The Real Deal New York

From the small electronics store he owned many years ago on the western side of Madison Square Park, Russian immigrant Tamir Sapir could look up and see the 30-story art deco building at 11 Madison Avenue. It would have never occurred to him that one day he would buy the building for $675 million.

The 2.2 million square foot office tower, an icon of the Midtown South skyline, was home to Credit Suisse First Boston, and existed in what must have seemed like a far away and rarified world for the former cab driver.

That was before Sapir, a 55-year-old with a strong accent, got involved in Manhattan real estate a dozen years ago.

He emerged on the real estate scene in the early 1990s, with cash from an electronics shop that catered to Russian buyers, and which he parlayed into multi-million dollar oil contracts in Russia. He started small in Manhattan – investing only $2.3 million but incredibly snatching up a 20-story building in his first purchase at 80 John Street, a deal done in the depths of the recession of the early 90s.

Last year, in the second-largest building sale of 2003, Sapir bought 11 Madison in the midst of a red hot investment sales market. The sale was second only to Harry Macklowe s record breaking purchase of the General Motors Building for $1.4 billion.

Sapir s short and dramatic climb in the world of Manhattan real estate he has assembled a portfolio of seven million square feet, he said – has not been without its difficulties.

He began buying and renovating buildings with no prior knowledge of real estate – a pattern he had established in other businesses in the past, including electronics and oil.

His purchase of 2 Broadway in 1995 almost destroyed him. Renovations of the building for the MTA were plagued by lawsuits, million of dollars in cost overruns and criminal convictions, including the conviction of the man who oversaw his real estate empire, Frederick C. Contini. Only in November did law enforcement agents conclude both Sapir and the MTA had been “victimized” by outside parties in the ordeal.

As he walked through 11 Madison Avenue on a weekday morning recently, Sapir was greeted by a few building workers, but was mostly anonymous amidst the bustle of people heading to their offices. He is largely an outsider in New York real estate circles, too. “I don t know many families in real estate,” he said. “I know they are there. But I don t even know the names.”

During an interview, Sapir is a talkative man who likes to recount his rise to the top from humble beginnings. His loquaciousness caused his advisor to step in more than once to prevent him from talking about business plans that aren t ready to be announced yet, including plans to work with Donald Trump on a residential project downtown that will involve one of Sapir s buildings. “Everything I have inside, it s always on the tip of my tongue,” said Sapir, who said he couldn t say anymore on the Trump project. Trump did not return calls as of press time.

While 11 Madison might have seemed like a foreign object of desire when he owned an electronics store, Sapir said he had his eye on the building since shortly after starting in real estate.

“During my rise in the business, we were good customers for Credit Suisse First Boston,” he said. “I was coming here very often. Every time I was coming to the building, I was always dreaming to have something like this on my own.” All his other buildings, with the exception of 53 Park Place, are relatively modern, and he liked the fact that the building was built in 1932, he said.

With his legal troubles ended in November, and 11 Madison on the market, Sapir was able to buy it, partly with funds that had been placed in escrow for the battles over 2 Broadway.

James DeCuzzi, chief executive for Sapir s Zar Realty Management and former president of the New York City tax commission, said the organization used “what is now known as the Macklowe approach” to acquire the building, referring to the G.M. Building deal last year.

Sapir put down a $20 million down payment “hard,” and with the down payment non-refundable and at risk, “we had but a few short weeks to go to closing, and we did it,” said DeCuzzi, who said the quick closing might have set a record for a property of that size. Sapir s offer beat out a field that reportedly included S.L. Green, Tishman Speyer, Jamestown and RFR Realty.

The building is 100 percent occupied – 85 percent of the space is taken by Credit Suisse First Boston – and there fortunately won t be any renovation work similar to 2 Broadway. 11 Madison underwent a $500 million renovation that was completed in 1997, and it s a triple-net leased property, Sapir said.

When asked about besting some of his rivals who are bigger to get the building, Sapir said, “we don t consider ourselves small.”

Sapir started small, however. He came to the U.S. in 1975 from Georgia in the U.S.S.R., and first went to live in Louisville, Kentucky with his wife and two children. Sapir, who goes by the first name “Tom”, initially started work as a bus driver and at a hardware store.

He soon moved his family to Forest Hills in Queens when he had saved up enough money, and went to work as a cab driver. His decision to enter the electronics business came rather informally after he had just purchased a TV and stereo, and a Russian guy was there to install it.

“Finally, we got all this together and, in the Russian way, you invite the guy to have a little vodka just because we have such a nice buy,” he said. “This Russian guy tells me, you look very nice, want to go in as a partner?” It only took a $10,000 investment to start the business, and soon it was booming. “Russians would get off the plane, and they would say, where is Tom Sapir s store? ” said Sapir. “They could buy a VCR here, sell it in Russia, and buy a house.”

Sapir also came in contact with people like the Oil and Chemicals Minister for the U.S.S.R., who came to his store one day to buy a microwave oven and later would help him out starting up in the oil distribution and other businesses in Russia, which Sapir acknowledged he knew nothing about at the time. “I called my friend and said what should I ask for? ” he said.

Sapir also began to establish contacts through the U.S.-U.S.S.R. Trade Economic Council, which he said put him in contact with executives at Fortune 500 companies who were exploring doing business in Russia, and led once to a conversation with vice-president George H. W. Bush during a flight to Russia.

While there has been innuendo in the past about Sapir s Russian ties, DeCuzzi said such rumors are “facially absurd and long ago categorically denied.”

Today, Sapir s distribution company, Joy Lud Distributors International Inc., remains intact because of a dispute over an oil contract in Russia, but no longer actively does business, DeCuzzi said.

Sapir made his entrance into real estate in 1992 with the 80 John Street purchase.

“We re talking peanuts at first, said Sapir. “But I jumped into starting to buy real estate. I figure how low are those buildings going to go? One day, they are definitely going to go up.”

In 1995, Sapir came across 2 Broadway, a vacant building that was part of the crumbling Olympia & York empire in the dying downtown office district. Sapir bought it for $20.5 million. Four years later, the property was worth more than $200 million.

But the building would also provide Sapir with what he said was the greatest challenge of his life. “It was all over the papers, what sort of hassle we had,” he said. “This was the hardest and most difficult time in my entire life.”

The problems revolved around renovations to the building following a 1998 lease agreement with the MTA. Renovations initially estimated at $135 million cost more than $450 million to complete, and several years of lawsuits took place. In April 2003, Contini, who worked with Sapir before they had a falling out and who oversaw much of the renovation, pleaded guilty to defrauding the MTA by billing it for nonexistent workers, a scheme that prosecutors said had robbed the authority of more than $5 million. Four other men associated with the project have pleaded guilty to similar charges.

In November, Zar Realty and the MTA ended their legal action over the building. Law enforcement agencies concluded that both the MTA and Zar were victimized third parties in connection with the renovation.

Even if he was a good buyer, Sapir was faulted as a poor operator by many. He also missed any signs regarding Contini, he acknowledged. “I was traveling so much, back and forth,” he said. “When I was coming to the office, from the parties involved, it was Mr. Sapir, when are you leaving? You know, what is the expression? When the cat is away, the mice will play.”

DeCuzzi said both Zar Realty and the MTA are still considering further litigation against people involved in the project. “We will be exploring and pursuing appropriate action against third parties, jointly,” DeCuzzi said, though he declined to provide names.

Going forward with the organization, Sapir said there are plans to form an umbrella organization later this year, in which all the businesses will be folded under the title of The Sapir Organization . “All the things we do will be under the family name and logo,” said Sapir.

Sapir has two children, Alex, 24, and Zina, 29, who work in the family business.

And while he doesn t worry about tracking the other New York City real estate dynasties, he appears intent on creating his own.

“I m putting everything for them to handle it in the future,” he said. “For me, my family has to be happy, that s all.”

When Bruce Ratner recently decided he wanted to build an arena in Brooklyn, he called on Stephen Lefkowitz. When Larry Silverstein set out to buy the World Trade Center, he got in touch with Leonard Boxer.

They are not the big names you usually hear about in New York real estate, but they are the ones that get the big projects done.

They are New York City s top real estate lawyers, and their sometimes arcane craft has helped shape and reshape the city skyline time and time again. The Real Deal looks at the city s top real estate attorneys in this month s issue.

Take Sandy Lindenbaum (pictured on cover page), considered by many to be the finest land use practitioner in the state. When Donald Trump wanted to find out how high he could build on a property on the East Side next to the United Nations, he went to the legendary lawyer, whose father had worked for Trump s father.

“I represented Donald since he was in short pants,” said Lindenbaum, though the two have had a falling out in recent years.

