The Real Deal New York

A glance at today s Lower East Side skyline offers a strong impression — one of these buildings is not like the others. While the newly christened Hotel on Rivington, a 21-story glass tower, would be a gem in any neighborhood, it s an unlikely sparkler in an area comprised of tenement buildings and dive bars, far from Manhattan s main tourist-traffickedécorridors.

Indeed, two major groups of travelers that carry the hotel trade business road warriors and families will likely shy away from the Lower East Side s diminished but still evident grit.

So who stays at the $225-a-night hotel, one of several boutique properties being developed in downtown Manhattan? “We re targeting people in the creative fields film, music, advertising, fashion,” said Klaus Ortlieb, the Rivington s general manager. “A lot of Hollywood people will stay here, as well as a fair amount of European travelers.”

If the Lower East Side has anything, it s a reputation as a point of artistic convergence, so this could certainly work in hotels favor.

“The hotel will definitely attract artists the Lower East Side was home to them at one point,” said Ortlieb, with no apparent irony. The Rivington s owner, Paul Stallings, began investing in apartment buildings on the Lower East Side in 1979, when terms like “war zone” were common and “rough neighborhood” was a model of gentle understatement.

In some ways, the move towards new hotels and redevelopment on the Lower East Side echoes the transformation that took Soho from being a bastion of loft-colonizing modern artists to the first neighborhood of retail. The Pomeranc Group, which opened the $25 million 60 Thompson hotel in Soho in February 2001, has plans for a Lower East Side project as well. The Allen Street development slated for late 2005 will be situated between Houston and Stanton, just blocks from the Hotel on Rivington. Add in developer Randy Settenbrino s plans for a 22-room boutique hotel on Orchard Street and you have a little cluster of pricey chic.

Even with the hotel and tourist trade in New York taking a terrible hit after Sept. 11 and visitor numbers fluctuating with national economic fortune in recent years, still developers have plenty of faith in their boutique offerings. Reservations were hard to come by at 60 Thompson, even in 2002, a claim few other New York hotels can make. Word-of-mouth apparently did the trick, since Pomeranc consciously opted to avoid advertising, directing its few print ads toward limited-circulation urban magazines.

Though none of the Lower East Side hotels have been open long enough to measure their success, Pomeranc s decision to develop at Allen Street, after pulling in healthy occupancy rates at 60 Thompson for several years, suggests that demand for boutique offerings in the area is high.

“[For our] commercial properties, we are reducing expenses wherever we can,” Stephen Brandman, chief operating officer of Pomeranc, told the hotel industry newsletter Supplier Interactive in 2003. “The boutique side paints a much rosier picture.”

But without the stately grandeur of uptown hotels as well as their proximity to business and tourist destinations what will sustain the new Lower East Side offerings?

In the city that never sleeps, the answer is night life. “The hotel is literally in the center of night life on the Lower East Side,” said Judi Wong of Hotel on Rivington. “And there will be a total of five bars when construction is completed.” The creative demographic that boutique hotels will be courting seeks the authentic New York entertainment and restaurants that only downtown can bring this is a crowd for whom upscale design and dive bars are far from mutually exclusive.

“The number of nightlife options available to guests is very important,” said Ortlieb. “And there are so many restaurants opening in the neighborhood.”

There s also an element of upscale snobbery in these hip downtown locales. The Hotel on Rivington and the Pomeranc s Allen Street project feature prominently advertised penthouses 5,500-square-foot penthouses in the case of Allen Street as crown jewels; rates at the Rivington range from a $225 a night basic room to the $5,000 a night penthouse. “The higher the floor, the larger the rooms get,” said Ortlieb.

With an average room size of 380 net square feet, this is no cramped economy hotel. The few remaining flophouses and backpacking hostels along the nearby Bowery certainly can t boast a private lounge on the second floor, a prized feature for the Rivington s promoters. The Allen Street hotel will have a similar members-only bar on the roof.

The luster on the Rivington s glass still shimmers, though it remains to be seen how boutique hotels will update themselves to continue to attract the creative crowd. Skeptics suggest they are pursuing the same fickle crowd that turns over nightclubs and bars in a matter of months. And with so many downtown projects in the works, stiff competition for the creative traveler s dollar will be as much a fixture as the surrounding bars, which by then may be “so 2005.”

TRD A glance at today s Lower East Side skyline offers a strong impression — one of these buildings is not like the others. While the newly christened Hotel on Rivington, a 21-story glass tower, would be a gem in any neighborhood, it s an unlikely sparkler in an area comprised of tenement buildings and dive bars, far from Manhattan s main tourist-traffickedécorridors.

Indeed, two major groups of travelers that carry the hotel trade business road warriors and families will likely shy away from the Lower East Side s diminished but still evident grit.

So who stays at the $225-a-night hotel, one of several boutique properties being developed in downtown Manhattan? “We re targeting people in the creative fields film, music, advertising, fashion,” said Klaus Ortlieb, the Rivington s general manager. “A lot of Hollywood people will stay here, as well as a fair amount of European travelers.”

If the Lower East Side has anything, it s a reputation as a point of artistic convergence, so this could certainly work in hotels favor.

“The hotel will definitely attract artists the Lower East Side was home to them at one point,” said Ortlieb, with no apparent irony. The Rivington s owner, Paul Stallings, began investing in apartment buildings on the Lower East Side in 1979, when terms like “war zone” were common and “rough neighborhood” was a model of gentle understatement.

In some ways, the move towards new hotels and redevelopment on the Lower East Side echoes the transformation that took Soho from being a bastion of loft-colonizing modern artists to the first neighborhood of retail. The Pomeranc Group, which opened the $25 million 60 Thompson hotel in Soho in February 2001, has plans for a Lower East Side project as well. The Allen Street development slated for late 2005 will be situated between Houston and Stanton, just blocks from the Hotel on Rivington. Add in developer Randy Settenbrino s plans for a 22-room boutique hotel on Orchard Street and you have a little cluster of pricey chic.

Even with the hotel and tourist trade in New York taking a terrible hit after Sept. 11 and visitor numbers fluctuating with national economic fortune in recent years, still developers have plenty of faith in their boutique offerings. Reservations were hard to come by at 60 Thompson, even in 2002, a claim few other New York hotels can make. Word-of-mouth apparently did the trick, since Pomeranc consciously opted to avoid advertising, directing its few print ads toward limited-circulation urban magazines.

Though none of the Lower East Side hotels have been open long enough to measure their success, Pomeranc s decision to develop at Allen Street, after pulling in healthy occupancy rates at 60 Thompson for several years, suggests that demand for boutique offerings in the area is high.

“[For our] commercial properties, we are reducing expenses wherever we can,” Stephen Brandman, chief operating officer of Pomeranc, told the hotel industry newsletter Supplier Interactive in 2003. “The boutique side paints a much rosier picture.”

But without the stately grandeur of uptown hotels as well as their proximity to business and tourist destinations what will sustain the new Lower East Side offerings?

