The Real Deal New York

Last month, a $7 million-plus sale at Dumbo’s One Main Street, the
centerpiece of David Walentas’ empire and the building he also calls home,
beat out a unit at One Brooklyn Bridge Park for the most expensive
condo ever sold in Brooklyn. One Main Street is one of only three
condominium buildings in the borough with units in contract for amounts
exceeding $4 million. At Brooklyn’s new priciest condo
” class=”read-more-link”>[more]

In the last year, banks and investors have started building up large
inventories of REOs, largely because they are having trouble unloading
them in a stagnating market where property values are no longer
appreciating and where credit for mortgages is harder to come by. For banks, foreclosed homes pile up
” class=”read-more-link”>[more]

While many developers have been racing to get started on projects
before changes in the 421-a tax abatement take effect, another group
has thrown in the towel, tripped up by the deadline and the faltering
economy. As a result, dozens of development sites with approved plans
for condominiums are on the market all over the city. Discouraged by 421-a changes, developers sell sites
” class=”read-more-link”>[more]

As sales have slowed and inventory has grown, developers are clamoring
to move new development condo units, many by adjusting prices. Condos on the chopping block” class=”read-more-link”>[more]

Over the last five years, Swig has poured hundreds of millions of his
family’s real estate fortune into New York City buildings. And last
month, he announced plans for one of his most ambitious and certainly
his most high-style projects yet. Surf’s up for Swig
” class=”read-more-link”>[more]

This feature story is part of a package on the numbers behind new
development, including which foreigners are buying where and what’s
happening at the very top end of the market. Adding it all up
” class=”read-more-link”>[more]

As the fight over construction of one of Manhattan’s largest new residential and retail developments, Columbus Village, escalated into a legal battle last month, leasing agent Winick Realty Group had quietly lined up tenants for more than half the retail space.

Winick has inked deals with nine retailers and the Ryan Center, a community health facility, for nearly 200,000 square feet of the roughly 320,000 total retail space in the development, which sits on both sides of Columbus Avenue from 97th to 100th streets.

The latest transactions bring more food retailers to the mix. Local cupcake maker Crumbs Bake Shop inked a deal for 500 square feet at 775 Columbus Avenue, one of five new addresses in the massive project. Tri-state area grocer Associated Supermarkets will take 13,000 square feet at 801 Amsterdam Avenue in the complex.

Sources suggested off-price apparel retailer T.J. Maxx may lease space at 808 Columbus Avenue.

On a recent weekday afternoon, the site hummed with the sound of power saws as construction workers raced to add another 12 stories to an eventual 29-story condo tower that will dwarf the existing residential properties on the site. The Chetrit Group and Stellar Management bought those seven red brick slab towers, collectively known as Park West Village, in 2000, and the redevelopment is part of a dramatic reshaping of this long-overlooked stretch of the Upper West Side.

Community groups and the Manhattan borough president are strongly opposed to the development. At press time, plaintiff Paul Bunten, a resident of Park West Village, was gearing up for a lengthy court battle over the legality of the construction and the need for an environmental review.

Late last month, Congressman Charles Rangel and representatives from the state Legislature and City Council joined the suit as co-plaintiffs.

A high-profile, protracted legal battle could hamper Winick’s effort to fill the rest of the space. Winick declined to comment for this story.

The latest two retail deals tilt the Columbus Village lineup further toward local stores. They round out a roster containing two parts Anywhere U.S.A. mall players (Borders, crafting emporium Michael’s and two big banks) plus one part workhorse local chains (Duane Reade and Modell’s), enlivened with a hearty glamour shot of upscale organics (Whole Foods).

Anchor tenant Whole Foods, which took a sprawling 57,500-square-foot space at the southwest corner of 97th Street and Columbus, has become a flashpoint for larger tensions around the project. Class issues are one major element of the controversy. The developers displaced an inexpensive C-Town grocery store — patronized by residents of apartments already on that stretch of Columbus, and of the housing projects to the north — to make way for Whole Foods and other retailers who can afford shiny new retail space said to carry ground-floor asking rents of $200 per square foot.

In fact, according to a source with knowledge of the deal, Winick chose to lease space to Associated to serve locals who find Whole Foods’ prices too high. The move may help blunt criticism aimed at Whole Foods, a.k.a. Whole Paycheck, in particular, and the retail complex in general.

“Associated is [about] capturing different income levels,” said the source, who was not authorized to speak and requested anonymity.

Bunten, who filed a lawsuit against the Department of Buildings as well as Columbus Village’s developers and contractors last month, takes care to assert he has no objection to Whole Foods. Bunten bristled when queried about whether he shops at the chain, asserting: “My habits are really immaterial… Our issue is that the building be constructed lawfully.”

Other area residents and business owners expressed more pointed reactions. At grocery store Mani Marketplace, stocked with organic fruit and the kind of chichi granola shoppers will also find at Whole Foods, manager Taso Mastakouris says he’s not worried about the competition, boasting that all of his prices are lower than Whole Foods’. Overall, he is hopeful that more retail space in the neighborhood will help him expand the store he has operated at 697 Columbus at West 94th Street for 16 years. “It might be a good thing, and bring [retail] real estate [rents] down,” said Mastakouris.

Others are much less sanguine. Sitting at her dining room table on an upper floor of 788 Columbus, octogenarian Vivian Dee looks out her window not at the trees or Central Park, the view she had for 40 years, but the neon orange netting around the new residential tower. The shouts of construction workers and din of their efforts provide a backdrop to her every word. Dee misses the C-Town market and a diner where neighbors used to congregate, and would like a similar eatery to open.

Then there are practical concerns that those who will flock to Whole Foods and go home again don’t have to consider. Jean Green Dorsey, vice president of community group West Siders for Public Participation, worries about Whole Foods’ plan to unload trucks on 97th Street, already a busy thoroughfare with a school, health center and through traffic from Central Park. “We’re for change, but we want change that respects the people who are already here,” she said.

Last month, Citibank sold six properties in Manhattan and in the outer boroughs for more than $12 million, only to lease the very same spaces back from the buyer. This is nothing new for the banking giant, which also sold its lower Manhattan headquarters last year. But Citibank isn’t the only one joining the sale-leaseback game to cash in on its assets.

Because of the uncertain state of the economy, many financial institutions are following Citibank’s lead, and companies in other industries are also selling their offices to cut their losses as a result of the credit crunch.

In a recent Webcast interview, The Real Deal’s Jen Benepe sat down with Robert Freedman, CEO of commercial real estate firm GVA Williams, to discuss how a declining market sparks sale-leasebacks.

Log on to www.therealdeal.com to see the full interview. And log on every Monday and Wednesday for a new edition of The Real Deal’s weekly Webcast, featuring a recap of each week’s breaking real estate stories and exclusive interviews with industry insiders.

The Real Deal: Citibank recently sold off a number of properties and then leased them back. It sold six Citi branches for $12.3 million last month. And in its biggest deal, Citigroup sold its headquarters at Greenwich Street for $1.6 billion to SL Green at the end of 2007. What is the appeal for them, and why are they doing this?

Robert Freedman: They’re unlocking their balance sheet. Like many financial institutions, they’re writing down non-performing assets as a function of the roiling debt market and the credit crisis.

TRD: Basically, they’re looking for some fast cash, correct?

RF: Yes, they’re looking to monetize an asset that’s not fully reflected on their balance sheet. For book purposes, for tax purposes, there are a number of different strategies.

TRD: Is there also some underlying reason with the Office of the Comptroller of the Currency in terms of their assets on their balance sheet?

RF: Yes, the Office of the Comptroller of the Currency prescribes for all of our banking institutions a primary capital-to-assets ratio. The real estate doesn’t qualify as primary capital. They’re in the business of lending, and their lending capacity would be crimped if they don’t have adequate primary capital.

TRD: Deutsche Bank also sold its buildings in a high-profile leaseback to the
Paramount Group last year. And Merrill Lynch sold its flagship bank in London for about $1 billion. Do you expect other financial firms to join the flow in doing the same thing?

RF: Yes, I think you’re going to see a lot more of this; it makes all the sense in the world. And moreover, many of their assets are trophy properties, which are trading at a premium, and they’ve ratcheted up in value to such an extent that it’s a market-timing issue. It’s a good time for them to sell because these assets have had a very steep run-up in value.

TRD: Can you give us some names of who you think are going to start unloading their properties?

RF: I think every major financial institution is going to have to look at this, no question, and they all have fairly significant real estate assets in this town and others.

TRD: What about other industries? The Real Deal reported on a possible sale-leaseback involving the healthcare company GHI on Ninth Avenue. So have you seen other kinds of companies either doing this or poised to do it?

RF: A lot of the healthcare companies that we’re dealing with — take hospitals, for instance — they’re rich in hard assets like real estate, and they have to look at levering those assets as their core businesses are struggling.

TRD: Who are some of the buyers, and are international companies contributing more to the recent trend than usual, as in the case of the recent Citibank branches selling to Irish company [Markland Holdings]?

RF: Clearly, because of the currency play, you’re seeing foreign buyers all over. Frankly, the British have always been very significant buyers; Greeks are major buyers. Remember, a lot of financial institutions occupy trophy properties. These are fortresses, these are best in class properties, the very properties that are trading at a premium. So there’s a market-timing aspect to sell. It’s the old adage, you know, sell high and buy low.

TRD: Have sale-leasebacks always happened when the economy tanks?

RF: Historically, yes, and unfortunately, I’ve been through too many market cycles. I’ve been in this business about 35 years, and yes, it’s a very predictive pattern that you clearly have to look at and unlock values to offset losses. So it’s quite a classic corporate response to a downturn in the economy.

TRD: So altogether, we should be seeing a number of sale-leaseback transactions happening over the next year, at least.

RF: Yes, I think you’re going to see a spate of them.

Queens development site asking $70 million

A 2.5-acre, 16-lot development site on Queens Boulevard is on the market with an asking price of $70 million, or $125 per buildable square foot. The site, at 70-25 through 72-19 Queens Boulevard, has a footprint of 126,937 square feet but is zoned for a mixed-use development of 560,000 square feet, with 400 apartments above and 110,000 square feet of commercial space on the ground level. The lots have a combined 811 feet of street frontage. Victor Weinberger of Re/Max Team Realty is marketing the property.

Times Square site for lease or sale

An L-shaped, 166,000-buildable-square-foot development site at 303 West 42nd Street is on the market for lease or sale. An outright sale could fetch up to $66.4 million, or $400 per buildable square foot, the New York Post reported. With additional air rights, the site of porn store Show World and several mixed-use buildings could support a development of up to 238,000 square feet. The property owners are seeking development proposals and would be open to a ground-lease arrangement or a partnership.

Downtown Brooklyn office building on the market for $45 million

A six-story, 165,200-square-foot office building at 180 Livingston Street in Brooklyn is on the market with an asking price of $45 million. The offices are fully leased to six tenants. The fourth, fifth and sixth floors are leased to one tenant until 2023; the third floor is occupied by multiple tenants with leases expiring in 2012 and 2013. The building allows office, retail, hotel, residential and community use; there are no additional air rights. Robert Knakal and Brian Leary of Massey Knakal are marketing the property.

Strip club could trade for $40 million

The site of adult entertainment venue Scores West, at 536 West 28th Street, is on the block and could sell for $40 million, the Post reported. The 31,106-square-foot property can be developed to upwards of 50,000 square feet through an air-rights transfer within the High Line zoning district. The club’s adult license can be used by the new owner or sold; a rival club is prohibited from opening within 500 feet of the current location. Scores West’s liquor license was recently suspended. Alex Picken of Picken Real Estate is handling the assignment.

Chelsea commercial building for sale

A six-story commercial loft building at 533-35 West 24th Street is on the market with an asking price of $36.5 million. The 32,424-square-foot property has 11-foot ceilings on floors one through five and a penthouse level with 20-foot ceilings and a roof deck. The ground floor is currently leased at $53 per square foot, or 60 percent of market rates; the above floors rent at an average per-square-foot price of $40, or 75 percent of market rates. Brock Emmetsberger of Massey Knakal is marketing the property.

Chelsea development site on the block

A three-story, 27,000-square-foot garage at 537-543 West 20th Street is on the market with an asking price of $20 million. The property currently allows 46,000 buildable square feet, but with High Line bonuses, the site can support a development of up to 56,000 square feet. The property’s owner, the Bermuda Limousine Company, plans to relocate its operations to a larger facility in Long Island City. Peter Hausburg, Anna Maria Ronquillo, Alan Miller, David Schechtman and David Lever of Eastern Consolidated are handling the sale.

Flatiron commercial building for sale

A four-story, 16,792-square-foot commercial building at 893 Broadway is on the market with an asking price of $18.5 million. Also known as 13 East 19th Street, the vacant loft property can support a redevelopment of up to 24,715 square feet; an as-of-right residential conversion is permitted as long as a portion of the building is left commercial. According to Massey Knakal, ground-floor retail rents in the area reach $300 per square foot; office rents command up to $60 per square foot; and residential sales fetch upwards of $1,900 per square foot. John Ciraulo, Brendan Gotch, James Nelson, William Simons and Craig Waggner of Massey Knakal are marketing
the property.

Nearly two years after its highly anticipated opening, the critically acclaimed Hearst Tower on Eighth Avenue is still without a ground-floor anchor tenant.

The 12,686-square-foot retail space has sat empty since 2006 as brokers struggled to find common ground with Hearst over the value (and potential) of the building, which is located at 300 West 57th Street.

Officials at Hearst said they are in talks with several potential anchor tenants and are holding out for a top-of-the-line retailer that makes sense for its high-profile headquarters.

But brokers said some retailers consider the building’s Eighth Avenue location harmful to the success of any luxury brand.

“The building is clearly one of the most spectacular buildings in the city, so you can understand why they won’t want to schmaltz it up with a falafel stand,” said Jeffrey Roseman, executive vice president at Newmark Knight Frank Retail. “I think if they had their druthers, they would like to see Prada or Gucci [in the space].”

Asking rents for retail space in the Columbus Circle area have ranged from $300 to $400 per square foot. But despite the surge in high-profile development, including the Time Warner Center just two blocks north, several leasing experts say that Columbus Circle has not established itself as a top location for storefront retail.

“The Time Warner Center is really a project unto itself,” said Brad Kaufman, a real estate attorney with the firm of Pryor Cashman. “It’s probably one of the few, if only, urban malls that’s succeeded in the city.”

Sources said talks fell apart between the Hearst building and at least two major retail chains, including the Container Store and CB2, a home furnishings spin-off of Crate & Barrel. CB2 opened its first New York location at 451 Broadway, while the Container Store has two locations in Manhattan, at 725 Lexington Avenue at 58th Street and 629 Sixth Avenue in Chelsea.

Crate & Barrel spokesperson Natalie Levy said the retailer has been “looking at properties across the U.S.” But she said she could not “confirm or deny” whether the Hearst building was under consideration. Container Store officials were not immediately available for comment.

In early April, many thought the building had finally secured a tenant when signs for cosmetics and apparel company Anna Sui graced the ground-floor windows. But it turned out that that was, well, just a façade. A spokesperson for the retailer confirmed that the signs were being used as a backdrop for a movie filming in front of the Hearst building. Ironically, given the retail drought at the building, the movie was “Confessions of a Shopaholic,” starring Isla Fisher.

Hearst spokesperson Paul Luthringer declined to comment on any specific
retailers, but acknowledged that discussions were ongoing.

“We are currently in discussions with numerous potential tenants,” said Luthringer. “It’s a fabulous space, and we’re being selective.”

FedEx/Kinko’s is currently the building’s only retail tenant; the firm signed a lease late last year for space on the 56th Street side of the building. In addition to that space and the 12,600-square-foot anchor tenant space, the building has another 2,000 square feet left to lease.

Some say the Hearst building has unrealistic expectations about its value and is insisting on bringing in a type of tenant that cannot be supported on Eighth Avenue.

“The landlord doesn’t know how to get out of his own way,” said a leading Manhattan retail broker who asked not to be identified. “They’re very difficult at Hearst; they’re very exacting. They’re very prissy.”

The broker said that Hearst treats the building as if it were located on Madison Avenue rather than Eighth Avenue, where the demographics are completely different.

“It’s not an accident that the place is called Hearst Castle,” said the broker. “They’ll probably sit empty if they don’t get what they want. They belong in an office park.”

Jim Downey, senior director of retail services at Cushman & Wakefield, which is marketing the building, said he resents the notion that the tower is being held up to an unrealistic standard or that Hearst is out of touch with the marketplace.

“It has nothing to do with prestige, style, class or élan,” said Downey. “We’re just trying to get the right tenant for the space.”

He said the main anchor space could be marketed to one tenant or could be split up among numerous smaller tenants.

When the 46-story Hearst Tower officially opened in October 2006, it was one of the hottest headquarters buildings in the city. Designed by Lord Norman Foster, the tower measures 856,000 square feet. A 2001 New York Times story called the design “brilliant” when it was revealed in 2001, and said that the city’s skyline “has been waiting for this.”

The building, one of the most environmentally friendly in the city, uses daylight sensors to lower energy use, and was the first office building in New York to receive LEED gold certification.

When the Hearst Tower opened, Columbus Circle was considered a neighborhood that had undergone a major revival. The 2004 opening of the Time Warner Center created a commercial and retail destination that drew a number of high-end retailers, including Hugo Boss and Stuart Weitzman, to the area. In 2005, developer Kent Swig entered a record deal to buy the Sheffield, an 845-unit luxury residential tower at 322 West 57th Street, and transform the property into condos. More recently, W&H Properties spent more than $82 million to renovate 250 West 57th Street, leading Mandarin Oriental and Exhale Enterprises to sign office leases there.

“I think the crossroads of the intersection are getting better and better,” said Robert Futterman, president of Robert K. Futterman and Associates. “If we were marketing [the Hearst Tower], we would come up with some interesting out-of-the-box ideas about getting it done.”

Go to chart: Class A sublease availability

With job losses announced and more predicted in the financial services industry and at businesses hit by its fallout, New York is seeing a citywide slowdown in office leasing activity that could last as long as 18 to 24 months, according to some experts.

But as direct leasing deals have become sparse, many commercial brokerages are turning to the type of deals that may become much more prevalent in coming months: subleases.

“Part of being successful in this business is being able to see ahead, and adjusting your business model to the changing market conditions,” said Bob Stella, Cresa Partners executive vice president. “You will probably see a little more disposition work for firms that are putting space on the market. Tenants are contracting rather than expanding.”

Sublease space accounted for 4.8 million square feet, or 32 percent of the available Class A office space in Manhattan in April. This figure is up from 28 percent at the end of the first quarter and 25 percent at the end of the fourth quarter of 2007.

A tally of unused space held by several big financial service tenants, calculated by Stella, estimates there is anywhere from 4 to 5 million square feet held by Citibank, Morgan Stanley and Lehman Bros. that could eventually come on the market as sublease space.

Large tenants will often keep this “shadow space,” as Stella calls it, in their portfolios, holding onto the space so it is available to them in a more expensive market once the economy rebounds.

But this may soon change.

“Major financial institutions are finally starting to reassess what their space needs are going to be over the next two to three years,” said Peter Kozel, head of research at Newmark Knight Frank.

Sublease rent can be anywhere from 15 to 50 percent lower than a direct lease at the same property, according to Andrew Wilkes, an associate broker at GVA Williams.

“Tenants who sublet are not in the market to make money; they’re not investors, they’re just looking to cut their losses,” Stella said. “They don’t have a benchmark [rent] to meet to have a certain cash flow, the way a landlord does.”

In an extreme example, a 10,000-square-foot space at 450 Park Avenue that Wilkes is brokering for the direct tenant, PNC Bank, has an asking rent of half the building’s asking rent for direct space.

PNC Bank is also subletting 21,000 square feet on four floors at Heron Tower, located at 70 East 55th Street.

In May, Crain’s reported that communications service provider British Telecom subleased 63,000 square feet at the New York Times Building from asset management company ClearBridge Advisors for around $95 per square foot. Direct rents at Forest City Ratner’s recently completed office tower are well above $100 per square foot.

Wilkes noted that PNC Bank is not downsizing, but reshuffling its space in three buildings, with a net result of an increase from 32,000 to 40,000 square feet of offices.

Factors that affect the amount of discount for a sublease include how recently the space was built out and the amount of time left on the direct tenant’s lease. If the tenant in place only has two years left, for example, it’s a less attractive deal, because once that contract terminates, the subleaser will have to renew for the full, direct lease rent. They also carry the risk the landlord will not renew.

The building owner must approve any sublease deal, and will often veto the sublease if they believe the direct tenant’s asking rent is too high, or if they have a creditworthy tenant in place that they would rather not lose, Wilkes said.

“It’s probably the most complicated type of lease agreement,” Wilkes said. “Because there are so many entities you have to satisfy.” In most cases, each party is represented by its own broker.

While large financial institutions are seen as the most likely to put sublease space on the market, brokers predict that small tenants — those looking for less than 10,000 square feet — will be the hungriest for the space.

Kozel said that small high-end private
equity firms and hedge funds have the potential to expand in this market.

Brokers say they will also target firms that deal with employment issues to fill space.

“As people get laid off, we’ve seen a lot of recruiting, human resources and consulting firms looking for space,” Wilkes said.

Despite a slowdown in leasing and an increase in vacancy in Manhattan’s
office market, asking rents continued to increase in April, according
to data from Colliers ABR. Comments

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The right partner apparently made all the difference in a successful bid for Hudson Yards.

Rupert Murdoch’s News Corporation was so central to the Related Companies’ original bid to develop Hudson Yards that its proposal was dubbed “Murdochville.” But when Murdoch dropped out, Related was forced to effectively drop its bid for the 26-acre waterfront project in February.

But Related got a second chance: While the firm lacked an anchor tenant, it did have a top-notch investment bank behind it. And so when Tishman Speyer pulled out last month, the backing of Goldman Sachs gave Related another shot at developing the massive site on Manhattan’s far West Side.

Related’s strong financial backing propelled it ahead of a Durst Organization-Vornado Realty Trust joint venture and Extell Development, said Gary Dellaverson, MTA’s chief financial officer.

The other surviving bidders, who all tried to re-enter bids after Tishman left,
evidently could not round up as much
money as Related with Goldman’s backing.

“Extell really worked very hard to address earlier bid problems,” said Dellaverson, “but Related understood that if there are difficulties in the market, it would still have to perform.”

A source affiliated with the Durst/Vornado bid, insisting on anonymity, confirmed that the joint venture did not have outside equity investors but refused to discuss whether it could have matched Related’s price. Extell did not return requests for comment.

Related accepted Tishman’s deal with only minor adjustments and signed a letter promising to build a $2 billion platform over the active rail yards only six days after Tishman gave up.

Related CEO Stephen Ross said that when News Corp. pulled out a day before second-round bids were due in March, Related had no time to rework its entire bid. At that time, the MTA was very keen on having an anchor tenant, and Tishman had Morgan Stanley as both an anchor and a backer.

Tishman lost Morgan Stanley as a partner, but went through all the negotiations and set a price of $1.054 billion.

Then it insisted on the right to walk away with few penalties if the market remained weak.

That left an opening for Related and Goldman, which didn’t need the protection that Tishman wanted, to step into a deal that had already been worked out. With Goldman Sachs’ rock-solid capital, Related could offer the same $1.054 billion and promise to build the entire rail yards, half of which the city still has to rezone.

Dellaverson, the MTA’s chief negotiator, said the agency was impressed with Related’s “desire to perform in any economy.”

The current deal also has parallels to the past: Related built the Time Warner Center on a former MTA property in the early 2000s, when economic worries also cast a cloud over big projects.

Now Goldman’s ability to fund the project means Related will not risk running short of credit or cash during the complex buildout.

“The initial platform will be financed with equity,” said Jeff Blau, Related’s president. “Goldman Sachs is our partner, but we will bring in additional limited partners throughout the process.”

Blau told The Real Deal that other investors, also likely to bring equity, would join Related later on in the project. Who they might be remains unclear, but Related has reached far and wide for investors before. In December, Goldman and others, including a fund backed by computer magnate Michael Dell and an Abu Dhabi investment group, sank $1.4 billion into Related for future big projects.

Related plans 5,500 units of housing, including affordable rents for at least 20 percent of the rentals, plus a hotel and large park connecting to the High Line and Hudson River. Ross said that the multimedia pavilion the developer presented last fall vanished when News Corp. quit the project, but he promised “a great park.” The city also needs to build a boulevard along the site.

Blau said that it helps to have investors in it for the long haul rather than lenders, a conclusion that Dellaverson shared.

“Others wouldn’t have made this choice,” Dellaverson said. “Steve Ross and the MTA are focused on the long term.”

Related has signed a series of agreements called a conditional designation letter, and has paid $11 million into escrow, said Jeremy Soffin, an MTA spokesperson.

Vornado Realty Trust’s massive build-out of the Bergen Town Center in Paramus, N.J., is one of several big retail projects currently enhancing the town’s position as the mall capital of the Tri-State area.

Vornado recently closed on a $290 million construction loan to finance a 950,000-square-foot retail expansion, part of which is scheduled to be finished in 2009. It includes a Target, a rehabbed Century 21 and a Whole Foods.

The publicly traded real estate company has leased 400,000 square feet to the three anchor tenants on the site, which sits just miles from the George Washington Bridge on the notoriously congested Route 4.

While Century 21 already has space at the retail plaza, the Target and Whole Foods will both be firsts for Paramus. A Vornado spokesperson declined to comment on the specifics of the redevelopment or to reveal any other tenants.

The expansion is expected to have a major impact on Paramus’ retail market. Real estate experts say it will bring life back to what has for years been a third-rate shopping center — though it will be at a time when consumer spending is tanking and retail rents are softening a little.

“They are taking a defunct mall and reconverting it into a hybrid mall,” said Jerry Welkis, president of Welco Realty.

This project is just the latest shopping addition to hit the already retail-obsessed town. The area is home to several big malls, including Garden State Plaza and Paramus Park, as well as to big-box stores like Ikea and Home Depot and outdoor strip shopping. The town’s location at the nexus of so many major highways (in addition to Route 4, it also sits at the juncture of the Garden State Parkway and Route 17) is credited with fueling its primacy as a shopping capital.

Many of Paramus’ destinations continue to expand. Last year, Garden State Plaza, which is owned by the Westfield Group, built a shiny new wing onto its already massive complex, in part to contain a movie theater.

The president of the Greater Paramus Chamber of Commerce, Fred Rohdieck, said on top of the Garden State Plaza and Vornado expansions, there are reports of possible expansions at Paramus Park and at several strip malls.

In addition to the Whole Foods, a Fairway Market — a beloved gourmet grocery staple on the Upper West Side, in Harlem and most recently in Red Hook — is expected to open soon in the so-called Fashion Center in Paramus. And West Elm, the popular furniture store, recently decided to take over roughly 21,000 square feet of the dated Treasure Island store while the Burlington Coat Factory just expanded its footprint in a shopping mall called the Paramus Center. Welkis, who handles many Paramus deals, noted that the Riverside Mall, which is just a few miles east of Paramus in Hackensack, recently transformed itself by adding several large upscale restaurants, including Rosa Mexicana.

Welkis said that average retail rents have been in the $30 to $40 a foot range, with a slight softening in the market in recent months because of the economic situation. He said that Bergen Town Center is on track to generate higher rents, with parts of the new expansion expected to go for $40 to $50 a square foot.

While Paramus is a strong retail hub, it has had to overcome several challenges. The municipality is subject to
Bergen County’s legendary blue laws, legislation mandating that stores stay closed on Sundays, and has competition from the Palisades Center in West Nyack, N.Y., one of the biggest malls in the country. But Welkis said the Palisades Center has not had much of an impact on Paramus’ retail activity. That may be since New Jersey doesn’t charge sales tax on clothing or shoes.

While the blue laws, which are stricter in Paramus than in the rest of Bergen County, are the only ones of their kind in New Jersey or the metro area, Welkis said several Paramus retailers are among the top sales stores in the region. While there have been several referendums to do away with the laws, county and town residents consistently vote them down. “Most major retailers in Paramus have two stores, and they are usually in the top 10 to 20 percent in sales,” Welkis said.

Bigger isn’t necessarily pricier when it comes to industrial space in the five boroughs.

In fact, smaller, one-floor industrial spaces — those between 5,000 and 10,000 square feet — have seen prices rise over the past few years, while prices at larger, multi-story properties, namely, those between 40,000 and 100,000 square feet, have stagnated.

“There’s a shortage of small space,” said John Ritter, principal at Sholom & Zuckerbrot Realty.

For example, in 2007, single-floor, smaller warehouse spaces sold for an average of about $200 to $300 per square foot in Brooklyn, while larger industrial buildings sold for $100 to $150 per square foot, said Ofer Cohen, managing director of Terra CRG, a commercial realty group that specializes in Brooklyn industrial property.

“There’s a lot less industrial inventory, and the same or more industrial business,” he said.

The price disparity between large and small industrial spaces in the five boroughs speaks to the shift in the kind of business that’s being done in the city now. With the large factories of New York’s past virtually obsolete, the remaining businesses tend to be small service companies, such as electricians, mechanics, heating, air conditioning, ventilating, metal manufacturing and importers of specialty foods that don’t need massive, multi-story space.

And while the subprime mortgage debacle has caused a tighter lending environment for all developers and real estate investors, industrial landowners have managed to escape the market downturn relatively unscathed. Ritter said that some business owners have had to pay more interest on their loans, but overall, the properties tend to receive financing by industrial revenue bonds — government-issued bonds that have remained pretty much unaffected by the credit crunch. And, operations that haven’t been able to obtain loans with affordable interest rates have leased space, which has driven up rental rates.