For the project, Lindenbaum calculated air-rights transfers, plaza bonuses and other zoning-code magic – and told Trump he could build the largest residential tower in the world, 90 stories tall, which later became Trump World Tower.

When Larry Silverstein bought the World Trade Center for $3.2 billion in 2001, six weeks before Sept. 11, Leonard Boxer headed up a team of 19 attorneys working on the deal, some at Silverstein s bedside, after the developer was hit by a car five days before final bids were due.

“Without him, the deal wouldn t have happened,” said Silverstein of Boxer. “With him, it did. He was totally focused on the deal in an excruciating time framework.”

When MetroTech and the Atlantic Center were built in Brooklyn by Forest City Ratner, Ratner called on Stephen Lefkowitz to do the land use work, and now is calling on him again for the Nets project.

James Stuckey, director of commercial and residential development for Forest City Ratner, called Lefkowitz “brilliant.”

“He has a way of simplifying the most complex issues we confront in our business,” Stuckey said. “It permits us to take on projects that others would normally avoid.”

What else makes for a top real estate lawyer?

Jonathan Mechanic, often viewed as the top leasing lawyer in New York, said one of the key qualities is a good sense for business.

“You can bring up all the arcane points you want, but it s about what is a sensible resolution of things,” he said. “Having spent time on the business side, I have a sense of what all the parties to a transaction are looking for.”

“Lawyers are seen either as a deal makers or deal breakers,” he said. “I m a deal maker.”

Some top lawyers thrive be being specialists, while others are generalists.

Lindenbaum has achieved prominence by honing in on city zoning laws, as part of what he calls “a provincial type of business.”

Joseph Shenker, another top real estate lawyer who is more focused on capital markets, values being a generalist.

“When I speak to an incoming classes of lawyers, I tell them a good or great lawyer doesn t blank out when another real estate topic comes up that s not their job,” he said. “They should be broad-based, and able to provide wise advice on any topic.”

Leonard Boxer

Partner, Chairman of Real Estate Practice

Stroock & Stroock & Lavan

A court battle with the Twin Towers insurers is Larry Silverstein’s main legal priority right now, but the focus of the Ground Zero rebuild will eventually shift to real estate law when development draws closer.

For that task, one of Silverstein’s key lawyers will likely be Leonard Boxer, whom the developer also counts as a friend.

Boxer was the real estate lawyer when Silverstein bought the World Trade Center in 2001, in “one of the great real estate stories ever,” the lawyer says. Silverstein was hit by a car just days before bids were due, but the deal was completed. Six weeks later the Trade Center was destroyed on Sept. 11.

“We had to be there for him while he was recuperating,” Boxer said. “He was in the hospital under an assumed name so nobody would know.”

Silverstein called Boxer, “a great negotiator and unique in that he’s also a good businessman, too.”

Boxer also took part in the biggest lease deal in Manhattan in 2003, representing HIP as the insurer took 486,000 square feet at 55 Water Street. Another recent triumph he “had his fingerprints all over,” Boxer said, was the development and financing of the Bear Stearns Building at 383 Madison Avenue, which opened two years ago.

With 45 lawyers, Boxer’s group ranks among the largest real estate practices in the city.

Though most highly noted for its development work, “we encompass every dimension you would need in the real estate world,” said Boxer, who came to the firm 16 years ago. A smaller firm, by contrast, wouldn’t have enough deals to support such a multi-faceted operation, he said. “You’ve got to keep people busy,” Boxer said.

Marty Edelman

Of Counsel, Real Estate Department

Paul, Hastings, Janofsky & Walker

“I’ve been asked about being interviewed at different times over the years, but I’ve declined,” said Marty Edelman, one of the top real estate attorneys in the city, during a brief conversation with a reporter recently. Edelman acknowledges that he doesn’t want to tamper with his formula for success so far. “Maybe I’m superstitious,” he said.

It’s a formula that has worked. Edelman has spent more than 30 years focused on real estate andécorporate law, doing pioneering work on financial structures such as participating mortgages and institutional and international joint ventures.

He’s put together deals on his own, too. Without any brokers involved, Edelman earlier this year reportedly put together a $425 million deal in which Paramount contracted to buy 1540 Broadway from Bertelsmann.

In recent years, Edelman advised on a $600 million land purchase in Manhattan, one of the largest assemblages in New York. The former Consolidated Edison property consists of four parcels on First Avenue, between 35th and 41st streets.

Edelman has also been active in the hospitality sector in Japan and Mexico.

Having absorbed leading real estate boutique Battle Fowler in 2000, his firm has a very large local, national and international presence, with over 155 real estate lawyers total. The firm is noted for property development matters and for the diversity of its practice.

Around 55 of the firm’s real estate lawyers are in New York, including another top lawyer, Paul Selver, who deals with land use matters. Selver has also been involved in advising on the redevelopment of the former Consolidated Edison site on the East Side.

Stephen Lefkowitz

Partner

Fried, Frank, Harris, Shriver & Jacobson

If the Jets stadium is completed on the far West Side of Manhattan and a Nets arena gets built in Brooklyn, it will be partly thanks to Stephen Lefkowitz.

The Fried Frank lawyer represents the New York Jets and Forest City Ratner in their respective projects, both of which look likely to transform parts of the city pegged for development in the next decade.

“I think Stephen is the top lawyer in his field,” said James Stuckey, director of commercial and residential development for Forest City Ratner. “He’s a great sounding board, and brilliant.”

Work on the Jets project started a year and a half ago, when planning began. Juggling both assignments, Lefkowitz said, “it’s been pretty active.” But the long-term nature of the projects means the work “ebbs and flows. These things take some years to develop,” he said.

Another project that Lefkowitz worked on, that recently came to fruition, was the Time Warner Center, which opened last month. (Of course he was there for the opening gala, he said.) Lefkowitz represented Time Warner in the development of the 2.8 million square foot project, which was started in 1999.

Farther back, Lefkowitz worked to find a new home for the Mercantile Exchange downtown, represented the stock exchange in its unsuccessful quest for a new home, and has done a lot of work for Douglas Durst, and, even farther back, Bill Zeckendorf, among countless other projects.

When Lefkowitz joined Fried Frank last year from Pillsbury Winthrop, it was considered a coup. He came to the firm “because it is the most interesting real estate practice in the city.”

Lefkowitz also served as an associate law professor at Columbia University and has worked in city and state government, including as special assistant counsel to Governor Nelson Rockefeller and for the state’s Urban Development Corporation.

Samuel Lindenbaum

Of Counsel, Land Use Group

Kramer Levin Naftalis & Frankel

When he switched to Kramer Levin Naftalis & Frankel from his old firm Rosenman & Colin two years ago, Sandy Lindenbaum got a higher-floor office with an even better view of the East Side than his former digs — and the skyline he’s played a big role in shaping.

“Look around, and I’ve had a hand in almost everything,” Lindenbaum said, looking out the window of his corner office on Third Avenue in the 50s. “Most of them are my babies.”

Lindenbaum has spent four decades as an attorney, and is considered by many the top land use lawyer in the city. He was practically raised in the profession by his father, Abraham (Bunny) Lindenbaum, whose first retainer came from Fred C. Trump. Perhaps it’s appropriate that one of Sandy’s biggest coups ever came for Donald Trump in 1999, when he won a city permit for the developer to build the tallest residential tower in the world next to the United Nations.

Sitting behind an immaculate desk (only three binders containing the city s zoning laws — his “bible”- are neatly stacked there), Lindenbaum says he has been working on a number of major projects this year, even if there are fewer “discreet, smaller projects.”

Some of the big ones involve Columbia University’s plans to create a new 17-acre campus north of 125th Street, which could involve three million square feet of buildings, Lindenbaum said. He is also working on a 3 million-square-foot office and back-office space project in Long Island City, for a developer he can’t name, as well as doing work on the former Con Ed site on the East Side for developer Sheldon Solow.

Two years ago, Lindenbaum’s seven-member land use unit jumped to Kramer Levin because his old firm merged with a Chicago firm, and there were cultural differences. Lindenbaum said he’s happy with his new firm.

The lawyer is hard-pressed to name his favorite project ever, because, as he says, developers have been known to call up and say “what about my project?”

But among those that were the most challenging, he mentions Park Avenue Plaza, a Fisher Brothers project completed in the early 1990s. The building ended up with a FAR (floor-area-ratio) of 31 — a very high number — thanks to Lindenbaum’s efforts. Developer Howard Ronson’s project at 1 Financial Plaza, which was completed in the early 1980s, was also great a challenge, involving street closings, landmark issues and a host of other hurdles. “It involved every type of city action imaginable,” Lindenbaum said.