In the city that never sleeps, the answer is night life. “The hotel is literally in the center of night life on the Lower East Side,” said Judi Wong of Hotel on Rivington. “And there will be a total of five bars when construction is completed.” The creative demographic that boutique hotels will be courting seeks the authentic New York entertainment and restaurants that only downtown can bring this is a crowd for whom upscale design and dive bars are far from mutually exclusive.

“The number of nightlife options available to guests is very important,” said Ortlieb. “And there are so many restaurants opening in the neighborhood.”

There s also an element of upscale snobbery in these hip downtown locales. The Hotel on Rivington and the Pomeranc s Allen Street project feature prominently advertised penthouses 5,500-square-foot penthouses in the case of Allen Street as crown jewels; rates at the Rivington range from a $225 a night basic room to the $5,000 a night penthouse. “The higher the floor, the larger the rooms get,” said Ortlieb.

With an average room size of 380 net square feet, this is no cramped economy hotel. The few remaining flophouses and backpacking hostels along the nearby Bowery certainly can t boast a private lounge on the second floor, a prized feature for the Rivington s promoters. The Allen Street hotel will have a similar members-only bar on the roof.

The luster on the Rivington s glass still shimmers, though it remains to be seen how boutique hotels will update themselves to continue to attract the creative crowd. Skeptics suggest they are pursuing the same fickle crowd that turns over nightclubs and bars in a matter of months. And with so many downtown projects in the works, stiff competition for the creative traveler s dollar will be as much a fixture as the surrounding bars, which by then may be “so 2005.”

New York City s loft spaces may have been born of artistic necessity, but they ve evolved into coveted living quarters in what are now top-dollar Manhattan neighborhoods like Soho, Tribeca and Chelsea.

Similar conversions of former industrial areas are now starting to transform once tough parts of Brooklyn into some of the city s hippest neighborhoods. East Williamsburg and Greenpoint are leading the charge, followed by edgier locales in other boroughs.

“Areas of Brooklyn that 20 or 25 years ago were manufacturing by day and a place to dump bodies out of cars by night, where timid citizens feared to walk, have, over the past seven or eight years, become fabulous,” said Chuck DeLaney, tenant representative on the New York City Loft Board.

But there are problems with that evolution. Sky-high real estate prices in Manhattan and some of the swankier parts of Brooklyn have driven people to seek out cheaper housing. As has happened elsewhere in the past, the first stage in the repopulation of stagnant neighborhoods that were formerly hotbeds of manufacturing has involved warehouses being illegally converted into living space.

This is how a whole neighborhood springs up in the shadows. “There is this weird kind of development model that took place in Soho and Tribeca that s now being repeated,” DeLaney said. “The first people tend to be moderate-income risk-takers, the majority of whom are artists, and they provide a great service but officialdom has to turn a blind eye to them until such time as their work is done. Then they tend to get pushed out.”

In January, Mayor Michael Bloomberg pledged to crack down on illegal conversions of industrial space in an effort to protect the city s industrial jobs and businesses. That involves promotion of 311 as a hotline for reporting illegal conversions and increases in fines for conversion-related violations.

The city also is creating firmer zoning for manufacturing areas slated to receive increased enforcement as Industrial Business Zones, formerly known as Industrial Parks.

Bloomberg said at a Jan. 19 press conference that conversions have “made it very difficult for businesses to make long-term commitments to staying in the city, not knowing whether their landlords will renew their leases or suddenly convert their space for residential use.”

Some feel the rezoning will help especially where industrial lots are rezoned for residential.

“A lot of these neighborhoods, where there are these heavily industrial blocks, these dark and desolate blocks, are going to be improved,” said David Maundrell, owner of Brooklyn-based brokerage Aptsandlofts.com. “You re talking about brand new buildings, new services, amenities. It s going to help Williamsburg a great deal, and that s where we do most of our business.”

Brokers are used to dealing with illegally converted lofts, and use a variety of approaches. Maundrell said he s able to skirt the issue by dealing only with landlords who have Certificates of Occupancy, tenants who have Artist-in-Residence permits or by renting commercial space for commercial purposes.

Maundrell s job is done once the landlord has a tenant sign a commercial lease. If the landlord then looks the other way when the tenant starts moving in couches and refrigerators or having a plumber install a bathtub or gas stove, that doesn t involve the broker. Doug Bowen, an agent with Douglas Elliman, who lives and invests in Brooklyn townhouses and works in Manhattan, said he runs into illegal conversions all the time.

“A lot of times, it s pretty open, even in the advertising,” he said. “It used to be that you would go into townhouse situations, and the brokers would simply say two-family being used as a three or one-family being used as a four, so they were up-front with people about what they were getting themselves into.”

Now that real estate is more expensive, buyers are savvier and often ask to see Certificates of Occupancy, though “thousands upon thousands upon thousands of illegal apartments,” remain, said Bowen. Any building which houses people in a manufacturing or commercial zone is illegal.

“You don t have to look beyond the giant white building on the shore of Williamsburg, which is plainly and evidently full of artists and studios,” he said. “Same with the Pencil Factory in Greenpoint.”

Bowen said he doesn t take sides on the issue. Illegal tenants, from artists to immigrants, have stimulated the economies of flagging city neighborhoods for decades, eventually upgrading them to prime real estate.

“They create value wherever they go,” said Bowen, who pointed out some of the most popular loft neighborhoods now, such as Bushwick, Crown Heights, Bedford Stuyvesant and even the Mott Haven section of the Bronx. At the same time, illegal apartments can be unsafe and put an extra burden on schools, streets, and sewage and sanitation systems. They dampen nearby real estate prices. Business owners renting in manufacturing zones complain about illegal apartments driving up costs and pushing them out a focus of Bloomberg s crackdown.

Like subway delays and throngs of tourists in Times Square, illegal conversions remain an immovable, if sometimes irritating, facet of urban life. Some believe it s time to expand the 1982 Loft Law, which applied to buildings with three or more separate units in existence between April 1980 and December 1981. That law legalized many of the lofts in Soho and Tribeca, and covers about 800 buildings in Manhattan, Brooklyn and Queens.

Tenants in loft neighborhoods not covered by the law who are fined or evicted are using the courts to defend themselves.

“In fact, the case law relied upon to win these cases governed the situation in 1978 and 1979 prior to the passage of the Loft Law,” DeLaney said.

While DeLaney believes it might be a good idea to expand the Loft Law, the Real Estate Board of New York has taken a stance against any such action.

“The Loft Law was passed to protect illegal tenants, who in some cases, without the owners knowledge, converted some of their spaces and then lived in them almost the equivalent of rent-free in the market conditions that existed,” said Steven Spinola, president of the Real Estate Board. “The board has serious concerns about legislation that in effect rewards people for that.”

Spinola suggested that rezoning might be a better tool. “What should be done is the city should try to keep pace with the changing neighborhood, so that instead of them being illegal lofts, they re legal lofts,” he said.

[i]TRD[/i]

All over Manhattan and this country s urban centers, records are being set for purchases of commercial and residential properties.

A handful of private investors in New York City lead the ranks of envelope-pushing buyers, beating out publicly traded companies and real estate investment trusts with huge and lightning fast bids for marquee properties. But some market watchers (and competitors) wonder what might happen if interest rates start to rise or rents fail to increase or both.