Others who follow the sector say the market is tight. “Based on my recent conversations with brokers and manufacturers, I can say that industrial vacancy rates in the five boroughs are extremely low right now — perhaps an all-time low,” said Jonathan Bowles, director of the Center for an Urban Future. (He said he has been unsuccessful in numerous attempts to obtain exact citywide statistics.)

As a bellwether of the industry, Bowles pointed to the vacancy rates at city-owned industrial properties such as Brooklyn Army Terminal and Brooklyn Navy Yard, where 95 to 100 percent of all usable space is occupied. In a 2006 report he co-authored, he pegged the industrial vacancy rate in Sunset Park, Brooklyn, one of the most popular areas for the market, at 1 percent.

One factor, he said, is that smaller companies often need to be within the five boroughs to maximize efficiency.

Abe Retek, president of Artek Sewing Supplies, was recently forced to give up his lease on a rental space on 25th Street between Sixth and Seventh avenues in Manhattan, where his business has been since the mid-1970s. His landlord, he said, intends to rent the space to an upscale retail business.

Now Retek is trying to quickly find a Brooklyn home for his mid-size business — a 15,000- to 20,000-square-foot space. While it would be cheaper for him to move outside the city’s borders, a Brooklyn spot would provide an easier commute for all the company’s employees. Retek said he has noticed that the bigger the space, the better the deal per square foot.

Retek said that from about 16th to 29th streets on the West Side, an area that used to be home to many manufacturers, industrial properties have been converting to retail spaces for posh, brand-name stores. He noted that he wanted to buy so that he doesn’t get “kicked out” ever again.

Indeed, Brooklyn is the most popular borough for industrial sales, according to Cohen of Terra CRG. The most popular regions in that borough for industrial property sales include Park Slope, Williamsburg and Sunset Park, according to a recent company report.

According to the Terra CRG report, there was no reduction in sales volume for industrial properties in Brooklyn between 2006 and 2007, the most recent figures available. The average size — in terms of price of each sale — was down, but the overall median price per square foot rose by 15 percent, the report said.

For example, the average price per square foot in Williamsburg spiked from $141 to $217, and in Sunset Park went from $190 to $205. Greenpoint also saw a rise in price per square foot, going from $179 to $198. Bedford-Stuyvesant/Brownsville proved the exception, where industrial property lost value, dropping from $115 per square foot to $91. (The Terra CRG study did not break down the prices according to the space’s overall size.)

Meanwhile, one-story buildings in the Bronx are renting for $12 per square foot, and are going for an average of $15 per square foot in parts of Queens, Sholom & Zuckerbrot’s Ritter said.

David Harari of GLI Pro, a D.J. equipment shop, said his 24,000-square-foot Coney Island building has attracted generous offers from businesses who want to rent it out. One problem: He likes his location, and can’t seem to find another property for sale that fits his needs — a warehouse with high, big doors and some office space.

“My gut sense is to stay where I am and see where the market goes,” he said.

Currently, the market is being driven
by tight supply, resulting from residential re-zoning and a rise in demand for
ground-floor warehouse space by importers, Cohen said.

Ritter, too, pointed to the city’s vast number of food producers and manufacturers as one constant among the region’s industries. Different ethnic groups demand certain foods from their home countries, leading to an outgrowth of many small food importers throughout the city.

In the meantime, the five boroughs have been losing industrial property at a rapid clip as buyers often eye multi-story industrial buildings for uses other than manufacturing. Indeed, some 30 to 35 percent of all such spaces have disappeared in the past decade, Ritter said.

Most have either been re-zoned as residential space, or converted into structures such as schools, nonprofit offices, self-storage space and hotels.

Investors, for example, have subdivided some of these structures into smaller spaces and leased them out as offices. Also, especially in trendy areas such as Williamsburg, developers have converted these buildings into office lofts and artists’ studios.

Meanwhile, larger industrial shops also tend to be more flexible when it comes to location, and often look outside the city’s borders to spots such as Westchester, Long Island and New Jersey.

“Once [you're] over 15,000 square feet, you can’t look locally. You have to look regionally,” Ritter said. “Space is a lot cheaper in New Jersey.”

Still, the loss of industrial property within the five boroughs has outpaced the exodus of business, causing demand to be greater than supply.

In the outer boroughs, the industrial property vacancy rate is less than 3 percent for spaces more than 225,000 square feet, said Ritter.

The bottom line: It’s unlikely that prices in the city will drop anytime soon. “One should buy if they’re financially stable,” Harari said. “What pushed me to buy was that my landlord kept asking for more money.”

Manhattan may be somewhat insulated from the current housing doom and gloom, but the Hamptons have started to see real signs of softening. According to a report released by Miller Samuel and Prudential Douglas Elliman, inventory was up by 27.2 percent and sales were down by 42.4 percent in the Hamptons in the first quarter of 2008 compared to a year prior. Properties are staying on the market significantly longer, for an average of 181 days, 41 more than last year.

Still, the real estate game rolls on. So on a Saturday in early May, The Real Deal visited five open houses — three in East Hampton north of the highway, which is often the first area to soften when the market turns, and two in Sag Harbor — hoping to chat with buyers and brokers about how the credit crisis and housing bubble bust have hit the Hamptons. But there was a problem: There were almost no buyers. At house after house, sign-in sheets were practically bare, and brokers stood bored, taking personal calls to fill the time.

“In the city, you still get maybe 40 potential buyers at an open house,” said Jennifer Kalish, an agent with Prudential Douglas Elliman, who was selling her own second home at 23 Fetlock Drive in East Hampton. “Not out here.” Kalish said these days she typically sees about 10 people at her open houses, but that often as many as half of those are neighbors, not potential buyers.

Brokers said the market had definitely slowed, but called Saturday’s ghost town somewhat unusual. The weather was spotty and it was the day before Mother’s Day, a double whammy.

In addition, according to Rick Hoffman, regional senior vice president in Corcoran’s East End office, the $1 million to $3 million price range is where the bulk of the area inventory is, so open houses in that range tend to be less crowded because there are more of them.

“We’re definitely not having a fire sale in the Hamptons,” said Hoffman, who was not hosting one of the open houses. “But we are transitioning to a little more of a buyers’ market. People are looking for those big bargains, and this is the price range where there is the most negotiability.”

At 13 Wigwam Lane, a 2,500-square-foot home in the Northwest Woods section of East Hampton priced at $1.05 million, one Manhattan couple, who asked not to be named, seemed to intuit the results of the Douglas Elliman report.

“Houses aren’t moving out here,” said the man, who works in film. “There’s a real air of desperation among brokers. I think sellers are still in this fantasy land where they think they can get 40 or 50 percent back on their investment — it’s not realistic.”

The couple said they’d been renting in East Hampton for several years and now that they’ve started a family — their infant son was in tow — they’re looking to buy a place. But, they’re in no rush.

“As a buyer, there’s less pressure,” the husband said. “It’s not like four years ago when everyone was desperate to get into the market.”

His wife said that after seeing a few houses in the $1 million range, they’ve started considering getting something at more like $800,000 and renovating to suit their needs. “I want a pool and at least three bedrooms,” she said.

Inside 13 Wigwam, Prudential Douglas Elliman broker Laura Lavergne said the house, which was new to the market, had been a second home for a Long Island couple who were leaving New York. Built in 1980, it had four bedrooms and two-and-a-half bathrooms. Amenities like a pool and an acre of land, part of which abuts a natural reserve, were draws, but even Lavergne admitted that the inside of the property needed work.

The kitchen and bathroom counters were dated, the white walls were scuffed in places, and though the five ground-level sliding glass doors in the great room flooded the first floor with light, they showed signs of wear.

“Some builders have been by,” said Lavergne, suggesting that someone in construction could be interesting in buying and upgrading it. “They see the potential.”

About two miles away, up a steep gravel driveway and tucked inside a grove of oak trees and azaleas, sat 64 Three Mile Harbor Road, a 2,600-square-foot four-bedroom, three-bathroom home selling for $1.1 million. According to broker James Keogh of Prudential Douglas Elliman, the house had been on the market about a month and was initially listed at $1.3 million.

The sellers, an older couple who used it as a second home, were moving to Florida to be closer to their son. Keogh said the price drop reflected the couple’s increased motivation to sell.

Like 13 Wigwam, 64 Three Mile Harbor boasted an in-ground pool and was surrounded by old-growth trees. There was a sound system throughout the house, including on the wooden pool deck, and stainless steel appliances in the kitchen. Drawbacks were cracked and stained countertops, a damp smell on the lower level, and mismatched carpet in the various bedrooms. But touches like French doors between the kitchen and dining room, a cathedral ceiling above the sunken living room, and a view of the boats bobbing on Three Mile Harbor added charm.

“I’d update the kitchen,” admitted Keogh. “But a lot of people just come out for the weekends and don’t want to spend the money.”

While waiting for potential buyers, none of whom showed up in the 45 minutes a reporter was there, Keogh mused about the slow market.

“I bet we see offers around $999,000,” he said. “We’ve been getting a lot of low-ball offers, a lot of people looking to negotiate. A lot of people are still testing the market.”

Keogh said he had one interested buyer the week before, but the man didn’t pull the trigger because he was concerned about road noise between the house and the harbor.

“He’s from the city and he’s trying to get away from that,” said Keogh. “So he’s still looking around on his own.”

Asked if sellers are getting anxious, Keogh shrugged. “Most everything out here is a second home, so they don’t need to sell,” he said. “Plus, the rental market here is so good, that’s always a backup.”

At 47 Cliff Drive in Sag Harbor, the sellers are considering just that.

The $1.4 million “beach shack” overlooking Noyack Bay is also listed as a summer rental for $32,000. At 1,400 square feet and only three bedrooms, 47 Cliff was
the smallest of the five houses and the only one without
a pool (though Prudential Douglas Elliman broker
Samantha Brown said permits were in place should the buyer want to put one in). It also had no pretensions of modern décor. Still, the kitchen had granite tile countertops, and the owners had recently installed solar panels on the roof, which, said Brown, resulted in energy bills of about $8 a month.

Despite these amenities, at just minutes before 5 p.m., when her open house was set to end, Brown’s sign-in sheet had only one name on it.

Up the block was 9 Cliff Drive, with two-story columns at the entrance to the 3,000-square-foot home built just last year. Apparently, little expense was spared. The floors were bamboo, the countertops a powder-blue sandstone, and the tile work in the kitchen and all three bathrooms was customized. The open kitchen, dining room and living room looked out over an unobstructed view of the bay, and a floating granite and stainless steel staircase wound upstairs to the master bedroom and “lounge.”

“This house is great for entertaining,” said Prudential Douglas Elliman broker Susan Marlow, gesturing over one of the home’s many balconies.

At just before 5 p.m., when the open house was scheduled to close, Marlow’s sign-in sheet also reflected only one previous visitor. A few minutes after 5, a couple and a mother-daughter pair came in, but took a quick look and promptly left, declining to speak to a reporter.

The house was listed at $2.68 million, but Marlow said she may try to get the seller — whom she described as “anxious to sell” — to take it down a bit. “In this market, you have to be priced exactly right,” she said.

Nobody knows that better than Kalish, who bought her bought her home in East Hampton two years ago for $1.2 million, then spent the next year “gut-renovating” the place. She blew out walls, lifted floors and installed travertine tile in the bathrooms and dark maple flooring throughout the massive main floor. All the appliances are state-of-the-art, and Kalish added some clever and dramatic details, like a pull-down step below the sink in the kid’s bathroom, and the ceiling-high stone fireplace that serves as the main floor’s focal point.

Kalish and her husband put the house on the market at $2.3 million in the fall of 2007, but the economic slowdown forced them to reconsider the price.

“My husband and I were like, ‘OK, the market slowed down; let’s price it to sell,’” she said.

The four-bedroom, four-bathroom home is now on the market for $2.1 million. Kalish, who has two small children and is thinking about another, said she’s heartbroken about leaving the house, but that with all the city activities her kids are involved in, it’s getting harder to get out of town often enough to justify the extra property.

“Now, we’re just looking to get out and give it to a nice couple,” said Kalish.

Manhattan

Chelsea

$980,000

85 Eighth Avenue

2-bedroom, 1-bath, 790 sf co-op in postwar elevator building (the Thomas Eddy); 24-hr doorman, concierge; hardwood floors, renovated kitchen with stainless steel appliances, custom-designed dining banquet, renovated marble bath, central air, Juliet balcony, northern and southern exposures with courtyard views; building has roof deck, storage and laundry; maintenance $1,176; 58 percent tax-deductible; four weeks on the market. (Brokers: Bill Smith, Bellmarc; Joseph Tedo, Corcoran)

East Village

$520,000

334 East 5th Street

1-bedroom, 1-bath, 600 sf co-op in prewar walkup; floor-through unit has refinished hardwood floors, exposed brick, decorative fireplace, northern and southern exposures with garden views; pet-friendly building has recently restored brick façade; maintenance $720; 50 percent tax-deductible; asking price $499,000; four weeks on the market. (Brokers: Jon Varnedoe, Seth Levine, Prudential Douglas Elliman)

Gramercy

$620,000

340 East 23rd Street

Studio co-op in new construction building (the Gramercy); 24-hr doorman, concierge; building has fitness room, roof deck and meeting room; common charges $380; taxes $610; asking price $620,000; six months on the market. (Brokers: Shvo Group Marketing; Uni Cregan, Century 21 NY Metro)

Harlem

$535,000

1825 Madison Avenue

3-bedroom, 2-bath, 1,205 sf co-op in new construction building; 24-hr doorman; two balconies with glass doors, master bedroom with private bathroom and walk-in closet, southern exposure; pet-friendly building has courtyard, common storage, garage, gym, laundry and recreation lounge; maintenance $1,646; 35 percent tax-deductible; asking price $645,000; 16 weeks on the market. (Broker: Irene Apelbaum, Weichert Realtors Mazzeo Agency)

Harlem

$505,000

2279 Third Avenue

1-bedroom, 1-bath, 745 sf condo in new construction building (the Bridges NYC); 10-foot ceilings, hardwood floors, washer/dryer, kitchen has smoked glass and custom aluminum cabinetry; common charges $375; taxes $204 per year (abated); asking price $505,000. (Brokers: Leo Muñoz, Sidney Whelan, Halstead Property)

Harlem

$447,000

70 Haven Avenue

2-bedroom, 1-bath, 835 sf co-op in prewar elevator building; stainless steel appliances, granite counters, oak wood floors; maintenance $718 per month; 40 percent tax-deductible; asking price $489,000; 48 weeks on the market. (Brokers: Maria McCallister, Barak Realty; Kelly Cole, Corcoran)

Harlem

$260,000

660 Riverside Drive

346 sf studio condo in prewar elevator building; part-time doorman; stainless steel appliances, granite counters, hardwood floors, northwestern exposure; common charges $370; asking price $272,000; 18 weeks on the market. (Brokers: Mary Jo, Rob Kravath, Amy Casey, Barak Realty)

Lower Manhattan

$2.08 million

20 Pine Street

2-bedroom, 2-bath, 1,444 sf condo in converted prewar building (the Collection); building has health club, pool, roof deck, lounge; common charges $1,331; taxes $0 (abated); asking price $2.08 million; two months on the market. (Brokers: Corey Wecler, City Connections; Shvo Group Marketing)

Lower Manhattan

$1.53 million

88 Greenwich Street

2-bedroom, 2-bath, 1,200 sf condo in modern conversion building (the Greenwich Club); 24-hr doorman, concierge; high ceilings, central air, stainless steel kitchen appliances, bathroom has marble countertops and limestone floors; building has laundry, health club, roof deck, game room, restaurant and lounge; common charges $1,167; asking price $1.53 million; 40 days on the market. (Broker: Tom Doyle, Bond New York)

Lower Manhattan

$395,000

300 Albany Street

550 sf studio condo in postwar elevator building (Hudson View West); 24-hr doorman; parquet floors, dining area, central air, dishwasher, western exposure with courtyard views; building has parking garage and laundry; common charges $1,005; taxes $488; four weeks on the market. (Broker: Maggie Hart, Bellmarc Realty)

Midtown East

$958,800

235 East 57th Street

1-bedroom, 1-bath, 1,200 sf co-op in postwar elevator building; modern kitchen, bedroom with southern exposure, side-wrap terrace has open city views; building is cat-friendly; maintenance $1,685; 46 percent tax-deductible; 21 weeks on the market. (Brokers: Donna Lentol, Warburg Realty Partnership; Viktoria Doma, Mark David)

Midtown East

$670,000

212 East 47th Street

1-bedroom, 1-bath, 690 sf condo in postwar elevator building; building has bicycle room, parking garage, fitness room, laundry, lounge, roof deck and common storage; common charges $567 per month; taxes $9,168; asking price $670,000; seven days on the market. (Brokers: Sophine Hung, Century 21 NY Metro; Corcoran Group)

Upper East Side

$2.05 million

10 East End Avenue

4-bedroom, 3.5-bath, 2,450 sf co-op in postwar elevator building; 24-hr doorman, concierge; large black granite entryway; marble master bath has double Jacuzzi, eastern exposure with river views; maintenance $3,568; 50 percent tax-deductible; asking price $2.85 million; 60 weeks on the market. (Brokers: John McCabe, Weichert Realtors Mazzeo Agency; Doreen Courtright, Corcoran Group)

Upper East Side

$505,000

205 East 68th Street

450 sf studio condo in postwar elevator building (Trump Palace Townhouses); 24-hr doorman, concierge; building has parking garage, outdoor play area, fitness center; common charges $613; taxes $500 per month; asking price $525,000; six months on the market. (Broker: Peter Kroll, City Connections Realty)

Upper West Side

$2.2 million

201 West 70th Street

3-bedroom, 2-bath 1,500 sf co-op in postwar elevator building; 24-hr doorman, concierge; oak wood floors, two private balconies, eastern exposure with city views; newly renovated kitchen has custom cherry wood cabinetry and granite countertops; pet-friendly building has private garden, gym, garage, common roof deck, laundry; maintenance $1,975; 57 percent tax-deductible; asking price $1.995 million; 10 days on the market. (Brokers: Kristina Ojdanic, Greg Kammerer, Corcoran Group)

West Village

$560,000

99 Bank Street

520 sf studio co-op in prewar elevator building; part-time doorman; hardwood floors, high ceilings, open views of Downtown; building has laundry; maintenance $732; 50 percent tax-deductible; asking price $549,000; one week on the market. (Broker: Danielle Sevier, JC DeNiro)

Brooklyn

Clinton Hill

$264,870

191 Willoughby Avenue

500 sf studio co-op in postwar elevator building; 24-hr doorman; hardwood floors with base molding, newly renovated bathroom, kitchen has wood cabinetry, granite countertops, breakfast bar; building has laundry, on-site parking and fitness center; maintenance $390; 17 weeks on the market. (Brokers: Jacquelynn Rossiter, Brown Harris Stevens; Jacob Elmann, Mark David)

Dumbo

$2.6 million

31 Washington Street

5,185 sf studio loft condo in prewar building; common charges $950; taxes $210; asking price $2.8 million; 20 weeks on the market. (Brokers: Lauren Caputo, Century 21 NY Metro; Halstead Property)

East Williamsburg

$446,250

158 Manhattan Avenue

1-bedroom, 1-bath, 1,000 sf condo in new construction building; hardwood floors, high ceilings, two exposures, central air, roof deck; common charges $195 per month; taxes $168 per year (abated); asking price $446,250; three weeks on the market. (Brokers: Jennifer Lee, Molly Townsend, the Developers Group)

Greenpoint

$730,000

460 Manhattan Avenue

2-bedroom, 2-bath, 1,143 sf condo in new construction elevator building; hardwood floors, central air, windowed kitchen, roof deck; common charges $335; taxes $576 per year (abated); asking price $739,000; eight weeks on the market. (Broker: Rachel Poggi, the Developers Group)

Williamsburg

$1.135 million

30 Bayard Street

3-bedroom, 2-bath, 1,410 sf condo in new construction elevator building (the Aurora); 24-hr doorman; hardwood floors, terrace, city views; building has roof deck and gym; common charges $1,088; taxes $162 per year (abated); asking price$1.135 million; 20 weeks on the market. (Broker: Binnie Robinson, the Developers Group)

Queens

Long Island City

$635,720

41-26 27th Street

2-bedroom, 2-bath, 1,033 sf condo in new construction elevator building (View 59); part-time doorman; terrace, washer and dryer; building has roof deck, storage, laundry and health club; common charges $640; taxes $39 per year (abated); asking price $598,000; one day on the market. (Broker: Jessica Pfeiffer, the Developers Group)

President of Stribling & Associates, a high-end New York City
residential firm with 200 brokers, including her daughter Elizabeth Ann
Kivlan. The company does about 600 deals annually totaling more than $1
billion. The company is the exclusive sales agent for the Plaza Hotel
Residences. Stribling founded the company in 1980 with partner Connie
Tysen. Comments

• Print

Some real estate pros think the co-op application process could be simplified with a standardized application. REBNY decided at its May meeting to form a subcommittee that will work on the
uniform application in September, when the council reconvenes. Comments

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The recent news that the town of Westhampton Beach is considering allowing the first-ever East End “eruv” to be installed for the Orthodox and observant Jewish community already has real estate experts predicting a change in demographics there — and a possible increase in property values.

Eruvs —a demarcation made by thin, nearly invisible wires that are strung high above the ground between utility poles to create a symbolic boundary of private space around a neighborhood — are in high demand among Orthodox and some other observant Jews because they authorize certain privileges, like carrying personal belongings and pushing a baby carriage, that are otherwise banned in public areas on the Sabbath.

In the past, the existence of an eruv in certain neighborhoods has translated into more desire for homes within the zone.

In Sunnyside, Queens, when a shrinking congregation wanted to attract younger members, its rabbi suggested — and happily discovered — that an eruv would do the trick because Jews would move to the area to be within walking distance of their synagogue. In Manhattan, real estate brokers have speculated that an eruv that was extended southward in June 2007, to Houston Street, could shift populations.

“For a portion of the Orthodox community, an eruv is a necessity; many won’t live in an area without one,” said Greg Corbin, a commercial sales director at Massey Knakal who is observant. “So, like anything else, it is a case of supply and demand. Eruv area equals more demand, which obviously increases property values [and] raises the price of all real estate, commercial and residential.”

Discussion of an eruv in Westhampton Beach has incited some controversy. According to several published reports, some Westhampton residents have expressed concern that it will attract too many Orthodox Jews; others have taken issue with it because they regard it as a religious symbol.

Westhampton Beach’s mayor, Conrad Teller, has rebutted the latter concern on the town’s Web site, writing: “It is a religious accommodation, not a religious symbol, protected by the Constitution.”

Judging by the eruvs in the five boroughs, a symbolic boundary in Westhampton could play an important role in marketing an area even if it doesn’t translate into higher property prices overnight.

Since 1994, the Upper West Side has had an eruv extending from 57th Street to 112th Street. In 2004, the eruv was extended east to the FDR. And last summer, upon the request of a group of rabbis and congregations, it was extended again, this time southward to Houston Street between First and Sixth avenues. In Brooklyn, eruvs surround Borough Park, Flatbush, Brooklyn Heights and Park Slope.

Julie Friedman, an executive vice president with Bellmarc Realty who is observant and lives in the Gramercy-Murray Hill neighborhood, was part of her synagogue’s effort to extend the eruv and said it may reshape the Jewish community in the area.

“People were being stymied by the lack of an eruv, and living in the community was a deficit and a hardship for those who follow eruv laws,” Friedman said. “The inverse relationship would be: So now that the eruv is here, it would naturally inflate the price since there’s no longer that obstacle of hardship?”

Five years ago, Friedman moved her family — she has three boys under age 10 — to the Murray Hill area from East 75th Street, attracted by the more affordable and spacious neighborhood. “I try, when I sell, to let people know that I am the profile buyer,” she said.

It is still too premature to evaluate how property values in Gramercy-Murray Hill have been affected by the eruv in the last 10 months, especially since the area is a prime destination without the eruv, Friedman said. She added that now when a listing comes on the market in her neighborhood and she has a family to show it to, she’ll include that it’s located in an eruv zone.

Rabbi Gideon Shloush of Temple Adereth El on East 29th Street said brokers generally take note. “It’s really something for people in the real estate field to pay attention to as they’re speaking to religious Jewish families,” Shloush said. “What do families look for? Religious families are going to look for nice apartments, a good neighborhood, an eruv, a community synagogue, kosher restaurants — all the stuff we have.”

Shloush said getting permission from the city’s Department of Transportation for the eruv’s two-year installation process “was a natural development, because our numbers are increasing.”

The Department of Transportation posts a series of rules for eruv installation on its Web site. The applicant is responsible for the installation and maintenance and must cover all associated costs.

Betty-Ann Weiner, the executive director of the Young Israel of Sunnyside, said the eruv has changed the face of its congregation. In the last four years, it has grown to nearly 70 people from about half that. And, after the eruv was installed last August, Weiner said she’s seen five families move to the neighborhood.

Weiner said two houses recently sold for thousands over their asking prices — one went for $650,000, up from $585,000, and the other for $950,000, up from $875,000 — with observant Jewish families in the bidding.

Felice Gross, a vice president at Brown Harris Stevens who is observant, said an eruv can impact suburban or outer borough property values far more than those on the Upper West Side and Upper East Side, where real estate is already at maximum demand.

“There’s just such a tremendous need [for an eruv] in suburban areas,” Gross said. “There’s more sprawl. People really want to live within walking distance of a certain area, and that combined with an eruv completes the picture.”

Corbin, the broker from Massey Knakal, pointed to Waterbury, Conn., a town where a rabbi began an Orthodox Jewish community in 2001 by building a synagogue
and eruv.

“In the beginning, five- and six-bedroom [homes] could be bought for $150,000. Last year, they came close to doubling — property values were up nearly 100 percent,” Corbin said. The local 7-Eleven convenience store now serves kosher Slurpees, and the ShopRite grocery store recently expanded its kosher section.

“People are speculating that years down the road, many new businesses will open [and] eventually, people might be priced out of [the] neighborhood,” he added.

What an eruv will mean to property values in Westhampton Beach if it comes in remains to be seen, but for Friedman, the idea is a no-brainer.

“Having [an eruv] in the Hamptons is a natural outgrowth to where many members [of New York
synagogues] summer,” she said. “It will definitely be a boost to the community.”

Two former Prudential Douglas Elliman agents, Jane Klaris and Diana Cannon, filed a federal lawsuit
claiming that they were treated by the firm as full-time employees but
didn’t receive the annual salary plus commissions they expected for
working on-site at a new development. [more]

Broker Jacky Teplitzky has seen her star rise at Prudential Douglas Elliman, culminating with her recent snagging of the firm’s award for top sales group. She recently moved into an Upper East Side apartment uniquely designed to complement the needs of her brokerage career as well as her family life.

Teplitzky worked with her husband, Max Dobens, a broker on her sales team, to convert the interior of their modern condo in Maison East at 1438 Third Avenue and 81st Street to be reminiscent of a prewar apartment, with a distinct separation between public and private space.

The 2,427-square-foot apartment, which they moved into with their two sons in January, has a wide gallery ending in a foyer that leads into an expansive, open living room and dining area in one direction and into a wing with four bedrooms and a home office in the other.

“I like the prewar layout, but I don’t necessarily like prewar buildings,” said Teplitzky, whose design taste also runs toward a distinctive blend of classic and contemporary. “Most of the apartments in prewar buildings are dark, and they don’t have many windows. I love light and sun.”

The apartment, which according to public records closed for $3.15 million, is an upgrade for the couple. It is significantly bigger than their old apartment, which was around the corner on 84th and First Avenue. And Teplitzky discovered it on the job while selling units there.

The road to top sales group has not been a linear one for Teplitzky. She was born in Chile and moved to Israel as a young girl after her father, a soccer player, competed in a tournament there and became enamored with the county. She served as a sergeant in the Israeli army as a teenager and then went to work for a tourism company.

When she moved to New York, she was working in tourism and got into real estate by happenstance: After she and Dobens purchased their first apartment, the broker told her she would make a good agent because she was a tough negotiator. She started out at MLBKaye International Realty and then moved to the Corcoran Group, where her husband joined her team, before starting at Prudential Douglas Elliman, where she has not only made a name for herself through sales, but has also aggressively courted publicity to
become a boldface name.

And she is using her apartment to further advance her success. She has already started entertaining clients there, despite the fact that she just finished decorating last month. She’s hosted dinner for a client from Ireland as well as for all the people she sold apartments to in the building.

Dobens, who has extensive experience in townhouse sales, made some structural alterations to the 24th-floor apartment, which has a number of large windows facing north, east and west along with three balconies, including a wrap-around. One of the key changes he made to the unit was closing off entrances to the kitchen and the dining room from the bedrooms to create some separation.

“Max was actually the architect of this apartment,” Teplitzky said. “I spent more time on the design.”

With the kitchen opening into the dining and living room areas, the apartment is used to entertain as many as 20 people at a time.

“One thing that was critical for Jacky and me was a proper formal dining room,” Dobens said. “I say ‘formal dining room,’ but there are not really walls per se. The dining room is separated from the kitchen by a counter and some hanging cabinets. The kitchen, living room and dining room are one big loft-like area, and that’s a key factor in the way we live and entertain.”

But even this airy, contemporary space has a prewar touch: The couple added crown moldings, which actually hang off the ceiling at the windows, to delineate the borders of the dining and living rooms. The moldings have the visual effect of making the postwar ceilings seem much higher than they actually are, Teplitzky said.

Teplitzky worked closely with interior designer Jeannine Williams to create a multipurpose area that could be used by the family but also serve as an elegant entertaining space. The focal point of the room — a blend of soft greens, yellows, oranges, reds and touches of blue — is a chandelier that Teplitzky had custom-made by craftsman Arthur Baruch by combining two chandeliers.

