The Real Deal New York

The luxury real estate market in New York City has been credited by
some for bolstering the rest of the market in the five boroughs, but
economists and real estate experts disagree about how long the
phenomenon can last.
Will high-end be next to fall?
” class=”read-more-link”>[more]

This month The Real Deal took a look at the top 10 home sales in Nassau, Suffolk and Westchester in New York; Fairfield in Connecticut; and Bergen in New Jersey; and the performances were impressive.
Luxe burbs still shine in priciest sales
” class=”read-more-link”>[more]

The Real Deal set out this month to detail a unit-by-unit
breakdown in Manhattan’s much-heralded newly constructed condo project,
15 Central Park West. [more]

The past few months have seen a lively exchange of views on the health of the city’s retail businesses. For The Real Deal’s special supplement this month, we look at both views, examining how the city’s retail scene is faring in a series of stories.
A soft landing in store for retail” class=”read-more-link”>[more]

Before the luxury condos — with their wood-burning fireplaces, mahogany
doors, sun-drenched living rooms and capacious balconies — were fodder
for the pages of glossy real estate catalogues, the classic white brick
complex was a cautionary tale for bad real estate marriages. Divorce, developer style” class=”read-more-link”>[more]

President of Rockrose Development Corp., which he founded in 1970
with older brother Henry, the chairman. Rockrose’s operating portfolio
includes 19 residential properties and five
office buildings in New York City, as well as six office buildings in Washington, D.C. [more]

While much of Lower Manhattan’s commercial office market has roared back to life in the last few years, 100 Church Street has remained nearly half-empty amid questions about its location, infrastructure and controversial ownership.

In November, Omnicom Group signed a lease for 183,000 square feet of space at the famed “Wedding Cake” tower at 195 Broadway after talks fell apart with the Sapir Organization, the landlord of 100 Church Street. Three years ago, the Toy Industry Association pulled out of an agreement to lease 300,000 square feet at the building, after publicly announcing the deal.

But the tide seems to be rising for the Lower Manhattan building, which in 2006 had the dubious distinction of having the most unoccupied space of a completed office building in Manhattan.

While 600,000 square feet of the building’s 1.13 million square feet is still empty, one lease for 45,000 square feet with Niche Media is already signed. And at press time, Newsweek was close to a deal for 200,000 square feet there — a move that could help put a stamp of approval on the property and dilute much of the drama surrounding the controversial Sapir Organization.

“You can’t get too much better than Newsweek, especially in the publication and media world,” Alex Sapir, president of the Sapir Organization, told The Real Deal.

He confirmed the Newsweek talks and said they’ve been going on since Thanksgiving; Newsweek’s lease at 1775 Broadway is up for renewal. Newsweek would not comment on any negotiation specifics, but spokesperson Jan Angilella wrote in a statement that the magazine is “looking at several locations, and 100 Church Street is one of them.”

CB Richard Ellis, which is representing the Sapir Organization at 100 Church, also declined to comment specifically on the negotiations, but broker Brad Gerla cited the multimillion-dollar upgrades that Sapir announced in 2006 as making a significant difference. “The tenants are responding to the improvements he’s made in the building,” Gerla said.

The pending turnaround of 100 Church could be an important achievement for the Sapir Organization, which has had less than stellar relations with the brokerage community and has been entangled in some high-profile legal battles.

The company was founded by chairman Tamir Sapir, who emigrated to the U.S. in the 1970s from the former Soviet Union via Israel. The former taxi driver made millions by trading oil and fertilizer with the Soviet Union in the 1980s and then entering the New York real estate scene, where he made a vast fortune. His net worth is estimated at more than $2 billion.

In 2003, Sapir’s Zar Realty Management settled a series of suits and countersuits with the Metropolitan Transportation Authority, which stopped paying rent amid allegation that the firm reneged on plans to renovate 2 Broadway, where the agency had office space. Sapir also got into a number of legal disputes with the brokerage community, amid allegations that the company was stiffing brokers on commissions.

“They didn’t play very well in the brokerage community,” said one downtown broker who asked not to be identified.

Meanwhile, tenants at 100 Church have complained of major problems in the building, including faulty elevators, single-pane windows and poor maintenance in general. However, when Tamir’s son, Alex Sapir, was named president in 2006, he set out to repair the company’s image and to bring the Class B tower up to higher standards.

“We never really marketed the building before,” said Sapir, whose company has owned 100 Church Street since 1997. “We started marketing the building in 2006. That’s when the downtown boom started to happen.”

The company, he said, considered a plan to convert the building into rental apartments, but when the downtown market started to pick up, it decided to upgrade the building for commercial tenants instead. Sapir said more than $20 million is being spent to replace the elevator cabs and improve heating, cooling, ventilation and mechanical systems.

The building itself was designed by architects Emory Roth & Sons in 1958 and has housed major investment firms, including the Bank of New York and Merrill Lynch. Both companies moved after the World Trade Center attacks, largely because of damage to the building.

The New York City Law Department was displaced
after the attacks too but moved back in, during 2002, and signed a new lease in February. Gerla said CB Richard Ellis is in talks with another client for an 80,000-square-foot lease on the site.

Brokers said the building, which is around the corner from Ground Zero, has suffered in part from its location. “It’s really in kind of a no man’s land from what people really see as the downtown Financial District,” said broker Paul Bostick of Bostick Realty.

Other executives said that while 100 Church Street has been trying to upgrade, there have been a few prime locations that still had availability.

“I think it’s just the location of where the building was post-Sept. 11,” said Joseph Jerome, principal of JEMB Realty, which owns several major buildings including 75 Broad Street and the Westinghouse building at 150 Broadway. “At the time, there were better-located buildings that had big spaces available.”

Brokers said now, the economics of Midtown office rents are playing as big a part in 100 Church Street’s pending turnaround as anything.

Asking rents in Midtown commanded a 61 percent premium over Downtown rents, the largest gap in 12 years, according to a fourth-quarter report by Cushman & Wakefield. Overall asking rates averaged more than $75 for Midtown versus $46 for Lower Manhattan.

Meanwhile, the Class A average asking rent climbed more than 25 percent compared to a year prior, to a record $83.40 per square foot in Midtown. Class A office space rose 18 percent to $53.16 in Lower Manhattan, while the vacancy rate fell to 5 percent from 6.9 percent in the fourth quarter of 2006.

Sapir said asking rents in his building, a Class B tower, average about $46 per square foot on the lower floors and in the $50s for upper floors.

Brokers said the deal that paved the way for negotiations with Newsweek was the 10-year lease inked by Niche Media, which publishes Gotham, Hamptons and other luxury magazine titles. The lease was signed in September. Niche, currently at 257 Park Avenue, is taking 45,000 square feet of space at 100 Church and will begin moving in by the summer. And the company got a good deal. It will initially pay $37 a square foot; after its fifth anniversary, that will rise to $39 a square foot.

Niche chief executive Jason Binn said one of the key
factors in the firm’s relocation decision was the lure of luxury brands like Hermès and Tiffany that are sprouting up in the area. He said he felt the magazine needed to be in close proximity to those brand names.

He praised Sapir and said, “Alex is really committed to making this property a Class A property that will have the most prestigious tenants in town. He’s creating for the real estate world a lot of sex appeal for this building and this area.”

When Eric Goode and Sean MacPherson acquired the Riverview Hotel on Jane Street in Manhattan a few months ago, they were no doubt counting on their backgrounds in the hospitality industry to guide them.

The $27 million purchase, which was finalized in January, is the third Manhattan hotel the two own, in addition to the Bowery and the Maritime.

The hotel portfolio, however, was built on earlier nightclub experience. The partners can count the Bowery Bar (now B Bar and Grill) in the East Village, the once-flamboyant Area in Tribeca (which closed in 1987) and Olives in the W Union Square as part of their mini-empire.

These building blocks paved the way for the cruise-ship-like Maritime Hotel, which they opened in 2003; the Bowery Hotel, which they opened in February 2007; and most recently the Riverview, which they just started restoring.

The two — who also run the Waverly Inn and the Park together — are members of the growing rank of high-profile nightclub or restaurant owners who have fashioned themselves into hoteliers. Rapper Jay-Z, who already runs a successful nightclub chain, is reportedly launching a five-star hotel. Robert DeNiro is following the success of his Tribeca Grill restaurant and his Nobu sushi empire by gearing up to open the Greenwich Hotel this spring. And Ian Schrager, who ran the famed Studio 54 and the Palladium, and was recently called the “godfather of boutique hotels” by the New York Observer, is now focused on a chain of hotels with Marriott International.

While the paths of all of those players have been well-documented, the question remains: How does a nightlife background prepare one for the hotel business?

Those who have made the jump said their experience making sure diners or clubgoers are satisfied has helped them build a strong service-oriented operation, perfect for dealing with hotel patrons.

In the case of Goode, 50, and MacPherson, 43, their background also helped with financing, convincing investors that they were a risk worth taking. Goode pointed out that it typically costs $100 million or more to launch a new hotel.

The Riverview, a 211-room, 100-year-old hotel, is in a state of disrepair, and until now has been operating as a single room occupancy operation.

“It’s really going to be a youth-oriented project, and it will be a much lower price-point because it’s effectively a youth hostel,” MacPherson said.

During a telephone interview with The Real Deal, he said he expected the renovation there to take about a year.

Unlike the Bowery Hotel, where the two put in the trendy Gemma restaurant, no new restaurant is planned at Riverview. The restaurant now in the hotel will continue to operate, MacPherson said.

Things have not been completely smooth sailing for Goode and MacPherson. According to the city, the Riverview was fined $5,000 in Janaury for failing to comply with a stop work order. MacPherson said the matter was a misunderstanding.

“Because it’s an SRO [single room occupancy], you can’t change the room configurations, but people didn’t realize the rooms weren’t being changed. It’s all a 25-year saga, and we have nothing to do with it; it’s a typical Kafkaesque situation we were dragged into,” he said.

MacPherson said hotels are relatively simple compared to the restaurant world. He said, “It’s all hospitality, all human, and catering to people’s emotional side.”

That has meant he and Goode have invested in features like a spa and a pool to add value for guests. It also means paying attention to detail, such as ensuring the light switches and electrical outlets are in the right places, MacPherson said. “Something both Eric and I have learned over the years, and believe in, is that you don’t need to focus on the razzle-dazzle but on the nuts and bolts,” he explained. “The only way to get them to return is to give them value on an emotional level.”

Goode said that as the thrill of nightclubs wore off, the
allure of a more stable, long-lasting hotel became appealing. “The nightclub experience was so ephemeral, and about being in constant flux, that it was like opening a play on Broadway, and we went into it very aware that we wouldn’t do it forever,” he said.

He said at the Bowery Hotel, they tried to build a place that is not just trendy, but also delivers a quality product. He said these days, he is “more interested in creating things that are really nice for me and my patrons.”

“In nightclubs I was trying to be artistic and creative, and not making that last,” Goode said.

Michael Overington, partner and president of development for the Ian Schrager Company, which has experience in both realms, said nightclubs are great training grounds for the hotel business because while they are only open for five or six hours, they are very service-intensive.

“Everything’s got to run smoothly in high speed, fast-forward, and your guest has to have a complete experience and want to come back,” he said.

Schrager himself was recently quoted by the New York Observer saying that he had the hotel landscape to himself for 10 to 15 years before other like-minded nightclub owners started making the move. But he said he didn’t think a boldface name or “branding” alone was enough. He called it a “jumpstart in getting things going.”

MacPherson said for him, the move from clubs to hotels was part of a natural evolution. “When I was younger,” he said, “it was about the theater, but as I get older, I want to sustain a business over time.”

“I just like the idea of continuing to grow,” he added. “I don’t think I’d want to continue to do any single thing, and there will probably be another
evolution sometime.”

Nonetheless, he said that he doesn’t see the pair leaving the hotel world. He declined to reveal any details on upcoming projects, but the duo reportedly has another New York project in the works, as well as a possible new venue on the West Coast.

Hunter College Brookdale campus for sale

Hunter College’s 4.2-acre Brookdale campus is on the market and could fetch more than $250 million, the New York Post reported. The site, owned by the City University of New York, is bounded by First Avenue and the FDR Drive and East 25th and 26th streets. The space is used for medical classrooms, research and community health programs, dormitories and a tennis court. The property has 448,600 square feet of existing floor area but is zoned for 1.19 million square feet of apartments and/or educational facilities. Darcy Stacom and Paul Liebowitz of CB Richard Ellis are handling the assignment.

UES apartment building could fetch $175M

A 28-story, 205,261-square-foot apartment building at 200 East 82nd Street is on the market and could sell for as much as $175 million, the Post reported. The building, built in 1980 and currently owned by P & H Associates, has 230 apartments with a rent average that tops $3,000 a month. Citibank occupies the 6,500-square-foot retail space. The property is being marketed as a candidate for a condo conversion but may be kept as a rental, with the ability to make unlimited rent increases. Jubeen Vaghefi, Jeff Morris, Nat Rockett and Thomas Beneville of Jones Lang LaSalle are marketing the property.

Greenwich Village apartment building for sale

A seven-story, 150,000-square-foot apartment building at 85 Fourth Avenue is on the market and is expected to sell for more than $100 million, the Post reported. The block-through property between 10th and 11th streets has 160 apartments, of which half are rent-stabilized and half go for market rates, four stores and a parking garage. Eric Anton, Ronald Solarz, Sam Schneider and Daniel Glaser of Eastern Consolidated are handling the assignment.

UES apartment building on the market

A 12-story, 73,396-square-foot apartment building at 150 East 72nd Street is on the market, the Post reported. The prewar elevator building has 40 units, 80 percent of which are free-market, and ground-level retail space. Developer Edgar Levy originally purchased the land in 1912; the current owners live in the building and have had the property in the family since 1934. The building is expected to go for around $100 million. Richard Baxter, Ron Cohen, Scott Latham and Jon Caplan of Cushman & Wakefield are handling the sale.

Chelsea hotel asking $95M

The 21-story, 55,916-square-foot Four Points Sheraton hotel at 160 West 25th Street is on the market with an asking price of $95 million. The property, built in 2001, can be converted for hotel-condominium use. Mario Gigante of Atlantic Real Estate Corp. is marketing the property.

Queens apartment building for sale

A 140-unit apartment building at 130-40 and 130-50 Ash Avenue in Flushing, Queens, is on the market, the Post reported. The property could sell for around $30 million. Units at the prewar building are 100 percent rent-regulated. Richard Baxter, Ron Cohen, Scott Latham and Jon Caplan of Cushman & Wakefield are handling the assignment.

Fashion District office building asking $30M

A 12-story, 73,106-square-foot office loft building at 335 West 35th Street is on the market with an asking price of $29.9 million. Located between Eighth and Ninth avenues, the building consists of 19 commercial units, of which 14 are occupied and five are vacant. Approximately 55 percent of the leasable area operates on a month-to-month basis and/or operates on leases with demolition clauses. Approximately 75 percent of the property can be converted into hotel or residential use. Robert Knakal and Shimon Shkury of Massey Knakal are handling the sale.

East Village development site for sale

Three mixed-use properties at 8 and 10-12 Bond Street are on the market with an asking price of $25 million. The package includes a three-story building at 8 Bond Street and two contiguous one-story buildings at 10-12 Bond streets. The properties, which can be delivered vacant, combine for more than 6,500 square feet of space and can be converted for hotel or residential use. Approximately 95 years are remaining on the long-term ground lease, which calls for 9 percent increases every five years. James Kinsey and Robert Knakal of Massey Knakal are handling the assignment.

Brokers
are saying their anecdotal experience leads them to believe that prices
have fallen 5 to 10 percent since the credit crunch hit last June. Buildings trade at a discount” class=”read-more-link”>[more]

Companies seeking to free up capital and investors looking for stable sources of income to support commercial acquisitions have unleashed a wave of sale-leaseback deals in an indication that real estate remains a flexible industry adapting to shifting markets.

Under pressure to restructure their struggling businesses and raise capital for developing their core assets, firms like Citigroup and Deutsche Bank have turned to sale-leaseback deals to unlock the value of their major assets.

In a typical sale-leaseback deal, the tenant sells the building to a real estate investment group or other owner and agrees to lease back the building under a long-term agreement, usually 10 to 15 years. In addition, some tenants opt to sign triple-net leases, which require them to be responsible for all taxes, insurance and maintenance costs. However, in return, they often get a break on the monthly rent.

Citigroup in December entered a $1.58 billion deal to sell its investment and corporate banking headquarters at 388-390 Greenwich Street to a joint venture of SL Green and Canadian investment firm SITQ.

As part of the agreement, Citigroup agreed to lease back the 2.6 million-square-foot headquarters, but will exit the property in stages over the lease period, leaving SL Green with one of the most lucrative spaces in Tribeca. The building is the former headquarters for the Travelers Group, which merged with Citigroup in 1998.

Citigroup, which began a massive restructuring in April 2007, has sold and leased back space at two of its Manhattan buildings in recent years, including 333 West 34th Street for $183 million and 250 West Street for $142 million.

“There’s been a perfect storm for them to say, ‘We’ve got a very valuable asset that we don’t need to have on our books,’” said Ken Zakin, senior managing director at Newmark Knight Frank.

The brokerage represents Group Health Inc., which wants to sell and potentially lease back its 441 Ninth Avenue headquarters. GHI, which has operated as a non-profit health maintenance organization for decades, is awaiting approval from state regulators to convert into a for-profit corporation under a merger with Health Insurance Plan of Greater New York.

The company is located in a potentially lucrative location on the far West Side of Manhattan, where real estate values have skyrocketed based on whether plans by the city to rezone the area for commercial development come to fruition. For example, SL Green in November sold 440 Ninth Avenue for $160 million, or $472 per square foot, after buying the property for only $31.7 million in 1998 and spending $24 million to upgrade the property.

Officials at Newmark and GHI would not comment on 441 Ninth Avenue other than to confirm they are exploring the potential value of the property.

“We have over a period of time received unsolicited bids for the building,” said Ilene Margolin, senior vice president at GHI.

The former warehouse was converted into office space in the 1980s by developer Harry Macklowe and sold to GHI in 1994 for $30.7 million. Published reports stated the building could go for as much as $250 million. Newmark Knight Frank president Jimmy Kuhn, who is taking the lead on the sale, declined to comment on the property.

Jay Koster, managing principal of Staubach Capital Markets, who was not involved in the agreement, said he expects to see an increase in sale-leaseback deals over the next 12 to 18 months.

“There is still a relatively deep base of real estate capital out there,” said Koster.

