The Real Deal New York

In many of America’s most popular destinations, from the beaches of
South Florida to the Las Vegas strip, “ghost towers” — empty or near
empty buildings — mark the skyline, mere shells of their developers’
failed ambitions. The perfect storm of plunging property values, frozen credit
markets and excess supply in certain real estate submarkets is stalling
many newly built projects. That raises the question: Is New York City,
late to the real estate downturn that has plagued the rest of the
country, due to be haunted, too? [more]

The West Village office of the now-defunct JC DeNiro & Associates
was a prime location for luring wealthy passers-by to browse framed
professional photos of $2 million condos.
The firm’s sleek, glass-enclosed and “very shiny offices” were one
reason salesperson Andrew Goebel was attracted to the 30-agent company.
As Goebel — who was fired from the company in the summer of 2008
after being told the company no longer needed a rental division — had
begun to realize, JC DeNiro’s carefully cultivated glossy image
concealed dire financial straits. [more]

While the auction gavel has made its way onto the real estate scene in
the New York area in recent weeks, not everyone is sold on the idea of
putting properties up for bid. Those who run auctions have, of course, very publicly touted them
as a way to get property moving in a market where transactions seem to
be stuck in quicksand. But the question remains: Do auctions really work for high-end
properties, or other properties that are not in distress? Or do they
simply set an artificial floor for prices and depress surrounding
property values?
[more]

Since opening her eponymous millinery shop in Nolita 10 years ago, Lisa Shaub has witnessed the euphoria of a trendy district on the rise. But now she’s watching the fall. Shaub says she has never seen business conditions as rough — or vacancy rates as high — in Nolita as they are now. Three storefronts just south of her shop at 232 Mulberry Street are available. [more]

With few deals to latch onto, brokers have started paying much
closer attention to first-time buyers and are now giving them first-class status. In this month’s Q & A, brokers told The Real Deal that
first-time buyers now constitute anywhere from 30 to 70 percent of all
of their clients. That’s a jump from 15 to 50 percent from before the
credit crunch. [more]

Walk down Main Street in East Hampton Village and there is little sign
that times have been tough on commercial landlords. J.Crew just
expanded into a 5,000-square-foot store at 14 Main Street. Tommy
Hilfiger recently opened at 69 Main Street. Michael Kors is opening up
at 48 Main Street. And Hermès is coming to 63 Main Street. “New this year we have Brooks Brothers right beside us at 54 Main,”
said Judi Desiderio, CEO and president of Town and Country Real Estate
in East Hampton Village. And Brooks Brothers has some high-profile
neighbors. “On the other side is Dylan’s Candy store, owned by Ralph
Lauren’s daughter Dylan. Next to her is Gucci,” said Desiderio.
[more]

While deal volume is nowhere near where it was last year at this time, residential brokers are finally starting to report an increase in bargain-hunting buyers and a slight uptick in rental deals. But while the prognosis for resales seems to be improving, things on the new development front are still bleak, with no signs of improvement on the horizon. In response to the unsavory market conditions, developers are drastically changing their strategies to survive the downturn. [more]

Having transformed from blighted neighborhood to artists’ enclave, Hunts Point in the South Bronx was poised to take the typical four-decade route to gentrification that culminates in wine bars, Whole Foods and an Apple store.

But these are not typical times, as one developer there has discovered.

Taconic Investment Partners bought the fortress-like American BankNote Building, a landmarked 400,000-square-foot, three-building commercial complex in Hunts Point, for $35 million at the end of 2007, “in the good old days,” said Taconic partner Douglas Winshall.

The developer is presently turning the property into the BankNote, Hunts Point’s first Class A office building and one of just eight in the Bronx.

Taconic’s initial vision for the complex — built in 1909 to house a facility that printed currency and other financial documents — was “to bring creative-type tenants out of Midtown Manhattan, such as ad agencies, architects, publishing firms,” Winshall said. Such businesses filled Taconic’s flagship property, the 3 million-square-foot 111 Eighth Avenue in Manhattan, also an industrial property that was converted to office space.

When Taconic bought 111 Eighth Avenue 12 years ago, said Winshall, “Chelsea was a pioneering location” settled by artists. Now the building is home to Google, Nike, Sprint, Armani Exchange and Deutsch Advertising.

The company envisioned the same scenario playing out in Hunts Point in the Bronx, which Winshall described as “the last-discovered borough.”

It would have been a cinch just a year or two ago, considering some of the project’s features. The largest space, the 200,000-square-foot top floor of the Garrison building, has 25-foot ceilings, a 100,000-square-foot mezzanine and 80,000 square feet of north-facing skylights.

Plus, it’s hard to imagine more affordable Class A space. Rents at the BankNote are in the mid-$20s per square foot, compared to an average of $60 per square foot in Manhattan. And a host of financial incentives offered by the city and state governments to Manhattan-based businesses that relocate to Empowerment Zones like Hunts Point can cut that rent in half for several years.

Still, in a recession deals are hard to seal at any price.

Paul Wolf, co-principal of Denham Wolf Real Estate Services, a partner in the building and its leasing agent, said: “Last year, before the market tanked, we were in discussion with large, internationally renowned organizations — a big architectural firm and a major designer, each looking at 100,000-square-foot spaces.”

Since then, said Wolf, “the architect lost a third of his assignments across the globe, laid off a third of his staff and tabled his expansion. And the design firm is not prepared to make any decisions until the third quarter of 2009.”

Due for completion before the end of the year, the BankNote renovation, designed by Beyer Blinder Belle, will combine the three buildings, plus a fourth on the same lot acquired separately; repoint the facade; replace 350 windows, some of them almost 400 square feet; and upgrade lobbies, common areas and bathrooms.

The Spector Group architectural firm is designing a pre-build of some of the 20,000-square-foot floors of offices in one of the buildings. “They’re built on a module,” said architect Scott Spector, so any size operation, from a 2,000-square-foot office to the entire floor, can be accommodated without major rebuilding.

The developers dreamed of having the Garrison building house a museum like the similarly imposing DIA:Beacon. But, said Wolf, “the tenancy we expect has changed a bit.” It’s more likely to go to a union training facility or school at this point. And most of the leasing activity is at the Lafayette building, one of the four buildings in the complex, which contains more conventional office spaces.

When Taconic acquired the building, it was 45 percent occupied. Some tenants left due to rent increases and more may follow. Winshall expects tenancy to drop to 25 percent for a period.

The BankNote’s most famous occupant, LightBox, is staying, attracting celebrities to its light-filled, 10,000-square-foot photography and film studio; as is the Wine Cellarage, which stores high-end wines for wealthy clients and auction houses; the Bronx Academy for Arts and Dance, and at least one charter school. Despite the dearth of available office space in the Bronx, particularly Class A, “we’re all struggling now because people are loathe to make big decisions,” Wolff said.

But he expects the tide to turn by the end of 2009. “We will see a lot of deals happening in the next three to six months,” he said. “I believe we know where the bottom is. It’s just that some people are holding out before getting there.”

The Downtown office market, a hot topic at a major summit held last
month on the World Trade Center site, has held up better than the other
two Manhattan markets in the current recession, but experts said that
will change as beleaguered financial firms return space to the market.
Leasing volume rose in the Downtown market while falling in both
Midtown and Midtown South, the most recent report from commercial
services firm CB Richard Ellis showed. And while all three markets
showed declines in average asking rents and increases in availability
rates, the Downtown results were the healthiest, the survey, which was
released last month, said.
[more]

485 Lexington asking $525 million

SL Green Realty’s 32-story office tower at 485 Lexington Avenue is on the market with an asking price of $525 million, the New York Post reported. The 921,000-square-foot building, between 46th and 47th streets, has $450 million in assumable debt through 2017. Citigroup is the lead tenant at the property, also known as Grand Central Square. SL Green had been in discussions to sell the building to Murray Hill Properties for $555 million, but talks reportedly have stalled. SL Green bought the property, and the adjacent building at 750 Third Avenue, for $480 million in 2004. Jon Caplan, Scott Latham, Richard Baxter and Ron Cohen of Cushman & Wakefield are marketing the building.

Lease for Harlem building on the market

A master lease for the Harlem Center, a 274,000-square-foot office and retail complex at 125th Street and Lenox Avenue, is on the market and is expected to trade for more than $100 million, the Post reported. National chains Marshall’s, H & M, CVS and Staples occupy the retail portion of the building, while the 147,000 square feet of office space is leased primarily to state government agencies. The master lease is owned by Forest City Ratner Companies; the Empire State Development Corp. owns the land. Jon Caplan, Scott Latham, Richard Baxter and Ron Cohen of Cushman & Wakefield are handling the sale.

Crane collapse site mortgage for sale

Arbor Realty Trust is looking to sell its $71.65 million mortgage on 303 East 51st Street, the construction site where a crane collapsed in March 2008, killing seven people, the New York Observer reported. The Kennelly Development Company’s original plan was to erect a 42-story condo building at the location, and the developer invested more than $120 million into the project. The developer stopped making payments after the crane accident, and the building is now facing foreclosure.

East Village walk-up asking $15 million

A six-story apartment building at 432-434 East 13th Street is on the market with an asking price of $15 million. The prewar property has 24,150 square feet above grade and contains 38 residential units, including 19 one-bedrooms and 18 two-bedrooms. Two rent-controlled tenants and six rent-stabilized tenants remain at the building, which is otherwise free market. The two retail units are occupied by a bar and a restaurant, which have leases expiring in 2012 and 2018, respectively. The property is zoned R7-2 and has a floor-area ratio of 3.44. John Ciraulo, Joseph Sitt and Craig Waggner of Massey Knakal are marketing the property.

Gramercy retail co-op on the block

A multilevel retail co-op unit at 222 Park Avenue South is on the market with an asking price of $12.75 million. Situated at the base of a 12-story elevator building, the corner unit has 6,314 square feet on the ground floor and 4,600 square feet of sellable space on the lower level. The unit is being sold by the current sponsor, and co-op board approval is not necessary. The space, which is limited to dry use, will be delivered vacant. John Ciraulo and Craig Waggner of Massey Knakal are handling the assignment.

Soho loft building on the market

A five-story loft building at 95 Grand Street is on the market with an asking price of $6.95 million. The 7,300-square-foot property is fully occupied but can be delivered vacant, with the exception of an interim multiple dwelling tenant living on the fourth floor. The ground-floor artist studio is owner occupied and consists of the first floor, cellar and mezzanine level. Free-market tenants are living in the second and third floors on three-month leases that can be terminated at the owner’s discretion. The fifth-floor unit is also owner occupied. Jerome Benayoun and Lipa Lieberman of Eastern Consolidated are handling the sale.

Washington Heights building for sale

An 80-unit walk-up apartment building at 404-412 Audubon Avenue is on the market with an asking price of $6.75 million. Situated on the southwest corner of Audubon Avenue and West 186th Street, the five-story property was built in 1912, and more than half of the units are two-bedrooms or larger. A sale at the asking price would represent a price per square foot of $104 and a gross rent multiple of 8.75. Most of the units are rent stabilized, averaging around $804 per month. The 58,300-square-foot building is zoned R7-2 and has a floor-area ratio of 3.44. Besen & Associates is handling the assignment.

Compiled by Linden Lim

In a Webcast last month, The Real Deal’s Jen Benepe spoke to Sam Chang, CEO of the McSam Hotel Group, about how he’s dealing with the tanking hotel industry and how it’s pushed his plans to retire at age 50 back a few years.

Chang talked about which projects he’s having trouble financing (the larger ones in the $30 million to $40 million range) and which ones his company is paying for on its own. He also told The Real Deal which neighborhoods he’s betting against for future construction. Still, despite the soft market, the king of budget lodging in the city is forging ahead with plans to build and open new hotels.

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

The Real Deal: Your company just filed plans with the city to build a 29-story Hyatt Place on East 52nd Street. But we’re in the middle of a recession and the hotel market is tanking. How are you financing that project?

Sam Chang: I really don’t know yet. We bought our land around three or four years ago and it took us this long to get approval. Since we already own the land, we might as well go ahead and file the permit and see how the market goes.

TRD: You are still building somewhere in the neighborhood of 17 hotels in New York City. Which of these projects are the most stressful in terms of dealing with the funding?

SC: Well, the bigger they are, the more difficult and stressful it is for me. For example, on 39th Street we are building three hotels, a total of over 600 rooms. It is a $200 million project and probably the most painful we’ve had.

TRD: The new market reports show trailing numbers for April 2009, with New York City revenue per room down 26 percent. This is the worst in the country. How many of those numbers applied to your portfolio of hotels?

SC: My portfolio of hotels in our segment is probably down around 20 percent. But January to March is always the slowest.

TRD: You were quoted recently saying that you had to lower prices by 20 percent. So, at how many of those hotels are you lowering the prices, how much lower can it go, and can it hurt the bottom line?

SC: [In] all the hotels we own in New York City, the prices are down around 20 percent and I think this will be the lowest we will go.


TRD: Sam, you told the New York Observer that you, despite building in Downtown Brooklyn, really don’t like the market there. Are there any other markets in New York City that you think are bad markets for hotels?


SC: Well, I definitely don’t like Harlem. Harlem is going to depend on overflow from Manhattan. If people can stay in Manhattan, then why would they want to stay in Harlem?

TRD: Going along with that theme, you have three hotels planned for Staten Island, one in the Bronx, two in Downtown Brooklyn and three hotels in Queens. Are you sorry you forged ahead with plans to build those hotels?

SC: I never feel sorry for anything I do. If I did it, I did it. I just have to do my best to finish these projects up.

TRD: You told The Real Deal recently that you are not going to buy any new sites, and five to six sites are actually being held up until financing comes through. But on some of them, like a project in Sunset Park, you said you were actually paying in cash. Is that right?

SC: Yes, for the small projects we will definitely build with our own money. For the bigger projects, like the ones we need $30 [million] to $40 million to build, those are definitely on hold until the financing is available.


TRD: In a previous interview, you said that you wanted to retire by the age of 50. So now that you’re 49 do you still expect to be able to retire by the age of 50, when you are a billionaire?