Jonathan Mechanic

Partner, Chairman of the Real Estate Department

Fried, Frank, Harris, Shriver & Jacobson

Prior to working for Fried Frank, Jonathan Mechanic was general counsel and a managing director of Howard Ronson’s HRO International, which was responsible for developing more than 2.5 million square feet of office space in Manhattan. He left the company in 1987, after working there for seven years.

As the most notable leasing lawyer in New York, Mechanic said it is this experience in business that gives him his edge.

“Having spent time on the business side, I have a sense of what all the parties to a transaction are looking for,” he said.

His former boss, and friend, agrees. “He has experienced first-hand both sides of the fence, the owner’s side and lawyer’s side,” said Howard Ronson. “It makes Jon one of the few all-round expert players.”

Mechanic’s relationship with the brokerage community is a good one, he said. “Seeing me on transactions, I get enthusiasm from brokers,” he said. A recent survey of lawyers also pointed out that Mechanic is known as a man who “does not suffer fools gladly.”

In terms of deals, ask Mechanic for his biggest in 2003, and he’ll tell you, “Where do we start?”

Mechanic was involved in advising 55 Water Street in the largest lease deal of the year, when HIP took 486,000 square feet in the building. He was also involved in the New York City Teachers Retirement System’s deal to take space in the same building, did work in connection with the AP moving into 450 West 33rd Street, played a part in the acquisition and recapitalization of 237 Park Avenue and advised Tishman Speyer in its acquisition of the Lipstick Building at 885 Third Avenue, to name a few.

Fried Frank’s real estate practice, which includes around 35 lawyers working in New York, is considered to possess a broad group of excellent attorneys. In addition to Stephen Lefkowitz (see profile in this story), Joshua Mermelstein is a top performer. Mermelstein advised Brookfield in a recent deal in which PricewaterhouseCoopers signed on for a long-term sublease for 800,000 square feet of space at 300 Madison Avenue, a building developed by Brookfield.

Benjamin Needell

Partner, Head of Real Estate Practice

Skadden, Arps, Slate, Meagher & Flom

Benjamin Needell and his firm seemed to have a hand in much of the major development work in Manhattan in 2003. Known for both his quiet demeanor and confrontational style, depending on who is asked, Needell’s work last year read like a laundry list of developments planned or underway in the city.

“Clearly the biggest deal we did this year was representing Bank of America,” said Needell. The firm advised the bank in signing a 1.1 million-square-foot lease to be the anchor tenant in Douglas Durst’s planned $1 billion Times Square Tower, which many hope will serve as a cornerstone deal to turn the sluggish office leasing market around.

Needell, who is known as a legendary rainmaker, was singled out in one survey of lawyers for his “hard-nosed, rather confrontational style.”

Peter Riguardi, president of Jones Lang LaSalle, who worked with Needell on the Bank of America deal, characterized Needell as “quiet, but carrying a big stick.”

“Ben has great depth to his personality and lifestyle, which makes him interesting and pleasurable to work with,” said Riguardi. “He is a no-nonsense professional who is extremely bright and thorough.”

In other projects this past year, Needell and his firm represented Apollo Real Estate Investment Fund in the Time Warner Center project, investor ING in the New York Times headquarters project, and advised Madison Square Garden in its search for a new home.

Needell’s firm also continued to represent Larry Silverstein in the developer’s rebuild of 7 World Trade Center.

Three years ago, the firm worked on the other side of the fence, representing the Port Authority when Silverstein bought the Trade Center for $3.2 billion.

Skadden Arps has 40 real estate attorneys who work in the firm’s New York offices, according to Needell.

Joseph Shenker

Partner, Coordinator of Commercial Real Estate practice

Sullivan & Cromwell

Shenker is a slightly different breed than other top real estate lawyers on this list because he is more focused on capital markets and not working in the “dirt” as much as some colleagues who focus on development and leasing.

In a recent lawyers survey, Shenker was called “a big picture guy” who commentators said was “one of the best brains in New York” — appropriate assets given the magnitude of the deals he’s worked on.

“Our practice fits in with our firm s Wall Street-based practice,” said Shenker. “We do some development and leases, but only large ones.”

Shenker is currently representing Goldman Sachs in a joint venture looking to acquire Canary Wharf, the 14 million-square-foot office property in London, which started as a private project, is now public, and might go private again. He is also working for Goldman in its plans for a new headquarters in downtown Manhattan.

The record-breaking sale of the General Motors building last year also involved Shenker, who advised the Soros Funds in a deal to provide $250 million in equity financing to buyer Harry Macklowe. He also had a role in advising Canada’s largest commercial property owner in selling its U.S. REIT last year, worked on behalf of Vornado since 1983, has regularly represented the Tisch family, and advised Whitehall Funds on its $1.85 billion sale of Rockefeller Center.

Perhaps not surprising given his capital markets slant, Shenker sees three big trends in commercial real estate in recent years. One is the continuing shift of real estate from private to public ownership, another is the growth of private equity ownership funds like Whitehall, and third is the prevalence of commercial mortgage-backed securities, and a corresponding explosion in mezzanine debt over the last five to eight years.

There are around 30 real estate lawyers working in Sullivan & Cromwell’s New York office. The lawyers are part of the firm’s general practice, rather than forming a separate department, in order to foster a “broad-based focus,” said Shenker. “We want to be an adviser with a wide range of knowledge that we can bring to clients.”

Large leasing deals brought in the new year on a good note in January, sending the class A office vacancy rate down in all Manhattan markets, according to a recent report by Colliers ABR.

Fueled by three transactions exceeding 200,000 square feet, the Midtown Manhattan office did especially well, with a January that produced 2.13 million square feet of new leasing, according to a report by CB Richard Ellis.

Leasing activity in the rest of Manhattan was substantial, if not spectacular, the CBRE report said.

Overall, the class A vacancy rate in Manhattan dropped to 10.7 percent in January from 11.3 percent the month before, according to the Colliers report.

Another positive sign for the Manhattan office market was the increase in average asking rents. The class A rate jumped 2.8 percent to $46.85 per square foot from $45.59 per square foot the month before, the Colliers report said.
 

Midtown

The biggest of the big deals, which took place in the Grand Central submarket, was the PricewaterhouseCoopers lease of 800,000 square feet at the newly opened 300 Madison Avenue.

PwC will be consolidating from its two current locations, 1177 and 1301 Avenue of the Americas. In another large lease, Kramer Levin Naftalis & Frankel took PwC’s space at 1177 Avenue of the Americas in a deal for 283,000 square feet.

Also, at 750 Third Avenue, Fairchild Publications leased 234,000 square feet.

As a result of the large transactions, Midtown Manhattan saw its class A vacancy rate fall to 10 percent from 10.6 percent in December, the Colliers report said.

Midtown class A average asking rents got a bit of a bounce to start the year, climbing 2.9 percent from $52.37 per square foot in December to $53.89 per square foot in January, according to the Colliers report.

The CBRE report said that Midtown experienced 775,000 square feet of positive net absorption in January, and that the availability rate dropped a dramatic 0.4 percent for the month to 13 percent.
 

Downtown

Downtown showed improvement in its vital signs in January, with the class A vacancy rate dropping to 13.7 percent compared to 14.2 percent in December, the Colliers report said.

Class A average asking rents recovered slightly, climbing to $34.75 per square foot from $33.88 per square foot, the report said.

The CBRE report said that Downtown showed positive net absorption of 38,000 square feet in January, while the availability rate increased by 0.1 percent to 15.4 percent.
 

Midtown South

The Midtown South class A vacancy rate eased to 6.5 percent in January from 6.8 percent in December, according to the Colliers report.

Like Midtown and Downtown, class A average asking rents were on the increase, jumping to $29.70 per square foot after having fallen in December to $27.64 per square foot, its lowest level in recent years, the Colliers report said.

The CBRE report said that Midtown South showed positive net absorption of 93,000 square feet and that the availability rate declined 0.1 percent to 12.4 percent.

Take a look at Fifth Avenue in the low 50s, and it’s easy to see the growth and importance of European “cheap chic” or “fast fashion” in New York.

In 2000, H & M – the Ikea of fashion – opened a massive, 35,000 square foot flagship store on Fifth Avenue at 51st Street, announcing its presence in Manhattan in a big way.

Only recently did fellow European competitors follow the Swedish retailer to Fifth Avenue.

In the fall, Mexx, the Dutch company bought by Liz Clairborne two years ago, made its U.S. debut by opening in a glassy flagship store on 52nd Street. Zara, the Spanish fashion store, is scheduled to open at 54th Street.