One of the most lucrative sale-leaseback deals in recent years was the May 2007 sale of 60 Wall Street to Paramount Group for $1.18 billion, the single largest sale of a building in the history of Lower Manhattan.

Deutsche Bank has operated its North American headquarters from the building since late 2001, and held firm during a period when many other financial institutions fled for Midtown. The agreement calls for Deutsche Bank to lease back the 1.6 million- square-foot building for 15 years.

Deutsche Bank put the building up for sale in early 2007 at a time when real estate values were skyrocketing in Lower Manhattan due to an influx of luxury retail, residential and hotel development.

The deal provided Deutsche Bank with a handsome return, as the investment bank had purchased the 47-floor tower in 2001 for only $610 million. The agreement provided Deutsche Bank with a pre-tax gain of about $435 million.

Ben Harris, managing director and head of domestic investments at W.P. Carey, said sale-leasebacks are popular with businesses, like banks, retailers and restaurant chains, that may own a lot of individual buildings in different locations.

Sale-leaseback agreements can also help recoup costs incurred when banks or retail chains expand into new markets — for example, if an offshore company opens branches in a new country.

In 2007, San Juan, Puerto Rico-based Popular Inc., a financial services conglomerate, sold a portfolio of five Banco Popular branches in the Bronx, Harlem and Flushing, Queens, to MLM Partners for $26.3 million. Under the agreement, Banco Popular will lease the buildings back for 20 years. The bank operates 26 branches in the New York and New Jersey area.

“There are more and more companies looking at alternative ways to raise money,” said Harris, whose firm provides net-lease financing for companies around the world. “It’s a whole lot harder to get financing from other places.”

Harris said, however, that sale-leasebacks will be limited in New York because of commercial rent taxes and the fact that many New York companies do not own their own real estate because of the high cost.

Manufacturers that are downsizing or outsourcing production can also benefit from a sale-leaseback. Standard Motor Products, a Long Island City-based auto parts maker, entered a $40.6 million deal in late December to sell its 300,000-square-foot headquarters to an out-of-state pension fund, and lease back 20 percent of the property over 10 years.

Standard Motor, which had owned the property for more than 40 years, is outsourcing its manufacturing to Reynosa, Mexico, and Independence, Kan., and hired Greiner-Maltz to do a comprehensive search for a buyer. An agreement was reached after evaluating more than 15 offers over a nine-month period.

“They gave us the assignment of giving them an appropriate investment operator so they could keep their offices on the property,” said John Maltz, president of the Long Island City-based brokerage. “They wanted to be sure there was no question they got the best value.”

Once the deal closes, the property will probably be upgraded into a Soho-style loft space with a retail component. However, Standard Motor will continue to use 20 percent of the building as its headquarters.

Sale-leasebacks should not be considered a cure-all for a company’s ills, particularly if the asset being sold has some symbolic value to its shareholders. The case of Sotheby’s should serve as a cautionary tale.

Sotheby’s, the Manhattan-based auction house, sold its 493,000-square-foot headquarters at 1334 York Avenue to RFR Holding Corp., a commercial real estate partnership led by Aby Rosen, for $175 million in 2002 to help pay off a series of regulatory fines for antitrust activity. Under that agreement, Sotheby’s agreed to lease the building back from RFR for 20 years.

RFR Holding had retained Jones Lang LaSalle in February 2007 to sell the building, but Sotheby’s fought the move, claiming a sale would violate an agreement between the firms that required the auction house to have the first right to buy the property back.

Last month, however, Sotheby’s reached a deal to reacquire its headquarters from RFR for $370 million.

Sotheby’s, in a regulatory filing, said it will finance the deal by assuming a $235 million mortgage that bears interest at 5.6 percent, using available cash resources and potential future loans.

The Manhattan office leasing market as a whole remained fairly
static between December 2007 and January 2008, according to CB Richard
Ellis’s latest monthly market report, although a drop in asking rents
in Midtown could be the first glimpse of larger troubles to come.

Leasing
activity in the borough was almost unmoved in January, down 30,000
square feet from the previous month to 2.2 million square feet. That
was up 41 percent from 1.56 million square feet leased in January 2007,
the report said.

Expected
layoffs in the financial services industry, which would decrease demand
for space and impact the market as a whole, have not yet been realized,
brokers say. In light of these predictions, however, some more cautious
landlords are anxious to make deals, which has given tenants more
bargaining power.

“There
are some landlords that are not as confident as others,” said Mitchell
Arkin, executive director at Cushman & Wakefield. “They are getting
nervous and may offer higher concessions and undercut the market.”

The
average asking rent in Manhattan was $68.61 per square foot in January,
up 15 cents from the month before, according to CBRE’s report. This
marks a noticeable slowdown from the $1.52 jump between November and
December, and the 82 cent rise from October to November.

This
may be the first sign of a predicted slowdown — and possibly even a
turnaround — in asking rents, according to brokers. Average asking rent
could decrease by as much as 5 to 7 percent in 2008, according to Peter
Kozel, executive managing director of research at Newmark Knight Frank.

Still,
the average asking rent was around $1.50 higher than the average of
$66.94 per square foot in January 2007, according to CBRE.

Manhattan’s
vacancy rate also stood still in January, at 4.8 percent, the same
figure as for December 2007, CBRE data indicate. The brokerage
cautioned that its recent restructuring of submarket boundaries could
affect direct comparison between January statistics and other months.

In
addition to a predicted decline in asking rents, analysts tend to stick
by previous predictions that space will open up this year. Kozel said
he expects Manhattan’s vacancy rate to increase to around 7 percent by
the end of 2008, from Newmark Knight Frank’s current estimate of 5
percent.

Some experts believe that an increase in available indirect space will
be more influential in giving tenants bargaining power than the less
substantial increase in direct space expected to come on the market.

“The
problem is how much sublet space is going to compete with direct space,
and we saw that happen in 2001 at the end of the tech boom,” Arkin
said.

However,
so far there hasn’t been a jump in sublease space, according to Kozel.
He says that “so far this has had the impact of minimizing the pressure
to reduce direct asking rents.”

Midtown

The
average asking rent in Midtown fell by $1.16 to $83.92 per square foot
in January, CBRE’s data showed. Average asking rent was still 24.5
percent higher than $67.40 per square foot in January 2007.
Note: Correction appended.

While
Midtown was the only of Manhattan’s three submarkets to experience a
fall in asking rents in January, certain pockets of it — including
Times Square and Penn Station — are seeing improvement, says Pamela
Murphy, vice president at CBRE.

Average asking rents in those two areas have reached $79.95 and $56.39 per square foot respectively, she said.

Midtown’s
leasing activity jumped 41.6 percent from December to 1.77 million
square feet in January, according to CBRE. Year over year, leasing
activity increased 70 percent from 1.04 million square feet in January
2007.

The
vacancy rate in Midtown increased slightly to 4.5 percent in January
from 4.4 percent the month before, CBRE’s statistics showed.

Midtown South

Leasing
activity in Midtown South fell by half to 210,000 square feet in
January, from 430,000 square feet in December, according to CBRE. It
was also down from 280,000 square feet in January 2007.

Midtown
South’s vacancy rate increased by 60 basis points to 6 percent in
January, from 5.4 percent in December, the report said.

The
average asking rent rose to $51.17 per square foot in Midtown South in
January, up 62 cents from $50.55 per square foot the previous month.

Downtown

Downtown’s
vacancy rate continued to decrease in January, falling to 4.9 percent
from 5.6 percent in December, according to CBRE.

Downtown’s availability rate was below Midtown’s for the first time December and is poised to continue declining, Murphy said.

Leasing
activity was down 58 percent in January from the month before, to
230,000 square feet, CBRE’s report said. It was about even with the
240,000 square feet leased in January 2007.

The
average asking rent increased 38 cents to $47.64 per square foot in
January compared to the month before. The average asking rent was up
16.5 percent compared to January 2007, when it was $40.88 per square
foot.

In 1989, when Heather Baley and her then-husband, Bill Lehre, pulled up in front of their prospective new home at 658 Vanderbilt Street, the first thing they did was double over with laughter.

Sitting before them, nestled between multi-story homes, was a one-story, 17-foot-wide bungalow built in the 1800s.

“When the broker showed it to us, we
got out of the car, sat down across the street and started laughing,” said Baley. “We laughed and laughed.”

Until then, Heather and Bill had been living in Brooklyn Heights. But with a new baby, their little apartment suddenly felt like it was bursting at the seams.

“We had a loft with one room and a 1-year-old. We had him in a porto-crib,” said Heather, who works as a paralegal. “The goal was to find a home with two bedrooms and a backyard.”

They looked in Cobble Hill, Carroll Gardens and Park Slope; they even saw one home in Manhattan. But the real estate market at the time was “popping,” and
everything their agent showed them was just out of their $125,000 to $200,000 price range.

Enter 658 Vanderbilt. The home had been on the market for $200,000 some time before, but it languished. When there were no takers, the agent, who had purchased it from the prior owner, put a renter inside and waited. Then, in 1989, the agent put it back on the market, this time at a $50,000 discount. At $150,000, it fit right in Baley’s budget; even better, it had the backyard she wanted.

“Bill is a carpenter, so the last thing we wanted was a handyman special,” said Baley about the work that eventually went into the home. “But it was so funny; it fit us.”

After moving in, Baley learned that
a very long history had attached itself to the home. She was told that their little
cabin had once, long, long ago, resided somewhere else. The story she’d heard placed the cabin in Prospect Park, as a summer home to the wealthy who lived in Brooklyn Heights.

“They would come and vacation in the ‘country’,” Heather said with a laugh.

But as the park became “more pedestrian,” the house, along with a few others like it, was moved via flatbed truck to its current location.

This story could be more legend than fact, however. Though local historians don’t dispute it, none have ever heard
such a story.

“The parkland over in that section, as
far as I know, had no houses on it,” said
Amy Peck, archivist of the Prospect Park Alliance.

Little 658 Vanderbilt isn’t the only
cabin in Windsor Terrace; there are actually two or three. Baley’s, however, is the only one that faces the street. According to John Burke, a local broker who was raised in the neighborhood, the others are hidden behind newer homes.

Baley’s home sits on its spacious lot behind a yard that overflows with flowers in the spring, and a stone path that leads past an actual driveway to the front door. Inside, Heather and Bill converted what was once a porch into a den. Beyond the den are a row of rooms: the living room, the master bedroom, the children’s room and the kitchen, each room connected to the next via doorways, which, one gets the sense, usually remain open.

“It’s deceiving,” said Burke. “Most people don’t realize it’s that deep of a house.”

“[The previous owner] would knock down a wall and put up a wall. Knock down a wall and put up a wall,” said Baley about the railroad style of the home. “And he didn’t know what a level was. There isn’t one straight piece in this house.”

When they first moved in, Bill built window boxes, now full of flowers, bookshelves in the den and a massive wood entertainment center and set of drawers. He also built a jungle gym for the kids out back.

Though the jungle gym has long since been replaced by an above-ground swimming pool, the sense of playfulness remains.

Baley divorced Lehre. But she and her partner of 10 years, Michael Napoli, now have plans for a grand renovation.

“We want to even out the peak in the front of the house, and go up one floor,” said Baley. “So we can have a real living area and not bedrooms on the ground [floor]. More bathrooms would be nice. A washer/dryer. I want it to grow just enough. I don’t want a huge house; I want it to be comfortable.”

The renovation would certainly add to the house’s value, which has climbed quite a bit since Baley and Lehre bought it in 1989.

“Because of the location — it’s a half block from the park, and a short block from the F train, and there’s the bus right there that goes to Brighton Beach — I’d put a price on it of $750,000,” said Burke.

Not that it matters. Baley doesn’t plan on ever leaving.

“I’m here until I die,” she said. “I love this neighborhood. I love this house.”

Forget the buyers. Instead, some developers are offering brokers sexy gifts like iPods, AMEX
gift cards and a package of goodies including airline vouchers and
laptops. That way, you can move units without resorting to lowering prices.
Dangling carrots before brokers at new condos
” class=”read-more-link”>[more]

The foreign investors buying trophy New York City properties in record numbers these days are getting a
little help from their own. Foreign real estate developers and brokers are setting up shop here, catering almost exclusively to overseas clients.

Sonu Arora, a 29-year-old developer from Manchester, England, founded the Iconic Development Corporation here about two years ago. Now he’s completing a 44-unit condominium development on the edge of Park Slope at Fourth Avenue and 19th Street in Brooklyn that was funded entirely by close friends and family in
England and Dubai.

Arora’s investors aren’t looking to buy exclusive luxury properties or mass-market, cookie-cutter condominium projects, he said. They want stylish, but affordable; fresh (a word that appears throughout the project’s marketing materials), but not sterile. They also expect a good investment.

“We are not looking at short-term gains, either by selling quickly or flipping contracts,” said Arora, who recently moved his family permanently to New York.

Foreign investors can get nervous after reading or hearing news reports about the troubled U.S. stock and real estate markets, Arora said. New York’s high real estate taxes and maintenance fees can also scare them away, especially in uncertain times.

“People are getting a little bit more
conservative,” he said.

But Arora said his friends and family across the Atlantic trust his advice because they’re making a 20 to 30 percent return on their investments. And to reassure them that their investments are solid, he flies them here, along with bankers from London and Dubai, and shows them what the city’s real estate market really looks like.

“It gives them perspective in a market somewhat troubled by differing market
reports,” Arora said.

His condos went on the market in February, six months ahead of schedule, for about $600 a square foot, he said. Prices start at around $400,000 per unit. After they’re sold, with marketing help from the Developers Group, his investors should be very happy with their return, Arora said.

They had originally expected the condos to sell at around $500 a square foot, he said. “That’s what builds momentum,” he added. “They get more confident as you work with them, and they’ve seen a decent return on their investment.”

Arora’s company is starting the process of converting a former glass factory at 35th Street and Third Avenue in Manhattan into 12 boutique condos. Arora is also planning another condominium project along the waterfront in Staten Island that should be completed next winter, and he’s bought a condominium site in Sunset Park, Brooklyn.

“Overseas investors have always had an eye on New York,” Arora said.

Rodrigo Niño, by contrast, doesn’t develop properties. But the 38-year-old Colombian native does help wealthy foreigners buy luxury condominiums here through Prodigy, his third-party real estate sales firm. He said he’s currently in the process of opening a branch office in Soho, and recently moved his family from Miami to an apartment in the West Village.

Niño’s company currently has two offices in Miami, one in Panama and one in Madrid. His company relies on real estate brokers who live in smaller cities overseas, such as Pamplona, Spain, near the French border. Those brokers can find buyers who have the euros and the desire to invest in New York City, but lack the experience and connections. The brokers tell Niño what their clients want, and he finds it.

“We have to rely on the brokers’ expertise,” Niño said. “They know their niche markets.”

Finding the right properties isn’t easy, Niño added. His wealthy clients want the best, and they have the money, sometimes as much as $30 million, to buy it. They prefer investing in condo/hotel projects that offer a full array of high-end amenities and have name brands they recognize. They want to live in condos along Park Avenue, or in Soho or Tribeca.

He’s helped several investors buy condos in Trump Soho and the William Beaver House on Wall Street, he said. His goal is to sell between $750 million to $1 billion worth of property in Manhattan over the next year, and he’s convinced he can do it.

“The reaction has been very, very surprising to me,” Niño said. “Everybody wants in. No one questions the validity of buying in New York.”

Amir Yerushalmi, president of Vision Real Estate Group, has been helping fellow Israelis buy property in New York City for the last 10 years. He started out buying individual condos for his customers in Israel. When they rent out the apartments, he collects the rent, deposits the money in a bank account and gives them quarterly market reports. “We try to give them a better feel of the market from people who sit right here,” he said.

But the makeup of his customer base has changed in the last two years. Now, most of his customers are from Spain, the United Kingdom or India.

New York real estate has become too pricey for many Israelis, especially when maintenance fees and taxes are added in, Yerushalmi said. They were willing to pay $600 a square foot, but not $1,000 a square foot. So they’re investing more in places such as Jersey City.

“Europeans, they buy for two reasons: The dollar is cheap, and they love Manhattan,” he said. “Israelis look at the return, and if they see negative cash flow, then they aren’t going to buy.”

He said he’s now spending more time and energy on large condominium development projects financed primarily by investors from France, India and the U.K., as well as Israel. In August, a group of international investors put in about $3 million toward the purchase of a 107-unit apartment complex in Jersey City that Yerushalmi said he bought below market value and turned into condominiums.

Spanish investors have also put in $5 million toward the purchase of a building at West 148th Street in Harlem, he said.

His company is also representing three Spanish hotel companies that want to buy hotels in Manhattan. They’re aggressive investors, he said, and they have cash to spend. Finding the right properties is hard because the hotel market is so strong, he said, but a few offers have been submitted.

Yerushalmi said he’s just glad he’s in
a good position right now. “It’s going to
be a tough year on the real estate market. And probably, 2009 is not going to be
any easier.”

For years, until a city rezoning slowed development, Staten Island was the fastest growing county in the state. But since the onset of the credit crunch, the borough has, by many accounts, suffered more pain than any other part of the city.

Building permits plummeted 43 percent in 2007 (to 826 compared to 1,345 in 2006). That decline was the sharpest in nearly 15 years.

A slew of other economic indicators took a beating too. New condo offerings fell by 92 percent, and the number of sales agents, which generally tracks newcomers to the profession, dropped 6.4 percent, the steepest decline in the city. Foreclosures, meanwhile, spiked a stunning 223 percent.

“We’re in the worst of it,” said Michael Diaz, a broker and owner of Village Realty in Staten Island. “The zoning changes coupled with the downturn the rest of the country is facing have put us where we are.”

Though the glamorous Manhattan market has managed to hold steady and buck national trends, Staten Island more closely resembles the rest of America, in both its demographic makeup and stock of single- and multi-family homes on cul-de-sac streets. As a result, the borough is experiencing the fallout from the subprime crisis in a way that is more like the rest of the country, real estate experts said.

“What’s happening in Staten Island parallels the larger market more so than the other four boroughs,” said Brian Scully, vice president of marketing for PropertyShark.com.

More foreclosures, fewer agents

While Staten Island’s population of about 478,000 is dwarfed by that of every other borough, it ranked second, behind only Queens, in raw foreclosures citywide. In percentage terms, none of the other boroughs came close to Staten Island’s 223 percent foreclosure spike — the second biggest increase was in the Bronx, which saw a 75.6 percent jump.