The concern is particularly appropriate in the wake of strong indications by Federal Reserve Board Chairman Alan Greenspan on Feb. 16 that the central bank will keep raising short-term interest rates without any pause in the months ahead. While rates remain “fairly low” even after six consecutive increases, Greenspan said, the Fed s desire to sustain a measured approach to making capital more expensive points to the amount of risk new buyers are assuming.

So will the big-time buyers, who are now big-time landlords, go bust?

“Real estate has always been cyclical,” said real estate lawyer Andrew Herz, a partner with Patterson Belknap Webb & Tyler. “And depending upon what happens to inflation and interest rates, these buyers will either look like fools or geniuses.”

The current flood of capital trying to enter a real estate market marked by very limited supply means many private investors are snapping up commercial buildings with plans to convert their holdings to lucrative residential properties.

Woody Heller, executive managing director and group head in the capital transactions group at Studley, knows what happens if commercial property owners rents can t keep pace with the rising cost of borrowing.

“Who s left holding the bag? The people that own property,” Heller said. “And obviously, people that own property on a more highly-leveraged basis will have more exposure.”

This new class of property magnates may not have the household name recognition of Donald Trump, but developer Joseph Moinian and his sometimes associates, part of a group collectively known as “the New York guys,” are laying out bundles of cash for buildings all over the country. Other members of the small private group include Joseph Chetrit, David Werner, Lloyd Goldman and Jeffrey Feil.

Moinian and Chetrit were part of a group that bought the Sears Tower in Chicago last year, paying $840 million, and Werner and others bought a $400 million, 50 percent stake in the Bank of America building in San Francisco, also in 2004.

Closer to home, the endless list of properties purchased by Moinian alone or with various associates induces envy: 180 Maiden Lane for $355 million; 530 Fifth Avenue for $213 million; 95 Wall Street for $184 million; 1450 Broadway for $124 million; and 17 Battery Place North for $70 million.

Bold purchasing on the part of these mostly foreign-born investors Moinian is a Persian Jew who came to the U.S. in the late 1970s, and the group is linked by religion, if not nationality – has upped the ante and forced other potential buyers, like SL Green Realty Corp., Shorenstein Co. and Chicago magnate Sam Zell s real estate investment trusts, to cough up serious money or retreat to a more watchful stance.

Bruce McLean, a partner in the Milestone Group, a national real estate investment firm which would like to increase its New York holdings, believes a glut of capital aimed at the real estate market, at a time when interest rates remain — as Greenspan reminded the world fairly low, is fueling the feverish pace of buying.

“The low interest rate environment combined with improving fundamentals combined with currency movements and overseas capital movements has created the perfect storm in terms of pushing up real estate values,” he said.

The dominance of private investors has much to do with the free-flowing capital, especially from foreign countries, available in a borrower s market. Lenders are eager to get pieces of real estate transactions.

Buyers with a healthy borrowing history are finding 100 percent financing for many properties, courtesy of primary lenders such as Washington Mutual and Fannie Mae, as well as private banks like First Boston and Wachovia with the assistance of daring mezzanine lenders who will provide a secondary mortgage. Traditional financing covers about 75 percent of these types of purchases.

“The lenders being the most aggressive are the mezzanine lenders, and because the interest rates on the first mortgages are so low, the mezzanine lenders can make a lot of money on the spread,” Herz said. “Some of them also would not mind it if they ended up owning the property.”

Private investors like Moinian can settle for a capitalization rate on properties cap rate being annual income expressed as a percentage of the purchase price that is much lower than that typically desired by real estate firms seeking to satisfy stockholders.

“You can t roll the dice when you have shareholders, or you will get sued,” Herz said.

But bidding wars have even driven down the cap rate historically sought by real estate investment trusts from 7 percent to 8 percent down to the 5 percent acceptable to private investors.

“I think that has come down,” McLean said. “REITs have become more aggressive as well. But they re not as aggressive as some of the private capital.”

Are high-flying private investors living on borrowed time? Some observers have raised questions about whether underlying rents will be able to support these exorbitant purchase prices. Others anticipate rents continuing to rise at a pace faster than interest rates.

“I think the influence of rents rising will have a more profound influence on the change in values than the impact of interest rates,” said Heller.

But some developers operating a move ahead on the chess board may be gambling on the fact that all those conversions may eventually lead to a demand for more office space.

“I would categorize the good investor as buying today s property in tomorrow s market,” said Asher Alcobi, founding president of brokerage Peter Ashe Inc. “The one that has the vision, and the one that can bring something to the table, would not hesitate to pay a little bit more at the prices of tomorrow to sell hopefully at the prices of next week.”

But if lenders lose their enthusiasm for real estate investments, that could shake up private investors. But that doesn t seem likely, experts said. The one thing to worry about is a correction to the market, said to be inevitable but always difficult to predict in terms of timing, perhaps spurred by some catastrophic event, along the lines of the 2001 terrorist attacks

“If alternative investments or asset classes suddenly became more appealing that would have a pronounced impact on values and pricing,” Heller said. “But at the moment, that doesn t seem to be the case.”

Nonetheless, some investors are waiting and hoping to swoop in on properties should the big buyers run into trouble.

“I don t know that we re necessarily poised as a kind of vulture,” said McLean of Milestone, referring to his firm s desire to make purchases in New York. “We have been aggressively looking to buy things, but we re typically outbid by people who apparently have more aggressive assumptions than we do.”

TRD

NYC s largest building owners Comments

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Manhattan s top real estate companies are playing musical chairs along the West Side, changing locations and nudging each other for market share.

Corcoran, Elliman and Brown Harris Stevens are unwillingly relocating, as their home base for many years, the Apple Bank Building at 2112 Broadway at 72nd Street, is going condo. As reported in The Real Deal last month, Corcoran will be moving its offices to a 20,000-square-foot space on a high floor of 888 Seventh Avenue at 57th Street.

Douglas Elliman and Brown Harris Stevens will remain in more central Upper West Side locations. Elliman plans to open in a 9,000-square-foot space at 1995 Broadway at 68th Street with around 80 agents this summer, according to published reports. Brown Harris s new offices will be in a 10,000-square-foot space at 1930 Broadway and will also open this summer.

Other firms are making first forays into the area. Sotheby s recently announced it would open an office at 450 Columbus Avenue at 81st Street, and JC DeNiro & Associates has expanded from two Downtown locations to open an office at 2265 Broadway at 81st Street.

In Harlem, Dwelling Quest is the latest residential real estate brokerage to set up a storefront at 528 West 145th Street, and will handle rental and residential sales services, as well as commercial and mortgage services through Dwelling Quest s sister companies, Quest Commercial and Mortgage Quest, respectively. The office will have 25 full-time agents.

“It was always part of our growth strategy to expand into Harlem,” said Daren Hornig, president and chief executive officer of parent company The Quest Group. “It is a very vibrant, exciting market and we re looking forward to contributing to the area s continuing revitalization.”