“[I] spent the first five years of my life with my grandparents,” she said. “The only thing I remember to this day from their house is the dining room with this nice drop chandelier. I always said to myself, ‘If I ever make enough money, one day, I’m going to have my drop chandelier similar to the one at my grandparents’ house.’”

The chandelier hangs over a Ralph Lauren walnut dining room table with an Art Deco-style ebony inlay.

The chairs, refined but comfortable, are upholstered in a nailed and tufted pear-colored green silk/linen brocade, done by Katsch Upholstery in the Bronx.

“The chairs had to be versatile to shift between feeling dressy enough to entertain at the table and casual enough so the family could have their breakfast there every morning,” Williams said.

In the kitchen is a bar where Teplitzky’s sons Aiden, 13, and Sean, 10, can sit on stools and watch the flat-screen television.

The couple kept some of the finishes offered by the developer and swapped others out for their own, Teplitzky said.

For instance, a rather small refrigerator was replaced with a 42-inch Sub-Zero (Dobens also added a 138-bottle Sub-Zero wine cooler), and the light oak wood floors throughout the apartment were stained a deep red, hinting at mahogany.

“I always look at the resale value,” Teplitzky said. “I decided with the mentality that you can never know what might happen, that the improvements we were going to make would be improvements that another person would appreciate, like the crown moldings. We changed the floor stain because all of the apartments in this building have the light stain, so people would come here and think this apartment looks different, which adds to its value.”

The couple also layered otherwise plain walls in the kitchen with glass tile in green, yellow and cream, and added an iridescent Venetian plaster to the walls of the powder room, to complement the marble included by the developer.

Teplitzky said on May 19 the final piece of furniture arrived: a low settee of mahogany with gold detail from Agostino upholstered in tangerine orange silk and linen damask by Christopher Hyland.

“I wanted people to walk into this room and look out and say, ‘Wow, what a view,’” she said. “If we had put two chairs with high backs, your eye would go to the chairs. So we chose the settee instead.”

Opposite are two custom-made armchairs upholstered in corn yellow accompanied by two delicate brass tables with rosewood inlay shelves on the top and bottom from Henredon. Many of the items in the room have touches of brass, including an ornate rolling tea table that the couple found in New Orleans.

Teplitzky placed colorful art from Chile throughout the apartment, and chose an Egyptian blue sofa to complement a painting hanging above it. Two blue vases in the entrance gallery hint at the blue themes, which predominate in the private wing of the apartment. Teplitzky said she encouraged her sons to become involved in picking their own designs for their rooms.

“Most parents decide on behalf of their kids what they’re going to do,” she said. “We didn’t. We didn’t want to be in a situation where they say later, ‘I hate this.’ We wanted this to be their personality.”

Sean went for a colorful feel with a focus on soccer and music, while Aiden’s room has a cutting-edge synthetic desk, where he does his homework and works on the computer. Both have custom-made closets and flat-screen televisions.

In the master suite, two spaces were created: a sitting room and a bedroom. In addition to the bed, wool and silk handwoven carpets by Carini Lang and a smoky reverse-painted glass-panel-framed dressing mirror by Shehadi Mirrors are also focal points.

Teplitzky and Dobens each have a custom-made closet, hers a walk-in with track lighting. Because the couple wanted their apartment to smooth away any ruffles in their marriage — “we were sharing a closet before, and we were fighting,” laughed Teplitzky — they also built a home office.

“In our previous apartment, our office was within the master bedroom,” she said. “And Max and I have different cycles. Max is a morning person, and I am an evening person, so he’d go to bed at 11 p.m., and I’d be up with the light on until 2 a.m. We knew if we ever moved, we’d have a separate office.”

That space, next to the master bedroom, has an old-world feel with antiqued file cabinets and a desk by ABC Carpet & Home. The desk is situated in front of a large window in a spot that makes it easy to swivel around and see who’s coming in.

“That’s important, especially because when you’re working at home, sometimes the kids come in right in the middle of negotiations over a $20 million apartment,” laughed Teplitzky.

With the traditionally sluggish summer season upon us, the advent of
the credit crisis not too far behind and inventory piling up, real
estate brokers are bracing themselves for what could be a particularly
slow few months. Comments

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Building in New York City hasn’t gotten cheaper and with buyers expecting an increasing amount of amenities and high-quality finishes, cutting condo sales prices is nearly impossible.

Developers generally do not want to raise the curtain on their budgets, but HJ Development provided The Real Deal with a detailed projected budget for its condo conversion of a rental building at 211 East 51st Street, nearly finished as of the middle of last month.

The cost to renovate the 76,500-square-foot building (purchased on May 4, 2007) is roughly $76 million: $46 million for acquisition, $16 million for hard costs including material and labor, and $14 million for soft costs including financing, brokerage and professional fees.

Total cost for an average 856-square-foot one-bedroom apartment (photos are of an 868-square-foot unit): $1,041,096. Average home asking price: $1.1 million. Profit: $58,904 or 5.7 percent.

That is a low rate of return, but developer Henry Justin said he still expects to earn his usual 10 to 15 percent profit, still relatively low, on the whole project by factoring in the commercial units. Asking prices for the commercial units are $2.7 million for one (under contract) and $2.8 million for each of the other two.

The 14-story building has 73 residential units, three commercial condos and 34 storage spaces. The apartments run from 505 square feet to 2,405 square feet with one to three bedrooms, eight units with terraces. The storage units, to be sold on a first-come, first-serve basis, cost around $19,950 each. As of mid-May, 11 units were under contract and closings are slated to begin next month.

One thing was apparent from the line-by-line budget: developers have to allot funds for even the smallest things such as robe hooks ($200 each). And the developer said he prefers to use high-end materials and fixtures.

“This will show you why prices can’t drop 10 or 20 percent,” Justin said.

He is able to cut costs, however, when it comes to construction since he is the developer and the general contractor.

But, a budget is not set in stone.

“I’ve never met a project where you don’t exceed a budget,” Justin said, and by press time 211 East 51st Street had increased to $76,227,000 from $74,226,500.

The price of (nearly) everything

The following is a breakdown of the costs for finishes and fixtures in a sample apartment, 4D, a 505-square-foot, one-bedroom condo, with an asking price of $650,000, in HJ Development’s 211 East 51st Street. The costs, provided to The Real Deal by the developer, include the price of the items, but not the labor involved or shared building costs. Many items can be found in all units, regardless of size. (The pictures displayed are actually of a standard 868-square-foot apartment.)

Bathroom

Vanity: Polished chrome with white polished three-quarter inch Bianco Dolomiti marble counter and custom-made medicine cabinet, $4,000

Shower curb: Bianco Dolomiti marble slab, $450

Accent wall tile: Five-by-three inch Fireclay ceramic tile, $2,000

Wall tile: White crackle ceramic tile, $1,600

Sink faucet and lever handles: Kohler Stillness in polished chrome, $280

Bath shower handle: Kohler Stillness, $145

Lavatory sink: Kohler Kathryn undercounter, $350

Showerhead: Kohler rain in polished chrome, $400

Toilet: Toto, $330

Stone mosaic tile floor: Polished Bianco Dolomiti marble, $1,300

Toilet paper holder: Vola in polished chrome, $175

Robe hook: Vola in polished chrome, $200

Shower enclosure with towel bar: Frameless glass door with polished chrome towel bar, $3,000

Subtotal: $14,230

Kitchen

Microwave and ventilator: Bosch over-the-range room stainless steel combination microwave and venting, $550

Backsplash: Stainless steel metal tile, $1,000

Floor tile: Honed cypress limestone, $1,200

Sink: Franke undermount stainless steel, $950

Faucet: KWC chrome Orcino with long lever and pull-out spray, $450

Refrigerator: Northland stainless steel top mount freezer in stainless steel, $4,200

Cook top: Bosch stainless steel four-burner gas cooktop, $900

Dishwasher: Bosch Integra 800 series, $1,100

Oven: Bosch stainless steel electric wall oven, $1,900

Countertop: Honed Calacatta gold marble, $1,500

Cabinets: Custom-made including $45 individual cabinet pulls, $13,000

Subtotal: $26,750

General

Windows: Wausau oversized double-glazed casement windows, $10,000

Hardware: Baldwin and Ives in antique brass/antique nickel/polished chrome, $1,300

Doors: Solid hardwood doors, $2,200

Light fixtures: In the kitchen, custom polished chrome lighting; in the bath, custom polished chrome, medicine cabinet with integrated lighting; $3,500

HVAC: Two individual climate-controlled heat and air conditioning units, $450 and $700

Flooring: Four-inch-wide solid white oak plank floors, $3,250

Subtotal: $21,400

Grand total: $62,380

The whole building’s budget, from top to bottom

Below is the projected budget for HJ Development’s 211 East 51st Street, a 76,500-square-foot conversion with 73 residential condo units, three commercial condo units and 34 storage spaces:

Hard costs

General conditions: payroll, etc., $1.2 million

Masonry: exterior, exterior cleaning and terrace pavers, $600,000

Structural steel: building extensions, $125,000

Exterior railings and stairs: $300,000

Concrete: building extension, $40,000

Roofing: installed new Johns Manville roof, $200,000

Lighting: unit interior, corridors, lobby, terraces, $210,000

Insulation: $150,000

Rough carpentry: Sheetrock, studs, etc., $600,000

Finish carpentry: custom wood moldings, etc., $485,000

Kitchen cabinets: handcrafted rift-cut white oak with lacquer finish, $950,000

Doors and hardware: solid hardwood doors with Baldwin hardware, $750,000

Windows and terrace doors: oversized Wausau double-glazed casement windows, $800,000

Stone: Bizzaza mosaic, Bianco Dolomiti, etc., $1.3 million

Wood flooring: solid white oak four-inch plank floor in ebony or light finish, $750,000

Carpeting and wall covering: Bentley print for street corridor and Innovations wall covering in corridors, $125,000

Painting and taping: $800,000

Bath vanities and fixtures: $150,000

Toilet and bath accessories: $275,000

Medicine cabinets: handcrafted polished chrome with integrated lights, $125,000

Kitchen appliances: Northland refrigerators, Bosch stovetop, oven, dishwasher and microwave, $700,000

Kitchen fixtures: custom polished chrome lighting and hardware, $175,000

Two elevators: modernization of system, new cabs with stainless steel and wire mesh interiors, new call buttons with dark bronze finish, $510,000

Plumbing: $800,000

HVAC: individual climate controlled air conditioning and heat units, $600,000

Building electrical and intercom phone entry system: $1.25 million

Resident’s lounge and fitness area: $200,000

Lobby allowance: reception, furniture, lighting, stone and security, $400,000

Subtotal: $14,570,000

Contingency (10 percent of hard costs): $1,457,000

Total hard costs: $16,027,000

Soft costs

Professional fees: attorney, architect, engineering, interior designer, etc., $1.2 million

Sales, marketing, brokerage: commission, advertising, brochures, models with furnishings, etc.: $4.5 million

Miscellaneous: real estate taxes, insurance, operating expenses, permits, filing fees, etc., $1.5 million

Financing costs: acquisition and construction loan interest, $7 million (HJ Development is financing $39 million)

Total soft costs: $14.2 million

Total hard and soft costs: $30,227,000

Acquisition: $46 million

Grand total: $76,227,000

Go to chart: Pricey Manhattan pads push slowing residential market a bit higher

Go to chart

With the dollar still weak, international buyers are flooding the city, snapping up units in some of the most luxurious buildings.

They zero in on projects with international brand recognition, a high level of service and an abundance of amenities, said Rodrigo Niño, president of Prodigy International, the exclusive sales and marketing company for Trump Soho, and co-exclusive sales and marketing team for William Beaver House.

Most developments do not meet the criteria.

“No more than 30 percent of condos are suitable for international buyers,” Niño said.

To get an idea where New York City’s foreign buyers are coming from, The Real Deal looked at the origins of buyers (in contract) in two buildings with great international appeal — Trump Soho and André Balazs’ William Beaver House.

Buyers in the buildings come from disparate parts of the world, from Venezuela to Japan to Greece, with less than 25 percent in each building hailing from the United States.

Since sales began at the 46-story Trump Soho in September 2007, 58 percent of the 400 units were under contract as of early last month, Niño said. Buyers at the hotel-condo at 246 Spring Street near Varick Street hail from 17 countries, with the largest number from Spain at 21.2 percent, the United States at 17 percent and the United Kingdom with 8.3 percent, according to data obtained by The Real Deal.

The average sale price is $3,200 a square foot for units ranging from 422 to 905 square feet for studios and one-bedrooms, Niño said. The project will be completed in summer 2009.

Trump Soho has hotel-condo appeal.

“I think hotel-condos appeal to foreign buyers because they are turnkey pied-à-terre properties that they can personally use and at the same time obtain daily and weekly income, which still allows them flexibility for their own personal use,” said Clifford Finn, managing director of new development marketing at Citi Habitats.

Foreigners have long gravitated to projects bearing the Donald Trump name.

“I believe that there are certain segments of the foreign marketplace that [associate] the Trump brand with ‘opulence, exclusivity and luxury.’ For others it is nothing more than an internationally recognized real estate brand. For others it doesn’t mean anything,” Finn said.

At the 47-story William Beaver House, more than 71 percent of the 320 condo units were sold between January 2007, when sales commenced, and the beginning of last month. Buyers come from 13 countries, with the largest groups from the United States, at 21.5 percent, Venezuela at 19.4 percent and Mexico with 14.7 percent, according to the source, also close to this project.
Note: Correction appended

The average price is $1,800 per square foot for studios through three-bedrooms ranging from 698 to 1,625 square feet. The building will be finished this August.

At William Beaver House, draws are that it “is one of the few ground-up projects in Wall Street … and the set of amenities is incredible,” Niño said.

But The Real Deal’s breakdown of buyers in Trump Soho and William Beaver House captures just a snapshot of a moving target.

“We have had incredible demand from all over the world,” Niño said. “The international markets are so dynamic that they change from month to month.”

Clinton Hill

The Absolute

111 Steuben Street

Construction on the six-story, 35-unit condominium designed by architect Gary Shoemaker is expected to be completed this spring. The building has residences ranging from 684-square-foot one-bedrooms to 1,877-square-foot three-bedrooms; many will have terraces or balconies. Apartments are priced from $410,000. All of the homes will feature eco-friendly maple micro-strip hardwood floors, high ceilings and video intercom systems. The building will also have a roof deck, fitness center, onsite parking available for purchase and Fresh Direct cold storage.

East Williamsburg

Meserole

127-129 Meserole Street

Stonehill Development is building the four-story, 16-unit ground-up building, designed by Karl Fischer. Apartments in the brick building will range in size from 654 to 1,573 square feet. Prices start at $420,000. The Developers Group is the exclusive sales and marketing agent for the project. Contact: www.thedevelopersgroup.com.

Gramercy

Gramercy 145

145 Lexington Avenue

Green Circle Construction is developing the 13-story, 12-unit luxury condominium, designed by architect Manuel Glas. Prices for the one-, two- and three-bedroom homes start at $848,000. The penthouse units have private elevator entrances, glass walls and private terraces. Amenities include a roof deck, private storage units and high-end security systems. Buyers also receive a complimentary one-year membership to the concierge service Abigail Michaels. Nest Seekers International is the exclusive sales and marketing company. Contact: www.gramercy145.com.

Gramercy

Sky House Condominiums

11 East 29th Street

The Clarett Group has announced the grand opening of the 55-story, 139-unit luxury condo tower. The building’s one-, two- and three-bedroom apartments are now available for immediate occupancy. FXFowle Architects designed the building. Contact: www.skyhousecondo.com.

Long Island City

The L Haus

Apple Bank invested in the condo development. Prudential Douglas Elliman will be marketing the apartments, which will sell for between $600 and $700 per square foot, Curbed reported. It will have around 5,000 square feet of retail space and parking space.

Long Island City

The Star Tower

28-02 42nd Road

Sales have been launched at the Roe Development Corporation’s 25-story, 180-unit luxury condominium, which is expected to be the tallest residential condominium in Long Island City. The project’s one- and two-bedroom homes range in size from 617 to 1,213 square feet. They are priced from around $425,000 to $1 million. Amenities include a 2,700-square-foot roof deck, private gym, valet parking service, outdoor grilling station, 7,500-square-foot mezzanine deck and a 1,000-square-foot club room with a kitchen, wet bar and entertaining area. Contact: www.thestartower.com.

Lower Manhattan

20 Exchange Place

The leasing office is now open for the first, 350-unit phase of Metro Loft Management’s 57-story luxury rental conversion of the former City Bank Farmers Trust Building. Rents start at $2,500 per month for the project’s tower units, studio to two-bedroom apartments, which are available for immediate occupancy. The 800,000-square-foot art deco building was originally built in 1931. Once the conversion is completed, amenities will include a fitness center, residents’ lounge, valet and a landscaped sundeck on the 19th floor. There will be over 100,000 square feet of onsite retail space. Contact: www.20xnyc.com.

Soho

211 Elizabeth Street

Sales started in April at the seven-story, 15-unit condominium developed by Peter Manning and Robert Siegel. The building, designed by Robin Standefer and Stephen Alesch of Roman & Williams, has one- and two-bedroom units ranging from 750 to 2,189 square feet. Prices start at $1.55 million. Stribling Marketing Associates is the exclusive sales and marketing agent. Contact: www.211elizabeth.com.

Upper East Side

40 East 66th Street

Developer Vornado Realty Trust has converted the 1929 building into luxury condominiums. Cetra/Ruddy Architects designed the conversion. There are three different layouts of apartments, all of which are three bedrooms and around 2,450 square feet. Amenities include a fitness room, bicycle and stroller storage and children’s playroom. Occupancy is slated for December 2008. Corcoran Sunshine Marketing is handling sales and marketing. Contact: www.40east66.com.

Upper West Side

535 West End Avenue

Extell Development’s 20-story, 22-unit luxury condominium, designed by Lucien Lagrange Architects, consists of exclusively full- and half-floor apartments. The five-, six- and seven-bedroom homes range from 3,753 to 13,825 square feet in size. Amenities include a lounge, courtyard, billiards room, indoor pool and fitness center. Occupancy is slated for fall 2009. Corcoran Sunshine Marketing Group is the sales and marketing agent. Contact: www.535wea.com.

Upper West Side

905 West End Avenue

Sales were launched in April for the recently renovated 13-story, 52-unit condominium. The 1917 building has two-, three- and four-bedroom residences ranging from 1,636 to 2,290 square feet in size. The project’s developer, Samson Management, is offering buyers an option to purchase apartments either in their existing condition, with prices starting at $1.865 million, or with an upgrade package, with prices starting at $2.02 million. Amenities include a roof deck and bicycle storage. Halstead Property is handling sales at the building. Contact: www.905wea.com.

Williamsburg

184 Kent Avenue

The landmarked warehouse building, which is undergoing restoration by JMH Development, will have 338 rental apartments and 29,000 square feet of retail space. The building was built in 1913 to be the headquarters of the largest wholesale grocer in the United States.

Williamsburg

The Rialto

150 North 5th Street

The four-story, 31-unit luxury condominium is designed by architect Gene Kaufman, and Andres Escobar is the interior designer. The loft apartments, which have 20-foot-tall ceilings, range in size from an 821-square-foot studio to a 1,843-square-foot three-bedroom. Prices start in the high $600,000s. Amenities include a ground-floor garden. The Developers Group is the sales and marketing agent. Contact: www.thedevelopersgroup.com.

Construction update

Chelsea

133 West 22nd Street

The Ascend Group’s 99-unit condominium celebrated its topping off in early April, with the completion of the project slated for the end of 2008. Designed by Cetra/Ruddy, the building, which has one-, two- and three-bedroom homes and penthouses ranging in price from $700,000 to $3 million, was nearly 90 percent sold in April. Amenities include an outdoor pool, interior courtyard, fitness center, onsite parking and a rooftop deck. Cantor Pecorella is the exclusive sales and marketing agent. Contact: www.133west22.com.

Sheepshead Bay

The Riviera Suites

2433 Knapp Street

Ground has been broken on SSJ Development’s 18-unit residential loft development, designed by architect Gregory H. Ginter. Completion of the project, which will contain one- and two-bedroom homes, is expected in spring 2009. The waterfront development will have a promenade, refurbished docks and boat slips.

Soho

Soho Mews

311 West Broadway

Developer United American Land has completed the glass-curtain façade of the two-building project, which includes 59 loft apartments, five townhouses and four penthouse units. Homes range in size from 1,225 to 3,900 square feet. They are priced from $2.4 to $11 million. Apartments are eligible for 421-a tax abatement. Occupancy is slated for late 2008. The buildings share more than 6,000 square feet of open space designed by PWP Landscape Architects. Other amenities include attended parking, a fitness center, a public art gallery, concierge service and exclusive benefits and the bar/restaurant Centovini. Corcoran Sunshine Marketing Group is the exclusive marketing and sales agent. Contact: www.sohomews.com.

Sales update

Bedford-Stuyvesant

273 Clifton Place

Only two homes remained in the four-story, eight-unit luxury development as of mid-April. The project’s studio and one-bedroom apartments range from 638 to 1,291 square feet in size, and all have outdoor space. The remaining units are 1,278 and 1,291 square feet, priced $460,000 and $490,000, respectively. The Developers Group is the exclusive sales and marketing firm for the project. Contact: www.thedevelopersgroup.com.

Chelsea

Chelsea Stratus

101 West 24th Street

The 40-story, 240-unit condominium, developed by LCOR, was 90 percent sold as of mid-April. Occupancy is slated for late spring 2008. SLCE Architects designed Chelsea’s tallest building, which will have one-, two- and three-bedroom homes ranging in size from 827 to 2,263 square feet with prices averaging around $1,200 per square foot. Amenities include a fitness center and private storage, as well as private outdoor terraces and balconies. Occupancy is slated for late spring 2008. Prudential Douglas Elliman is the exclusive marketing and sales agent. Contact: www.chelseastratus.com.

Murray Hill

The Charleston

225 East 34th Street

LCOR’s 22-story, 191-unit condominium was 90 percent sold out as of mid-April. The units are already open for occupancy, and include studio, one-, two- and three-bedroom units starting at $1,099 per square foot. Amenities for the building include the Club Charleston, a 2,400-square-foot amenities center with a fitness center, media lounge, dining area and catering kitchen, as well as an outdoor garden. Prudential Douglas Elliman is the marketing and sales agent. Contact: www.thecharlestonnyc.com.

Prefabricated homes, a largely West Coast phenomenon, are popping up in the New York City area for the first time.

Led by Resolution: 4 Architecture (RES4), a New York City-based firm building the “Bronx Box,” and Rocio Romero, who built a home in Gallatin, N.Y., modern prefab is stirring interest among price- and eco-conscious consumers. [more]

R. Donahue Peebles has made a career of bringing New York influences to his properties in other parts of the country, most notably South Florida, where the majority of his office buildings, luxury hotels and high-end condos are located. But now, after two decades of exporting the New York vibe elsewhere, he’s feeling out the market for his first New York City project.

On a sunny Monday last month, Peebles, who goes by Don, met with several potential investors in New York from the real estate division of JPMorgan Chase, toured a potentially developable 160,000-square-foot, $300 million property in Midtown South and discussed plans for creating a New York-based private equity fund with a consultant over lunch at Cipriani.

His goal, he said, is to acquire two development projects in the $200 to $300 million range this year and then open an office in New York. He said wants to bring a boutique hotel with five-star amenities to a trendy Manhattan location, but not somewhere already oversaturated with similar establishments.

The 48-year-old African American entrepreneur, who has written a book detailing his rise in the real estate industry (“The Peebles Principles: Tales and Tactics from an Entrepreneur’s Life of Winning Deals, Succeeding in Business and Creating a Fortune from Scratch”) and has another scheduled to come out later this year, noted that he takes “very calculated” risks.

“I look at the risk, I assess it, and I make sure I understand it,” he told The Real Deal during his sweep through New York. “I look for ways to mitigate it.”

Peebles, who hosted a fundraiser for Barack Obama late last month in Miami that brought out celebrities like Russell Simmons and NBA star Alonzo Mourning, also almost always offers his own capital on a project and then brings in other investors once the projects are more solid, he said.

“In general, I’ve tried to mitigate risks by being a little contrarian to the market,” Peebles said. “We want to sell when fewer people are selling, and buy when fewer people are buying.”

Raised by a single mother in Washington, D.C., Peebles dropped out of Rutgers University after a year and started in the business by appraising properties and arguing property tax appeals. He said he learned what he needed to know from reading and observing others. Things changed quickly when he signed his first million-dollar deal at age 27 in a then-blighted neighborhood in D.C.

Today his company, the Peebles Corporation, has $4 billion and 7 million square feet of projects in development nationwide. Operating several of his early projects — a Courtyard by Marriott in Washington, the Bath Club in Miami — provides steady income. And his net worth is “in excess of $500 million,” he said.

Peebles said his vision in New York is to bring the amenities of Fifth Avenue hotels to a Downtown market. On this trip, he stayed at the recently renovated Essex House to get a feel for what’s already being offered at similar establishments.

He told The Real Deal that his current focus is to secure sites most affected by the rocky economy. He said that he is now negotiating a deal on an existing property in Midtown South that, if successful, could open within 12 to 18 months.

While he is cognizant of the financial difficulties of today’s market, Peebles is confident that he can forge ahead.

“While it is certainly more challenging to secure debt financing in this market, equity financing is still plentiful,” he said.

He also said that there may be opportunities given the slowdown and the credit crunch in the form of decreased land values and stabilizing construction costs — and, with fewer projects in the pipeline over the next few years, a decrease in competition.

Peebles is doing this while juggling two of his most ambitious projects yet: a $2.8 billion 4.5 million-square-foot hotel and entertainment center in Las Vegas called Las Palmas, and a $1.4 billion, 90-acre oceanfront property near San Francisco, where he hopes to create a platinum LEED-certified hotel, office and residential complex. He said that his geographically divewrse portfolio should be viewed as an asset. “I want to bring a little bit of Miami, a bit of South Beach, to New York. And, I want to bring a little of New York to South Beach and Washington, D.C.”

Meanwhile, he also has plans for a New York-based $350 million private equity fund designed to support small- and mid-size developers in urban centers that tend to be diverse in both ethnicity and gender. He will provide the contacts with architects, contractors, and design and marketing consultants.

Carl McCall, a former New York State comptroller who has invested in Peebles’ projects, is encouraging him to proceed.

“Real estate is a very attractive investment to pension funds and to institutional investors, and what they look for is people with a proven track record,” McCall said. “He has a string of successful deals, so that makes him a very attractive client, a very attractive investment to institutional investors.”

Peebles said he never imagined he could have come this far this quickly.

“When I started off in Washington, I felt Washington was going to be the place where I was going to be. Then, when I went to Miami and started doing business there, I said, ‘Well, there’s no reason to limit myself elsewhere.’”

Mamaroneck, NY

Sweetwater

Developers Iron Oak and Atlantic Realty Partners unveiled the prewar-style, 90-unit building at a preview opening in early April. The building, designed by Sullivan Architects, has one-, two- and three-bedroom units with prices ranging from $400,000 to $1.2 million. Amenities at the building include several different lounges, a library and a billiards and game room. Houlihan Lawrence Project Marketing is the exclusive marketing and sales agent for the development. Contact: www.liveatsweetwater.com

Morristown, NJ

The Highlands of Morristown Station

The Roseland Property Company and Woodmont Properties have broken ground on the mixed-use development project, which they are building in partnership with New Jersey Transit. It will include a five-story, 217-unit apartment building. The building is expected to be completed in spring 2010 and will have units ranging in size from 661 to 1,346 square feet. Also at the site will be a parking garage, 8,000 square feet of ground-floor retail and 6,000 square feet of amenity space. Amenities in the building will include a club room with a billiards table and bar, swimming pool, landscaped deck, fitness center and business center with conference area and computer stations.

Sales update

Jersey City, NJ

77 Hudson

Developer K. Hovnanian has sold 60 percent of the homes released so far at the 48-story, 420-unit project; 20 percent of the units sold in 2008 have been to foreign buyers. The one-, two- and three-bedroom homes are priced from $500,000 to $2.75 million; studios are priced in the $400,000s. Cetra/Ruddy designed the project, and Core Group Marketing is the exclusive sales and marketing agent. Contact: www.77hudson.com.

New Brunswick, NJ

The Residences at the Heldrich

The 48-unit condominium, located in the four-star hotel the Heldrich, was over 50 percent sold as of late April. The project’s apartments range in size up to 1,325-square-foot two-bedrooms. Amenities include private underground parking and access to the hotel’s exercise room and swimming pool. Contact: www.heldrichcondos.com.

Millbrook, NY

Millbrook Lofts

Bennet Associates is developing the eight-unit residential loft conversion of a historic Bennett College space. The duplex two-bedroom condos range in size from 1,250 to 2,100 square feet, with 15- to 25-foot-tall ceilings. Prices start at $395,000. Houlihan Lawrence Real Estate is the exclusive sales and marketing agent for the project. Contact: www.millbrooklofts.com.

New Rochelle, NY

The Greens at Cherry Lawn

The 26-home gated residential development on 17 acres of property was 80 percent sold as of its grand opening in early April. The subdivision, developed by WN Weaver Street and designed by Robert Orr & Associates in collaboration with Justin F. Minieri, has whitewashed brick homes with over 3,600 square feet of living area. Community amenities include concierge service, guarded entrance, fitness center, heated pool and tennis court, as well as a community club room with a catering kitchen. Houlihan Lawrence Project Marketing is the exclusive marketing and sales agent. Contact: www.tgacl.com.

New developments that court foreign buyers are more aggressively tailoring marketing materials and presentations to those buyers’ needs.