H & M has become the hot destination for the Gen X, Y and Z set by providing up-to-the-minute trends at K-Mart prices. It’s been facing off against its competitors in the Flatiron District to Union Square to Soho to Herald Square and the area around Bloomingdale’s.

“It’s promotional disposable fashion,” said Stephen J. Stephanou, executive vice president at Madison HGCD. “You might see a customer standing in line with 10 of the latest trendy tube tops for $150, and if it doesn’t dissolve on the disco floor, that’s great.”

“It’s a niche that hadn’t existed before,” he said. “It’s going to be a phenomenon that will continue to expand in the city.”

H & M, which has six stores in Manhattan, has been the most aggressive in its expansion efforts, while Zara, which is higher-quality merchandise, has take a more cautious approach even though it has been here since 1987, and now has five stores.

Mexx, the Liz Claiborne unit, is “the new kid on the block,” said Stephanou. It started with the flagship on Fifth and another store in Union Square this past year. “The jury is still out on how they’ll do,” said Stephanou.

Other smaller players in Manhattan aiming at the same general market include Miss Sixty, Esprit, Sisley and Forever 21.

In its quest to capture fashion-conscious shoppers, H & M hasn’t shied away from going right to prime locations or opening up stores practically next to one another, brokers said.

H & M made a splash in the city when it opened the flagship store on Fifth Avenue, said Susan Kurland of Cushman & Wakefield, which represents H & M in Manhattan.

“In their mind, if they were going to make a mark, they wanted to do it in one of most important shopping streets in world,” said Kurland.

Faith Hope Consolo, vice chairman at Garrick-Aug Worldwide, who has represented H & M outside Manhattan, said if the chain didn’t open up there, “nobody would have known who they were. It’s like buying a full-page advertisement.”

Rent didn’t come cheap – about $500 a square foot on the ground floor.

“They are really willing to pay the freight,” said Consolo. “They go to main and main.”

Elsewhere, H & M has opened up multiple locations in high-traffic areas, including a store on either side of Macy’s on 34th Street. This past year, H&M added a second store in Soho at 515 Broadway, only a block away from a smaller store at 558 Broadway, and across the street from where the new Bloomingdale’s will open.

“They’ll aggressively line themselves up with big stores,” said Stephanou. “They all want high-traffic and high-visibility neighborhoods.”

Kurland said H & M had altered its approach somewhat after opening its flagship store. “At one time the stores had to be 30,000 square feet, but maybe they would go as small as 10,000 square feet now,” she said. “It’s more location driven – if they find a great spot, like in Soho, they’ll take it.”

The company also opened up a store in Harlem in 2002, taking 23,000 square feet to become the first retailer at the new Harlem Center. The company’s director of real estate in the U.S. said the company based its decision to open there not on stacks of research, but on the number of shopping bags spotted in the area. Kurland said the H & M Harlem store “was doing very well.” Consolo said she thought the area a better fit for H & M than for Mexx and Zara, but said the location might require patience, because “to immerse oneself in the neighborhood takes a longer lead time.”

Going forward, Consolo said it might make sense for H & M to expand to areas including 86th Street between Lexington and Third Avenues, as well as to Lower Manhattan. “The H & M customer is basically the Duane Reade customer, so it would work in Lower Manhattan,” she said. She also said the company could go to the Meatpacking District, but Kurland said there was too little foot traffic in that area.

H & M’s competitor, Zara, has moved slower. Zara came to New York City in the 1980s, taking a spot at 750 Lexington Ave. next to Bloomingdale’s. “They only wanted to be on that corner,” said Consolo, who did the deal. The chain tried to expand to malls in Mexico and the southwest, a move that didn’t work out well. More recently the company opened stores in Soho, the Flatiron District, 34th Street and on Fifth Avenue at 54th Street. The store carries merchandise that “looks like knock-off designer clothes,” said Consolo. “Something from Donna Karan that would be $1,000 would be $100 at Zara.”

As far as Mexx, which is new to the U.S., Stephanou said the company’s new store on Fifth Avenue showed “they are clearly trying to position themselves next to H & M.” In Union Square, Mexx (which falls somewhere between Zara and H & M in its prices), opened up across the street from the Diesel store there,

Other stores that have opened up or signed new leases recently include Sisley and Esprit. Stephanou helped Esprit find 10,000 square feet of space at 110 Fifth Ave. in the Flatiron District as part of a U.S. relaunch of the venerable ’80s brand. Sisley, which is a Benetton Group clothing store, looks to be undergoing a major drive to expand, recently signing leases at 133 Fifth Ave., 753 Broadway and at the Time Warner Center for a 2,200 square foot space. Maybe the ’80s are coming back.

Still, H & M seems like the store to beat right now. Says Kurland: “They move better with the trends than anyone I’ve ever seen. They bring in a new inventory every couple of days.” The store also does very well on the distribution end, she said. “If they had a monster day, you wouldn’t find the merchandise gone. Their stores are always stocked fresh. In another store, you might find the merchandise depleted for a week until a new shipment arrives.”

Some compared it to Macy s buying Bergdorf Goodman.

Others in Manhattan residential real estate wondered why Sotheby s, the prestigious auctioneer, would sell the rights to its name to the highest bidder at any price.

But nearly all said that Cendant s agreement to buy Sotheby s U.S. real estate brokerage for $100 million was a good move for the expanding national conglomerate which owns Corcoran and the Sunshine Group and looks intent on gobbling up even more of Manhattan.

It was the highest price paid for a Manhattan residential firm, though a comparison of earlier deals must take into account that Sotheby s has 15 offices around the country, including Beverly Hills, Southampton and San Francisco.

The previous Manhattan record was Dottie Herman s purchase of Douglas Elliman for $71.8 million last year. Insignia bought the firm six years earlier for $71 million, and Barbara Corcoran sold her firm for around $70 million three years ago.

The deal adds a very high-end business to a national company with little experience running luxury brands. Under the $100 million agreement, Cendant will license the Sotheby s name for 50 years, with an additional 50-year option. The deal also includes Sotheby s 175-agency affiliate network.

Sotheby s has two offices and 115 agents in Manhattan.

“It s a wonderful name, and it s a good thing for Cendant to buy them,” said Hall Willkie, president of Brown Harris Stevens, who said he thought the $100 million price tag “seemed reasonable.”

“These things sell for three, five or seven times income, and here you are getting 15 offices, an affiliate network, and the name,” he said.

“I think it s a good deal and a good buy,” said Andrew Heiberger, CEO of Citi Habitats. “It s very clean, and more high-end than the Corcoran name.”

Growth seems to be the order of the day going forward, with Cendant planning to expand Sotheby s beyond its existing markets. Sotheby s has a stake in the expansion because it will receive royalties based on new franchises.

Bill Ruprecht, president and chief executive of Sotheby s, said the goal was to give the Sotheby s brand “dramatically more exposure among high net worth families throughout the United States.”

Richard A. Smith, chairman and CEO of Cendant s real estate division, said the company “looks forward to building and operating a franchise system” with Sotheby s.

But real estate executives say there is a risk of diluting the Sotheby s name through expansion. Others say that the Sotheby s real estate division could face a fallout among both brokers and consumers simply because it is no longer connected to the prestigious auction company, but instead belongs to the company that owns Avis Rent a Car and Days Inn.

“There is a pecking order in each firm s own mind in terms of prestige,” said Michele Kleier, president of Gumley Haft Kleier. “No broker wants to be bought out by a firm that they perceive has less prestige than their firm.”

Kleier said that was the case when Coldwell Banker Hunt Kennedy bought the 60-agent Charles H. Greenthal last year, and considerable staff turnover followed.

“There is no guarantee they will want to remain at the new Sotheby s,” she said. “It s a different culture they are going to have to deal with.” In terms of Cendant laying down $100 million for the company, Kleier said it would only be a good deal “if the brokers stay.”

The purchase could be problematic for home buyers and sellers as well, said Willkie.

“It changes Sotheby s position in the high-end business,” he said. “The seller of a $10 million apartment will know that Sotheby s is not that Sotheby s. Competitors will bring it up if the seller doesn t know. We could see a fallout at the high-end of the market.”

Willkie, who worked for Sotheby s years ago, said he was very surprised the auction business would agree to give up some control over its name.

“I never would have predicted that Sotheby s auction business would ever give up control of their name,” he said. “Your name is all you ve got.”

Beyond Sotheby s stated reason of why they sold the real estate division (they wanted to expand, and Cendant could help them with that), there has been some speculation about other reasons for the sale.