More telling, perhaps, is that the number of real estate salespeople (agents rather than brokers) dropped 6.4 percent in 2007. The only other borough to see a negative trend in that category was Brooklyn, which saw a drop of less than 1 percent. The number of brokers on Staten Island did increase, by 1.8 percent, but that was the lowest rise in the city.

Sandy Krueger, CEO of the Staten Island Board of Realtors, said he is not overly worried about the numbers. Krueger said he hasn’t seen a sharp decline in membership or enrollment in the training programs the Board of Realtors offers agents. “We generally see some drop-off at this time of year anyway,” he said.

Dawn Carpenter, president of the Staten Island Board of Realtors and owner of her own real estate firm, said some agents decided to break from the day-to-day grind of being an agent and pursue it as a part-time career. Carpenter works with many of these agents on a referral basis. “The agents refer their clients to me in exchange for a fee,” she said. Since last year, Carpenter said she’s seen a 5 percent increase in her referral business.

Industry observers say Staten Island is now fully a buyer’s market. Housing prices have dropped around 5 to 10 percent, with entry-level houses selling for around $350,000, according to R. Randy Lee, who is chairman of both of the Building Industry Association of New York City and the Staten Island Economic Development Corp.

Zoning changes

While Staten Island is being hit relatively hard by the recent downturn, observers
said that some of the pain the borough is
feeling traces back to the overhaul of its
zoning laws in 2004 — and last year’s loss of a property tax abatement that benefited owners of newly constructed one- and two-family houses.

The zoning regulations aimed to stem overdevelopment problems by limiting the number of allowable homes per parcel of land and requiring that houses have larger yards and greater distances between them. For example, on a 3-acre parcel of land, builders are now limited to 19 housing units, whereas in the past, they could have built 55 new units.

“We were overdeveloping,” said Staten Island Borough President James Molinaro. He noted that the federal government was turning a blind eye to greedy lending companies, who were allowing homebuyers to purchase a new house with only a 5 percent down payment when their income couldn’t support the monthly mortgage payments.

“On top of that, property taxes have now increased, and people simply can’t meet their expenses, which is why we are seeing so many foreclosures,” he added.

Many Staten Island residents welcomed the restrictions in development when they were passed and say they are still needed.

“We have so much congestion, and streets are jammed with traffic, and that has gotten continually worse over the past 10 years,” said Chan Graham, executive director of the Preservation League of Staten Island, which champions the fight to get older houses in the borough landmarked.

Frank Naso, one of Staten Island’s prominent builders, said that while the market has slowed, it isn’t dead. “I’ve had a steady year and have not had to lay off any of my workers,” he noted.

After the abatement

Still, Naso and others worried that the loss of the 421b tax abatement program, which slashed a homeowner’s property taxes for the first eight years after he or she bought a newly constructed house, will further delay any pickup in the market.

“The abatement helped a lot of first-time owners to afford their purchase,” said Naso. He noted that a semi-attached home selling for $450,000 would have cost an owner $200 quarterly in taxes with the abatement — and will now cost them $1,500.

“The average Joe just can’t afford that,” he said.

Carpenter said builders also used tax abatements as an amenity to lure buyers. “All in all, though, I think there is still a healthy inventory out there, and the market will rebound,” she said.

Carpenter added that Staten Island is the most affordable borough in the city and thinks an upzoning on the more
urban North Shore would make the borough more appealing.

The North Shore, which includes neighborhoods like St. George and Stapleton that are convenient to the ferry, is indeed seeing some large-scale construction projects. A 700-unit waterfront complex in Stapleton is currently underway.

Molinaro agreed that with proper planning, there is plenty of room for expansion. “We have 33,000 acres on Staten Island, and we only have 500,000 people,” he
said. “There is potential for high-rises and condos in places like St. George, but not in the suburbs, and that’s where we have to manage our growth.”

The Hamptons have always been known as the playground for the rich and famous. But how has the East End of Long Island fared during the national housing slowdown? Early last month, about 80 homes were reportedly in various stages of foreclosure in East Hampton and Southampton, even a $15 million home in East Hampton.

Meanwhile, the summer rental market got off to an early, strong start in 2008. A three-month summer rental in Sagaponack hit the market earlier this year with an asking price of $1 million; many homes in the $300,000 to $400,000 range were already leased out by early January.

In a recent Webcast interview, The Real Deal’s Jen Benepe sat down with Rick Hoffman, regional senior vice president at the Corcoran Group. Hoffman shared his thoughts on the recent uptick in foreclosure activity in the Hamptons and talked about how the 2008 rental season is shaping up.

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

The Real Deal: A RealtyTrac search of foreclosures and lis pendens found several major properties in Southampton that are in foreclosure. What’s happening? Is that part of a trend?

Rick Hoffman: I don’t see that as a trend at all. In fact, I think if you look back, historically, there is probably always something that shows up as a lis pendens in the high-end in Southampton and in East Hampton … but I don’t think you’ll ever see any one of these properties being auctioned on the courthouse steps.

TRD: Let’s talk about some trends, because some in the media have said that there is a sudden upward trend. Did you see that in the numbers that you documented?

RH: Maybe slightly in the lower end of the market. And those markets that you’ll find out east are the Hampton Bays, Flanders and East Quogue markets; the Noyack and North Sea markets in Southampton; and maybe the Springs market in East Hampton, up through the Springs. These are typically houses priced below $1 million, and they are typically primary residences.

TRD: A new report in the Southampton Press had some very interesting numbers. It said that while overall home sales were down 10 percent from last year, the market for homes over $4 million was very robust. In fact, the median price has continued to go up, and the total value of transactions has gone up. This is usually an indication of an expanding market; what’s going on there?

RH: That’s true. This has been happening for a couple of years out east. What we’re seeing is the actual number of properties transferred did go down by a percentage point. In real estate, it’s very difficult to talk about markets because as they say in that old adage, it’s location, location, location — well, very much so when you’re talking about the market itself. Even on the East End, it’s very location-specific.

TRD: Which price range of homes has fallen off the most?

RH: They’ve always reported that it’s the $1 million to maybe $3.5 million range, which is where you see a lag in the market. But that’s our biggest inventory on the East End if you look at overall inventory, so that’s the most affected. That’s also where a property owner, if they don’t properly price their home, it’s going to sit on the market longer because it’s competing with the most like product.

TRD: Any noteworthy change in the median home price?

RH: The median home price continues to go up on the East End. We’ve seen median home prices go up from 8 to 13 percent each year over the course of the last three years, so that also is an indicator that inventory is not stagnating on the market, because demand is still there.

TRD: Media reports have said rentals are surprisingly, given the current economic uncertainty, flying out the door and prices are up; is that happening?

RH: Rentals are great this year. More than 50 percent of our Amagansett rentals were gone as of about three weeks ago. And when I say our rentals, it’s not just us; most of the companies share rental listings. I haven’t seen rental prices go up significantly this year. I think with the strength of this year’s market, we may see rental prices go up a little next year. What everyone likes to talk about is, they say, “Well, if rentals are so strong this year, this must mean sales are going to go down.” But we’re not seeing that happening in the Hamptons. We’re seeing incredible sales on the high end — we represented the $103 million sale. We would have had the record in the United States, but we were beat slightly at the end of the year.

TRD: Where was that?

RH: In East Hampton.

According to brokers and price-watchers, fallout from the subprime
crisis is creating enough doubt in the city’s real estate market to
prompt many to wait out the uncertainty and rent instead of buy. More New Yorkers opt to rent, not buy” class=”read-more-link”>[more]

Brokers like to call it the Hell’s Kitchen Renaissance, conjuring up words like “vintage” and “quaint.” The gentrification of the area, which is also known as Clinton and Midtown West, started in the 1990s and capitalized on its proximity to the Theater District. Now, the area, which runs from 34th Street to 59th Street between Eighth Avenue and the Hudson River, is sporting sleek new towers next to lower-slung prewar buildings and brownstones; a tour last month of several open houses yielded a variety of buyers and apartment types.

At Chatham 44 at 464 West 44th Street at 10th Avenue, for example, a newly built condo anchors a tree-lined block. The shiny glass-and-aluminum corner building, designed by architect Stephen B. Jacobs, is nine stories, the top two of which are devoted to duplex penthouses.

The luxury building has sold all but two of its 58 units, according to Suzette Meshulam, senior vice president and associate broker at Halstead Properties.

“We just closed on 23 apartments at the end of January,” Meshulam said at a Saturday afternoon open house, where she was showing the remaining one-bedroom and duplex penthouse.

While there were only a few visitors on this particular day, one single lawyer in his 30s, who declined to
give his name, checked out the one-bedroom unit on the sixth floor.

“I’m renting a condo now in the East 30s, but am interested in the Midtown West neighborhood because I could walk to my office in the West 50s,” he said.

The 641-square-foot apartment he was looking at had an asking price of $799,990. Common charges were $603, and the monthly taxes started at $69.

“I really don’t like living in the Murray Hill neighborhood,” the lawyer said of his current apartment. “It just doesn’t have that neighborhood feel to it. Besides, the East Side is more expensive.”

Walking through the one-bedroom, which faced out onto 48th Street and had a sliver balcony off the living room, he said he was impressed by the high-tech kitchen and Miele appliances. “Kitchens are important,” he said. “I like to cook.”

Meanwhile, a few floors up, the duplex penthouse was being offered for $2.49 million. Common charges on that 1,576-square-foot unit are $1,486, and real estate taxes are $170 a month for the first year and $340 a month starting the second year.

The lower level of the unit occupies 979 square feet, and includes the living room and kitchen along with
a bathroom and small bedroom. The 597-square-foot upper level is home to the east-facing master bedroom, a den and the master bathroom. “We envision this for
parents with an older child because there is privacy. They can come in downstairs while the parents are upstairs,” said Meshulam.

Both units at the West 44th Street building share perks including high-speed fiber-optic Internet access in each unit, white oak floors and a sleek lobby with a mailroom that includes a high-tech video screen alerting residents when packages arrive.

The building also has a social networking Web site called LifeAt, where condo owners can connect, and a large outdoor common area off the second floor. But, perhaps, the most lavish perk is the private roof cabanas that are available for separate purchase.

Around the corner, at 505 West 47th Street, a new condo building was under construction. Several house hunters stopped in to check out the model kitchen and living room. The condo, scheduled to open in the spring of 2009, is actually two buildings connected by a wide courtyard designed by the architectural firm H. Thomas O’Hara.

“We went on the market in the last week of October and have sold 85 units out of 109,” said Vince Rocco, senior sales manager for Halstead Property.

Rocco was showing floor plans for one-bedroom units with asking prices of $710,000 and penthouse units ranging from $1.39 to $1.58 million.

Noriko Ono, who lives in Tokyo, was there with her daughter. “We want a second home here in New York City, a place to stay instead of a hotel when visiting the city.” Ono explained that the purchase would be a good investment.

She said she liked Midtown West and was especially
attracted to the building’s private rooftops, which were advertised as landscaped terraces.

Kathie Sirkin and her husband, Joe Pasquino, who
currently live on Park Avenue and 36th Street, were looking at the penthouse units. They said they were itching for a change.

“We love this neighborhood,” said Sirkin. “I rollerblade and bike and have a dog — which you can do here along the river.” Sirkin said she had a hard time convincing her husband that it was no longer a rundown area.

“I’m still undecided,” said Pasquino. “I mean, I like the penthouse and the access to the rooftops where you can barbecue, but it’s hard to imagine what the apartment is actually like with model rooms and not the real thing.”

The couple was on their way to another Hell’s
Kitchen property.

The building’s amenities include a fitness center, full-time concierge, a common roof garden, and rooftop terraces available for purchase. And, like the building on West 44th Street, the units come with washer-dryers and high-end kitchen appliances by Miele and other name brands.

If those amenities aren’t enough, residents there have easy access to neighborhood places like the Sullivan Street Bakery, which makes fresh breads and pizzas, Amy’s Bread, Kyotofu Dessert Bar, Bisco Latte and Cold Stone Creamery, which makes its own ice cream.

Heading north

Ten blocks north, condos and co-ops in prewar buildings are also on the market. Waiting in a top floor, one-bedroom apartment at 314 West 56th Street between Eighth and Ninth avenues was George Penny with the Atco Residential Group.

“I’ve been showing this on-and-off since the fall,” said Penny. “Today we’ve had a few people. I’d say two at least are real buyers.”

The six-story co-op was shaded outside by scaffolding because the building just had a new roof installed and had its brickwork re-pointed. Even though the building was dwarfed by the zigzagging Hearst tower and by Sheffield 57, both across the street, the apartment had good light.

The top-floor unit, which was approximately 550 square feet, had an asking price of $479,000 with maintenance of $1,007 a month. Inside, a brick wall ran lengthwise in the living room. A pass-through kitchen had a small skylight.

The kitchen fixtures were clearly from the 1970s, but Penny noted, “These fixtures pull out easily and can be replaced with newer stuff.”

One prospective buyer was Tamar Kamen, 30, who now rents on 30th Street and Park. She said she wants to own rather than rent.

“The rent keeps going up,” said Kamen, a product developer for Estée Lauder, which is a quick walk from the unit. Her questions for Penny were about the board and how it handles renovation requests.

Just around the corner at 345 West 55th Street, another one-bedroom prewar co-op had an asking price of $459,000, with monthly maintenance of $881.

The seventh-floor, 450-square-foot unit was being shown by Nina Rothman of Halstead Property, who said it was put on the market just two weeks earlier. Rothman said the apartment had been on the market for about two weeks, and that while only eight people had showed up on this day, there were more a week earlier.

Beth Temple, who rents her current apartment on the Upper West Side, was one of those scoping it out.

“I’m interested in buying rather than renting,” said Temple, 45, who runs her own consulting business from home. And, she said, she’d rather
live on the West Side of Manhattan than the East Side.

The apartment had high, beamed ceilings, oak parquet floors and a renovated bathroom with a new pedestal sink, marble floors and an old cast-iron tub that provided some character. The Pullman-style kitchen was at the end of the large living room, and the well-lit bedroom had extra-large windows.

But, like many of the nearby apartments, one of the unit’s main attractions was outside — proximity to Central Park, the theater district and the Time Warner Center with gourmet grocery Whole Foods.

It has been a while, but Manhattan home buyers seem to be getting the
upper hand, with prices starting to soften and qualified buyers taking
their time to shop around. Power shifts to buyers” class=”read-more-link”>[more]

Social networking sites like Facebook and MySpace have been credited with successfully promoting everything from porn stars to literature. Now, some of the players in New York real estate are dipping into the virtual networking waters, with mixed results.

Pages on those Internet sites usually serve as personal calling cards; users are most often young adults and teenagers who use the site to create a virtual identity using photos, music, videos and blogs. But these pages are often also used to market political candidates and commercial interests, including real estate businesses.

In December, Savanna Partners’ Williamsburg condo development 125 North 10th launched a MySpace site that had more than 200 “friends” at press time. The site proved a useful tool in promoting the development’s January launch party, thanks in part to the event’s marquee entertainment — celebrated Brooklyn burlesque star Angie Pontani. “Miss Cyclone” is a prolific user of MySpace, which she used to draw a crowd to the property, says Doug Bowen, CORE Group Marketing sales director.

“We thought MySpace would resonate with our core audience,” Bowen says. “We’re in one of the most vibrant artistic communities in the city. People here are very media-savvy, and they pay attention to online advertising. It seems to be working pretty well, though I couldn’t say that any sales have transpired as a result.”

The development sent out an e-mail blast from which mention of the MySpace site netted a large number of hits, Bowen says.

Meanwhile, the Developers Group is working on an April launch of a Facebook site for the Edge, a Douglaston Development project also in Williamsburg.

The Developers Group executive vice president Highlyann Krasnow said she feels her firm of young brokers “should have looked into this before,” but plans to keep promotion of the site to a minimum. “We really want it to be word-of-mouth and organic,” Krasnow says. “Facebook has an underground connotation, and we want to keep it that way. Then it feels more legitimate.”

“Underground,” “legitimate” and “organic” are the characteristics craved by young adults who have grown weary of corporate influences and manufactured media messages, says Michael Hoy, a Prudential Douglas Elliman broker who has been involved in a number of new media initiatives in recent months.

Starting last spring, Elliman posted a number of property tour videos of Brooklyn rentals on the video site YouTube. Featuring witty subtitles and campy 1980s love songs by the likes of Bon Jovi, the clips seem to have resonated with the 18- to 30-year-old crowd. One video generated nearly 2,500 views.

The brokerage was less successful last fall with its MySpace sites for two high-end properties that appealed mostly to older buyers, says Hoy, who was involved in both projects.

“It’s a little too corny for most young people, and the older crowd didn’t catch on to it,” says Hoy, who is currently creating a social networking portal for New York real estate in which renters, owners, developers, buildings and neighborhoods could have their own MySpace-esque pages. Like his other new media efforts, Hoy is targeting a younger audience.

“Real estate has been really hot in the last 10 years, and it’s still moving with the dinosaurs,” he says. “These guys are moving the same boring print ads which are costing them money, when there is this free thing called the Internet.”

Go to chart: Top 10 highest-price Westchester properties sold in 2007

Westchester County is nicknamed the Golden Apple for its prosperity, and the luxury real estate market is certainly feeling the halo effect from all that good fortune.

Lately, overall prices have come down around 10 percent, said experts in the county’s housing market, but sales are brisk in the market’s high-end, which benefits from proximity to the waterfront and Manhattan in the lower Westchester region, and from sprawling country estate-like settings in the north.

The Cross-Westchester Expressway, I-287, which stretches from the Tappan Zee Bridge in Tarrytown through the Connecticut border, slices through the county to create a rough north-south border.

Northern Westchester is home to several properties fit for European royalty (with names to match) though the sprawling hunting grounds of Bedford and its environs have been chopped into ever-smaller parcels as land has passed down through families and secondary buyers.

Locales closer to the Bronx border, notably Scarsdale and three nearby communities that line Long Island Sound (Larchmont, Mamaroneck and Rye) also command top dollar.

The county’s top 10 priciest properties that closed in 2007 ranged from $6.7 million for 40 Old Corner Road in Bedford to $17.05 million (cash) for 144 Sarles Street in Bedford Corners.

Four homes cracked eight digits — $11 million and higher.

Northern peaks

The Town of Bedford, home of moguls like Martha Stewart and other A-listers in business and entertainment, tops all county locales with five homes in the top 10 sales. Divided into three hamlets, the community is about an hour from Manhattan.

Bedford and adjoining Greenwich, Conn. are akin to Park and Fifth avenues, said Craig Siano at Sally Siano and Associates in Bedford Hills.