SC: No, no, no. I mean, a billionaire is out of the question. I was thinking about retiring at 50 when I finish all my hotels, but it doesn’t look like I’m going to finish everything right now, not with this financial crisis. I’m moving my retirement age to 55 and giving myself five more years.

Compiled by Victoria DeCarmine

In June 2008, William “Billy” Macklowe ousted his legendary father, Harry, as chairman and CEO of Macklowe Properties. A year later, instead of moving the company forward, the younger Macklowe is still putting out the fires that were set during the final tumultuous years of his father’s reign. For months, Macklowe has fought to stave off the seizure of the former Drake Hotel site at Park Avenue and 56th Street by Deutsche Bank, which filed to foreclose in August 2008 after the company defaulted on a $543 million loan meant to finance the redevelopment of the site into condominiums and retail stores.
[more]

These days, one or two buyers can make or break an entire project by
helping developers reach crucial benchmarks in the selling process. In
response, sponsors are doing everything in their power to win over
these tipping-point buyers.
[more]

In the easy lending climate of recent years, it seemed almost anyone, no matter how much money they had in their bank account, could become a real estate developer. But in the post-boom world, lenders are hinging much of their decision-making on something that was previously off-limits: a developer’s personal wealth.

Real estate financial experts say sponsors now must display evidence of tremendous riches to qualify for a loan, as lenders examine everything from borrowers’ cars to their vacation homes and their kids’ college tuitions. As a result, real estate development has transformed from a great equalizer, an industry offering opportunities for a wide range of entrepreneurs, to the exclusive province of the rich and famous.

“This is the wrong time to start out with nothing,” said Gregg Winter, principal of W Financial, a direct private lender, and commercial mortgage broker Winter & Co.

These days, lenders are willing to go to surprising lengths to ensure they’re dealing with extremely well-capitalized individuals, Winter said. They now perform “deep background checks” that scrutinize not only the buyer’s real estate experience and portfolio but personal assets. “They’re looking much more carefully to see that the developer or owner has enough liquidity outside of his real estate life to handle difficulties,” Winter said. “Lenders are more attentive to that than ever.”

That means the borrower must produce personal financial statements and proof of investments and assets, from retirement accounts to vacation homes. And those documents are then double-checked against public records.

“If you own a summer house with no mortgage and it’s an asset, [lenders] absolutely care about that,” said Jeff Bernstein, a partner at real estate investment banking firm Guild Partners.

He added: “Banks always had personal financial statement requirements. But these criteria are being looked at much more closely and weighted much more heavily.”

Lenders are even evaluating a borrower’s car and jewelry, looking for evidence of deep, long-standing wealth, experts said.

“If you’re a real estate lender, you’re going to notice whether your client has a Bentley or a Ferrari,” Winter said. “Nothing’s off limits.”

This mentality represents a vast change from recent years, in part because recourse loans, in which the borrower can be held personally responsible for repayment, are increasingly common these days.

When credit was easy and the real estate market was on its speedy trajectory upward, rookie developers regularly emerged from other fields, drawn by the notion that “anybody who could fog up a mirror could borrow money,” said Frank Sullivan, a principal at real estate consultancy Gallin Glick Sullivan O’Keefe.

At the time, it also was possible for developers to get up to 95 percent financing. But with institutional capital and mezzanine lending now largely at a standstill, “you’re lucky to get 40 to 50 percent,” said Robert Knakal, chairman of Massey Knakal Realty Services.

Two years ago, he said, a developer could probably have done a $20 million deal with only about $400,000 of personal equity. Today that same developer would likely be asked to put up around $8 million.

Not only is more equity required, but full or partial personal guarantees are becoming the norm, said Knakal.

“The banks want to know that if the property is not successful, they’re secured by the personal assets of the borrower,” he said. “There are some non-recourse loans out there, but they’re more difficult to get.”

The new requirements are a direct response to what lenders view as mistakes of the boom. Developers all over the country secured non-recourse loans at the height of the market — and they now have the option of simply handing troubled properties back to the bank.

In March, for example, Crain’s reported that an office building at 475 Fifth Avenue, owned by the Moinian Group and financial partner Westbrook Partners, would be returned to its lender, Barclays Capital, after the owners defaulted on loans.

Banks want to avoid such an outcome this time around by ensuring not only that the borrower has skin in the game but also can pony up more cash if necessary.

“If something gets screwed up, they want to know this guy has $10 million in the bank that they can go after,” said Guild Partners’ Bernstein. “They want to know every nickel this guy has isn’t in this, that he can have some ability to carry this through some chop.”

He added that some banks even demand that a borrower do all of his personal banking with them, including checking accounts and mutual funds.

And lenders aren’t easily fooled. Homes, cars and other outward trappings of wealth only work in a developer’s favor if the borrower can truly afford them and is not overleveraged, Winter said.

“You don’t want to see someone with too many obligations that are expensive to maintain,” said Winter, who recently made a loan to a borrower with holdings in the diamond industry after carefully assessing the prospects of a De Beers mine in South Africa.

“The college tuition, the Bentley, the Ferrari, the diamond business, none of those are going to create a ‘yes’ or ‘no’ on their own,” Winter said. “You’re going to look at them in context. The savvier the lender is at looking at the big picture, the more likely he is to get the loan repaid.”

In fact, some say lenders are now more focused on the qualifications of the sponsor than on the merits of the real estate deal in question.

“It’s always the case in a down market — sponsorship is prioritized,” noted Keith Braddish, an executive vice president at CB Richard Ellis Capital Markets. “[Lenders] want to align themselves with borrowers who are financially well-heeled, the guys who are going to walk the walk when the market gets tough.”

As a result of these factors, “we’ve had a very tangible shift in the profile of the buyers,” Knakal said. “The buyers are high networth individuals and/or old-line families who have been around for decades.”

That category includes players like the Muss Development Organization and the LeFrak family, who are rumored to be in the process of banking land in the New York area, as well as the city’s many under-the-radar “real estate families” who own large amounts of property and are very well-capitalized, Bernstein said.

“There are dozens of those guys whose names you wouldn’t have heard of,” he said. “They’re conservative and they have substantial assets, and they can afford to act during tougher times.”

If developers think selling new condominiums in Manhattan is tough, they should try finding buyers for high-end townhouses.

Pricey, older townhouses appeal to a tiny percentage of buyers — by one broker’s estimate, just 3 percent of house hunters are looking for a townhouse — and as a result, they’ve always taken longer to sell than condominiums. But since the real estate market crashed, townhouses are proving even more difficult than usual to sell, and when properties do change hands, it’s only after steep price reductions.

“The townhouse market has been a little on the slow side,” said Anne Snee, a senior vice president at the Corcoran Group. “Townhouses are trickier to market. It’s taking longer than normal for everything to sell.”

Fewer buyers for high-end properties, combined with hard-to-get financing, are causing townhouses to languish on the market. According to data on closings from StreetEasy, 10 townhouses were sold in April, and the average length of time on the market was 54 weeks, compared to 100 new condominiums, which sold after an average of 28 weeks on the market.

Brokers who specialize in townhouses cautioned against drawing too many conclusions from townhouse sales data because of the small number of transactions.

Officials at StreetEasy said the numbers do not fully reflect the current market, which they describe as far more active than in the early months of 2009. Brokers interviewed by The Real Deal said that while they’re seeing much greater interest in the second quarter, townhouse buyers are looking for bargains, and sellers are not jumping at their offers. In some cases, sellers are reluctant to accept offers because they owe more on their mortgage than the property’s current value.

One of the hardest-hit areas is Harlem, which has a glut of townhouses for sale. Just four sales were recorded in April in Upper Manhattan, compared to 11 in April 2008, according to StreetEasy’s data.

A beautifully renovated three-family home in historic Hamilton Heights, originally listed at $2.6 million in July 2008, sold in February for $1.7 million, after three price cuts, said Brian Phillips, an associate broker with Prudential Douglas Elliman who specializes in Harlem townhouses. The buyer, an investor, paid cash for the house at 457 West 143rd Street.

Would-be buyers are finding apartments on the Upper West Side more affordable, which adds to the challenge of selling a townhouse in Harlem, Phillips said.

“I’m getting offers, but some sellers owe more than the properties are worth,” he said.

Still, the inventory of houses in all of Manhattan has dropped. The number of Manhattan townhouses on the market in April dipped 6.4 percent, to 539 houses, compared to 576 at the end of April 2008, according to Miller Samuel, the real estate appraisal and consulting firm. Meanwhile, the numbers of available co-ops and condos were each up 20 percent for the same period, said Jonathan Miller, the firm’s president and CEO.

Debby Solomon, a senior vice president with Elliman, sees more townhouses for rent and fewer for sale.

Owners are eager to make some rental income as they wait for prices to go up before putting their homes on the market, Solomon said.

“The listings for sale are limited,” she said. “I’ve been looking for clients from Los Angeles who want to rent a townhouse. There are tons to choose from for rent.”

But some sellers are going to great lengths to close a sale, as was the case with a townhouse on West 69th Street that had been carved up into multiple apartments.

The townhouse sold last month for $4.4 million to a New York investment group, but only after a $500,000 price cut and months of complicated negotiations. The house took nearly a year to sell, said Edward Mermelstein, a real estate attorney whose firm was involved in the transaction. The deal went through because the seller provided the financing, he said.

Sales of townhouses above $5 million are rare in today’s market, he said.

“You’re having issues financing these properties,” Mermelstein said.

“On top of financing, the market itself has contracted,” he added. The people purchasing [high-end properties] are slowly disappearing. You’ve got bankers and hedge-fund guys who’ve lost their jobs and bonuses. Those were the targets of the townhouse market.”

Spring thaw

Still, some brokers are seeing a thaw after dealing with a dead market at the beginning of 2009.

Two townhouses on the Upper East Side are enticing house hunters, including one home with a garage on East 75th Street that attracted Madonna’s attention, said Don Correia, a senior vice president at Halstead Property. That home, originally listed at nearly $7 million, has an accepted offer.

There’s also a signed contract on a two-story townhouse at 75th Street and York Avenue that initially went on the market for $2 million.

“It was as dead as a doornail in January and February,” Correia said. “Things have turned around in the last month.”

Based on fresh interest among high-end buyers, Rachel Koenig of Prudential Douglas Elliman expects the second quarter to be much better for townhouse sales. One of her listings, a turn-of-the-century, six-story mansion at 11 East 74th Street, had been scheduled for an auction in May through Bid on the City, an online real estate trading venture, but the auction was canceled after a contract came in, Koenig said.

“The activity I’m seeing on the higher-end market has picked up,” Koenig said. “I’ve seen some houses go into contract in the last few weeks.”

That should be encouraging to Irish investor Derek Quinlan, who needs a wealthy buyer for his 13,000-square-foot limestone mansion at 20 East 64th Street, priced at $37 million, according to the New York Post. Built in 1857, the house has five bedrooms, two terraces, a gym, massage room, basement staff quarters and library.

According to the Post, Quinlan had been renting it out for $90,000 a month before putting it on the market.

While many New York City developers are hamstrung by the recession and
scrambling to get their own financial houses in order, some are
starting to think about positioning themselves for a market rebound.
Although many of the projects they’re considering are in their
infancy — and have yet to reach the desks of the city officials who
would need to sign off on them — experts say a few savvy developers are
already plotting their post-credit crunch courses. In most cases, the
planning does not involve laying out serious money, but instead is more
centered around gearing up for zoning approvals or variances on
properties that do not have “as of right” development status. [more]

Potential buyers are musing about why — in light of the new market
landscape — some developers of new condo developments haven’t dropped
their prices.
“Seems like [Williamsburg condo development] 80 Metropolitan is
another building that’s stubbornly clinging to the pricing they set
before things dropped,” wrote one poster on the real estate Web site
StreetEasy.
What incredulous buyers often don’t realize is that
across-the-board price cuts have not been easy for most developers to
make, because price reductions must be cleared with lenders. [more]

Stung by a wave of condominium defaults and the collapse of the credit
market for jumbo loans, some real estate brokers are channeling their
energies into a different area: affordable housing developments with
government-backed financing for first-time buyers. For some brokers these offer a stable alternative to market-rate
condominiums and co-ops. In recent years, firms like Halstead Property
and Fillmore Real Estate have expanded their presence in affordable
housing or mixed-income projects. And, in recent months, as the
recession has made market-rate sales more difficult, competition among
brokers has intensified because more buyers are turning to affordable
units.
[more]

Now that New York City brokerage Coldwell Banker Hunt Kennedy is
closing its doors, what’s next for the 21-year-old, 214-agent company?
The remainder of Manhattan’s sixth-largest firm, according to a recent survey by The Real Deal,
is believed to be on the auction block and priced at around $5 million.
But because Coldwell Banker Hunt Kennedy — including its luxury
marketing division Coldwell Banker Previews International — allegedly
owes some $12 million, the price would presumably go toward its debt. Coldwell Banker Hunt Kennedy is by far the largest Manhattan
company to close so far, with offices at 555 Madison Avenue, 329
Columbus Avenue, 64 West 21st Street and 155 Seventh Avenue in Park
Slope.
[more]

Just when things appeared to be looking up for the New York City real
estate market, the industry was hit with shocking news: Coldwell Banker
Hunt Kennedy would close its doors. The fate of CBHK remains unclear
(see sidebar). But one thing is certain: Now that traffic seems to be
reviving somewhat in the normally busy early summer market, brokers are
scrambling to make up for this winter’s very slow months by doing as
many deals as possible. And as the demise of CBHK shows, many may find
that isn’t enough to put them on par with what they’ve earned in the
past.
[more]

In a move that experts are calling unprecedented for the real estate market, buyers in contract to purchase new condominiums are banding together to demand concessions from developers, or to get out of their contracts entirely.

Sponsors, unaccustomed to communicating with their buyers at all, let alone multiple buyers, must now learn to negotiate with these groups in a manner akin to collective bargaining with a labor union.