Sales offices are translating marketing materials and Web site content into multiple languages, hiring staff fluent in more than one foreign language and providing sensitivity training to brokers to avoid offending overseas buyers.

For buyers who do not speak English as a first language, the Platinum condo has translated marketing materials into Spanish, Italian, French, Korean and Japanese for distribution and Web site posting, said Marketing Directors’ Carolyn Sebba, director of sales at the project at 247 West 46th Street. In addition, there is one broker who speaks Spanish and another who is fluent in French. That was not why they were hired, Sebba said, but “it’s coming in very handy.”

Marketing Directors also uses etiquette memos to help agents learn about working with buyers from other countries.

The memos “educate us on various cultural do’s and don’ts so we don’t offend anyone,” Sebba said.

American Properties Realty is among those targeting the Asian market. It recently launched a virtual tour in Korean for its Bellaire development in Demarest, N.J. Tarragon Corp., a developer, is devoting advertising dollars to Asian publications. Tarragon has brokers who are fluent in Korean on staff at two New Jersey developments: Trio in Palisades Park and One Hudson Park in Edgewater.

David Perry, director of sales for developer the Clarett Group, said that hiring multilingual agents has garnered business “because people are more comfortable hearing an explanation in their own language.”

Clifford Finn, director of new development marketing at Citi Habitats, said that while he has bilingual agents working at many sites and will sometimes have floor plan dimensions converted into the metric system, such measures do not necessarily increase sales.

What does increase sales, however, is “advertising in foreign marketplaces,” Finn said, which he does.

Running an international marketing company, Rodrigo Niño knows how to cater to foreign buyers — through foreign brokers. The president of Prodigy International, which is exclusively marketing Trump Soho Hotel Condominium and co-exclusively marketing the William Beaver House, educates international brokers on their home turf, brings them to the project site and sends them home to work with local buyers.

Since there is a contingent of New York City buyers who do not speak English, he has marketing materials translated into many different languages and a staff speaking 11 or 12 different languages.

“There is an incredible amount of sophisticated buyers from Spain that don’t speak a word of English. Same thing happens with Italy and France,” said Niño, who planned to move his headquarters to New York City from Miami by this month.

Patricia Cliff, senior vice president and director of European sales at the Corcoran Group, has found such efforts unnecessary. Her buyers, on the high end of the spectrum, are generally conversant in English.

Earlier this year, she wrote a guide to buying New York real estate for international buyers, albeit in English. Besides that, she only caters to foreign-language buyers by translating square feet to meters, but she doesn’t do that very often.

The bottom line is, she said, “I haven’t found anyone doing handstands to accommodate foreign buyers.”

Basketball icon Earvin “Magic” Johnson Jr.’s development at 110 Green
Street in Brooklyn is preparing to open its doors to potential buyers
this summer, but brokers don’t know what to expect in terms of sales
success for the much buzzed-about building. Comments

• Print

For a developer who has often found himself in the hot seat, Don Capoccia has a temperate perspective.

“This
is such aggravating, difficult work on a day-to-day basis that you have
to be passionate about it from the outset,” says Capoccia, one-third of
development firm BFC Partners. “You can’t waver.”

Then again, he has reason to be encouraged.

On
a tour last month through the downtown Brooklyn sales office for Toren,
the latest project BFC Partners has brought to market, the sun
reflected off the glass casing of the model for the 38-story tower
that’s being built on Myrtle Avenue.

“We’ve
been on the market for almost six weeks now,” says Capoccia, who notes
the building is selling for $750 a square foot. “Out of 199 market-rate
apartments, we have 32 executed contracts back and 11 out right now.”

Capoccia
notes that with 1,300 applications in on the condo’s 42 affordable
units, “we’re almost a third sold out in a little more than five
weeks.”

The
sun appears to shining for Don Capoccia. But that hasn’t always been
the case for the developer, who’s been in the New York City real estate
game since the early 1980s.

Over
the course of more than two decades, Capoccia has courted controversy
time and again. He has concentrated on emerging areas — the East
Village in the ’80s, East Harlem in the ’90s and, more recently, the
Williamsburg waterfront and downtown Brooklyn. He’s often been on the
receiving end of protests and negative media coverage for things like
bulldozing community gardens on the Lower East Side (think of epic
tenant-landlord battles in the play “Rent”) and using non-union labor.

Capoccia, who is openly gay, does not have a history of shying away
from public confrontation. A few years ago, he resigned from a federal
commission that President Bush appointed him to after the president
came out against gay marriage.

And he does not feel like he has much
to apologize for, especially when it comes
to the choices he’s made in his development career.

“There
isn’t a more anti-development city in the world than New York. Once a
New Yorker gets his or her housing situation worked out, it’s
basically, ‘F— everyone else,’” he says. “I think the only thing you
can do is build the best job you can and let the completed project tell
the story.”

East Village years

Donald
Capoccia grew up in Rome, N.Y., and moved to the city in the late ’70s
to get a master’s degree in urban planning at Hunter College. It took
him three years to complete what is typically a two-year program.
Before that, it took him seven years to finish a bachelor’s degree.

He
says his entry into the development world was “all very accidental.” It
started when he closed on 72-76 East 3rd Street in 1982, properties he
was able to acquire in order to build condos through the city’s Dollar
Building Program. Only one hitch: One of those properties, a vacant
lot, was “filled with motorcycle carcasses,” care of a Hell’s Angels
branch headquartered across the street.

“I
closed on the property and rented a pickup truck, hired 10 or 12 day
laborers and brought a set of bolt cutters. I did not look behind me
because the Hell’s Angels were just across the street,” says Capoccia.
“I cut the gate and started to drag the stuff out. Had there been a
desire to get in my way, I have no idea whether I’d even be in this
business today.”

BFC
Partners, which Capoccia began with the fathers of the two other
principals now at the firm, Joe Ferrara and Brandon Baron, went on to
work on hundreds of units of housing in the East Village and Alphabet
City over the next eight or so years. The majority of BFC’s
developments involved affordable components. Capoccia says the company
completed the first New York City Housing Partnership project in the
East Village (Del Este Village on Avenue A and 13th Street) and the
neighborhood’s first 80/20 rental building.

Ferrara,
who has been involved in the business since he graduated from college
almost 20 years ago, says that he is typically responsible for
spearheading marketing on projects, while Baron concentrates on
construction issues and Capoccia usually takes the lead in identifying
and selecting development sites.

Jumping Uptown

Over a five-year period beginning in 1996, BFC Partners built close to 1,200 units in East Harlem.

“That
included an important project — at least to us — called Madison Park up
on 120th Street. This was an area that was really a no-man’s-land,”
Capoccia recalls. “So we had to design, with our architect, a building
that would attract a market to Harlem that had not been seen for many,
many, many decades, sort of a middle-class buyer who would qualify for
a six-figure share loan.”

Capoccia
says he decided to add to his risk by transferring unused FAR from a
parking lot in order to make Madison Park a 128-unit development. In
the end, he notes, “it was an enormous success; there were 2,225
qualified buyers who all wanted in.”

He
says BFC now finds itself “priced out” of East Harlem. “The interesting
thing to me was I watched that neighborhood turn around in five years,”
he says. “It took me more like 10 years to see anything happen in the
East Village.”

Brooklyn beckons

In
2002, BFC Partners began negotiating with the city to build Schaefer
Landing, is at least a 10-minute walk from the closest subway line.

The
Water Taxi stop had been an integral part of Schaefer’s marketing
drive. Capoccia says that a new prototype barge designed for Schaefer
is coming; if it works, there’ll be 17 of them all around the city.
“People felt compelled by the Water Taxi, but they don’t really use it,
in part because it’s not a regular enough service,” he says.

Building on Bond

On
the luxury end of the spectrum, another recent Capoccia project, 48
Bond Street, recently sold out at prices that averaged about $1,600 a
foot, with about a third of the units going for north of $2,000 a foot,
according to public records.

Deborah
Berke, a noted interior designer, was the architect for the 17-unit
Noho condop, which Capoccia developed separately from BFC.

At
the same time Capoccia was developing 48 Bond, two other high-ticket
condos were rising on the same block: Tony Goldman’s 25 Bond Street,
and 40 Bond Street, which was developed by Aby Rosen and Ian Schrager.

“These
are big people to try to compete with, and I didn’t want to try to
compete with them,” says Capoccia. “I didn’t want to get too far afield
from what was happening on Bond Street, and what has happened there
over the past 100 years.”

Political ties

One
of the first hits that pops up when the name “Don Capoccia” is entered
into Google is an article from the late ’90s published in a left-wing
newspaper called “the Shadow.” The article talks about the developer’s
plans to destroy the community gardens in order to build the Del Este
Village condos through a sweetheart deal with the Giuliani
administration. The mayor’s office is depicted as hell-bent on
privatizing public spaces and accepting cash and gifts from Capoccia.

But
Cappocia’s political ties are not black and white. While campaign
contribution records show he’s given tens of thousands of dollars to
Republican candidates over the past several years, he’s also given a
fair share of cash to Democrats, most recently to Barack Obama’s
presidential campaign. And Capoccia’s relationship with the political
sphere has been extremely public. In 2002, President Bush appointed him
to the U.S. Commission of Fine Arts.

Capoccia
describes his political endeavors and appointments as mostly separate
from his work as a developer. “My interest in politics largely revolves
around questions of equality in sexual orientation,” says Capoccia. He
said that while he was a Bush appointee on the fine arts commission, “I
had to resign my position when he went out to support a constitutional
amendment barring marriage between gay men and women.”

“I
worked very successfully with Governor Pataki, along with many others,
to get a sexual orientation nondiscrimination act passed in New York,”
he says.

Courting controversy

Capoccia
isn’t afraid of public confrontations. He has seen plenty of his
projects attract negative media attention through the years. Most
recently, union activists set up a huge inflated rat near the Toren
construction site. Capoccia responded by putting up a big sign next to
the rat that read, “BFC salutes the Lunar Chinese New Year, 2008, the
Year of the Rat.”

The
most notorious situation, however, was at Del Este Village. Units in
the development were sold to applicants making between $30,000 and
$70,950. But to build Del Este, the developers destroyed several
community gardens, and community acrimony flared. In late 1999,
activists chained themselves to the gardens’ fences to try and prevent
their destruction.

Capoccia says the ends justified the means.

“We
have buyers in that project who are still there today who came out of
households that were doubled up in the Lillian Wald Housing Authority
projects along the East River,” he says. “That’s where we drew our
market from. I think people should say what they have to say, but at
the end of the day, if the builder’s done the right thing, it just
works in the neighborhood.”

Where to next?

Staten Island may be Capoccia’s final frontier in New
York City.

BFC
Partners is constructing 167 middle-income co-ops in the Staten Island
neighborhood of Stapleton, and Capoccia says he hopes to lure buyers
from Southern Brooklyn neighborhoods like Bay Ridge and Bensonhurst.

“We think there’s an opportunity here that no one else has seen,” he says.

Reviewed by Dorn Townsend

“Nextville”

By Barbara Corcoran, with Warren Berger
Springboard Press, 256 Pages, $24.99

Thanks to modern medicine, regular exercise and healthier diets, many New Yorkers are living longer than ever before. And thanks to a strong real estate market that reinforces their positions atop the pinnacle of global capitalism, many of these New Yorkers also possess assets worth more than ever before. Yet from their corner offices and terraced apartments, some of these lucky hard-chargers may pause a moment to ask themselves, “What if I dropped it all and moved?”

With the insistence of a Jehovah’s Witness banging on your door, Barbara Corcoran, founder of the well-known real estate agency the Corcoran Group, steps up to answer this question. Her suggestions are detailed in “Nextville,” a book equal parts travel guide, pop psychology and stubborn marketing.

Corcoran’s intended audience isn’t stay-at-home or fixed-income retirees, but those “seeking the glorious next act of your life.” The author contends that in the coming years, a privileged demographic seeking to graduate to a “next” phase will cause “another mass movement of people.”

The purpose of “Nextville” is to suggest to these affluents where to resettle. In the past, for many Americans, the answer to the question, ‘Where to retire?’ was often, “Go south, old people.” But Corcoran aims for more discernment, dismissing Florida, for instance, as “heaven’s waiting room.” Instead, she counsels Ruppies (Retired Urban People) and Zoomers (retirees who zoom to far-off destinations) to imagine retirement as a new beginning and exhorts them to “think outside the hammock.” A real estate broker to her bones, Corcoran advises that “sometimes, it takes a fresh place to make a fresh start.”

Corcoran spends the next 10 chapters identifying different types of buyers and offering suggestions on the places and types of real estate they might consider. For instance, people with a passion for bird-watching might consider moving to Essex, Conn., where the Audubon Society holds an annual Eagle Festival. Zoomers with a hankering to try their hands at the hospitality industry are advised that Saugatuck, Mich., has a “growing demand for B & B’s.”

Relocating somewhere new can be intimidating, so Corcoran advises Zoomers to surround themselves with people who
have similar interests. Austin, Knoxville and Davis, Calif., are recommended as good spots for retirees looking for hip trailer parks, unlimited boating and abundant bike paths.

Other cities are saluted for their rock-and-roll scenes. This may lose readers, since it’s hard to imagine many retirees passionate enough to move to be closer to a genre that celebrates rebellion against the so-called system.

With a no-stones-left-unturned quality to this book, it sometimes feels like Corcoran has never visited a city where she hasn’t considered plonking down and buying real estate. Corcoran finds merit in conventional places like Hawaii (the arts scene), Madison, Wis. (residents are outdoorsy), and Oregon (bylaws are green-friendly). She also sings the praises of parking in Dubai (for its over-the-top qualities) and Panama City (your dollar goes further, and it has beaches).

Corcoran differs from those magazine lists that commonly offer the 10 or hundred best places to retire because she doesn’t endorse any one of these spots more than another. Her aim is to offer suggestions on where older people who feel young at heart can go to start over or to cultivate dormant passions.

Descriptions of these places, and many others, make up the bulk of the book. As snapshots, they can be engaging, but reading “Nextville” cover to cover may seem like a chore. Corcoran believes in the “transforming power of place,” and while her breezy depictions of locales may not prompt many people to actually pick up and move (many of her depictions come across as great vacation destinations), her text may inspire people to give some thought to important questions: “Where would I be happiest? How do I discover where I belong?” While “Nextville” is geared to an older audience, these are important questions for people of any age.

Atlanta

More deep-pocketed bidders are expected to attend live real estate auctions in the metro Atlanta area as more discounted luxury homes and investment opportunities become available, the Atlanta Journal-Constitution reported. A 1.7-acre estate in Cherokee County hit the auction block in mid-May with a minimum bid of $2 million; the auctioneer had reported an appraised value of $4 million. A 36-acre development site in north Fulton County, approved for 23 homes, was also available for a minimum bid of $1.5 million; it previously had an asking price of $3.6 million. Sellers are guaranteed quick sales at auction and are protected from bottomless sales in the minimum-bid format.

The owners of Executive Park, an office community in north-central DeKalb County built in the 1960s, are banking on a $312 million redevelopment plan to transform the site into a thriving mixed-use village. Dubbed the Park at Druid Hills, Boston-based HRPT Properties Trust wants 877,600 square feet of new office space, 432,600 square feet of retail, 790 residential units and a 160,000-square-foot hotel, the Atlanta Journal-Constitution reported. Developer Taylor & Mathis would tackle the project, considered one of the highest-profile attempts in metro Atlanta, to retrofit a suburban complex.

Boston

Downtown Boston’s once-booming condo market is finally showing signs of weakness, after having enjoyed brisk sales and ever-higher prices during the peak years from 2004 through 2006. Condo sales in the area’s 12 core markets dropped 22.4 percent in the first quarter from last year, while the median price fell 1 percent, to $475,000, according to an analysis by the Listing Information Network. The first quarter posted just 513 sales, compared to the 700-unit quarterly pace from 2004 through 2006, the Boston Globe reported. Experts attributed the slowdown to tighter lending rules, which have left the core market of young professionals hard-pressed to come up with down payments.

Chicago

Industry observers are bracing for the fallout of the record 5,984 condos slated to come online this year in downtown Chicago in a dramatically slower sales market. Last year, 4,794 condos came to market in the area, and 4,160 units are projected for next year, according to Appraisal Research Counselors. But the demand for these homes has not kept pace with the growing supply: The number of downtown condo sales plunged 83 percent in the first quarter to 201 units, from 1,207 in the year-ago period, the Chicago Tribune reported. The Belgravia Group is developing Quincy 565, an 18-story condo tower slated for completion in 2009, among other downtown projects.

As downtown Chicago’s commercial real estate market continues to struggle with a high office vacancy rate, the city’s suburbs have fared much worse. Downtown’s vacancy rate increased to 12.3 percent in the first quarter of 2008 from 11.7 percent in last year’s final quarter, according to MB Real Estate. Meanwhile, the vacancy rate in the suburbs rose to 17.3 percent, from 16.1 percent in the same period. Global real estate firm UGL Equis pegged the first-quarter vacancy rate for downtown Chicago at an even weaker 12.7 percent and 18.5 percent for the suburbs. Both companies pointed to struggling mortgage and title insurance companies to explain the growing vacancies, the Chicago Tribune reported.

Las Vegas

The Las Vegas housing market showed some positive signs in April: Single-family home sales increased from the same month of the previous year for the first time since September 2005, according to the Greater Las Vegas Association of Realtors. April tallied 1,794 sales, nearly a 30 percent increase from April 2007 and the fourth consecutive monthly increase, the Las Vegas Review-Journal reported. The inventory of single-family homes for sale rose just 3.1 percent from the previous year, stabilizing at 22,942. Meanwhile, the median price was down 3 percent in April from the prior month and 22.7 percent from April 2007.

Los Angeles

The new owners of Burbank’s NBC Studios announced a $750 million redevelopment plan to upgrade the site with four 14-story office towers, strengthening the city’s Media District, where asking rents are high and vacancies low, the Los Angeles Times reported. Construction is under way at the first tower of the rebuilt complex, renamed the Pointe, and is slated for completion by March 2009. Owner M. David Paul & Associates, which has title to half of Burbank’s office space, said the company plans to complete another tower every 30 months or so. Other plans for the complex include two outdoor plazas, underground parking and a health club and spa.

Philadelphia

Existing home sales in the eight-county region around Philadelphia fell 32 percent in the first quarter of 2008 from the prior quarter, according to Trend Multiple Listing Service data compiled by Prudential Fox & Roach. The company found that the median sales price of existing single-family homes, condos and co-ops declined just 0.5 percent in Philadelphia, Bucks, Montgomery, Chester and Delaware counties in the same period. Kevin Gillen, an economist at the Wharton School at the University of Pennsylvania, concluded that the median sales price of a Philadelphia single-family home dropped 8 percent in the nine months since spring 2007, the Philadelphia Inquirer reported.

Phoenix

A Colliers International report estimated that 24 million square feet of new commercial and warehouse space could be developed in the West Valley by 2010, spurred on by improved transportation infrastructure in the region. Most of that build-out would likely occur in Buckeye, Goodyear and Surprise, where the BNSF Ennis railroad spur has generated about 900 acres of commercial development to date, the Arizona Republic reported. Commercial developers have also been drawn to the low property taxes and still competitive prices of the southwest Valley, where the per-square-foot price of ready-to-build commercial properties reached $8 in 2008, up from $2.10 in 2001.

The retail vacancy rate in the Valley reached its highest level in more than a decade in the first quarter of 2008, according to local commercial real estate analyst Bob Kammrath of Kammrath & Associates. He concluded that the vacancy rate for retail space of 30,000 or more square feet was 11.3 percent as of March, compared to 9.6 percent in March 2007. The rate is the highest since 1996, when vacancies reached 11.8 percent, the Arizona Republic reported. Kammrath predicted that local retailers and unanchored specialty outlets would fare the worst in the coming year.

San Francisco

Commercial tenants in San Francisco put a combined 436,933 square feet of office space back on the market in the first quarter of 2008, the greatest negative net absorption in the area’s office market since the third quarter of 2002, according to CB Richard Ellis. Some experts said the grim findings could just be a blip in an otherwise healthy office market, but others noted that companies might be scaling back expansion plans amid an uncertain economic climate. The slowdown comes as about 1.5 million square feet of office space is in the pipeline, including projects at 500 Terry Francois Boulevard, One Kearny Street and 555 Mission Street, the San Francisco Chronicle reported.

Seattle

Bellevue city officials hope to remedy the lack of affordable housing in the Eastside region by converting a portion of the Bel-Red corridor, a 900-acre warehouse district, into low-cost residences. If successful, the project would create the largest number of affordable units in the city in more than a decade. The City Council wants to overhaul its incentive program, which has been taken up by only one developer over the past 12 years. The influx of thousands of people to the city and the growth of companies like Microsoft and Yahoo are boosting home prices and rents, and teachers, police officers and other workers are getting priced out, the Seattle Times reported.

Microsoft announced last month that it would lease 561,000 square feet of new space at downtown Bellevue’s City Center Plaza, currently under construction at Northeast Sixth Street and 110th Avenue Northeast, the Seattle Times reported. The software giant will occupy 25 of the 26 floors at the building and expand its Bellevue presence to 1.6 million square feet, greater than the region’s biggest office tower, Seattle’s Columbia Center. Microsoft plans to move 2,000 employees into the new space next year. The announcement bodes well for the area’s retailers, condo developers and office landlords, but office tenants are likely to contend with lower vacancies and higher asking rents.

Washington, D.C.

The high foreclosure rate in the outlying areas of Washington has caused home prices to drop in recent months, attracting first-time home buyers looking for affordable options, the Washington Post reported. Home sales in Manassas increased 33 percent, to 52 in March 2008, from 39 the previous year; there were 86 pending sales as of early May. Prince William County, located 30 miles west of Washington, posted a 20 percent jump in year-over-year home sales: A total 502 units sold in March 2008, compared to 418 in March 2007.

Lenders sue Royal Palm owners

A fund controlled by investment management firm Blackrock has sued Guy Mitchell, majority owner of the Royal Palm hotel in South Beach, where the conversion of 150 rooms to hotel-condo units is stalled. The suit alleges that Mitchell and his partners are overdue on loans borrowed to purchase the hotel for $128 million in 2005 and claims the mismanaged hotel is losing as much as $12 million per year. Amidst the ongoing legal dispute, Mitchell has put the hotel up for sale for $220 million, according to sources.

Critics have said that because the hotel is not a national brand — it is operated by Crowne Plaza — it is unable to compete with other South Beach resorts. But the hotel’s original developer, R. Donahue Peebles, who opened it in 2002, claims the hotel was making enough money to cover its $55 million loan under his ownership.

Miami office bldg sells for $49M

Rubicon America Trust has sold One Riverview Square, an eight-story Class A office tower at 333 South Miami Avenue, to Boston-based Eaton Vance for $49.6 million. The 147,895-square-foot building is 100 percent leased by the United States government, housing Immigration and Customs Enforcement and Social Security Administration offices, and has an attended, three-level parking garage.

Florida passes foreclosure fraud bill

The Florida state legislature passed bills pertaining to foreclosure fraud and new condos in both the House and Senate in May, both of which are expected to be signed by Gov. Crist. As a result of one bill, the foreclosure rescue business will have more transparency, and fraudulent offers to save homes from foreclosure will soon face greater penalties. Rescue companies will have to provide disclosures in contracts, including the fact that a homeowner may be selling his or her property.

A bill that would make several amendments to Florida’s condominium law was unanimously approved in both the House and Senate. It will restrict owner associations from appeasing complaining condo owners with payments, make it harder for those convicted of a felony to serve on boards, and allow owners to place religious symbols on their doorposts.

Sports celebs buy and sell

Several high-profile sports figures have made big real estate buys in South Florida recently.

Retired basketball pro Michael Jordan has purchased two lots in Jupiter for $4.8 million, according to Palm Beach County records. The parcels are located in the private golf club community Bear’s Club, at 172 and 174 Bear’s Club Drive.

Billionaire Wayne Huizenga, part owner of the Miami Dolphins, has sold his Fort Lauderdale estate for an undisclosed price. The 1926 building at 516 Mola Avenue, which sits on 11,000 square feet of property, was listed for more than $17 million about a year ago.

Miami Dolphins coach Tony Sparano paid $1.7 million for a five-bedroom lakefront home in Davie in Broward County, according to property records. Sparano, who was recently hired to replace Cam Cameron after the Dolphins had a disasterous 2007 season, purchased the 5,182-square-foot home in Stonebrook Estates with his wife.

Home sales may have hit bottom

Miami ranks No. 1 on a list of the top
10 worst-selling housing markets in
the country, a recent report by Miami television station CBS4 said, although according to a report from the Florida Association of Realtors, March showed the first increase in home sales of the
year in South Florida, signaling a possible turnaround in the market.

While the number of unsold homes on the market is also increasing, the rate at which homes are hitting the market has slowed in many places, and almost stopped in Broward County’s condo market. Home sales in Miami-Dade County were up 13
percent in March, from the month before; sales were up 29 percent over the same
period in Broward.

Home prices dropped in Palm Beach County and the Treasure Coast in March, while the number of sales picked up slightly in both counties. The median price of a single-family home in Palm Beach County fell 7 percent from February to $320,000, and home prices in Treasure Coast also decreased slightly to $169,700.

South Florida industrial vacancy up

The South Florida industrial real estate market saw a first-quarter increase in vacancy rates and stabilizing rents from the previous quarter, according to Globest.com. However, market reports and experts said the region is just experiencing a correction after double-digit rent increases and record-low vacancy rates — under 5 percent — in 2007. Miami-Dade County’s industrial vacancy rate has risen to 6.3 percent, still below the statewide average of 6.5 percent. Rising fuel costs have also strained the industrial market, which has been hurt by the downsizing
of industrial companies related to the housing industry, including those producing building products and appliances.

When the real estate market was booming in New York, the modern-day Harlem renaissance seemed inevitable. New condos went up, and buyers bought townhouses to rehab and resell.

Now, as the market has slowed and real estate experts scramble to pinpoint exactly which not-so-prime areas are going to get hit hardest, the question becomes, “How will Harlem weather the storm?”

The experts interviewed for The Real Deal’s Q&A this month said that while new developments abound in Harlem, some projects are struggling financially. They also said that high-end retail is arriving here and there, but is largely lagging behind the luxury developments.

In many cases, Harlem mirrors the rest of the city in that buyers are gaining more of an upper hand with more time to make decisions and a little more wiggle room when it comes to negotiating prices. One expert said price per square foot at some full-service buildings has dropped slightly in the last six months, but that as buyers get priced out of other Manhattan neighborhoods, Harlem has become a logical alternative to moving to another borough. Most real estate pros said condos were faring best, while the townhouse rehabs for sale were not seeing much movement. In fact, one architect said that sales volume in the townhouse market was off by 25 percent compared to two years ago.

Buildings like 111 Central Park North, 5th on the Park and SoHa 118 were all singled out as some of the most exciting new additions to the iconic neighborhood. But even as the invisible 96th Street demarcation creeps upward and amenity-filled buildings become a norm, some brokers said their buyers are still not yet willing to venture into East Harlem. And with the 125th Street rezoning moving forward amid the shaky market, all eyes will be on Harlem to see what happens there next. For more, we turn to our experts:

Albert Marengo CFO, Gary Silver Architects

What is the most negative aspect of the Harlem market right now?

The lag in retail development in East Harlem. The area is changing dramatically, and retail development has not really caught up. It should be pushing forward, but it is lagging behind right now.

What is the most positive aspect?

From our point of view, the attraction of working middle-class people in search of real estate value with upward potential.

What is the most troubled condo project in the Harlem market right now?

The Ivey on Second Avenue and the Lenox Grand. Both had developer financial issues.

What sector of the residential market is faring best in Harlem right now? What part is weakest?

The best sellers are smaller units — studios, one-bedrooms and small two-bedroom condos in full-service buildings. In the condo market, once you pass the $780,000 to $800,000 number, buyers will wait till the very last minute to make a decision.

Are you still seeing buyers who are moving from farther south in Manhattan to buy and renovate townhouses?

Nowhere near two years ago. It’s less than 25 percent of what it was two years ago, if that.

Any notable deals you’ve seen recently that show the state of the market?

The most obvious is 111 Central Park North. All units closed at an average of $1,100 to $1,200 per square foot. That is in direct competition with Midtown Manhattan.

Which areas of Harlem are most overrated or underrated right now?

The old barrier of 96th Street hasn’t been true for five years now; 110th Street in Harlem is going to be northern Manhattan.

What sort of residential per-square-foot prices are you seeing in Harlem?

For full-service buildings, it averages $650 to $850. Six months ago, the lower number was $700 instead of $650.

What is the brokerage scene like in Harlem right now?

Bigger guys are doing well — the Warburgs, Douglas Ellimans, the Corcorans. It may be that the mom-and-pops might close or dissolve into the big companies because they don’t have the ability to spend as much money to attract the buyers as the big ones.

Yoav Haron partner, Artimus Construction

What’s the most positive aspect of the Harlem market right now?

It continues to grow at a faster pace than the rest of Manhattan in terms of new development. We are continuing to build a 54-unit rental. Almost 95 percent of the vacant land is being developed. There were five new foundations in the last three months; it has a lot to do with the 421a. All the condos and rentals we are building are being built at up to 40 to 50 percent of prices that people are paying below 110th Street.

What’s the most negative aspect?

Because the market in Harlem has grown, some of the new developers are not as experienced, and some developments have run into financial trouble. There are some who decide overnight that they will be a developer. Those are the kinds of projects that are stalling.

How is Harlem faring in relation to other parts of Manhattan and to the boroughs?

Harlem’s luxury products have increased at a faster pace than most of Manhattan compared to what was available in Harlem several years ago. And this is beginning to surpass almost all the outer-borough neighborhoods in terms of condo prices. For certain developers they continue to go up, but on average, they have leveled.