Several sprawling Bedford properties are currently on the market for substantial eight-figure sums, including Devonshire, which lists for $43 million. Spread across 103 acres, the grounds are a haven for equestrians, who enjoy access to miles of horse trails that lace the surrounding woods, a holdover from fox hunting days. Modern amenities include a 10-bay climate-controlled car collector’s garage with a washing station and a hydraulic lift. In addition, the 21,000-square-foot main house features a Tiffany dome in the master bedroom.

Meadowbrook, another country estate on the block, features a 20,000-square-foot main house with 1920s guest houses in the heart of Bedford. It’s been on the market for six months, and the asking price of $42 million is negotiable, said Siano, since the owner passed away and his children aren’t interested in a country estate.

Though it sits on 70 acres in an area with four-acre zoning, “someone who takes the entire piece will likely buy nearby homes,” he said. “The thinking now is generally ‘if I see it, I want to own it.’”

Many blue-chip properties like these are sold in private. “Clients are mainly people well-known in the business world, not necessarily in the entertainment world,” said Siano. “These are people who own the studios, not the ones in front of the camera.”

Hillandale at 1233 Rock Rimmon Road in Stamford, the highest-priced property to ever appear on the Westchester MLS, is asking $95 million. The former retreat for the Sulzberger family, owners of the New York Times, the lavish French-style 20,000-square-foot mansion straddles the Connecticut-New York border with 97 acres in Stamford, Conn., and 168 acres in Pound Ridge, N.Y., which borders Bedford.

The current owner — Gilbert Haroche, founder of Liberty Travel — bought it in 1992 for $6.7 million. Though the stunning estate has a Stamford mailing address, it is being marketed as a Pound Ridge property.

Astor’s place

One piece of land wholly located in Westchester that could possibly top Hillandale’s asking price is Holly Hill on Scarborough Road in Briarcliff Manor, last occupied by socialite and philanthropist Brooke Astor, who died last fall. The future of the 65-acre parcel, near the Hudson River and Metro-North in the western portion of the county, depends on the impending disposition of her will.

One of the very few privately-owned Hudson River estates with substantial property, Holly Hill’s potential price, as one unit or broken into parcels, is difficult to determine, since there are no comps in the area, said Lerner.

Down the street on Scarborough Road, an 8,000-square-foot house that sits on 25 acres is in contract for $9.259 million, down from a listing price of $10.95 million said Phyllis Lerner, broker-owner at Legends Realty Group in Briarcliff Manor. The lot includes several other houses and lacks the cachet of Holly Hill and its association with one of New York City’s oldest and wealthiest families.

The highest-priced property sold in the county last year, 144 Sarles Street, is a secluded 34-acre waterfront parcel on the shore of Howlands Lake in Bedford Corners. Featuring broad lawns, apple orchards and a main house built in 1930, it sold for $1.25 million below its asking price.

The grand home, located minutes from the entrance ramp of I-684, is down the road from the county’s largest home, the Georgian mansion at Seven Springs, bought by Donald Trump in 1995 for $7.5 million. Trump floated plans to build either a golf course or a 17-home subdivision on the 213-acre site, the girlhood home of Katherine Graham, long-time publisher of the Washington Post, which overlooks Byram Lake and overlaps the towns of Bedford, New Castle and North Castle.

Local authorities opposed Trump’s plan, with the dispute centered on Trump’s proposal to provide secondary emergency access to the project by using a deactivated public road running through a nature preserve bequeathed by Graham’s father, Eugene Meyer, who built Seven Springs.

However, the developer celebrated an appellate court decision last month allowing him to proceed with an eight-home subdivision in the North Castle portion of the property.

Though Bedford properties dominated the top 10, four houses south of the expressway in the lower Westchester communities of Scarsdale, Purchase, Mamaroneck and Rye also landed on the list.

Different parts of the county cater to different tastes.

“In places like Bedford, it’s bucolic and beautiful and people from Manhattan jump up there, but after three years, they realize that it takes 20 minutes to drive to the supermarket or the train station and they can feel isolated,” said Claire Civetta, associate broker at Coldwell Banker Doernberg Real Estate in Scarsdale.

Scarsdale has the county’s highest median income per family, at $182,792.

“In Scarsdale, things never change: the schools are top-notch, it’s 32 minutes to Manhattan by train and 15 minutes to the [Westchester County] airport,” she said.

Manhattan isn’t the only commuting destination for residents; others drive to the emerging business hubs of Stamford and Greenwich, she said.

The village property that cracked the top 10, 12 Heathcote Road, is located in the mansion district, which includes Morris Lane, Dolma Road, Murray Hill Road and Cooper Road. Other tony homes dot the Fox Meadow and Greenacres neighborhoods, though land is at a premium.

Despite the restricted space, the drive toward greater ostentation has led to excesses. An executive from the Global Crossing, the once high-flying telecommunications company, knocked down an existing home on a four-acre lot to build a 15,000-square-foot extravagance more suited to the Moors of Scotland than the New York City suburbs.

Although “Scarsdale is a place where owners of estates knock down other estates on the adjoining property,” said Civetta, sometimes owners buy properties for other uses. “One guy bought the house next door and instead of tearing it down, he kept it and built a basketball court, an indoor pool, and a workout gym, along with a tennis court and soccer field; it’s a little fiefdom in the heart of Scarsdale.”

Land and water

Around 40 percent of Westchester’s high-end buyers consist of Manhattan exiles looking for relative bargains, along with a sizable number of European clients, said Gary Herbst at Buyer’s Edge Realty in Tarrytown.

“Compared to Manhattan, it’s a pleasant surprise for them to find fairly reasonable prices and some land,” said Herbst. “They want good schools and different lifestyles for the kids; generally they don’t mind the commute.”

Large and expensive estates also exist near big corporations: 3 Stoneleigh Manor Lane in Purchase, located near the corporate headquarters of PepsiCo and Master Card, took fifth place on the top 10.

Waterfront property, by contrast, determines the high end of the spectrum in Rye. “Most buyers are local owners looking to trade up,” said Diana Plunkett at Houlihan Lawrence in Rye, who also specializes in nearby Purchase and Harrison. She said most of these owners also keep a pied-à-terre in Manhattan.

She lists a unique opportunity in these parts: 2.58 acres on a peninsula known as Parsonage Point, with 950 feet of water frontage with expansive views of Long Island, for $15.5 million, down from the initial asking price of $20 million.

“You can build a 12,000-square-foot home with a swimming pool and tennis court,” said Plunkett.

The owner, an entrepreneur who lives close by on Milton Point, has owned the property for 25 years and planned to build his own dream house there one day. He subdivided it several years ago, so any new house would share the southerly view with a next-door neighbor.

Like the occupants of the old-world mansions in northern Westchester, residents of the southern portion of the county enjoy enviable lifestyles.

“We have the best golf clubs, sailing, yachting,” said Plunkett. “When you live in Rye, you don’t have to go on vacation.”

Go to chart: Top 10 highest-priced Fairfield County properties sold in 2007

Now that Leona Helmsley’s lavish country estate Dunnellen Hall is on the market for $125 million, the question arises, will this property cause Greenwich’s already high real estate prices to skyrocket into the stratosphere?

Despite weakness in the overall market, luxury properties have continued to sell at astronomical prices in Fairfield County. The top 10 homes sold last year in the county — all in Greenwich — start at $12 million and go as high as $30 million. While brokers say the Helmsley sale won’t juice the market further, they note that the area is on mostly solid ground for 2008.

The county is home to many executives who work on Wall Street (which has already seen some layoffs), but the turmoil is being registered here in pretty mild terms.

“We are not immune from the foreclosure activity [and] we are affected on the ancillary side because home owners who work in the financial industry have been under pressure,” says Doug Werner, a broker with William Pitt Sotheby’s International Realty in Darien, Connecticut. “Buyers are coming in and expecting to steal stuff; that’s not going to happen. But there are good deals to be made.”

“The fundamental drivers in Fairfield County are pretty darn good,” says Barry Rosa, vice president of Prudential Connecticut Realty.

He adds, “Employment levels are very strong in places like Stamford and Norwalk, which keeps the markets stable. We also are keeping our mortgage rates at about 6 percent.”

Rosa explains that the largest mortgages for super high-end homes, which sell for around $15 million, are about $1 million. “These sales are very heavy in cash payments against the properties and that’s not as affected by mortgage rates as it is for a normal buyer,” he notes.

The luxury home market is driven by Greenwich, the priciest town in Fairfield County and a magnet for high-end luxury living in the northeast. Zoned to have large amounts of land, and catering almost exclusively to the well-heeled, many properties have a country feel with the advantage of a quick commute to Manhattan.

“I’ve seen a lot of changes in the market in the last 22 years that I’ve been selling real estate,” says Bill Andruss, a real estate agent for Sotheby’s International Realty in Greenwich. “Greenwich is very unusual because it’s a blue-chip community that continues to do well year after year.”

Andruss claims any economic “gloom and doom” has always eluded Greenwich real estate. “Greenwich had a very good year last year. Our median price ranged from $1.94 million to $2 million.”

Helmsley’s 23,000-square-foot mansion on Close Road in Greenwich, with its seven bedrooms and 14 bathrooms, is the highest-price property currently on the market in Fairfield County. But the asking price of the mansion of the late, so-called “Queen of Mean” may be so lofty that it doesn’t reflect or affect the rest of the market.

“I think that property is a different kettle of fish, a tabloid interest. How many people would buy something like that? It really shouldn’t impact the rest of the market,” says Werner.

Down the road from the Helmsley home is a recent sale, a property that traded last year for a mere $14.7 million. The five-acre spread at 35 Close Road in Greenwich overlooks Wilshire Lake, a 17-acre lake fronted by only nine homes.

Waterfront properties contribute to the appeal of communities like Greenwich, Darien, Stamford, Norwalk and Westport, and command a hefty price tag. Of the 23 towns in Fairfield, eight border on Long Island Sound.

“People want the location, they want to be on the water,” says Werner. “There are limited amounts of this kind of property — that’s why it’s so attractive and expensive.”

For an example of how pricey great views can be, there’s 109 Byram Shore Road. The 10,000-square-foot contemporary house on 10 acres overlooking Long Island Sound sold for $28,500,000 last year. The property has two private beaches, 600 feet of waterfront and sweeping manicured lawns with mature trees. The vistas include Long Island Sound and the New York City skyline.

Another buyer who wanted privacy picked up an entire island with a 7,000-square-foot house. Nipowin Island, just off Greenwich’s Mead Point, is a 1.5-acre island attached to the mainland by a causeway; the property fetched $18.5 million last year.

What’s referred to as a “cottage” has three-bedrooms, a formal garden, a pool overlooking the sound and a four-car garage. The island was on the market for a little under a year.

Waterfront views are not the only appealing feature of Greenwich, which has four communities: Cos Cob, Riverside, Old Greenwich and Greenwich, says Andruss.

“The area is very beautiful and very diverse. It’s a solid town with wonderful amenities — excellent public and private schools, a public golf course, two town beaches and over 800 acres of parks.”

Shopping on Greenwich Avenue, which is considered by some the Rodeo Drive of the East Coast, is also prized.

Fairfield luxury homes that are not on the waterfront have a pastoral feel: the county’s rolling hills are dotted with old stone walls and century-old trees. These homes are typically on four acres and look out over expansive lawns bordered by forests or wooded areas.

Last year, a 1929 Georgian Colonial manor house on 1 Indian Spring Road in Greenwich sold for $13.41 million. The secluded, 17-bedroom, 14-bathroom mansion sits on 11 acres surrounded by mature gardens.

“What drives the upper pricing is the house that has complete visual and aural privacy,” says Werner. “That’s what we mean by ‘back country.’”

Over in New Canaan, a newly built “Hampton Style” mansion on 727 Smith Ridge Road sold in July for $10.075 million. The 9,000-square-foot, two-story house has a built-in media theatre, exercise room, sauna, heated pool, wet bar, wine cellar and game/billiard room.

Werner says properties in New Canaan, which is sandwiched by Stamford, Norwalk, Darien and Wilton, are mostly on four acres, the minimum size allotted by the town’s zoning code. “You might find property that’s six or seven acres, but that’s a rare bird in New Canaan,” he says. “It’s a luxury to have that much private property around you that’s that close to midtown Manhattan.”

In Darien, zoning creates even smaller properties, as little as one-fifth of an acre to two acres, with prices ranging from $600,000 to $10 million, according to Andruss.

Meanwhile in Westport, a property at 273 Saugatuck Avenue in a gated, waterfront community on Long Island Sound sold in November for $7.5 million. While markets began unraveling in other parts of the country, the home, which was built in 1976, was scooped up after only two months.

Go to charts: Top 10 highest-price Nassau and Suffolk county properties sold in 2007

Long Island may be seeing an uptick in foreclosures and a decline in overall home prices, but the high-end market is continuing to see record sales.

The so-called Gold Coast of Nassau County (which stretches from Great Neck to Huntington) and the Hamptons in Suffolk County are real estate echelons unto themselves.

An estimated 53 homes sold for above the $10 million mark in 2007. Financier Ron Baron generated the biggest headlines for the purchase of an oceanfront home on Further Lane in East Hampton, for $103 million in May.

Until January, when hedge fund manager Louis Moore Bacon paid $175 million to buy the Forbes family ranch in Colorado, the purchase was the most expensive residential real estate transaction in the country.

Records were also set elsewhere in the Hamptons in 2007: a Bridgehampton home fetched $37.5 million, a Montauk home yielded $35 million, and two Southampton homes went for over $32 million, according to Suffolk Research Service and the Corcoran Group.

While Nassau County did not best its 2006 record of $14.4 million, which was taken by a home in Oyster Bay, the Gold Coast had two homes that sold for $11.1 million — one in Mill Neck, the other in Brookville. In addition, a property in Kings Point went for $12.5 million and set the 2007 Nassau sale record, according to the Multiple Listing Service of Long Island.

“Long Island isn’t an affordable place to live,” says Pearl Kamer, chief economist of the Long Island Association, a business and civic organization. “But not everything is as high as the Hamptons and the Gold Coast.”

Indeed, last month MLSLI released data showing that the median home price on all of Long Island, including Queens, saw a 4.6 percent decline from January 2007 to January 2008, to $417,000.

Suffolk saw a 6 percent decline in its median price to $397,500, while Nassau fared better with a 2.2 percent decline to $440,000.

New Nassau numbers

Some of the Gold Coast’s most expensive homes lie in Kings Point and Sands Point — at least for 2007, that’s where six of the 10 highest-priced homes were clustered.

The area has been a destination for the wealthy since the 1920s, when the mansions that inspired F. Scott Fitzgerald’s “The Great Gatsby” glittered in all their glory. (Kings Point and Sands Point provided the fodder for the fictional West Egg and East Egg that divided Gatsby and Daisy).

Kings Point, home of the U.S. Merchant Marine Academy, had four of the 10 highest sales in 2007. Three of them were on the same street.

The record-breaking $12.5 million sale was at 190 Kings Point Road in January. The 15-room contemporary home sits on a 1.5-acre waterfront site. Two others on the street fetched $7.7 million and $7.65 million.

Another, on nearby Shore Drive, sold for $9.5 million.

“There’s not much new construction in Kings Point, but there are mansions of 6,000 to 7,000 square feet that were built starting 30 years ago,” says Nahid Akins, executive director of the Great Neck office of Prudential Douglas Elliman’s North Shore Group.

Meanwhile, in Sands Point, just east of Kings Point, estates are listed at $1.7 million to $20 million. For example, on Cornwells Beach Road, a 16-room waterfront mansion with a guest house is on the market for $19.95 million.

Karen Newhouse, executive director of the Port Washington/Sands Point office of Prudential Douglas Elliman’s North Shore Group, notes that in Sands Point, “you can get every style from ranches on slabs to waterfront estates with custom mansions.”

High-end Hamptons homes

On the other side of Long Island is the Hamptons, where driving down certain roads can often lead to as many celebrity sightings as in Hollywood.

Suffolk Research Service reported that the median home price on the East End hit $717,000 in 2007, increasing from $625,000 in 2006. Spending $10 million, $20 million or even $30 million on a prime piece of property is becoming more commonplace.

Rick Hoffman, regional senior vice president for the Corcoran Group, says: “The $10 million-plus market goes up every year … there are hundreds of properties on the East End that would sell for $10 million or more.”

Hoffman says there were 50 sales of $10 million or more last year, 15 of which passed the $20 million mark, and 18 of which sold for between $15 million and $19 million.

Still, Baron’s $103 million purchase of 40 oceanfront acres, on East Hampton’s Further Lane, managed to make even jaded jaws drop there. The property, which was sold by oil heiress Adelaide de Menil and her husband, Edmund Carpenter, was actually two adjacent parcels — 260 Further Lane for $58 million and 278 Further Lane for $45 million. Eight historic homes were removed before the deal closed.

Now Corcoran has two properties on the market for more than $60 million. Three Ponds Farm, a 60-acre estate on Bridgehampton’s Scuttlehole Road that includes an 18-hole U.S.G.A.-rated golf course and 14 gardens, is listed at $68 million. But that was reduced down from $75 million after it sat on the market for several years with no takers. And on Southampton’s Meadow Lane, a nine-acre oceanfront property with a shingle-style mansion designed by Francis Fleetwood is listed at $62.5 million.

“Southampton and East Hampton always lead the sales,” says Paul Brennan, region manager of Prudential Douglas Elliman. “Since the early 20th century, the playgrounds of the wealthy have been Southampton, Palm Beach and Newport.”

On Southampton’s Meadow Lane, three properties sold for more than $30 million and one went for nearly $24 million in 2007.

And in East Hampton, a deal at 12/14 Tyson Lane hit nearly $30 million.

Noel Berk, a principal at Mercedes/BERK Private Real Estate, which specializes in Hamptons and Manhattan properties, says one of the things perpetually driving up prices is the limited supply of properties, a fact that has much to do with strict land preservation requirements.

But as far as breaking the $103-million record in 2008, Berk isn’t holding her breath.

“That East Hampton property was one of the largest in the Hamptons, and given the quieter atmosphere in the Hamptons right now and given the minute availability of large oceanfront properties like that one, that will be a record that stays a while,” she says.

Bergen County remained northern New Jersey’s most expensive real estate market, home to the top 10 sale prices in the region in 2007, mostly within the small exclusive community of Alpine.

In spite of softening in the overall market, the luxury housing market is thriving in northern New Jersey.

Alpine is also one of the nation’s most expensive communities and the town of almost 2,200 laid claim to five of the most expensive home sales last year in northern New Jersey. Short Hills in Essex County is also one of the nation’s most expensive areas, though no sales there made the 2007 list of closed deals.