For some sponsors, bargaining with a group can be a boon, helping to accelerate the closing process. But many are refusing, preferring to work solely with individuals. In some cases, such as the Brompton in Yorkville and the Toren in Downtown Brooklyn, the sponsors’ refusal to negotiate with a group has led to litigation.

“There are groups of purchasers at buildings who are meeting and trying to figure out what to do, to try and negotiate with the developer to get concessions,” said Lawrence Weiner, an attorney at New Jersey-based law firm Wilentz, Goldman and Spitzer, who is representing a group of four buyers of three units suing the developer of Toren to rescind their purchase agreements. “I think based on the technology available today, it’s just a lot easier to find people who are sharing your issues.”

Since the Wall Street meltdown this fall, buyers of new condos have demanded additional concessions at the closing table or attempted to get out of their contracts completely. Experts say the deluge of attempted renegotiation is unlike anything the real estate market in the city has experienced before, including the last major downturn in the early 1990s.

“Even after Sept. 11, when we anticipated people walking away from deals, we never saw anything quite like this,” said Neil Garfinkel, a partner at Abrams Garfinkel Margolis Bergson and residential counsel to the Real Estate Board of New York. “I don’t think there’s any precedent for what’s going on in the marketplace.”

Along with individual buyers asking for concessions, groups of purchasers have started finding each other on blogs and Internet forums, seeking strength in numbers, sharing information and plotting strategies for collective bargaining with the developers.

“In a lot of respects, they’re trying to use economic leverage to force the issue,” said Garfinkel. “If enough people say, ‘we’re not closing until you negotiate,’ that puts the sponsor in a difficult position.”

In a Yahoo! group for buyers at Upper West Side condo Linden78, purchasers traded information about the rescission letters the developer sent out after missing the project’s deadline, and kept each other updated when they received their deposits back.

On the Web site Queenswest.com, a group of buyers at One Hunters Point in Long Island City arranged a December 2008 meeting at a local coffee shop to discuss ways of bargaining with the developer for concessions.

“Now that the sponsor is throwing in incentives to new buyers, those of us who signed early feel we’re not receiving any benefit from going into contract six to 12 months ago,” wrote one poster on the forum. “We may have a better chance of renegotiating if we come together as a group.”

On StreetEasy, a discussion thread called “Brompton buyers are organizing” was formed in February to help buyers “get price concessions in light of the dramatic change in the environment,” one buyer wrote.

Such coordination between condo buyers was virtually impossible in the last major real estate downturn in the early 1990s, Stephen Kliegerman, the executive director of development marketing at Halstead Property, said.

“The Internet today has created an entirely new venue for consumers to share information and attempt to work together,” Kliegerman said. “People are posting things on Facebook pages, saying, ‘If you’re in contract in this building, call me.’ I’ve seen a few of those.”

Attempts to negotiate with developers run the gamut, from friendly requests for more information to lawsuits demanding full refunds.

At the Toren, for example, a lawsuit filed April 22 by Weiner on behalf of buyers Leslie Smith, Alessandro Papa, Margaret Sanz and Karl Junkers demanded that the buyers be given the right to rescind their contract agreements and that they get refunds for their deposit money, totaling $145,800, in addition to compensatory damages and attorney’s fees. The lawsuit hinges on the developer’s failure to adhere to the Interstate Land Sales Full Disclosure Act, which requires developers building projects with more than 99 units to file a property report with the Department of Housing and Urban Development, Weiner said.

By contrast, Kliegerman said, a group of buyers recently approached the developer of a condominium Halstead is marketing, which he declined to name.

The buyers (who “found each other on the Internet”) requested a meeting with Kliegerman and the developer of the project, who fielded questions such as when construction would be completed, if the sponsor planned to rent units, and how the buyers could get financing if fewer than 70 percent of the units are sold. Buyers with specific requests for concessions were instructed to take them up with the developer at the closing table, he said.

“It was more of a fact-finding mission,” Kliegerman said. “They weren’t coming to strong-arm the developer.”

He added that such meetings can be a good way to calm buyers’ nerves and defuse tension.

A developer “should always be willing to sit down with people who have concerns,” Kliegerman said. “You have to allow people to be heard and give them accurate information so they can make up their own mind.”

Still, he said, when it comes to specific negotiations about price and concessions, he recommends that his developers negotiate only with individual buyers, and only at the closing table to ensure they’re offering concessions to buyers who are serious about closing.

Negotiating with a group of buyers is risky for a sponsor, especially a large developer with multiple buildings, because it opens the developer up to having to do the same thing elsewhere.

“A major developer knows that if they negotiate, word will spread like wildfire to other projects,” Garfinkel said. “No one’s going to want to close.”

As a precaution, he said, more purchase contracts now make it possible for developers to sue buyers for damages if they attempt to walk away from their deposits.

But if a developer is too inflexible, he may find himself slapped with litigation. Soon after the buyers at the Brompton started their online group, attorney Adam Leitman Bailey announced the first of a series of lawsuits he planned to file on behalf of 17 buyers in contract at the building who are refusing to close without concessions from the developer, the Related Companies, citing falling real estate market values and an inability to secure mortgages.

Weiner said he has filed lawsuits on behalf of eight clients at One Hunters Point as well as about 30 other clients in several other New York City developments.

“A lot of my clients have tried to negotiate with the developers about concessions, and they stayed firm,” he said.

In some cases, negotiating with a group can even be advantageous to a developer, depending on the size of the building and the type of concessions, said Perry Cohen, a partner in the real estate group at Todtman, Nachamie, Spizz & Johns who represents several builders. For example, it may be cheaper to offer some types of concessions on a bulk basis.

“If [the sponsor] is buying 100 refrigerators and he can get a better deal on them because he can get a group rate, it’s better than negotiating on a piecemeal basis,” Cohen said.

Smaller developers whose aim is to finish closing all the units in one project also may be more likely to offer across-the-board concessions to a group.

“A smaller sponsor may be more inclined to negotiate with purchasers in order to get them closed,” Garfinkel said.

Manhattan

Chelsea

$1.575 million

16 West 16th Street

2-bed, 3-bath, 1,800 sf co-op in an elevator building (Chelsea Lane); unit has northern, western and southern exposure, terrace; building has live-in superintendent, storage; maintenance $2,445; 51 percent tax deductible; 18 weeks on the market. (Broker: Robert Rosa, Century 21 NY Metro)

East Village

$1.17 million

38-40 Stuyvesant Street

2-bed, 2-bath, 927 sf condo in a prewar building; unit has hardwood floors, washer and dryer, private roof deck, eastern, western and northern exposure, granite countertops; common charges $768; taxes $305; asking price $1.17 million; 25 weeks on the market. (Broker: Javier Lattanzio, Time Equities)

Gramercy

$535,000

130 East 17th Street

1-bed, 1-bath, 600 sf co-op in a prewar building; unit has fireplace, hardwood floors; building has storage, laundry facility, roof deck; maintenance $926; 50 percent tax deductible; asking price $555,000; 29 weeks on the market. (Broker: Susan Faber, Barak Realty)

Midtown East

$395,000

225 East 46th Street

Studio, 1-bath, 403 sf condo in an elevator building (the Executive House); full-time doorman; common charges $365; last listing price $410,000; six weeks on the market. (Broker: Ray Asis, City Connections Realty)

Midtown East

$330,000

320 East 42nd Street

Studio, 1-bath, 400 sf co-op in an elevator building (Woodstock Tower); 24-hour doorman, concierge; unit has terrace; building has fitness center, garage, courtyard; maintenance $846; 60 percent tax deductible; last listing price $370,000; five months on the market. (Broker: Elliot Adler, City Connections Realty)

Upper East Side

$2.8 million

181 East 90th Street

3-bed, 3-bath, 2,319 sf condo in an elevator building (the Metropolitan); 24-hour doorman, concierge; unit has northern, eastern and western exposure, den, hardwood floors, granite countertops, Jacuzzi, washer and dryer; building has full-time handyman, fitness center, children’s playroom, storage, live-in superintendent; common charges $2,101; taxes $663, five-year tax abatement; asking price $2.995 million; 12 weeks on the market. (Brokers: Karin Posvar-Picket, the Corcoran Group; Art Irwin, Halstead Property)

Upper East Side

$957,500

59 East 75th Street

1-bed, 1-bath, 870 sf co-op in an elevator prewar building; unit has air conditioning, granite counters, hardwood floors, fireplace; building has laundry facility, storage; maintenance $1,284; 65 percent tax deductible; asking price $995,000; four weeks on the market. (Brokers: Karin Posvar-Picket, Beth Ferrante, the Corcoran Group)

Upper West Side

$950,000

180 West End Avenue

3-bedroom, 2-bath, 1,250 sf co-op; unit has terrace; building has storage, bicycle room, laundry facility, gym, live-in superintendent, private park, 24-hour security system, garage; maintenance $1,729; 47 percent tax deductible; asking price $1.095 million; 21 weeks on the market. (Brokers: Frances Rickard, Century 21 NY Metro; Svetlana Choi, Bellmarc Realty)

Uptown

$225,000

668 Riverside Drive

1-bed, 1-bath, 650 sf condo in a prewar elevator building; unit has granite countertops; building has laundry facility, live-in superintendent; common charges $225; taxes $27 with 10-year tax abatement; asking price $225,000; one week on the market. (Brokers: Leif Johansson, Robert Kravath, Barak Realty)

Queens

Jackson Heights

$212,500

35-35 75th Street

1-bed, 1-bath, 750 sf co-op in an elevator building (Montclair Gardens); building has laundry facility, live-in superintendent; last listing price $220,000; 10 weeks on the market. (Broker: Matt Weinstein, City Connections Realty)

Whitestone

$142,000

158-22 16th Avenue

1-bedroom, 1-bath, 650 sf co-op (Clearview Gardens); unit has air conditioning; maintenance $675; asking price $149,000; four weeks on the market. (Broker: Anthony Carollo, Carollo Real Estate)

Compiled by Jovana Rizzo

Last October, a banking executive offered Ian Reisner and Mati Weiderpass of Parkview Developers $15.5 million in cash for their apartment, a 4,000-square-foot combination of five apartments at Southmoor House at 230 Central Park South.

The pair didn’t have to think hard about turning down the offer.

“After thinking about where we would move, we realized we would never be able to replace this,” Reisner said, gesturing to the 16th- and 17th-floor views of Central Park.

For Reisner, 40, and Weiderpass, 49, the apartment is as much a home as their headquarters for Parkview, and it is where they conceived plans for the 505, a seven-story, 109-unit ground-up condo in Hell’s Kitchen that is impressively 90 percent sold after launching in late 2007. Reisner attributes their success to a formula of low-priced units — the majority sold in the low $600,000 range — in a booming neighborhood, and said he’s excited to relaunch the sales office this summer to sell the remaining units: four one-bedrooms, two two-bedroom penthouses and one three-bedroom penthouse.

Reisner said they closed the sales office last fall so they could focus on finishing construction. He added that they are on budget, on schedule and that the first movers come this summer.

Parkview owns nearly one-fourth of 230 Central Park South, making it one of the co-op’s largest shareholders. Reisner and Weiderpass bought their first apartment — four units that had already been connected — in 1995 in the wake of the savings-and-loan crisis for a mere $820,000, and added the fifth unit in 2002. Five years ago, the two men embarked on a nearly $5 million two-year gut renovation to create their current space. No design detail has been spared in the renovation, overseen by architect Paul Dominguez, most notably to the point that there is near-perfect symmetry throughout the home.

“I’m into symmetry big time, and you’re not going to find anything in my apartment that’s not symmetrical,” said Reisner, pointing to ceiling beams he built to parallel the building’s actual support system.

The apartment has four bedrooms, six bathrooms, a great room with sweeping park views, a formal dining room, library, bar and kitchen decorated for entertaining with an intricate Moroccan-tiled island.

The rooms, save for the upstairs bedroom, master bath and guest suite, are all connected through a series of custom-made

8-foot-tall pocket doors. There isn’t much art on the walls, to avoid clashing with the intricate ceiling decoration, fabric hangings and paneling that fill the spaces instead.

Reisner said he isn’t into art, and much prefers architectural elements, while Weiderpass, who likes photography, has hung a few framed prints. The focus, however, is more on the view of Central Park.

Maximizing such a vista would theoretically be any homeowner’s priority, but Reisner and Weiderpass took the opportunity as an edict, carving out panoramic windows wherever possible, and using the pocket doors to allow the rooms to flow into one another and toward the view. The kitchen and guest suite do not have that view, but in the master suite, a series of windows and mirrors allow for views from the closet, shower and Jacuzzi.

After passing through the foyer, the apartment begins in the great room, a 720-square-foot, white-walled room filled with off-white suede furniture. The apartment is styled in early 20th-century French Art Deco, and the rooms are monochromatic for dramatic effect: The great room is white to further accentuate the park’s natural colors. The burgundy library is meant to be soothing, while the brightness of the golden dining room makes up for a lack of park views, Reisner said.

The apartment is also built for entertaining, something Reisner and Weiderpass love to do — “give me an excuse and I’ll throw a party,” Reisner said. The pair frequently host benefits and celebrations, and said they have the goods on hand to handle a 100-person party.

The dining room is in the back of the home. Reisner installed gauzy curtains to shield the view of neighboring apartment buildings, and pocket doors open to the library, which has views of the park. There is a large 20-seat dining table made of anegre, a blond African hardwood, and a grid pattern in the bamboo floor echoes the tic-tac-toe-patterned ceiling. To further match the ceiling and floor, there is a delicate three-stepped pattern on the formal dining ware.

Just outside of the dining room, there is the library and bar space, where a black-and-gold marble bar sits opposite a wood-burning fireplace with a matching marble mantel, which is surrounded by four velvet club chairs.

That’s Reisner’s favorite retreat, he said. “I find [the library] to be calm, soothing and a great place to unwind by the fireplace and read the day’s paper.”

Everything is tucked away in the kitchen, which is done in classic subway tile and Calcutta marble. A breakfast nook sits between cabinets, and even the coffee pot is nestled behind a trap door.

