client list reads like a who’s who of local real
estate luminaries. The Manhattan-based lobbying firm’s clients include
SL Green Realty, Manhattan’s largest commercial landlord; the
developers of the New Domino, the biggest mixed-use project planned in
Williamsburg; Elad Properties, the Israeli company that converted the
Plaza Hotel into one of the most expensive condominiums ever, and a
host of others. [more]

Nearly a dozen retail vacancies dot Broadway between Houston Street and Astor Place. In recent years of economic excess, the strip languished in the shopping shadow of its neighbors — trendy Soho to the south and bustling Union Square to the north.

But in today’s sagging economy, Noho, with its rents half the price of areas like Soho, could draw new retail blood such as apparel tenants, gourmet markets, and European brands that would have previously turned their noses up at the area, brokers said.

Still, the economy and bleak national retail picture are stalling the neighborhood’s resurgence.

Due to market conditions, “so many retailers have pulled back,” said Jeffrey Roseman, a principal and executive vice president at Newmark Knight Frank Retail.

Andrew Mandell, a partner with Ripco Real Estate, agreed. “The problem now is that chain stores are dormant, Wall Street is struggling, and [retailers] are preserving capital and paying down debt,” he said.

The spaces that longtime tenants Au Bon Pain and Gonzalez y Gonzales occupy are on the market because the two eateries have leases coming due.

The stretch of Broadway includes a disparate mix of fast-fashion retailers, food tenants, sportswear stores and chain retailers like Crate & Barrel and Urban Outfitters. But lately it’s been somewhat of a ghost town.

The strip fell victim to national chains that went out of business, such as Tower Records (692 Broadway) and Steve & Barry’s — which was set to replace the record store there until it, too, went belly up — and failed retail concepts, such as Helio, a wireless merchant (626 Broadway).

“This area has been struggling,” Mandell continued. “Even at the height of the market, there have been a lot of vacancies there for a long time.”

During its heyday in the 1980s and 1990s, the avenue was the shopping destination of the New York University crowd, marked by iconic stores like Antique Boutique and Canal Jeans.

But that’s before some neighboring areas bloomed into the vibrant shopping destinations they are today.

Nonetheless, Noho still benefits from a mix of student, residential and tourist traffic. And when the NYU bookstore moves from University Place to 726 Broadway next year, the strip will get an added boost, brokers said.

Peter Farkas, the in-house owner’s representative for 718 Broadway, the former home of Canal Jeans, is bullish on the area.

“I think Soho and Noho are starting to blend,” he said.

The location at 718 Broadway is close to being signed by a European apparel wholesale company that is looking to launch a lab store in the Diesel model, Farkas said.

A European brand could also take over 738 Broadway, said Lori Shabtai, director of luxury and brand retail for Winick Realty Group, which is brokering that lease.

The door is also opening for smaller, mom-and-pop stores, she noted. Indeed, landlords in the area are waking up to gourmet stores, delis, coffee shops and “Shake Shack” types of merchants — all potential tenants, she said.

Before, “Everybody wanted a tenant that was a bank, everybody wanted a tenant that had 500 stores,” Shabtai said. “Then you see that retailer closing 400 of their 500 stores.”

As a result, “A lot of entrepreneurial tenants that were not able to move forward in the market … suddenly, they’re a hot commodity.”

When the former Tower Records spot that has been vacant for two years gets filled, it will send a signal to retailers that the area is undergoing a rebirth. That’s because the store served as the unofficial retail anchor for the neighborhood, brokers said.

Vornado, which is marketing the location, declined to comment.

However, TJ Maxx, CVS and Forever 21 have eyed the spot, sources said.

Newmark is brokering the lease for 632 Broadway, the former home of the now-defunct National Wholesale Liquidators. The asking rent for the space is between $200 and $300 a square foot.

The spot could go to a major shoe company, a well-known designer sportswear store or a video merchant that would complement the Best Buy next door, Roseman said.

Ripco has been marketing the Au Bon Pain at 685 Broadway, whose lease expires in October, for a year. The store is the retail base of a co-op building with $3 million loft apartments, so the landlord wants to replace the Au Bon Pain with a non-food retailer, such as an apparel merchant, shoe store or a wireless phone shop. But in this market, if the landlord can’t find a better tenant, he is likely to extend Au Bon Pain’s lease.

While the asking rent is $225 a square foot, “if someone comes along and says they want to pay $150, we’ll definitely entertain it,” said Richard Skulnik, the broker who is handling the location.

Ripco is also hoping lower rents will woo a tenant that would have been set on Soho for the Gonzalez y Gonzalez restaurant space at 625 Broadway.

The asking rent is $250 a square foot, whereas Soho rents are around $500 a square foot, said Scott Auster, a partner with Ripco.

Ripco plans on replacing the restaurant, which it has been marketing for over a year, with two tenants: an apparel merchant for the Broadway side and a café for the Mercer Street side, Auster said.

“We’re hoping for something to move in this fall,” he said.

While the entire commercial real estate scene is struggling, not all of
that struggle is created equally. Some of it is coming in the form of
giant chunks of empty space, the likes of which have not been seen in
Manhattan for decades. Whether through relocations, downsizing or bankruptcies, huge swaths of
office space on single city blocks remain unoccupied — creating, in
some instances, the urban equivalent of massive dead zones. And the
amount of available space is staggering. [more]

Deal Sheet

As real estate brokers watch their incomes plummet in a vastly weakened
market, experts say there’s an accompanying increase in unethical
behavior, from inflating asking prices to stealing buyers to making
fake offers.
While most brokers are well-behaved and cooperation is even
improving on certain fronts, insiders say some agents, desperate to
make deals, are committing more ethical violations. Buyers, too, are
guilty of transgressions in their frenzy to get the best possible deal. [more]

 
On a Webcast last month, The Real Deal’s Jen Benepe explored a lighter side of real estate — celebrity apartment swaps. While the New York market is still struggling, there are plenty of celebrities including “30 Rock” actress Tina Fey, Britney Spears and Rihanna, who are all still actively buying, selling and renting apartments. At the Apthorp on the Upper West Side, for example, Alec Baldwin, Sarah Jessica Parker and music executive Tommy Mottola have all reportedly looked at apartments recently. Log on to www.therealdeal.com to see the full segment and to access the archives. The Real Deal posts new editions of the Webcast regularly, featuring exclusive interviews with industry insiders.

Hi, I’m Jen Benepe and this is The Real Deal.

In the last few weeks alone, actor Alec Baldwin looked at three condos at the Apthorp, comedian Joan Rivers put her East Side townhouse up for sale with an asking price of $25 million, while “Pretty Woman” actress Julia Roberts, television sitcom star John Stamos and singer Rihanna all either inked deals to rent or started looking at apartments to lease.

And they just add to celebrity activity in apartment hunting that has taken place since Lehman Brothers collapsed last September.

Whether celebrities are actively trying to take advantage of a down market is unclear. But one thing seems to be certain: They are either selling for losses, negotiating deals or getting steep discounts when they buy just like everyone else.

Brokers that we talked to said other celebrities are getting good deals, too — relatively speaking, of course.

Actress and comedian Tina Fey of “Saturday Night Live” and “30 Rock” fame recently bought an Upper West Side apartment with her husband for $3.4 million — that’s $700,000 lower than the initial asking price. The apartment was listed by Marcy Grau of Stribling Real Estate.

As I mentioned, fellow “30 Rock” actor Alec Baldwin visited the Apthorp, the massive prewar condo conversion between 78th and 79th streets on Broadway. Units in the building failed to sell at their original $3,000-a-square-foot prices, and prices have since dropped. According to the New York Times, Baldwin is considering purchasing and combining three units but is apparently looking to offer less than the $15.5 million asking price. The paper also said that actors Sarah Jessica Parker and Matthew Broderick, who are married, as well as music executive Tommy Mottola, are among the other celebrities who have looked at the building.

In a market where many are still feeling serious economic pain, it would be silly to describe celebrities as struggling, especially since many of them still make millions of dollars. But some are still trading down, even if it is to a multimillion-dollar pad.

Britney Spears, for one, made headlines when she listed her Beverly Hills mansion, which saw a price reduction last week to $6.5 million, from $7.9 million. According to Life & Style Weekly in March, Spears started renting a place in Alpine, New Jersey, 15 minutes north of the city. The monthly tab? $30,000 — but Britney’s record label, Jive Records, is reportedly paying the bill. In a telltale sign of how much the market has changed since its peak, the house she’s renting is also for sale for $7.5 million, down from the $8 million asking price just over two months ago.

In the finance world, there are plenty of fallen executives trading down or looking to unload property. Lehman Brothers CEO Dick Fuld reportedly placed his 6,200-square-foot Park Avenue apartment on the market for about $32 million in late May. He paid about $21 million for it two years ago.

While we’re talking finance, U.S. Treasury Secretary Timothy Geithner had trouble unloading his five-bedroom house near Larchmont, N.Y., after having listed it for $1.6 million early this year and then reducing the asking price to $1.57 million.

According to news reports, Geithner gave up and rented it for $7,500 a month a few weeks ago.

We mentioned Rihanna earlier; the singer is reportedly renting a Soho loft, which was listed by broker Lisa Maysonet at Prudential Douglas Elliman for $18,000 a month, while she films a new movie, “Personal Protection.”

And according to the Post, Julia Roberts is putting $50,000 a month toward two apartments at One Morton Square on West Street while she’s in town filming “Eat, Pray, Love.” One apartment is for her family and the other is for her nanny and staff.

So while the high-end market may still be hurting, it is clear that some still have their fame and their fortune intact.

Compiled by Victoria DeCarmine.

One: That’s the number of apartments that closed in Cobble Hill in May. There was also just one single solitary closing the month before that in April, according to research compiled by StreetEasy.

This month The Real Deal zeroed in on the area to find out what kinds of deals were making it to closing.

While on the face of it, that one deal seems like a pretty bleak indicator of the market in the Brooklyn neighborhood, those in the know maintain it’s not nearly as bad as it appears.

The neighborhood is small in size — it roughly spans from Atlantic Avenue to Degraw Street and Hicks to Court streets (or Smith Street, depending on whom you ask). And given its housing stock of low-rise brownstones, there simply aren’t that many apartments in the area.

Add the fierce loyalty of the area’s residents, and their penchant for putting down roots, and it makes sense that Cobble Hill hasn’t ever been a neighborhood known for doing a ton of trading.

As a point of comparison for this May’s one deal, in May 2008, there were five closings in Cobble Hill (two of which, because of the disputed boundaries, some people might argue are actually in Boerum Hill).

The biggest reason for the slowdown, experts said, is that today’s sellers are reticent to even put their apartments on the market.

According to numbers culled from the first half of 2009, Sam Heskel, executive vice president of real estate appraisal firm HMS Associates, estimates volume in Cobble Hill is down by 53 percent.

“They’re scared to buy [another place]; they’re scared to [borrow] money,” said Heskel, who was careful to note that this is a citywide trend.

Sellers are also, it seems, scared to take even the slightest hit.

“If you look at what’s on the market, they’re either priced too aggressively, or the sellers aren’t serious,” said Prudential Douglas Elliman’s Terry Naini, who represented the buyer of 44 Bergen Street, Cobble Hill’s lone May closing.

“A really nice listing came on the market [in Cobble Hill] recently and they ended up renting it because the seller said, ‘I don’t want to sell if I have to sell at a discount.’”

Townhouses especially are still at pre-recession prices, she noted.

“People hear that Norah Jones bought on Amity [Street], and they think they can sell for $3 million,” Naini said. “There’s still a gap between where sellers are and where buyers are, and that’s why you’re not seeing a lot trade.”

Heskel said that the value of condos in the area is down by 16 percent over last year; townhouses and one-to-four-family homes are down 10 percent, and co-ops are down around 13 percent. But all three types of stock are up over the first quarter of this year. The neighborhood is also somewhat buffered by the fact that it did not see the same meteoric rises in value during the boom as some other areas.

“The property values [in Park Slope] went up a lot faster than in Cobble Hill or Boerum Hill. And because it had the sharpest increase, it’s suffering a lot more,” said Naini. “[Cobble Hill is] more stable with regard to pricing. It’s taking a longer time to sell our product, but we haven’t had to drop our prices as Park Slope had to.”

The steadiness might be thanks again to the size of the area’s housing stock.

“Not having a lot of inventory creates stability for the pricing,” said Gail Morin, the Corcoran broker who represented the seller of 44 Bergen Street.

Foreclosures in the neighborhood, meanwhile, seem to be more or less nonexistent. (“I couldn’t find any for the last six months,” said Heskel.)

Each of the brokers The Real Deal spoke with said that despite the lack of closings in April and May — the most recent full months of data available at press time —they had noticed an uptick in interest over the last couple months. So what is sparking that interest?

“Everything that sells is under a million. The properties that are under a million seem to have a much quicker absorption rate, much quicker than anything over a million,” said Naini. “Part of that is what everyone knows already, which is that it’s first–time homebuyers who are buying.”

Morin helped her seller put 44 Bergen, a 2,020-square-foot condo, on the market for $1.2 million on January 19. After about five weeks of very little interest, they dropped the price to $1.139 million.

This was about the time that Naini convinced her client to come look at the apartment.

“When I took [my buyers] there, they said, ‘We can’t afford that.’ And I said, ‘It’ll sell for $999,000,’” said Naini.

“We went in, they liked it, and they bought it.”

The unit went into contract on March 11, and closed in early May for $999,999.

“What I’m finding in the market in Cobble Hill is a lot of buyers are scared of the asking prices, and they don’t move forward,” said Naini. “If the buyers at 44 Bergen weren’t my clients, they probably wouldn’t have even gone to look at the place, but it’s perfect for them.”