While new luxury condos in Jersey City and Hoboken are listed at multi-million dollar prices, none there made the list of top housing prices, either.

Brokers specializing in Bergen County said the high numbers don’t surprise them.

Mariola Astman, a broker with Burgdorff Realty, said she has seen some slight drop-offs in the amount of interest, but the luxury market is strong with the subprime mortgage crisis impacting the cheaper areas of Bergen County instead.

“This area has not been affected as other parts of the country by the subprime issue,” Astman said. “Home values are high and incomes are high.”

Astman primarily works with finance executives looking to move into the suburbs. She said that while some homes could remain on the market for several months, she has sold several in the luxury market in as little as two weeks.

Michael Merzel, a sales agent with Re/Max, said the sellers of luxury homes he deals with are very serious about closing the sale and usually are not dipping their toes into the water to see if there are any bites.

“There is a lot happening in that market,” he said. “People in that price range are not as affected as we may think [by the credit crisis].”

Jeffrey Otteau, the editor of a widely-read Garden State real estate newsletter, predicted earlier this year that proximity to a train line will remain one of the main factors keeping markets strong in northern New Jersey. He said homes along train lines in areas like Bergen County and Short Hills will continue to sell faster than non-train-line homes. Statistics Otteau released last year support this view, showing that the luxury housing market in Passaic County, which borders Bergen County on the west but lacks its easy railroad access, was one of the most sluggish in the state.

The top home on the list sold for $8 million: new construction on 2.3 acres at 1 Margo Way in exclusive Alpine. The six-bedroom home was originally listed at $7 million, making it one of only two homes on the list to close for higher than its listing price.

The 25-room mansion is built on a hilltop on a cul-de-sac backing onto county-owned woodlands, providing plenty of privacy. The six-bedroom Colonial boasts a billiard room, library, seven full baths, two half-baths and a three-car garage.

A French manor-inspired 15-room house on 6.4 acres in tony Franklin Lakes, at 394 Saddle Brook Trail, fetched $7.5 million. The home has a pool house, situated by a waterfall that empties into a Greco-Roman pool. The main house includes an 800-square-foot, 12-seat-theater, his-and-hers dressing rooms, and an elevator to all three floors. The six-bedroom home is designed as a “smart house,” allowing the owner to use a computer to control its systems.

Coming in at number three is a $7 million house on Rio Vista Drive in Alpine. The 21-room home, set on two acres, includes several reception rooms on the first floor along with a master suite, which includes his-and-hers dressing rooms and bathrooms. The seven bedrooms include two on the third floor set aside for staff.

The home also has a gym, wet bar and tennis court.

Other homes on the top 10 list closed at or near asking price: A 17-room house in Saddle River closed on May 1 for $6.6 million, a drop from the asking price of $6.995 million, while a 12-room house in Alpine closed for $6.5 million, the original asking price, on Sept. 7.

A 20-room house in Cresskill closed for $6.35 million, the original asking price, on Feb. 16.

A 13-room house in Saddle River closed for $6.25 million on June 1, after the asking price fluctuated. The house was originally listed at $6.295 million, and then moved up to $6.495 million, before closing at less than the original asking price.

Two homes in Alpine round out the list, closing at $6 million each. One Alpine house closed on Nov. 19 for $400,000 less than the asking price, while the other closed on July 11 for $450,000 less than the asking price.

In 2006, Alpine posted one of the largest home sale prices in the Northeast at the time, with $32 million being paid for a 40-room house, which was originally listed at $40 million. The property, one of the largest private homes in New Jersey, boasts indoor and outdoor pools, private ponds and a small power plant, amongst other features.

Short Hills, one of the most exclusive enclaves in Essex County, posted sales of between $4 million and $5 million last year and has remained strong, according to agents specializing in the community. Sue Adler, a sales agent with Keller Williams, said Short Hills and neighboring Summit see high interest from Wall Street types who are relocating to the suburbs.

Separate numbers for Summit, part of Union County, were not available. But Summit has long been considered one of the most expensive areas in the Garden State and has routinely ranked in the top several hundred wealthiest communities in the country.

Bring on the bidding

Adler said she has witnessed several bidding wars in the Short Hills and Summit marketplace, especially over homes priced between $1 million and $4 million. She said the market has started to pick up in the early months of 2008, and predicts that the luxury market in her neck of the woods will remain strong this year.

“It’s always busy after bonuses,” she said. “It’s been picking up but there are not crazy bidding wars.”

Despite the strong sales, Burgdorff broker Astman had one bone to pick: She said she wishes the media would cover the market differently.

She said that media reports have scared off some buyers in the $1-million-plus price range, and have caused others to approach the buying process more cautiously.

“I wish the media would stop telling people not to invest in real estate,” Astman said. “The buyers are there. It takes them longer to make a decision because they hear the media hype.”

Go to chart: In cooling market, townhouses still show hot streak

As the price for glass increases and the economy and housing market
waver, some developers are looking to use less expensive alternative
materials as they design new buildings. With glass costly, a new idea: Walls” class=”read-more-link”>[more]

A committee formed by the Real Estate Board of New York is
attempting to iron out the kinks of selling apartments in new
developments. REBNY rules to speed up new development sales
” class=”read-more-link”>[more]

Bedford-Stuyvesant

192 Spencer Street

Sales have been launched for the six-story, 47-unit luxury condominium, designed by Kossar & Garry Architects. Many of the one- and two-bedroom homes will have private outdoor space. Residences will range in size from 634 to 1,332 square feet. Prices begin in the low $300,000s. Completion is slated for early 2008. The Developers Group is the exclusive sales and marketing agent. Contact: www.oneninetytwo.com.

Bedford-Stuyvesant

721 Flushing Avenue

Calder Construction Corp.’s 13-unit project is made of brick and precast stone with sliding window doors. The condominium’s one- and two-bedroom homes will range from $260,000 to $399,000. Aptsandlofts.com is handling sales. Contact: www.aptsandlofts.com.

Bushwick

1037 Decatur Street

The six-unit condominium project had sold five of its apartments as of late January, at prices ranging from $270,000 to $350,000. The one-and-a-half-bedroom homes range from 690 to 1,100 square feet in size, including two duplexes. Aptsandlofts.com is handling sales. Contact: www.aptsandlofts.com.

East Williamsburg

Greenbelt

361 Manhattan Avenue

The developers of Brooklyn’s first LEED-certified condominium, Derek Denckla and architect Gregory Merryweather, have hired Aptsandlofts.com as the marketing and sales agent for the eight-unit project. Seven two-bedroom residences range from 835 to 1,130 square feet in size, and are priced from the mid-$600,000s to $815,000. A 710-square-foot one-bedroom is priced at $599,000. Designed by Merryweather, the building has a corrugated steel fa & Ccedil;ade and a glass-curtain wall. The non-profit Contemporary Performance Research has purchased the building’s 4,000-square-foot ground-floor space to provide low-cost rehearsal and performance space. Contact: www.aptsandlofts.com.

Flatiron

15 Union Square West

Developer Brack Capital Real Estate is converting the former Tiffany & Co. building into a 12-story, 36-unit luxury condominium. Two-bedroom residences range in size from 1,763 to 2,189 square feet, while three-bedrooms range in size from 2,370 to 3,164 square feet. Perkins Eastman is the architect for the project, and Vicente Wolf has been hired as the interior designer. Homes on floors one through six will have ceiling heights up to 16 feet, while homes on upper floors will have large, private outdoor terraces. Occupancy is slated for fall 2008. Brown Harris Stevens Select is the exclusive sales and marketing agent. Contact: www.15usw.com.

Greenwood Heights

639 Fourth Avenue

Iconic Development Corp.’s 44-unit condominium project has one-, two- and three-bedroom apartments, most of which have private outdoor space and floor-to-ceiling aluminum-framed windows. The Developers Group is the exclusive sales and marketing agent for the project. Contact: www.sixthreenine.com.

Harlem

Rhapsody on Fifth

2056 Fifth Avenue

AFC Realty Capital has hired the Corcoran Group to direct sales and marketing at the seven-story, 22-unit condominium, which was over 50 percent sold as of late January. The Marketing Directors was previously in charge of sales at the project, where prices for the remaining units start in the upper $900,000s. Contact: www.2056fifth.com.

Lower Manhattan

Dwell

95 Wall Street

The Moinian Group’s project will be the first Yoo by Starck-designed rental building. Occupancy is expected to begin late this spring for the studio, one- and two-bedroom apartments. Amenities include valet services, on-site parking, fitness center, indoor/outdoor lounge and complimentary breakfast. Citi Habitats Marketing Group will be the exclusive leasing agent. Contact: www.dwellonwall.com.

Lower Manhattan

99 John Deco Lofts

99 John Street

Rockrose Development Corp. is converting the 27-story, 442-unit rental building into a luxury condominium. About 85 percent of the development’s units will be studios or one-bedrooms. Hotel-style amenities include complimentary breakfast in the lobby, free wireless Internet, a fitness center, billiards and a screening room. The penthouse homes will have cabanas and a spa. Contact: www.99johndecolofts.com.

Times Square

The Platinum

247 West 46th Street

Developer SJP Residential has named Cushman & Wakefield the exclusive leasing agent for the 6,183 square feet of ground-floor retail at the 43-story, 220-unit luxury condominium project. The Marketing Directors is handling sales of residential units. Contact: www.platinumnyc.com.

Tribeca

34 Leonard Street

R Squared Real Estate Partners hired architect Beyer Blinder Belle to design the 16-unit luxury co-op. The one-, two- and three-bedroom residences range in size from 1,541 to 3,086 square feet. Amenities include a climate-controlled wine cellar, a roof deck with grill and bar area, private sunbathing area with outdoor shower, pet spa and a fitness center. The Marketing Directors is the exclusive sales and marketing agent for the project. Contact: www.34leonard.com.

Upper East Side

Georgica

305 East 85th Street

The Ascend Group named its new 20-story, 58-unit luxury condominium tower after Georgica Pond in East Hampton. Cetra/Ruddy designed the 134,000-square-foot building, which will target families, offering two-, three- and four-bedroom homes that range from 1,298 to almost 3,000 square feet in size. Amenities include a children’s playroom, fitness center and landscaped roof deck. Cantor Seinuk Group is the engineering firm hired for the project. Construction is slated for completion in 2009. Prudential Douglas Elliman Development Marketing Group is handling sales, which are expected to begin this month. Contact: www.georgicalife.com.

Upper East Side

The New Yorker Condominium

1474 Third Avenue

The New York State Attorney General’s office has declared
the 17-story, 32-unit luxury condominium’s offering plan effective. Developer R.A.L. Companies & Affiliates hired architect Creative Design Associates for the building’s renovation. The building will have one- to four-bedroom homes and include a
bicycle room and individual storage units. Stribling & Associates is the exclusive marketing and sales agent. Contact: www.1474third.com.

Williamsburg

439 Metropolitan Avenue

Architecture firm Helder Design is developing the project, which will include two duplex condominiums as well as the builder’s studio space. The building is expected to become the city’s first mixed-use project to receive a LEED Platinum rating, Curbed.com reported.

Financing

Upper East Side

1055 Park Avenue

Wrightwood Capital provided $15 million in construction financing to Davis Development Holdings for the development of the 12-story, eight-unit condominium project. The building will have a library, bar and sauna. The 16,000-square-foot development will consist of two- and three-bedroom apartments with outdoor terraces.

Sales update

Chelsea

Loft 25

420 West 25th Street

R.A.L. Companies & Affiliates’ nine-story, 79-unit luxury condominium project was more than 60 percent sold as of mid-February. The studio, one- and two-bedroom homes each have oversized windows and individual climate control. Amenities in the development include a 5,000-square-foot landscaped roof deck, media room, fitness center, individual storage units and lobby with garden and reflecting pool. Stribling Marketing Associates is the exclusive sales and marketing agent. Contact: www.loft25.com.

Downtown Brooklyn

Lookout Hill Condominiums

199 State Street

Developers Alchemy Properties and Matel Realty had sold out and completed construction on the 11-story, 46-unit condominium project as of early February. The building has a 2,000-square-foot backyard garden, and all of its homes come with Sirius Satellite Radio. Contact: www.lookouthillcondo.com.

Harlem

NoMa 175

Corner of Payson and Seaman avenues

Developers Abraham Sandberg and Eli Harrar had sold two units at the six-story, 12-unit luxury condominium as of early February, the New York Times reported. The project includes 11 one-bedrooms, ranging in size from 615 to 625 square feet, and one 1,020-square-foot two-bedroom duplex. The one-bedrooms are priced from $385,000 to $525,000, and the two-bedroom is listed at $675,000. The development cost $3 million to build. Contact: www.noma175.com.

Harlem

The Kalahari

40 West 116th Street

The 12-story, 249-unit green condominium project was approximately 75 percent sold as of the end of January. The two-tower complex will have two- and three-bedroom apartments. Amenities include a rooftop garden, concierge and parking garage. Contact: www.kalahari-harlem.com.

Lower Manhattan

The Exchange

25 Broad Street

Swig Equities’ 565,000-square-foot luxury condominium was over 35 percent sold as of early February. The 21-story, 121-unit building’s offering plan has been declared effective, and its homes are available for immediate occupancy. Amenities include a health club, spa, residents’ lounge, dining room, screening room, laundry, tea room, viewing garden, children’s playroom and business resource center. Contact:www.25broad.com.

Upper West Side

Sheffield 57

322 West 57th Street

The 58-story, 583-unit luxury condominium, developed by Swig Equities and Y L Real Estate Developers, was over 46 percent sold as of early February. There were 29 homes remaining in the first phase of sales, which consisted of units up to the 35th floor. The mixed-use project will have 109,000 square feet of office space and a 372-car parking garage. The building’s amenities include a private restaurant, screening room, playroom, health and fitness club and open air pool. Swig Equities is handling sales. Contact: www.57sheffield.com.

New construction condos that offer more amenities than five-star hotels not only come with hefty price tags at closing time — increasingly, they also come with rising monthly common charges.

The deluxe amenity packages that have become standard fare at new condos — things like health spas, dry-cleaning services and pet grooming — are one of the leading factors in the spike in condo fees, real estate attorneys and management companies said. Until now, condo fees have generally been modestly low compared to the maintenance charges at co-ops, which has made a good selling point.

Currently, while condo charges are still lower (partly because they do not include real estate taxes), they are not the selling point they once were, especially because the luxe add-ons are coinciding with rising fuel costs, ballooning payroll fees, and increasing property insurance premiums and security expenses.

Michael Mendillo, president and CEO of Wentworth Property Management, said in the last two years more condos have introduced upscale, white-glove services. “Having your dog walked, getting tickets to a game and plays — those are all extra services,” he said.

However, he added that while many prospective buyers look at how much common charges will cost, the fees are rarely a deal breaker, particularly as more buyers have expectations of luxury services. Mendillo said even the exterior look of a building has become important.

“The curb is important to the eye,” Mendillo noted. “A building may look old and tired because of the power-washed building next door. All this drives up costs.”

$500 for breakfast

Real estate attorney Luigi Rosabianca noted that one condo he knows of in the Financial District recently began offering a continental breakfast in a common lounge, but cancelled the service after residents realized how much it was tacking onto their monthly fees.

“After three or four months, the owners realized it was costing them about $500 to $600 a day,” Rosabianca said. “They figured out the yearly cost and are no longer serving breakfast.”

He said the question buyers need to ask themselves is: “Do you buy into a building
for a free cup of coffee, or would you rather have a balanced budget?”

It’s not just the new condos that are
being hit with rising costs. A lot of what is driving up bills are expenses that affect buildings of all ages and types.

Doug Heller, a real estate lawyer and a partner with Herrick, Feinstein LLP, said the price of heating oil, which condo boards have virtually no control over, is one of the biggest culprits.

“The worst increase I’ve seen has upped a condo budget about 15 percent,” he said of a building on the Upper West Side. “It’s the high fuel charges.”

Michael Wolf, president of Midboro Management, said one 60-unit building that his firm manages on the Upper West Side saw its heating bill jump from 7 percent of its $900,000 annual budget, in 2003, to 9 percent in 2007.

Plus, Wolf said: “You see a spike in fees from changing services, like adding a 24-hour doorman.”

Labor costs are based on union contracts, which means that wages increase every four years. The last spike in that category was a year and a half ago, when 28,000 doormen, porters and other apartment building employees nearly went on strike before a contract was hammered out. That deal included 8.5 percent raises over the length of the contract for thousands of buildings in Manhattan, Brooklyn and Queens.

Mary Ann Rothman, executive director of the Council of New York Cooperatives & Condominiums, a nonprofit organization that advises co-op and condo boards, said one of the most noticeable spikes in fees came right after Sept. 11, and has stayed high since.

“We had tremendous escalating costs for insurance that really skyrocketed,” she said. Added building security and health insurance for building service employees have also become major expenditures.

The New York Times, citing numbers from appraiser Jonathan Miller, recently reported that common charges and real estate taxes have together spiked 38 percent at condos between 2002 and 2007, compared to a 27 percent increase in the previous five-year period.

Condos cheaper?

In 2006, the Council of New York Cooperatives & Condominiums found that common condo fees were about 45 to 55 percent of what co-op owners were paying in maintenance. That is largely because condos separate common fees from real estate taxes and mortgage payments.

The report, which compared data from roughly 200 co-ops and 150 condos, also indicated that over the past three years, wages, including benefits, had gone up approximately 11 percent.

“A big piece of the co-op maintenance is the building-wide mortgage, but then again, an individual condo mortgage is usually bigger,” said Ronald Kremnitzer, partner and co-chair of Pryor Cashman LLP, a firm that converts rental buildings to condos.

Kremnitzer said condo common charges combined with condo real estate taxes are typically lower than comparable co-ops, but the condos usually sell for more money.

“Now when you go get an individual condo mortgage as opposed to a co-op loan, you generally have a bigger mortgage and pay more interest,” he said. “The prices for both condo and co-op really are a wash-out, the difference being the purchase price and the ongoing price.”

Making repairs

Another factor that can drive up common charges, particularly in new condos, is shoddy construction.

When condo boards find that the building needs repairs or has major structural problems like a leaky roof or poorly installed flooring, a capital assessment is levied on the tenants, which results in a temporary fee hike.

Wolf said that scenario is common. “A board does an assessment to pay for deficiencies in new construction left by the developer,” he said. “Maybe for the builder, things didn’t go according to plan: It could be a mechanical failure or exterior issues.
In most cases, the sponsors are going to
repair that, or the building does an assessment to pay for it.”