Up the carpeted, spiral staircase is a guest room, the master suite and the couple’s latest renovation project, a guest suite. A notable highlight in the master suite is the Jacuzzi overlooking the park, which is surrounded by mirrors — even on the ceiling — and offers the feeling of an infinity pool hanging over the trees 16 stories up.

Having completed their renovation, the pair now buys other properties in the building to renovate and resell them. Reisner has spent 10 of the last 12 years on the building’s board, pursuing an ambitious project to create a cond-op arrangement, a hybrid with co-op taxes and condo rules. (Under his leadership, the co-op building no longer requires board approval or financial disclosures from its residents, and pied-à-terres and subleases are welcome.) The building recently sold its air rights to fund a new Art Deco façade, elevators and a gym.

“My vision is to take a park-facing building in close proximity to the finest addresses in the world, and redevelop the building from a prewar co-op to a state-of-the-art condo, fully refurbished and ready to compete with the best,” Reisner said, referring to 15 Central Park West, Trump Tower and Columbus Circle nearby.

And yet, between work, parties and their two Shiba Inu dogs, Lucy and Ricky, the partners, who have been together for 15 years, still try to find time to enjoy where it all started.

“It’s rare that there is quiet around the house, but I have a separate office where I can sometimes isolate myself from all the activities,” Weiderpass said.

A visit to Boymelgreen Developers’ Web site gives the impression that
the firm, founded by Shaya Boymelgreen, is one of the most powerful
real estate companies in New York — and a major player on the global
stage. The site notes that “in just over a decade, Mr. Boymelgreen has
transformed his family business into one of the largest and most active
development companies in New York City and a powerful global
development and investment firm.” [more]

While many potential buyers of residential real estate in New York City
are waiting on the sidelines, expecting prices to fall further, the
plunge of interest rates to historical lows has sparked an explosion in
mortgage refinancing.
“We are definitely seeing tremendous interest in refinancing,” said
Brooke Jacob, CEO of Everest Equity in Suffern, N.Y. “Anybody with an
open loan balance is trying to do it. Whether they own a unit in a
condo or a co-op, whether it’s a townhouse in an outer borough, a
single-family home, an apartment complex or any real estate, when
interest rates drop, you will see an influx of refinancing. Demand is
huge.”
[more]

When economists first began talking about the V-shaped — meaning fast
and strong — recovery from a recession, they had no idea they would
spawn an entire alphabet soup of economic models. But there are now a
whole host of lettered recovery theories to subscribe to.
Indeed, many economists, real estate experts and market analysts,
appear to be ditching the idea of the V-shaped recovery this time
around, and are instead lining up behind the L-shaped, U-shaped or
J-shaped recovery models. (The shape of the letters, of course, refers
to the charted pattern made by economic data such as retail sales or
employment.)
[more]

Sales update

Central Harlem

239 West 135th Street

Sales launched at the 12-unit condominium building, which has one-bedrooms and one- and two-bedroom duplexes, in the middle of last month. Amenities include a virtual doorman and a 25-year tax abatement. Units start at $495,000. Corcoran is the exclusive sales and marketing agent.

Harlem

Hamilton Lofts

117 and 121 Edgecombe Avenue

Sales launched early last month at Gold Development’s two-building, 12-unit project. The two- and three-bedroom units range from 920 to 1,220 square feet and from $539,000 to $698,000. The building includes private storage spaces, video intercom units, outdoor spaces and a 15-year 421a tax abatement. Construction was expected to be completed by June 1, and occupancy is set to begin this summer. Halstead Property Development Marketing is the exclusive sales and marketing agent. Contact: www.hamiltonlofts.com.

Prospect Heights

Vantage 238

238 St. Marks Avenue

Sales began recently at the Karl Fischer-designed 20-unit condominium slated for completion at the end of this summer. The building includes 700-square-foot one-bedroom units starting at $435,000 and 1,200-square-foot two-bedroom units starting at $645,000. Amenities include outdoor space for most units and a 15-year tax abatement. Corcoran is the exclusive sales and marketing agent. Contact: www.vantage238.com.

Williamsburg

NV

101 North Fifth Street

Fifty-percent of units have been sold at the Morton Group’s development and move-ins are expected to begin within the month. Apartments range from 670-square-foot one-bedrooms to 1,440-square-foot three-bedrooms, and prices begin at $430,000. Amenities include rooftop terraces, a fitness center, a media lounge, a courtyard garden with a fire pit and parking spaces. The Developers Group is the exclusive sales and marketing firm for the project.

Rental update

Brooklyn Heights

72 Poplar Street

The owners of the former police precinct on Poplar Street, between Henry and Hicks streets, plan to convert the building into 30 rental apartments, the Brooklyn Paper reported. The space, designed by architect Andrew Fredman, would also include a ground-floor medical facility and an adjacent parking garage. Community Board 2′s land-use committee approved the conversion proposal in late April.

Midtown West

Silver Towers

600 West 42nd Street

Leasing began early last month. The Silverstein Properties-developed, 1.2 million-square-foot complex includes a public park, an indoor pool, parking and more than 20,000 square feet of retail space. The 1,042 studio to two-bedroom apartments rent for $2,300 to $8,000, and the complex also includes 317 affordable apartments. Units will be available starting in the middle of this month, and the building is slated for completion in early 2010. Citi Habitats is the exclusive leasing and marketing agent. Contact: www.silvertowers.com.

Upper West Side

Columbus Village

97th to 100th streets between Columbus and Amsterdam avenues

Leasing began at Chetrit Group’s complex last month. The complex has 710 units spread out over five buildings. Rents there start at $1,895 for a studio. Amenities include a Whole Foods in the building.

Uptown

119th Street and Third Avenue

Units are now available for rent at Third Avenue Associates’ 90-unit luxury condominium building, where sales launched in 2008. Rents for one-, two- and three-bedroom units at the Barry Rice-designed building range from $1,975 to $4,450 per month. According to StreetEasy, three units in the building had sold and seven were in contract as of mid-May. Contact: www.119thandthird.com.

Williamsburg

44 Berry Street

Leasing has begun at Cayuga Capital Management’s project. The 42 units in the building, a former tonic water factory, are all between 800 and 900 square feet and can be reconfigured to fit up to four residents. Rents range from $1,900 to $3,200 per month. Amenities include a common vegetable garden, fitness center, bocce ball court and 15,000 square feet of retail stores. Aptsandlofts.com is the exclusive leasing and marketing agent. Contact: www.44berry.com.

Compiled by Sara Polsky

New condos have lost their boom-time sheen and are now more troubled than virtually any other sector of the New York market. However, there are still firms out there moving the remaining units.

This month, The Real Deal surveyed the top new development marketing firms, which have their work cut out for them, as buyers who were once signing contracts before a building’s foundation was even poured are now demanding steeper discounts and more concessions.

The survey found that the Corcoran Group and its subsidiary, the Corcoran Sunshine Marketing Group, have marketed more new condos than any other brokerage in the last few years, just as the last time The Real Deal conducted the survey in 2006.

Go to chart: Biggest new development marketers by number of projects

But while Corcoran has maintained its place at the top of the heap, the real success story seems to be Halstead Property Development Marketing, which has snatched away a huge amount of market share from its competitors in the last several years.

In 2006, Halstead ranked number 10 in terms of number of units marketed. This year, the firm has skyrocketed to third place, listing 4,139 new development units in 59 projects between 2007 and 2009.

Go to chart: Biggest new development marketers by number of units

That number represents a massive amount of growth for the firm, which represented only 229 new development units between 2005 and 2007 (the 2006 survey included projects slated for 2007).

Corcoran and new development-focused Corcoran Sunshine together topped the list by a wide margin, marketing 6,661 units in 200 projects between 2007 and 2009, the survey found. Prudential Douglas Elliman Development Marketing Group finished second, with 4,436 units in 77 projects, moving up from third place last time.

The survey looked at new developments that began sales or leasing between 2007 and 2009. Projects were counted for each firm for the year in which it was hired to market the project, even if another firm was later hired to handle the sales or rentals.

With the new development marketing world shrinking — a recent survey found the number of closed sales in new developments dropped a stunning 67 percent in the first quarter of 2009 from the prior-year quarter — many firms are finding they need to evolve to survive. Corcoran Sunshine, for example, is now consulting with lenders on distressed properties all over the country.

Yet even with the diversification, there seems to be hardly any way to escape the pain felt by all new development marketing firms in the city.

Go to chart: Biggest projects for each firm

“Clearly, the new development market has been one of the hardest-hit submarkets because of the financing issues and construction costs,” said Shaun Osher, founder and CEO of Core Development Marketing, 13th on The Real Deal’s list. “It’s definitely a difficult and trying time.”

Still, some firms are doing better than others. Halstead Property, for example, has focused heavily on new developments for the past five years, since Stephen Kliegerman gave up his post as the company’s director of sales for Downtown to focus exclusively on the sector as the firm’s executive director of development marketing.

After a hiring spree three years ago, “developers started to take notice that our developments were beating them for buyers,” Kliegerman said.

Kliegerman said he often looks to brokers in the field for insight.

“We bring actual resale brokers to meetings to get their opinion,” he said. “At some companies, there’s a wall between resale and new development. We don’t have a wall.”

That input helps paint an accurate picture of market conditions and upcoming trends, he said. During the recent boom, for example, many developers in Harlem “were being told that you had to build bigger apartments to attract people to Harlem, when the exact opposite was true,” he said.

Rather, Kliegerman said, because Harlem is a “value market,” units needed to be conservatively sized so that interested buyers could afford them. At the Bridges North development, where Halstead was brought in to help reposition the project as a rental, the developer had been “priced out of the market, even at $600 per square foot,” because the project — originally marketed by Elliman — had two- and three-bedroom apartments.

Kliegerman added that Harlem is a particular area of strength for Halstead.

By contrast, Elliman has nurtured its presence in Long Island City, where it recently took over Arris Lofts from Corcoran Sunshine, said Andrew Gerringer, managing director of the Prudential Douglas Elliman Development Marketing Group.

Elliman also is handling sales at Long Island City developments Crescent Club, the Powerhouse and the L Haus, Gerringer said.

“Long Island City has been a real boon to us,” he said. “That’s what’s been driving a lot of our success to date.”

That’s particularly true now that the high-end market has soured, since the majority of the Long Island City units are less than $1 million, he said.

Elliman is not, however, doing as well in some traditionally blue-chip neighborhoods such as the Upper East Side, where Corcoran Sunshine recently took over former Elliman projects Manhattan House, Miraval Living on 72nd Street and Yorkville’s Georgica.

“We’ve been expanding our market share and taking over properties and repositioning them to meet market demand,” said Kelly Kennedy Mack, president of the Corcoran Sunshine Marketing Group.

Corcoran acquired the Sunshine Group, founded by New York City marketing guru Louise Sunshine, in 2002, and the two merged operations in June 2005. Largely as a result of this marriage, Corcoran now is unrivaled in its dominance in new developments across the city, even in the recession. “We’re really in every area of the city,” Mack said.

But even for Corcoran’s new development teams, selling condos is not easy these days. In response, Mack said, the company has been consulting on distressed properties all over the country and handling sales and marketing for buildings on the West Coast and in South Florida.

“We started expanding more into other areas when the market started to slow down a bit,” Mack said.

The lull was caused by the credit crisis, which makes financing new residential projects very difficult, if not impossible, for developers. Mack estimated that while there were 7,000 sponsor units for sale in Manhattan in 2006 and 9,000 in 2007, only about 800 new condos are expected to come online by the end of 2009.

“Because of the lack of financing to developers in the market, the pipeline has shrunk considerably,” Mack said.

Companies that have managed to do well in relative terms are those that are adapting, said Elan Padeh, CEO of the Developers Group.

“What worked three years ago,” said Padeh, “isn’t necessarily working now.

“You really have to know what buyers are looking for,” he added. “In today’s market, it’s about price point.”

The Developers Group rose from eighth in 2006 to seventh this time around, with 2,569 units. The Brooklyn-based company beat out 25 competitors to become the exclusive sales and marketing agent at the 385-unit development the Edge in Williamsburg.

Other companies dropped on the survey, falling behind their competitors, as they presumably are feeling the pain of the market.

The Marketing Directors, for example, fell from second to sixth place, and Stribling Marketing Associates, which handled sales at the litigation-plagued Plaza, fell from sixth to 10th.

The controversial Shvo Group, which has presided over troubled developments like 20 Pine and Rector Square, fell from seventh to ninth.

With fewer new development projects to sell, many agents who specialize in new development may leave the industry altogether.

“There will be a contraction in the marketplace,” said Kliegerman, who predicts that the pipeline of new developments will not fully recover until 2012 or 2013. “Just like in any business, the strong will survive.”

Others note that marketing the most units isn’t the best barometer of a firm’s success. “We’re not interested in having every project in the city,” Osher said. “Only the ones we can be successful in selling.”

At the Desk of John Catsimatidis

Atlanta

Atlanta’s attempts to recover from the condo glut are drawing new auction businesses to the area, the Atlanta Journal-Constitution reported. Sellers can still profit on auctioned units if they are sold in bulk, said Andrew Gardner, vice president of condo operations for Lane Co., an Atlanta-based developer. Lane auctioned more than 40 units in 90 minutes in Midtown Atlanta earlier this year. Another auction was scheduled for last month, with the goal of selling nearly 60 units in two days. Auction bids generally start one-third below the original listing price for a unit.

Boston

Local communities are battling over nearby residential and commercial developments, the Boston Globe reported. Framingham is suing Natick over Chrysler Apartments, a $65 million affordable-housing complex off Speen Street, near the Framingham-Natick border. Framingham officials say the project would create more traffic — another 2,714 vehicle trips per day — than the town can handle, and the lawsuit asks for money for road improvements. Newton and Brookline are also fighting over a housing, office and retail project called Chestnut Hill Square. Brookline officials, like those in Framingham, say the Newton project will generate too much traffic.