Heskel said that the difference between the listing prices and the contract prices of condos averages 6 percent. The difference at 44 Bergen was just over 12 percent.

Regardless of negotiability, most Cobble Hill brokers seem to have the same thing to say about the general feeling of the market in Cobble Hill: It’s getting better. “I’m definitely seeing an uptick in activity,” said Steven Gerber, a broker with Corcoran. “Open houses are more well-attended, people are actually calling during the week to set up appointments.”

Gerber just negotiated the signing of a contract for 314 Clinton Street, a three-bedroom co-op on the first floor of a 1,700-square-foot, floor-through corner brownstone with a fireplace and a 500-square-foot outdoor space.

After the listing came on the market at the end of April, priced at $1.35 million, Corcoran hosted two open houses. In their wake there were seven bids on the property, said Gerber.

None of these bids went over asking, but the bid the seller chose, which belonged to the buyer with the largest down payment, came close.

In other positive indicators, the retail scene on Court Street has recently seen a flurry of activity.

“The retail was sluggish for a while. There were five vacancies on Court Street, and they all got rented within the last two months,” notes Andrew Friedman, a broker at Halstead Property, highlighting a health food restaurant going in next to Trader Joe’s and a new coffee bar at Warren and Court streets. “That shows the health of the neighborhood.”

Said Heskel, “Cobble Hill, like the better neighborhoods in Brooklyn, started declining later, and will recover sooner.”

Manhattan

Chelsea

$890,000

236 West 26th Street

Studio, 1-bath, 1,100 sf co-op in a prewar elevator building (the Capitol Loft Building); building has live-in superintendent, roof deck; maintenance $1,108; 40 percent tax deductible; last listing price $950,000; nine weeks on the market. (Broker: Angela Tweed, City Connections Realty)

Gramercy

$1.08 million

280 Park Avenue South

2-bed, 2-bath, 1,033 sf condo in an elevator building; 24-hour doorman; unit has washer and dryer, hardwood floors; building has health club, pool, storage, roof deck, live-in superintendent; common charges $867; taxes $9,972; asking price $1.175 million; 21 weeks on the market. (Broker: Anthony Gentile, Barak Realty)

Lower Manhattan

$495,000

20 Pine Street

Studio, 700 sf condo in an elevator building (20 Pine The Collection); 24-hour doorman, concierge; unit has hardwood floors; common charges $553; taxes $552; asking price $655,000; 10 weeks on the market. (Broker: Ariel Cohen, Prudential Douglas Elliman)

Lower Manhattan

$435,000

20 Pine Street

Studio, 595 sf condo in an elevator building (20 Pine the Collection); 24-hour doorman, concierge; unit has washer and dryer; building has pool, spa, health club, terrace; common charges $625; taxes $250; asking price $650,000; eight weeks on the market. (Broker: Ariel Cohen, Prudential Douglas Elliman)

Midtown West

$350,000

345 West 58th Street

Studio, 1-bath, 450 sf co-op in an elevator building (the Coliseum Park Apartments); full-time doorman; building has live-in superintendent, garage, garden, laundry room, roof deck, storage; maintenance $665; 50 percent tax deductible; last listing price $398,000; eight weeks on the market. (Broker: Javier Arriola, City Connections Realty)

Tribeca

$6.44 million

101 Warren Street

3-bed, 2.5-bath, 3,027 sf duplex condo; unit has marble baths, floor-to-ceiling windows, large outdoor space; building has fitness center, parking, children’s play area, screening room; common charges $3,307; taxes $651; asking price $6.44 million; 159 weeks on the market. (Broker: Victoria Shtainer, Prudential Douglas Elliman)

Upper East Side

$2.9 million

181 East 90th Street

3-bed, 3-bath, 1,948 sf condo in an elevator building (the Metropolitan); 24-hour doorman, concierge; unit has northern, southern and western exposure, washer and dryer, hardwood floors, granite countertops, Jacuzzi; building has fitness center, storage, children’s playroom, live-in superintendent, full-time handyman; common charges $1,777; taxes $475; asking price $3.35 million; 12 weeks on the market. (Broker: Karin Posvar-Picket, the Corcoran Group)

Upper East Side

$1.175 million

400 East 70th Street

2-bed, 2.5-bath, 1,290 sf condo in an elevator building (the Kingsley); 24-hour doorman, concierge; unit has hardwood floors, balcony, three exposures; building has storage, laundry facility, gym, live-in superintendent; common charges $987; taxes $1,119; last listing price $1.299 million; five weeks on the market. (Brokers: Shirley Harnick, Kimberly Jay, Prudential Douglas Elliman)

Upper West Side

$555,000

215 West 95th Street

1-bed, 1-bath, 555 sf condo in an elevator building; 24-hour doorman, concierge; unit has hardwood floors; building has storage, laundry facility, roof deck, health club; common charges $461; taxes $385; asking price $595,000; nine weeks on the market. (Broker: Jolyn Bennet, Barak Realty)

Upper West Side

$360,000

205 West End Avenue

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

Uptown

$265,000

345 West 145th Street

1-bed, 1-bath, 650 sf co-op in an elevator building; full-time doorman, concierge; unit has hardwood floors; building has storage, laundry facility, live-in superintendent; maintenance $650; asking price $325,000; 65 weeks on the market. (Broker: Amy Casey, Barak Realty)

Uptown

$250,000

100 Bennett Avenue

1-bed, 1-bath, 800 sf co-op in a prewar elevator building; building has storage, laundry facility, live-in superintendent; maintenance $546; 40 percent tax deductible; asking price $250,000; 12 weeks on the market. (Broker: Doug Booth, Barak Realty)

Queens

Flushing

$600,000

157-58 25th Drive

3-bed, 2-bath detached ranch house; house has basement, laundry room, attic, garage, private driveway; taxes $4,291; asking price $630,000; 18 weeks on the market. (Broker: Anthony Carollo, Carollo Real Estate)

Jackson Heights

$212,500

35-35 75th Street

1-bed, 1-bath, 750 sf co-op in an elevator building (Montclair Gardens); building has live-in superintendent, laundry facility; maintenance $500; 50 percent tax deductible; last listing price $220,000. (Broker: Matt Weinstein, City Connections Realty)

From broker to broke: A growing number of real estate firms are
skimping on paying their bills and squabbling with agents over
commissions, industry insiders say. Agents, vendors and customers are complaining that real estate
firms, struggling to make ends meet in a slow market, are skipping
payments, paying them late or bouncing checks. Comments

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The cheaper alternative to summering in the Hamptons is becoming even more economical.

The credit crunch has slashed prices on the Jersey Shore, offering buyers and renters — some of whom are deserting the Hamptons — the best deals in years.

Significant price drops can be found up and down the northern and central Jersey coast — not only in shore towns such as Asbury Park, which saw a building blitz when the economy was peaking after a period of struggle, but also in wealthy enclaves that until recently were widely considered bulletproof.

Though few properties are trading in desirable beach towns such as Bay Head and Mantoloking — both known for their shingle-style homes reminiscent of Nantucket — and Spring Lake, which boasts block after block of Victorian-era mansions with wrap-around porches — brokers say a smattering of deals illustrate that there are opportunities to be had.

“The bargains are better now than I’ve seen in 20 years,” said Jackie Kennedy, a veteran sales associate with Diane Turton Realtors, which has 16 offices on the Jersey Shore. “You couldn’t get a property in Spring Lake for under $1 million that was worth anything going back three or four years. You’re now seeing nice homes trade for $650,000.”

The slide in Spring Lake prices pertains to luxury properties as well. Kennedy said one oceanfront home, which was originally listed for $10.9 million, is now on the market for just under $7 million.

And in Mantoloking, only a short drive south, the story is much the same. For example, one beachfront property recently sold for $3.76 million. “It was unheard of for similar oceanfront properties to sell for under $5 million a few years ago,” said Diane Mayer Cornell, a realtor associate with Van Scyver Realtors. “I think it’s an incredible bargain.”

But even as deals have become more readily available, the volume of sales in wealthy Jersey Shore towns has continued to drop since the onset of the recession, several brokers said.

In Bay Head and Mantoloking, only five properties closed between January 1 and June 1, compared to nine during the same period last year, and 21 in 2007, according to statistics provided by Van Scyver Realtors.

While the Jersey Shore is often scoffed at by those who frequent the Hamptons, which is decidedly more expensive, some are trading their drives on the Long Island Expressway or rides on the Long Island Railroad for trips down the Garden State Parkway.

This summer, Matthew Foy, an investment banker from England who has lived in Manhattan for the last five years, has swapped his rental in Wainscott in the Hamptons for a house in Spring Lake Heights on the Jersey Shore.

For $6,000, Foy is getting rights to the master bedroom of a large share for the entire summer, in a house that is roughly six blocks from the beach. Last year in Wainscott, he paid $8,000 for six weekends in a smaller room in a house significantly farther from the beach. While his Hamptons house had a pool, Foy said the proximity to the beach and large backyard of the Jersey Shore house makes for a wash.

“You get a whole lot of house for your dollar at the Jersey Shore,” Foy said.

But it’s not solely the economy that triggered Foy’s decision, he said.

“I got tired of spending three and a half hours on a bus on Friday and Sunday,” he said, pointing out that on Friday afternoons an express bus gets him to the Jersey Shore in about an hour and 20 minutes.

“On the Jersey Shore, I find you wake up and spend most of the time on the beach instead of at brunch. It’s more of a beach community than the Hamptons.”

Some brokers said the unsteady economy is not only prompting young professionals to pick New Jersey over Long Island, but noted that others are making the switch, too, in an attempt to get a better deal.

Richard Carroll, a sales associate with HCH Sotheby’s International Realty on Long Beach Island, said a growing number of his clients, especially families, are now choosing Jersey over the Hamptons because of the price. While Hamptons’ defectors are not the norm, there are families that previously shared rentals in the Hamptons who are now renting by themselves on Long Beach Island because of the down economy, he said.

“A lot of those folks rented with another family, where you have one side of the group have a situation come up and they can’t afford it anymore,” he said.

Despite the greater number of people looking for rental deals in New Jersey, many Jersey Shore brokers say that unlike property values, summer rental prices haven’t dipped significantly from the top of the market.

Instead, landlords have become increasingly flexible in order to attract tenants. In the past landlords would often have required tenants to rent a property for the entire summer; however, now they are willing to settle for monthly or even weekly rentals, brokers said.

And some are offering tenants perks to sweeten the deal. “Owners will buy beach badges for renters. Instead of utilities being $300, they’ll give a reduction,” said Van Scyver Realtors’ Cornell.

Several brokers described the starkest phenomenon of the 2009 summer rental market as just how late it started.

“People didn’t start renting until later,” said Jacob Smith, who represents a majority of the rental properties for Ward Wight Sotheby’s International in Belmar. “Some are savvy and they know the prices are lower closer to the summer. At that point they have leverage over the owners … others were just more fickle about renting,” he said.

And while Smith said that prices haven’t dropped significantly compared to last year, more owners were willing to negotiate lower prices in order to secure “safe” renters, which underscores Belmar’s ongoing shift away from its long-time identity as a raucous beach destination.

Meanwhile, during the boom, a number of developers set their sights on building condos near the beach in once-depressed towns like Asbury Park and Long Branch. While a handful of developments were completed in Asbury Park over the last few years, symbols of the credit crunch linger in the form of vacant lots ubiquitously scattered along the small city’s oceanfront.

For the developments that were completed, though they’re slowly attracting buyers and renters (many of whom are from New York City), prices have dipped noticeably, brokers said.

“In general, sale prices of condos at new developments in Asbury Park have dropped by about 15 percent,” said Michael Brim, an associate with Gloria Nilson GMAC Realty.

After shouting a hearty “arrivederci and au revoir” to the New York City residential real estate market last fall, foreign buyers are finally starting to return.

Typical of the trend are the six deals David Perry, director of sales at the Clarett Group, closed with foreign buyers in the four-week period that ended in the middle of last month, and the two contracts broker Darren Sukenik lined up with clients last month, one from Croatia and another from Italy.

“We’ve had two this week, and compared to zero for the last four months, that’s a lot,” said Sukenik, a managing director of luxury sales for Prudential Douglas Elliman.

While brokers report renewed activity from foreign buyers, there are sharp distinctions between this nascent trend and the heady days of 2006 and 2007. Back then, foreign buyers accounted for roughly a third of all new development sales, and about 15 to 20 percent of the total residential market, according to Jonathan Miller, president of the appraisal firm Miller Samuel.

Now, especially as new development is stalling, experts expect foreign nationals to be a far smaller segment of buyers. Brokers say residents of Italy, South Korea, Argentina and Chile are scouting for bargains in the bruised Big Apple, but their return is a trickle, not a surge. So far, overall residential sales in 2009 are down 50 percent from the year-earlier period, and are expected to stay in the doldrums this year.

“It doesn’t begin to replace the buyers knocked out by the credit crunch,” said Miller, adding: “Europeans especially are being hit by the global credit crunch — we’re not seeing carpenters from Ireland coming here to buy $2 million condos.”

Today’s smaller group of foreign buyers is seeking different types of properties than in the past, and they are spending less, brokers say. The difficulties involved in arranging a jumbo mortgage, the kind of large loan often used to finance a pricey home, are skewing foreign buyers toward cash deals. In addition, financial metrics like projected rental income from a property are foremost in buyers’ minds, rather than sexy renderings or trophy addresses.