What sector of the residential market is faring best in Harlem right now? What part is weakest?

Rentals and condos are faring the best; co-ops are weaker.

Are you still seeing people move to Harlem from farther south in Manhattan to buy and renovate townhouses?

There are not as many as there used to be, but you can drive down any street and see a townhouse being renovated.

Any notable deals you’ve seen recently that show the state of the market?

Fifth on the Park and SoHa 118 have gone into several contracts over $1.5 million. People want to make deals before the next school year. We are seeing a lot of Upper West Siders moving to Harlem to take advantage of larger space and lower prices.

What sort of residential per-square-foot prices are you seeing in Harlem?

At SoHa 118, we are selling on average for over $850 per square foot. The deals are going through at asking prices or a little below or above, depending on the product.

Denice Johns owner, Society Estates

What group of sellers is most active in Harlem right now?

Definitely condo sellers, which is mostly developers. But I find a lot of people that bought a couple of years ago are selling. Developers are now finding themselves in competition with home sellers. Right now, because of the economy, prices are stable; it just takes a little longer to sell. Now it might take three months to sell, when
before, it took almost a month.

How have buyers and sellers changed their attitudes?

Buyers are looking for extra deals. Sellers, or the developers, are trying to stay as firm as possible.

What is the most exciting new condo project in Harlem (that you are not involved with)?

There are a couple: the Delaney and 5th on the Park. Fifth on the Park is priced higher but is a little different. It has a pool, and the building is larger than most.

What’s the level of condo inventory like overall compared to other parts of Manhattan?

There is a lot of inventory; not as much as Downtown, but there is still more room for condos. There are pockets of developments, a lot on one block and then nothing for several blocks. I think it is getting better and better, especially 125th Street. People are buying and combining, making a 3,000 to 4,000-square-foot apartment — that has been a trend in Harlem. Because the prices are so much less than in Manhattan, they can have these grand apartments that might cost $16 million Downtown but here only cost $3 to $4 million. It looks like development is slowing down right now, but they have a lot that will be coming up.

What sector of the residential market is faring best in Harlem right now? What part is weakest?

Definitely condos and combining two condos are really doing well. Townhouses — I don’t see them moving.

What geographical part of Harlem is doing best? Which is performing worst?

Definitely below Morningside Heights, Mount Morris between 110th and 125th [is doing best]. The Washington Heights area at 155th and up, going east [is doing worst].

Which part of the neighborhood is most underrated?

The East Side is nice. All these new buildings are coming up, and people don’t seem to want to go over there. At 116th Street and Madison, the East Side all the way to 125th and above, there are beautiful buildings, new construction, and the prices are more reasonable, but when people call, they say they don’t want to go to the East Side.

What’s the overall level of sales activity like compared to the recent past?

Two years ago they were jumping, even a year ago. Right now, things are not flying off the rack. Some people call and come back to see if you’ve gone down on the price. That never happened before.

What is the brokerage scene like in Harlem right now?

The developers want to deal with people —or companies — they know. What bothers me the most is they don’t in general entertain the bids from smaller brokerages. I sold 50 percent of the Dwyer in six months with a one-bedroom going for $1.1 million. That shows that mom-and-pops can do the same, if given the opportunities. The theory is that a mom-and-pop can’t, which is ludicrous.

Klara Madlin president, Klara Madlin Real Estate

What group of buyers is the most active right now in the Harlem market? What group of sellers is most active?

The most active buyer is the investor. The most active seller is also the investor. Two years ago, it was new homeowners buying and long-time homeowners selling.

How is Harlem faring in relation to other parts of Manhattan and to the outer boroughs?

One is still able to get more for [their] money in Harlem than in, say, the Downtown or Midtown area. However, the outer boroughs are still less expensive.

What is the most exciting new condo project in Harlem right now (that you are not involved with)?

The WA Condominiums — featuring a track and field, and Olympic swimming pool. The downside is this building is asking $1,205 per square foot. Wow.

What geographical part of Harlem is most overrated or underrated?

East Harlem is very underrated; 110th to 145th on the West Side is doing much better.

How have the big brokerages done in relation to the mom-and-pop brokerages?

The main ingredient that keeps the new, larger firms in business in Harlem is new development. The new developers with the large projects seem to be the base for survival for those firms, while the private sector of the community seeks out the service of the smaller mom-and-pop boutiques. They do remain loyal.

Melissa Brown-Bornstein vice president, sales and leasing division, the Olnick Organization

What surprises have you seen in the Harlem market recently?

At the Lenox, they just recently leased ground-floor retail to a fancy foreign car showroom with a café for their customers. A lot of investors [were] behind that.

How active is the market among Manhattanites who currently live farther south, but are looking for rental deals in Harlem?

We are getting fairly competitive in two-bedrooms for $2,600 to $2,700 a month. We don’t have a lot of them. The larger one-bedroom or junior four’s are $2,000 a month. It’s a great bang for your dollar.

What’s happening with Harlem rents in general?

Compared to two years ago, the rental market has definitely appreciated. It has a direct relationship to buyer caution…the rental market has held its own.

Sandy Wilson senior managing director, Harlem office, Corcoran

How is Harlem faring in relation to other parts of Manhattan or to the outer boroughs?

As everyone has sharpened their pencils and insisted on getting great prices, so has the Harlem buyer. We are also noticing that potential buyers may wish to dip a toe in the water and rent an apartment until they become familiar and know exactly where they wish to buy a home uptown.

Any notable deals you’ve seen recently that show the state of the market?

A gorgeous, 17-foot-wide townhouse on West 142nd Street recently closed for $2.89 million, which was a record-breaker for that size house on that block.

What geographical part of Harlem is doing best?

Condos below 125th Street. The historic areas of Hamilton Terrace, Striver’s Row and Mount Morris Park West are seeing brisk sales and open houses averaging 20 to 30 people on Sundays. East Harlem is seeing great interest from investors who are building condos.

What sort of residential per-square-foot prices are you seeing in Harlem?

You can see prices as low as $500 per square foot for a “fixer upper” townhouse to $1,000 per square foot for a full luxury penthouse apartment.

Gary Cannata director of sales, Harlem office, Prudential Douglas Elliman

What is the most negative aspect of the Harlem market right now?

The media and press paint a really ugly picture, which is really misleading and weighing on consumers. Markets across the country are suffering far greater than what we are seeing in New York City. We are selling property that is priced right. We aren’t doing the volume we may have enjoyed in recent years, but deals are being made at stable price ranges.

What group of buyers is most active right now in the Harlem market?

We are seeing a great deal of families relocating. They are being priced out of prime Upper West [Side] locations. Additionally, we are finding young, first-time buyers that are priced out of most of Manhattan.

How is Harlem faring in relation to other parts of Manhattan?

We are finding more inventory in Harlem compared to other parts, so there is more to see, and that is time-consuming.

Christopher Halliburton senior vice president, Warburg Realty Partnership

What is the most problematic aspect of the Harlem market right now?

We have to overcome a few failed developments and overzealous developers that caused some projects to stall and created some buyer concern and skepticism.

How is Harlem faring in relation to other parts of Manhattan and to the outer boroughs?

Harlem is holding its own compared to other parts of Manhattan. The fact is, you can get luxury new construction in Harlem for 20 to 30 percent less than in other parts of Manhattan. When average new construction south of 96th Street is $1,000 a foot and you can get a doorman green building on 104th and First Avenue for $800, that’s a compelling savings.

What is the most exciting new condo project in Harlem right now (that you are not involved with)?

WA condos. It has everything: indoor parking, rooftop pool. There is a reasonable level of units available. Some of them are just not priced right, and the developers have waited too long to lower their prices and most likely cannot afford to lower them now due to the increased debt service.

What is the most troubled condo project in the Harlem market right now?

Lenox Grand.

Joseph Holland president, Uptown Partners

What group of buyers is the most active right now in the Harlem market?

I’m seeing relatively active groups including foreign buyers from Europe and East Asia. We’re seeing the value purchasers from the Upper East Side and Upper West Side of Manhattan.

How have buyers’ and sellers’ mentalities changed recently?

It’s a buyer’s market. People are taking their time; they are looking around, getting a second opinion, and don’t feel in a rush. Among some sellers, there is more of a willingness to bargain.

What is the most exciting new condo project in the Harlem market right now (that you are not involved with)?

It may not be that new, but 111 Central Park North because of its location, price point and view.

What’s the level of condo inventory like overall compared to other parts of Manhattan?

New condo project absorption is not as strong, although sales are still happening. The next several months, as new units come on the market, will tell as to whether absorption continues in Harlem. It’s harder to get a construction loan and equity loan for construction … so there has definitely been a slowdown in the number of projects. There is a lot of construction going on right now, and they were in the pipeline and funded prior.

What sector of the residential market is faring best in Harlem?

Condos still have activity, [but] townhouses in terms of resales [are not seeing] as much activity. People are in the wait-and-see mode.

What’s open house attendance like?

It reflects the slowdown. We are hoping that with the better weather people start coming out. I hear it’s not just us, it is overall.

What sort of residential per-square-foot prices are you seeing in Harlem?

The prices are still holding steady. At 5th on the Park, we have not lowered our prices. Last year we amended our offering plan to increase prices. From what I have read, the average for condo prices in Harlem is $800 per square foot. Ours is a little higher. I think there are other condos that have done the same thing. Whether that will continue to be the policy after the spring selling season, who knows.

The gray, institutional-looking building that until recently sat at 340
Court Street in Carroll Gardens used to house the once-powerful
International Longshoremen’s Association.
[more]

Almost a decade after a crackdown on building managers and agents who
took kickbacks from unscrupulous vendors and service providers, the
problem remains as intractable in New York real estate as cockroaches. [more]

Related chosen as new Hudson Yards developer

The MTA announced it had reached a $1.054 billion deal with the Related Companies, and financial backer Goldman Sachs, to develop Hudson Yards, following Tishman Speyer’s abandoned deal. Mayor Michael Bloomberg lauded the deal, saying, “Despite the setbacks of the last few weeks, we are certain that Related and Goldman will realize this tremendous opportunity to develop what is really the only large parcel of undeveloped space left in Manhattan.” (See How Related won Hudson Yards bid.)

Critics call for replacing Buildings Department

Critics of the Department of Buildings called for replacing the agency at a recent New York City Council meeting. Louis Coletti, president of the Building Trades Employers’ Association, and REBNY president Steven Spinola are vouching for creating a public corporation that they say would be both more decisive and flexible than the Buildings Department, the New York Times reported. The industry opposes a bill by Council member Jessica Lappin that would empower the agency to appoint independent safety monitors (at the property owners’ expense) at construction sites with a track record of serious safety violations. Twelve separate bills call for various other reforms.

Zuckerman, Moinian tussle over Eighth Avenue tower

Real estate and media tycoon Mort Zuckerman argued in a Manhattan Supreme Court affidavit that developer Joseph Moinian was holding up the construction of his 39-story Eighth Avenue office tower. The tower, known as 250 West 55th Street, is supposed to be built by January 2010. At issue was a four-story building owned by Moinian, at 241 West 54th Street. Zuckerman claimed that Moinian is denying his company, Boston Properties, access to the building so it could be reinforced before work begins next door. Zuckerman also claimed Moinian was trying to stall the project and force him to buy the property, the New York Post reported.

Albany tackles foreclosures

The New York State Assembly passed legislation last month to impose a one-year delay on foreclosures caused by defaults on mortgage payments, while the Senate prepared to take up a related bill backed by Gov. David Paterson. The governor’s proposal was to delay foreclosure for 60 days after lenders get an offer to renegotiate from a homeowner. Assemblyman James Brennan, the Brooklyn Democrat who filed the bill for a year-long freeze, said he welcomed Paterson’s proposal, the Associated Press reported.

Bloomberg OKs property tax cut for another year

Mayor Michael Bloomberg, in a budget update early last month, said the city’s finances are stable enough to extend a 7 percent property tax cut and $400 property tax rebate for one more year, but not longer than that, Newsday reported. Earlier this year, economic uncertainty prompted Bloomberg to say the $1 billion tax cut that took effect last year might not survive.

Foreclosures hit Hamptons high-end

This summer might not be so sunny in the Hamptons, as a wave of foreclosures could hit high-end homes there. In the first quarter, banks started preliminary foreclosure actions, called lis pendens, against a record 120 homeowners in East Hampton and Southampton. About 20 percent of those homes are worth more than $1 million, the Post reported.

Landmarks approves Nouvel’s MoMa tower

A skyscraper planned next to the Museum of Modern Art designed by prize-winning architect Jean Nouvel cleared a big obstacle last month. The Landmark Preservation Commission approved the transfer of development rights from two buildings on Fifth Avenue, the University Club and St. Thomas Church. The proposed 75-story hotel-condo at 53 West 53rd Street now moves to the city’s land-review process. Area residents have expressed concern about the tower’s height, which would be taller than the Chrysler Building.

Builders around the city are racing to get projects started in order to beat a looming deadline.

Upcoming changes in the 421-a tax abatement policy — which will make requirements for receiving benefits stricter, in addition to lowering the level of benefits — are driving builders to get multifamily developments in the ground prior to June 30.

Meanwhile, those who realize they won’t make the deadline are figuring out creative ways that they can work around changes in the 421-a policy, like carving projects into small individual units and cutting back on monthly maintenance fees.

Alchemy Properties, for example, felt the pressure to get two new developments into the ground in the last two months: a condo building at 303 East 77th Street in April and luxury condos at the former Sony Studios at 800 Tenth Avenue in mid-May.

Another developer, who declined to be named, is building an 18-story, 60,000-square-foot mixed-use condo at the southwest corner of 14th Street and Third Avenue, and needed to take out a high-interest, $10.24 million bridge loan in order to do demolition and get a foundation in the ground before June 30. A conventional construction loan would have taken three to four months to obtain, compared to the two weeks it took to get the bridge financing, said Gregg Winter, the principal of W Financial, who originated the loan.

“Even though the borrower had a construction loan lined up, it was just far too risky for them to count on it closing in time to commence on the foundation by June 30,” Winter said.

One strategy that the assessed value change has spawned among perceptive developers who know they are going to miss the deadline: the division of projects into more units of smaller size.

Real estate lawyer Paul Korngold, partner of the firm Tuchman, Korngold, Weiss, Lippman & Gelles, said he has already seen this from a client of his in Woodside who
expects to break ground after July 1.

“If you have 42,000 buildable square feet, you are now going to be more inclined to make 60 apartments that are 700-square-foot studios, than 20 big 2,100-square-foot homes,” Korngold said. The explanation: Projects started after the cutoff date will receive a cap on their tax abatements at an assessed property value of $65,000 per unit. Since each smaller unit will have less value in excess of the $65,000 cap, the builder will get the most amount of abatement for their money.

Another real estate attorney, Luigi Rosabianca of Rosabianca & Associates, also mentioned ways developers are “getting creative” with the impending changes in abatement policy.

He pointed out that while a developer might choose to build three adjacent one-bedroom units where he would have previously built one three-bedroom unit, the floorplans are often designed in such a way that if later on a buyer wanted to convert the three apartments to a single unit, it would not be difficult.

Of course, if the buyer wanted to combine the units to get a resulting three-bedroom, they’d have to forfeit the abatement received on two of the units that get combined. “Of course, if somebody is looking for a three-bedroom, [the abatement] is less of a concern than for somebody looking for a studio or a one-bedroom,” Rosabianca noted.

Another strategy is for developers to hold down costs elsewhere. One of Rosabianca’s clients, a developer in Murray Hill, realized he was going to miss the July 1 cutoff for his residential project, which wasn’t a “high-scale” project, according to Rosabianca.

“Once he realized he wasn’t going to make the deadline for uncapped tax abatement, the developer opted to scale back amenities, thus reducing the common charges,” Rosabianca said. Due to the nature of the development, Rosabianca’s client believes the cost of monthly fees is an important factor to potential buyers. The decrease in monthly common charges, the developer figured, somewhat compensated for the increased monthly real estate taxes.

Expanded area

Developers who don’t get their projects in the ground before the June 30 cutoff date will be required to build 20 percent low-income housing within their projects in order to qualify for the tax breaks in more areas of the city. A low-income minimum is currently required to obtain the abatement from 96th Street south to 14th Street, as well as in the West Village. On July 1, this zone — known as the Geographic Exclusion Area, or GEA — is set to expand to include all of Manhattan and parts of the outer boroughs.

The new GEA will include parts of Long Island City, Astoria, Elmhurst, Jackson Heights, Flushing and Woodside in Queens; most of East Williamsburg, parts of Fort Greene, Crown Heights and Sunset Park, and all of Greenpoint, Williamsburg, Downtown Brooklyn, Brooklyn Heights, Carroll Gardens, Boerum Hill, Red Hook and Park Slope in Brooklyn; Mariners Harbor, Port Richmond, New Brighton and Clifton in Staten Island; and Crotona Park, Melrose and Mount Eden in the Bronx.

Low-income requirements in the GEA are designed to propel building of cheaper apartments in neighborhoods where it wouldn’t normally be practical for a developer to build them. While the GEA expansion is intended to spur building of affordable housing in less affordable communities, almost every expert contacted by The Real Deal predicted it will have a negative effect on the industry. Developers previously took the abatements for granted, they say, and taking the benefits away will slow development in the new GEA, which is already dragging from the credit crunch. Development in some areas, they said, may grind to a halt.

“I think that fundamentally, this change makes market-rate housing more expensive … and we’re going to see housing production affected dramatically,” said Francis Greenburger, founder and CEO of real estate investment company Time Equities, and no stranger to criticizing real estate tax policy. Greenburger openly criticized the city and state’s taxing policies for condo conversions in a 1990 New York Times article.

Greenburger said that while he is very sympathetic with the city’s need for affordable housing, he believes the amount of income a developer loses by making one-fifth of a project low-income housing will simply deter them from aiming for the abatement in many cases. If the developer did fulfill the 20 percent requirement, he noted, they would need to mark up the market-rate component of the project to compensate for the lost profit.

“In effect, it costs you more to build market-rate housing,” he said. “It’s always a very expensive step for people to buy a new home, so to be hitting them up with this extra cost, I think it’s going to be a real issue.”

Aptsandlofts.com president David Maundrell said that the loss of abatements stands to make larger developments — 2,500-square-foot to 5,000-square-foot plots — prohibitively costly for many developers in Williamsburg.

Adding insult to injury, Maundrell said the overall market there is hurt by developers’ rush to make the June 30 date. He said a sudden oversupply will likely decrease the value of units at these projects once they come to market.

“[The policy change is] forcing developments to come to the market all at the same time, and buyers notice this,” Maundrell said. “And it’s causing them to think, ‘I’m just going to wait a little while.’”

A major goal of expanding the GEA was to push market-rate building activity farther out to so-called fringe neighborhoods, formerly passed over by such developments. Insiders who spoke to The Real Deal, however, were skeptical that the tax-regulation change would have this effect.

Nicholas LaPorte Jr., executive director of the Associated Builders and Owners of Greater New York, said that while the policy attempts to push developers farther into the boroughs, he doesn’t think they are going to start projects there.

“[The new policy] is asking developers to put large projects in neighborhoods, communities that don’t have the demand for that … in Bushwick, for example,” he said. “Developers just won’t be able to get the prices for those units required to cover their building costs.”

LaPorte added that between the credit crunch and rising costs of land acquisition and construction, he doesn’t foresee any low-income housing produced under 421-a without additional government assistance.

Korngold believes that once the deadline to get in the ground passes, more creative strategies to deal with the new policy will surface.

“Most developers right now are just focused on beating July 1, and they don’t focus on the details,” he said. “Then, after July 1, I think they are going to get a lot more sophisticated on 421-a.”

While the pending June 30 deadline date has caused a critical drop in the value of undeveloped sites that will no longer qualify for 421-a abatements as
of right, it has had the reverse impact in another
market: the trading of 421-a certificates that absolve developers of the low-income requirement — and sometimes even can grant developers an extension for breaking ground.

A certain species of the document, formed via an agreement between low-income developers and the Housing Preservation Department on or before Dec. 26, 2006, gives developers until June 30, 2009, to break ground on their projects and avoid both the $65,000 assessment cap and the 20 percent low-income requirements.

Needless to say, these certificates — dubbed “golden” certificates by their brokers — have skyrocketed in value as July 1 approaches, since they will be the only way to beat the assessment cap and low-income requirements once the date passes.

The certificates are selling for $37,000, up from around $25,000 last summer, according to Massey Knakal managing director and partner James Nelson.

“As we get closer to the June 30th deadline, and people don’t get in the ground, the ["golden"] certificates will definitely go up in value,” he predicted. “I’d guess beyond $40,000 by June 30th.”

His firm has sold 16 such certificates, for a total of $592,000.

The one catch to the “golden certificates,” however, is that they cannot be applied to developments outside the new 421-a Geographic Exclusion Area. So if you want to build outside the zone, your only options are to break ground by July or suffer the abatement cap.

Real estate attorney Paul Korngold said, however,
that because property values outside the GEA tend to be lower, the cap in those areas usually won’t hurt a developer as badly.

There are exceptions of course, such as super luxury property in Forest Hills, Queens, Korngold noted. But for other outside-the-zone locations, “odds are the assessed value of a project will not exceed $65,000 per unit in a lot of those areas,” Korngold said.

The turmoil surrounding Hudson Yards last month — with the Related Companies stepping in to salvage the deal in an 11th-hour, billion-dollar agreement — illustrates just how difficult it can be to do business with a state agency like the Metropolitan Transportation Authority.

But beyond the currently in-the-spotlight West Side and the Atlantic Yards site in Brooklyn, the MTA has a vast real estate portfolio.

The agency owns or leases 14,000 properties in the metro area, including 5,350 in the city. The sites include train stations, rail yards, switching facilities and other infrastructure locations. What’s more, the MTA is either selling or has recently sold a handful of them.

However, an audit of the agency’s real estate portfolio, which commercial real estate firms Massey Knakal and CB Richard Ellis conducted to get a handle on how much surplus land the MTA could sell, found that the assets it could consider selling are worth a mere $20 million combined.

“There is some value, but not a lot of low-hanging fruit,” said Tom Sheehan, senior vice president at CBRE.

“People think we are a significant holder of disposable assets,” said the MTA’s longtime real estate director Roco Krsulic. Yet he notes, “with demands for facilities growing rather than shrinking, we seldom find ourselves in a disposition mode.”

Complicating matters is that the MTA does not actually own all of the land it uses. In some cases it carries long-term leases with other government agencies — and determining title can be tricky, said Thomas Gammino, senior director of sales at Massey Knakal.

The few properties the agency has sold recently include the Mamaroneck train station in Westchester County, which went for $1.25 million, to the Bronx-based Verco Properties and a $12 million parcel in Westbury, Long Island, near the Mineola train station.

The latter deal stemmed from a two-block, 3.5-acre parcel near the Mineola station that the MTA purchased for $11.5 million in 2002. On one block, it built a four-level parking garage.

Last month, Great Neck-based A1 Universal Construction Realty bought the remaining block, a 1.3-acre property, for $12.2 million. The firm’s CEO Mike Yeroushalmi declined to comment on what he plans to do with the space.

In Mamaroneck, Verco is planning to spend $1.25 million on top of the $1.25 million it paid for the station to convert it into a high-end restaurant and to tuck office space into the high-truss ceiling, though the company must abide by strict preservation guidelines.

“This will be a destination not just for commuters but for the surrounding area,” said Chris Verni, who co-owns Verco with his brother, John. “It’s not going to be an Applebee’s.”

Meanwhile, the MTA is currently in the process of marketing several sites. The only New York City site in that category is at 166 Smith Street in Brooklyn, which the agency bought in 2003 for $2.01 million in order to install a switching and signaling facility. That facility occupies almost two-thirds of the basement, but the MTA is now looking to sell the rest of the building. Responses to an official request for proposals for the site were due late last month.

Upstate in Dutchess County, the agency is moving forward on a larger project that five developers have already officially responded to as part of the MTA’s so-called request for expressions of interest. The agency is looking for a developer to design a mixed-used project on an 18-acre site surrounding the Beacon train station and is also requiring the developer to expand and upgrade the station. A formal RFP will be issued in the fourth quarter of this year.

Go to chart: Foreclosure Patterns – 2007

Struggling homeowners in low-income New York neighborhoods with high mortgage default rates say they don’t have far to look for the sources of their financial woes. They blame the so-called “one-stop shops” that were supposed to help them prosper.

These businesses specialize in fixing up and selling houses bought through distress sales and foreclosure auctions, then offer buyers the services they need to purchase these houses. That includes finding mortgage lenders, appraisers and even lawyers to represent them at the closing. Many buyers are swayed by the convenience factor, but critics who have studied them say one-stop shops often fail to offer the normal checks and balances that protect the customer in standard real estate transactions.

At least five different lawsuits pending in the civil division of Supreme Court in Kings County and in the federal court for the Eastern District of New York take aim at some of the biggest one-stop shops in the city, charging they’ve engaged in illegal practices, such as racial targeting and fraud.

Ripe for rip-offs

Some of these cases are based on events that took place many years in the past, but advocacy groups say alleged crooked practices by one-stop shops are linked to the current subprime crisis and the recent rise in mortgage defaults in predominantly low-income, minority neighborhoods.

“There was a void of affordable credit in those neighborhoods,” said Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project (NEDAP), a Manhattan-based nonprofit organization. He’s the former director of the Foreclosure Prevention Project at South Brooklyn Legal Services.

“They [mortgage lenders] jumped in and started targeting people for any kind of loan they could get them into, and they knew that they could turn [the loans] around and sell them,” Zinner said. “That system went on for more than 10 years, and now it has imploded. Those of us who were working with homeowners were saying for years to the investment banks and to regulators that this is a house of cards.”

Lynn Armentrout, a lawyer who years ago settled several cases against Better Homes Depot, a one-stop shop currently defending itself in several ongoing lawsuits in Brooklyn, said, “there is a similar fact pattern.”

“The house is bought on the cheap by Better Homes Depot. They turn it around and sell it for a huge increase in price that really isn’t justified by any change in market conditions; but they get a crooked appraiser to appraise at its inflated price; and then they get a crooked lender to fudge over the underwriting and approve a loan that should never be approved, and everyone is protected because the mortgages are insured by the federal government,” she said. “Then the lender sells the mortgage on the market right away, and hence we have our subprime crisis.”

Eric Fessler, president of the Ozone Park-based Better Homes Depot, did not return numerous telephone messages left at his office requesting an interview. However, in a Newsday interview in 2004, Fessler took credit for helping thousands of families find homes in neighborhoods such as Bedford Stuyvesant, Bushwick and East New York — some of the neighborhoods hardest hit by the subprime crisis.

He told the paper that he had not engaged in any conspiracy to take advantage of homebuyers. “We do a tremendous amount of transactions, so we are bound to hear some complaints,” Fessler was quoted saying. “Many of these lawsuits are frivolous.”

However, Fessler has had a long history of documented legal troubles. According to court papers, in the early 1990s federal prosecutors charged Fessler with paying kickbacks to attorneys as part of an effort to illegally expand his mortgage banking business. He served nine months in prison.

In 2003, Fessler’s company settled a lawsuit by New York City’s Department of Consumer Affairs for allegedly misleading many first-time homebuyers. It paid more than $525,000 in restitution to 36 New Yorkers and a $100,000 civil fine.

Other homeowners have failed to win legal redress for similar alleged violations.

Lionel Oullette, executive director of CHANGER, a homeowner advocacy organization, said one-stops’ often complex business practices can mean high legal expenses in cases that can last for years.

“And then there is the fact that they [one-stop shops] intimidate and threaten people; most people are not up for the fight,” he added.

Reverend Linda Council and her daughter, Kimberly Council, have a case against Better Homes Depot and a variety of associated companies. They have been fighting to save their home from foreclosure by the Chase Mortgage Company.

The Councils said they contacted Better Homes Depot in 1999 about purchasing a home after seeing one of the company’s advertisements in a local newspaper, but went through a bait-and-switch and a legal nightmare. In court papers, the Councils claim a Better Homes Depot agent told them to provide financial information and then sign a blank mortgage form, which the agent from Better Homes Depot would fill out later.

The application for the Federal Housing Administration (FHA) insured loan went through Madison Home Equities, a company with which Better Homes has a longstanding relationship. Madison also has had its share of run-ins with regulators. The company was sanctioned in 1998 by the FHA for allowing false documents to be submitted, which enabled homeowners to borrow beyond their means. In 2000, it entered an agreement with the Department of Housing and Urban Development to stop issuing FHA-insured loans for five years. It also paid a $71,000 civil fine.

In court, the Councils claimed that after signing a contract to buy a home for $230,000 at 183 Etna Street in East New York, they were told the property was not available and that a representative of Better Home Depot then steered them to a dilapidated property at 102 Etna Street.

They said they were told the property was being fixed up and that it was a legal two-family house, which could generate rental income. The house was only legally classified as a one-family residence. Mother and daughter also said many promised repairs were never made. Still, their purchase of 102 Etna Street was financed by an FHA-insured mortgage through Madison Home Equities in the amount of $203,477. An appraiser provided by Better Homes never told the Councils that BHA had purchased 102 Etna Street for $131,000 in a deal financed by Madison Home Equities, less than six months prior to the Councils’ purchase. The appraisal omitted mention of the need for substantial repairs including major plumbing repairs, a new electrical system, a new boiler and a new roof.

The case remains open.

In another federal lawsuit, in Eastern District Court, six Brooklyn homebuyers claim they are victims of a property flipping scheme orchestrated by Yaron Hershco, who owns United Homes and allegedly owns or manages about five or six other related companies, which all use 139-27 Queens Boulevard as an office address.