Wolf said that sometimes a sponsor, usually the developer selling the units, doesn’t cover those costs because their obligation to the project has ended.

Rosabianca said developers know that modest common charges are one of the lures of buying a new condo. Still, he warned that keeping those fees too low can cause problems later on. And, while new condo developments often advertise themselves as having low common charges, those charges often end up increasing later because of new costs.

“It’s foreseeable that when a building comes into operation, they realize their budget didn’t meet the building’s needs, so they increase common charges,” he said. “It happens all the time.”

According to Rosabianca, boilerplate language in the condo offering plan often states that the budget is subject to any reasonable increases.

Planning for high costs

Condo boards vary in the way they plan for the future, with some socking away reserve money and others opting out of maintaining rainy day funds.

“There is a condo board that didn’t need to raise the common charges but raised them 2 percent anyway this year,” Heller, the real estate lawyer, said. “They said they were worried that unit owners were getting too comfortable without ever raising fees. If you do it prophylactically, build a reserve, you won’t get shocked.”

Elly Pateras, vice president and senior managing director for Douglas Elliman Property Management, said condo boards that accurately project expenses for the following year can keep up with the 3 to 4
percent cost of living increases.

“Many buildings don’t raise the common charges or run a deficit for two or three years, and then they meet up with expenses,”
Pateras said. “All of a sudden, there’s a 16 percent increase.”

Kremnitzer, who also represents condo buyers, advises his clients to find out what the projected charges will be over the years.

“We look at condo minutes — find out if there have been things like leaks or complaints,” he said. “But one of the most important things we look at is how much
money is the condo holding in the bank, how financially successful the building is. We like seeing a building hold three to six months or more [worth of common charges] in reserve.”

He said if a building’s budget is $1 million a year to cover labor, insurance, fuel and normal repairs and is generated solely from common charges, the building should have at least $500,000 in the bank.

But it’s a matter of striking the right financial balance, because some people get nervous if a building holds too much in the bank, he noted. “Now they have credit lines and much thinner tax reserves,” he said.

Asbury Park, NJ

Majestic on the Park

The Teicher Organization is converting the Salvation Army building into a mixed-use project with two- and three-bedroom luxury condominiums. The development will also have ground-floor retail and on-site parking.

Riverside, NJ

Pavilion Avenue

The Teicher Organization is building the mixed-use residential and commercial development on the site of the former Zurbrugg Memorial Hospital on Pavilion Avenue. The $100 million project will consist of 430 condominium units as well as retail and office space.

Hoboken, NJ

Harborside Lofts

1500 Garden Street

Occupancy has begun at Toll Brothers’ 116-unit luxury condo. The studio, one-, two- and three-bedroom loft homes range in size from around 680 to 2,500 square feet and have 13-foot ceilings. Amenities include rooftop garden terraces, a rooftop pool, fitness center, waterfront promenade and 24-hour concierge. Contact: www.hudsontea.com.

Jersey City, NJ

Canco Lofts

50 Dey Street

Sales have begun for phase one of the 1 million-square-foot, 551-unit condominium conversion of the American Can Co. factory. Over 80 percent of the 101 loft homes of phase one were under reservation before sales were officially launched. Prices for the one-, two- and three-bedroom apartments range from $350,000 to $850,000. The development’s 10,000-square-foot residents’ club will have a fitness center, yoga studio, children’s play center, screening room, pet park, billiards and a heated garage with elevator access. Construction on phase one is expected to begin in summer 2008. Phase two, which will include an additional 101 residences in the landmarked building’s third tower, is expected to launch sales in fall of 2008. Contact: www.cancolofts.com.

Rahway, NJ

Savoy at Rahway

Maplewood Homebuilders’ 36-unit residential project contains two-bedroom homes ranging up to 2,000 square feet in size. Prices for the condos, which come in eight different designs, start at $315,000. Underground parking is available to all residents. Contact: www.homesbymaplewood.com.

Sales update

Jersey City, NJ

The A

The Athena Group is developing the 34-story, 250-unit condominium, which was nearly 90 percent sold as of early February. RMJM Hillier designed the brick and glass tower, which includes one- and two-bedroom apartments priced from the mid-$400,000s. The building’s amenities include 24-hour concierge service and a fitness center with terrace. Contact: www.insideA.com.

Jersey City, NJ

Gull’s Cove

Metro Homes’ 16-story, 323-unit first phase of the luxury condominium was more than 70 percent sold as of mid-January, when units became available for occupancy. The studio to three-bedroom residences range in size from 500 to 2,000 square feet; they are priced from the mid-$300,000s. Amenities at the 432-unit project, designed by architect Dean Marchetto & Associates, include a fitness center, indoor parking, concierge and a landscaped garden with putting green. The property will have three retail tenants, including SAWA Steakhouse & Sushi Bar. The Marketing Directors is the exclusive sales and marketing agent for the project. Contact: www.gullscove.com.

While New York City is getting the first office tower in America to compost food waste, compared to other cities, New York lacks green high-rises.

There are only 17 green buildings in Gotham — as
measured by the Leadership in Energy and Environmental Design certification from the U.S. Green Building Council — compared to 36 in Chicago and 34 in Portland. Portland, a city about one-sixth the size of New York, has already built about 5.05 million square feet of LEED-certified buildings, with millions more square feet in the pipeline.

In New York City, the most high-profile example of green building is the 2.1 million square feet of commercial space coming online at One Bryant Park, a 54-story tower where food waste will be recycled. It is being built by the Durst Organization and will account for nearly a quarter of the city’s LEED-certified space.

While 311 green buildings are in the pipeline in New York for the next five to seven years, the majority of these are new developments. Most of these are small residential projects, like the Greenbelt, an eight-unit residential project at 361 Manhattan Avenue in Williamsburg being developed by Derek Denckla and architect Gregory Merryweather. The project is Brooklyn’s first LEED-certified condo.

With the downturn in the post-credit crunch era, the status of green new development in the city may be unclear. However, retrofitting buildings, a less visible aspect of
green building, is another way of adding to the city’s green housing stock.

Retrofitting existing buildings can be expensive, but building owners can enjoy more than just lower energy bills, which, depending on the extent of the retrofit, can decline by up to 40 percent.

Typical retrofits include more efficient use of water in bathrooms, new windows that require virtually no window-washing with chemicals, individual heating and cooling mechanisms for each office, and green-friendly lighting systems.

Taken together, these changes can add up to massive environmental benefits and steep reductions in greenhouse gas emissions. While expensive, experts say these types of retrofits are less costly than tearing buildings down and building from scratch.

Retrofitting will be necessary in order to achieve Mayor Bloomberg’s PlaNYC greenhouse gas emission goals of a drop of 30 percent below 2005 levels by 2030. PlaNYC does not spell out how this reduction will be reached, but the energy produced to operate buildings currently accounts for 79 percent of the city’s carbon emissions.

But retrofitting is not without its drawbacks, including the downside of its popularity.

“Everybody building a new building is looking to make them as green as possible,” said Steven Spinola, president of the Real Estate Board of New York. “But there aren’t enough contractors to do what needs to be done in a short time,” including retrofitting existing buildings.

That’s an understatement. According to an estimate by the USGBC’s New York chapter, there are only several hundred contractors throughout the city qualified to design and oversee green retrofits.

“LEED is still quite new, and it takes a while to get tradespeople trained to do something new,” said Vicki Been, director of the Furman Center for Real Estate at New York University. “We’re in the early stages, so there are going to be delays.”

In pursuit of its green goals, the city is trying to nurture a community of professionals who can do green retrofits. In addition, the city government has committed to retrofitting its own sizeable portfolio of buildings in order to comply with PlaNYC by 2017.

To help make existing buildings green, the USGBC is starting a training program for contractors this fall. The course will supplement workshops already available.

“No city has effectively tackled existing buildings,” said Russell Unger, who heads USGBC’s local chapter.
But there appear to be incentives for cities to do so. In addition to benefiting the environment, there’s evidence LEED-certified buildings can command higher rental premiums.

One Bryant Park is an example. Many future tenants
have signed leases for higher than $100 a square foot, well above the average asking rent for Midtown, which was $79.81 last quarter.

While many of the tenants are from the finance industry and are keen to occupy extra-large floor plates, observers say that One Bryant Park’s green features are also an important draw.

“Tenants are saying it [environmental friendliness] is one of the most important things they look for now,” Been said.

Sam Chang, who built his reputation as New York’s most prolific hotel developer, is gaining a stronger foothold in the affordable condo market.

Following on the heels of his success in hotels, Chang’s plans to develop a recently purchased site on East 8th Street in Manhattan, as well as another 96-unit project in Queens, could help put him on the real estate map as a major player in a new arena.

“We’re in a sluggish market right now,” said Alan Miller, a principal at Eastern Consolidated and broker on some of Chang’s biggest deals. “He’ll price them right, and he can blow them out the door.”

Chang has made his name on the dozens of “limited service” hotels he’s built throughout the city. He is currently building six on one block of East 39th Street, including a Comfort Inn and a Holiday Inn Express.

Real estate observers say that if Chang, who is the CEO of McSam Hotel and the head of the MikeSam Construction Corp., is able to apply his skill in the hotel business to the condo business, he will be a force to be reckoned with.

“What he brings to the table is the ability to get very difficult deals done in a city like New York,” said Bill Fortier, senior vice president of franchise development at Hilton Hotels. “He takes these little pieces, cuts them into these little slices of pie and gets things right. He tends to get them built and sells them off quickly.”

Lalia Rach, dean of the Tisch Center for Hospitality and Tourism at New York University, said Chang would be able to transfer his hotel success into condominium development if he finds well-thought-out locations and markets the properties to the right audience.

“He’s a very smart businessperson,” Rach said. “One of the things consumers are looking for is value for money. That’s why his hotels have been so successful.”

Chang has already made one successful foray into the condo business, the Eastwood, a 10-unit, six-story, light brick building with retail on the ground floor that Chang developed on East 5th Street and Avenue D in 2005.

City records show that it largely sold out by the fall of 2005, with prices ranging from $585,000 for a 741-square-foot apartment to $764,000 for a 2-bedroom unit measuring 900 square feet.

Eastern Consolidated officials say Chang’s East 8th Street site, which is 4,600 square feet, may very well resemble the Eastwood.

Charlotte Fu, associate broker at Eastern Consolidated, said the 397-401 East 8th Street site — which Chang purchased from the owner of Key Food Sam Obeid — is perfect for another condo project because it comes with rights to develop an additional 20,000 square feet.

The condo also comes as McSam’s new non-hotel projects are creeping into the outer boroughs, with a mixed-use site on Queens Boulevard in Woodside and one in Forest Hills.

City records show that “McSam Queens” is the owner of a building at 63-14 Queens Boulevard, which is being developed into a 96-unit condo project measuring more than 172,000 square feet.

Robinson Lemos, associate broker at Corcoran Group, and his partner Adriano Hultman are marketing several condos in the area, including C Condo, located at 79-35 Calamus Avenue, where units start at $399,000 for an 891-square-foot one-bedroom apartment.

Chang’s project in Forest Hills involves two condo buildings at 64-34 and 65-06 Grand Central Parkway that were originally being developed by developer Howard Lepow; Massey Knakal brokered a deal to sell them to Chang for $7.3 million in early 2007.

Chang was out of the country and unavailable for interviews.

Speculation abounds that Chang may expand further into condo development because he may be able to get a better return on his investment than from doing limited-service hotel properties. He recently began expanding into more boutique hotels from limited-service for the same reason, observers said.

“You find a good location, you build it, you sell it and you walk away,” said David von Spreckelsen, vice president at Toll Brothers. “The one thing he doesn’t have with hotels [that he would with condos] is the attorney general process. You don’t walk away as cleanly as you do a hotel.”

Chang’s current business includes his own low-cost construction firm that is able to undercut nearly every major hotel developer in the city. While his practices have led to confrontations with major unions in the city, should he decide on major condo expansion, he would likely be able to undercut the prices of many large-scale developers.

“If he’s doing it himself, he’s controlling costs,” said Von Spreckelsen. “That stuff is done all day long in the boroughs. I would think he wouldn’t have a problem.”

Meanwhile, Chang’s excursion into condos does not seem to be cutting into his hotel dealings.

In February, Chang furthered his relationship with another hotel brand by increasing his stake in financially struggling Trump Entertainment to 2.33 million shares, or 7.5 percent, according to filings with federal regulators. The move fueled speculation that he may be interested in a takeover bid.

Trump Entertainment officials said they have had no direct contact with Chang.

Also, Chang sold the Holiday Inn Express in Manhattan for $42 million to Magna Hospitality Group, an East Greenwich, R.I., firm that manages several of his hotels.

The developer has several hundred rooms in the pipeline, including a controversial Comfort Inn on Webster Avenue in the Bronx that is facing major opposition, as neighbors fear it could be used for illicit activity.

“Just in terms of the way they do business, they’re not very responsive,” said Greg Faulkner, chairman of Community Board 7. “To be honest, we would have much preferred to have a condo rather than a hotel.”

In a recent conference call announcing its first quarter results for 2008, Robert Toll, chairman and CEO of Toll Brothers, described the extent of his company’s recent slump, saying, “Based on current traffic and deposits, we are not yet seeing much light at the end of the tunnel.”

Yet if the tunnel in question is the Holland or the Queens-Midtown, there is some brightness shining through.

Like other national home builders, the Horsham, Penn.-based Toll Brothers is having a rough time lately. Its revenues are down, and its net signed-contracts have been cut in half, while its share price has dropped by more than 60 percent from its 2005 high.

Amid the national gloom, though, Toll’s New York-area story is upbeat, with condos in Brooklyn, Queens, Manhattan, Hoboken, and Jersey City selling briskly. While urban high rises are not Toll’s traditional stock-in-trade — the company is best-known for high-end, single-family suburban homes often tagged “McMansions” — Toll says its “City Living” urban development division is in town to stay.

In the past several years, Robert Toll has been assigning letter grades to various markets in which his Fortune 500 company operates. Northern California was recently handed a D-minus, while Southern California, Las Vegas and eastern Florida all scored an F-minus.

But urban New Jersey scored a B. And, according to a company spokesman, the New York City metro region also scored a B with the company’s Williamsburg and Long Island City properties around 80 percent sold, and its Manhattan building on Third Avenue near 14th Street sold out.

Since Toll Brothers tends to build in the suburbs or even exurbs, it’s a little ironic that its New York projects are all in edgy areas like Williamsburg, Long Island City and the East Village. While many of the national builders have arrived on the shores of the Hudson and the East River, even sniffing around Manhattan, Toll has made the longest leap.

“Our buyers really took us here,” says Benjamin Jogodnik, Toll’s executive in charge of Hoboken and Jersey City projects. The company, he says, moved from single-family homes to “active adult” and golf-course communities favored by older buyers.

Now some of those same buyers are empty-nesters interested in buying condos for their adult children and possibly moving to cities themselves.

Because Toll is not an old-line New York real estate family, when it came to New York, it had nothing in the pipeline, says David Von Spreckelsen, director of acquisition and development for Toll in New York City. As a result, it gravitated to areas that were being rezoned for residential towers but that were still close to Manhattan.

One of its most current projects is in the rezoned section near the Gowanus Canal, whose once-toxic waters are being flushed and cleaned. Toll intends to build nearly 600 low-rise units there in what it calls Carroll Gardens. Last month, the company revealed those plans. And it has asked the city to rezone a three-acre swath in the neighborhood.

While the company has found buyers citywide, there’s been some culture shock.

“People in Williamsburg want something cool and eclectic,” says one broker active in the area, who asked not to be identified because she is not authorized to speak to the media. Toll’s buildings there, Northside Piers and North 8, are “cookie cutter,” she says, calling the company the Wal-Mart of real estate.

While the buildings afford some river views, they tend to be a fairly long walk from subway lines, with desolate stretches along the way. At the same time, she adds, “I’m sure there’s a market for Toll Brothers.”

Toll, of course, agrees. Along with the sold-out 77 units at 110 Third Avenue (off 14th Street), Toll has sold 80 percent of the 118 apartments at its 5th Street Lofts in Long Island City.

While the nearby hipsters may scoff, their new neighbors seem attracted by granite finishes and Bosch dishwashers, just as Toll’s suburban customers have long been. Far from being turned off, the Toll name has helped sell, as has Toll’s network of past and potential customers, says Stephen Kliegerman, executive director of development marketing for Halstead Property, who has worked with Von Spreckelsen.

“There is a quality and a familiarity with the brand that people feel good about,” Kliegerman says.

On the New Jersey side of the river, Toll has some boldface names as customers. Giants quarterback Eli Manning lives in a Toll condo in Hoboken, as Robert Toll has noted in investor calls. New Jersey Governor Jon Corzine lives in the Hudson Tea building, a former Hoboken factory converted to condominiums by Toll. He will soon move to another Toll project, Maxwell Place, an 800-unit project on the site of a former coffee factory, also on the river in Hoboken.

Toll has also built 230 units, nearly all sold, just over the Hoboken line and three-quarters of a mile inland in Jersey City. From there, Toll has gained preliminary approval to build three high-rise towers in Jersey City’s Powerhouse District.

Like Queens, Manhattan and Hoboken, Jersey City is void of McMansions and has yet to see its first Wal-Mart. But it does have a Toll Brothers — and a Target is not far away.

Reviewed by Alec Appelbaum and Dorn Townsend

A common recent complaint about Manhattan is that the economic boom that has hoisted property
values in Manhattan has also dashed its vitality. Whereas neighborhoods like Soho and the Upper West Side were once hotbeds of creative inventiveness and passion, these days the high costs of real estate have shut out the kind of diversity that once gave character to these areas. For many new arrivals in Manhattan, the struggle to make ends meet is heartbreaking — especially for new residents with artistic ambitions but without rent-controlled apartments or indulgent parents.

To varying degrees, this brooding about real estate infects everyone in “Ellington Boulevard,” Adam Langer’s rollicking third novel. (The book’s title alludes to West 106th Street and the Manhattan Valley neighborhood where most of the book’s action unfolds.)

“Ellington Boulevard” isn’t the first New York City novel to make property concerns a theme. Few works of fiction, though, have so focused on real estate.

Property angst takes hold of every character in this novel: A jazz clarinetist has to confront his past when his rent-stabilized walk-up is sold. The talents of a young writer are immobilized when she stays in her childhood home. The decision to buy a condo tips the balance in a newly married couple’s relationship. The loutish son of a saintly landlord tries to use inherited properties to reinvent himself as a business success. To pay his bills, an aspiring actor becomes a broker, a job he initially disdains but comes to master.