These factors, plus buyers’ post-boom wariness about new construction, are partly behind the sluggish pace of sales for former foreign-buyer darlings such as André Balazs’ William Beaver House in the Financial District. However, the blogosphere has recently swirled with chatter about foreign buyers mopping up many of the empty condos there.

Rodrigo Nino, president of Prodigy International — now in charge of marketing William Beaver House while former co-exclusive sales and marketer Core Group Marketing engages in a legal battle with the developers over allegations of unpaid commissions — said he had signed contracts with a group of foreign nationals from Spain, Italy and Columbia for 32 apartments at the building for about $41 million.

“We are witnessing the beginning of real estate 2.0 from the international standpoint,” said Nino. “This is a much more numeric model — now it’s not about bells and whistles, now it’s about real numbers.”

Two or three years ago, many of Jacky Teplitzky’s foreign clients hungered for trophy addresses such as the Time Warner Center or 15 Central Park West. They focused more on getting into a prestigious building than scrutinizing comparables. This year, Teplitzky, a managing director at Elliman, has closed on half-a-dozen deals for less-sparkling addresses. Instead of lofty prices of $20 million and above, all six transactions ranged from $1 million to $3 million.

Likewise, Patricia Warburg Cliff, senior vice president and director of European sales at the Corcoran Group, has also seen demand for glitzy addresses like Time Warner Center decline. Buyers who might have plunked down millions adding a Manhattan jewel to their glittering global real estate portfolios are now skipping the expense.

“I wouldn’t say [these clients have] evaporated, but you really don’t need a fifth home, and hotel rates are down substantially,” said Warburg Cliff.

Some of the new numbers-conscious foreign buyers, including Italians and Koreans, are foregoing slices of swank with stunning views to snap up small freestanding buildings. Known as “taxpayers,” these no-frills buildings with retail, office and residential space provide the autonomy of total ownership and the small-but-steady return of a 2 to 3 percent cap rate. Warburg Cliff recently sold one of these properties, with a restaurant on the ground floor and an office and a few apartments above, in the Flatiron district for about $8 million.

Foreigners’ demand for new construction is lagging overall. But Clarett’s Perry said Sky House at 11 East 29th Street is 95 percent closed, with 15 to 20 percent sold to foreign buyers.

In general, the push to buy into pre-construction has given way to a search for proven properties in established areas including the West Village. Buyers expect to come out ahead thanks to rental income and recession-level prices.

“They are buying signature properties at a major discount,” said Sukenik.

“It’s like shopping the fur department at Saks in the beginning of the season for 70 percent off — that’s their mindset, and they’re right,” he said.

In one of the strictest sectors of New York City real estate — co-ops —
rule-breaking is on the rise. Real estate brokers and lawyers say that
as the economy has eroded, there’s been a spike in unauthorized sublets
by shareholders who are desperate for cash but can’t sell their homes. [more]

With its veneer of wealth and privilege, the Hamptons may not seem like
a hotbed of unethical real estate practices. But industry insiders say
the very exclusivity that attracts the rich and famous allows
questionable behavior to flourish — perhaps more than in any other real
estate market in the country. [more]

The jury’s still out on the sales market, but Manhattan’s notoriously
hectic summer rental season is carrying on at its usual pace —
financial crisis or not. Prices may be lower and incentives more plentiful, but summer is
still the busiest time of year for rentals, and that hasn’t changed,
brokers say. [more]

In 2006, a young Brooklyn developer envisioned selling 130 units in a building he was about to construct, called the Viridian, in the emerging Brooklyn neighborhood of Greenpoint. The developer, Joel Schwartz, borrowed money at the height of the market and managed to complete his project this past January.

However, the lender on his $36 million first mortgage, Bank of New York, withheld its final payment. Subsequently, the lender of a $12 million mezzanine note, which counted basketball legend Magic Johnson as an investor, wanted to take over the property, so Schwartz was left with little choice but to file for Chapter 11 protection in early February.

Note: Correction appended

Schwartz’s attorney, Kevin Nash of the firm Goldberg Weprin Finkel Goldstein, said his client made the right decision because he has a viable restructuring plan and needed protections from Bank of New York and Canyon-Johnson Urban Fund, the joint-venture fund between Canyon Capital Realty Advisors and Johnson’s development corporation.

“He has a C of O,” Nash said, referring to a certificate of occupancy obtained in January.

Bankruptcy beckons

In the coming year, the number of bankruptcies in the city is expected to accelerate, but it is not expected to hit the levels seen after the last major real estate recession, experts said. In that period, major developers such as Peter Kalikow, Donald Trump and Battery Park City builder Olympia & York all took the bankruptcy plunge. “The pressure is just starting to build. I expect there will be more, but not like the abundance in the late 1980s and early 1990s,” said Carl Schwartz, partner and chair of the real estate department at law firm Herrick, Feinstein.

Two decades ago, in the last major real estate downturn, bankruptcies like Joel Schwartz’s were a popular path to recovery. But since then, new laws have forced judges to be more lender-friendly, and lenders have added loan provisions making borrowers personally liable if they file for protection. Nash noted that developers must now prove to a judge that they are not simply trying to cut the debt on an overleveraged property (known as “cramming down” the lender), but instead show that they have a roadmap out of their financial crisis.

Because of such changes, far fewer developers than might be expected have filed for bankruptcy in this cycle, a change that The Real Deal noted in its February issue.

But bankruptcy still has its upside.

Perhaps the single most powerful aspect of filing for bankruptcy is that it halts foreclosure proceedings, which have become increasingly common lately.

“In the prior cycle, [defensive bankruptcy filings] happened all the time. It was one of the negotiating tactics and frankly, it was fairly effective in terms of helping developers negotiate deals with lenders and potentially shield them from foreclosure,” said Steven Lichtenfeld, a partner at the law firm Proskauer Rose and co-chair of its real estate finance practice.

Today, a developer can file for personal bankruptcy or can file on behalf of the development entity. And if the developer chooses to, he can file for both.

The bankruptcies early in this cycle have been in smaller developments. But with the number of foreclosure lawsuits rising in high-profile projects such as Kent Swig’s 25 Broad Street and 45 Broad Street, experts wonder if larger firms will seek protection soon.

Nash, who filed a mechanic’s lien against one of Swig’s buildings on behalf of a client, said that type of distress may force a developer to file for bankruptcy. A spokesperson for Swig declined to comment.

Rewritten rules

There have been several key changes since the 1990s that have kept the number of bankruptcy filings down somewhat.

For example, Lichtenfeld said new rules in the bankruptcy code in 2005 forced debtors to file a viable reorganization plan within 90 days and begin making payments to the lenders.

In addition, the inclusion of so-called “springing” guarantees that became common in mortgage documents often makes the borrower or principals personally liable for recourse.

Nash said another reason few bankruptcies have been filed is the steep decline in the value of real estate. The purpose of the Chapter 11 filing is to buy time to reorganize, find financing or sell the assets, he noted, but in a falling market all those efforts are impeded.

Despite the obstacles, companies large and small have filed in the city over the past six months, including General Growth Properties, the owner of the South Street Seaport mall in Lower Manhattan; Water Street Realty Group, the developer of the 52-unit condominium 133 Water Street in Dumbo; and Fred Deutsch, whose LD Development was the builder of a four-story residential building at 338-342 22nd Street in Greenwood, Brooklyn.

In addition, dozens of other real estate-related cases have been filed, experts said.

The most recent data from the Administrative Office of the United States Courts showed that the number of Chapter 11 cases filed in federal court in Manhattan and Brooklyn more than doubled from 85 in the fourth quarter of 2007 to 198 in the same period of 2008.

Bankruptcies not all equal

Some developers survive bankruptcies, while others disappear.

Donald Trump, for example, has sought bankruptcy protection for his companies numerous times. Trump’s Plaza Hotel at Fifth Avenue and Central Park filed for bankruptcy in November 1992. He lost control of the building, but in exchange received favorable treatment on debt. Most recently, Trump Entertainment Resorts filed for Chapter 11 in February in New Jersey, days after Trump resigned as chairman of the company. The company wants to push the due date for a reorganization plan to September, and Trump himself is reportedly trying to take back control with the help of Dallas-based Beal Bank.

For his part, Peter Kalikow survived after filing for personal bankruptcy and bankruptcy on behalf of his company, Kalikow Real Estate Company, in 1991. By 1994 his real estate holdings were recovering, and he is now president of H.J. Kalikow & Co.

But others were not so fortunate. Olympia & York, the builder of the World Financial Center, disappeared after its bankruptcy in the 1990s. The World Financial Center is now controlled by the Canadian firm Brookfield Properties.

Meanwhile, the bankruptcy process has been sped up since the 2005 laws were passed, said Jeffrey Wurst, partner with law firm Ruskin Moscou Faltischek. Going forward, most bankruptcies should take four to five months to complete.

And, during the bankruptcy process the debtor retains the right to borrow, and in fact, often must borrow in order to reorganize. But a stigma can follow the filing, even if it is successful, because the debtor has to acknowledge the filing in future loan applications.

Kenneth Patton, associate dean at the Schack Institute of Real Estate at New York University, said about 16 percent to 20 percent of an asset’s value is generally lost in a bankruptcy or foreclosure.

“Your hands are tied,” Patton said. “Lost tenants, inability to negotiate, you have to put cash out. It’s harder to renew leases without a full pocketbook.”

Divorce can be ugly, especially when one party doesn’t want to be known as a divorcée.

As construction projects turn south, developers and their marketers are increasingly splitting up, leading to battles over termination fees.

These fees, which are often specified in the original marketing contract, used to be viewed by developers as the cost of changing their brokerage midway through a project, said real estate attorney Gary Rosenberg. Typically, when the developer terminates an agreement with their marketing firm without cause, payment is due.

However, as the market slows, developers often don’t have cash on hand to make that payout, which can be on the order of $500,000.

“If the project is going under, the marketing person is not the last bill you pay — never mind the first,” Rosenberg said. “This is the person who’s losing $500,000, complaining to the developer, whose project is down $10 million.”

As a result, some lawsuits have been filed recently over termination fees.

As The Real Deal reported in its April issue, Corcoran Sunshine filed a lawsuit in state Supreme Court alleging that the developer of Five Franklin Place in Tribeca owes the firm a $500,000 termination fee. In that case, Corcoran said it terminated its agreement with the building after the developer failed to pay it more than $100,000 in marketing expenses.

Also in April, Core Group Marketing filed a court notice involving termination fees against the developers behind the Jasper, an 80-unit condo in a converted office building in Murray Hill at 114 East 32nd Street, between Park Avenue South and Lexington Avenue.

Core says it is owed a $500,000 termination fee for a nixed marketing agreement with the building, which is currently in foreclosure.

At the time, Core CEO Shaun Osher said, “Unfortunately, due to its own financial constraints, our client has placed us in a position where our last avenue to recoup the monies our client owes us is through the legal process.” He declined to expand on that because of pending litigation.

Observers say there may be more termination fee battles to come.

“There’s a lot of shifting going on right now,” David Maundrell, president of aptsandlofts.com, said, referring to the musical chairs of marketing firms at new development projects. Maundrell notes that termination clauses typically bring the marketer “much less” than what would be earned if the development sold out.

For example, if a firm is hired to sell a 52-unit building in Williamsburg where prices are an average of $500,000 a unit, it can expect to make nearly $800,000 (assuming a 3 percent commission). But if the firm ends up collecting a termination fee it could only end up making $50,000 to $75,000, Maundrell calculated.

“If a broker is being released, they want their expenses covered. Developers, on the other hand, want the option to walk away from a situation if it’s not going well with the broker,” Maundrell said.

For marketers, though, there’s a delicate balance of trying to get paid for their work while not burning any bridges with developers for potential future partnerships.

“Nobody wants to be known as litigious,” noted Rosenberg. “It’s never a good thing for somebody in the service business to litigate with a client.”

As a result, many monetary agreements involving termination fees are done as quiet settlements in conference rooms across the city, sources said.

Short of a rocketing upturn in the market, the easiest way to prevent this stress is a well-drafted contract, sources said.

Maundrell, for instance, said he insists that his termination fee clauses stand if the developer sells the property outright.

Otherwise, he has the full exclusive marketing period to work on a project, period.

“Most times it’s been ironclad, and [developers] have changed gears after the original exclusive agreement expires,” he said.

Also, confidentiality terms in such contracts are — or should be — standard, said real estate attorney Luigi Rosabianca, who has represented several marketing firms that have been terminated by developers in recent months. Rosabianca declined to name the clients or to discuss the suits.

“These matters should remain confidential, as they may have unintended effects on the respective parties, for example, bad press, improper assertions [or] business goodwill adversely affected,” he said.

Halstead Development Marketing, Corcoran Sunshine Marketing and Prudential Douglas Elliman Development Marketing Group declined comment.

Leasing update

Bronx

1926 Crotona Parkway

The 62-and-older section of the affordable rental development opened recently. Two-bedroom units are available for $823 per month at the Atlantic Development Group and Highbridge Community Development Organization project. The development will include a landscaped backyard and a common area.

Greenwood Heights

639 Fourth Avenue

The 44-unit building is 75 percent occupied after converting from a condominium to a rental, the New York Post reported. Rents begin at $2,250 for a one-bedroom. Amenities include parking and glass balconies and floor-to-ceiling windows in all units. Contact: www.sixthreenine.com.

Staten Island

Park Lane at Sea View

460 Brielle Avenue

Park Lane at Sea View, the first affordable rental development for seniors on Staten Island, opened in early June. The Arker Companies, the Domain Companies and the Metropolitan Council on Jewish Poverty developed the 104-unit building. Fifty-one of the building’s apartments will be reserved for people with low to moderate incomes, with rents ranging between $744 for a studio and $957 for a two-bedroom, the Staten Island Advance reported. Rents for the remaining 52 apartments, open to seniors with higher incomes, will range from $1,330 to $1,590.