The suit alleges that United Homes and other companies that Herscho controls use deceptive business tactics to sell first-time minority homebuyers homes that are overpriced and damaged. The complaint cites a review of 60 properties sold by United Homes entities during 2002 to 2003, which reveals that in most instances, the company would only hold a house for a few months before selling it for an average markup of more than $160,000. Herscho did not return numerous calls to his office requesting an interview.

The long list of other defendants who allegedly aided and abetted the United Homes property flipping scheme includes Olympia Mortgage, which issued the mortgages. It also includes subsidiaries of Credit Suisse First Boston Mortgage Securities, which allegedly created “no income, no asset guidelines” that allowed Olympia access to subprime secondary market financing.

Meanwhile, Best Express Homes, owned by prominent Hillary Clinton supporter Keith Kantrowitz, is also in the legal docket.

Gloria Kingston purchased her first house from Best Express Homes in 2000. Her lawsuit alleges the company inveigled her into getting an unaffordable mortgage for 171 East 59th Street in Brooklyn by telling her to use a friend with better credit to secure the FHA-insured loan.

According to the lawsuit, Kingston and her friend were steered to a lawyer and appraiser working in cahoots with Best Express and to a mortgage company, Power Express, registered to the same Long Island address. Kingston claims she was not informed that both companies were owned by Kantrowitz, and thus prevented from surmising a possible conflict of interest.

In 2002, Kingston defaulted on her mortgage. DLJ Mortgage Capital, a company that acquired Kingston’s mortgage, commenced foreclosure proceedings.

During the course of the foreclosure hearings, Kingston attempted to sell her property to minimize her losses, but she found that she was unable to do so because her house was encumbered with building violations that predated her purchase.

Kantrowitz, who briefly fielded questions from a reporter before taking another telephone call, did not respond to numerous requests for a follow-up interview. He claimed he is primarily involved in mortgage banking these days and no longer active in the foreclosure resale business, although he said that because of the credit crunch, the foreclosure resale business is slowing down. He said, “It is getting a little weaker because it is harder to finance, so if you cannot finance, you have no buyers.”

Zinner of NEDAP also sees signs of the foreclosure resale business slowing down. “The enforcement agencies have not moved aggressively against these one-stop-shops,” he said. “It may be the market that ultimately stops them, because I think that going forward, it is going to be very hard to get financing for their schemes.”

A major legal brawl is breaking out
over how homes are appraised, at what cost and by whom. The outcome could directly affect the price you pay for your next piece of real estate, and the amount of mortgage money you can obtain.

The fight centers on an unusual agreement reached in March among Fannie Mae, Freddie Mac, their federal regulator and New York Attorney General Andrew Cuomo. The agreement took the form of an out-of-court settlement under which Cuomo terminated an investigation of the mortgage finance giants’ appraisal practices in exchange for their adoption of a far-reaching “home valuation code of conduct” covering all loans they purchase or securitize.

The code, which is scheduled to take effect on Jan. 1, would shake up the entire appraisal system:

•Mortgage brokers, who originate roughly 60 percent of all new loans, no longer would be allowed to select or pay appraisers. That could force some mortgage shoppers to pay for multiple appraisals rather than just one.

•In-house appraisers at banks and mortgage firms no longer would be permitted
to do appraisals for loans to be funded by their organizations.

•Lenders would not be able to use appraisals generated by management companies — firms that contract with networks
of appraisers nationwide — if they have a
significant financial stake in the management company.

Under the agreement, Fannie and Freddie would spend $24 million over the next five years to create and staff a new “independent valuation protection institute” to monitor appraisal standards and provide a complaint hotline for appraisers and consumers.

What’s the big problem here, you might ask? Inflated appraisals — often involving either pressure by loan officers or fraudulent collusion by appraisers themselves — played a role in at least some of the mess we’re seeing in many housing markets.

Prodding Fannie and Freddie to undertake appraisal reform is a good idea, right? Critics say: Not if you look at the details.

When the two mortgage companies and Cuomo recently asked for public and industry comment on the settlement, they were inundated with often angry responses.

Major financial and banking trade groups are not happy. In a letter, eight groups including the American Bankers Association, Mortgage Bankers Association and the Consumer Mortgage Coalition called the whole idea “bad policy” and demanded that Fannie’s and Freddie’s federal regulator withdraw its support for the agreement, effectively killing it.

In their witheringly critical letter, the groups said the settlement, sanctioned by the Office of Federal Housing Enterprise Oversight (OFHEO), violated multiple federal statutes and permits a single state, New York, “to unlawfully exercise authority that resides exclusively in the federal government.

Fannie, Freddie and thousands of banks and thrift institutions are federally regulated, and cannot be ordered to change key loan underwriting procedures by a state government, the groups argued. By “forcing the dismissal of thousands of highly skilled appraisal professionals because they are employed [by banks]” would “wipe out millions of dollars of investments” along with jobs now held by competent, ethical professionals.

Five national appraisal organizations agreed, and said mortgage brokers should not be prohibited from hiring independent appraisers because the current system — if strengthened by greater use of review appraisals to double-check accuracy — works efficiently for consumers and the mortgage industry as well.

The National Association of Mortgage Brokers said removing them from the appraisal equation would force buyers to pay more for appraisals and spend more time
on applications.

Under the Fannie-Freddie plan, “consumers would be financially tied to the first lender they, or their mortgage or real estate professional, submit their application [to],” according to the brokers. “Any subsequent application may require a new appraisal,” doubling or tripling the cost and time involved.

Other critics charge that the Fannie-Freddie plan opens the door to greater use
of low-cost appraisal substitutes such as
automated valuation models (AVMs), computer-driven estimates that can be far off
the mark.

Where is all this headed, and why should you care? Fannie, Freddie and Cuomo say they will look at the critiques and make modifications if necessary. But federally regulated banks and mortgage companies are so angry that they are likely to challenge the legality of the entire settlement in court and demand an injunction.

In the end, after all the smoke clears, there’s a shot at an improved, consensus appraisal system: much tougher penalties for lenders who pressure appraisers, much tougher penalties for appraisers who give in, and more accurate appraisals for the consumers who pay for them.

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

Like a spreading infection, restrictions on credit are moving into new and more specialized niches of the mortgage market.

The latest to feel the pinch:

•Cash-out refinancings.

•Loans with anything less than full documentation of borrower income, credit and assets.

•Mortgages for certain second home purchases.

•Investment loan applications where the buyer already owns at least three other rental properties.

•Mortgages to borrowers with “nontraditional” credit, such as “thin files” with scant information at the three national credit bureaus.

•Short-term construction loans that convert to permanent mortgages.

•Adjustable-rate mortgages where the first rate adjustment occurs within 60 months after closing.

In a lender bulletin issued in April and scheduled to take effect for all loans delivered after Aug. 8, Freddie Mac said it plans to restrict financing to second home and investment real estate purchasers who already have “individual or joint ownership” interests in multiple properties. In the case of second-home buyers, they will be ineligible for new mortgages through Freddie if they have ownership interests in more than a total of four properties securing debt, including the one they propose to finance.

Similarly, loans for rental houses, rental condos and other investment properties will be ineligible if the borrower has ownership stakes in a total of four units. Previously, Freddie allowed investors to own up to 10 rental properties carrying mortgages.

Freddie Mac also announced cutbacks on refinancings of mortgages where the property had secured a “cash-out” refinancing within the prior six months. The company defines a cash-out as any refinancing where the replacement loan balance exceeds the previous balance by 5 percent or more.

According to the company’s quarterly surveys, more than 80 percent of refinancings involved equity-depleting cash-outs.

The rule changes, Freddie Mac said, are designed to “reflect the risk of these transactions” in the wake of post-boom property devaluations and higher rates of delinquency and foreclosure.

Meanwhile, private mortgage insurers — who provide loss coverage for lenders and investors on loans where down payments are less than 20 percent — have begun rollbacks on a variety of products, especially in areas they define as distressed or declining.

Genworth Financial, one of the largest insurers, on May 5th stopped considering applications for second home purchases anywhere in the state of Florida. Also effective that date, in all “declining/distressed” markets, Genworth would not touch cash-out refinancings, investment properties of any type, nontraditional credit applications, construction/permanent loans or adjustable-rate mortgages with initial adjustments within the first five years.

Genworth said the new restrictions are intended to promote “prudent underwriting standards” in light of higher risks prevailing “nationally and at localized levels.”

PMI Group, another high-volume insurer, banned cash-out refinancings, limited documentation loans and all mortgages secured by investment properties in “distressed” markets. In non-distressed areas, cash-out refinancings on second homes and rental houses no longer are eligible for coverage, nor are interest-only loans on investment real estate and all mortgages on properties containing three to four units.

PMI also boosted minimum credit score requirements for “jumbo” loans nationwide to a 700 FICO, and now will require at least 10 percent down payments. The company also ruled out “stated income/stated asset” mortgages on duplex purchases, where one unit is occupied by the owners and the other is rented out.

MGIC, the largest private mortgage insurer, recently eliminated coverage of all “option ARM” loans that have either scheduled or potential negative amortization features that increase borrowers’ principal debt rather than reduce it monthly. During the boom years, option ARMs were wildly popular in major metropolitan markets across the country. MGIC’s new ban is nationwide. The company also no longer will insure cash-out refinancings using limited documentation, temporary rate buy-downs on investment real estate, and nontraditional credit applications to buy second homes.

Why the continuing rollbacks, and how long could they continue? Lenders and insurers are carefully studying the sources of their greatest losses from mortgage vintages between 2003 and 2007. Where they see inordinate risk, they are reacting much as they would to a disease: They are eradicating it.

Some of those high-loss loan products — mass-marketed option ARMs with minimal down payments and “stated” incomes, for instance — probably never will be seen again. Others are likely to
return only with tougher underwriting standards and higher fees tied to credit and geographic risks.

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

Who have better credit scores on average — home buyers with higher or lower incomes?

Inside the country’s fastest-growing home mortgage program, the surprising answer is: People with lower incomes have slightly higher FICO scores. That finding, which emerged from a statistical analysis of all approved mortgages insured by the Federal Housing Administration (FHA) during fiscal 2007, is now buttressing a forthcoming major policy switch that could affect thousands of buyers and refinancers.

FHA, which for decades has used a one-size-fits-all approach to pricing its insurance on home loans, plans to shift to a “risk-based” system keyed to FICO scores and down payments, beginning as early as mid-July. Private sector lenders and insurers have priced interest rates and premiums using sliding scales of FICO scores and down-payment amounts since the mid-1990s.

FHA’s move, which will cover all new applications including “jumbo” loans up to $729,750 in high-cost markets through December, will bring the agency in line with the private sector’s predominant approach.

Brian Montgomery, FHA’s top official, outlined the impending change in a speech in early May to the annual conference of the National Association of Real Estate Editors. Under the old approach, he noted, buyers with stellar FICO scores paid the same premiums as borrowers with poor scores. That amounted to a pricing inequity for applicants who presented low risk of default on their loans, and an inappropriate subsidy of applicants who were likely to default.

A study of an entire year’s applications turned up the additional fact that FHA’s lower-income borrowers typically had higher FICO scores than buyers with larger incomes.

“Is it counterintuitive? Yes,” said Montgomery. According to the study, applicants with FICO scores of 680 to 850 had median incomes of $48,756 last year, while those with low scores of 500 to 559 had median incomes of $53,388. Fair Isaac Corp.’s FICO scores range from about 300 to 850 — the higher the better — and are predictive of future defaults and foreclosures.

Even at rock-bottom down-payment levels of 3 percent, applicants with lower incomes had higher credit scores than applicants with bigger incomes making similar-size down payments.

All of which underlines the key reason for making the switch to risk-based pricing: Why should people who have demonstrated superior credit — irrespective of their income levels — pay the same mortgage insurance premiums as loan applicants who have seriously flawed credit histories?

Under the new system, according to FHA’s outline of its plan, “a larger number of low-income borrowers (will) benefit from premium reductions than … moderate-, middle- and upper-income borrowers combined.” On 30-year loans with down payments of 10 percent or more, applicants with FICO scores above 680 will qualify for the lowest premiums — 1.25 percent of the loan amount upfront and annual renewal premium payments of 0.5 percent. Borrowers with down payments under 5 percent and poor credit scores — FICOs ranging from 500 to 559 — will be charged premiums of 2.25 percent up front and 0.55 percent annually. All borrowers will continue to receive the same market-based interest rate. Under the current system, borrowers pay uniform 1.5 percent premiums upfront, and 0.5 percent annually.

To set premium rates by credit standing, FHA plans to use the middle score of an applicant’s three FICOs generated by the national credit bureaus — Equifax, Experian and TransUnion. If only two scores are available, it will use the lower. For applicants with thin or “nontraditional” credit histories on file at the bureaus, FHA will underwrite and price the loans without reference to FICOs, with heavier emphasis on rent and utility payments among other measures of creditworthiness.

Though FHA mortgage volume has more than doubled in the past year, the move to risk-based pricing is expected to make it more attractive to buyers and refinancers. During the housing boom years, FHA lost much of its business to subprime lenders and insurers who offered zero-down, low- or no-documentation loans at high interest rates and fees, including prepayment penalties. FHA, by contrast, always has required at least a 3 percent down payment, full documentation of income and assets, but has never permitted prepayment penalties.

Since taking over as FHA commissioner in 2005, Montgomery has emphasized “modernizing” FHA and winning back market share. That has included pushing for higher loan limits to serve greater numbers of borrowers in high-cost areas such as California and along the East Coast. FHA also is now the government’s key vehicle for refinancing borrowers stuck with unaffordable — and often toxic — subprime mortgages. TRD

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

A flurry of reports indicates many housing markets around the world are
experiencing the same downturns affecting many American cities. Despite
this, not all the news is gloomy; a number of markets are showing
surprising resilience. We’ve chosen to highlight some of these emerging real estate areas. Comments

• Print

Take a dollop of the sophistication of Paris, add Orlando-style theme parks and plentiful golf courses and surround it all with buildings packing the urban heft of New York City. This is a reasonable description of the development program underway in Abu Dhabi, a tiny but extremely wealthy emirate located on the Persian Gulf.

Though sometimes overshadowed by its brassier neighbor Dubai, per capita, Abu Dhabi is the wealthiest emirate among the United Arab Emirates — and it’s engaged in its own full-throttle development binge.

Like Dubai, Abu Dhabi’s rulers have embarked on plans to greatly increase the number of tourists, but with a difference. Whereas Dubai seeks to make waves in the worldwide mass tourism market, Sheikh Sultan bin Tahnoun Al Nahyan, Abu Dhabi’s ruler, recently declared that his emirate is focused on “five-star travelers where visitors would spend 10 times more,” the newspaper Arabian Business reported in May.

To meet this goal, Abu Dhabi’s rulers have created a five-year plan for tourism. By the end of 2012, the emirate plans to increase the number of hotel rooms from 12,000 to 25,000, to cope with projected visits by 2.7 million tourists.

This five-year plan is a revision of a prior five-year plan launched in 2004, which called for 21,000 hotel rooms and 2.4 million visitors by 2012. Presently, Abu Dhabi has around 1.6 million visitors annually.

U.S.-based hotel chains are stepping in to help meet the new goals. In April, both the Hilton Hotel Corporation and Marriott announced plans to greatly increase the size of their Middle East portfolios in the coming years. Marriott announced the company will grow from 26 hotels in the region to 65 by 2010. According to a recent study by Deloitte, there are 64 hotels, totaling 19,482 rooms, currently in the pipeline.

Jean-Paul Herzog, the president of Hilton Hotels for the Middle East and Africa, recently told Arabian Business that his firm has the goal of “signing an additional 20 management agreements and doubling our portfolio by 2012.”

Pools of oil are underwriting Abu Dhabi’s drive to become a tourism destination; the emirate has about 8 percent of the world’s oil reserves. Along with tourism, the emirate is also making significant investments in heavy industry and education.

For some, Abu Dhabi, where the average temperature throughout the summer exceeds 100 degrees Fahrenheit, might seem like an unlikely tourist destination. Yet according to the Deloitte report, the average room rate in Abu Dhabi for the first quarter of 2008 was $252 and the occupancy rate was at 86 percent. The Deloitte report attributes some of these gains to increased passenger traffic at Abu Dhabi International Airport, which jumped 31 percent in 2007.

The Deloitte study further showed that the Middle East now has the highest average room rates in the world at $181 (overtaking Europe for the No. 1 spot), as well as the highest occupancy rate in the world at 74.3 percent.

To continue luring those “five-star travelers,” Abu Dhabi’s rulers are at work on an ambitious development program. Over the last few years, the city-state has been enticing some cultural brand names and building a multi-billion-dollar arts district that the New York Times likened to a “daring cultural Xanadu” on Saadiyat Island, adjacent to the city’s downtown. In the next few years the Guggenheim, the Louvre and New York University are all poised to open outposts.

Nearby, work has commenced on a maritime museum, a museum of history and a performing arts center with expected completion dates in 2012. There’s also a Formula One race track being built at the cost of $40 billion on Yas Island, also near downtown. Yet the emirate is cultivating a softer side to its image: An ecological preserve located 6 miles into the Persian Gulf on Sir Bani Yas Island is under construction, and the Qasr Al Sarab retreat in the Liwa desert is in the works.

Each day, the business sections of Zimbabwe’s leading newspapers carry ever-more-dire fiscal news. But to understand the unraveling of the country’s economy, the real estate pages are hard to beat.

In May 2007, a three-bedroom home with manicured gardens and a swimming pool in the upper-middle-class suburb of Borrowdale cost 4 billion Zimbabwe dollars. Six months later, the house was still on the market, this time listed for 380 billion Zimbabwe dollars. That house is still for sale, but last month a similar home in the same enclave went for 8 trillion Zimbabwe dollars.

Welcome to the mad, mad world of business in Zimbabwe. According to the World Bank, the country has the world’s fastest-shrinking economy; inflation is rocketing forward by about 165,000 percent a year.

With the Zimbabwe dollar fast depreciating, most Zimbabweans rent or pay for real estate in U.S. dollars or in Zimbabwe dollars pegged to the black market rate, which means daily changes due to currency fluctuations. In April 2008, the official exchange rate was 30,000 Zimbabwe dollars equaled one American dollar. At the black market rate, one U.S. dollar bought 55 million Zimbabwe dollars.

Still, the property market for high-end and upper-middle-class homes has remained relatively stable in real terms. Up until an inconclusive national election held last March, analysts in Harare said the one sector of the economy that had been dependable was real estate. (As the old adage goes, nothing is as safe as a house.) Brokers say that most properties are paid for through bank transfers, which begin and end in foreign accounts.

“It is our opinion from market evidence that there is high demand for all forms of property, (that is) commercial, industrial or residential, but this unlike the norm is not driven by high returns from property, but rather the need to hedge against rapid loss of liquid money value due to inflation,” leading property consultants CB Richard Ellis said after a recent survey.

Now, with the country in post-election turmoil, brokers in Harare report that many of the city’s high-end homes for sale have been abruptly pulled off the market as buyers wait to see which side wins the election.

Brokers say about 600 upper-middle-class and high-end homes now get sold each month, half the number of five years ago. Agents say that single-family homes in posh suburbs like Avondale and the Highlands area go for between $140,000 and $145,000, down about 5 percent in the past year.

If Robert Mugabe remains at the helm, analysts say real estate will continue to be an attractive way to invest money.

“The property market … is propelled by excess liquidity that is existent in the economy,” said Brains Muchemwa, an economist with the Genesis Bank, a leading commercial bank in Zimbabwe.

Should Mugabe lose, brokers say prices would remain steady in the short term, but might decline within a year as foreign investment returns, the country’s economy begins recovering and new houses get built.

Until only a few years ago, Zimbabwe had one of Africa’s strongest economies. Downtown Harare, the capital, has skyscrapers, busy shopping malls and high-end hotels. Its middle-class and high-end housing stock includes everything from downtown condos to old Colonial homes with deep verandas, swimming pools and tennis courts.

Yet hyperinflation has felled Zimbabwe’s manufacturing, tourism and farming sectors (among many others), worsened unemployment and race relations, and prompted a mass exodus. One quarter of the country, about 3 million residents, has emigrated in the past several years.

Economic analysts say current demand for properties is being driven by shortages of quality properties. The spiraling cost of buying building materials means there has been almost no new residential construction in several years. According to Corry and Mukuyu Quantity Surveyors, building costs for ongoing projects “may safely be escalated at plus 900 percent” on a monthly basis.

“I think this government has shown that it does not respect the sanctity of property rights, and if it is re-elected, we will see the current trend continuing,” said John Robertson, a Harare-based economic consultant. “In real terms, there would not be any exuberance, but mere value preservation in properties.”

For now, getting a loan to build or buy properties is difficult. Since banks aren’t offering fixed-rate mortgages, borrowing money domestically can be punishing.

“The lack of mortgage finance due to prohibitive interest rates and high construction costs has retarded the levels of construction, and the building material basket went up by 69,117 percent during the year 2007,” Bard Real Estate said in its latest annual report.

This article was researched and written by a Harare-based reporter.

On a recent afternoon, Select Citywalk, a new mall in New Delhi, was bustling with activity. Women in saris waited to order Italian coffee, teenage couples held hands as they rode escalators and shoppers stopped to examine a Lamborghini being raffled and clustered around window displays for the Body Shop and Esprit stores.

These kinds of scenes are normal at malls in the United States. Until recently, however, this kind of retailing was absent in India, the world’s second-most populous country. But with the spending power of middle-class Indians ballooning and demand for high-end products and services rising, the country is experiencing a revolution in retailing.

Whereas no large indoor mall has opened in the U.S. since 2001, nearly 100 have popped up in the past decade in India, most of them in just the past couple of years.

“It’s an upcoming market — very nascent — and has a huge potential,” said Shilpa Malik, vice president of business development for Select Infrastructure, the firm behind Select Citywalk.

Analysts believe that the retail sector in India is poised for tremendous growth. A recent report by McKinsey & Company lays out the potential: By 2025, Indian income levels will nearly triple, aggregate consumption will quadruple and the middle class will swell by a factor of more than 10, to 583 million people.

Poverty will shrink, discretionary spending will rise and the nation’s consumer market will jump from the 12th largest in the world to the fifth, the report posits.

Last year, India’s retail sector grew between 25 and 28 percent, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM). Valued at $300 billion last year, India’s retail sector is expected to grow to $365 billion this year — and $440 billion in 2010.

Presently, less than 5 percent of that sector is located in dedicated indoor or outdoor malls. The shopping experience is still dominated by neighborhood stores and street vendors that typically aren’t registered for sales and income taxes.

Modernism is not without controversy, because many of the tens of millions of Indians with livelihoods tied to unorganized retail are fiercely fighting for protection. Because these retailers represent a vigorous voting block, their concerns can be important when politicians consider changes to, say, zoning laws and development applications.

Still, the trend is clear: India had just 1 million square feet of organized retail space in 2002, but nearly 14 million square feet last year, according to ASSOCHAM.

Malik estimates that one-third of India’s retail market will be organized within a decade. Indeed, many in India’s retail development industry believe that indoor malls have a bright future in this crowded and often intemperate south Asian nation. Air conditioning is a big perk, particularly in parts of India where spring and summer temperatures regularly top 100 degrees. So too is the nearly immaculate state of many of these shopping malls, in a nation where even the nicest outdoor commercial areas are often littered with garbage, overrun with stray dogs, dotted with beggars and plagued by poor electrical infrastructure.

“The indoor malls might have a much longer lifespan in India than in the U.S.,” said Jean-Pierre Raulot-Lapointe, a real estate analyst at Thomas Consultants, a retail development strategy consulting firm based in Vancouver that lately has been advising some of the region’s largest retail developers.

Rents at Indian shopping malls vary. Select Citywalk, with its cluster of international retailers, charges between $12 and $15 per square foot per month. Other malls charge as little as $1.50 per square foot per month.

“A lot of developers are looking to the future, and they want to establish their mall in Delhi and get people in the habit of going there,” Raulot-Lapointe said. “And they feel that over time, expenditure and rental rates will go up in their malls.”

Analysts say some of these malls have already failed because their layouts are poorly conceived. On a recent tour of malls in India, Raulot-Lapointe found numerous flaws that seem obvious to experienced mallgoers, like food courts near the ground floor entrance where the highest-paying tenant ought to be, a mall with a wastefully oversized atrium, and malls with hallways that zig-zag and lead nowhere.

“Malls are popping up like crazy, and you wonder how well thought out they are,” said Raulot-Lapointe. “It’s a race, and the ones that are going to stand the test of time are the ones that are done the best. I think that is something that is overlooked by some developers.”

These developers are, almost by rule, Indian. Each of India’s 28 states has its own laws, zoning rules and environmental standards — not to mention strict national rules regulating foreign investment in retail — so it’s difficult, if not outright impossible, for an international developer to build and operate shopping malls here.

“Entry is very hard, but if you can get in, you will make a good return,” noted Bill Rattazzi, CEO of Emaar MGF, a joint venture between an Indian and Dubai-based firm that has been building malls around the country.

Ben Frumin is a New Delhi-based reporter.

Spiking energy prices are powering a new wave of office construction in Calgary, Canada’s premier oil and gas metropolis.

A city of 1.1 million people in the province of Alberta, Calgary, now boasts the lowest office vacancy rate in the world — about 3 percent, according to 2008 figures. Although these numbers represent an adjustment from last year’s historic low of 1.5 percent, both tenants and leasing agents said they are still feeling the crunch in a city where Class A office space presently goes for an average of $55 per square foot.

As a result, more than a dozen office skyscrapers are currently under construction in downtown Calgary, representing 6.5 million square feet — a 13 percent increase in capacity. About 3.4 million more square feet of office space is being built in the suburbs.

“It’s very tough to get more than 100,000 square feet of contiguous space,” said Jack Matthews, president of Matthews Southwest and project manager for the Bow, a $1 billion, 58-story glass tower rising downtown. “Right now, people are officing in strange places.”

The Bow was designed by Foster and Partners, the distinguished U.K. firm responsible for the Hearst Tower in Manhattan. The tower is pre-leased to EnCana, Canada’s largest fossil fuel producer.

Space is currently so tight that EnCana now houses its 3,500 employees and contract workers in five different buildings, according to spokesperson Carol Howe. But the Bow will enable EnCana to consolidate staff in one location, she said.

Calgary’s boom is being fed by record oil prices. Extracting fuel from the province’s tar sands, where most of the oil comes from, involves a process many times more expensive than tapping oil resources elsewhere in the world. Energy analysts say that while it costs about $8 a barrel to extract oil in the Persian Gulf, it costs about $60 per barrel to extract oil in Alberta.

For the boom to last, global oil prices need to stay high. But if they do, the region’s energy industry is expected to catalyze $100 billion in capital investment over the next five years, said Mike Gigliuk, director of research for the Alberta office of CB Richard Ellis, a commercial real estate company.

“I haven’t seen this kind of growth in 25 years,” he said.

About 100 different companies’ headquarters are located in Calgary, which has more “head offices” than any other city in Canada except Toronto, Canada’s longtime finance and business epicenter. Yet between 1999 and 2005, head office employment in Calgary rose 64.4 percent, more than triple the growth rate of Toronto.

The current building wave represents 57 percent of all office construction nationwide. Interestingly, this isn’t the first time Calgary has experienced a full-throttle commercial real estate stampede; demand for oil sparked a transformative building frenzy in the late 1940s. Another decade-long building boom was fed by the Arab oil embargo in the 1970s.

A unique feature of development is Calgary’s so-called “15-pluses,” essentially enclosed elevated walkways connecting buildings. Virtually every mall, office tower and condo building in the central business district is connected by these spans, as are libraries and indoor gardens. During the winter, residents who live and work downtown can do so without ever setting foot outdoors.

However, the cycles have had their downsides, too. A worldwide drop in oil prices in 1981 sucked nearly all the momentum out of the city’s energy sector, and a drop in oil prices in 1991 led to another property crash. In that slide, office vacancy rates rose from about 7 percent to over 20 percent in a year.

According to Gigliuk, a bust comparable to the ones that occurred in 1981 and 1991 is unlikely to occur any time soon, largely because of unconventional oil processing methods that have come on board over the past 15 years.

“Oil sands development has a 50-year time horizon — much longer than conventional oil processing,” said Gigliuk. “It takes the cyclicity out of the market,” he added.

Alberta’s oil sands capacity is thought
to be second only to that of the Saudi Arabian reserves.

The confidence in the Calgary market has led many office developers to abandon typical real estate practices such as securing anchor tenants prior to construction.

“It’s the first time I’ve seen spec projects in my 12-year career,” said Loy Sullivan, director of office leasing for Eighth Avenue Place, the first phase of which will be ready for occupancy in 2011.

The billion-dollar project, which includes two office towers, is being built on speculation and is financed by SITQ, Canada’s biggest pension fund manager, and bcIMC, another institutional investor.

Calgary’s oil success has helped create a healthy environment for many other industries, including manufacturing and high-tech start-ups. The area is also popular with film production companies. Nevertheless, the office tower craze has little to do with economic diversification, experts said.

“There are lots of other things going on in Calgary,” said Matthews. “But oil is the driver.”

Linda Baker is a freelancer covering the Pacific Northwest.

On a recent afternoon, Erik Wesselius took 20 visitors on a guided tour of Brussels. His tour didn’t pause in front of Renaissance-era townhouses or the city’s heralded Art Nouveau mansions.

Instead, Wesselius led his guests into the heart of the European Quarter, a sort of continental Capitol Hill. He pointed to the European Commission — the executive arm of the 27-state European Union — then across the street to an office building.

“Laws are debated there,” said Wesselius, who is the co-founder of a transparency advocacy group called the Corporate Europe Observatory, as he pointed at the Commission building. But then he pointed at a cluster of squat office buildings: “But these days, they’re being written and shaped there.”