Dwelling Quest will join Warburg Realty, which opened a storefront office in Harlem in October.

In other areas of Manhattan, Brown Harris last month announced the opening of a 2,500-square-foot office on the ground floor of 43 North Moore Street in Tribeca.

While architect Richard Meier s marquee two tower project on the West Village waterfront attracted almost as much notice for construction delays and water leaks as architectural panache, his latest project, at 165 Charles St., may eventually epitomize cost overruns in pursuit of perfection.

Where Meier designed the glass towers at 173-176 Perry Street, but left them as raw space on the inside, the new Charles Street project is the architect s outside and in, right down to the bathroom faucets and screening room chairs.

Developers Simon Elias and Izak Senbahar, who are unaffiliated with the Perry Street buildings, decided to meld their fate to the architect s vision from the start. Giving the architect carte blanche has meant continual cost increases.

“We went to Richard Meier and he really wanted to do a third building and he wanted to do the finished interiors,” Elias said. “We gave him a free hand everything he wanted. We knew we would end up with a unique product.”

It hasn t been cheap. “We started out with an 85 percent construction loan,” Elias added, “and ended up at 60 percent as we continued down the design phase. All the extra money we put in was our own equity.”

Living in a building that owes more to art than commerce leaves little room for modest budgets. Prices have reached as high as $4,394 a square foot or $20 million – for the 4,551-square-foot penthouse with an 1,800 square-foot terrace. The unit has drawn interest from prospective buyers such as Hollywood mogul David Geffen. If it gets the asking price, it would be Downtown s most expensive apartment.

Wrapped in glass and aluminum, the sleek, minimalist 16-story building is similar but not identical to the Perry Street towers. “The façde is different it s like a cousin, not a brother, of what s there,” Meier said. “The height is the same and the idea of the open, transparent building is similar.”

Extraordinary interior finishes abound. Apartment walls never touch the ground but instead float just above it, for purely aesthetic reasons. Sheetrock was laid on the inner walls by the same team that did the Museum of Modern Art. Meier s handwritten signature even graces the inside of kitchen cabinets.

“They are pure Richard Meier,” said James Lansill, senior managing director of The Sunshine Group, which is marketing the project. “Every detail on the inside is proscribed by Meier.”

Windows in the building have three layers of glass to keep out the noise from the West Side Highway below. A protective layer shields out harmful ultraviolet light rays. To keep the glass clean, the building had a crane-like apparatus mounted on the roof to reach down it s an in-house, or rather on-house, robotic window washer.

The finishes transcend craftsmanship, says Elias. “If you look at the Getty Museum [designed by Meier], everything lines up in an amazing way. You see here too, in the apartments, the wood planks on the floors line up with the bare wood on the terraces. I don t know if anybody notices that, but it s the kind of thing that s typical of him.”

Interior doors are made of translucent glass. Bathrooms feature a frosted window between the shower and the master bedroom. Shower bases are made of one piece of stone, custom-ground for drainage, instead of tiles.

The common areas are similarly impressive. A below-ground atrium space houses a 50-foot pool next to a 15-foot waterfall. Other amenities include a private wine cellar and a 35-seat screening room specially-designed by acoustic engineers.

Approximately 45 percent of the building s 31 apartments are sold. The 22 three-bedroom units cost between $5.3 million and $8.5 million. Its three studios, lacking the front views that the larger apartments have, are the building s bargains, going for about $1.25 million, well below the average overall $2,500-per-square-foot pricing.

Developers hope that with finished space, they will avoid the problems experienced in the other Meier towers. In that project, buyers had to put in their own basics, including bathroom plumbing, and the building reportedly experienced leaks and other problems. Calvin Klein, who bought a unit in the building, threatened to sue over the complications that arose.

The Charles Street project will also be unique in that Meier made an agreement with the developers stipulating that he would never replicate certain aspects of the design in any other projects.

Two of the units are reserved for the developers. “Both Izak and I are going to keep apartments here,” said Elias. “We won t do this again and we didn t want to drive by 10 years from now and say, I should have kept one. ”

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Clinton
Lumiere
350 West 53rd Street
The 66-unit building, developed by Victor Homes, saw more than 80 percent of its apartments sold within three weeks on the market. The building offers 421-square-foot studios starting at $350,000, 721-square-foot one-bedroom units starting at $550,000, 1,250-square-foot two-bedroom units starting at $850,000 and penthouse units starting at $1.25 million with private rooftop hot tubs. Building amenities include 24-hour doorman with refrigerator storage facility, concierge service, private fitness center and open garden. Occupancy is scheduled for summer 2005. Contact: Shvo Group, 212-380-2100 or visit lumierenyc.com.

Clinton
Clinton West
516 West 47th Street
A pair of six-story buildings, with an additional penthouse floor, will feature 149 condominium apartments when they are completed in late summer. Developer SDS/Procida recently purchased the site for $55 million. The project will be the first building to rise over the West Side railroad tracks in decades, the developer said.

Downtown Brooklyn
The Smith
Smith St. and Atlantic Ave.
50 condos in the building developed by Leviev Boymelgreen are expected to go on sale in early May. The project, which will include a hotel, will have studios and one- and two-bedroom apartments as well as duplex penthouses. The apartments should be ready for occupancy in March 2006. Contact: The Sunshine Group, 212-750-0500.

Dumbo
The Nexus
84 Front Street
The 12-story, 56-unit condo building will have one-, two- and three-bedroom apartments, ranging from around 600 square feet to 2,000 square feet. Prices will begin in the mid-$400,000s and go up to $1.6 million for 12th-floor penthouses. Designed by Marvin Meltzer Architects, the building is expected to open in the fall of 2005, and will have a garage, health club and landscaped garden. Contact: The Developers Group, 718-222-1545.

Dumbo
Beacon Tower
85 Adams Street
Sales are expected to begin April 1 for the 23-floor, 79-unit condominium. The building will have one- and two-bedroom apartments, plus a three-bedroom penthouse, with prices starting in the mid-$500,000s for a one-bedroom. The building, developed by A.I. & Boymelgreen, is scheduled to be completed in September 2006. Contact: Corcoran Group Marketing, 212-343-5400.

East Harlem
The Roosevelt Lane Condominiums
227 East 111th Street
The seven-story property designed by Gary Silver Architects offers 22 loft-style condo units, ranging from studios to three-bedrooms, as well as penthouse units with outdoor space. Prices range from $219,000 to $650,000, with units available for occupancy in February 2005. Contact: Chris Halliburton, Warburg Realty Harlem, 646-253-0333.

Flushing
College Point Blvd. and Roosevelt Ave.
Muss Development announced plans to build a $600 million mixed-use project on a 14-acre brownfield site. The project will create six condominium and rental buildings with 1,000 residential units, 725,000 square feet of retail space and a waterfront esplanade along the Flushing River. The first apartments will open in 2008.

Hudson Square
Urban Glass House
Spring and Washington streets
Architects Philip Johnson and Alan Ritchie s new condominium development was recently purchased by Glass House Development LLC, a partnership formed by Abram Shnay, Charles Blaichman and Scott Sabbagh, from Greenwich Street Partners LLC for approximately $24 million. Construction is scheduled to begin this winter. The Sunshine Group has been named the marketing and sales agent for the building. Contact: The Sunshine Group, 212-750-0500.