The sale might be a result of Sotheby s downscaling to offset losses following the United States Department of Justice investigation of price fixing involving Sotheby s and Christie s, in which both companies agreed to pay $268 million each to settle civil claims. In 2001, Sotheby s laid off about 8 percent of its staff and sold its Upper East Side headquarters in New York for $175 million.

Frederick Peters, president of Warburg Realty in Manhattan, said he doesn t think the sale had anything to do with the performance of the real estate division.

“It s a public company, and I ve looked at the numbers,” said Peters. “It has always looked like an extremely productive business.”

According to SEC filings from November, the real estate division brought in $27.6 million in revenues for the first nine months of 2003, down from $28.6 million the year before. The revenue for the auction business was around $174 million in the first nine months of 2003 (down $10 million from the first nine months of the year before), but that number would be proportionally much higher if it included the last three months of the year, because that is when Sotheby s does 35 to 40 percent of its auction business.

Peters said that it was likely the sale was “really more about what happened with the auction business. The lawsuit and settlement amounts were fairly substantial. This was an opportunity to raise a whole bunch of cash without affecting their core business.”

The deal, of course, is also the latest example of a national conglomerate coming in to buy a Manhattan firm. Smith of Cendant said his company plans to continue building its presence in New York.

Since its entry into the real estate business in 1995, Cendant has shown a voracious appetite for acquisitions, transforming itself into a real estate empire. The conglomerate, which is based in Manhattan, says it now has a hand in one out of every four residential real estate transactions across the nation.

NRT, a unit of Cendant, has acquired 50 firms per year over the past five years and now is more than twice the size of the next-largest residential brokerage, Minneapolis-based HomeServices of America. Cendant is also the world s largest real estate franchiser, owning the licenses of Century 21, Coldwell Banker, ERA Coldwell Banker Commercial, and Corcoran.

As far as HomeServices entry into Manhattan, president and CEO Ron Peltier told The Real Deal back in August that he expects his company to make acquisitions in New York sometime in the next two years.

Despite the increasing presence of conglomerates, Willkie thinks there will always be room for independents.

“I don t think all of the companies will sell,” he said. “And if someone came in and bought every independent – say, theoretically – brokers would spin-off and start their own companies again. Some brokers might find they can t service clients in an atmosphere like that.”

Independent, high-end Manhattan companies said they were happy about Sotheby s being bought, because it helped them to stand out more.

“Consolidation offers the few of us who now remain as smaller high-end boutique operations increasingly clear differentiation opportunities,” said Peters of Warburg.

“It helps us maintain a unique place in the market,” said Kleier, whose boutique firm has around 40 agents. “They can t possibly give the same service a smaller firm gives.”

Though if there is much more consolidation, Kleier joked, “I m going to be the third-biggest company in the city soon.”

Some New York City brokers are getting their shot on the small screen, as the reality TV craze has spread to real estate.

Cable television shows like the Discovery Channel’s “Double Agents” and Home & Garden Television’s “House Hunters” have been popping up on the airwaves, giving viewers the chance to see home buyers and agents as they search for the perfect home.

Others, like the A&E Network’s “Sell This House,” bring in real estate experts to advise owners on problem listings, and a few bring in agents to judge efforts to renovate a home.

While the bulk of the shows are shot in Los Angeles, several have been filmed in New York.

Aileen Grossmann, a manager of a Citi Habitat office in the Flatiron District, recently helped a couple find a place in Murray Hill on an episode of “House Hunters.”

The episode is scheduled to air in the next several weeks. Reruns will regularly appear over the next few years.

Grossmann, a former TV producer who landed the role because of her contacts in the industry, said the concept is perfect for New York.

“People go to open houses merely out of shared curiosity and nosiness here,” she said. “This show plays into the fascination with what other people do with the small places they live in.”

In the episode, insurance consultant Yoav Irom and his fianc e Lisa, who works in fashion and design, are looking for a larger apartment in the Murray Hill neighborhood where they live. Lisa’s current 800 square foot apartment can’t handle two dogs and recent arrival Yoav.

The couple faces time pressure in the show because they want to find a place before their upcoming wedding, which is several weeks away-not an easy situation in the current market.

“In New York, you have to move on it in a week if you want a place,” says Grossmann in the show. “There’s not that much to choose from.”

The show films the couple as they look at three places — a renovated two-bedroom that Lisa thinks “lacks character,” a comparatively inexpensive apartment that needs renovation, and a “light and airy” two-bedroom with French doors and a second loft bedroom.

The couple ends up going with the third apartment – which can “seat 20 dinner guests” in the living room – with just two weeks to go until the wedding.

Grossmann said it was difficult to set up the shoots, because of co-op boards. Because of that obstacle – and because real life is a relative term on reality television – some of the proceedings were slightly contrived.

“It was the biggest nightmare ever, because of co-op boards,” said Grossmann. “I had to beg people to let us use their apartments.”

The couple is shown looking at two condos on the program, even though they had ruled out condos as too expensive, compared to co-ops. Grossmann also didn’t get approval for the co-op that was shown, because of time constraints, but said she hopes more people will become aware of the show in the future and permission to film will be easier to secure.

“When this airs, if people have fun with it, I think it will mean easier access if more people know about the program,” she said.

Betsy Allman, supervising producer for “House Hunters,” said that so far two episodes have been filmed in New York, and “we plan to do more this season.”

The show, which airs Thursday nights, is among the top rated programs on Home & Garden Television, or HGTV.

Allman said the show searches for agents anyway they can. “We go to open houses and see signs and drive through neighborhoods,” she said. Brokers can also approach the show with good homebuyer candidates. There is only a courtesy fee for appearing on the program, but, of course, being on the show can be a good marketing opportunity for an agent. Some observers have also said the shows might create a more positive image for the real estate industry as a whole.

Other reality shows, like A&E’s “Sell This House,” filmed in New York last year and plan to return in the coming months, said Rob Sharenow, executive producer at A&E.

The show is based around the concept of the open house. Each week features homeowners looking to sell and prospective buyers secretly videotaped as they express their observations upon first seeing a home. Enter a real estate and home decoration expert who watches the video with the seller and advises on changes. In the end, the place is transformed, and the buyers are brought back through.

“We filmed in a one-bedroom in Manhattan – one of the smallest properties that’s been on the show, and the most expensive,” said Sharenow, “and it was one of our more popular episodes, and the apartment sold right after we staged it.”

While the show doesn’t focus on agents, Sharenow said there is currently a show up for consideration on A&E that prominently features brokers.

“The whole home show craze, I don’t think its going to stop,” said Sharenow.

Other home shows on the tube, mostly related to home renovation, include “Building Character,” “While You Were Out,” “House Rules,” “Curb Appeal,” “Trading Spaces” and others.

Real estate TV’s popularity isn’t confined to the U.S., either. There is no shortage of real estate agents on British television. One recent show featured London agency Greene & Co. as the subject of a six-week hour-long prime-time national slot on BBC2. Agents from the company were followed by cameras for six months last year as they went about their work.

Finally, there is the current mother of all TV reality shows, which is arguably real estate-related because of its central character – “The Apprentice.”

Palm Beach is a lot like Manhattan – an island with limited inventory and super-high prices, where homes generally start at $1.5 million and go up to above $30 million.

It’s also much the same clientele as Manhattan, so it’s no surprise that several firms in New York have opened offices in Florida’s most expensive real estate market.

Three Manhattan firms – Brown Harris Stevens, Sotheby’s and Corcoran – have offices there, and they rank among the biggest firms on the island.

The Corcoran Group is the latest Manhattan entry into the Palm Beach market, buying Paulette Koch Real Estate in October, which has around 25 agents. The company is currently in the process of doubling its space in moving to a new office, and will eventually make room for 20 new agents, said Corcoran CEO Pam Liebman.

Koch, who is now vice president of sales at Corcoran, said the company was getting a lot of referrals from Manhattan as a result of the merger.

“If I tell you it’s one referral a day, we are getting much more than that,” she said. “It’s exceeded our expectation, and this is just the beginning.”

But Hall Willkie, president of Brown Harris Stevens, said it remains to be seen how Corcoran will do in Palm Beach.

“They are a very broad market firm, and it will be interesting to see how they do there,” said Willkie. “Time will tell.”

Brown Harris Stevens has 50 agents in Palm Beach, and has been in the market since buying two independent firms there in 1998. Sotheby’s has around 30 agents in Palm Beach.

The biggest firm on the island is Martha A. Gottfried, which has around 80 agents. McCann Coyner Clarke Real Estate is another big player, with around 40 agents. The island is saturated with small agencies, with some 56 real estate offices total, even though there are only around 400 sales a year on the island, according to Willkie.