For many people, Brussels may evoke images of chocolate and beer. But corporations and governments around the world are also realizing that institutions situated in Brussels, like the European Commission, European Parliament and European Council of Ministers, churn out rules that affect them — and not always in a good way.

That’s one reason why demand for commercial office space near Europe’s government campus is climbing; corporations and lobbying firms are opening offices to create a trans-Atlantic version of Washington’s K Street. In Brussels, it’s called the “Leopold Quarter” in addition to the “European Quarter.” The 1-square-kilometer district is an assemblage of public squares surrounded by short modern office buildings.

Demand for office space has set off a building boom. At 200 million square feet, Brussels now has more commercial office space than Washington, D.C., which has about 120 million square feet. (Even throwing in suburban Maryland and Virginia only puts D.C. slightly ahead at 250 million.) While only 2 percent of the office space in Brussels is leased by European institutions, nearly 10 percent is leased by corporate lobbyists, according to a report by CB Richard Ellis.

Despite the increased supply — about 4 million square feet of further office space is under construction, and the commercial vacancy rate is about 9 percent —Brussels’ office rents have grown, too. Since 2000, rents have risen from about $31 per square foot to about $47 for Class A office space. This is more than it costs in Brussels’ other commercial enclaves like the downtown financial center, where asking prices are around $31 per square foot, and suburban business parks, where asking rents are about $25 per square foot, according to CB Richard Ellis. (All prices have been converted from euros to U.S. dollars, at the exchange rate for mid-April.)

In the past five years, the number of U.S. firms with a lobbying presence in Brussels registered in the European Public Affairs Directory has risen by 20 to 25 percent, according to the Corporate Europe Observatory. Lobbying firms such as Burson Marsteller, Hill and Knowlton and GPlus are expanding, and their staff lists often include the names of well-connected former EU officials.

Total lobby-related turnover is still far smaller than in Washington — it was estimated at $1.2 billion in 2006 compared to $3.8 billion in D.C. — but it is on the rise.

The presence of U.S. firms and lobbies is not always obvious in Brussels. Lobbyists say strains between the U.S. and Europe have been exacerbated by the war in Iraq, and U.S. firms setting up in Brussels steer clear of gaffes that could damage their lobbying.

“European institution officials are happier talking to Europeans rather than Americans. Europeans are more accepting and understanding of issues if they’re presented by a fellow European,” said Anita Kelly, who is Irish and the spokesperson for the U.S. Chamber of Commerce in Brussels.

Beyond nationality, lobbying in Brussels is to some extent shrouded in mystery. Unlike the United States, the European Union has no transparency rules requiring lobbyists to reveal their clients or incomes.

“In the absence of a lobby register, real estate leases are the way to gauge corporate interest operating in Brussels,” said Wesselius.

Certainly, the name plates on the buildings closest to the commission and parliament read like a roster of companies, which may have objections with EU regulations.

For instance, Philip Morris and General Electric have offices opposite the European Commission. GPlus, the lobbying firm hired by Microsoft to dispute the contention that the software giant deploys anti-competitive practices, is located in the next building.

According to brokers, Boeing, Caterpillar, eBay, International Paper, MasterCard, Pioneer, Texas Instruments and Time Warner have all recently leased small offices in the European Quarter from which to lobby.

American lobbyists and corporations aren’t the only ones snapping up space. Toyota has its European headquarters nearby. Agents say that the Republic of Turkey, whose application for EU membership is one of the bloc’s most contentious policy issues, is seeking to move its diplomatic offices from a forbidding concrete building to a contemporary glass structure, the better to broadcast an image of transparency and modernity.

Overall, observers say lobbying represents something of a growth industry in Brussels.

“If anything, lobbyists will just move a few streets on and closer to the European Parliament,” said Wesselius. “That’s where there’s still untapped potential for influence.”

Juliane von Reppert-Bismarck is a freelance reporter based in Brussels.

The past decade has been a bonanza for many real estate markets in Europe, but Germany hasn’t been one of them. Now that’s starting to change, particularly in Berlin, where international buyers are heavily represented. As interest in Germany’s capital grows, the persistent price gap between real estate in East and West Berlin is finally closing.

In 2007, about $8.9 billion worth of residential property changed hands in Berlin, but since the fall of the Berlin Wall in 1989, prices on the city’s east side have been lagging.
While the wall, which zig-zagged through the heart of the city, came down quickly, a syndrome — Berliners call it “Wall in the head” — continued to permeate thinking about property values.

Houses on the same street, built in the same style, fetched far more if they were on the Western side of the vanished wall. Indeed, as recently as 2002, prices were on average four times higher in the former West, while, according to municipal statistics, the East accounted for most of the city’s 7 percent vacancy rate.

In the past year, prices have roughly leveled out, but the old bias is still discernible, especially among West Germans.

“I bought my apartment on the advice of a West Berlin friend who made East Berlin sound like it was somewhere in Poland,” said Paul Kildea, a London-based classical music conductor.

Kildea bought his 1,250-square-foot apartment in Schöneberg, a neighborhood with elegant 19th century apartments in West Berlin, which is somewhat reminiscent of Park Slope. At $270,000, Kildea said he spent less than a fifth of what he would have paid in London.

He also considered buying in Prenzlauer Berg, a greatly hyped and quickly appreciating neighborhood in East Berlin.

Both neighborhoods are lined with four to six floor residential buildings containing interior courtyards, abundant public squares and parks and connected by bike lanes as extensive as they are busy. Prenzlauer Berg, a long-time magnet for global bohemians, is the first neighborhood in East Berlin where average prices have surpassed neighborhoods in West Berlin.

Brokers that focus on Prenzlauer Berg report that their buyers are at least 25 percent international, mostly British, Irish and American investors.

Foreign investors come in two types. Many of the buyers, like Kildea, are artists drawn to Berlin by its cosmopolitanism, bohemian chic, and spirited arts scene, as large and diverse as what one would find in New York or Paris. Celebrities are taking notice, too. Last year, the German edition of Vanity Fair reported that Brad Pitt and Angelina Jolie bought a 6,500-square-foot apartment in Marzahn, a borough in East Berlin.

The other foreign buyers are mainly
investors — including major American banks — who buy to rent. They do so out of a sense that Berlin remains undervalued compared to other major world capitals and because rents are appreciating quickly. According to the 2007 Berlin Mietspiegel (rent index),
rent increased 5.8 percent over the last
two years.

“Germany still hasn’t had the real estate boom that other countries have had,” said Julian Power, director of Berlin Capital, a company that helps foreign investors buy and manage property in Berlin. “Which makes it a no-brainer to buy there.”

He and other brokers emphasize that profits will be mid- to long-term, so investors must be willing to hold onto properties for upwards of 10 years.

Whereas prices in central London average about $1,800 per square foot, residential properties in desirable neighborhoods like Schöneberg, Charlottenburg and Prenzlauer Berg sell for $320 to $415 per square foot. In gritty neighborhoods where gentrification hasn’t nudged prices, plenty of apartments can be found for around $110 per square foot.

Unlike London, Dublin or Madrid, Berlin’s property prices have been so low that
the market has emerged relatively unscathed by the recent housing market cave-ins triggered by overbuilding and the U.S. subprime mortgage crisis.

Still, even though prices are comparatively low, real estate in Berlin isn’t the sure thing its boosters might have you believe. The city, whose mayor describes it as “poor but sexy,” is no stranger to real estate slumps.

A small boom, supported by the transient hope that Berlin would become the nation’s financial center (that remains Frankfurt), followed reunification. But prices dropped again in 1996, and investors were left with partially empty buildings, many renovated at great
expense in the city’s east.

“You can see that someone spent a million euros renovating just a few years ago,” said Power. “Now, investors spend 750,000 euros for the whole building and are just delighted.”

Berlin’s turnaround began in 2004, when Cerberus Capital Management and Goldman Sachs’ Whitehall investment fund bought 65,700 units from GSW, the largest residential property developer in Germany, for $3.34 billion. Smaller investors followed, and the market now shows signs of steadier growth.

Despite barriers, internationals still make up a large proportion of buyers in Berlin partly because of the strong tradition of renting. While 40 percent of the people in Germany own their houses, only 13 percent of those in Berlin do.

“Some Americans move here and then adopt the German behavior of renting rather than buying, even when they could buy,” said Deike Peters, a German academic married
to an American screenwriter. The couple bought a 1,900-square-foot apartment in Prenzlauer Berg in 2001 and have watched their friends who rent gradually get priced out of the neighborhood.

At the same time, Peters realizes if, 10 years ago, they’d bought a home in Los Angeles, where the couple spends part of each year and where prices have appreciated much faster than Berlin, it would have been a more profitable investment.

Still, for a large segment of foreigners investing in properties in Berlin, the allure isn’t their potential return on investment.

“In 2005, it was all buy and rent for profit,” said Power. “Now, I have more and more people looking for lifestyle properties.”

Rachel Nolan is a freelance reporter based in Berlin.

In Haifa, Israel’s third-largest city on the slopes of Mount Carmel overlooking the Mediterranean, the property market is all about the view.

While Tel Aviv generates a lot of real estate interest as the country’s financial, cultural and high-tech center, Haifa has the beach, mountain air and many global high-tech employers. And the city, which has always been considered Israel’s blue-collar center, is emerging as an important business hub and developing a more playful nature.

“Haifa is unique in terms of real estate,” says Margot Calacuda, a real estate agent with Anglo-Saxon Haifa, a local brokerage. “We have topography, with apartments built up and down the sides of the mountains. So the view and the fantastic air is everything when it comes to finding a place.” The city is built in three tiers. The lower bay area cradles the city’s commercial center; above, the middle tier of Mount Carmel is home to many immigrant communities. But it is the upper tier, known as the Carmel, that is considered most desirable. All three tiers are connected by the Carmelit, one of the smallest subways in the world, with only four cars, six stations and a single 1,800-meter-long tunnel. “Carmel, Carmeliya, Ramat Begin — these are the neighborhoods that are always in demand,” says Calacuda. “If young families can’t afford to stay here, they go to [the nearby suburbs of] Zichron Yaakov and Tivon. In fact, the trend is to stay in smaller flats just to be able to stay in Haifa and in the Carmel.”

Because of its views, the Carmel is Haifa’s main hotel district, where the major four- and five-star hotels are located. Some of those include luxury apartments for residents who want the amenities of a hotel. But the Carmel is primarily a bustling series of neighborhoods, joined by several major boulevards and shopping areas and intersected with winding residential streets lined with flowering trees and modest three- and four-story apartment buildings.

The big demand is for five-room apartments with a porch or a garden, says broker Moshe Cohen, “but there’s not much available in that realm,” he says. “They’re also expensive, at around half a million dollars.”

Still, prices for apartments in the Carmel are considerably cheaper than those of comparable apartments in the upper-middle-class echelons of Tel Aviv or Jerusalem.

Prices in Haifa overall have never fully recovered from the Palestinian intifada that began in September 2000, or from the war with Hezbollah in Lebanon that lasted through much of the summer of 2006. Moreover, says Calacuda, since 2006, when Haifa was hit by Katyusha rockets from Lebanon, prospective buyers don’t want to buy apartments that lack a security room or bomb shelter; only new buildings have sealed rooms in each apartment.

“There’s been a depression in prices,” says Cohen, who believes the three-year intifada is more to blame than the 2006 war. “The market was already affected when the war struck. There’s been no growth, and it’s been that way since the intifada.”

Prices were perhaps on their way up in 2006, “but the war hit us strong,” adds Calacuda. “So it’s an opportunity to buy in Haifa because prices haven’t gone up yet.”

A typical three-bedroom apartment in the Carmel, without what Calacuda calls the “extras” — balconies, garden or a fantastic view — costs between $180,000 and $200,000. Most buildings are built along the mountain, so if it’s not “accessible” (which means it may have 40 to 100 stairs but no elevator), the price could be reduced by as much as $30,000 to $50,000.

If there is a balcony, garden or a view of the mountain, another $30,000 to $40,000 could be added to the total price.

While there is little new construction in the area, and that has hurt the real estate market, “there’s no reason why people wouldn’t want to live in Haifa; all the high-tech companies are here, and it’s only an hour to Tel Aviv,” says Calacuda, referring to Matam, the veteran Haifa business park that is located at the southern entrance to the city and is home to the Israeli R&D and manufacturing branches of Google, Intel, IBM, Microsoft, Motorola, Amdocs and other companies. “You’d think that this would be the trend.”

Yet the “young kids,” say brokers, want to move to the big city, otherwise known as Tel Aviv. “It used to be the joke that Haifa rolled up its sidewalks at night,” adds Calacuda. “But Moriah Boulevard [in the Carmel] is filled with pubs, and so is the city. There’s a lot more to offer now.”

There’s also another area, Massada Street in the Hadar middle tier, which shows promise in terms of future real estate development, says broker Yoav Etiel, based out of nearby Zichron Yaakov.

Massada Street, with its own Carmelit stop, is considered the “Haifa equivalent to Tel Aviv’s Sheinkin,” says Etiel, referring to the central Tel Aviv street that is popular for its cafes, restaurants, boutiques and galleries. Hadar and Massada are both filled with Bauhaus-designed buildings that require major facelifts, while Massada is dotted with small antique shops and cafés and currently appeals to students and singles.

“Some people are buying apartments that will eventually become something; the question is, “When will that happen on Massada?’” says Calacuda. “For now, they’re owned by landlords who are renting out to students, and they didn’t keep up the area.”

Cohen is also looking at Bat Galim, within the bay area of Haifa, which is within walking distance of the Haifa port and where there has always been talk of development. There’s been particular interest in the area since 2002, when Egged, the country’s main bus company, closed what had been the city’s main station in the neighborhood.

Still, things are quiet in the bay area, and it’s less desirable as a residential neighborhood, says Calacuda. “Young families are not going to the bottom of the city to buy an apartment,” she says. “There’s been a little bit of a trend of people from Tel Aviv buying in Bat Galim, but there’s no real flow of investors. Only if there’s a renewal and a real gentrification will there be serious development.”

Jessica Steinberg is a Jerusalem-based freelance reporter.

Macau used to be an enclave that people visited for a few days in order to gamble at casinos.

But since 2002, when the Macau government allowed foreign casino operators to set up shop, Las Vegas heavyweights like Sheldon Adelson and Steve Wynn have set in motion a radical real estate shake-up in the former Portuguese colony, an enclave just slightly bigger than Manhattan.

While the recently built casinos and their hotels remain big earners, they have also generated a secondary development boom, this time of high-end residential properties — which are sold to wealthy Chinese buyers with a penchant for gambling.

“Macau is an up-and-coming market, and for investors who know about the Las Vegas story, this is a hotspot,” said Gregory Ku, managing director of Jones Lang LaSalle Macau.

The result is, ironically, that the only city in China where casinos are legal is seeing its properties become something of a high-stakes gamble, as buyers pay ever-larger sums for residences, in effect betting that real estate will continue its meteoric rise.

“You are 99.9 percent likely to have made a profit if you have bought a property in Macau in the last two years; it just depends on how much,” said Ku. He noted that investors are gravitating toward Macau despite the soaring prices because property values remain significantly cheaper than those of other major cities in the region, including Hong Kong and Singapore.

Prices for high-end residential apartments have at least doubled in the last three years thanks to a booming economy fueled by the growing number of casinos and hotels. Presently, Macau has 28 casinos, which collectively posted revenue increases of 46 percent in 2007, to more than $3.1 billion, according to Colliers International.

The average price for a new condo has risen to about $1,060 per square foot, up from about $800 per square foot a year ago, according to a report by Jones Lang LaSalle.

Though developers have been working overtime to fuel the voracious appetite of buyers, approval of new sites for high-rises has been slow, said brokers, as the Macau government is keen to protect the peninsula’s colonial streetscapes, which have led to its designation as a UNESCO world heritage site.

“There is just very little in the luxury market, which is why every time a new property becomes available, it is sold out very quickly,” explained Johnny Lai, deputy general manager of Colliers International in Macau.

About 2,100 new units came online in 2007. There are about 25,000 more units, including roughly 7,500 high-end apartments, that are scheduled to come online by 2010. At the same time, demand should outpace supply, as a further 85,000 casino jobs are expected to be created by 2010.

To capitalize on the market’s upward momentum, some wealthy investors are making bulk purchases and choosing to flip some properties and lease out others. For example, one of Ku’s foreign clients bought more than 10 apartments in Macau; none of them were for his own use.

While the in-casino bettors may be counting on Macau to turn their fortunes overnight, in the property domain, players are said to be holding onto their properties in anticipation of bigger payoffs down the road.

Rico Kwok, Centaline Property Agency’s managing director in Macau, says only about 20 percent of investors have flipped their properties within a year of purchase. The vast majority, he says, are choosing to hold on for more than two years.

International investors currently comprise a third of property buyers in Macau, brokers say, with the remaining buyers from Hong Kong, China and Macau.

Voracious gamblers aren’t the only people driving up the residential market. By the end of 2007, the number of overseas workers in Macau had soared 28 percent in a year, to over 80,000. This influx has fostered a bullish rental market that has seen gains of 15 percent over the last two years as hotel and casino executives jostle for accommodation.

As a result of the strong demand, properties have sleeker designs than ever before, as well as more lavish finishes and a broad range of clubhouse facilities that were unheard of just a few years ago. “Prior to 2005, you would have been lucky to find a pool and gym in an apartment building,” said Lai.

Now, these offerings are part and parcel of what’s expected. The question is how elaborate and extensive they are.

In any other market environment, investors who had already doubled the return on their investment would be reaching for the champagne. Yet brokers are confident Macau’s rise will continue, with the opening of more hotels and casinos. Indeed, big players in the hospitality industry like Four Seasons, Shangri-La and a second phase of the Venetian are scheduled to open in the next few years.

“I don’t believe the market has peaked yet. With so many hotels and casinos opening in the next few years, there will be much more good news for the housing market,” said Ku. “If Sheldon Adelson’s vision turns out to be correct, Macau’s property market will climb to another level. House prices will one day be in line with Hong Kong.”

Andrea Li is a freelance reporter based in Hong Kong.

At the recent opening of a sales center in Panama City, dozens of real estate professionals drank wine and cocktails and gushed over the model for the Plaza Costa del Este, a towering new luxury hotel/condo scheduled to be completed along the city’s waterfront in 2010.

Despite the drumbeat of grim real estate news from elsewhere in the world, visitors at the launch party insisted that the real estate situation in Panama City, home to just over a million residents, was different — and that the city’s construction boom was built on a bedrock of solid fundamentals, including an economy growing at about 7 percent a year, an influx of companies opening outposts and a wave of retired and semi-retired American homebuyers.

According to Emporis, a firm that tracks construction, Panama City is presently undergoing the biggest skyscraper building boom in the world outside of the Persian Gulf and China. The city is emerging as an important banking hub and a magnet for foreign second-home buyers.

While only about 1,500 condo units have come online in the last several years, a whopping 50,000 units are being marketed and about 10,000 units are presently under construction. Some 70 towers are presently under construction.

Prices for new apartments in Panama City have rocketed upwards, from about $110 per square foot in 2005 to between $400 and $450 per square foot this year. Some units along Balboa Avenue and Punta Pacifica, streets abutting the ocean, can command prices above $500 per square foot.

Despite the signs of speculation, local real estate people insist that Panama City’s boom is unlike the showy boom, and even more spectacular bust, of condos in south Florida.

“Miami had so much available that the market turned, and there were too many keys on the street. I think the boom in Panama is sustainable, and I’m not being optimistic; I’m being realistic,” said Jose Manuel Bern, the sales manager and heir apparent to Empresas Bern, a Panamanian company with about 1,200 units under construction.

Yet not all observers are so optimistic. Many find strong parallels with yesterday’s giddy exuberance of Miami.

“Panama City is a market that’s entirely driven by speculation, so we’re telling our clients to wait on the sidelines until the first units come online and prices start to come down,” said Paul McBride, CEO of Prima Panama, a real estate marketing firm. “There isn’t enough market growth to justify the present level of growth.”

One way to gauge a market’s health is by the number of speculative buyers placing deposits on units. Optimists, like Bern, say only about 15 percent of the units sold are bought by speculators. Others, like McBride, place the number around 30 to 40 percent.

Still, real estate professionals seem undaunted by troubles in the global economy. Many developers continue to pitch new projects, sometimes taking their sales pitches on the road to places like New York and Toronto, where Panama is pitched as a kind of politically stable and financially affordable tropical paradise.

“Many North American retirees quickly realize upon coming to Panama that they can live like a king here on their otherwise medium-scale budgets. This is true of many other places in the world, but in Panama, retirees find American-style infrastructure, services and a growing community to integrate into,” said Jacob Ehrler, a former Corcoran sales associate who now lives in Panama.

Yet increasingly, people are expressing doubts that Panama City’s real estate bull market can continue.

“Panama may be in for a rude surprise. Unless a wave of foreigners arrive to soak up the growing supply of new apartment and office blocks, there is going to be a major correction in the Panamanian housing market,” said Walter Molano, head of research at BCP securities, a Greenwich, Conn.-based investment bank with ties to Latin America.

“Right now, this is a market that is feeding on itself. We’re at the point in Panama City where even the taxi drivers are promoting real estate projects,” said McBride.

For their part, developers are counting on more than large numbers of elderly North Americans to sustain Panama City’s boom. The planned expansion of the Panama Canal as well as new branch offices of multinationals are expected to boost demand.

“Panama is the story of the little country that could…it is a small boutique country that has a lot to offer,” Bern said. “I don’t have enough product available to keep up. When someone comes in and needs a place immediately, I don’t know if I can have it ready.”

Andrew O’Reilly is a freelance reporter based in Panama City.

Belize isle quietly booms

The island of Ambergris Caye, Belize’s most popular tourist destination, has more than quadrupled in population — from 2,500 to 12,000 — since 1993. The location has been transformed from a quiet home to divers and fishermen to
a second home or retirement spot for Americans and Canadians. High-end residential development dots the island. Its main town, San Pedro, has seen major retail improvements.

The island recently gained two supermarkets, several restaurants and paved roads to San Pedro.

Two factors have protected the island from being overrun by tourism: Shallow waters surrounding the island prevent it from becoming a cruise-ship stopover, and a lack of all-inclusive resorts have helped it fend off spring breakers.

Government restrictions on Ambergris Caye, which is 25 miles long and about 4.5 miles wide, keep waterfront buildings no taller than three or four stories, the International Herald Tribune reported.

Agents said that despite significant growth in home value — as much as 20 to 30 percent in recent years — homes remain inexpensive relative to similar Caribbean locations for expatriates. Waterfront condos sell for between $300,000 and $500,000, compared to prices in excess of $1 million seen for comparable properties on islands like St. Barts.

Because much of the island’s undeveloped land is swamp, however, the price for waterfront development sites has spiked at a sharper rate, almost doubling from $3,500 to over $6,000 per linear foot of coastal land.

European slowdown seen at biggest industry show

Discussions at the largest real estate show in the world, Salón Inmobiliario Internacional de Madrid, centered on bad news from European housing markets, while hopes were higher for developers in South America and Asia.

The number of exhibitors at SIMA declined 25 percent to 600 this year, from 800 in 2007, representing the event’s first downsize since it began 10 years ago. Attendance was down around 6 percent from its record 160,000 last year.

Several Asian investors made their first appearance at the event this year, and some European companies arrived to market second-home developments in Asia, according to the International Herald Tribune. For example, Swiss-owned Siam Royal View was marketing Thai vacation homes, priced from around $393,000 to $2.4 million.

During a panel discussion at the event, Tobias Just, an analyst with Deutsche Bank, called recent price increases in Eastern European housing markets — including Bulgaria, Russia and Croatia — “unsustainable.” He said a correction in those markets is “very likely.”

High-end apartments in Russia are hovering around $2,336 per square foot, compared to $650 to $750 per-square-foot prices seen in most large cities.

U.S. finance firms boost London rental market

U.S. financial institutions are increasing staff in London to manage European and Asian operations, giving the high-end rental market there a boost, real estate experts told the International Herald Tribune.

Leasing activity for rentals of $1,950 to $3,880 per week was up 10 percent in the first quarter, compared to the first quarter of 2007. About half the city’s luxury rentals are leased by individuals, with the remainder by companies; most leases are for at least a year.

Despite help from the increase in U.S. tenants, high-end rental prices in London are expected to increase a modest 5 percent in 2008, according to Newmark Knight Frank, after a leap of 15.4 percent the previous year.

A few weeks before Mort Zuckerman wrangled a deal for one of the most iconic buildings in New York City, he told me that if another bidder won the General Motors Building, he would buy a full-page ad in this magazine with a picture of the winning bidder lounging on a sunny beach with a Daiquiri in hand. Zuckerman would cover all costs, a decidedly lower sum than the $2.9 billion he ultimately paid to own the GM building.

It’s ironic how Zuckerman, head of Boston Properties and publisher of the Daily News, is all over television and newspapers talking about the end of the bull market and the plunge into recession when he shelled out the highest price ever paid for a U.S. office building.

Could it be that he is shooing the flies away while he feasts on a timid market? Well, it’s no secret that lending is tight. Banks are being demanding for even cautious deals, which the GM transaction was definitely not.

So naturally, Zuckerman turned to Middle Eastern investors from Qatar and Kuwait. This sort of financing is not available for everyone, but Zuckerman is not just anyone. A New Yorker profile once described him as a quiet-yet-alluring globetrotting real estate billionaire who advises heads of state and knows his way around both fine art and a good joke. Clearly, the man knows how to make a deal.

Someone else who has continued to manage making deals is Kent Swig. This month we bring you a long-overdue profile on Swig that you won’t see anywhere else. He’s Harry Macklowe’s son-in-law, and the 46-year-old is rising fast in the real estate world, though he still has a long way to go before he sits at the head of Macklowe’s table. He’s been on a steady buying binge over the last several years, picking up office buildings in Lower Manhattan, where he has been particularly active, and scooping up companies such as Helmsley-Spear. His $418 million purchase of the Sheffield, the West 57th Street apartment building he’s converting to condos, set a 2005 record. He also forked over $260 million for a residential building at 25 Broad Street, setting a Downtown record. You’ll learn a lot more about him in our piece.

We’ve always taken great pride in knowing what’s going on in the market and having the time and resources to delve deeper than other news outlets into the topics that are affecting our industry. One of our great assets is regular conversations with industry leaders. On a weekly basis, we invite sources, including investors, analysts, developers, brokers and company heads to come to our office and give us their perspective on the market.

Prolific hotel developer Sam Chang was one recent guest. He said he’s continuing to buy development sites when he comes across opportunities, even as he sells other properties. And he’s still got plenty of hotels in the pipeline to finish, more than any other developer in the city. He’s also going to move a little bit more into the hotel operating business (as you’ll likely read about in an upcoming issue).

It’s important for us to know these industry leaders in order to bring you stories that get at what they are really thinking.

These conversations also spark research and reporting like what you’ll find in a package of stories that looks at price changes at new condo developments in Manhattan and Brooklyn over the past three months.

We found prices are decreasing on the whole. While much of Manhattan remained strong — particularly Downtown and the Upper East Side — Harlem was weak and saw a lot of price decreases with few price increases. Brooklyn fared worse than Manhattan overall. Williamsburg saw the most total price decreases as was somewhat expected, as a result of what many see as an oversupply of new development there.

Finally, with summer here, we know readers will want some fun beach reading. Check out the first-ever New York City real estate crossword puzzle on page 162 and a review of Barbara Corcoran’s book, Nextville.

Enjoy the issue,

Amir Korangy

A California-based liquidation and auction house has created a New York-based division to service investors in distressed real estate, entering a competitive marketplace that may soon hold even more players.

Great American Group’s new arm, called Great American Group Real Estate, will offer a wide range of services, including appraisal, renegotiating leases, raising capital and providing expert testimony. The unit will also explore buying stakes in undervalued locations. [more]

Just in time for the 2008 summer rental market, Century 21 NY Metro has formed a marketing partnership to take advantage of an important seasonal demographic shift in the city: the arrival of college graduates.

Century 21 NY Metro has teamed up with UrbanGradRealty, a real estate brokerage company that targets soon-to-be graduates with their eyes on New York. UrbanGradRealty will be sharing its database of leads with C21 NY Metro, allowing the brokerage to better target graduating seniors nationwide. UrbanGradRealty says it will benefit from association with the well-known Century 21 franchise name.

UrbanGradRealty has ad campaigns at over 175 college campuses across the U.S., although company founder Jonathan Iger said a large focus goes toward the universities that output the highest-paid grads. Ivy League schools, George Washington, Georgetown, Duke, and Syracuse are important targets.

And in keeping with the times, UrbanGradRealty is utilizing an increasingly effective medium for reaching America’s youth: social networking sites like MySpace and Facebook. College students spend an average of 21 minutes per day on such sites, according to a study cited by Century 21 NY Metro president Mike Simon.

Iger said new grads are now typically renting in the low $2,000s per month for a one-bedroom to over $5,000 per month for a three- or four-bedroom. But extravagant sums, even for fresh grads, aren’t totally unheard of. “We just rented to a recent grad that’s paying $12,200 per month,” Iger said. “Now he either has a really nice job, or really nice parents. But I’m going with the parents.”

A Barcelona-based development company doing its first project in the U.S. is looking to stay in Manhattan for the long haul. The company, Espais Promocions Immobiliàries, is temporarily operating its U.S. business at the off-site sales office for Twenty9th Park Madison, a 142-unit condo it’s building with Miami-based developer Arcon Solutions at 39 East 29th Street between Park and Madison avenues.

Once the on-site sales office is complete in July, the company will establish a permanent Midtown office, said Andres Hogg, the general manager of operations in the U.S., who was hired in mid-January. He is scouting sites for his four-person team. It will be the company’s only office outside of Spain.