Lower East Side
138 Delancey Street
Fred and Robert Haramatz, the owners of Ratner s, are building a 14-story residential building on the site of the defunct kosher restaurant. The brothers have leased space in the rear of the building to two celebrities, who will open a bar in the former Lansky Lounge. The pair also leased part of the building to a Sleepy s bedding and mattress store, which will open in a couple of months, Crain s reported.

Nolita
Kenmare Square
210 Lafayette Street
The 11-story curved tower co-developed by Cape Advisors and Andre Balasz will offer loft-style residential units ranging from 460 to 2,700 square feet. Prices start in the $600,000s. Interiors designed by architect Richard Gluckman will feature solid ash wood flooring, oversized windows, and 10-foot ceilings. The building will have a 24-hour concierge, a fully equipped gym, and an on-site building manager. Contact: sales office, 212-274-0616.

Soho
311 West Broadway
Developer Albert Laboz has commissioned Gwathmey Siegel to design a five-story, 110-foot-tall glass and steel residential building for the long-vacant parking lot, according to published reports. The design includes retail space on the ground floor of the West Broadway side and townhouses on its Wooster Street side.

Upper West Side
2112 Broadway
The Apple Bank Building is being converted into a residential building. The current building is 177,000 square feet with 204,750 square feet of possible residential space. The condominium will most likely offer loft units, according to Curbed.com.

West Village
163 Charles Street
Developer Barry Leistner bought the site for a small eight-story brick and glass condominium building designed by architect Daniel Goldern that will rise behind the newest of the three Richard Meier-designed towers. The building will include an upper triplex, two 2,100-square-foot duplexes and ground floor commercial space.

Williamsburg
12th & Park
232-236 North 12th Street
The 12-unit loft building designed by Bricolage Architects is located across from McCarran Park. The newly constructed rental building will have a traditional brick façde and each apartment will have an open plan and 15-foot ceilings; sizes range from 600-square-foot mini-lofts to 1,800-square-foot loft duplexes, and many units will have either rooftop terraces or balconies. Prices for the units will range from $2,000 to $4,000. Contact: David Maundrell, aptsandlofts.com

Williamsburg
Withers Place
246 Withers Street
The 25-unit triangular-based building will be ready for occupancy this month. The apartments, designed by architect Karl Fischer, range in price from $300,000 to $925,000, and offer a variety of one, two and three-bedroom layouts. Sizes range from 593 square feet to over 2,300 square feet. Contact: Helene Luchnick, Douglas Elliman, 212-965-6008.

Sales Update

Astor Place
445 Lafayette Street
More than 40 percent of the units have already been sold in the 21-story residential tower designed by architect Gwathmey Siegel in collaboration with Ismael Leyva. The building offers two- to four-bedroom loft residences from $2.95 million to $12 million. Contact: Related Residential Sales, 212-473-4445.

Carnegie Hill
One Carnegie Hill
215 East 96th Street
More than 70 percent of the units have already been sold in the 42-story residential tower. The building, developed by The Related Companies, has one- to three-bedroom apartments starting on the 23rd floor for $450,000 to $2.2 million and rental units below. The project will be finished in fall 2006. Contact: Related Residential Sales, 212-410-9600.

Lower Manhattan
56 Pine Street
Forty-eight out of the 90 units, excluding the penthouse, in the 16-story building have been sold for $750 per square foot, according to published reports. Dan and Jordan Rosen created the project out of a former corporate rental. The building includes a fitness center, game room, club floor with lounge, media room and doorman. Contact: sales center, 212-891-7656.

Midtown
The Plaza Hotel
57th St. and Fifth Ave.
Elad Properties has named Stribling Marketing Associates as exclusive sales and marketing agent for the 200 condominium homes that will be created at the soon-to-be-partially-converted hotel. The hotel will close in April and reopen in late 2006 as a mixed-used property, featuring residences, hotel rooms and retail. Condos will range from one to four bedrooms and will occupy the top 12 floors of the building as well as some lower floors facing Central Park. Studio apartments are expected to go for more than $1 million and larger apartments with unobstructed views of Central Park could come close to $6,000 per square foot, according to the Post. An on-site sales office is expected to open in mid-June. Contact: Rosita Sarnoff, Stribling, 212-585-4542.

Roosevelt Island
Riverwalk Place
465 Main Street
More than 70 percent of the units have been sold in the 18 story residential tower, according to The Related Companies and The Hudson Companies, the developers of the project. The waterfront building will open for occupancy in spring 2006 and studio to three-bedroom apartments are asking $420,000 to $1.65 million. Gruzen Samton Architects and SLCE Architects designed the project. Contact: Related Residential Sales, 212-754 0455 or visit riverwalknyc.com

Upper West Side
The Hopkins
172 West 79th Street
Nearly 50 percent of the 95 apartments in the 20-story prewar building have been sold in its conversion from rental to condominium ownership. Twenty-six apartments went to insiders and seventeen went to outsiders. The average gross price per square foot was approximately $670 for insider sales and $920 for outsider sales, according to sales agent Walter & Samuels.

Construction Update

Midtown
325 Fifth Avenue
Construction was scheduled to begin last month for the 250-unit, 397,000-square-foot residential condo project with work expected to be completed in 18 months. The project is joint venture between Continental Properties and Douglaston Development.

South Street Seaport
Townhouses in the Sky
80 South Street
Construction of the Santiago Calatrava-designed building received a go-ahead from the city s Department of Buildings last month. The architecturally ambitious 835-foot high tower will be made up of 12 stacked cubes designated for residential use. Sales could begin as early as April.

FINANCING

Brooklyn Heights
4 Water Street
Commerce Bank provided a $6.4 million construction loan for a six-story building directly under the Brooklyn Bridge overpass that will contain 13 condo units, retail space and a parking garage.

Chelsea
126-36 West 19th Street
Sonnenblick-Goldman arranged a $20.6 million land acquisition on behalf of The Clarett Group, which plans to build condos on the site.

Prospect Heights
651 Washington Avenue
Commerce Bank provided a $1.25 million construction loan for a six-story, nine-unit condo building.

Tribeca
88 Leonard Street
The Singer and Bassuk Organization announced the closing of $120 million in Liberty Bond and other financing for 88 Leonard Street, a 386,000-square-foot property which will contain 352 residential apartments. The developers of the project are Boymelgreen Developers and Africa Israel Investments.

West Village
627 Greenwich Street
Non-recourse acquisition and development financing in the amount of $47 million was provided for the purchase of a 107,000-square-foot loft building which will be converted into residential condominiums. Carlton Advisory Services arranged the financing.

West Village
415 Greenwich Street
A $100-million loan closed for the conversion of the eight-story structure, which will have two floors added. Corus Bank financed the conversion.