Construction update

Bedford-Stuyvesant

552 Lafayette

552 Lafayette Street

Developer KTR Construction’s 15-unit building was slated to open in mid-June. The building’s exterior was designed by Karl Fischer and Associates. The building includes one-bedroom apartments averaging approximately 650 square feet and two-bedroom units that are around 768 square feet. Prices range from $315,000 to $435,000. Amenities include a common roof deck, parking for purchase and pending FHA approval that would allow buyers to pay down payments as low as $11,000. Aptsandlofts.com is the exclusive sales and marketing agent. Contact: www.552lafayette.com.

Chelsea

120 Eleventh Avenue

The former Life Savers Mints factory, which has also housed Spike Bar and artists’ and photographers’ lofts, has been converted to a condominium. The building, developed by Gianfranco Chicco and Robert Chandler of Puissance Enterprises, contains five loft and two penthouse apartments. Prices range from $4.2 million to $17 million. Prudential Douglas Elliman is the exclusive sales and marketing agent. Contact: www.120eleventh.com.

Downtown Brooklyn

The Brooklyner

111 Lawrence Street

The Clarett Group’s 51-story tower, the tallest building in Brooklyn, topped off in early June. The 491-unit rental building was designed by Gerner Kronick and Valcarcel Architects and includes studio through two-bedroom apartments. Amenities include a 24-hour concierge service. Occupancy is expected to begin in late 2009 or early 2010.

Greenwood Heights

574 Fourth Avenue

The Henry Radusky-designed building has reached its full height, Brownstoner reported. The 12-story building contains 80 units.

Sales update

Lower Manhattan

75 Wall Street

A rent-to-own option is now available at the Hakimian Organization, Peykar Brothers Realty and Gorjian Properties-developed building. The first full year of rent can go toward the purchase price of the unit. The building’s 349 units range from studios to three-bedrooms. Prices for available units range from $625,000 to $7.75 million, according to Streeteasy.com. Corcoran Sunshine Marketing Group is the exclusive sales and marketing agent. Contact: www.75wall.com.

Park Slope

500 Fourth Avenue

About 15 percent of units had sold as of early June at the 156-unit Isaac Katan development. Prices start at $342,000 for a 539-square-foot studio, the New York Post reported. A 3,000-square-foot unit in the building is on the market for $1.426 million. Buyers who purchase before the end of July will receive a 10 percent discount. Completion is expected in the fall.

Compiled by Sara Polsky

New development condos, places where many buyers once turned a blind eye to problems, are now emerging as a breeding ground for litigation over everything from misrepresentation to shoddy construction to unpaid vendors.

When prices were escalating, buyers seldom complained if their views weren’t as spectacular as they had been promised or if the floors buckled. The current downturn, however, is now revealing a plethora of ongoing bad behavior at new developments — problems that, as money runs tight, are getting worse. Meanwhile, unhappy buyers or stiffed vendors are much more likely to sue.

“In a bad market, a lot more emphasis is put on honesty,” said Jonathan Phillips, a senior vice president at Halstead Property. “People are very concerned about not being cheated.”

During the boom, it was common for developers and their brokers to make wild claims about how quickly their splashy new condos sold out and the astronomical prices wealthy buyers paid for penthouses. But these claims weren’t always accurate, said Phillips.

“In every boom, the developer does a pas de deux with accuracy,” Phillips said. “If anyone goes back and looks at the rate that sellouts were perceived to occur and when those sellouts were registered [with the city], they’re often a world apart.”

These kinds of exaggerations were viewed as somewhat innocuous when a building’s rapid sellout was viewed as a virtual certainty.

“I don’t think [honesty] is what a lot of people thought about first in a boom market,” Phillips said. “They thought about momentum. If the building was sought-after and everyone wanted it, they would be able to sell it faster and for more money.”

That has changed now that sales of new construction condos have slowed drastically. In the current environment, banks often refuse to write mortgages in buildings that are less than half, or even 70 percent, sold out. That means that a slight exaggeration of the units sold, previously viewed as no big deal, can now torpedo a deal by preventing a buyer from getting financing. But misrepresenting the number of units will likely backfire, said Phillips.

“You will see [the situation at these developments] blow up left and right, and they have, over the past year,” Phillips said. “Banks are going to verify through their underwriting how many units have been sold.”

At Financial District condominium 20 Pine, developer Shaya Boymelgreen and marketer Michael Shvo are facing a lawsuit from a buyer alleging that they falsely claimed that 140 of the building’s 409 residential units were “already in ‘hard’ contract with bona fide purchasers,” were false, according to the suit, which is ongoing.

Luigi Rosabianca, principal attorney and founder of real estate law firm Rosabianca & Associates, said he’s dealing with several lawsuits where buyers were told that a certain percentage of units had been sold in a building, only to later find out that it wasn’t true.

When brokers tell a buyer that a certain percentage of units are sold, “the [buyer is] emboldened by that,” Rosabianca said. “People think, ‘I can get a loan, no problem.’”

John Serpico, a real estate attorney at Brooklyn law firm Serpico, Serpico & Siddiqui, said he is aware of one case where a buyer was told by a broker that a condo building was 70 percent sold, only to find out at closing that only 40 percent of the units had been purchased.

As a building moves from floorplans to framing, there are even more opportunities for rancor between buyer and seller. With many developers short on cash, buyers are complaining of substandard materials and craftsmanship. They are also saying that developers are not completing projects on time or not finishing construction at all.

Adam Leitman Bailey, a real estate attorney who is representing disgruntled buyers at the Brompton, Manhattan House and other new development projects in the city, said the combination of high land prices and the recent construction boom has, in some cases, resulted in shoddy construction.

“These developers paid a really high price for these properties,” Bailey said. “In order to make money, they have to cut corners somewhere, so they don’t build well.”

At the Brompton, for example, a group of buyers have sued recently in an attempt to get out of their contracts.

One of them, Dave Hsu, the purchaser of Unit 6K, sued the developer, the Related Companies, in May, claiming “an inordinate delay in completing construction of the condominium without material defects” and “fraudulent and/or negligent misrepresentation” of the building’s access to a nearby Equinox Fitness Club. The case is ongoing.

Rosabianca said some recent lawsuits have more to do with buyers’ desire to get out of their contracts than problems with the building. However, he said, “people definitely cut corners in this market,” adding: “When you cut corners, you end up sacrificing quantity for quality.”

For example, he said, buyers are complaining that small “punch-list” items now take longer to get finished, in part because they are no longer at the top of many cash-strapped developers’ priority lists.

Sometimes the construction problems extend far beyond punch-list items.

Bailey’s firm is representing the board of managers in one Midtown West building where buyers claim there are more than $6 million in problems with the building, ranging from issues with the roof, bathrooms, showers, common areas, flooring and mechanicals.

The developer, who has several other projects in New York, “ran out of money,” Bailey said. “The contractor won’t do the work because the sponsor hasn’t paid them.”

Contractors aren’t the only ones not getting paid.

Lawsuits have been popping up all over the city with vendors — such as public relations firms and accountants — claiming that developers have skimped on their payments. The Alexico Group is facing litigation after it failed to pay $254,000 in back rent for a sales office at Upper East Side condominium the Laurel.

Another lawsuit filed by Brant Publications claimed that the developer owes them for $65,000 worth of ads in Interview and Art in America magazines.

At Arris Lofts in Long Island City, a suit filed in February by media buying firm Renegade alleges that the developer, the Andalex Group, has not paid for $170,000 worth of newspaper advertisements Renegade placed on the developer’s behalf.

“If you’re involved in real estate, many things are transaction-oriented,” said Gary Rosenberg, a founding partner at law firm Rosenberg & Estis. “Very often, you work on deals where the closing is when everything gets paid — and if there is no closing, then you’re not paid as fast.”

While payment disputes arise in good times, too, they were less likely to end in court when times are flush, Rosenberg said.

“It’s much easier to come to a resolution when you made money on a deal,” he said. “It’s a lot more difficult when you’re not talking about how much you’re going to make; it’s how much you’re going to lose. It’s a tough conversation.”

He emphasized that most developers very much want to pay their vendors, but in this environment, some simply can’t.

“Developers aren’t looking to not pay people,” he said. “You may really want to write that check, but you don’t have [the money] to write [it].”

At the Desk of Roy Stillman

Atlanta

In Gwinnett County, many construction sites face funding troubles and foreclosure. Developer Brett Harper planned to build an office and retail center with a brook running through it in downtown Snellville. But when the Community Bank of Loganville, Harper’s lender, was shut down last fall, Harper lost his funding and had to stop mid-construction, the Atlanta Journal-Constitution reported. For the banks, the cost of maintaining the project sites can run higher than the values of the properties, and the banks could have to pay fines if the sites are damaged under their ownership.

Downtown Atlanta’s Equitable Building was auctioned off in early June for $29.5 million, 56 percent of the amount due to the project’s lender, the Atlanta Journal-Constitution reported. Building owner Equastone 100 Peachtree owed $52 million to lender Capmark Bank. Buyer 100 Peachtree Street Atlanta LLC, a Capmark affiliate, was the only bidder in the auction. Equastone bought the building for $56.8 million in May 2007, and tax records place the current value of the half-vacant building and the land at about $45 million. The sale price indicates how much buyers are now willing to pay for Atlanta’s Class A office space, local experts said.

Boston

The Massachusetts Division of Banks issued 87 cease-and-desist orders against mortgage brokers and lenders, the Boston Globe reported. The brokers and lenders allegedly failed to provide required financial information, such as evidence of posting bond money, due by the end of March. Five of the companies that received cease-and-desist orders had submitted information as of early June and are no longer subject to the order. The others may not accept new applications and must transfer pending applications to other lenders or brokers.

Chicago

The U.S. Postal Service announced in early June that it will auction the former Chicago Post Office on Aug. 27, the Chicago Tribune reported. The suggested starting bid for the 3 million-square-foot, 14-story building at 433 West Van Buren over the Eisenhower Expressway is $300,000, but there is no minimum bid. Since 1995, when the building became vacant, proposed uses for the space have included a casino, a water park and a $300 million condo, office and hotel project. That project received initial approval from the city two years ago, but the Postal Service’s deal with the developer fell through.

Las Vegas

The average listed home price has fallen 16 percent in Las Vegas during the past year, the Las Vegas Review-Journal reported. The average price fell from $330,870 to $276,780, according to data from Trulia, a real estate search engine company. Thirty percent of the listed properties in Las Vegas have seen at least one price cut. Of homes listed for more than $150,000, 35 percent have seen at least one price cut, while 23 percent of homes listed for less than $150,000 have seen cuts. A higher percentage of single-family homes than condominiums saw cuts.

The framing for the $50 million Mercer condominium project was taken down in late May, following a construction halt in November. The project is the first in the Las Vegas area to be taken down, the Las Vegas Review-Journal reported, but it is unlikely to be the last, local real estate experts said. Tom McKinley, managing member of Vanguard Construction, former general contractor for the 113-unit project, said he expects developers JDL Development and Modern Living Holdings to sell the property. Jim Letchinger, JDL president, said the condo project had been 60 percent sold and had complete financing.

Los Angeles

Properties in several parts of Southern California are selling for less than they sold for 20 years ago, according to the Los Angeles Times. In 14 zip codes in the region, mostly in desert communities, median prices are below what they were in April 1989, according to real estate information service MDA DataQuick, meaning that many homes have lost all of their appreciated value. In one Lancaster zip code, the median home price was $87,000 in April, down 74 percent from the peak of $334,500 in 2007. Such extreme value losses in one downturn are unprecedented, economists said.

Philadelphia

Harleysville National Bank & Trust Co. said in June that it had been given until the end of the month to gain more capital to cover possible loan losses. The bank, which has lent to many suburban Philadelphia homeowners, has been hit hard by the real estate downturn. The bank had $3.6 billion in loans as of the end of March, half of them backed by first mortgages, home-equity loans and loans to residential builders, according to the Philadelphia Inquirer. Harleysville CEO Paul Geraghty said he expected to raise $65 million to $120 million from private investors.

Craig Spencer, developer of the Residences at Ritz-Carlton at 15th Street and South Penn Square, has not let the downturn in the luxury real estate market change his plans for his 270-unit project. Spencer said he turned down an offer from a potential buyer who asked for a $50,000 price cut on a unit. The project cost developer Arden Group about $300 million, and unit prices range from the $500,000s to $12 million, the Philadelphia Inquirer reported. So far, 80 units in the project have closed, and Spencer expects half of the 37 pending contracts to fall through.

Phoenix

Economic problems are hitting the developers of some of Phoenix’s most upscale condominium projects, the Arizona Republic reported. At the Summit at Cooper Square, a two-year-old luxury building, the city threatened to post a water shut-off notice because the project was three months behind on payments. Weitz Company, which built the project, sued W Developments in November, alleging that the final payment on the Summit was not made. At other projects, financial difficulties have led to the loss of some luxury amenities. Owners have lost their valet parking at Landmark Towers on Central Avenue, and owners at nearby Orpheum Lofts have filed a lawsuit over parking issues.

As the real estate downturn continues, senior housing projects remain a fairly active market in Arizona, with more than 2,200 units planned across seven projects, according to the Arizona Republic. Developer Avenir Group plans to build a 500-unit project at 91st Street and Legacy Boulevard. Silverstone, developed by Plaza Cos. and Classic Residence by Hyatt, will consist of 270 units at Scottsdale and Pinnacle Peak roads. Life Care Services’ Sagewood will have 342 units southwest of Loop 101 and Tatum Boulevard. Several of the projects expect move-ins to begin early next year.