After the Twenty9th Park Madison project is done at the end of the year, the developer expects to have two local projects — one likely to be a 100-key full-service European boutique hotel under the Alma brand in the Midtown area — in predevelopment, Hogg said.

“We want to do two projects at the same time if they don’t compete against each other,” Hogg said. The goal is to have two or three Manhattan projects besides Twenty9th Park Madison complete in the next five years.

Twenty9th Park Madison will be 34 stories with 536- to 1,309-square-foot studios, one- and two -bedroom condos. Prices range from $675,000 to $4.5 million for the 10 penthouse units. Sales started in early fall 2007 and hit the 50 percent sold mark this April, according to Coldwell Banker Hunt Kennedy’s new development division, the exclusive marketing and sales agent for the project.

Residential

Barak Realty

Robert Kravath was promoted to vice president.

Century 21 NY Metro

Bob Brooks joined the firm. He will be managing a team of eight rental agents.

The Corcoran Group

Debra LaChance was promoted to managing director from senior vice president. Terrence Harding and Brett Grabel were appointed vice presidents.

DJK Residential

Gordon Voight II joined as sales associate.

Terra Holdings

Gerald Makowski was promoted to executive director of marketing from director of marketing.

Time Equities

Roberta Axelrod was appointed director of residential sales, rentals and conversions with the firm’s new residential brokerage division. Maggie Ocampo was appointed sales manager of residential brokerage.

Warburg Realty

Charlie Lewis joined as senior vice president and sales manager of the firm’s Harlem office.

Commercial

Cantor Fitzgerald

Andrew Stark was appointed executive managing director of the firm’s new real estate investment and development group, Cantor Real Estate.

CB Richard Ellis

Patrick Murphy was promoted to vice chairman from executive managing director.

Cushman & Wakefield

Louis D’Avanzo and Robert Giglio were promoted to executive vice president from executive director. Mark Mandell was promoted to executive director from senior director. Robert Gallucci and Andrew Kahn were promoted to senior director from director. Alexander Hernandez was appointed senior director at the New York headquarters of Cushman & Wakefield Sonnenblick Goldman.

Eastern Consolidated

Jerome Benayoun joined the firm as director. Benjamin Fishkind joined as financial analyst.

GoldenTree InSite Partners

Robert Rediker joined the firm as director of asset management. He was previously senior vice president and director of asset management at Forest City Ratner Companies.

Keefe, Bruyette & Woods

Michael Hawkins and Robert Woomer were named principals of the firm’s new real estate investment banking division.

Liberty Title Agency

Douglas Forsyth joined the firm as executive vice president.

Somerset Partners

David Spies joined the firm as vice president of acquisitions.

PropertyShark.com names new CEO

Following the departure of CEO Ryan Slack, PropertyShark.com has officially made Bill Staniford, a former vice president of sales, its new CEO. Staniford said in a statement that as a Marine he “spent a lot of time gathering, analyzing, and disseminating information. We do the same thing here at PropertyShark.com; it’s just real estate information instead of military intelligence.” Staniford has worked as a director for Kaplan Inc. and was founder and CEO of Mozaic Design and Decor, a retail business. Slack left the Brooklyn-based online property Web site to start a new online venture that will help real estate professionals collaborate, plan events and form networking groups.

Time Equities launches brokerage

New York-based real estate investment and development firm Time Equities is expanding into the residential brokerage arena with the opening of a boutique brokerage division. Time Equities Residential Brokerage will have a staff of 10 and offer sales and rental listings in New York City and New Jersey for both its own projects and others, the company said.

New NYC listings site launches

Another new Web site offering property listings in and around the city recently launched. NYVacancies.com, developed by a group of New York property managers, offers targeted, registration-free listings that include maps, floor plans and contact information for properties. A search engine covers sizes, rents, amenities and neighborhoods. The site had almost 1,500 listings as of early May. An established competitor, StreetEasy.com, recently expanded service to include nearby counties in northern New Jersey.

Corcoran, PropertyShark.com partner

PropertyShark.com has formed a partnership with the Corcoran Group to provide Corcoran agents with access to all of PropertyShark.com, at the brokerage’s expense, in a deal similar to alliances the Web site has formed with investment sales companies Massey Knakal and Extreme Realty. Corcoran agents no longer have to pay out of pocket for a PropertyShark.com account and will be reimbursed by Corcoran if they already have one. Until recently, about 350 to 400 of Corcoran’s 1,100 agents had PropertyShark.com accounts, said Pamela Liebman, president and CEO of Corcoran.

Citi Habitats announces rebranding

Citi Habitats, Manhattan’s largest residential rental brokerage, has announced a re-branding initiative that will feature an advertising campaign, a new corporate logo, a redesigned Web site and radio promo spots during New York Yankees and New York Mets baseball games. The campaign launched in early May.

Cushman & Wakefield teams with Envirosell

Commercial real estate services firm Cushman & Wakefield is teaming up with Envirosell, a behavioral research and consulting agency, to get a firmer grasp of the needs of its retail clients. Cushman & Wakefield will utilize research conducted by Envirosell to better consult with retailers and landlords. The two companies have worked together before on a repositioning assignment examining tactical and strategic improvements for a major landlord’s portfolio.

Cantor Fitzgerald launches Cantor Real Estate

Cantor Fitzgerald, the Manhattan-based global financial services firm, said it will launch an investment and development group, called Cantor Real Estate, focused on dislocated assets and other opportunistic real estate deals. Cantor Fitzgerald said it plans to raise between $300 and $350 million for the new fund. Andrew Stark, the newly named executive managing director of Cantor Real Estate, previously worked as president of the Northeast and mid-Atlantic regions of WCI Communities, the Bonita Springs, Fla.-based homebuilder that specializes in master planned communities.

Alchemy opening first-ever sales offices

Alchemy Properties is opening its first two formal sales offices for two Manhattan condo projects. The developer, which does its own marketing, recently opened a sales office for Hudson Hill Condominium, an 11-story, 67-unit condo at 462 West 58th Street. Alchemy will also soon open a sales office for the Isis Condominium, a 19-story building at 303 East 77th Street. At previous projects, Alchemy has had a makeshift sales center operating out of the construction office, but no formal sales offices. As times have changed, Alchemy is moving away from selling most of its units before the buildings are even built. People now “really want to see what they’re buying,” said president Kenneth Horn.

Think you’re a close reader of real estate news? Put your savvy to the test with The Real Deal’s first crossword puzzle, designed to test your knowledge of current real estate events and terminology.

Then click here for the answers to see how well you did.

The wedding gifts have been put away, and the happy couple that works together in real estate is now settling into their first months of married life.

But this isn’t just any couple: Claudine DeMatos and Raphael De Niro, son of actor Robert De Niro who runs the De Niro Group at Prudential Douglas Elliman, are real estate royalty. And the story of how they met and married is as close as one can get to a real estate fairy tale, because De Niro not only won her heart, but sold her on the business as well.

DeMatos never thought she’d end up in real estate. She was working with Naomi Campbell at NC.Connect, a fashion PR and events firm, and hobnobbing with celebrities when she met De Niro through nightclub impresario Richie Akiva, who made the introduction in the Hamptons in 2004.

De Niro had just started as a real estate agent. “He wanted to get into residential sales so he could see the other side of the business,” she said, referring to his development experience. De Niro is also a partner with his father in the Greenwich Hotel in Tribeca, which opened in April.

The couple, both 31, began dating soon after they met. “Right away, I realized he was the one,” she said. They were engaged on Valentine’s Day 2007.

After DeMatos left NC.Connect, she thought about opening a clothing store, “but my partner in the venture, Tamara Levy, had gotten her real estate license and was doing very well.”

De Niro convinced her that selling properties would make a good segue for someone with so many contacts, so she went to work with the group, helping him market properties on the Web and embracing the Web’s potential to showcase prime apartments. Then she got her license, and has immersed herself in the business ever since.

The group specializes in high-end properties and keeping their boldface clients out of the real estate pages of newspapers, yet they’ve been linked with David Blaine, Ron Burkle and Carmen Kass.

DeMatos said real estate was not part of her original game plan. She grew up in Port Washington on Long Island and graduated from the Fashion Institute of Technology.
Note: Correction appended

“To me, real estate was an afterthought,” said DeMatos. “I’m enjoying it, though I never thought I would. When I was growing up, my best friend’s mother was an agent; her car was always stacked with papers, and I always thought, ‘Wow, that’s hard.’”

The couple was married in March at a private ceremony in the Bahamas. The Daily News reported that 200 guests attended the wedding, including celebrities and moguls like David Blaine, Harvey Keitel, Chazz Palminteri, Ron Burkle and Butter owner Akiva.

The pair lives in Tribeca in rented digs, but they are in contract on a place near the Greenwich Hotel.

DeMatos said their personalities complement each other’s professional responsibilities. Raphael serves mainly as the group’s public face, running to showings and meetings, while she follows up with the other six group members, oversees the Web site and engages in strategic planning.

“Now with the hotel and other projects, I have more of an active associate broker role,” she said. “He’s the ‘know-it-
all,’ the numbers man and negotiator, while I’m the marketing and computer geek. We’re an amazing team.”

When developer Izak Senbahar shaves in the morning, he has one eye on the razor and the other on a small TV that’s built into his bathroom mirror. “While I’m shaving, I’m also looking at the news and what’s going on in the market,” he said.

Senbahar is such a believer in the TV mirror that his Alexico Group is installing them in the master bathrooms of the 129 residences in the Laurel — the new 31-story, glass-and-limestone residential tower the firm is developing at 400 East 67th Street.

The mirror TVs — which cost roughly $5,000 apiece, including installation, and seem to be one of a kind in New York at the moment — are the latest in a string of fancy boob tubes that developers are including in bathrooms and kitchens in new Manhattan construction projects to sweeten the deals.

Bathroom TVs, albeit the wall-mounted variety, can also be found at the Mark Hotel on Madison Avenue — another Alexico property — as well as at 995 Fifth Avenue, the old Stanhope Hotel, which Extell Development converted into 26 deluxe residential units. Meanwhile, the Carriage House, a forthcoming 24-unit condo development in Chelsea, will have 17-inch plasma screen TVs with built-in DVD players in all master bathrooms.

Developers are including state-of-the-art TVs in other rooms, too. At the Omni at 206 East 95th Street, developers put flat-screen televisions in every kitchen.

Stephen Kliegerman, executive director of development marketing for Halstead, said developers are simply looking to stand out. “What can I do to distinguish my job from someone else’s?” he said. “Put a TV in the bathroom! It certainly is a sexy amenity.”

Senbahar agreed. He’s had his TV-cum-mirror for the past four years (“no shaving mishaps so far,” he noted). He said he didn’t know of any New York projects other than the Laurel, where residents are paying around $1,900 a square foot to move in, that had incorporated the technology. (Neither did several other new development marketers.)

So will the mirror TVs be a key selling point?

“I don’t think it’s a major selling point, but it is one of those delightful perks,” said Joanie Schumacher, the Laurel’s sales rep, who gave The Real Deal a demonstration of the devices in a model residence. “I think a lot of people want TVs in their bathrooms.”

So many Spartan, offbeat condo names have started to proliferate in northern Brooklyn that residents could find themselves in conversations that resemble the old “Who’s on First?” skit by Abbott and Costello. One new building, at 154 Skillman Avenue, is called Home. Another, at 196-200 South 2nd Street, is known simply as the Pad.

Dave Maundrell, president of the brokerage and marketing firm aptsandlofts.com, devised the somewhat generic names. “We thought these names would relate to the market and set ourselves apart,” said Maundrell, an East Williamsburg native. “This wouldn’t necessarily fly in Brooklyn Heights or other conservative neighborhoods. On Park Avenue, they’d think ‘the Pad’ meant their helipad or something.”

In its sixth week of sales, the Pad, known for a slightly funky aesthetic, was 40 percent sold. Prices range from $395,000 to $645,000, Maundrell said. Apartments at Home — which are larger, hence the more traditional name — run from $600,000 to $749,000.

Potential buyers in Williamsburg are attuned to irony and the one-word, back-to-the-basics names compete with industrial-themed condos in the neighborhood, including the Warehouse and Factory Lofts.

In addition to Home and the Pad, Williamsburg also has projects like the 575-unit mixed-use complex called the Edge, which refers to its location near the East River. Meanwhile, New Condo, near McCarren Park in Greenpoint, is named as a play on its Newton Street
location.

The address-as-nameplate is especially effective for developments in prime locations, said Doug Bowen, a vice president at Core Group Marketing who specializes in Williamsburg. His latest is 125 North 10th Street, a few blocks from the Bedford Avenue station.

“In my experience, these edgier building names tend to fade quickly,” said Bowen. “They get the younger crowd to show up, especially to offbeat locations, but it’s rarely something of classic importance.”

One unique name, Hello Living, refers to a six-condo complex on Pacific Street near the border of Prospect Heights and Crown Heights, far from the hipster precincts in Williamsburg.

The marketing design features conference-style name tags (“Hello, my name is . . .”) filled out with the names of the individual buildings: Madison, Hudson, Dakota, Montana, Sydney and Austin. Wags have noted that the project’s location is about as far from the action as the names imply. Still, the project has found buyers. In the Madison, 12 of 15 apartments have sold; in the Hudson, two of 10 remained for sale as of mid-May.

Maundrell said there are limits to naming a project. He said he would not name anything in Williamsburg “the Crib.” The Pad and Home are happy mediums, added Shana Bowes, director of marketing at aptsandlofts.com. “They’re selling, so it is working.”

Core sued by former broker

A former Core Group Marketing agent is suing the company and its key players for allegedly cheating him out of more than $51 million in commissions.

Broker Joseph Bongiovanni filed a lawsuit in New York State Supreme Court March 7 against Core Group Marketing; co-founder and CEO Shaun Osher; co-founder Jack Cayre; principal Joseph Cayre (owner of Midtown Equities); founding member Steven Ganz; and broker Jon Isaacs. Bongiovanni alleges that the defendants stole his clients and refused to give him commissions on five development deals, including one for $200 million, and three residential sales.

In an eight-count complaint, Bongiovanni claimed that when he left the Corcoran Group for Core in August 2006, he and Osher reached a verbal agreement that Bongiovanni “had exclusive rights” to any client that he brought with him to Core. He claims that meant “no sales agent at the firm maintained a right to show properties to said clients other than the plaintiff.”

He also claimed that Osher verbally agreed that “any client which plaintiff procured either prior or subsequent [to] his joining the defendant firm was his and his only with respect to the ability to earn commissions.”

Osher wrote a statement that the claims are baseless.

“We firmly believe that Joseph Bongiovanni’s allegations against Core Group Marketing are without merit,” he wrote. “We are saddened that Mr. Bongiovanni has chosen to take the actions he has. We are confident that our reputation among our clients and peers alike will not waver as we move through the litigation process as a result of Mr. Bongiovanni’s unfounded claims.” By Lauren Elkies

Brooklyn lands the Real World

Jennifer Connelly and her actor-husband Paul Bettany might be selling their Park Slope home and moving to Manhattan, but don’t count Brooklyn out yet. MTV has announced it will air “the Real World: Brooklyn” early next year. No sign yet on whether the cast will live in Williamsburg, Greenpoint, Carroll Gardens, Park Slope or anywhere else in the borough. TRD

Prosecution moves forward for brokers accused of tax evasion

Eleven veteran New York City real estate brokers named in March as part of a tax evasion investigation led by the Albany County District Attorney face varying legal consequences, including reductions of charges, although no cases have been dismissed, authorities said.

Patrick Brennan, a senior associate broker at the Corcoran Group, was initially charged with two misdemeanor counts for failing to pay taxes in 2004 and 2005, the DA’s office said. Considered a minor offense, the charge was reduced to what’s called an adjournment in contemplation of dismissal.

If Brennan files an accurate tax return for two years, pays taxes owed plus penalties and interest, and stays out of legal trouble for six months, the case will be dismissed, the DA’s office said. Otherwise, the DA will prosecute the case.

Two other Corcoran brokers similarly saw their charges reduced. Gabriel Bedoya, a Corcoran vice president and associate broker who also has a real estate investment firm, was initially hit with two misdemeanors for allegedly living tax-free in 2004 and 2006; Dennis Hughes, a senior vice president and associate broker at Corcoran, was originally charged with a misdemeanor for allegedly failing to pay taxes in 2006.

Miriam Sirota, a senior vice president and associate broker at Corcoran, will be arraigned on tax evasion charges on June 3. The DA’s office said it would not discuss details of that case until then.

The brokers are part of a group of 31 real estate professionals in the state whom the DA’s office said failed to report more than $13 million in income and evaded more than $650,000 in state income taxes. By Lauren Elkies

Manhattan retail rents rise

Despite the economic slowdown, Manhattan retail rents increased in prime shopping corridors over the past months as tourists continued to spend freely, a report released from the Real Estate Board of New York said.

Manhattan retail rents grew by 3 percent compared
to a year ago to an average of $111 per square foot, the report said.

Not all the news was good. In some areas, rents fell,
including on Madison Avenue from 57th to 72nd Street, where the average asking rent fell by 8 percent to $1,066 per square foot.

In Midtown, the average asking rent rose by 9 percent to $145 per square foot; in Midtown South, rents rose by 8 percent to $96; and in Midtown East, rents rose by 6 percent to $164.

The city’s highest rents were found on the 10 blocks of Fifth Avenue south of 59th Street, where asking rents averaged $1,958 per square foot.

The survey reported a strong increase in rents in Herald Square and Soho’s Broadway district; the most dramatic increases were on Third Avenue between 60th and 72nd streets. By Adam Pincus

Tribeca mansion aims to break Downtown record

Months before the completion of one of Downtown’s largest townhouses, seller Steven Schnall said he has already seen interest from several potential buyers for his mansion at 2 North Moore Street in Tribeca, which hit the market with a $35 million price tag last month.

If it sells for that price — which brokers say is likely — it will break the record for the highest-priced single-family home sold south of 14th Street.

Schnall, founder and former CEO of New York Mortgage Trust, paid just $5.57 million for the property in 2005, when it contained two buildings, one of which was landmarked. Schnall had the southern building razed,
and gutted the landmarked building to its basement.
He then did his best to renovate the landmarked facade, and began building a six-story building to its south, also connected internally.

When completed, the 11,000-square-foot home will include a three-car garage, 50-foot lap pool, billiards, bar, media room, roof deck, balcony and a maid’s apartment with a separate entrance. And because the lot is located on a corner, the building will have 65 feet of frontage on North Moore Street and West Broadway.

Pricing the behemoth was a headache, Schnall said, because there was no comparable property in Tribeca. He interviewed several prominent luxury brokers to determine a good per-square-foot price point and decided on $3,000 per square foot. While he finally chose Deborah Grubman of the Corcoran Group to represent the listing, Schnall said he also spoke to Douglas Elliman, Massey Knakal and Sotheby’s.

Other brokers asked by The Real Deal said that while the bottom-line price is record-breaking, the price per square foot is reasonable for a luxury property in Tribeca. By James Kelly

Lear closes on 15 CPW condo

Television writer and producer Norman Lear and his wife Lyn closed on a 38th-floor condominium at 15 Central Park West, paying $10 million, according to city records. The two-bedroom, 2,367-square-foot apartment went into contract in October 2006 and the sale was finalized April 28.

Lear, 86, produced hit shows such as “Sanford and Son,” “All in the Family,” “One Day at a Time,” “the Jeffersons” and “Maude.” Other entertainment figures in the trophy tower include Warner Bros. president Alan F. Horn, musician Sting, actor Denzel Washington and Tokyo-born director and producer Keiko Ibi. By Adam Pincus

Real estate licenses enter the Internet era

The New York State Department of State, the agency that issues real estate licenses, has moved some of its operations online.

The department recently launched a 24-hour licensing management system that expedites the licensing process and updates information in real time. The system, called EAccessNY, allows real estate agents and brokers to apply for a salesperson license, change an address, renew a license and check the status of pending forms.

Before the system launched, new agents had to trek downtown with application in hand to the Department of State’s New York City office on William Street, or mail a form and wait as long as a month to receive a permanent license. And while hard copies are still required for certain forms, others must now be done on the Web.

“This really allows them to go ahead and work right away,” said Michael Barbolla, general sales manager at Charles Rutenberg Realty. By Lauren Elkies

Columbia University buying failed Riverdale development

The down real estate market has dealt a major blow to one developer in the Bronx neighborhood of Riverdale. L & M Equity Partners and its affiliate Hudson Arlington Associates, the firm behind the Arbor, a 127-unit condo at 3260 Henry Hudson Parkway, has taken that property off the market and is selling it to Columbia University.

“Columbia has agreed in principle to purchase the residential building now under construction at 3260 Henry Hudson Parkway for housing faculty members, graduate students and their families,” said Robert Hornsby, Columbia’s director of media relations.

Hudson Arlington Associates declined to comment on the impending sale, which has Riverdale’s real estate community buzzing.

The wholesale purchase of an entire building by a nonprofit, even one as deep-pocketed as Columbia, is not giving local brokers great confidence in the future of Riverdale’s real estate market.

“I don’t think it’s a good thing,” said Robert Wachsman, president of Riverdale Homes, a local brokerage.

Brokers said that only 13 apartments in the still-unfinished Arbor had entered into sale agreements. Some observers said they believe the project’s high prices and unappealing design slowed sales. Units at the Arbor ranged between $400,000 and $900,000, too high for Riverdale, Wachsman said. By John DeSio

Murray Hill condo lures buyers with week of free meals

To welcome the annual onslaught of New Yorkers who greet the spring by going apartment-shopping, the developers of Jasper, a converted prewar loft in Murray Hill, hosted a week-long open house with free meals from neighborhood restaurants along with tours of model units.

The open house, which was held in May, was meant to attract buyers who might otherwise ignore Murray Hill, said Shaun Osher, CEO of Core Group Marketing, the development’s exclusive marketing and sales agent. Food was provided by restaurants like Blue Smoke, Dos Caminos and the Second Avenue Deli.

The 18-story, 121,000-square-foot building was developed by the Harch Group and PHH Realty and designed by architect Ismael Leyva. About 50 percent of the units have sold since September, Osher said. Its one- and two-bedroom units and penthouses are priced from $800,000 to $3 million.

“We felt that spring is always the time when people go out and look at property; they get out of winter doldrums,” Osher said. “We wanted to create something unique and bring people into the sales center and connect to Murray Hill, because Murray Hill is a hidden gem in the city.” By Catherine Contiguglia

Somerset Partners founder sells grass roof townhouse

A West Village townhouse at 13 Leroy Street with a garage, skyloft and mutliple grassy roofs has sold for $13.82 million. The seller, Keith Rubenstein, is a founder of Somerset Partners, a real estate investment fund. He bought the four-story home for just under $9 million in early 2006 from Andrew Rasiej, who founded Irving Plaza and sold Digital Club Network.

Rasiej, a former city public advocate candidate, bought the property, which is west of Bleecker Street, for less than $2 million and hired Turett Collaborative Architects to transform it. Actor Will Smith lived here briefly. The buyer was not listed on the deed. TRD

Broker, architect launch Soho art series

A broker and architect who double as artists launched a series of one-night art events recently in an underground space in Soho.

Stribling broker Mary Mihelic, who co-curated the show with architect Caridad Sola, said they wanted to address the uneasy relationship between art and real estate. Artists are often pioneers into neighborhoods, she said, only to be followed by wealthier residents who drive up prices and eventually force the artists out.

Mihelic saw the subterranean gallery as a way to keep art in New York City.

“Once Manhattan loses its writers and artists and musicians, it will become one big shopping mall,” she said.

The self-described guerrilla artist from Chicago built a crane in the space with a halo, in reference to the construction accidents in Manhattan.

It was not the only reference to the beleaguered Department of Buildings. She created an invitation for the event in the form of a DOB permit.

Co-curator and fellow artist Sola is an architect with Bovis Lend Lease who is working on the Sept. 11 Memorial and Museum. She said she and Mihelic were lucky to come across the Soho location. Even in the tight real estate market, unused properties are still scattered around the city, she said. “There are so many vacant spaces sitting there doing nothing,” Sola said. By Adam Pincus

Developer buys at Plaza for $13M

Ronald Oehl, president of Manhattan-based Stonehenge Capital Corporation, TLM Realty Corp. and TNC Realty Group, has purchased a condo at the Plaza Hotel for $13.34 million, according to city records. Stonehenge Capital Corporation is a national specialty finance company that manages investment funds with more than $500 million in capital. Oehl has donated to the presidential campaigns of both Democratic Sen. Hillary Clinton and former Republican Sen. Fred Thompson. TRD

1975: Buildings corruption scandal snares inspectors

Nearly two-thirds of the city’s Buildings Department inspectors assigned to Manhattan were indicted in a multi-year corruption investigation 33 years ago this month, in what may have been the largest mass-indictment within a single agency in the city’s history. The 40 inspectors were among 95 people charged with bribery, extortion and grand larceny.

“In anyone’s recollection, this is the largest number of employees indicted in a single department,” the city’s Commissioner of Investigation, Nicholas Scoppetta, told the New York Times. The charges alleged that contractors paid city workers as much as $5,000 to speed up inspections or avoid them entirely. In addition to the 40 city inspectors, 55 individuals associated with private contractors were charged.

By April 1976, the investigation had grown to 124 indictments, half of which were city inspectors. The inquiry led Mayor Abraham Beame to introduce department directives to reduce graft among investigators by allowing architects and engineers to certify that their plans for new construction or major alteration were in compliance with code.

The process, known as self-certification, was broadened under the Giuliani administration and is currently in use but has been criticized for permitting lax enforcement of the building code. In 2007, the Department of Buildings was allowed by state regulators to refuse plans from architects or engineers who abused the system.

1952: First major private slum clearance projects start

The city’s first significant private urban renewal projects began 56 years ago this month, with the signing of contracts for four sites in the Lower East Side and Harlem. The controversial program, first known as slum clearance and later as urban renewal, began with the Housing Act of 1949, which provided federal dollars to cities to buy land with poor living conditions and redevelop it with large housing projects. Although the program created thousands of housing units in the nation, critics faulted it for destroying neighborhoods.

The New York City projects were planned to develop housing for 6,500 middle-income families at a cost of $85 million. The plans included the East River Houses south of the Williamsburg Bridge — the first project in the city to qualify for Title I slum clearance dollars. The project opened to its first residents in 1955.

The Harlem projects included Delano Village, located between Lenox and Fifth avenues and 139th and 142nd streets, which cost $16 million; Lenox Terrace, between Lenox and Fifth avenues and 132nd and 135th streets, built at a cost of $14 million; and Park West Village, originally known as Manhattantown, between Central Park West and Amsterdam avenues and 97th and 100th streets, which cost $37 million. The rents in the cooperative apartments were expected to range from about $20 to $30 per month, after an initial down payment.

Delano Village is now owned by TIAA-CREF and Vantage Properties and managed as rental apartments. Lenox Terrace was opened in 1958 and purchased by the Olnick Organization in 1968, which now offers the units as rentals. Park West Village was completed in 1961. It was converted to condos in 1989. U.S. Rep. Charles Rangel and Gov. David Paterson live in the six-building Lenox Terrace complex.

1921: World’s first skyscraper church opens

The world’s first church housed within a skyscraper was opened 87 years ago this month in a 21-story Midtown building. The Fifth Church of Christ Scientist moved into five floors of the Canadian Pacific Building at 9 East 43rd Street at Madison Avenue. The worship space rose the entire five floors, with opera-style seating holding an audience of 1,700.

The building’s owner, Madison Avenue Offices Inc., was originally formed by members of the church. The company purchased land from St. Bartholomew’s Church at Madison Avenue and 43rd Street for $1.5 million in 1920 as one of the parcels needed to build the office tower. The company gave the church a 99-year lease.

In 1938, the building was sold at auction for $5.25 million, and changed hands several times since then. Macklowe Properties bought the building around 2000 and in 2005 unveiled a $100 million rehabilitation, renamed 340 Madison Avenue. In 2006, Macklowe sold the refurbished building for $550 million to office property investment and management firm Broadway Partners. A Christian Scientist church and reading room still exists in the building.

Compiled by Adam Pincus

Astor’s appetite for New York real estate appears to have had no
limits. On his deathbed in 1848, he is said to have exclaimed, “Could I
begin life again, knowing what I now know, and had money to invest, I
would buy every foot of land on the island of Manhattan.” Comments

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In the June issue of The Real Deal, the story “Real estate
royalty settles down” incorrectly stated that Claudine DeMatos’ family
had owned a horse farm in Bridgehampton. DeMatos had a friend whose
family owned a horse farm there, and she would visit as a child.

The story “Surf’s up for Swig” incorrectly stated the years and months of several events. Kent Swig was engaged to the daughter of Harry Macklowe in September 1986. Swig left Macklowe’s company in 1994. He acquired Brown Harris Stevens in 1995 and Halstead in 1999. The article also incorrectly named Swig’s partner on the Sheffield condo project. His partners on the project were Yair Levy and Serge Hoyda.

The
story “Foreign accents mark city: A look at buyers in two new condo
buildings,” incorrectly stated the number of condo units that had been
sold at William Beaver House. More than 71 percent of the 320 condo
units were sold between January 2007 and the beginning of May 2008, not
71 units, as originally stated.

The article “Looking for Magic in Greenpoint” incorrectly attributed the prices for the units at 110 Green Street to the Developers Group. It came from an anonymous source with knowledge of the project.

In the original version of a June 16 Web story titled “Jones Lang LaSalle to acquire Staubach,” a quote from an article in the June 2007 issue of The Real Deal was taken out of context. When Studley CEO Mitchell Steir said “I’d like to be bought out,” he was referring specifically to a buy-out from his younger associates at some point in the future.