New Residential Developments From Previous Months

Atlanta

Commercial

Architect Santiago Calatrava, who is designing a train station and residential tower in Lower Manhattan, is heading to Atlanta. Calatrava unveiled plans for a future Atlanta Symphony Center last month. The structure, featuring a monumental white sculpture capped by a soaring arch at 14th and Peachtree streets, might become an enduring symbol of the city, the Atlanta Journal-Constitution reported.

Residential
Apartment rents in the city averaged $806 last year, up slightly from $803 in 2003 but down from $814 the year prior, according to a report by Grubb & Ellis. Buckhead experienced the highest occupancy, followed by Sandy Springs and Dunwoody. In the condo market, high-end product is overbuilt, and demand will increase for moderate-income projects, the report said.

Commercial
While Midtown and Buckhead have been a destination for commercial developers, Downtown Atlanta hasn t seen a new office building since 1992. But plans for a sizeable new project are in the works. Barry Real Estate Co. is seeking to build up to 1.2 million square feet of office space in three towers. Anchor tenants Georgia Power and Ernst & Young have been signed up for the two smaller 14-story towers. But the future of the project s 600,000-square-foot trophy tower, recently unveiled, is less certain, with no anchor tenant taking space yet.

Boston

Commercial
More than 6 million square feet of life sciences laboratories, research space, and housing are expected to be built between 2003 and 2007 in Boston, part of a little noticed building boom, the Boston Globe reported. More than two dozen life sciences projects are underway, nearing construction, or recently completed. The marquee building that most exemplifies the trend is Genzyme s $140 million headquarters just outside of Kendall Square in East Cambridge, the epicenter of the biotech cluster in Massachusetts.

Residential
For two years now, Arlington has been the Greater Boston locale where houses sell fastest, according to data from the area s Multiple Listing Service. The town s average number of days on market for a house decreased by four days, to 29, from 2003 to 2004, according to the Boston Business Journal. Waltham, Framingham, Norwood and Medford have also consistently numbered in the top 10 in those two years.

Chicago

Residential/Commercial
Chicago saw a spike in the number of condo units coming online during the last part of 2004, following a six-month slowdown in activity, according to a recent report from Appraisal Research Counselors in Chicago. The spike came from two projects with a total of about 1,000 units, including the 450-unit Plaza 440 at 440 North Wabash. The sold-out project is considered a low-cost alternative to the Trump condos set to rise, Realtor.org reported.

Residential/Commercial
Deutsche Bank announced last month it was lending $640 million to Donald Trump to build the 90-story Trump International Hotel & Tower in Chicago, where 75 percent of the units already have been sold.

Residential
A record 6,298 new homes were sold in Chicago last year, an 80 percent gain from 2003, according to Appraisal Research Counselors. Fourth-quarter sales surged 60 percent to more than 1,300, despite forecasts of a slowdown during what is traditionally a slow season for the housing market. The boost in sales came as a surprise to many, considering the city s sluggish job growth and concerns about speculative buying and oversupply, according to a story in the Chicago Tribune.

Las Vegas

Residential/Commercial
Redevelopment of Downtown Las Vegas is starting to take shape and garner attention, with a spate of recent projects. The Diversified Real Estate Group announced plans last month to build Club Renaissance, a 60-story, 950-unit condo tower with prices from $149,900 to $900,000, the Las Vegas Sun reported. Other recent downtown projects include the under-construction World Market Center, a giant furniture showroom, and the completed Las Vegas Premium Outlet Center.

Los Angeles

Residential
Despite predictions of weaker appreciation rates last year, Southern California home prices rose by more than 20 percent, according to DataQuick Information Systems. By December, the regional median price had soared to $424,000, up 22.5 percent from the same month in 2003. The volume of sales was down 6 percent compared to the year before, the Los Angeles Daily News reported.

Commercial
Silicon Valley-based Internet giant Yahoo is shifting its center of gravity south, signing a 256,000-square-foot lease in Los Angeles County last month in one of the area s largest leases in the past year. Yahoo, which is making an aggressive push to become a force in the entertainment industry, signed the 10-year deal at the Equity Office-owned Colorado Center — soon to be known as Yahoo Center. The company will keep its headquarters in Northern California.

Residential
San Diego is in the midst of a condominium fever that shows little signs of abating in 2005. At the end of 2004, the median price of a condo was $375,000 a 30.7 percent increase from a year earlier, according to the San Diego Association of Realtors. A shrinking supply of available condos — new construction permits for condos were down nearly 57 percent in the third quarter of 2004 over the previous year–could drive prices higher.

Miami

Residential/Commercial
Condo-hotel projects are catching on in South Florida. More than 30 condo-hotel projects have been built, are being converted or are planned from Fort Lauderdale to south of Miami. Developers, including the active Falor Companies, have been attracted to the projects because by selling ownership of rooms in advance, they get an ample supply of cash to build hotels without taking on the risk of hefty loan payments during the often dicey early years after a hotel debuts, the Miami Herald reported.

Residential/Commercial
In Tampa, Donald Trump announced plans last month for what will be the tallest residential building on the Gulf of Mexico–a 52-story, 190-unit condominium community that will be priced from $700,000 to $5.5 million per residence.

Philadelphia

Residential

Philadelphia continues to have one of the nation s lowest apartment vacancy rates – 4 percent, compared with 11 percent in Dallas and Atlanta, 10 percent in Houston, and 5 percent to 6 percent in Boston and Washington, according to a CB Richard Ellis report. Even in Center City, where nearly 6,500 residential units were added over the last seven years, vacancy rates remain low and rents continue to rise, according to a story in the Philadelphia Inquirer. Projects under construction or planned in the area would add 2,149 units by 2008.

Commercial

Key office buildings like One and Two Liberty Place that epitomized Philadelphia s renewal hopes when they went up in the late 1980s and early 1990s are facing significant vacancies, the Philadelphia Inquirer reported. In Two Liberty alone, 40 of its 58 floors are or soon will be empty, totaling about 800,000 square feet of space. The Bell Atlantic tower and Centre Square face 600,000 and 700,000 vacant square feet, respectively.

San Francisco

Residential
The median sale price of a single-family home for 2004 in the Bay Area was $532,000, a 17 percent rise over $455,000 in 2003 and the highest for any year since 1988, DataQuick Information Systems reported.

Commercial
Freedom Tower architect Daniel Libeskind is setting his sights on San Francisco. The Contemporary Jewish Museum last month revealed a $41-million plan for transforming the historic Jessie Street Power Substation into its new home, with Libeskind designing the 60,000-square-foot space. Groundbreaking is scheduled for spring 2006.

Residential
Almost nine percent of all home sales in the nine-county Bay Area last year were for $1 million or more, the San Francisco Chronicle reported. A $1 million house in San Francisco is roughly equal to a $220,000 home in Anchorage, a $236,000 home in Phoenix, $261,000 in Baltimore, or $544,000 in Honolulu, according to statistics from Coldwell Banker.

Seattle

Residential/Commercial

Microsoft co-founder Paul Allen s company, Vulcan, announced plans last month for a 450,000 square foot mixed-use development at the corner of Westlake Avenue and Denny Way in Downtown Seattle. Vulcan has already undertaken 12 other projects in the South Lake Union neighborhood, and the two-tower project would add 300,000 square feet of office space, 100 residential units and 17,000 square feet of retail space. Construction could start by the end of the year.