As a result of its themes, real estate pros will find much in this novel with which to relate. The city’s rent-control laws, for instance, receive a drubbing. It’s no accident that artistic growth halts for the two characters who enjoy rent-controlled apartments; their creativity atrophies at nearly the same moment that their generous leases are signed.

For a book that takes on Manhattan real estate, a number of setbacks surface. For instance, the only apartment that gets sold is a two-bedroom unit on West 106th Street. Langer strains credulity by asking readers to believe that this bargain-priced apartment could sit on the market for months, attracting only one bidder.

Another false note is the sometimes negative depictions of the city’s real estate pros. While much of the novel’s action pivots on real-estate concerns, property professionals come off as overly barracuda-like. Josh, the broker, “greases supers, scours the daily papers for obituaries, swoops down upon recent crime victims — if living in the city is getting too tough for them, he says, now would be a perfect time to sell.”

Despite these shortcomings, there is much to enjoy in this book. The writing is brisk and graciously captures the concerns of the city’s Craigslist generation. Broad subplots manage to skewer the city’s publishing and theater communities, while liberal arts graduate students come off as less-than-desirable tenants.

For all of Langer’s rhapsodic and easy-going prose, the book makes some penetrating observations. The anxiety of the characters in “Ellington Boulevard” is not just about being able to pay their rent or mortgage: It’s about having one’s creative years frittered away by an overheated property market. Yet even as rising property values challenge his characters, those price pressures can’t knock out their spirits.

An excerpt on how to be a successful New York City broker:

“In college, Joshua had always approached every directing and acting gig, no matter how seemingly trivial, with a focus and an attention to detail so intense that many actors and designers refused to work with him afterward. His approach to real estate was equally obsessive. He read the Post’s real estate section on Thursday, Newsday’s and the Times’ on the weekend; he pored over every word of Crain’s New York Business, Real Estate Weekly, The Real Deal and Curbed.com. He attended open houses five days a week. He arrived early and stayed late at every class and tutoring session offered by the Manhattan Real Estate Professional School on 32nd Street, and listened to every broker’s recruitment pitch, ultimately declining six job offers because he had committed to work for Brad Overman.

Is it possible to combine luxury with green? That’s what one South Florida builder is about to find out.

After
20 years of building mansions that sell for as much as $135 million,
Frank McKinney, a developer in South Florida’s Delray Beach, is betting
on the fact that he’ll be able to find just one buyer who can afford an
ultra-luxury home, but will want it to be green.

In July, McKinney
started construction on a speculative 15,000-square-foot,
ocean-to-Intracoastal mansion in Manalapan in Palm Beach County; he
claims the home will be the largest and most expensive certified
environmentally friendly house ever built. The asking price: $29
million.

While it may be hard to
believe that a 15,000-square-foot home could even be considered green,
McKinney is building the house to the standards of the U.S. Green
Building Council and the Florida Green Building Council. He claimed
that he’s seen “the green light” and is already planning to build a
second green house for which he plans to seek LEED Platinum
certification — the highest green classification.

“We want to set the standard for environmentally responsible luxury construction practices,” said McKinney.

McKinney
calls the $29 million home, which has seven bedrooms and 11 bathrooms,
Acqua Liana, the Tahitian phrase for “water flower.” The design is
inspired by his trips to Bali, Fiji, Tahiti and Hawaii.

The three-story home
will feature thatched roofs, meandering water gardens, an interior
acrylic floor with moving water below, a 24-foot water wall with a
fog/smoke screen on which moving images will be projected, a suspended
double-helix glass staircase and a guesthouse constructed out of palm
and bamboo that is partially submerged in a lagoon.

In addition to those showy green touches, the home will have an impressive environmentally efficient infrastructure.

It
will have enough solar panels to cover a regulation basketball court
(and generate enough energy for two average-size homes); a water system
that collects an amount of “gray” runoff water that would fill an
average swimming pool every 14 days; enough reclaimed wood to save 7.5
acres of Brazilian rainforest; and pools, water gardens and spray
misters to lower the temperature in the home by 3 to 5 degrees. During
the building, crews will recycle 340,000 pounds of debris.

According to Rob Hink,
president of the South Florida chapter of the U.S. Green Building
Council, former vice president Al Gore’s environmental crusade has
raised awareness about global warming and created more demand for homes
that don’t pollute. That demand, Hink said, has led to an increase in
the number of builders interested in constructing green homes.

For some developers, building green is also a tool to help give them a leg up on the competition in the tanking Florida market.

“I
think green features can be used as a marketing tool,” said Tedd
Gatteau, a real estate agent with Regency Realty Services in Boca
Raton. Gatteau said those who are interested in owning green homes
won’t be turned off if developers also exploit those features in their
advertising and marketing.

And on top of the
bragging rights they get for being socially conscious, buyers also reap
health and financial benefits when their homes are efficient. The
resultant properties will have lower energy and water bills and reduced
greenhouse gas emissions.

“I’m not the kind of
guy who is going to go out on my lunch break, hug a tree and then eat
granola,” said McKinney. “I’m a businessman first. But when you
dovetail responsible environment stewardship with a smart business
approach — I’ve never seen two things that come together like this.”

Atlanta

Atlanta home prices so far this year have dropped off just 2 percent since 2007 despite slower sales and an oversupply of unsold homes. The city currently ranks fifth among metro markets in the U.S. for price stability, the Atlanta Journal-Constitution reported. Foreign buyers are taking advantage of a weak dollar and helping keep the region’s real estate market afloat. A National Association of Realtors study concluded that Georgia ranked ninth among all states for foreign investment in residential real estate in 2007.

Boston

The median sales price of a single-family home decreased in 199 communities in Massachusetts last year and increased in just 53, the Boston Globe reported. The 50,435 single-family home sales figure tallied last year in Massachusetts was 5,000 fewer than in 2006 and the lowest total for the state since 1992. The Warren Group, a real estate publisher, said the Boston-area community with the largest uptick was the exclusive suburb of Lincoln, which saw a 27 percent year-over-year increase in the median sales price.

A $1.4 billion project to restore commuter rail service from two Massachusetts cities to Boston could drive up real estate values, the Boston Globe reported. New Bedford and Fall River officials are hoping for revitalization similar to that seen in Brockton, Newburyport and Worcester, where rail service to the Hub has been restored since 1994. The Warren Group reported that the average single-family home prices in those cities appreciated up to 30 percent faster than their county average after commuter rail service returned.

Chicago

The inventory of unsold condos in downtown Chicago may be at an all-time high, but a record 5,900 new residences will be added to the area’s existing stock in 2008. A total of 4,150 new condos and townhouses were built in 2006, and 4,300 units were constructed in 2007. But sales of these new units fell 29 percent last year to 2,961, from 4,180 the previous year, the Chicago Sun Times reported. According to Chicago-based Appraisal Research Counselors, 5,814 condos remained unsold on the market at the end of 2007.

The McGraw-Hill Construction Outlook for Chicago reported that total construction in the greater Chicago area could decline 8 percent in 2008, to just under $18 billion. Office starts will see an 11 percent drop-off, according to the report, although the projected $1 billion in starts will be historically high. Retail construction is also expected to fall 12 percent this year, to $977 million. McGraw-Hill expects unemployment in the region to rise to 5.4 percent in 2008 from 4.9 percent last year, the Chicago Tribune reported.

Detroit

Wayne County had the highest foreclosure rate among the nation’s 100 largest metro areas in 2007, the Detroit Free Press reported. According to RealtyTrac, which defines metro Detroit as Wayne County, 4.9 percent of Wayne County homes entered some stage of the foreclosure process last year. These default notices, auction sale notices and bank repossessions increased 68 percent from 2006. That amounted to about 4.8 times the 2007 national average of 1 percent of homes in some stage of foreclosure.

Las Vegas

A record 39.2 million people visited Las Vegas in 2007 and filled more than 90 percent of the city’s hotel rooms, despite an increase of just 342 in the number of available rooms from the previous year. A Las Vegas Convention and Visitors Authority report concluded that Sin City visitation grew by about 300,000 people last year. Visitors in 2007 spent on average $132 per night for a hotel room, a 10 percent year-over-year increase and the fifth highest rate in the country, the Las Vegas Review-Journal reported.

Las Vegas’ industrial vacancy rate increased in almost every submarket in 2007, according to a Grubb & Ellis report. Industrial vacancy, which has been inching up in the city since 2006, reached 6.2 percent in the fourth quarter of 2007 for 93.2 million square feet of total space, the Las Vegas Review-Journal reported. The northwest submarket had the highest vacancy rate at 31.6 percent, followed by Henderson’s 8.2 percent rate. The reported average asking rent in the fourth quarter was $10.37 per square foot triple-net.

Los Angeles

Only 9,983 homes were sold in Southern California’s six-county region in January, the lowest total in 20 years, according to data tracking firm DataQuick Information Systems. Nearly one out of four properties sold in Los Angeles, Orange, Ventura, San Bernardino, Riverside and San Diego counties in January were in foreclosure, which could be putting downward pressure on home values, the Los Angeles Times reported. The median sales price was $415,000, 18 percent below 2007′s peak and the lowest since January 2005.

Philadelphia

Fewer home sales and lower prices have hurt Philadelphia’s income from real estate-transfer taxes in recent months, the Philadelphia Inquirer reported. The city’s Finance Department said income from transfer taxes has been running about $5 million short of estimates, with a possible shortfall of $15 million by mid-year. Home prices dropped an average 4.4 percent in the fourth quarter of 2007, and the 4,725 total home sales were the fewest on record since spring 2003, according to the Wharton School at the University of Pennsylvania.

Phoenix

A total of 3,350 homes were sold in the Phoenix area in January, compared to 4,520 resales the previous year and a record 9,360 sales posted in January 2005, the Phoenix Business Journal reported. The last time sales totals were that low for the month was in January 2002, when 3,345 home sales were recorded, according to an Arizona State University study. The median sales price for a Phoenix home in January was $230,000, down from $232,000 in December and $260,000 in January 2007.

The 1.59 million square feet of sublease office space in the Valley at the end of 2007 represented only 2.3 percent of total office supply, but it was also twice the amount of sublease space that was on the market a year earlier, the Arizona Republic reported. Experts are worried that the 4.57 million square feet of office space under construction in the Valley at the end of 2007 will depress rents. CB Richard Ellis data show that Scottsdale accounts for 637,659 square feet, or 40.2 percent, of the Valley’s current sublease supply.

San Francisco

As the broader San Francisco housing market continues to tumble, the Bay Area’s rich are still buying high-end homes for record sums, the San Francisco Chronicle reported. The penthouse at the unfinished Millennium Tower at 301 Mission Street sold recently for $11 million, or $2,289 per square foot. In the fourth quarter of 2007, 40 condos and single-family homes sold for more than $3 million, a total of $213.8 million, according to Pacific Union GMAC Real Estate. That was up from 22 sales for $119.4 million a year earlier.

Seattle

The median home sales price in Washington dropped 2.5 percent in the fourth quarter of 2007 from the year-ago period. That represented the first year-over-year decline since the Washington Center for Real Estate Research began tracking the data in 1994, the Seattle Times reported. Fourth-quarter sales in the state dropped 25.6 percent to 99,120, from 133,220 in the same period of 2006. Sales were down 28.1 percent to 24,170 in King County, while the median sales price declined 0.2 percent to $439,000.

About 400,000 square feet of retail space was added to Seattle’s greater downtown area in 2007, bringing the total to 5 million square feet, according to the Downtown Seattle Association. But some say there is not enough retail development underway in the area’s downtown core. In outlying areas in greater downtown, the vacancy rate for retail space increased from 5 percent in 2006 to 6 percent last year. The asking rent reportedly fell from an average of $25.02 per square foot in 2006 to $23.29 per square foot last year.

Washington, D.C.

Montgomery County’s once booming real estate market could finally be slowing down, with new developments farther from Washington faring worse than older neighborhoods closer to the Capital Beltway. The average sales price of existing homes in the Bethesda-Chevy Chase area dropped 3.5 percent in the fourth quarter of 2007, compared to the same period in 2006, according to George Mason University’s Office of Housing Policy Research. In Damascus, at the county’s outermost stretch of Interstate 270, the average house price fell more than 14 percent in the same period, the Washington Post reported.

Foreigners buy more Florida condos

Real estate agents say that the weak dollar is bringing an increasing number of condo buyers to Miami from Europe, Canada and South America, Reuters reported. Florida led the country in home sales to foreigners last year, according to a National Association of Realtors study, accounting for 26 percent of such transactions in the U.S. This latest study also concluded that over 7 percent of Florida homes sold last year went to foreign buyers, and 65 percent of agents brokered at least one foreign transaction. (A previous story by The Real Deal saw a similar trend in 2006.) A record number of foreigners visited Miami in December, according to online property auction site FastHomeAuction.com.

Miami, Ft. Lauderdale areas have among highest foreclosure rates

Two Florida cities, Miami and Fort Lauderdale, appeared in the top 10 of highest foreclosure rates in the U.S., according to RealtyTrac’s rankings of the nation’s 100 biggest metro areas, the Wall Street Journal reported. The state had three of the top 20 on the list.

Authorities say the markets with the most foreclosures had experienced rapid growth and unsustainable price appreciation, or were hit with a widespread economic downturn. Detroit ranked the highest, with 4.92 percent of households in some stage of foreclosure. Nationwide, foreclosure filings went up 75 percent last year.

Boca Developers seek to expand Biscayne Landing project

Boca Developers, responsible for building a massive residential and commercial community at Biscayne Landing, are seeking community support for permission to bring 200,000 additional square feet of commercial space to the development, the Miami Herald reported. The space would be used for planned offices, retail and a hotel. The new proposal would also create a small theater that would be used for film festivals.

Boca Developers president Brian Street said the new proposal would still have almost 6,000 residential units. The developers encouraged residents to consider an increased commercial space a “dynamic alternative to the marketplace” in a time when the residential market is suffering. Expanding the commercial component would create 7,000 jobs, according to the developer.

Developers cut prices in Port St. Lucie

While Port St. Lucie has always been known for having great residential property deals, the downturn in the real estate market has caused home prices to go lower than expected. Some developers have begun dropping prices and producing smaller, cheaper homes to increase sales. On the plus side, an emerging research and development corridor along Interstate 95 is expected to bring jobs and boost the area’s housing market, the Palm Beach Post reported.

Up to 70 percent of the builders who worked in Port St. Lucie during the housing boom are no longer there, according to Don Santos of the Treasure Coast Builders Association, and membership at the Realtor Association of St. Lucie County has dropped to 1,400 from 1,600 at the peak of the boom.

Homestead puts brakes on condos

In light of recent overbuilding in the area, the city of Homestead passed legislation last month that will bring a halt to the development of new condos, townhouses and cluster-style homes in the eastern half of the city for the next year. The region is approximately 30 minutes south of Miami. While the law enjoyed general support, disagreements over how the moratorium would deal with developments already planned or underway caused it to pass the City Council by only
a 4-3 vote, the Wall Street Journal reported.

The moratorium follows similar moves made by the city of Hallandale Beach, north of Miami, last summer to curb overdevelopment. The six-month moratorium there put restrictions on new developments with 10 or more housing units or 4,000 square feet of commercial space.

Port St. Lucie builders accused of abandoning jobs

Island Shore Homes, a builder in Port St. Lucie, is one of several in the city that has been accused of abandoning customers because of debt related to the housing market crisis, the Palm Beach Post reported. While criminal charges have not been filed against Island Shore’s New York-based principals, Kevin Kelly and Richard Parisi, they are involved in several lawsuits against their former partner Michael Miranda.

Meanwhile, customers are left to shell out more money, or even take out unanticipated loans, to have their homes completed by other builders. The buyers have reportedly collectively lost hundreds of thousands of dollars, but some buyers could be eligible for a reimbursement of up to $250,000 per contractor from the Florida Homeowners’ Construction Recovery Fund.

HUD struggles to help Miami-Dade housing agency

The U.S. Department of Housing and Urban Development is working with local leaders to stabilize Miami-Dade County’s housing agency, after having taken over the agency in fall 2007. The agency, which currently has a list of 28,000 people awaiting aid, faces a shortage of cash, organizational problems and accusations of corruption, the Miami Herald reported.

County Manager George Burgess cut about 80 agency positions before HUD took control; more jobs have been cut since the October takeover. Liberty City has been hit particularly hard by the disarray, as HUD has refused to uphold the agency’s promise last year to construct 850 housing units at the site of a demolished housing project.

Fraud charges for Oakland Park builder

Assistant State Attorney Catherine Maus has accused Oakland Park-based construction company HomeCo Unlimited of scamming South Florida homeowners for four years, by collecting deposits while doing little or none of the work they were being paid for, the Sun-Sentinel reported. Company CEO Douglas Livingston and project manager John Ostendorf face dozens of felony charges stemming from more than 60 customers’ complaints. Livingston’s attorney claims they failed to finish jobs due to economic problems following the Sept. 11 terrorist attacks.

The firm was the target of a criminal investigation in 2003, during which customers were advised to refrain from paying any more money. The following year, the construction company filed for bankruptcy protection after being sued at least 36 times and owing more than $960,000 to customers and subcontractors.

The irony of Ikea’s new position as a spark of retail life that might
pull Red Hook back from the real estate graveyard is not lost on
brokers and business owners in the neighborhood, where many in the
community have strongly opposed its opening. [more]

It’s very fancy on old Delancey Street, you know — or so the song goes. In reality, however, Delancey Street (which nowadays serves as something of a dividing line between Chinatown and the Lower East Side) hasn’t been all that fancy. But it’s getting there.

Delancey runs for about 14 blocks between the entrance to the Williamsburg Bridge on the east and the Bowery to the west, and new developments are starting to sprout amidst the
thoroughfare’s mish-mash of discount stores, 19th century buildings and fast-food restaurants. As the patina of cool surrounding the Lower East Side envelops Delancey, the street appears to be moving toward a new identity and luring new, more upscale residents.

Barrie Mandel, a senior vice president at the Corcoran Group who led sales for Blue Condominium at 105 Norfolk, a high-end development just off Delancey, thinks the types of buyers attracted to the glassy tower typify the changing face of the area.

“People attracted to the Blue were interested in living in the neighborhood, but they weren’t interested in living in one of the rundown, tenement-style buildings,” said Mandel. “I think Lower East Side buyers are looking for the new, interesting thing, but they also want to have a place to get a cup of coffee and a bank to go to. That piece of the neighborhood is getting more interesting and a better place to be.”