Chicago

Chicago wants to tear down most of Michael Reese Hospital, a South Side medical facility, to build an Olympic village for the 2016 Summer Games. But state preservation officials say the hospital, whose main building was built in 1907, may be historically significant, the Chicago Tribune reported. The Illinois Historic Preservation Agency is legally required to assess the property before any project at the site is allowed to proceed, but the city has already agreed to buy the hospital campus for $86 million and sell it to developers for the $1 billion Olympic village.

Las Vegas

Two luxury condominium projects on Las Vegas Boulevard, the 275-unit Streamline Tower and the 359-unit One Las Vegas, have hit financial trouble. Streamline, which is 10 percent sold and has already had some move-ins, filed for Chapter 11 bankruptcy protection in late April, the Las Vegas Review-Journal reported. One Las Vegas, which was completed in June, has been taken over by its lender, Corus Bank of Chicago. Corus will sell the project’s units, which were originally priced starting in the $400,000s, at a 50 percent discount. Several other Las Vegas projects, including Newport Lofts, Cosmopolitan, Turnberry Towers and Mira Villa, recently went back to their lenders.

Short sales are increasing in Las Vegas, but according to local brokers, the bank approval process for these sales remains slow, the Las Vegas Review-Journal reported. The city saw a 27.5 percent increase in short sales in April from March, with 246 short sales, according to Rob Jenson of the Jenson Group. There were 8,119 short sale units on the market in April, a 4.3 percent increase from the previous month. Distressed sales made up 86 percent of all Las Vegas sales in April, and the numbers have been similar for the last seven months.

Los Angeles

Los Angeles’ largest office landlord, Maguire Properties, lost $53.9 million in the first quarter of this year, following 18 months of losses, the Los Angeles Times reported. Low demand for rental space and $5 billion in debt are hurting the owner of U.S. Bank Tower, Wells Fargo Center and other buildings in Los Angeles, Glendale and Pasadena. The company took on debt to purchase 23 office buildings in the Los Angeles area in 2007. CEO Nelson Rising, who has been head of the company for a year, has tried to raise money by selling off Orange County office properties but has had little success.

Philadelphia

The Waldorf-Astoria Hotel slated for 1441 Chestnut Street is on hold, the Philadelphia Inquirer reported. Timothy Mahoney, president and CEO of Mariner Commercial Properties, sold his stake in the project to his partner, Brook Lenfest of Brooks Capital Group. Mahoney said the two did not agree on how to move forward with the project in a climate marked by falling prices and rising inventory. The $420 million project, which was to include 136 luxury condos in addition to retail and restaurant space, is one of nine City Center hotel projects that have been delayed.

Area malls are seeing vacancies rise as retailers struggle with the recession. Occupancy at the Gallery at Market East, one of eight Philadelphia-area malls owned by Pennsylvania Real Estate Investment Trust, fell to 78.8 percent in the first quarter, down from 84.5 percent in the same period of 2008, the Philadelphia Inquirer reported. At the Springfield Mall, occupancy among non-anchor tenants fell to 84.7 percent from 88.3 percent at the end of 2008′s first quarter. The REIT has taken out large loans for renovations at several of its malls and the company had $2.8 billion in debt at the end of the first quarter.

Phoenix

A lawsuit filed in Maricopa County Superior Court early last month claims that home builder KB Home and lender Countrywide rigged appraisals to inflate the values of new homes sold since 2006, the Arizona Republic reported. The plaintiffs, seven KB Home buyers in Buckeye and Sunrise, are seeking class-action status to bring more buyers into the suit. Some appraisers have said they were forced to inflate the values of homes or risk losing business. The suit claims that appraisers selected inappropriate comparable sales, ignored the housing market’s decline after 2005 and used data from incomplete KB Home sales.

San Francisco

A waterfront project that was slated to bring as much as $10.2 million annually to the Port of San Francisco will likely be scaled back, the San Francisco Chronicle reported. The revised plan cuts the amount of retail space to about 186,000 square feet. The scaled back site is expected to bring in about $6.5 million in yearly revenue. The developers hope to begin construction in 2013 on the $2 billion project, which would include 10 commercial and residential buildings, and complete it in phases over a 17-year period.

Seattle

If a past-due loan is not paid off, about half of the site of the Heron and Pagoda towers in downtown Seattle will be sold at a foreclosure auction June 19, the Seattle Times reported. The project, which was to consist of 1.2 million square feet of condo, hotel, retail and office space spread over two 550-foot towers, was postponed indefinitely last year. Lender G4 Capital Partners said an affiliate of developer Multi Capital Group has defaulted on its $13.7 million loan, plus $900,000 in interest and fees, which was to be paid on Dec. 1.

Washington, D.C.

Buyers from across the country and abroad have made offers on a two-story farmhouse in Leesburg on sale for $1 as of last month. The buyer must be able to move the house from its current location, where owner H.H. Hunt plans to build an assisted-living facility. Prospective buyers offered to tow the house on tractor-trailers and described the properties where they would put the structure. Some described their trouble getting loans or told stories of homelessness, and one potential buyer hoped to transport the house by boat for her 18 grandchildren to live in, the Washington Post reported.

Compiled by Sara Polsky

Fort Lauderdale developer can’t play Trump card

The Trump International Hotel and Tower in Fort Lauderdale may no longer be able to use Donald Trump’s name, the Miami Herald reported. Trump said the developers of the property were in default on a licensing agreement to use the name. Sales at the building, where prices began at $600,000, were boosted by the Trump brand. Now 30 buyers are suing the project’s developers and Trump, saying Trump’s involvement with the building was misleading.

Brickell construction continues despite rumors

Construction on Miami’s Brickell Financial Center has continued despite rumors that work on the office tower halted, GlobeSt.com reported. The last crane is coming down, and the next step is to install the building’s exterior curtain wall system, according to developer Foram Group. The building has topped off and is slated for completion in 2010. One prelease tenant, law firm Bilzin Sumberg Baena Price & Axelrod, canceled its $58 million deal for 115,000 square feet in the building in February.

South Florida foreclosure filings up over 100 percent

The number of foreclosure filings in South Florida jumped by more than 100 percent in April as unemployment and loan problems continued and property values fell further, according to data from foreclosure tracking firm RealtyTrac. Foreclosure filings rose 111 percent in Miami-Dade County between March and April and were up nearly 90 percent year-over-year, the Miami Herald reported. In Broward County, foreclosures spiked 124 percent month-to-month and 91 percent year-over-year.

UBS renews lease at Bank of America Tower

UBS Financial Services has renewed its $7.5 million, five-year lease for 34,536 square feet at Miami’s Bank of America Tower. The lease renewal is the tower’s sixth and largest so far this year. Tony Puente, senior vice president of Fairchild Partners, represented the landlord, Wealth Capital Management. Colleen Newcomer, president of CBN Commercial Real Estate Services, represented UBS Financial Services. The Bank of America Tower is now 92 percent occupied.

Compiled by Sara Polsky

By the numbers

Robert A.M. Stern is dean of the Yale School of Architecture in New
Haven, Conn., and founder of Robert A.M. Stern Architects, where he
personally directs each project.
The firm designed 15 Central Park West, the limestone condominium
where total sales topped $2 billion, making it the most successful
apartment building in the world.
[more]

While almost all developers in the city are feeling the impact of the recession, Staten Island developers — even one of the largest in the borough — have seen construction come to a virtual standstill.

“You don’t want to say it’s come to a halt island-wide, but it’s as close to a halt as it can get,” said James Prendamano, a broker with Casandra Properties, a firm that represents high-profile developers and projects on Staten Island.

Take St. George, which was on the short list of potentially up-and-coming neighborhoods because of its proximity to the Staten Island Ferry. A quick ride to Lower Manhattan made it inviting to luxury condo developers when the market was hot.

Leib Puretz was one of those developers. Back in 2006, the Brooklyn developer envisioned creating 750 luxury condo units in St. George among several towers, including the View, the Pointe and 130 Bay Street Landing, the fifth building in the Bay Street Landing complex. Many of those units, however, came online just as the economy was starting to tank.

Sales have been slow and the number of units has been scaled back. According to Prendamano, only 25 percent of the View has been sold and units at the Pointe and the Pearl, as 130 Bay Street Landing is also known, are not yet on the market due to sewer and legal issues. In the end, Prendamano expects 500 units to be brought to market.

Meanwhile, the Staten Island Advance reported, Capital One Bank is foreclosing on $34 million in mortgages for the Pearl, which has 101 units, after the developer was unable to get enough financing to pay the note when it came due last year. The paper also reported that the developer is facing foreclosure on roughly $10.7 million in mortgage payments at the Staten Island Hotel, a project he invested in last year. And a private equity lender is also foreclosing on $33 million in other St. George properties, as well as land in the South Shore slated to become a strip mall that Puretz also owns.

“Banks are not lending,” Prendamano, who represents many of Puretz’s projects, told The Real Deal. “Until they start lending, this is not going to get better. Period.”

While Puretz — who is in workout discussions with banks to get new financing — seems to be the highest-profile example of the fallout, other developers and projects also are suffering in the borough.

Plans for a $4 million Russian cultural center in the South Beach section of Staten Island have been slowed by foreclosure, the Advance reported. In addition, construction on a grocery store called Family Fruit in New Brighton, a non-Puretz project that is represented by Casandra, is being “restrategized,” Prendamano said. A Walgreens was supposed to come to the Pointe but has been delayed, and Puretz’s proposed Liberty Towers condo project in St. George has yet to get started.

It’s too soon to tell how many developers will face foreclosure this year, but for now Puretz’s experience seems more the exception than the rule.

“The types of developers we have here on Staten Island are well-financed developers who have been here a long time,” said Anthony Licciardello, a broker who also blogs about local real estate. “They experienced the last downturn in the ’80s and knew having too much inventory when things turned was going to be a problem.”

The developers having the most trouble, Licciardello said, are the so-called spot developers — those who got into the mix to capitalize on the recent boom. Their projects are more prevalent in the southern, more suburban side of the island.

In St. George, Theo Dorian, the president of the neighborhood civic association, said he’s hoping things turn around soon.

Dorian supported many of Puretz’s projects, as well as others to revitalize the area. But for those projects to really succeed, he said, there needs to be an accompanying investment in public transportation, such as expanded ferry service, as well as road widening, increased parking and an increase in school capacity.

He said developers seeking to attract more Manhattanites also should be more aggressive about marketing the area. Playing up the fact that St. George is a cheaper alternative to the city could help attract artists and be a lure for young professionals, he said.

But Dorian doesn’t think the market will turn around anytime soon.

That’s not to say that no development is moving forward. The king of budget lodging, Sam Chang, CEO of the McSam Hotel Group, is moving forward with plans to build three budget hotels in the borough.

“Staten Island is a market that’s not open yet, [so] nobody knows how they’re going to do until I open up,” he said.

In addition, the city broke ground in January on a new $220 million, 182,000-square-foot courthouse in St. George.

The project, scheduled to open in 2012, will house several courts and jury assembly rooms in one location and promises to add much needed parking to the neighborhood.

Some are hoping that the project, and the influx of people it will bring to the area, will spark others. The neighborhood is starved for new restaurants and places where people can buy “a coffee and a bagel and a New York Times,” Dorian said.

“I worry that people will come to the conclusion that this neighborhood can’t work — that the guy [Puretz] who wanted to come in and do some good failed,” he said.

Go to chart: Sealing the deal in Gramercy

With its well-maintained prewar buildings and tree-lined streets, Gramercy, the micro-neighborhood surrounding exclusive Gramercy Park, has long been a desirable residential enclave.

But as with most Manhattan neighborhoods in recent months, sales have been few and far between.

This month, The Real Deal zeroed in on the area to find out how many deals in Gramercy are closing and to determine exactly what kinds of apartments are selling most strongly.

According to the real estate data Web site StreetEasy, the number of closings has dropped more than 81 percent in the last year. The site found that only 10 units closed in the area this April, the most recent closing data on record, compared to 54 in April 2008.

The site defines Gramercy as running between 14th and 23rd streets, and between Park Avenue South to the west and First Avenue to the east.

Sofia Kim, vice president of research at StreetEasy, cautioned that the number might not represent all the Gramercy closings in April of this year, since typically most closings are recorded with the city’s Department of Finance two to eight weeks after the closing occurs. But even taking that into account, it was evident as of the middle of last month that far fewer Gramercy properties are trading now than during the same month-long period last year.

While most of the units that closed in April went into contract in the middle of the winter, they offer a representation of what’s actually making it to the closing table and not falling apart because the mortgage fell through or the buyer got cold feet about the recession.

Of the 10 properties that did sell, six were co-ops, three were condos and one was a cond-op. Prices ranged from $295,000 to $2.7 million.

Seven of the 10 deals that closed were for one-bedrooms, and only two properties had two bedrooms or more — two facts that brokers say are helping to guide them as they decide which deals to chase.

Interestingly, only one of the sales recorded in April was for a building fronting the private park from which the neighborhood’s name derives — a location that gives residents “key” privileges to Gramercy Park.

Elaine Mayers, a vice president and associate broker with Citi Habitats, said that while property on the blocks surrounding the park is “very desirable,” it consists only of prewar buildings, so if a buyer is looking for an apartment in a building with newer amenities, they typically search elsewhere in the neighborhood.

With that said, only one of the sales in April was in a condo building developed in the past few years—the Gramercy Starck condo at 340 East 23rd Street, where interiors were designed by Philippe Starck.

The brokers who were fortunate enough to claim a sale reported several key trends that helped them clinch their deals. They said there were more first-time buyers and price drops of about 20 percent from the peak of the market, balanced by an increase in the number of buyers putting up more cash because less financing was available. Or, to put it differently, the sales climate in Gramercy has been something of a microcosm of Manhattan as a whole.

Mayers said first-time buyers have accounted for nearly “100 percent” of recent purchases in Gramercy. Mayers, who brokered one of the 10 deals that closed in April, an 820-square-foot, one-bedroom unit at Gramercy Park Tower at 205 Third Avenue, said it sold “fairly quickly” after hitting the market in October.

“We kept lowering the price as needed,” she said. “We didn’t want to chase the market.”