Palm Beach is the priciest market in Florida, though “Naples is on its way up, and South Beach [Miami] is a hot spot again,” said Eva Vanderwater. assistant managing director in BHS’ Palm Beach offices.

Anything below $1 million on the island is generally a tear-down, said Vanderwater. “The land is more expensive than some of the homes, and that’s why we see teardowns,” she said.

The CEO of Foxtons, the two percent discount brokerage that has been frequently criticized by Manhattan firms for its approach, looks to be out of a job.

Glenn Cohen, who founded Foxtons North America, which operates in the Tri-State area, appeared to no longer work at the company as of the middle of last month after a flap over a Foxtons commercial that aired as a mock news story on a local CBS news broadcast. Others said Cohen left the company because of issues with employees there, possibly in connection with alleged overtime rules violations.

Foxtons did not return calls for comment, but Cohen has disappeared from the company s Web site and has been absent from the company s corporate headquarters for several weeks. One spokesperson told another news outlet she “used to be” Cohen s assistant, but wouldn t confirm whether Cohen is still employed by Foxtons.

Last month, Foxtons notified the New Jersey Department of Banking and Insurance, which oversees the state s Real Estate Commission, that they wanted to change their broker of record, according to a department spokesperson. The broker of record had been Glenn Cohen, according to the department. The company had until Feb. 17 to file a new broker of record.

A spokesman for the New Jersey Department of Labor also confirmed that it was investigating Foxtons for possible violation of overtime rules. A company found guilty would be required to pay back wages and fines, the department confirmed.

Rick O Neil, president of another area discount brokerage, Help-U-Sell Real Estate, said he heard Cohen had left his job “because of problems with employees.”

Foxtons aggressive advertising also appears to have gotten Cohen in trouble.

The company has advertised heavily since its founding four years ago, on radio, in newspapers, on subway cars, billboards, trucks and even on bus shelters, partly a result of a partnership with global media company Viacom.

In an unusual move in late January, Foxtons bought all of the available ad time on an 11 p.m. newscast on Channel 2. The company then promoted its appearance in a series of misleading ads on the radio that suggested the company would be profiled in a news story, and not as part of a commercial.

The company s website also promoted the appearance, proclaiming, “Don t miss it! Learn the secret [of] Foxtons extraordinary success tonight on CBS 2.”

During the commercial breaks on the TV program itself, Cohen was interviewed on a mock news set about the benefits of working with Foxtons.

Having a single company back a local newscast is highly unusual. After saying the commercial was an “experiment,” a Channel 2 spokesperson later said there wouldn t be any similar ads in the future. It then fired the advertising executive responsible for selling the commercials.

Following the airing and the surrounding controversy, Cohen boasted how well the commercials worked in an advertisement.

“There were more calls on the morning following the broadcast than on any other day since Foxtons inception a little over three years ago,” Cohen said in the ad, according to the Daily News.

Andrew Heiberger, CEO of Citi Habitats, said Cohen s missteps and departure serve as proof that the company has a flawed business model.

He said Foxtons business plan – based on selling homes at one-third the standard commission of 6 percent – is “not sustainable,” because it won t be able to provide services that consumers demand to sell a home.

“Actually, it s really good for the brokerage industry,” said Heiberger. “It clarifies publicly that 2 and 4 percent commission is not workable.”

“If customers are asking, Do you make too much in commission? ” Heiberger said, “This says, we don t. ”

Foxtons was started in London before expanding in 2000 to the United States. Under Cohen s watch, the West Long Branch, N.J.-based company has grown to 400 employees in the Tri-State area, including 280 agents. Only around 5 to 10 percent of the company s business is done in Manhattan, Cohen said earlier. Foxtons has plans to expand in major markets across the United States.

The economy is on the rebound, Wall Street bonuses are back, interest rates are still low and there is a serious lack of apartment inventory. That means open houses these days can be as crowded as a hot New York nightclub.

On a recent Sunday, JC DeNiro & Associates had an open house for the original Thomas s English Muffin home at 337 West 20th Street in Chelsea, where the muffin got its start in the 1880s. The co-op board was notified in advance that there would be a line outside the carriage house. To deal with the 250 to 300 people waiting patiently in a line that stretched halfway down the block, three agents were stationed at strategic points – the front door, the apartment itself and one agent to escort four to seven people at one time to the apartment and back.

“Since January 5th, the market has gone crazy,” says Christopher Mathieson, managing partner and co-owner of JC DeNiro, which has two offices downtown. “People are realizing this is their last chance to get into the market before it goes really crazy.” Mathieson says he s seen brokers pricing properties based on how the market was three months ago, but “you don t want 20 offers coming in. You want it at the right price with four or five offers coming in. Having 20 offers means you didn t price it right. Prices are changing in a week. We have increased prices on properties that haven t even come on the market.”

“You cannot believe how crowded they are. There hasn t been one that I have been at where the agent has not run out of materials,” says Linda Cohen Wassong, a broker at Douglas Elliman. She says the good news today is that prospective buyers often give the name of the broker that referred them and that fewer people go without referrals.

Many brokers agree that even on incredibly cold days the turnout has been unbelievably high. “On a Sunday with sleet, snow and rain all in the same day, over 70 people came to an apartment in the $700,000 range,” says Jacky Teplitzky, an executive vice president at Douglas Elliman. “They were all drenched and I had to keep a mop available for the walk-through. If someone is willing to go out in those conditions with infants in strollers, they are seriously looking.”

“There is a psychological effect when a potential buyer comes and sees so many people at an open house. They start to think if everybody else wants it, I want it,” says Teplitzky. “The adrenaline and competitiveness gets going so sometimes it s not really related to whether they really like the apartment.”

Mathieson of JC DeNiro agrees. “The thinking is if there are 100 people here, the apartment must be fantastic. They wait patiently, maybe because it s Sunday and not a work day. Job security is back; a lot more people are doing open houses on the weekends instead of private appointments during the week since they can t get off work. That may be another component of why open houses are so active right now.”

“It s just been flooded beyond belief with people, on average we have 30 people or as much as 100.” says Lisa Stobing, sales manager for Bellmarc s Gramercy/Chelsea office. “A lot of people are anxious to buy, but there s not enough to go around. I can t even tell you how many bidding wars I ve heard about,” she says.

Often people don t know how high to go when giving their final and best bid. “How much should I ask my client to bid, brokers ask. They are trying to outsmart the next bidder. Do you do $1,000 or 2,000 or 10,000 or 10,001?” Strobing says.

A lot of times it comes down to who has the best financials. “Buyers are at the mercy of sellers,” says Strobing. “Sellers have so many offers to choose from. I remember when the sellers thought they had gold when they didn t, and now they do. Buyers get angry because they think the sellers are pigs but the sellers are turning around and having to buy in the same situation. Getting that extra bedroom is costing more and more.”

At Fillmore Real Estate in Brooklyn, president John Reinhardt says that visitors to open houses have increased to one and a half times the usual amount in just the last three weeks. “My managers say they ve been getting an average of 30 to 35 people per open house, and at a brokers-only open house recently we had 42 agents,” he says.

To gain maximum exposure for their properties, firms like JC DeNiro said they come up with extensive marketing plans and treat open houses like a business launch.

“We look at it like it s an opening night. That s where you get tons of offers,” says Mathieson. He says the company recently had open houses for two listings in the same building, on one of the most photographed streets in the West Village, and had a great turnout. “If you have a line of 200 people for an apartment, then people know that they have to act fast,” he says.

With technology advancing, there are also an increasing number of ways to let buyers know about open houses. Information can be downloaded to Palm Pilots or sent via text messaging to handhelds and cell phones. Potential buyers can also weed out the apartments they are not interested in by visiting sites with virtual tours.

But old-fashioned print advertising is still the first choice.

“We do full-page, and a page- and-a-half of advertising for open houses in all the local Brooklyn papers,” says Reinhardt. “I see people walk in with those torn out. When you have 20, 40, 60 or 80 happening, they feel if they are out of the house, they might as well go see more.”

Teplitzky likes to try several routes at once.

“You are reaching a broader audience with more choices to get information, so what I do is send a flyer to all the other brokerage firms and emails within our company and other companies to get the maximum number of buyers,” she says.

Condo and co-op inventory continued to drop in Manhattan in February, creating bidding wars, disgruntled buyers and stressed brokers, but possibly helping the rental market.

Corcoran released a report early last month saying that inventory of properties for sale is down 50 percent compared to a year ago, according to data from its house listing system.

Warburg Realty president Frederick Peters also painted a grim picture of listings in mid-February.