Residential/Commercial

Construction of one of Downtown Bellevue s largest housing projects is slated to begin in June. The four-phase project by developers Wasatch Development Associates includes six towers covering a nearly 10-acre piece of land, the Seattle Post-Intelligencer reported.

Washington, D.C.

Residential

The median home price in the five-county Baltimore area surged 25.5 percent to $215,000 during the year-over-year period ended in January, according to Metropolitan Information Systems Inc. In the city of Baltimore, average sale price shot up 36 percent to $137,295 in January. Federal Hill, Canton, and the Fells Point neighborhood in the city remain popular with buyers, while Brewers Hill, Union Square, and Druid Hill are becoming an increasing draw, the Baltimore Sun reported.

Residential
Home prices have risen dramatically in the D.C. area, as homeowners noticed when they recently received their assessments. The average assessed value of a home in Northern Virginia has roughly doubled since 2000, the Washington Post reported. In Maryland – in Bethesda, Chevy Chase, Olney, Potomac and Wheaton in Montgomery County – average property values grew by an astonishing 65 percent over three years ago, when those homes were last assessed. And unexpectedly strong revenue driven by a hot real estate market has helped the District with a $318 million budget surplus for fiscal 2004, a stark contrast with when the city was more than $500 million in debt and virtually bankrupt nine years ago.

As pioneering New Yorkers venture further out on subway lines seeking affordable accommodations, they are discovering neighborhoods like Brooklyn s South Park Slope, which is experiencing a small development boom.

While little land is available for development in Park Slope proper, South Slope, an area whose boundaries who are fluid, but are generally seen to stretch from 9th Street to Greenwood Cemetery and Fourth Avenue to Prospect Park, is rich with vacant lots and plenty of potential for developers. Some landowners between 9th and 15th streets may have benefited from an April 2003 rezoning that makes building smaller apartment projects easier.

“There s a lot of wonderful things going on in the South Slope right now,” said Eric Brody of the Corcoran Group s Development Division, who lives in the neighborhood. “Quite a few projects are currently on the market or will be coming to market shortly.”

Along 15th Street, 16th Street, 21st Street and 22nd Street new small apartment buildings, projects under construction or vacant lots with building permits slapped on their plywood fences pepper both sides of the thoroughfares.

The increase in development is a natural progression in a neighborhood that has remained a stable enclave of middle-income families, many of them Eastern European immigrants living in ranks of frame and brick rowhouses and the odd Victorian brownstone, even while other Brooklyn neighborhoods became slums in the 1960s and 1970s.

Susan Franks, who moved to New York a year and a half ago from Seattle, said she didn t even bother to look in Manhattan, but sought out South Park Slope right away.

“I had a friend of a friend who lived here and said it was really nice and kind of quiet and safe and just a good neighborhood to live in,” said Franks, who pays $1,100 a month for a studio apartment that might cost her $1,800 in Manhattan. “I have a dog, and I wanted a bit more space for my money.”

Value for money is exactly what s driving people to South Park Slope, said Billy Stephen, senior vice president in the Brooklyn office of the Corcoran Group and a Park Slope resident.

“In Center Slope, the minimum you re going to pay is over $500 per square foot,” he said. “So here we re getting a product that s about $460 per square foot to as low as $375 per square foot for larger apartments.”

Those figures reflect the past year s preconstruction sales in a pair of eight-unit buildings on 21st Street between Fourth and Fifth Avenues. Two-bedroom, 650-square-foot apartments with high-end kitchen finishes in stainless steel, granite and maple, with marble baths and terraces sold for $299,000, while 1,000-plus square-foot garden duplexes went for $374,000. Two more eight-unit buildings in the complex will come to market this spring with construction finishing by the fall, Stephen said.

While those who bought in the first two buildings were single professionals, young couples and students, after the buildings sold out people seeking to purchase the apartments for investment began contacting Stephen, and prices are likely to climb, he said.

Patrick Brennan, a broker with Aguayo & Huebener, said a restored Victorian frame house at Webster Place between 17th Street and Prospect Avenue recently sold for $1.1 million, which may be a record for South Slope.

While North and Center Slopes have been populated for years by young professionals working in Manhattan, South Slope is seeing that element arrive en masse. With easy access to the F train, it s possible to commute, though Franks said the trek to her Manhattan job takes an hour.

Other neighborhood attractions include a lower population density, more available parking, and retail shops and restaurants along both Seventh and more recently Fifth Avenue, now a lower budget cousin of Brooklyn s trendy restaurant row on Smith Street. Gyms are opening, especially along 15th Street, and shopping in the area is done at Eagle Provisions, a large European-style supermarket that has served the neighborhood since Park Slope South s days as a hub of Polish immigration.

A disused National Guard armory along 14th and 15th Streets between Seventh and Eighth Avenues is slated to become a community recreation center, though Stephen said the project has been discussed since the 1970s. Aguayo & Huebener are now marketing Park Pavilion, a five-story 30-unit condominium complex on 15th Street between Seventh and Eighth Avenues. Three other lots on the block have apartments under construction or planned, Brody said. Further down on 15th Street between Fifth and Sixth Avenues, the Corcoran Group will start selling a 24-unit complex shortly.

Franks said she plans to stay in the neighborhood. Others who ve made the switch from renter to buyer in the area are pleased they did. Paul Tainsh bought his three-story frame house on 16th Street between Seventh and Eighth Avenues 18 years ago for $250,000. He has no intention of selling, but fears that rapid development is changing the South Slope character especially with reports of a 22-story tower going in at 200 16th Street, which was actually due to a misprint on a building permit, according to Sam Lowinger of C & H Development, the contractor for the more modest five-story building.

Tainsh said he worries that about the quality of new construction, and fears that public services needed for a larger population may lag behind the construction boom.

“I wonder what the impact will be if the condominium market goes flat,” he said. “While the development may have a positive impact on house prices, it could also have a dampening impact on rents. If there are just not that many people who want to spend $500,000 on a studio or a one-bedroom apartment, people will be forced to rent them out. That will put a lot of new apartments on the market.”

Roslyn Huebener of Aguayo & Huebener said even with rapid development, much of the neighborhood won t change.

“It can t change overnight,” she said. “The development just stabilizes the values. It s not going to displace people who are here, because they own their homes already. It brings more young people into the mix younger, hipper families, who would ordinarily seek prime Park Slope, but can t afford it.”

[i]TRD[/i]

Once a spot for relative bargains, prized properties see an average 10 percent rise [more]

New development shifts area s identity from signature skyscraper [more]

MTA opens fate of rail yards to bidders
The Metropolitan Transportation Authority opened the sale of rail yards envisioned by some city and state officials as a location for a West Side stadium to other bidders besides the Jets and Madison Square Garden. The move came after MSG said it would pay $600 million for the 13-acre rail yards site, where it would build housing and office buildings. The Jets had offered to pay $100 million for the land to the cash-strapped transportation authority, which had appraised the land at just short of $1 billion but was willing to take $300 million. The Jets also released a redesigned stadium plan last month, which includes a leaner, less imposing glass-walled structure. And a study by the Independent Budget Office, a publicly funded nonpartisan watchdog group, found the tax revenue generated by the proposed stadium would cover the city’s costs and provide a total surplus of more than $200 million in the next three decades.