The asking price for the co-op was originally $829,000, according to StreetEasy, and the last ask was $699,000. It ultimately sold for $670,000.

Mayers said the unit got multiple offers but that they were rejected before it ultimately went into contract. She also said the seller did some minor repair work to the unit at the buyer’s request before the unit sold to help seal the deal.

Danelle Snider of Fenwick Keats Goodstein said a studio she sold at Gramercy East, at 301 East 22nd Street, went on sale in October, with an asking price of $350,000. The price of the co-op was reduced a couple of times, and it ultimately sold for $295,000. Asked what factors went into moving the deal to the signed contract phase, she said, “It helped that we had a motivated seller.”

Snider also observed that while many would-be buyers might prefer to ink a deal in Gramercy, she’s seeing “more people broadening their search to look in Kips Bay or Murray Hill, since many are looking for value over neighborhood.”

Another Manhattan-wide trend seen in Gramercy in recent months is an increase in buyers putting more cash on the table since financing has become more difficult to obtain.

Sachiko Goodman, a managing director at Prudential Douglas Elliman, sold a 525-square-foot alcove studio in the Gramercy Arms at 145 East 15th Street that closed for $425,000 in late April.

Goodman said the buyers financed much less than the maximum amount allowed by the building’s co-op board. Along with other brokers, she said more buyers are being cautious nowadays and taking out smaller mortgages.

Plus, “many buyers need to put up more cash, because it’s not easy to get a mortgage,” said Goodman, who noted that the buyer of the Gramercy Arms unit was pre-approved for a loan.

Goodman said the sale of the studio, which was initially listed for $525,000 in mid-September and ultimately sold for $425,000 after a few price reductions, was a relatively easy one because of the “reasonable” price and the demand for smaller units in Gramercy.

In addition, she said, the neighborhood is still attracting parents buying apartments for their children.

In general, brokers said they believe Gramercy’s tight supply and small size will help it retain its value — a selling point they are invoking with potential buyers.

“If you want to live on the Upper East Side or the Upper West Side, you have a lot more [inventory] to choose from,” said Emily Tannen, a director at A.J. Clarke who recently brokered a sale in the Gramercy Plaza building at 130 East 18th Street. “Gramercy is a very small and desirable area, and there’s more competition for apartments.”

Rachel Lustbader, an associate broker and managing director at Warburg Realty who brokered the sale of one of the seven co-ops that sold in the neighborhood in April, said, “Gramercy prices are about 20 percent off peak.”

“The neighborhood is in step with most of Manhattan” in terms of price decreases, said Lustbader.

Still, she said customers remain who are “very sure” they want to live there. That and the lack of supply are helping brokers in Gramercy seal the few deals that are being completed. “There are just a limited number of premier prewar buildings there,” she said.

Port Authority plans to shrink WTC project

The World Trade Center project will shrink from five skyscrapers to just two towers, the New York Daily News reported. The Port Authority of New York and New Jersey plans to cut the amount of office space built at the site to 5 million square feet from 10 million, sources familiar with the plan said. The Port Authority also would build two four- or five-floor buildings for retail use instead of developer Larry Silverstein’s two proposed 79-story towers. The credit crunch has limited financing for the project.

REBNY gearing up for tax hike battle

The Real Estate Board of New York is pulling together business groups across the state with the intention of fighting proposed tax increases in New York, said Steven Spinola, the group’s president, at an event last month. Spinola said REBNY and other business associations need to be more active in their opposition to real estate and other tax increases. “The business community needs to be more vocal. That is us and that is every business person. We are being drowned out by demands for ‘tax the rich,’ ‘millionaire’s taxes,’ ‘tax businesses’ and ‘provide services,’” Spinola said, “and we have to stand up and basically say that is not going to work.”

Quinn says rent board caters to landlords

In response to the Rent Guidelines Board’s proposed hike for stabilized rental units, City Council Speaker Christine Quinn said the board has to “end its longstanding practice of catering to landlords.” The board proposed increases of 2 percent to 4.5 percent for one-year leases and 4 percent to 7.5 percent for two-year leases. Quinn said last year’s rent hike will cover the increasing operating expenses expected for this year. She also said that according to the board’s 2009 income and expense report, revenues have exceeded expenses and that average monthly net operating income was 17.2 percent higher in 2007 than in 1990, after adjusting for inflation. Quinn said that “landlords will still make money if rents are frozen — they just won’t make it hand over fist,” the Daily News reported.

Rhea appointed housing authority chairman

Mayor Bloomberg last month appointed John Rhea to serve as chairman of the New York City Housing Authority, according to a press release from Bloomberg’s office. Rhea succeeds Tino Hernandez, the previous chairman, and Ricardo Elias Morales, who was serving as interim chairman. Rhea most recently was managing director and co-head of the global consumer/retail group at Barclays Capital. NYCHA, the largest public housing authority in the country, oversees 178,000 affordable housing units in 340 developments. “John will bring new dynamic leadership and innovative thinking to managing NYCHA at a particularly challenging time for public housing,” Bloomberg said.

Landmarks says Rudin must shrink tower

The Landmarks Preservation Commission told Rudin Management to downsize its proposed residential project on the site of the current St. Vincent’s Hospital in Greenwich Village. The commission said the tallest tower proposed for the site on the east side of Seventh Avenue, between 11th and 12th streets, has to be lower, but the commission didn’t specify by how much, the New York Post reported. The commission already approved construction and design of a new hospital on the west side of Seventh Avenue.

On a recent trip to Chicago, I was struck once again by the profound
difference in the way Chicagoans and New Yorkers consume architecture.
For our Midwestern brethren, architecture is a way of life and a source
of ongoing pride. The charming boutique hotel in which I stayed, the Burnham, was
actually named in honor of the architect who conceived the building
over a century ago, Daniel Burnham, the man responsible for our own
Flatiron Building.
[more]

In the boom years of 2006 to 2007, investment bankers and financial
services firms were making the big bucks. Any way you look at it, the
numbers were fat, with big bonuses, high expense accounts and very high
rents for office space, especially in Class A office buildings in the
Plaza District.
[more]

A chart that ran in the June issue, “Empty promises: A look at vacant or largely unsold NYC residential projects,” misstated the name of the developer currently involved with the Oro at 306 Gold Street. United Homes is no longer involved with this project. 147 Flatbush Avenue Property Owner is now the developer of Oro. In addition, the twin tower mentioned in the chart is not associated with Oro or its developer. Attorney Kenneth Fisher, who was quoted in the chart, is not affiliated with the developer or the project.

The article “Lonely at the top” in the May issue of The Real Deal overstated the total number of units at 1200 Fifth Avenue. The building has 50 units, 22 of which are sold, according to the Amended Condominium Declaration filed with the city’s Department of Finance. Of the remaining 28 units, at least 11 are actively listed for sale and at least 16 are rent-controlled or market-stabilized rentals, a source said.

The “Biggest price cut of the day” feature that ran on the Web site on June 9 incorrectly listed the asking price of an apartment. Apartment 4B at 120 Eleventh Avenue is on the market for $5.4 million, not $5.04 million as it is listed on Streeteasy.com, according to Lida Drummond of Prudential Douglas Elliman.

Scots’ protest of Trump golf course goes on

Donald Trump’s planned golf course and housing project, about eight miles outside Aberdeen, Scotland, continues to court opposition.

The project has already received preliminary approval, and construction may begin early next year. But environmentalists and residents are still speaking out against the $1.5 billion, 1,400-acre development, the International Herald Tribune reported.

Trump plans to build two golf courses, a 450-room hotel, 950 vacation homes, 500 single-family houses, a conference center and a golf academy. But Michael Forbes, a fisherman and quarry worker whose land is in the middle of Trump’s proposed development, has refused to relocate. And a Scottish architecture Web site and magazine gave the Trump project the Pockmark Award for being the worst planning decision of 2008. Another local resident, Bill Grant, told the International Herald Tribune that the weather makes Trump’s proposed location a poor one for a golf course.

But Trump said he thinks he has chosen the right location for the project. “This is probably the most unique piece of property in the world for what we’re doing,” he said.

Luxury projects in Phuket put on hold or canceled

On Thailand’s largest island, Phuket, the market for high-end properties has flattened as a result of the financial crisis and political problems in the country. Sales are down 50 percent year-over-year, according to the Phuket office of CB Richard Ellis.

While billboards still advertise risk-free real estate deals and luxury homes dot the landscape, several projects have been put on hold or canceled, the International Herald Tribune reported. Construction has paused indefinitely on Shangri-La’s Phuket Resort & Spa, a Lehman Brothers-financed project. The land for another Lehman-backed project, a Four Seasons resort and luxury villas in Rawai, is for sale.

Even at developments that are not officially on hold, such as the east coast projects Jumeirah Private Island and the Philippe Starck-designed Yamu, there have been construction delays of at least six months.

Uruguay capital lures foreign buyers

Montevideo, Uruguay’s capital city, is increasingly popular with foreign buyers.

Property developers have descended on Montevideo in droves over the past few years, and the city has made an effort to clean up Montevideo’s Old Town. In 2008, average property values in the Old Town and in Montevideo’s suburbs increased by about 8 percent, according to local agents.

Prices in the Old Town neighborhood are low because of its reputation as a red-light district, the International Herald Tribune reported. A 1,076-square-foot apartment sold just over a year ago for $77,000. In newer developments, such as Apart356, a 29-unit development geared toward young professionals and foreign buyers, apartments are priced between $120 and $150 per square foot.

Purchasing property in Uruguay is a low-risk move for foreign buyers, said Juan Federico Fischer, a real estate attorney who advises people investing in Uruguay. Property is generally bought and sold in U.S. dollars, even if the buyers are Uruguayan, and foreign currency bank accounts are common.

Compiled by Sara Polsky

Last month, The Real Deal broke the sad news that the 214-agent firm Coldwell Banker Hunt Kennedy is planning to close shop. As the real estate community mourns the loss of yet another firm — this one the largest to topple to date and run by the esteemed Joanne Kennedy, a fixture on the real estate scene — it’s a good time to take stock of where we are.

It’s the beginning of the summer season, a time when many of us would normally be making our way out to the Hamptons, the Jersey Shore or upstate New York to leisurely spend the weekends.

But this year is different.

Not only are the real estate markets in those vacation destinations struggling, it doesn’t quite feel like the appropriate time to be curling up with a book on the beach or mindlessly dawdling in the vegetable garden. Rather, the summer of 2009 may just be the summer to fight on and figure out how to work with the hand the market has dealt us.

That’s exactly what William “Billy” Macklowe seems to be doing. This month marks the one-year anniversary of the date when he officially took over Macklowe Properties from his legendary father, Harry. That’s why we bring you a profile of how his first year on the job has been.

While some may be wondering exactly what he is the CEO of now that the company is in sell-off mode, one thing is certain: He’s hustling to put out the fires that his father (and the market) set. See the story on page 30.

In this issue, The Real Deal also brings you a ranking of the top new development marketing firms. While new condos are clearly one of the hardest-hit sectors of the market, there are still firms out there doing everything in their power to sell the remaining inventory. (We all know that their jobs have gotten a lot harder since the downturn started.) Not surprisingly, the Corcoran Group and Prudential Douglas Elliman came in first and second, respectively. But the real success story seems to be Halstead Marketing. Look at the story on page 34 to see why, and to see which other firms made our list.

As a side note, we would also like to acknowledge a couple of complaints from those who felt that they were unfairly left off our “top agents” list in last month’s issue. We stand by our methodology, which relied on OLR listing data. But because of the overwhelming amount of information we were sifting through, we were only able to credit the first agent cited for each listing — even when a larger team of brokers was in place. As a result, some high-profile brokers, like Elliman’s Leonard Steinberg and Sotheby’s Meredyth Smith, were not included.

Meanwhile, in this issue we bring you a list that nobody will be complaining about not making — a catalog of so-called ghost towers. Until now these ghost towers — or largely empty buildings that stand as fossils of the overzealous building boom — have been more common in places like South Florida and Las Vegas. They have not been an issue here. But that might be changing. Our research identifies 23 residential condo and rental projects in New York that are most at risk of remaining empty for years to come. See the list we’ve put together on page 57.

On a more personal note, I want to express my sadness over the death of veteran Corcoran broker Mitchell Lawrence, who was a senior managing director at the firm’s 12th Street office. He will be greatly missed.

Also, I would like to congratulate The Real Deal’s editor, Stuart Elliott, who married fellow journalist Julie Satow late last month in a wonderful New York City wedding at the Plaza. We’ll make an exception for them as they spend the beginning of this month enjoying their honeymoon by the beach.

And I can’t sign off without thanking you for all of your feedback on our new and improved Web site, which we launched last month. For those of you who haven’t yet weighed in on what you think of it, please take the time to fill out the survey on page 50. And be on the lookout for the additional new features to come.

Finally, in the last couple of months, the number of you who are following our Tweets on Twitter (a tongue twister, I know) has increased six-fold. It’s a great way to get real-time updates on all of the real estate events we attend. So check it out at www.twitter.com/trdny and also become a fan of The Real Deal on Facebook.

As Virgin Megastore exits Manhattan, it leaves behind two large retail spaces in Times Square and Union Square. The Times Square space is already spoken for: The New York Times reported that clothing brand Forever 21 is replacing Virgin in Vornado Realty Trust’s 60,000-square-foot space.

The Union Square space, meanwhile, doesn’t have a tenant yet. However, landlord Related Companies is confident that it will have a deal to announce in a few weeks, said Webber Hudson, executive vice president of Related Urban, Related’s mixed-use development branch.

Hudson said Related is looking for the “right combination of retailers to enhance its commitment to Union Square.” While Hudson said some potential tenants have been interested in taking the entire two-level space, which is about 57,700 square feet, it will likely be divided among a group of retailers. Hudson said most of the interested parties have been apparel brands, while consumer product and beauty companies also have inquired.

The Villager reported last month that Tommy Hilfiger had looked at the space for a potential new store, and, according to Women’s Wear Daily, Nordstrom is interested in taking the store’s lower level.