“By our own calculations, we have 63 percent the number of active exclusives as we had a year ago,” Peters said. “It’s not because brokers forgot how to sell real estate. There is just no inventory.”

According to Jonathan Miller, president of the appraisal firm Miller Samuel, the number of condos and co-ops for sale in Manhattan dropped 11 percent between the end of the fourth quarter and the end of January. There were 4,321 properties listed at the end of the January, compared to 4,843 at the end of the fourth quarter.

“Everything is going to some form of competitive bidding,” said Peters. “Every good property is mobbed.”

Daren Hornig, president and CEO of Dwelling Quest, said buyers are now forced more than ever to act quickly, and Peters said many were growing disgruntled.

“Anyone buying now has usually been burnt one to 10 times before, so they are often afraid miss a deal,” said Hornig.

“A year ago it was sellers who were disgusted,” said Peters. “Now, it’s moving into buyers being disgruntled.”

The low inventory is also making brokers “a lot more stressed,” Peters said.

Things got heated recently over sales at a new project at 505 Greenwich Street, when Elliman broker Michael Schvo and Christopher Mathieson, managing partner at J.C. DeNiro, accused Corcoran of blocking them from showing its exclusive listings at the new development. Mathieson also said Corcoran refused to sell him an apartment in the building solely because he was a realtor.

Corcoran said the allegations were false and exaggerated. CEO Pam Liebman pointed out that it is customary to first offer apartments on a “priority list” created by the developer, and REBNY officials pointed out that the 72-hour rule doesn’t apply to properties on the market for the first time.

Corcoran also filed a complaint against Mathieson with the ethics committee of the REBNY, which Mathieson acknowledged receiving. Neither side commented on the details of the complaint.

The shortage of sales inventory has had the effect of helping the rental market, according to Andrew Heiberger, CEO of Citi Habitats.

“The rental market is 100 percent coming back on all fronts,” said Heiberger. “When the condo market goes crazy, people priced out of the market have to rent.”

Heiberger said vacancies in the rental market, which had reached as high as 5 percent in the last two years, had been hovering around 3.7 percent for while, and were now down to around 2 percent.

Gary Kiyan, listings and systems manager for DJ Knight, said the rental market was improving, but that “it isn’t as if anyone flipped a switch”

“I’m encouraged by some of the things I’m seeing,” he said. “We’re seeing more activity.”

But he said he was concerned that there are still alot of new rental developments coming online soon.

Heiberger said the improved situation means owners are starting to remove incentives for renters. “That’s the first thing peeling away,” he said.

Hornig of Dwelling Quest said owners were becoming less likely to pay commission to brokers, which happens in a weak market.

“A lot of them are paying a month’s commission, but they are pulling back,” Hornig said.

There has been talk about a boom in Long Island City for at least the last two decades.

Proximity to Manhattan, cheap rents, spectacular views and good transportation links have all been touted as reasons to come to the area.

While a commercial boom doesn’t look likely to happen in the near future, given that Long Island City is “overflow” space that isn’t in demand now because of the weak office market in Manhattan, there has been impressive activity on the residential side.

As part of the Queens West project as well as other developments slated for the area, there will likely be a minimum of 5,000 units that will go online in Long Island City in the next seven years.

Rockrose Development.has plans for seven residential buildings at the Queens West site, with construction on the first building beginning this fall. Each building will be around 500 units, including the first building, which will be 32 stories tall.

AvalonBay Communities, a public REIT, is planning to build a total of 250 more units at the Queens West site, with construction starting before the end of the year.

“I think that these projects will be the turning point for Long Island City,” said Jon McMillan, director of planning at Rockrose. “People are going to recognize it as an exciting place to live.”

Queens West, which is located on the waterfront, is part of a state initiative that began in 1984. Already, two buildings have been completed- the 522-unit City Lights, which opened in 1997, and the 372-rental unit Avalon Riverview, which opened last year.

There is relatively little other housing stock in Long Island City, mostly two and three story buildings east of Queens West.

Fred Harris, senior vice president for development at AvalonBay, said occupancy at the Riverview project is well over 95 percent, and is mostly drawing people who work in Midtown, including people new to the city.

“We have a heavy representation of new arrivals in the city,” he said. Residents tend to be young, Harris said, though the project is also being marketed to empty nesters from the suburbs.

In general, rents are roughly 20 percent off comparable new construction in Manhattan, said Harris. A one-bedroom runs $2,350 a month for 13 months, less two free months rent. “Plus, you get a little higher level of amenity,” said Harris. “Every apartment has a washer and dryer.”

Queens West has good access to transportation – less than a five-minute walk to the subway – though neighborhood amenities are relatively scarce, including no supermarkets.

One positive sign, however, was the opening of the Riverview Restaurant & Lounge at the base of the Avalon building last month, “the first retail use of that caliber,” said Harris.

The views are also a big selling point. “The view are unbelievable,” said McMillan. “You feel very psychologically close to Manhattan.”

Going forward, the Rockrose project will transform the area. The company plans to bring in retailers and even build an elementary school. Most important is a large public park along the waterfront.

“The public environment we will be able to create along the waterfront will make the project,” McMillan said.

There are also other projects in the works in Long Island City.

One is the East River Tennis Club project, just south of the Queensboro Bridge. The project will consist of more than one million square feet on the East River, said Andrew Gerringer, managing director of Douglas Elliman’s Development Marketing Group, which just signed an agreement to work on the project. “It’s a great site overlooking all of midtown Manhattan,” Gerringer said.

Another project, located by the Triborough Bridge on 21st Street, is in the works, said Frank Zuckerbrot, executive vice president at brokerage Sholom & Zuckerbrot. Plans are also in the works for Silvercup Studios West, a two million square foot residential, production studio, office, cultural, and retail space, with an architect, Lord Richard Rogers, best known for his work with the Centre Pompidou in Paris, hired this summer.

One enormous wildcard is the building of an Olympic Village on part of the Queens West site if the city is awarded the 2012 Olympic Games. The village could provide housing for 18,000 New Yorkers after the games are over.

“That’s obviously a huge thing,” said McMillan. “If it happens, we’ll try to figure out a way to do it intelligently and not destroy the other projects in the process.”

In Manhattan’s residential real estate market, a curious trend is unfolding, as developers seem to be reading the market on a different page than the rest of us.

One would think that with the rental market lagging and the condo market strong due to low interest rates, developers would be rushing to build for-sale units rather than rentals, or quickly converting their rental buildings to condos.

But recent numbers show different thinking, with developers putting four times as many rental buildings as condos on the market in 2003. Of a total 5,303 residential units that went online last year, 4,566 were rental units and 739 were condos, according to figures from the Real Estate Board of New York.

While the rental market may be tightening, much of the recent upsurge in rental properties may be related to the long-term business strategies of developers, rather than immediate market conditions. Rentals also continue to be a draw because they allow developers to build their portfolios and receive tax advantages, as well as government incentives, particularly downtown with the Liberty Bond program.

Miki Naftali, President and CEO of El Ad Properties, a Manhattan high-end condo developer with extensive holdings in Canada, said last year’s preponderance of rentals was simply the “end product” of development activities begun two or three years ago in a booming rental market. He said he expects the bull market in condos to last another year at least.

Despite the hot sales market, many expect developers will continue to put greater numbers of new rentals on the market than new condos in the next few years, especially with the improving economy expected to provide more jobs.

“Rentals will continue to be the majority over the next few years in the near term, but sales may gain some market share because of so much rental property in the market,” said Jonathan Miller, president of Miller Samuel, the Manhattan residential real estate appraiser.

Miller said rental property development is good for long-term players, who can take advantage of low interest rates now, confident of the “rental market coming back in the long term.” He said the ability of these developers to secure lower cost construction loans in the current interest rate environment, coupled with their expectation of an improved rental market as the economy picks up, makes it worthwhile. Also, many long-term players also want to avoid the tax implications of selling condo units, he said.

The desire for a stronger portfolio in the long term is also an important factor for other developers. “Many developers would rather build rental properties so that they can grow their portfolios and rentals have an income tax advantage compared to selling homes,” said Shane Neuringer, associate director of acquisitions at Rockrose Development Corporation, a residential developer that has increasingly shifted its attention to rental development since the mid-1980s. “With apartment buildings, you get a non-taxed loan; the proceeds of the loan are not taxed.”

The changing character of certain sections of Manhattan has also made it easier for developers to execute their long-term strategy of building a portfolio through rentals. In so-called “emerging neighborhoods,” developers have taken advantage of lower land prices and low interest rates to build more rental properties, an opportunity not available to them in more established neighborhoods.