San Francisco

A group of Walnut Creek residents and a local mall owner are hoping to overturn the City Council’s approval of a Neiman Marcus slated to open at Broadway Plaza. The residents complain that the city already has too much retail and that the 90,000-square-foot store will only create traffic and parking problems. Taubman, the company that owns the Sunvalley mall in Concord, is paying people to gather signatures for a petition against the Neiman Marcus opening, the San Francisco Chronicle reported. The Neiman store was originally slated to be 107,000 square feet, but the developer scaled back the plans after residents filed suit in January.

Seattle

GIS International, the Bellevue developer that proposed a hotel and condo tower in Seattle’s Denny Triangle, put the property up for sale in early June. The site, at Minor Avenue and Stewart Street, is on the market for $3.995 million. The developer planned to build 180 condos, 132 hotel rooms and 4,800 square feet of retail space and underground parking. But the developer never pursued permits for the project, according to city records, and city rules would have prevented the proposed tower from being built because a 440-foot residential tower was planned for the adjacent lot, the Seattle Times reported.

Washington, D.C.

Lord & Taylor announced in late May that it would close its store at the Landmark Mall in Alexandria on June 12. Company officials did not give a reason for the store closure, but analysts said the mall’s vacancy rate is growing and the demographics of the area are no longer a fit for Lord & Taylor. The Landmark Mall is owned by General Growth Properties, which has filed for Chapter 11 bankruptcy, and Landmark also filed for bankruptcy protection independently, the Washington Post reported.

Compiled by Sara Polsky

By the Numbers

Over its 39-year history, Rockrose built itself into one of the biggest
residential success stories in New York real estate. The company has 20
residential apartment buildings in New York City, mostly rental
buildings, which include more than 5,000 units. In addition, Rockrose
has five commercial office buildings in New York and six in Washington,
D.C. [more]

Samuel “Sandy” Lindenbaum, who is counsel at Kramer Levin Naftalis
& Frankel, is one of the city’s most high-profile land-use
attorneys. Over the years his clients have included some of the city’s
pre-eminent commercial and non-profit organizations, ranging from
Carnegie Hall to Weill Cornell Medical College to the Macklowe,
Silverstein and Solow organizations. [more]

Three years ago, a new high-water mark was set in Red Hook when the first house in the neighborhood sold for more than $1 million.

In the years that followed, a number of other houses in the Brooklyn neighborhood traded in the seven figures, making the largely industrial area one of the boom era’s most unlikely Cinderella stories.

Nowadays, however, brokers say sales of homes priced at more than $1 million are generally not in the cards in Red Hook.

While deal volume and prices are down, the market for the area’s small stock of single-family and two-family houses appears to be back to pre-2006 values.

However, the neighborhood is in the midst of a retail renaissance, bucking the retail trend citywide. And in a strange twist, it is also upending the traditional real estate logic that goods and services follow residents.

Mom-and-pop explosion

When Ikea opened in Red Hook last summer, many of the Brooklyn neighborhood’s residents worried that traffic would overwhelm the area.

A year later, however, several new mom-and-pop stores and eateries have opened or are planned on Van Brunt Street, the neighborhood’s main drag, and even some former opponents of Ikea concede that the store’s presence has turned out to be a boon for Red Hook.

Retail and demographic changes in Red Hook have long provided fodder for media outlets: In 2007, the New York Post referred to the area as “Dead Hook,” while a New York magazine story titled “The Degentrification of Red Hook” noted that “the neighborhood now seems to be going in reverse” after being hyped as the next ‘It’ area.”

More recently, many news outlets, including The Real Deal, reported that the opening of the Ikea store was expected to give the area a boost. But few predicted that retail in Red Hook would be doing as well as it now is — particularly in the midst of a major economic meltdown.

Over the past couple of months, a clothing boutique called Tiburon, which specializes in handmade apparel and crafts, and a coal-oven pizza place called Anselmo’s opened.

Meanwhile, a new café and bar called Fort Defiance was slated to open late last month. A number of other new spots — including a sausage-and-beer joint called Grindhaus, a hair salon, a vintage clothing store, a tapas restaurant and a roasting facility for Portland, Ore.-based Stumptown coffee — are all also planning to open soon.

“What’s happening on Van Brunt is very reminiscent of what happened on Smith Street in the early ’90s,” said Sal Cappi, a vice president with Fillmore Real Estate, referring to the “restaurant row” that runs through Boerum Hill, Cobble Hill and Carroll Gardens.

Cappi said that 20 years ago, “you wouldn’t have even felt comfortable walking on Smith … after dark, but then the city repaved all the streets, you had pioneering young chefs open nice restaurants, and before you knew it restaurants and antique stores came on. And now, you actually have American Apparel.”

The newcomers join Fairway, the well-reviewed restaurant the Good Fork, several bars, an art gallery, the diner Hope & Anchor and the bakery Baked.

The newest openings have all been small businesses; in the wake of Ikea’s opening some analysts predicted that the neighborhood would become an attractive location for other big-box stores, but the economic winds have since shifted.

Developer Thor Equities’ plan to build a large mixed-use development on the waterfront anchored by a major national retailer is still in wait-and-see mode, according to a Thor spokesman.

Meanwhile, many businesses now set to open on Van Brunt have received grants from the Southwest Brooklyn Industrial Development Corp., according to Elizabeth Demetriou, the organization’s director for revitalization and development.

Demetriou said that while the grants, which typically provide matching funds for storefront renovations, haven’t been the main impetus behind the new businesses, they have likely resulted in higher-quality renovations.

Million-dollar question

On the residential front, Beth Frazier, a salesperson with Corcoran, listed a townhouse on Beard Street for $1.18 million in late April. She said open-house traffic for the property has been robust.

The property has been the most expensive residential listing on the market in Red Hook for the past couple of months, according to StreetEasy.

At any given time, brokers say, there are only a handful of houses for sale in Red Hook, and the most desirable properties are generally clustered on a few streets. As of the middle of last month, Frazier said, the sellers had received three offers that were around 10 percent off the listing price. But, she said, the property had yet to go into contract.

Plus, many would-be Red Hook buyers are reluctant to cross the million-dollar threshold, brokers who work in the area said.

Tina Fallon, an agent with Realty Collective — a brokerage that she said mainly represents buyers — observed that the only single- and two-family houses now selling in Red Hook are going for less than $1 million.

“The $1 million mark seems to be the number buyers have a hard time going beyond,” she said.

She and her husband actually paid more than $1 million for a house in the neighborhood a couple of years ago. But she said the streak of sales priced in that range that began in 2006 has been cut short by the weakened market and by the fact that there was more high-end inventory for sale from 2006 to 2008.

“There are still renovated properties on the market in excess of $1 million, but they’re just not selling,” Fallon said. “Renovated properties that come onto the market under a million — those are selling, and at prices very close to $1 million.”

After 2005, said Fallon, “the quality of the housing stock available improved” in Red Hook because fully renovated homes were coming on the market more readily.

“Pre-2005, we had a market of 100 percent unrenovated properties,” she said. “And renovated versus unrenovated makes all the difference in Red Hook.”

The largest recent sale appears to underscore Fallon’s point.

A 2,620-square-foot house at 52 Dikeman Street sold for $980,000 in early April — $5,000 more than the property, which had been extensively renovated, was listed for in November.

Denise Cataudella, the Corcoran vice president who listed the house, said before it went on the market she and the sellers were looking at comparable properties for above $1 million. But in September, after the economy cracked, “It was very hard to go to the sellers and tell them that their expectations from a year ago were off.”

Cataudella and most other brokers active in Red Hook say prices in the area are between 20 and 25 percent off peak — just as they are elsewhere in the city.

StreetEasy shows that only two houses in Red Hook sold in the first six months of 2009, both for less than $1 million. However, only three houses in the neighborhood sold in the first six months of 2008 — none over the $1 million mark either.

That tiny supply makes it difficult to extrapolate statistical trends there.

The land that condos forgot

While the condo-development frenzy swept the five boroughs during the boom, it largely bypassed Red Hook.

In fact, the most recent new-construction development to come on the market is a townhouse project, not a condo tower. The King Richard Townhouses on King Street, which began holding open houses last month, include five adjoining properties ranging in price from $750,000 to $1.15 million.

Nicole Galluccio, a broker with Prudential Douglas Elliman who is representing the property, said prices there work out to “a blended average of about $550 a square foot” and that setting the prices was very difficult due to the lack of comps in the area.

The developer of the project, Gino Vitale of Vitale Builders, said he has developed about 40 projects in the neighborhood over the past 15 years.

Vitale said that though he has another 20 townhouses on the drawing board for the neighborhood, “I’d be lying if I told you I wasn’t worried” about the prospects for the King Street development in the current market.

Bloomberg, Silver lay blame for WTC stalemate

Mayor Michael Bloomberg and Assembly Speaker Sheldon Silver singled out the Port Authority of New York and New Jersey for dragging out the World Trade Center redevelopment talks with developer Larry Silverstein. “We are disappointed that we have yet to reach agreement to address the latest impasse at the World Trade Center site,” a joint release from Bloomberg and Silver said last month. According to the New York Daily News, sources said Bloomberg and Silver are pushing the Port Authority to guarantee more financing for Silverstein. The developer wants financing for two skyscrapers, but the Port Authority only wants to back one tower. Without an agreement, officials on both sides fear that Silverstein could delay integral components of the site, including the main access roadway and transportation hub.

Affordable home program moving slowly in the city

Housing advocates say that while the Obama administration’s mortgage modification program could help thousands of New Yorkers, it has been slow to get off the ground, and the majority of people who have applied for help have yet to hear whether they will receive it. The Center for New York City Neighborhoods, a public-private agency that connects homeowners with counselors approved by the Department of Housing and Urban Development, has overseen 400 applications for the Making Home Affordable program, and as of last month, only about 100 of those mortgages had been modified, the New York Times reported.

Senator’s switch may have killed tenant legislation

In the weeks before New York State Senator Pedro Espada Jr. abandoned the Democratic caucus and shifted power to the Republicans, Senate Democrats were poised to vote on expanding rent regulation and tenant rights, including legislation that would have abolished vacancy decontrol. Espada, chairman of the State Housing Committee, assured Democratic leaders he would take up the bill, but announced he opposed the legislation last month when he joined the Republicans. Tenant advocates say with Republican control of the Senate, the legislation won’t pass, and they believe there is little chance the bill will come up for vote next year.

Rent board approves increases

The Rent Guidelines Board approved increases for rent-stabilized units last month, authorizing an increase of 3 percent on one-year leases and 6 percent on two-year leases. According to the Times, after a motion for a rent freeze that was put forward by a tenant representative on the board was struck down, dozens of tenants walked out in protest. In the weeks leading up to the meeting, a number of elected officials joined the call for a rent freeze, including City Council Speaker Christine Quinn and Comptroller William Thompson. The board has never approved a rent freeze since it was established in 1969.

Mortgage programs prey on troubled homeowners

The economic crisis has spawned several companies that prey on homeowners who are having trouble paying their mortgages. The companies promise to save borrowers’ homes from foreclosure in exchange for an upfront fee, which is often thousands of dollars. New York Attorney General Andrew Cuomo said he plans to sue one company, Uniondale-based Amerimod, and plans to investigate 14 other loan modification companies that his office received 50 complaints about, the Times reported. The Federal Trade Commission has brought about 11 cases against similar companies in the last year and sent warning letters to 71 more.

The reinvention of the High Line is a story 10 years in the making. It
was in 1999 that two men who lived in the neighborhood, Robert Hammond
and Joshua David, hatched the idea of transforming this rusting hulk
(some might say eyesore) into an urban park. [more]

As the unemployment rate soars —- the latest data available from the U.S. Bureau of Labor Statistics puts the May unemployment rate at 9.4 percent — enrollment in colleges and universities is booming, as students are finding it makes sense to stay in school. The resulting upswing in the need for student housing has only fed the boom in the construction of new dormitories and residence halls around New York City.

In fact, this fall, as hundreds of thousands of collegians from around the world descend on New York City, a number of new dorms will be in various stages of development.

The City University of New York is the nation’s largest urban public university. It comprises 23 institutions, including 11 senior colleges and six community colleges. CUNY serves more than 243,000 degree-credit students and 240,000 adult, continuing and professional education students.

Next month, Queens College, one of CUNY’s largest schools, will welcome students to its first residence hall, the Summit. Construction for the Summit commenced in April of last year, when Queens College announced an agreement with developer Capstone Development Corp. to build and manage the dormitory on its Flushing campus. The 155,738-square-foot building is located at 65-30 Kissena Boulevard and has a total of 144 units, which will accommodate 506 students. Rents will vary depending on the unit type; the price per semester will range from $4,250 for accommodations in a shared bedroom to $7,000 for a single bedroom.

The College of Staten Island, one of the senior colleges of CUNY, planned to open the first phase of an inaugural dormitory, but found itself a victim of the global financial crisis. Groundbreaking was planned for October of last year for two four-story buildings and one five-story building with a total of 600 bedrooms. American Campus Communities had agreed to be the developer and to construct and manage the dormitory facilities. As reported in the Staten Island Advance, groundbreaking is on hold indefinitely because no bank would finance the project as of December 2008.

The vice president for external affairs at the College of Staten Island, Bob Huber, said, “We are in the queue to go forward, and all of a sudden the credit crunch hit. Trying to get a loan for anything in this environment, all the banks basically got religion at the same time.”