Although rents in the area are down compared to last year, Hudson said prices there have not eroded as much as in other areas, thanks to Union Square’s high foot traffic. Hudson said retailers will be paying market rate, but in a case where a retailer could benefit the area, he would “come off the market if it’s the right tenant.”

Brooklyn’s biggest Multiple Listing Service has partnered with StreetEasy to place some 2,500 of its listings on the site, aiming for a new era of transparency for real estate in the borough. All member listings from the Brooklyn New York MLS are now visible for the first time on StreetEasy, according to Dawn Doherty, the vice president of strategic development at the real estate listings Web site.

That means information on price changes and the number of days on the market — data that StreetEasy compiles for each listing on its site — will be available to consumers for the first time, she said.

In the past, listings information for the Brooklyn New York MLS, including listings’ specific addresses, was available only to the group’s members.

With the addition of the new data, StreetEasy now has nearly 8,750 total Brooklyn listings — 7,000 sales listings and 1,750 rental listings — versus a total of 6,250 previously, an increase of 2,500 listings.

When StreetEasy was first launched in 2006, it operated by “scraping” the Web for real estate listings and posting them, allowing users to access and search nearly all of the city’s listings for free. Now, however, most of StreetEasy’s listings are provided directly to the site by industry feeds and by brokers themselves, though some are still found by scanning the Web.

Until now, Doherty said, the site’s accumulation of Brooklyn listings has been hampered by the domination of small, independent real estate brokerages in the borough, making it harder to ensure that all of the listings are represented on the site. In Manhattan, by contrast, large firms like Prudential Douglas Elliman and the Corcoran Group have a large majority of the listings.

Brooklyn previously had five MLS systems, but they have merged over the years into two: the Brooklyn New York MLS and the smaller Brooklyn MLS, said Gerard Longo, the president of Brooklyn brokerage Madison Estates and Properties and president of the BNYMLS.

In the coming months, the Brooklyn MLS also will be absorbed into the BNYMLS, which is the largest MLS in the borough, with members from more than 200 companies, he said.

This story originally ran on www.therealdeal.com

Residential and commercial brokerage NYC Homes has left its office in the Flatiron District and is looking for a smaller space. Founder J.P. Kingue said he and his 10 employees left their 3,000-square-foot office at 34 West 28th Street between Broadway and Sixth Avenue and now are looking for a new office for around half the size. Kingue said he is close to signing a deal for a space in Union Square that is about 1,500 square feet.

As with all brokerages in New York City, business is slow. Steve Landfield, a former broker at NYC Homes, left the company earlier this year to work for Royalton Realty.

“There was little activity. I was having a lot of difficulty getting ads answered, so I moved on,” said Landfield, who also teaches commercial real estate at the New York Real Estate Institute.

NYC Homes is one of many brokerages to downsize because of the downturn.

To cut costs, five-year-old boutique brokerage Domain Properties moved from its 5,000-square-foot space at the corner of 25th Street and Broadway to a 500-square-foot space at 234 Fifth Avenue. And larger agencies with multiple locations in the city — including Bellmarc Realty, Citi Habitats, Warburg Realty and the Corcoran Group — have closed some offices.

Residential

Barak Realty

Jeffrey Tanenbaum was promoted to senior vice president from vice president.

Brown Harris Stevens

Andrew Kramer joined the company’s West Side office as vice president and director. He was previously a vice president at the Corcoran Group.

Century 21 NY Metro

Regis Roumila, Evan Schwarz and Nomund Shakner joined the company along with their respective rental teams.

Gumley Haft Kleier

Sara Robbins joined the company as an associate broker. She was previously an attorney with Davis & Gilbert.

Stribling & Associates

Bahar Tavakolian joined the company as a residential sales specialist. Tavakolian was previously with Fox Residential Group. Catherine Harding joined as a senior vice president. She was previously with Phyllis Koch Real Estate.

Commercial

Jones Lang LaSalle

Scott Panzer joined the company with his 13-member group. The team, previously with Newmark Knight Frank, includes Deborah van der Heyden, Robert Romano, David Kaplansky, Steven Rotter, Sean Black, Lisa Campofranco, Meredith Marash, Shannon Rzeznikiewicz, Kenia Fuertes, Brad Lane, Oliver Lloyd, Devorah Lebovic and Neela Rastogi.

Massey Knakal

Robert Burton, Ken Freeman and Paul Smadbeck were promoted to senior vice presidents of sales.

NAI Friedland Realty

Anthony Lembeck was promoted to chief operational officer from executive vice president and industrial division head.

NAI Global

Rhyne Brown was promoted to executive vice president of client development. James Garrett Jr. was promoted to executive vice president of network operations. Henry Goodfriend was promoted to executive vice president of operations. Patricia Faulkner was promoted to senior vice president of client development.

Newmark Knight Frank

David Falk was promoted to president of the New York tri-state region from executive managing director and partner.

Savitt Partners

Cory Strauss and Stefan Sharma joined the company’s brokerage services division as associate directors. Strauss was previously an associate director at Adams & Company Real Estate. Sharma was previously with the William Morris Agency.

Square Foot Realty

Beth Greenwald joined the company as a director. She was previously a director at Cushman & Wakefield.

Compiled by Linden Lim

Go to puzzle: Which broker rules the roost?

Click here for the solution.

AG forces Sheffield57 to suspend sales

Sheffield57 developer Kent Swig was forced to halt sales after state regulators notified the sponsor that the offering plan at the troubled West Side condo had expired, three sources familiar with the decision said.

Swig will not be able to sell any apartments until state Attorney General Andrew Cuomo approves its 19th amendment to the offering plan, which legal sources said is required to update prospective buyers about any material changes in the operation of a condo or co-op conversion. A spokesperson for the attorney general’s office did not return calls seeking comment.

On Sept. 9, 2008, Swig issued an 18th amendment, but that amendment only updated unit prices at the building, and the Martin Act, which regulates conversions in New York State, says pricing-only amendments do not extend the expiration of the offering plan.

About three months earlier, Sheffield57 issued the 17th amendment, which included information about the reserve fund balance, working capital fund, certificate of occupancy, number of units sold and construction schedule at the building.

The decision by the attorney general comes at a critical time for Sheffield57, which sources said had millions of dollars in mezzanine debt coming due last month and is actively trying to refinance the building. Analysts said that with fewer than half of the building’s projected 587 apartments sold, lenders will be reluctant to finance a building with so many fundamental challenges. By David Jones

Eastern Consolidated cuts broker ranks

Investment sales brokerage Eastern Consolidated cut six brokers and five support staff last month in response to sharply reduced sales volume over the past year, company co-founder Peter Hauspurg said.

The company, based in Midtown, now has about 40 brokers on staff, said Hauspurg, the firm’s chairman and CEO.

“Due to the greatly reduced volume in the sales market nationwide and New York City in particular, we have slimmed down to a team that has experience in good markets and bad,” he said.

He said he expected that by the end of this year or the beginning of 2010, distressed properties entering the market would spur more sales activity.

Hauspurg said in general those cut were more junior brokers, each with less than three years of experience, who worked on sales in New York City, but not in the surrounding area. He did not anticipate more layoffs, and, in fact, plans to add a senior broker shortly. By Adam Pincus

Sales price per foot halved at the Plaza Hotel Residences

A second-floor duplex at the Plaza Hotel Residences sold for $2,751 per square foot, about half the price that similarly sized units were closing for last year.

The three-bedroom unit with 4,283 square feet was sold by the developer, Elad Properties, to a company called Paradeplatz Ltd. for $11.786 million.

The condo faces Central Park in the rehabilitated hotel at 768 Fifth Avenue.

The purchase by Paradeplatz went into contract in September 2008 and closed May 15, according to city property records published last month.

A similar, but slightly smaller, sponsor unit on the fourth floor with 3,912 square feet went into contract in 2006 and closed in August 2008 for $21.5 million, or $5,504 per square foot, city records show.

A smaller duplex on an upper floor that the developer sold went into contract in 2007 and closed in January 2009 for $11.076 million, or $4,055 per square foot, records show. Elad Properties declined to comment on the sale. By Adam Pincus

Brooklyn developer files for Chapter 11 protection

Fred Deutsch, developer of a four-story residential building at 338-342 22nd Street in the Greenwood section of Brooklyn, filed for bankruptcy protection last month.

Deutsch, the owner of LD Development and 11 other entities he controls, filed for bankruptcy protection May 11 in federal court in Manhattan, according to the filings. The liabilities for LD Development were allegedly between $10 million and $50 million, while assets were between $1 million and $10 million.

The Brooklyn project had a stop-work order served on April 30, which remained in effect late last month, the city Department of Buildings Web site said.

Deutsch is the founder of Voxonic, a Manhattan software company based at 244 East 62nd Street that can transform a speaker’s voice into hundreds of languages, according to the company’s Web site. Another entity controlled by Deutsch, 244 East LLC, which has owned the 62nd Street building since March 2006, when it purchased the property for $4.5 million, also filed for bankruptcy.

In May 2006, Deutsch sold a 30-story building at 114 East 32nd Street to the developer of the Jasper, Harry Jeremias, for $53 million, 43 years after purchasing the building for an undisclosed price, according to records at the New York City Department of Finance . The building was once an office tower; Jeremias is planning to convert the property into residential apartments. By Adam Pincus

Corcoran Group veteran Mitchell Lawrence dies

Longtime Corcoran Group broker Mitchell Lawrence died last month after 21 years with the company.

Friends and family gathered at a memorial service last month at the Stephen Wise Free Synagogue at 30 West 68th Street. Corcoran did not release the cause of death.

Lawrence is survived by his longtime partner, Joseph Dwyer, a Corcoran vice president; his sister Stacey Lippman; brother-in-law John Lippman; and his niece Danielle Lippman.

Lawrence, 54, was a senior managing director at Corcoran’s 12th Street office at the time of his death, after joining the firm in 1988, according to an e-mail alerting employees at the company of his death.

Pamela Liebman, Corcoran’s CEO, could not immediately be reached for comment.

Lawrence “belonged to that special class of Corcoran folk we call ‘old-timers,’” the e-mail said. “As such, he played an important part in shaping the character of the firm in its early days. Many of the photos we possess of those years feature a smiling Mitchell — he always wanted to be where the fun was.” By Candace Taylor

Bobby Short, Leonard Bernstein eight-room home on the market

The sprawling, eight-room apartment at the Osborne that was home to cabaret singer Bobby Short and composer Leonard Bernstein is on the market for the first time in two decades, according to the listing broker, Katie Rosenberg of Warburg Realty.

Apartment 4B is a four-bedroom, three-and-a-half-bath co-op in the century-old Osborne at 205 West 57th Street, designed with 11 stories on the front and 15 on the back. The sellers, whom Rosenberg declined to name, are asking $3.495 million, or $1,165 per square foot for the home, which underwent 14 months of restoration before going on the market in late April, said Rosenberg, who escorted The Real Deal on an exclusive tour of the apartment. The monthly maintenance is $4,662.

The Bernsteins took up residence in 1961, the year Osborne residents banded together to buy the building and turn it into a co-op in the face of a proposal to replace it with a 17-story apartment building. Apartment 4B was purchased by actor Larry Storch, Rosenberg said. Then, in the 1970s, Bobby Short, the cabaret singer and pianist known for his longtime gig at the Carlyle, moved in, staying for 14 years before selling to the current owners in 1986, according to Rosenberg. By Candace Taylor

With the newspaper business on the ropes, real estate pros are wondering, could more printing plants and newspaper offices be converted once the market eventually picks up?

Past well-known examples are the conversion of the old New York Times headquarters and the old New York Post building. Now a new condo marketing campaign is displaying nostalgia for the days of typewriters and copy boys.

At the former Ridgewood Times newspaper building at 852 Cypress Avenue in Queens, the presses stopped long ago, though the paper still publishes under a different name at another location. (Thanks to desktop publishing programs and the Internet, these days many publications are sent to be printed off-site.)

The old newspaper building served as a public school since the 1960s, but developer N. S. Construction turned it into 19 condos that opened for occupancy in late April. As of early last month, five of the condos had sold.

The marketing campaign plays up the 25,000-square-foot structure’s pedigree: The Web site’s home page features a simulated 1920s typewriter that spits out hyperlinked copy on a virtual piece of yellowed paper, complete with staccato sound effects.

The developers are hoping that the building, on the Queens-Brooklyn border, will generate interest. David Maundrell, president of aptsandlofts.com, which is marketing the building, said it translates well into residential living because of its high ceilings, concrete floors and a wall of windows that let the sun shine in. “It’s soundproof like a vault,” Maundrell said.

As the crow flies, the neighborhood isn’t too far from Manhattan, and lies just east of burgeoning Bushwick, which has attracted many artists due to its low prices for true loft space and the thrill of living on the edge in what is still an ungentrified pocket of Brooklyn. “Our buyers are either those with blue-collar roots, like nurses and firefighters, who have steady jobs no matter the economy, and artists and professionals displaced from Williamsburg or Greenpoint,” said Maundrell. “They like the new construction as opposed to something that needs to be renovated.”

Prices range from $279,000 for a 550-square-foot studio with a sleeping loft to $499,000 for a 1,150-square-foot, one-bedroom duplex with a private roof deck.

Many former manufacturing buildings are coming onto the market in the city, said Robert Knakal, chairman of investment sales firm Massey Knakal Realty Services. Africa Israel USA signed its first retail tenants in March, at a reported $275 per square foot, at the old New York Times headquarters on West 43rd Street, where the presses last roared in 1997. The paper abandoned it a decade later for its new Eighth Avenue digs.

In 1999, GHC Development Corporation turned the old New York Post building at 75 West Street in the Financial District into rental residences. The paper’s former headquarters along the FDR Drive at the foot of the Brooklyn Bridge has been converted into a storage center.

Ridgewood is a tougher sell, of course. Surrounded by industrial areas of Maspeth and the immigrant nabe of Glendale, the building is a three-block walk from the ninth stop on the L line, considered the “hipster express” because of its stylishly dressed young riders, who may appreciate the irony of living in a defunct printing press in the digital era.