“The more established neighborhoods, such as the Upper East Side, Upper West Side, and Greenwich Village will see more condos due to high land cost there,” said Neuringer. “But in emerging neighborhoods like the Far West Side and the financial district, land is less expensive, so it is more feasible to do a rental project.” Neuringer added that his company is probably the biggest landlord in the financial district, with properties like 2 Gold Street, boasting 50 floors and 650 units.

The government has also played a part in this scenario, fueling rental development through the Liberty Bond Program and 80/20 tax-exempt bonds. “In New York City, there is a powerful incentive to develop rental properties under the 80/20 tax-exempt bond program. Not only is the cost of capital attractive, but there are low income housing tax credits and city real estate tax benefits that are part of the program,” Neuringer said. “Also, downtown Liberty Bonds have been a big incentive to do rental projects since the interest rates are attractive and condos are not permitted under that program.”

For developers who want to convert their rental buildings to condos after their building is completed, a change in midstream can be expensive, said Daren Hornig, president and CEO of residential brokerage Dwelling Quest.

“The rental market typically caters to smaller size units, and the units are not as highly finished,” Hornig said. “With the condo market, you are going to want that Sub-Zero refrigerator, and granite instead of formica countertops, and switching over can be expensive.”

Rental developers who haven’t fared well recently might be able to take solace in the fact that the hot condo market won’t last forever. Robert Rissetto, director of the residential division of the Olnick Organization, which builds rentals in Manhattan, said the condo market may actually be cooling somewhat and that the buying binge brought on by low interest rates has “gone on long enough,” having been impacted by other factors like the uncertainties of the job market and companies moving out of New York and others coming in, factors he said favor a decision to rent rather than buy. “Those who can [purchase condos] did, the ones that are left can’t for a variety of reasons,” he said.

Rissetto said that the rental market bottomed out from around mid-2002 through the end of 2003. He said rentals have been tightening up lately and that the vacancy rate for his company’s rental portfolio is consistently below 3 percent now.

But condo developers, for their part, said their units will continue to be red hot, and noted that many buildings are being converted to condos. “What we see is that more and more developers are shifting to condos in the past year because of the high prices of land or property for development in Manhattan, which makes it unprofitable to develop rentals,” said Naftali of El Ad Properties.

In addition to low interest rates drawing hordes of buyers, Naftali said the condo market today is better priced-wise and has a better level of activity than five years ago.

He cited the quick turnaround sale of his company’s 43 high-end condo units at 49 East 21st Street over an eight-week period between November and January, a holiday period that is normally slow for business.

“The condo market is very strong now,” Naftali said, noting the preponderance of first-time buyers shifting from renting to buying. “Basically, what they figure is that the monthly payment if they take a 75 to 80 percent mortgage will be equal to or lower than their rent, and that if they can come up with the down payment they can own a very high-quality apartment in the best city in the world.”

It used to be that the only reason to trek out to the area bounded by 125th and 133rd Streets between Broadway and the Hudson River was to get a car fixed or to pick up groceries at the Fairway supermarket.

Manhattanville, the historic name for the neighborhood known to others as West Harlem, is a semi-industrialized no-man’s-land of garages, auto mechanic shops and storage spaces lying in the shadows of the elevated portion of the West Side Highway. The neighborhood is soon to change.

Columbia University plans to build a 17-acre tree-lined campus, with classrooms, performance halls, laboratories and dormitory housing in the valley between Morningside Heights and West Harlem, bordered by the 12th Ave. highway viaduct and the elevated subway line running along Broadway.

This project is Columbia’s first major building campaign in 15 years. The project may also bring in a new era of residential and commercial development in Manhattanville, West Harlem to the north, and, to a lesser extent, Morningside Heights to the south, where Columbia is the major landowner and there are few properties available to the public.

Klara Madlin, owner of Klara Madlin Real Estate, said the Morningside Heights neighborhood “used to be like an undiscovered little gem that nobody knew about.”

One-bedroom apartments in the neighborhood that sold for $100,000 to $250,000 in 1998 are now listed from $400,000 to $500,000.

A mix of professionals, artists, educators and students, the area has been sought out by residents who have been priced out of downtown and are looking for more affordable environs. But there are few apartments to choose from and prices are continuing to rise, Madlin said.

Columbia University now owns approximately 6,000 apartments in the area. About 90 percent of those are occupied by people affiliated with the university. Columbia largely sat out the building market in 1980s, but in the last decade has begun constructing anew. From Lentfast Hall, a new 16-story residence for law students at 121st Street and Amsterdam Avenue to a 12-story building with faculty apartments and an elementary school on 110th Street and Broadway, Columbia is now more aggressively pushing its real estate boundaries, even venturing as far south as 103rd Street and Broadway where construction on a 13-story dormitory recently broke ground.

With space at a premium, private condo projects are selling out quickly, though development opportunities are hard to come by, said Veronica W. Hackett, co-founder of the Clarret Group. Clarret is jointly developing the $56 million Opus condominium at Broadway and 107th Street with Prudential Real Estate Investors. “There’s just a limited amount of development opportunities,” Hackett said.

Because there is limited stock being developed, buyers and renters are heading further and further north to Harlem, where Madlin said she’s seeing non-doorman, two bedroom co-ops on Riverside Drive in the 130s going for $350,000.

Columbia’s northward expansion will continue pushing prices in Manhattanville and West Harlem. “Wherever there’s a college you’re going to have bars and restaurants and bookstores,” said Madlin. “It will increase the market rates. It’s inevitable.”

Presently, a considerable portion of the housing stock in West Harlem is subsidized, and yet many of the leases entered into with the city are soon to expire and a good number of these properties may flip onto the market just as they did 20 years earlier on the Upper West Side, Madlin predicted.

Marvin Johnson, of Benjamin James Realty, said bargains abound in Harlem, but he sees another two-year period before prices rise to a level comparable with the area to the south.

“When I started doing this, buyers said ‘I don’t want to go north of 96th, and now they’re saying ‘I don’t want to go north of 125th.’ But they’re probably missing out because some of the nicer properties are in Hamilton Heights along Hamilton Terrace and Convent Avenue, Strivers Row and Sugar Hill.”

In the past year in Harlem, there’s been a bevy of condo activity, with properties going up at 135th and Broadway, 120th and Eighth Ave. (the Harriet Tubman), 118th and St. Nicholas Ave. (the Rosa Parks), and 146th St. and Convent Avenue.

Yet the area west of St. Nicholas Avenue, along Amsterdam and Broadway in the 140s and 150s is still marginal because of a persistent drug market, Johnson said.

Community residents are generally welcoming the new development and are also insisting that Columbia take their input into consideration.

“We would like to see a number of the jobs created from this project go to people within the community,” said Jordi Reyes-Montblanc, chairman of Community Board 9, which represents residents in the immediate vicinity of the proposed project. Many are non-English speaking immigrants. Montblanc wants Columbia to guarantee them language training and to make accommodations to local businesses.

Next spring, the city and the state expect to begin a $12 million plan to rebuild the Harlem piers on the waterfront running alongside the site of Columbia’s proposed satellite campus. Residents need to have free access to the new park, insisted Montblanc.

“It’s not going to be a gated community. They’re not going to create a bunker in the middle of Manhattanville,” he said. “If we’re not able to work with Columbia then they’ll remember 1968 like it was the good old days.”

Relations with the surrounding community have been peaceful since 1968, when, under considerable pressure from residents and students, Columbia abandoned plans to build a gym in Morningside Park with separate entrances for the mostly white students of Columbia and the mostly black residents below.

Having learned from its mistakes, in the late 1980s Columbia worked closely with the community in its next large development project, the construction of a four-building hospital complex on 168th Street that succeeded on the premise of job creation and neighborhood uplift.

The Manhattanville project will be a similar boon to the neighborhood economy, bringing in $1 billion annually and creating 9,000 permanent new jobs, according to a university study.

“They’re selling it as something economically good for the city and the neighborhood,” said Robert McCaughey, chairman of the Barnard College history department and author of Stand, Columbia (Columbia University Press). “The key difference [from 1968] is this would be research facilities and that would mean jobs.”

With litigation regarding residential displacement a nonissue (since the area is comprised mostly of warehouses and automobile service stations), and the university already owning or controlling more than 40 percent of the 17 acres (and in talks to buy 32 percent more), many say the deal is as good as done.

But community activists still want to make sure the expansion is integrated into the existing community, and not closed off from it. . “Do they want to close certain streets and introduce gates and thus make the ability to penetrate the site more difficult?” asked one activist, who declined to be named. “That’s the critical issue: Is it a mixed-use community that has an institutional presence or does it become literally a satellite campus?”