No. 7 subway line extension gets funding
A proposal to extend the No. 7 subway line to Manhattan’s far West Side received $45 million in funding by the city last month and is expected to go into construction later this year. The city will spend $2 billion to stretch the subway line west from Times Square by 2010. The plan will go forward no matter what the fate of a proposed West Side stadium for the Jets.

United Nations scouring boroughs for interim HQ
The United Nations is scouring other boroughs such as downtown Brooklyn and Queens in search of a location to build its interim headquarters, which would eventually become a permanent location for office workers, the Post reported. Earlier plans for a 35-story building to be built on Robert Moses Park, a playground next to the UN in Manhattan, were stalled by the New York state Senate.

Developers get affordable housing incentives
Officials at the city’s Housing Preservation and Development Department are seeking to push more affordable housing in Brooklyn and Manhattan. In Brooklyn, Commissioner Shaun Donovan is proposing that the city offer developers an 18 percent increase in floor space if they agree to make 15 to 25 percent of their units affordable. In Manhattan, under a plan approved for the far West Side rezoning, developers can add 33 percent to density if 20 to 30 percent of the units they are building are affordable, Crain’s reported.

Bronx superstore shot down by council
In what some reports characterized as a backlash against big box superstores, a City Council panel unanimously rejected an application from BJ’s Wholesale Club to open in the Bronx, effectively killing a project that had been in the works for a year. Organized labor had intensely lobbied lawmakers to deny zoning changes because of BJ’s alleged anti-union policies, the Post reported.

Discrimination suit filed against co-op
A wealthy Mexican banker rejected by the co-op board at 965 Fifth Avenue, who has a child with Down syndrome, last month filed a lawsuit against the 965 Fifth Avenue Owners Inc. and Brown Harris Stevens Residential Management alleging discrimination against people of Mexican descent, along with families with young children and the disabled, the Post reported. Brown Harris said Gonzalez’s application was denied because of a tax lien filed against him, according to the suit.

Bush backs Kennedy rail connection in budget
In a budget plan issued last month, President Bush proposed using $2 billion in Sept. 11 aid to build a $6 billion rail link connecting the World Trade Center site to the Long Island Rail Road and Kennedy International Airport. The MTA is also moving ahead on the plan, choosing a consultant to conduct a $60 million environmental impact study on the project.

Gehry-designed theater plan unveiled
The city unveiled a design for a $38 million theater created by Hugh Hardy and Frank Gehry that would rise opposite the Brooklyn Academy of Music in the borough’s Fort Greene section. The structure is the cornerstone of the new BAM Cultural District, a $650 million effort to convert vacant and underused properties in the area into space for arts organizations.

Are home prices irrationally exuberant?

If you own a house in any of the three dozen metropolitan areas where appreciation rates exceeded 20 percent in the last 12 months, you might think so. Ditto if you live in one of the 14 major markets where the average home more than doubled in price in the past 60 months alone. That s pretty exuberant by all historical standards.

But are any of these hyper inflationary areas — primarily located in California, Nevada, Florida, New England and the mid-Atlantic states — heading for significant corrections in values this year? Could one or more of these bubbles go pop?

New economic research offers both disquieting and reassuring answers. On the one hand, some of the frothiest local markets are exhibiting unmistakable signs of speculative fever. One hint is the percentage of home and condo purchases attributable to investors — nonoccupant buyers in pursuit of capital gains rather than residences for themselves.

Nationwide, 8.4 percent of all home purchase loans made by lenders in 2004 went to nonoccupant investor buyers, according to the San Francisco-based research firm, LoanPerformance Inc. But in Las Vegas, which was by far the fastest-appreciating housing market in the country last year at a record-setting 41.7 percent, the proportion of investor loans was 16.1 percent, almost double the national average.

In Miami, where the housing price appreciation rate last year was 23.6 percent, 11.3 percent of all new purchase mortgages went to investors. In Los Angeles, 10.4 percent of new loans went to investors, while housing prices soared by 30.5 percent.

Another disquieting sign in some high-gain markets has been a rapid surge in “interest-only” mortgages, which allow buyers to make artificially low monthly payments for initial periods ranging from two to five years, followed by sharply higher payments afterward. Many interest-only purchasers either cannot afford to buy high-priced houses at standard interest rates or expect to flip the property at a profit before the higher payments kick in.

Interest-only loans accounted for barely one-third of 1 percent of all
new home purchase mortgages in 2001, according to LoanPerformance, but now account for 14.5 percent of purchase loans in red-hot San Diego, 10.5 percent of new loans in Boca Raton-West Palm Beach, Fla., and 13.2 percent of loans in Las Vegas.

Other forms of payment-reduction plans also are booming in high-fizz markets, including mortgages that allow buyers to set their own payment levels and rack up substantial “negative amortization” — that is, adding to the principal debt on the property month after month, rather than reducing it.

All these techniques increase home buyers leverage — their ability to acquire high-cost real estate at minimized costs. But they also increase their risk of losing the house should their incomes or appreciation rates drop unexpectedly.

Which raises what one mortgage economist calls “the leading question of the new year”: Could any of the major bubble markets go snap, crackle and pop in 2005?

In a new statistical research study, economist Michael D. Youngblood identifies 27 local housing markets that have reached bubble stage. Youngblood, who works for Friedman, Billings, Ramsey & Co., an investment-banking firm based in Arlington, Va., defines bubble markets as those where per capita income growth rates severely lag housing price growth and are seriously out of sync with historical price-to-income norms.

Most of the bubble markets in Youngblood s study are in California, but a handful are not, including Boston, New York, Honolulu, Boulder, Colo., Danbury, Conn., and Bellingham, Wash. Notably absent from Youngblood s list are all the high-appreciation markets in Florida, plus metropolitan Washington, D.C., and Philadelphia, where household incomes have lagged housing price increases, but whose ratios are still within historical norms.

Are there dangers of busts in any of the 27 bubble markets? Youngblood comes to this reassuring conclusion: Even in the highest-flying markets, it would take four straight quarters of economic recession — rising unemployment, flat or declining household incomes — to precipitate a housing price bust. And not one of the 27 has yet racked up even one quarter of recession, notes Youngblood. Any serious housing price deflation — if indeed it is in the cards — is unlikely for at least a year.

That s not to suggest that appreciation rates are likely to keep humming along in the double digits indefinitely. To the contrary, price gains of that magnitude are not sustainable. They eventually burn themselves out by making housing unaffordable to all but a small percentage of potential buyers.

Youngblood and many other mortgage economists expect a slowdown in the rate of housing price growth in even the zestiest markets in the coming year or two. But no busts.

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Ken Harney is a real estate columnist for The Washington Post.