Canvassing commercial buildings — the old-school practice of going
office to office to see if tenants need more or less space — seems to
be making a comeback. While commercial brokers can blast out mass e-mails or pick up
their cell phones whenever they want to check if tenants need more
space, some are tired of waiting around for responses. As a result,
they are wearing out their shoe leather drumming up business the
old-fashioned way: face to face.
[more]

The new co-op building Beacon Towers in Harlem is offering a “stimulus package” to buyers, giving them $300 every month for their first year living in the building.

“We saw how the government is trying to stimulate the economy on a national level, so we are trying to stimulate it on a local level,” said developer Frank Anelante, principal of Lemle & Wolff.

The incentive will be offered to buyers until July 5, but Anelante won’t be handing residents a $300 check every month; the developer said $300 will be deducted from residents’ monthly maintenance fees.

Anelante, who has been a developer in Harlem since 1981, said the goal of the incentive is to be sensitive to the economic climate, and to help local retailers around the co-op building, an eight-story building at 29 West 138th Street.

Buyers will be given welcome packets with information about local stores — like dry cleaners and hardware stores — and restaurants in the area. Anelante hopes the Beacon Towers residents will spend the $300 left in their pockets at local businesses.

The 73-unit Beacon Towers has 19 market-rate apartments, and the rest are middle-income housing. Sales started in March, and between signed contracts and accepted offers, Anelante said the building is about 45 percent sold. Prices for the one- and two-bedroom units range from $282,000 to $749,000. Halstead Property is the exclusive sales agent for the project.

Anelante said that buyers who previously purchased units will be offered a comparable incentive, but not the $300 a month.

Many developers are offering incentives to draw buyers, like paying common charges, broker fees, closing costs and coupons for free transfer taxes. Anelante said he chose the $300 incentive over typical concessions because those will likely be negotiated on a deal-by-deal basis anyway, and he wanted to do something “not only for our purchasers, but for the community at large.”


This story originally ran on TheRealDeal.com.

1971: Urstadt Law gives rent regulation powers to state

Republican Governor Nelson Rockefeller signed the controversial Urstadt Law 38 years ago this month. The law limited the city’s ability to regulate rents and rolled back some restrictions on rental apartments that were implemented because of the severe housing shortages of World War II.

The law, named for Charles Urstadt, the governor’s commissioner of Housing and Community Renewal, put the power to regulate rents in the state’s hands and gave property owners the right to remove apartments from rent restrictions when the tenant vacated the unit — a phenomenon known as vacancy decontrol. Prior to the law being signed in 1971, the 1.3 million rent-controlled and 400,000 rent-stabilized apartments in the five boroughs were regulated by the city.

Rockefeller said the rent restrictions were limiting housing construction, and that he signed the law to “deal with housing problems severely worsened by rent control itself,” the New York Times reported. The bill was passed by a GOP-controlled legislature.

Vacancy decontrol was fiercely debated at the time and remains hotly contested. This year, with the legislature and governor’s office held by Democrats, real estate experts believe the laws could be overturned or altered. Today there are about 1 million rent-stabilized units and about 40,000 rent-controlled units. The Assembly passed a package of pro-tenant proposals in February that included a measure to repeal the 1971 law. But as of last month, the bill was in committee in the Senate.

1938: Queens leads nation in building permits
The dollar value of construction permits filed in Queens County 71 years ago this month was the highest in the nation. Developers filed building plans in Queens County worth more than in any other borough in New York City, any other city in the nation, and any state other than New York and California.

New building permits for Queens projects were valued at $10.3 million in June 1938, representing 7.3 percent of the $140.4 million in plans filed nationwide that month.

Queens was undergoing a sharp rise in population, which grew from 469,042 in 1920 to 1,297,634 in 1940, U.S. Census figures show.

For all of 1938, Queens led all boroughs with $145 million in new construction, more than half the entire $281 million in new construction permitted for the entire city.

The number of building plans filed in Queens was up 23 percent to 12,359 in 1938, while citywide the dollar figure for plans was up 19 percent from 235 million in 1937. In Manhattan, builders filed plans for 233 new buildings worth $42 million in 1938, down from $60 million the year before.

Most of the new construction in Queens was for new housing, but some building was for the development of the 1939 World’s Fair in Flushing Meadows.

1890: Second Madison Square Garden opens
The second building to carry the name Madison Square Garden opened 119 years ago this month at the northeast corner of Madison Square Park in what is now Midtown South.

The building, with a seating capacity of 8,000, was designed by renowned architect Stanford White and hosted events such as horse, automobile and dog shows, as well as the Democratic National Convention in 1924.

J. Pierpont Morgan was one of several stockholders in the company that built the arena that replaced the original Madison Square Garden, a track for bicycle racing that was previously on the site.

Despite being the premier indoor venue in New York City, the new arena was not profitable, and by 1908 the owners offered to sell the site bounded by Madison Avenue and Park Avenue South on the west and east, and 26th and 27th streets on the north and south.

The real estate firm F&D Company bought the building in 1911 for $3.5 million, but lost it in a foreclosure auction in 1916 for $2 million to the New York Life Insurance Company.

The insurance company demolished it in 1925 to build its 40-story New York Life Building, which was completed in 1928. A new Madison Square Garden, the city’s third, opened in 1925 at Eighth Avenue and 50th Street, and was demolished in 1968. The fourth stadium bearing the name was opened in 1968 above Pennsylvania Station at Seventh Avenue and 32nd Street.

By Adam Pincus

Recession aside, New York City developers in today’s day and age are almost guaranteed community opposition to any grandiose projects they propose.

But back in 1925, Tudor City’s swashbuckling developer, Fred Fillmore French, faced no such aggressive challenges when he razed four city blocks at the end of 42nd Street to build the largest residential development in Midtown.

French rode out a number of boom-and-bust cycles during his career. And while he eventually built a grand estate in upstate New York, he died in 1936 in his 50s, leaving little cash and a tangle of financial problems that took decades to resolve.

While best known for Tudor City and Knickerbocker Village on the Lower East Side, his most significant contribution to the city’s real estate landscape may have been “the French Plan,” an investment vehicle that funded hundreds of millions of dollars in New York City developments and paved the way for modern real estate investment trusts.

The French Plan was essentially a way for small investors to own equity in a building, a cutting-edge idea at the time. The idea was pitched in a prospectus, published as a hardcover and in newspaper and magazine advertisements that were up to three pages long.

“Never before, as far as we know, has the man with $100 to invest been given the same terms as the man with $100,000,” the ad stated.

“It was a very democratic, American concept that someone with a basic salary could invest in a piece of their own city,” Alexander Rayden, author of a 2007 study of the French Plan, told The Real Deal.

A first investment

French was born poor in the Bronx to a cigar-maker father and a university-educated mother in 1883. His father died when he was young, leaving French to hawk newspapers, mow lawns and wash windows for money.

But his mother insisted he receive an education, and he eventually won a scholarship to prep school Horace Mann. The 6-foot-2, broad-shouldered youth also attended Princeton for a year before he traveled to the Southwest, where he did some “ranching and mining.” But he soon returned home and took an engineering course at Columbia, according to books and news stories written about his life.

French had a strong work ethic but argued with employers and was fired from a series of temp jobs where he earned as little as $5 to $18 a week, according to his obituary in the New York Times, which also quoted him as saying that by 1907, he found himself “penniless.”

“To collect my wits I sat down in City Hall Park, weak with hunger and fatigue,” he was quoted as saying. He walked five miles up Broadway, where he convinced a Board of Education member he knew to lend him $500 — $10 of which he asked for in cash.

“The amazing good fortune to have $10 with which to relieve an empty stomach made me light headed,” French said. “I walked to the Savoy Hotel and ordered one glorious meal.”

His cash may have been spent immediately, but the meal gave him a craving for the high life.

He used the rest of his borrowed money as a down payment to buy his family’s tiny rental house and leveraged that to raise cash to develop a small building in the Bronx. He parlayed his new cash flow into the purchase of a handful of income-generating properties that started him on a new path.

Building a business

While French’s business was established by the time World War I began, times were lean. He hunkered down in the cellar of his boyhood home, paying himself a $15-a-week salary and an office boy $5 more at $20.

After the war, business boomed, and in 1921, his French Plan took off, allowing him to expand his company to some 300 employees.

According to biographies of French, he gave his staff daily pep talks and wrote inspirational articles for his company newsletter. He argued that Jesus had been the greatest salesman of all time, interpreting the Bible verse “knock and it shall be opened unto you” to mean “keep knocking until the door is opened.” According to Rayden, he added his own tagline: “And if it isn’t opened pretty soon, kick down the door.”

The French Plan was so successful that it financed the colorful Mesopotamian-influenced Fred F. French office building at 551 Fifth Avenue at 45th Street.

Built in 1925, the 38-story Art Deco building was among the tallest in the city at the time.

By 1928, French was living with his wife, Cordelia, and four children in a penthouse at 1010 Fifth Avenue, a 15-story building he developed across from the Metropolitan Museum of Art.

French also built a sprawling lakeside estate in Pawling, N.Y. There he reportedly planted some 60,000 trees and seedlings.

“Around town, people said that Fred F. French built his house so that he could sit on his front porch and look from horizon to horizon and say to himself, ‘It’s all mine,’” wrote James Morrison, the son of French’s doctor, in City Journal in 1998.

Other people’s money

This is how the French Plan worked: A 50 percent bank mortgage was matched by equity investors, who were issued preferred shares that earned around 6 percent. The idea was to repay the principal in 10 years or less, after which the shares would be convertible to common stock in the building. In this way, the investors and French’s company would split ownership of a building, dividing proceeds, while the French Company also profited as general contractor and manager.

“The French Plan was rooted in the real estate tradition of operating with other people’s money,” Rayden wrote in his study “The People’s City: A History of the Influence and Contribution of Mass Real Estate Syndication in the Development of New York City.” Rayden noted that at its height, it boasted some 30,000 investors.

“But,” Rayden said, “French put a substantial amount of money back in his business. He was trying to build a corporate empire and was a true believer in his product.”

On the East Side, French envisioned a project on a truly grand scale: Tudor City would cost $35 million, a stunning figure at the time.

As Tom Shachtman, author of “Skyscraper Dreams: The Real Estate Dynasties of New York,” wrote in his 1991 book, “for some time he had contemplated creation on a scale not earlier imagined for Manhattan: a city-within-a-city, where he could control the siting of all buildings, the vistas, the flow of traffic.”

French put this development where the tenements of “Corcoran’s Roost” — named after the Irish gangster who once reigned there — were plagued by the stench of nearby slaughterhouses. He realized the area was convenient to the rising business district around Grand Central Terminal, three blocks west.

French employed an army of agents to buy up the individual properties secretly, before word could spread that someone was assembling a large parcel to develop.

In just over a month in 1925 French spent $7.5 million on the site, and then he announced plans for an 11-building complex that would eventually house a hotel and 2,800 individual apartments.

“The project needed 10 million bricks, breaking the then-record by 6 million, and had the largest order of electric refrigerators ever made until that time,” said Brian Thompson, a real estate broker who owns Tudor City Living and who wrote his master’s thesis on Tudor City and the French Plan.

Tudor City boasted two 1-acre parks, a miniature 18-hole golf course and tennis courts. Advertisements wooed suburbanites with promises that they could stop commuting like sardines crammed into train cars.

Tudor City, which started going co-op in the 1970s, was a success by all measures and was even profitable during the Great Depression. According to Rayden, by 1930 the property had a $4.5 million rent roll and employed 581 people. By 1936 the buildings were valued near $100 million. The city landmarked all of Tudor City in 1988.

It takes a village

In 1929, after Tudor City was in the ground, French conceived an even bigger project: a $150 million rental complex for 30,000 affluent residents to be called Knickerbocker Village.

Sworn to secrecy, 42 brokers working for dummy companies reportedly spent $5 million buying up land on the Lower East Side, according to a 1937 Time magazine article.

But the Depression shut off the pipeline of investors, causing the French Company to default on $14 million of preferred stock and leaving investors enraged.

In 1933, as President Roosevelt’s New Deal got under way, French convinced the new Reconstruction Finance Corporation to pony up $8 million to fund the first federally financed urban redevelopment plan.

Knickerbocker Village was scaled down to two 13-story buildings comprising 1,592 apartments, which would rent to white-collar workers for about twice the prevailing cost in the area. French’s profits would come from managing the property.

But all was not smooth sailing there. In 1934, with 600 renters set to move in, the apartments were not yet finished. The renters, many of whom were lawyers and journalists, started a tenants’ association, airing a list of grievances that included kitchens and bathrooms without fixtures and inoperable elevators and laundry rooms. When the French Company representatives failed to address the complaints, the tenants launched a rent strike. The following month, management caved, instituted repairs and reimbursed tenants a combined $25,000.

In a study of tenant activism published in 1986, Mark Naison, a professor at Fordham University, argued that the situation was a catalyst for tenant organization.

“The recalcitrance of the French Company became a metaphor for the problems all tenants faced in winning recognition of their rights,” Naison wrote. “They became evangelists for tenant activism in their Lower East Side neighborhood and the city as a whole that led to modern renters’ rights laws.”

Two years after the strike, French suffered a fatal heart attack and died with only $10,000 in his bank account.

Soon after French’s death, his wife, Cordelia, hired Aaron Rabinowitz — a former real estate developer — as head of the firm.

According to a book by Rabinowitz’s son, Alan, his father stabilized the firm, making it one of the few public companies to survive the Depression without bankruptcy reorganization. Eventually, Rabinowitz bought out Cordelia’s interest and spent the next 30 years, until he died, untangling the financial mess and settling lawsuits by various French Plan investors over the defaulted properties. The investors, it seemed, had not understood that their preferred stock positions left them without any liens on the actual underlying buildings.

While he had little to show financially when he died, French was always eyeing his next real estate play. His belief was that the New York area would grow to a population of 30 million. With that, he declared: “You can’t overbuild Manhattan.” TRD