Issues including shortages of available construction and financing, sparse development space, and a lack of approval from local residents and community boards to allow dormitories to be built in their neighborhoods have long plagued universities and colleges.

But, credit crunch aside, it is generally easier for universities, especially larger ones, to obtain funding for dorms.

Meanwhile, Community Board 2 in Long Island City approved plans for CUNY to build a mixed-use development at Fifth Street and 47th Avenue in the Queens West section. The 12-story building, when completed, would have a total of 400 residential units, half of which would be market-rate rentals, and the other half divided between 188 graduate units and 12 faculty housing units at street level. The development will also have 6,000 community-use units to be occupied by the Queens Council on the Arts.

Back on Staten Island, construction is under way at Wagner College. The private school, which will celebrate its 125th anniversary this year, will erect its first new dormitory in 40 years. The $24 million, 200-bed residence hall will be devoted to seniors and constructed on the college’s former Campus Road baseball field.

Two recently completed dormitories have been welcoming students during the past year. Last July, Columbia University paid $67.6 million for the Arbor, a nine-story condominium tower at 3260 Henry Hudson Parkway. The Arbor is a 127-unit condominium complex developed by L & M Development Partners and a New York City real estate investment fund. In September, graduate students from Columbia moved into the residence. The university is running a shuttle business between the buildings to the local subway station, and also carries passengers to the Medical Center Campus in Washington Heights.

And earlier this year, the School of Visual Arts’ trendy Lower East Side Ludlow Residence opened at 101 Ludlow Street at the corner of Delancey Street at the former site of a Duane Reade. The new 20-story, 80,000-square-foot, 353-bed dormitory, a development of Charles Blaichman, entered into a 20-year lease with a renewal option for 20 years and an option to purchase at the end of the lease.

Philanthropy is fueling the expansion of several projects at Fordham University, including dormitories at the Rose Hall campus in the Bronx. In October, Thomas P. Salice and Susan Conley Salice, graduates of Fordham in 1982, donated $7 million to be used for a new residence hall. Salice and Conley Halls — two towers joined at the base, which will house 460 students — will encompass 76,000 square feet and are expected to open their doors in June 2010.

Also at Fordham, construction is expected to be completed next year for Campbell Hall, a 90,000-square-foot residence hall. The building will be the namesake of Robert E. Campbell, a 1955 graduate of Fordham, and his wife, Joan Campbell. The Campbells’ gift of $10 million to Fordham is among the largest in the university’s history.

In the fall, students will move into St. John’s University’s off-campus residence located at 172-14 Henley Road in the Jamaica Heights neighborhood of Queens. The new seven-story building will have a total of 500 beds. The University plans to use a shuttle bus to bring students back and forth to the main campus.

Although the credit crisis has taken a toll on education centers, the demand for student and faculty housing is expected to continue to grow in the foreseeable future. Administrators at the City University have been meeting with developers, attempting to secure sites for dormitories, and many public and private institutions in New York, New Jersey and Connecticut are shopping for sites and joint-venture partners to build new housing.

As long as the need is high, expect to see more dorms rising.

Michael Stoler is a columnist for The Real Deal and host of real
estate programs “The Stoler Report” and “Building New York” on CUNY TV
and on WEGTV in East Hampton. His radio show, “The Michael Stoler Real
Estate Report,” airs on 1010 WINS on Saturdays and Sundays. Stoler is a
director at Madison Realty Capital as well as an adjunct professor at
NYU Real Estate Institute, and a former contributing editor and
columnist for the New York Sun.

Since first-time buyers are getting thousands of dollars in tax credits from the federal government to stimulate the economy, why shouldn’t all homebuyers get equal treatment? And what about refinancers — couldn’t they make good use of a tax credit to help defray closing costs and loan fees?

Whatever your thoughts on these questions, there is an effort getting under way in Congress to extend tax credits to anyone who buys a new or existing home in the coming year, with no income limitations. In one case, legislation would even create a new “temporary” $3,000 tax credit to help defray the costs of refinancing mortgages on principal residences.

Two Dallas-area congressmen — one a Democrat, the other a Republican — have introduced bills that not only would broaden the reach of the current housing tax credits to almost everybody, but would keep the program going until either mid-2010 or the end of that year. The current credit expires Nov. 30.

Rep. Kenny Marchant, a Republican who represents the suburbs between Fort Worth and Dallas, is pushing a bill that would expand the current $8,000 federal credit to buyers of all houses — not just first-timers — through June 2010. The bill (H.R. 2619) would also create an unprecedented $3,000 credit to help offset “qualified refinancing costs” — closing fees, lender charges and the like — through next June.

In a statement, Marchant said his goals are to “jump-start new sales,” “reduce the housing inventory” and “stabilize housing prices.” As to the refinancing credit, he said the idea is to encourage owners “to take advantage of current low mortgage rates” — cutting their monthly payments to stay out of financial trouble. The $3,000 refi credit could be used to pay for loan “points,” other transaction fees or to “put equity in their home if they’re a little underwater.”

Marchant’s House colleague, Rep. Eddie Bernice Johnson, a Democrat who represents downtown Dallas, has introduced the Home Buying Credit Expansion Act (H.R. 2606), which would extend the current credit through Dec. 31, 2010. The bill would also open the credit to all buyers of principal residences, but would not provide any new tax incentives to stimulate refinancings.

The near-simultaneous introduction of tax credit expansion bills on Capitol Hill appeared to put the two most potent housing lobbies — the National Association of Realtors and the National Association of Home Builders — into a political quandary. On the one hand, any broadening of tax incentives for homebuying would be good news for their builder and realty broker members.

On the other hand, any public perception that the expiration date for the current credit might be extended could cause some potential buyers to delay purchases. And if all would-be buyers might be eligible for some future federal tax credit — not just first-timers — large numbers of consumers might just stay on the sidelines waiting for that better deal to come out of Congress.

A spokesman for the National Association of Home Builders said the group “does not want anything that would stop the traction the current [tax] credit is now getting. We think it would be more appropriate to address [an extension or other changes] closer to the credit deadline” in the months ahead.

But Mary Trupo, public policy director for the National Association of Realtors, said her 1.1 million-member group sees it differently.

“We say — if [the credit] is working for first-time homebuyers, then why not for all buyers, with no income limitations? We would like to see the expiration date extended [beyond Nov. 30]. Expanding the credit is really the way to stabilize the [housing] market — by making it available to everybody.”

Trupo said first-time buyers accounted for one-half of all purchasers in March — up from one-third in January — and that increase is directly attributable to the tax credit.

The association has no hard estimate of what effect opening up the credit to all buyers would have on total sales. But Jed Smith, managing director for quantitative research, said earlier projections about the first-time buyer credit ranged into the hundreds of thousands of additional sales. Broadening the credit to all buyers would almost certainly push the total higher.

Where’s this all headed? Don’t look for any immediate action on Capitol Hill. The legislative calendar is jammed already, the budget deficit is at all-time levels, the summer recess looms, and neither of the tax credit bill sponsors sits on the Ways and Means Committee, which must originate all tax legislation.

But later this year, you can bank on it: There will be a significant push to extend the housing tax credit — and maybe even open it up to everybody.

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

I’m happy to report that in the last few weeks, brokers we’ve talked to say they have started to see the market paralysis break a little, as more people start looking to take advantage of steep price drops on both the sales and rental sides of the market.

Indeed, brokers say that while prices may be lower and incentives laid on thicker, activity has been showing some signs of improvement lately, with increased open house traffic and more contracts being signed (relatively speaking, of course).

Whether these so-called “green shoots,” the in-vogue term for positive economic indicators, are the beginning of a real recovery is anyone’s guess. There are still a lot of economists — like our friend Robert Shiller at Yale — who believe they are tantamount to weeds growing in between the cracks of the sidewalk that will wilt due to a coming increase in unemployment and higher interest rates. Some of them predict that New York prices still have another 40 percent to drop, which seems incredibly drastic to me.

But as we head into summer it’s hard not to get a little giddy about the possibility that the pessimists may be wrong and that the newfound confidence we’re hearing about could continue to grow.

In that vein, this month The Real Deal focused on some of the new life that seems to be coming back into the market.

For one, foreign buyers are slowly starting to purchase property here again, although they are spending less and are more concerned with getting good deals. See page 18 to find out what other factors they are considering before signing on the dotted line.

We also looked at the number of contracts signed and closed in new buildings in Manhattan, Brooklyn and Queens and ranked the buildings with the most activity during the spring months. While the numbers are still pretty small, they offer a good real-time gauge of what’s happening in the city’s condo market. To see which buildings ranked as the best sellers this spring, see the charts on page 58.

There are, however, obviously still a lot of players who haven’t quite recalibrated yet.

Perhaps the best example is Michael Shvo, who personified the condo boom better than almost anyone. The once press-hungry marketer is being dogged by creditors and unhappy buyers and is now rarely in the public eye. Read the story on page 50 to find out where he’s gone.

Meanwhile, with the market so far off from where it was just last year, there seem to be more brokers, developers and firms cutting corners these days. That’s why we’ve devoted a package of stories to ethical breaches. While we know that most in New York’s real estate community are standup professionals, there are those out there who seem to be blurring the line — either willingly or because they are strapped for money. For example, there are an increasing number of firms bouncing commission checks to agents and stiffing vendors. To find out more about the bad apples, see the stories starting on page 35.

One other story I’d like to mention is our profile of Suri Kasirer. You may not know her by name, but she is one of the most powerful lobbyists in the city and a major behind-the-scenes player in the world of New York real estate. Her client list includes some of the biggest names in the business, like SL Green and Extell. And she’s definitely someone you want on your radar. To find out why, read the story on page 30.

On a more personal note, I’d like to congratulate our senior deputy editor, Jennifer White Karp, and her husband, Howard, on the birth of their second daughter, Aviva Salome Karp, who was born last month. We are all incredibly excited for them.

Finally, I want to publicly express how honored I was to be named to the New York Observer’s list of 100 most powerful people in real estate last month. I was proud to be in the company of so many legendary real estate figures — people who have literally reshaped the skyline here. I’d like to thank my colleague Jared Kushner for throwing such a wonderful event for all of us at the Four Seasons.

And speaking of proud, I am incredibly proud to report that The Real Deal reached 1.4 million Web site hits last month and that we’ve doubled our Web traffic since September. We also have more than 2,800 followers on Twitter — so you who have signed up can all pat yourselves on the back for embracing a new social and business networking technology that seems to be growing like wildfire out of nowhere. We’ve already started tweeting from real estate events all over the city, so keep following us.

Macao real estate market sees signs of an uptick

After months of real estate difficulties, the property market in Macao may be getting a boost.

Earlier this year, property transactions in the autonomous special administrative region of China were at their lowest point in 24 years, according to the International Herald Tribune. Only 311 apartments were sold in Macao in January, the lowest number of sales since 1985. Prices for apartments larger than 150 square meters have fallen 36 percent over the past year due to the global economic downturn and Macao’s stalled bureaucracy.

But now transactions are starting to speed up again. Roughly 960 apartments were sold in March, and the election of a new administration is expected to heat up the stalled construction market. As visa restrictions lighten, Macao, which is the world’s largest gambling market in terms of revenue, will also be able to draw more gamblers.

But while the region’s future looks brighter, there are still trouble spots. Several casinos under construction, including the Shangri-La, Sheraton, Traders and St. Regis hotel and casino projects, have been postponed indefinitely due to developer Las Vegas Sands Corporation’s financial difficulties. No new construction permits have been issued since 2008, when Macao’s former secretary for transport and public works was convicted of bribery and money laundering.

British expats struggle to sell homes abroad

British buyers are trying to unload their homes abroad now that the pound’s value has fallen.

The housing boom allowed Britons to pick up property across the Channel in France and Spain, but since the bubble has burst, many must now decide what to do with their homes abroad, the International Herald Tribune reported.

Some of these expats have already returned to the United Kingdom, but others have been trapped by the down market, unable to sell their foreign homes.

In 2005, there were 133,000 British people living permanently in France and 205,000 in Spain, according to the European Union statistics office. Anecdotal evidence suggests that the number of Britons living in France has dropped significantly.

For example, membership in the town of Pays de la Loire’s Euro-Mayenne Association, which brings together foreigners and local businesspeople, has fallen to 363, from a high of 500 in 2004. As a result, business has fallen for some local merchants, like Grainne Cavanagh, director of a moving company near Biarritz, by as much as 50 percent.

Josephine Baker’s home on market in Paris suburb

The 19th-century French château once belonging to actress and entertainer Josephine Baker is now on the market for $16.3 million, the International Herald Tribune reported. The 10-bedroom home, Le Beau Chêne, is about 15 minutes outside of Paris and contains 6,500 square feet of living space and about 3.7 acres of gardens.

Baker, who made her way to France via Harlem and wowed Paris in the 1920s, bought the home in 1929 from Anna, countess of Noailles, and lived there for 18 years before selling it to the parents of the present sellers in 1947. Baker’s visitors while in residence included Mohammed V of Morocco. The château’s amenities include a tennis court, a swimming pool, a garden room with a fountain and huts for raising animals.

Compiled by Sara Polsky

A new commercial broker at Sierra Realty is also an Emmy-winning actress. Blanche Baker Magill has joined Sierra as an associate director of commercial sales and leasing. Clients and colleagues may recognize Magill from her role playing Molly Ringwald’s older sister in the 1984 Brat Pack film “Sixteen Candles.”

The actress-turned-broker previously worked at Coldwell Banker Hunt Kennedy and decided to leave when she heard rumors that the firm was closing. The Real Deal reported that CBHK shut down in May.

“Once I heard the rumor, I figured better be safe than sorry,” Magill said. “The day I signed a contract [with Sierra] was the day they announced the franchise wasn’t going to continue. You have to see things coming in a turbulent situation. It can create opportunities for people who recognize them. That’s the reality we’re living right now.”

Magill was an actress for several years before she got married, had children and quit the business. Although she tried to get back into the acting scene as her children got older, she found it exceedingly difficult. “There was very little work for a woman in her 40s,” Magill said.

To make some extra money, Magill saw an opportunity to enter the commercial real estate world, saying she was attracted to the commercial side rather than residential because there were so few women in the field.

“I think there’s a gap between clients and who’s serving them,” Magill said. “Women have made great strides in business, but not commercial real estate. It’s dominated by men.”

A recent deal Magill closed was a new office for architect Page Cowley, who took the seventh floor of 10 East 33rd Street.

Magill still acts intermittently, and on one occasion her two worlds converged.

“I went to a screening party at the Pioneer Theater and met the owner of Mo Pitkin’s [bar],” Magill said. The owner was selling the building and Magill got the exclusive listing.

Longtime Brooklyn broker Harvey Heit has left local brokerage Rita Knox Realty to start his own firm. Heit worked with Rita Knox, who he said was his mentor, for 13 years. However, as the economic climate worsened, Heit said he decided to take his future into his own hands.

“Listings are harder to sell, but brokerage houses are becoming more friendly about co-brokering,” Heit said. “I felt I could make more money by being on my own because if I co-broke, I would have to split half the commission with my boss.”

Heit said that being his own boss allows him to be more flexible in terms of compensation. At the moment, Heit is running H Heit Realty LLC as a one-man operation. Heit converted the first floor of his brownstone, at 364 Sixth Street, into an office and meeting room for clients.

“Right now I’m just hoping to keep my head above water,” Heit said. “A lot of brokers are hurting right now. This year, I just want to start getting a steady flow of business back, pay my bills and go from there.”

When he left Rita Knox, Heit sent out an e-mail to about 1,600 contacts telling them about his new venture, and he has been doing deals by word of mouth since.

Heit has an exclusive right now for a brownstone on the same block that he lives on that’s listed for $1.65 million, and he just closed on a multi-family building in Prospect Heights for $1.7 million. The multi-family building was originally priced at $2.5 million.

Heit is also focusing more on Internet marketing, and plans to start putting listings up on Twitter.

“With all the things you can do online with social media, I feel like one person sitting behind a computer can do the whole job of advertising,” Heit said.

New York Times real estate reporter Teri Karush Rogers and Denise Dell’Olio, a creative director at an ad agency, just launched an online community for homeowners called BrickUnderground.com.

The two came up with the idea when they moved into the same Upper West Side co-op and found they had more questions than answers about homeownership and maintenance.

“Even though I’ve been reporting real estate for all these years for the [Times], I can’t get answers to my own questions,” Rogers said. “You don’t know how things are handled in other buildings. Something could be handled the same way for 30 years just because that’s the way it’s always been done.”

The Web site includes a forum for homeowners to ask questions and provide tips, and includes a blog with links to real estate articles.

“We really want to be the online 411,” Rogers said.

Real estate attorneys Adam Leitman Bailey and Luigi Rosabianca have already joined the Web site, and Rogers said Julie Friedman, an executive vice president at Bellmarc Realty, and Deanna Kory, a senior vice president at the Corcoran Group, have also signed on.

“It’s a resource for homeowners who want to get informed, connected and supported,” Rogers said. “A place they can turn whenever they need help with anything to do with their co-op, condo or townhouse.”

Residential

AC Lawrence & Company

Ernesto Cortes joined the company as a sales agent. He was previously with Warburg Realty.

Ardor New York Real Estate

Iris Shorin joined the firm as vice president. She was previously a vice president with JC DeNiro & Associates.

Barak Realty

Ortal Schneider and Royce Brown joined the company as sales associates.

Century 21 NY Metro

Tori Rouse was appointed manager of the firm’s Uptown office. Brandon Isner joined as weekend rental manager.

Citi Habitats

Rajan Khanna joined the company as a senior vice president and associate broker. He was previously with Brown Harris Stevens.

DJK Residential

Takk Yamaguchi joined the company as a sales agent.

Commercial

American Land Services

Ori Foger rejoined the company’s New York City office as vice president of marketing and sales. Most recently, he was vice president of business development for KV National Land.

Atlantic Development Group

Adriana Acedo joined the company as director of marketing and tenant relations.

CB Richard Ellis

Matt Van Buren was promoted to executive managing director of the company’s Midtown office from managing director.

Centerline Capital Group

Peter Blass was appointed vice president of the company’s agency lending products division. He will work out of the New York office.

Madison Commercial Real Estate Services

Patrick Anarumo, Terence Guerriere, Joseph Napolitano, Danielle Sprouls and Louis Weinberg joined the company.

Massey Knakal

Christoffer Brodhead, Meyrick Ferguson, Tom Gammino, Mark Lively and Swain Weiner were promoted to vice presidents of sales from sales agents.

NCB

Deirdre Casey Gernavage was promoted to vice president of the company’s New York real estate closing department from assistant vice president of the New York underlying team closing department.

The Rockefeller Group

John Bottomley joined the company’s investment subsidiary, Rockefeller Group Investment Management Corp., as senior vice president.

Savitt Partners

Robert Conover joined the company as chief financial officer. He was previously chief accounting officer with the Related Companies.

Sierra Realty Corp.

Peter Levitan was promoted to managing director from commercial sales and leasing specialist.

Compiled by Linden Lim

Crossword puzzle: Wishing the market would hit bottom already

Crossword solution

Halstead takes bigger bite out of Connecticut market

In a massive grab for market share reminiscent of the recent real estate boom, Halstead Property has gained five offices and 160 new agents by absorbing Connecticut real estate brokerage Country Living Associates.

Joining with the 17-year-old Country Living Associates, located in Fairfield County, in addition to the recent takeover of 55-agent Darien’s Wheeler Real Estate, brings Halstead’s total number of agents to more than 900 in three different states, and is part of a strategy of “smart growth” for the company, according to Diane Ramirez, the president of Halstead.

Ramirez did not disclose the details of the arrangement, saying only that Halstead absorbed the agents of Country Living and now has five new offices. The transaction was not a purchase, a Halstead spokesperson explained further, because no money changed hands, but would not elaborate, saying Halstead does not disclose financial details because it is a privately held company.

Country Living Associates, now known as Halstead Property Country Living, previously had seven offices in Fairfield County; Halstead has closed the corporate headquarters in Norwalk and consolidated the company’s Darien office with nearby Wheeler. All of the Darien agents were encouraged to join Wheeler, said company co-founder Sharon Daley Maasdorp, who previously owned the company with colleague John DiCenzo, and now is Halstead’s executive director of sales for New Canaan. By Candace Taylor

Laurel developer sued over rent

Alexico Group is facing litigation after it allegedly failed to pay $254,000 in back rent and other charges for an off-site sales office at the Laurel, its 31-story condominium building at 400 East 67th Street.

Since 2007, the Manhattan-based development marketing firm has operated the Laurel sales and design center at 1161 First Avenue, which is a street-level commercial space located at the rival St. Tropez condo, on the corner of 64th Street.

The complaint, filed by the St. Tropez Board of Managers on May 27 in New York Housing Court, alleges the developer — which pays $53,571 per month in rent — failed to make a payment since January. Alexico, led by Izak Senbahar and Simon Elias, told the landlord that slow sales at the Laurel were hurting its ability to make rent payments for the sales office, according to St. Tropez’s attorney.

“The reason they’re not paying their rent is because they can’t sell any units [at the Laurel],” said Adam Leitman Bailey, attorney for the St. Tropez. “Their lease expires Sept. 30. They’ve asked to be let out of their lease.”

Alexico officials, however, have a different take on the situation.

“The dispute relates to, among other things, space the condominium board arbitrarily annexed without our consent or any advance notification,” according to an Alexico spokesperson, who asked not to be named.

He claimed the St. Tropez expanded a health club into the sales office space without prior consent, and that there were other problems, including flooding, in the building. He declined to comment when asked why Alexico never took the landlord to court over these alleged problems, but said there would likely be new litigation. By David Jones

Extell unloads Diamond District building

Extell Development sold a 10-story building at 30 West 47th Street for nearly $8 million less than the company paid for it last year after stripping it of air rights needed for its nearby Gem Tower.

Extell sold the property at 30 West 47th Street to Jemsa Realty for $42.5 million May 14, after going into contract in January, according to property records published last month.

The developer bought the property for $50.1 million in June 2008, then transferred air rights from the building to its under-construction, 32-story tower at 50 West 47th Street, city records show. By Adam Pincus

Core sues William Beaver developers for fraud

Core Group Marketing has filed suit against the developer of chic downtown condominium William Beaver House, claiming it is owed more than $220,000 in unpaid commissions for units sold at the building.

In a suit filed last month in New York State Supreme Court, Core claims that the project’s owners committed breach of contract and fraud by failing to pay commissions for units Core sold at the development. Core asked that the payments for rent be paid along with interest, legal fees and compensatory damages.

The high-profile Financial District project is being developed by hotelier and nightlife impresario Andre Balazs, along with SDS Investments, a private real estate firm led by developers S. Lawrence Davis and Alex Sapir, president of the Sapir Organization.

Core CEO Shaun Osher declined to comment, but recently told The Real Deal that William Beaver House, located at 15 William Street at Beaver Street, was “one of the most difficult projects I’ve ever worked on,” and that he pulled his sales team from the building when the developer failed to pay his agents their commissions.

Core was hired as the co-exclusive sales and marketing firm at the project in June 2007, along with Prodigy International, a brokerage with offices in New York, Miami, Panama, Mexico and Spain.

Rodrigo Nino, the president of Prodigy, which is now the sole sales team remaining on the project, said he is not familiar with the lawsuit, but that “the developer was very unhappy with the performance that [Core] had. They didn’t sell so they were let go.” By Candace Taylor

Swig rushes to sell debt at Sheffield57 condominium

Developer Kent Swig is racing to complete a deal to sell the senior mezzanine debt at the Sheffield57 condominium to a team led by Fortress Investment Group, amid a blockbuster derivative lawsuit by his fellow investors that could affect a final agreement.

Under the proposed deal, Guggenheim Structured Real Estate would sell its debt in the building, which includes a senior mezzanine loan of $76 million and a junior mortgage loan of about $2 million, sources said.

The sources added that Swig and Guggenheim were looking to sell the debt at 90 cents on the dollar, while most offers were coming in at 60 to 70 cents.

The buyers would then foreclose on the note, take over the property, and pour millions of dollars into the building to complete construction and cover delinquent payments owed to numerous contractors.

“The note’s in default,” said an executive familiar with the negotiations, “but Guggenheim doesn’t have the [additional] money to put into the deal that the property needs.”

Sources say that Fortress had been in discussions with Area Property Partners, formerly known as Apollo Real Estate Advisors, to become a member of the investment group. The sources added that Area officials, however, had concerns about the complicated legal and financial entanglements at Sheffield57. The building’s former owner, Rose Associates, emerged recently as a potential manager and investor in the deal.

“We do not comment on our investments or potential investments,” said Lilly Donohue, a managing director at Fortress.

At least two other firms were left at the altar during the bidding process, including Angelo, Gordon & Co. and Westbrook Partners. Officials at both firms declined to comment. Officials from Area and Fortress also declined to comment. By David Jones

The Observer releases its Power 100 list

The Real Deal’s Amir Korangy made the New York Observer’s Power 100 list of the most powerful people in New York real estate, released last month. President Barack Obama ranked first on the list, which includes politicians, developers and brokers, followed by Stephen Ross, CEO of the Related Companies, and Mort Zuckerman, chairman and CEO of Boston Properties. Twelve women made the list, including Corcoran Group CEO Pamela Liebman, Elliman CEO Dottie Herman and CB Richard Ellis Vice Chairman Darcy Stacom. The Observer also held a poll inviting readers to vote for the most powerful people in New York real estate, and The Real Deal’s Web editor, Lauren Elkies, was named the city’s most powerful real estate blogger. TRD

While developers at many new condos in New York have already slashed prices, Donald Trump is standing firm.

Despite the pressure to get out the price-chopping ax due to current market conditions, The Donald insists he won’t budge at his latest project, Trump
Soho, a 46-story condo-hotel.

“It’s a very good building in a very good location, and we feel we don’t have to,” says Trump of the high-rise, whose 391 units, available since fall 2007, are 55 percent sold, at an average of $3,000 a square foot.

“There’s nothing wrong with lowering prices, nothing wrong with doing that on occasion, but it’s not something we like to do,” Trump told The Real
Deal, adding he never lowered prices in previous downturns.

Whether wise or short-sighted, Trump seems to be bucking a trend.

By most estimates, average sales prices are down 20 to 25 percent in Manhattan from the height of the market. And new construction condos have been especially hit hard with price drops. In one severe example, artist and developer Julian Schnabel’s Palazzo Chupi on West 11th Street has seen price reductions of more than 52 percent on some units.

But Trump’s resistance to a drop in prices seems to be a long-held philosophy. The New York Times recently quoted Louise Sunshine, a Trump Organization alum and one of The Donald’s protégés, saying price cuts were not a necessity, even in this market.

“I would advise anybody who lives in a quality building to raise their prices and have patience,” the paper quoted her saying.

That is despite the fact that banks have become more willing to allow developers to cut prices. As The Real Deal reported last month, while banks were reluctant at the onset of the recession to allow ground-up buildings to lower their prices, an increasing number of lenders have been changing their tune.

“The banks are starting to realize it’s better to get something than nothing,” says real-estate attorney Jeffrey Reich.

Trump may be holding out for $3,000-a-square-foot takers at Trump Soho, but that same anti-price cut mentality does not necessarily exist at a number of existing buildings around the city bearing his name that have resales. Those buildings are obviously a different beast and something Trump has no control over, but about a dozen units in Trump condos across the city sold for between 5 percent and 15 percent less than their asking prices, according to StreetEasy.

At Trump World Tower, for example, No. 8G, which was listed in March for $1.195 million, sold in early June for $1.025 million, a 14 percent discount. Similarly, at Trump Park Avenue (502 Park Avenue), No. 16H was listed for $2.5 million in March but sold for $2.15 million in April, another 14 percent off, according to the data.

Jonathan Miller, the president of appraisal firm Miller Samuel, said Trump, like other developers, probably won’t see an uptick in activity until he lowers prices to be competitive with the resale market.

“Their profits could disappear, and that’s not something to be taken lightly,” Miller says.

But perseverance could pay off long-term. “If they can hold on until the market changes, they will be better off.”

As real estate agents look for new ways to increase their name recognition in a highly competitive market, some are trying their luck on the silver screen.

Susan Skinner, a broker with Prudential Douglas Elliman, recently started advertising on 12 screens at the AMC movie theater on Broadway and 68th Street near Lincoln Center and said the benefits far outweigh the costs to produce the 15-second clip. While Skinner started her movie ads a few years ago, she said her most recent ad speaks to what’s going on in the current down market.

She noted that in the down market, her appearances on the big screen have helped her differentiate herself from other brokers who do standard mailings.

“I do get a lot of people who recognize me who say, ‘Oh, I saw you in the theater,’” Skinner said. “And, there’s a certain glamour factor.”

Skinner — who currently has several Upper West Side listings, including a three-bedroom co-op on Central Park West with an asking price of $975,000 — said the time and cost of sending out 5,000 postcards was too much. She said advertising at the movies gives her a wider reach.

“Of the thousands of people who go to these movies, there’s got to be somebody who, over time, is going to see me and remember the ad and the name,” she told The Real Deal. “It’s very expensive to do the postcard thing, and I wanted to try [advertising] a different way.”

Her commercials come on during First Look, the pre-feature advertising loop that’s produced by National
CineMedia.

And according to Cliff Marks, CineMedia’s president of sales and marketing, Skinner is not alone.

Brokers are regularly among the company’s top 10 advertising clients, he said. Despite the down market, he said ads from brokers are about even with last year, if not slightly up.

It also helps that theaters are most crowded over the weekend, when people are most likely to look at real estate, Marks noted. Plus, while there is always the chance that part of the audience will be standing on line for popcorn and Milk Duds right before the movie, those who are in the theater don’t have the option to change the channel.

Marks said the success rate for advertising in theaters is three to five times higher than it is for television.

Average costs run between $50 and $75 per screen per week in New York, Marks said. Production costs — like filming, editing, scriptwriting and hair and makeup — are additional.

Skinner said she got the idea from fellow Elliman broker Ann Cutbill Lenane, who ran her first cinema ad in 2001. Lenane said she was inspired to tape her pre-movie ads after seeing brokers advertising on billboards and bus stops in North Carolina.

“When [the movie theater advertisement] first went up [in New York], it was funny because people thought it was a personals ad and they didn’t know what to make of it,” Lenane said.

But, she said, now people recognize her on the street and it’s worth it.

“It’s really silly and fun, but it makes me feel a little bit more a part of my neighborhood, which is what I really enjoy,” she said.

Meanwhile, Corcoran broker Deanna Kory started advertising on the silver screen two years ago as part of her full marketing plan.

“[Initially] I didn’t like that kind of public display because I felt it was odd, but over time I just thought, there’s a little bit of fun when people remember you,” she said. “The main thing is just having name recognition, and it’s been very great.”

Brian Podnos, a residential and commercial sales associate at Ben & Company, is back this month with some tips for winning over clients and holding onto a job. Use with caution.

Last week I set a new record for deals slipping through my fingers at the real estate firm where I work. I had a rental application with a deposit in my hands at 9:00 am. By 9:18, the deal had fallen through.

But I wasn’t upset. I was shocked that I could accomplish such a quick turn of events. So were my coworkers, who congratulated me with laughter. To celebrate, I decided to take myself out to a nearby bar.

Later, I got another application with a similar deposit on the same apartment. I went back to the office and laughed in the faces of my coworkers and the principal. I called the owner of the rental and laughed at him. I picked up the office cat and laughed at her. Then the client called and said she couldn’t take the apartment because there weren’t enough Chipotle restaurants in the area. I stopped laughing and went back to the bar. The bartender laughed at me.

I was drinking quite heavily, despite the early hour, and I got into a conversation with a fellow next to me. He was in real estate, too, or at least he had been before losing his job because he wasn’t making enough to keep his desk. Now no brokerage would take him.

I felt bad for him. As bad as my day at work was, it was still better than having no job at all. Still, as he was telling me about his trouble paying bills, buying groceries and dodging loan sharks, all I could think was, “Not enough Chipotles in the area? Are you kidding?”

Leaving the bar, I thought about how things have changed since 2006, when we were treated like kings and queens and clients carried us from appointment to appointment on sedan chairs. No one throws rose petals at our feet as we walk now. The sky does not rain green presidents anymore.

Back at the office, I started to panic. My job probably isn’t safe either. In fact, I know it’s not safe. How could I have missed the signs? When did my principal grow out that pencil mustache, the one he’s stroking and playing with as he glares at me? Since when did he walk around petting the fat office cat? And where did that laugh, “Muhahaha,” come from? When did he start wearing that cape?

It was time to take action and come up with ways to generate clients. Here are my new rules; feel free to use them.

First, advertise, but no Craigslist. No newspaper postings. You have to be different from everyone else, like the naked cowboy in Times Square. People notice that guy. So if you see the naked real estate agent handing out business cards in Midtown, say “Hi,” because I haven’t been arrested yet.

Next, send gifts to your clients. Lots of them. This can be costly, and I’ve taken that into consideration. What you have to do is buy a present that has a lot of items in it, like a buildable chair. Send them one piece a day. Or a box of crayons. The importance is quantity, not quality.

If you prefer to give only one present to a client, make sure it is dramatic. I prefer things that are alive. A cute puppy is good. Nothing ugly now, this isn’t amateur hour. Remember to poke holes in the box; I learned the hard way how important that is.

But what if these brilliant techniques don’t work? What if I lose my job? What would I do? I don’t think I could handle the straight nine-hours-a-day-at-a-desk gig. I’d end up playing Tetris all day. All of you with regular day jobs: Don’t act like you’ve never done that before.

No, I think I would choose a career that’s more stable, like acting, because I’ve always been good at lying. But how would I get auditions? I’d have to hand out business cards to managers and agents, naked, of course.
This kind of thinking was depressing me. After all, I still have my desk; I just needed to earn it. So I went back to the bar. After a few rounds of shots I went out on the street and asked people walking by if they needed an apartment. This didn’t work, so I started demanding they take an apartment.

After I got out of jail, I got a call from a client who needed an apartment and I knew just the one to show them. But I wasn’t going to let these people make a fool of me, too, so after my hangover wore off, I got naked, gave them a baby seal, and left a trail of French fries to a contract.

What a shock: The clients signed the lease and I ended up renting the same apartment I had lost two times that morning.

Since that day I’ve stopped worrying about losing my job and started focusing on how to get the job done. I’ve also started playing a lot of Tetris, just in case.

A Flatiron District parcel where one of the early 20th century’s most important architects, Stanford White, had sexual dalliances with a 16-year-old mistress, is facing a tax lien foreclosure.

The owner of the parcel at 22 West 24th Street has not paid real estate taxes in years and now owes $82,987, a lawsuit filed in New York State Supreme Court last month alleges.

But the banal mechanisms of the court process mask a tumultuous period for the address, beginning with a fire in 2003 that badly burned the building and its owner. Four years later, in 2007, the building collapsed.

But it is a dispute over the title to the land involving the infirm owner, her allegedly mentally challenged son, and an outside contractor, that has put the valuable parcel, just half a block from Madison Square Park, in threat of foreclosure.

In 1901, White, a famous playboy, began liaisons with 16-year-old actress and model Evelyn Nesbit. He was a partner at the prestigious firm McKim, Mead and White, where he designed iconic New York City structures like the Washington Square Arch and the New York Herald Building.

White and Nesbit would rendezvous at the four-story building at 22 West 24th Street. They carried on the affair for years, fueling the rage of Nesbit’s husband, millionaire Harry Thaw, who fatally shot White during a musical in the architect’s own creation, Madison Square Garden, in 1906.

Decades later, in 1980, a woman named Juliette Gordon bought the building for an undisclosed sum. She suffered several strokes in 2002, and in 2003 was burned in a fire at the building, according to a lawsuit she filed in August 2006 alleging the building had been improperly taken from her.

The suit claimed Gordon, then 72, lost control of the building after a home improvement contractor named Christian Bandler met her mentally ill son, Noah Weinreb, and convinced him that others were trying to take the building away. In June 2004 he convinced Weinreb, who had power of attorney for his mother, to give Bandler an option to buy the property.

In March of 2005, the title was transferred to 22 West 24th Street LLC, with Gordon and Bandler’s company, Gramercy Management, as the sole members, giving Bandler powers to manage the development or sale of the site, the suit says. The suit says that was when the property tax arrears began. The suit seeks to void the option agreements and deed transfer.

Bandler said the allegations were baseless in an interview with The Real Deal. He also said that he had not been notified of the foreclosure process because the papers had been served to the wrong address.

Bandler’s attorney declined to comment, and the attorney for Gordon would not comment because a settlement agreement was pending.

The foreclosure action was brought by a trust, NYCTL 2008-A Trust, that buys New York City tax liens and seeks payment on them. The trust is serviced by Xspand, a subsidiary of JPMorgan Chase, which declined to comment.

In the case of a forced sale the tax lien, interest and fees would be paid off first, then other liens. The trust does not profit from the sale of the property after recovering the lien, interest and attorneys’ fees, sources said.

This story was originally published in the daily news section on therealdeal.com.

1983: Top prices for auctioned government-owned parcels

In auctions held a week apart, Financial District properties owned by the federal and city governments sold for record amounts 26 years ago this month.

The former United States Assay Office at 32 Old Slip was purchased for $27 million on July 20, besting the former top price of $3 million for a federal building that sold in Philadelphia just days earlier.

And a five-building, city-owned parcel at the corner of William and Beaver streets sold a week later for $13.15 million, topping the previous record price of $4.6 million in 1980 for a New York City property.

Paris-headquartered office developer HRO International bought the 120,100-square-foot Assay Office building that until 1982 stored 4,140 bags of gold coins confiscated from Nazi Germany as well as silver and gold. The United States Bureau of the Mint, which owned the building, also burned damaged paper money and melted damaged coins at the location on the East River, bounded by Old Slip, South Street, Front Street and Gouverneur Lane.

The building was demolished in 1986, and in 1987 HRO International built a 36-story office tower at 32 Old Slip, known as Financial Square. Paramount Group sold it for $751 million in 2007 to Beacon Capital Partners.

Trans World Equities bought the city properties at 13-15 and 23 William Street and 51-53 Beaver Street that the city had acquired in 1979 for nonpayment of taxes.

The site is now the home to a trendy, 330-unit condominium tower being built by hotel developer André Balazs and the private real estate firm SDS Investments, led by developers S. Lawrence Davis and Alex Sapir, president of the Sapir Organization.

1953: Cement driver strike idles 100,000 workers

The post-war construction boom in New York City was halted for two months during a strike 56 years ago this month by a union representing 1,800 truck drivers that froze construction on $600 million worth of projects and idled 100,000 workers.

The drivers of Local 282 of the International Brotherhood of Teamsters who deliver sand, gravel and ready-mix cement, as well as building supplies, first walked off the job July 3 because of a dispute over wages and benefits.

At the height of the stoppage, Mayor Vincent Impellitteri convened a three-person mediation committee to try to resolve the dispute. The strike did not end until the president of the national Teamsters union, Dave Beck, forced the drivers to return to work in exchange for sending negotiations to binding arbitration.

Affected projects included the $13 million Bellevue nurses’ home and school, the East Harlem Hospital and a hospital in Elmhurst, Queens. Paving work on the approaches to the Brooklyn Bridge was stalled as well, delaying completion of the project.

1931: 112-year-old Chelsea brokerage incorporated

The real estate brokerage firm James N. Wells’ Sons, founded in 1819 to manage the real estate concerns for the Moore family farm known as “Chelsea,” was reorganized as a corporate entity 78 years ago this month.

The firm was closely tied to the growth of the West Side neighborhood that grew from a bucolic area to a working-class residential enclave.

The founder of the company, James N. Wells, was a carpenter and builder who was acquainted with Clement Clarke Moore, author of “A Visit from St. Nicholas” (now known as “The Night Before Christmas”) and became his real estate adviser.

The Chelsea farm’s original boundaries ran from 19th to 24th streets, and from Eighth Avenue to the Hudson River.

Wells convinced Moore that instead of selling the land, he should lease it in parcels for long terms. In 1931 the realty corporation’s president, James Eadie, valued the property at $40 million.

The most significant single lease that the Wells Company arranged was to Henry Mandel, developer of the London Terrace apartment houses, for the block between 23rd and 24th streets and Ninth and 10th avenues.

James N. Wells’ Sons still survives as Stribling-Wells & Gay, after being acquired by Stribling & Associates in 1989.