Mandel noted that Blue, where buyers moved in more than a year ago, was the first high-end doorman condo in the immediate area. The development’s final two units — a 2,494-square-foot penthouse listed at $3.475 million and a 15th-floor duplex priced at $2.425 million — were recently completed and put on the market.

“It’s very interesting going back to the Blue now, a year after people have moved in,” said Mandel. “The people who live there are mostly businesspeople … in the morning you see them leaving the building in their business clothing, and then at night you see them leaving the building again in hipster clothing, and they’re going out to clubs or places like the Mercury Lounge.”

Mandel noted Blue’s buyers see themselves as trailblazers. “I think people in Blue are going to be very annoyed when other buildings get finished and they’re not the only ones in the neighborhood,” she said.

Some of that annoyance may come from a new 16-story condo rising at 38 Delancey. Lee Yan, who is developing the 56-unit condo, said his project, which will include three floors of commercial space, will contribute to higher-quality housing in the area.

“Every day, the Lower East Side changes,” said Yan, whose family has owned a cookware and metal supply business on Chrystie Street for 30 years. “We’re building because people want to live here.”

Yan said 38 Delancey is on track to be completed by June 2009, and that his
target buyers are young families.

Farther down the street, another project under construction will cater to an even younger demographic. Developer Charles Blaichman is building a 20-story tower at Delancey and Ludlow that will be leased to the School of Visual Arts and used as a residence hall for the next 20 years.

The building will include 353 beds,
and Bank of America will be one of the ground-floor retail tenants, according to Michael Grant, SVA’s assistant director of communication.

Grant said the school expects to move into the building this fall, but it’s still
unclear when the development will be ready for students to move in. The dorm will
provide the school with much-needed student housing.

“With this new hall, SVA will have 1,400 beds, which can serve about 40 percent of our students,” said Grant. “It’s great for our students because you can only imagine how difficult it is for someone to move to New York to go to college and then try to deal with the city’s real estate market.”

Beyond that, Grant noted that SVA as an institution is clearly aware of the real estate pressures in Manhattan. “We’re just like everyone else,” he said. “We wanted to get in somewhere before everything else was gone.”

Part of Delancey’s appeal right now, in fact, is that it’s an alternative to everything else, particularly Uptown and Brooklyn, according to Iris Shorin, an associate broker with DJK Residential who often brings potential buyers to Lower East Side properties.

“People who don’t want to go to Williamsburg, they’d rather be on Delancey Street,” said Shorin. “Same for buyers who don’t want to go to Harlem. I see it going where basically every other neighborhood has gone. It appeals to people who want a Manhattan, not a Brooklyn, address, and also people who are priced out of Tribeca or Soho, or who are looking for an alternative to the East Village or Chinatown.”

At the end of the day, buyers are “banking on gentrification,” said Shorin.

Delancey’s “potential” inspired Philip Chong, who has developed projects like 135 Division Street and 23 Greene Street, to build River Ridge, a 46-unit condo at Ridge Street and Delancey, according to Kathy Tsao, the Prudential Douglas Elliman broker who’s marketing the property. Most units at River Ridge are asking between $900 and $1,000 a square foot. The development went on the market in late December, and as of mid-February, five contracts had been executed and another five were in the offering.

Tsao said the condo is mostly attracting first-time homebuyers who believe in the neighborhood’s potential.

“Buyers are interested in the vibrancy of the neighborhood,” said Tsao. “It’s a multicultural neighborhood with a lot of energy and excitement, and there is a lot to do and see in the neighborhood.”

Tsao said she and Chong “think the future of Delancey is going to be fabulous. In the near future, we believe this will be an extension of the Village and Soho.”

Delancey’s transformation into a strip that’s held in the same regard as the Village or Soho will likely hinge at least in part on new and more varied retail coming into the street. Because Delancey is a wide street, it’s potentially attractive to larger retailers.

As it stands now, there are several bank branches on the strip as well as fast-food restaurants like McDonald’s and a Starbucks. There are also new higher-end establishments on side streets off Delancey, like Nurse Bettie, a recently opened bar, on Norfolk; a mixture of vendors at the Essex Street Market, including merchants who sell kosher products and vendors hawking gourmet food like artisanal cheese; and a couple of bar/venue spaces that draw crowds, including the Bowery Ballroom at 6 Delancey.

As Roberto Ragone, the executive director of the Lower East Side’s business improvement district, sees it, the key question for Delancey is where strategic anchor stores should go.

“The national chains and franchises that have gone into Delancey in the past might have been playing it safe,” said Ragone. “The BID would like to see new retail that encourages foot traffic. Hypothetically, something like a Barnes & Noble could complement other things on the strip, especially with the SVA dorm coming.”

Delancey is also named as a street primed to become
a cultural and tourist hotspot in the state’s Empire Zone development plan for Chinatown and the Lower East
Side. The program uses tax incentives to help attract new business.

Luring tourists would bring more people to the neighborhood during the day, noted Ragone, which would further transform the area.

“The Lower East Side has flourished as a nighttime destination in recent years, but it’s still struggling as a daytime destination,” he said.

While the neighborhood has become something of a buyer’s market because
of the recent economic uncertainty, the limited inventory in the
Heights has helped insulate it from the more severe pain seen in some
other Brooklyn neighborhoods. [more]

The eastern section of Ferry Point Park, located at a bend of the East River next to the Bronx-Whitestone Bridge, is one of the bleakest sites in New York City.

The former municipal landfill is marked by bulldozer tracks and large hills of grayish dirt. In recent years, residents of the
adjacent Throgs Neck neighborhood heard repeated promises that this 222-acre wasteland would be transformed into the city’s first luxury golf course, complete with a new 20-acre waterfront park and a 7-acre community park.

A decade ago, the prospect of that golf course, along with an anticipated downzoning of the area, helped spark a housing boom on undeveloped lots adjacent to the park. Dirt streets were paved, sewers were installed, and hundreds of two- and three-family homes were erected.

But environmental problems stalled the project, and in 2006, the Bloomberg administration cancelled the city’s contract with the private developers who were to build and operate the golf course.

Now, the city has announced that it will build the new links itself.

In it for the long haul

Throgs Neck residents are hopeful that if the plan goes off without a hitch, their property values will rise and they’ll be looking out over a golf course rather than a pile of dirt by 2010.

City Council Member James Vacca, a resident of Throgs Neck, said that since 2000, 300 to 400 homes have been built on what were vacant lots.

“They sold for top dollar,” Vacca said. “I think that they eventually would have been built anyway, but they wouldn’t have commanded those prices — it was the allure of looking out over a golf course.”

Some say the prospect of the Ferry Point Park course has been influencing the area’s real estate market for the past 30 years.

“In the 1980s and 1990s, there were some houses that were built in the area, which people bought in anticipation of the golf course,” said Lynn Gerbino, president of the Throggs Neck Homeowners Association, which still uses the traditional spelling of the neighborhood’s name.

She added, “I would say that some of the houses for sale were sold above market rate.”

Despite the fallow links, data show new homeowners in the neighborhood have not done badly. Figures accumulated by PropertyShark.com show that home values within the 18-block stretch adjacent to Ferry Point Park have increased in the past several years. The median home sales price rose from $315,000 in 2003 to $488,800 in 2007.

“Anyone who bought after 1999 saw their real estate values go up significantly to begin with,” said Marcia Davis, an associate broker with Coldwell Banker. “So they certainly were not hurt.”

However, many homeowners have recently been hit hard by the subprime crisis. The streets adjacent to Ferry Point Park are dotted with “for sale” signs.

According to a recent study by the Federal Reserve Bank of New York, the 10465 zip code, which includes the area of Throgs Neck adjacent to the golf course, ranks 78th out of the 2,205 New York State zip codes in terms of the number of subprime first lien loans.

More shockingly, approximately 47
percent of the subprime loans in the 10465 zip code are in default by at least 30 days.

Increased property values

If the golf course gets built, it could provide some buffer against any potential downturn in property values.

“Certainly, getting it done and looking
attractive would raise the value of homes nearby a minimum of 10 percent, depending on proximity and view,” said Barry Hersh, associate director of the Steven L. Newman Real Estate Institute at Baruch College.

Dorothy DeMarco, principal at the Bronx-based Town and Country Homes and Properties, said that the houses will increase in value “because it will become a much more attractive and glamorous
location.”

But DeMarco said that she is still not convinced the course will get finished anytime soon. “I have been disappointed before; it has been such a difficult development.

“But it is going to happen,” she added. “It is just a question of time.”

The original Giuliani-era project was one of the largest concession agreements in the history of the city’s Department of Parks and Recreation. Ferry Point Partners, a group of private developers that included golf legend Jack Nicklaus and New York City-based developer Paul Kanavos, won the contract to build and operate the course.

The project had the enthusiastic backing of Mayor Giuliani, who announced in December 2001, just three days before he left office, that he was negotiating with the Professional Golfers’ Association to bring a major tournament to the site.

However, the project was mired in
controversy. Lawsuits centered on both environmental issues and the legality of
the contract between the city and the
developer.

A boondoggle

The course was supposed to have been completed in the spring of 2002, but its building dragged on for years. Instead of becoming a world-class greenway, Ferry Point Park became a boondoggle.

Environmental problems caused by the underlying landfill plagued the project and caused repeated delays. In November 2006, when the city terminated its contract with Ferry Point Partners, the New York Times reported that the estimated cost of the golf course had risen from an initial $22.4 million to $84 million.

Local historian Bill Twomey noted that during that time, truckloads of construction and demolition debris were brought in,
intended to serve as a base layer for the
new links.

In the spring of 2007, months after the Bloomberg administration terminated the contract with Ferry Point Partners, the city issued an RFP for a new developer to build and operate a golf course at Ferry Point Park. The city received just two bids, both of which were deemed unsatisfactory.

So this time, instead of turning the project over to a private developer, the city is taking matters into its own hands. It will be hiring its own contractor to build the golf course, and will then broker a separate agreement with an operator once the links have been built.

In announcing the RFP in January for a contractor,
Mayor Bloomberg said, “Leaving this land fallow doesn’t serve anyone.”

The former landfill still causes problems, which will
presumably be resolved once the golf course gets built. Dust blows off the dirt hills, and people complain of smells wafting from the site. “When the wind blows the wrong way, you get a terrible stench coming from the dump,” said Davis from Coldwell Banker, “but when the golf course gets built, you are not going to have that.”

Vacca, who first started advocating for a golf course at Ferry Point Park in the late 1970s when he was a member of the local community board, said that he is cautiously optimistic. “It’s been a long haul,” he said. “I am waiting; I am holding my breath.”

MTA looks for millions from Hudson Yards bidders

The winning Hudson Yards bidder will have to pay tens of millions of dollars that might not be refunded if the deal to redevelop the 26-acre site falls apart, Crain’s New York Business reported. The MTA wants a $9.2 million fund to improve a Long Island Rail Road facility near Shea Stadium, according to documents the agency sent to the five bidders. A $5 million fund for expenses would be required for the western and eastern parcels of Hudson Yards, along with a $10 million fund for environmental expenses. The MTA also wants to lease the site instead of selling it.

Real estate tax revenues to fall

Both the city and state are preparing for a big drop in real estate tax revenues. The city predicts a 39 percent fall in sales volume for commercial deals through 2009, the New York Sun reported. The median price for those sales is predicted to drop by 32 percent. City revenue from property taxes this year is forecasted to be $1.5 billion, 14 percent lower than in 2007. The city predicts the mortgage recording tax will bring in $1.15 billion, a drop of about 27 percent. “It is obviously a trend that we are very concerned about,” said David Weprin, chairman of the City Council’s finance committee.

Port Authority may take stake in new Penn Station

With the planned redevelopment of Penn Station falling short by $1 billion, the Port Authority could take a stake and provide crucial funding, the Sun reported. Vornado Realty Trust and the Related Companies are expected to contribute $550 million, while the state and city would each contribute $300 million. State officials said they are looking for more money from the developers and the federal government. The state’s top development official, Patrick Foye, said involving the Port Authority “is not a sound idea.” The new Moynihan Station is expected to help drive the far West Side’s growth.

Rental buildings face higher assessment

Assessments for rental apartments are expected to increase this year, while co-ops and condos could get a break, the New York Post reported. The city’s Department of Finance is using a new formula, which Jack Freund of the Rent Stabilization Association said hurts low-income buildings with high operating expenses and low profit margins. That’s because those buildings’ expenses aren’t taken into consideration. Condo owners and residential multi-family property owners will receive a new tax assessment notice.

Willets Point plan loses key supporter

A Queens City Council member has pulled his support for the city’s ambitious redevelopment plan for the Willets Point area at a crucial moment, the New York Daily News reported. Just before the city’s plan to transform the so-called Iron Triangle will go before community board hearings, Council Member Hiram Monserrate said he has withdrawn his support unless the city can guarantee the construction jobs will pay a “living wage” and enough affordable housing will be built. The city said the Willets Point project will create 5,000 permanent jobs and 20,000 construction jobs. The City Council must approve zoning changes before a massive mixed-use development can be built.

West Village project rejected again

Architect-developer Peter Moore’s proposed rezoning of a five-block area, which would clear the way for a 560-unit residential development, has been rejected by a community board. This isn’t the first time his project at 627 Greenwich Street has run into trouble. In 2003, the City Council denied approval after Speaker Christine Quinn voiced concerns. At a recent Community Board 2 hearing, several residents opposed rezoning the commercial area within Barrow, Clarkson, West and Hudson streets to mixed-use. Residents said they feared Moore’s project would be the first of many residential developments that would change the neighborhood’s character and bring in too many new schoolchildren and too much traffic.

Political fortunes can change fast, but that hasn’t stopped the city’s real estate power brokers from dipping into their bank accounts to place their bets on presidential candidates.

An unscientific review of federal campaign filings by The Real Deal found that many New York City developers and real estate heavyweights were more solidly behind their hometown senator, Hillary Clinton, than any other candidate in the running — at least before her chief opponent started stringing together victories.

As of the most recent campaign finance disclosures, only a few real estate outliers had written checks to Senator Barack Obama, who finished last month with 11 consecutive primary and caucus wins, tilting prospects for the Democratic Party nomination in his favor, if the headlines are to be believed.

But as always, a number of real estate bigwigs spread their cash around to multiple contenders. Here’s a sampling of who has given to whom:

Larry Silverstein, who has supported Clinton in her past elections and given money to dozens of politicians, gave Clinton the maximum allowable amount of $4,600 for both the presidential primary and general election.

Steven Roth, head of Vornado Realty Trust, also shelled out $4,600 for Clinton’s campaign. But he also donated $2,600 in June to dark-horse Democrat Christopher Dodd and $2,300 in December to the now-defunct bid by Republican Mitt Romney.

While Harry Macklowe has given to Clinton in the past, donating $5,000 to her political action committee when she was running for re-election to the Senate in 2006, federal election records show that he’s stayed out of the race this time. That may be because he’s figuring out how to pay back his roughly $7 billion debt and looks likely to sell his trophy General Motors Building. His son, William, who has managed some of Macklowe Properties’ debt restructuring, however, donated $2,000 to Clinton in June.

Meanwhile, the Zeckendorf brothers, whose most recent project is the ritzy 15 Central Park West, gave Clinton a combined $9,200 in this election cycle. William Zeckendorf listed his employer as Brown Harris Stevens, the brokerage he and his brother, Arthur, co-chair. Arthur, who also gave to former mayor Rudolph Giuliani before he dropped out of the race, cited his employer as Terra Holdings, the parent company of Brown Harris and of Halstead Property.

Several top brokers hedged their bets. Bruce Mosler, head of Cushman & Wakefield, donated both to Clinton and to Giuliani, before he dropped out of the race. Dottie Herman, chief executive of Prudential Douglas Elliman, spread her donations around with $2,300 going to Clinton, $2,300 to Senator John McCain, the presumed Republican presidential nominee, and $1,500 to Giuliani. And Kent Swig, a co-chairman of Brown Harris Stevens, gave to Clinton and to Giuliani.

Meanwhile, Jonathan Mechanic, a powerhouse real estate lawyer with Fried Frank, gave $2,000 to Clinton in the spring and $2,300 more in September. But he gave $1,000 to McCain’s political action committee the previous year.

While Obama may pick up more cash in this Democratic-leaning city if he moves into the general election, a few early backers have already sprinkled cash into his campaign war chest.

The maverick Joseph Sitt, who’s still angling to develop a big chunk of Coney Island despite a city-defined rezoning that is blocking him, gave $2,300 to Obama in the fall.
Joseph Moinian, whose Moinian Group is redeveloping 1775 Broadway, which Newsweek plans to vacate, gave Clinton $2,700, Giuliani $4,600 and Obama $2,300.

Federal Election Commission spokesperson Michelle Ryan noted that the maximum donation for both the primary and the general election from an individual is $2,300. So, when a candidate gets a $4,600 check early on in the process, he or she has to stash away half for the general election — if they make it that far.

While real estate players are notorious for showering money on local politicians, who have more direct sway over zoning laws that make or break their lucrative projects, new city rules will now limit how much they can give to local candidates.

But having the next president as an ally can be hugely important. And, because New York City real estate players often have a lot of money and, more importantly, a lot of friends with money whom they can recruit as donors, they can be important to fundraising.

Some real estate players remain staunch Republican donors. Larry Gluck of Stellar Management, which has converted several formerly rent-protected properties to market rates, and Associated Builders and Owners of Greater New York chairman Jerome Belson both donated to Giuliani’s campaign and have been inactive since that campaign ended.

So what can we expect of the relatively quiet players like Stephen Ross of the Related Companies and Douglas Durst of the Durst Organization? A telling sign comes from the contributing tactics of Bruce Ratner, who is developing the controversial Atlantic Yards site in Brooklyn.

Ratner donated $28,500 to the Democratic Senatorial Campaign Committee, which Senator Chuck Schumer, a major Atlantic Yards supporter, chairs.

New York City’s crackdown on counterfeit goods is costing not just knockoff artists but also their landlords — and the fines they are being slapped with are higher than the price tags for real Prada bags and Rolex watches.

The city’s anti-counterfeit initiative, which was launched by Mayor Michael Bloomberg and Police Commissioner Raymond Kelly in 2003, invokes nuisance laws to sue owners whose buildings house counterfeit clearinghouses.

“The fines they’re handing out are astronomical,” said Eric Anton, an executive managing director at Eastern Consolidated. “We’re talking hundreds of thousands of dollars.”

The mayor’s office of special enforcement, which is charged with handling many of the counterfeit cases, has seized more than $60 million in fake goods since 2003. That figure does not even include seizures conducted exclusively by the New York City police department.

And while landlords are not often trafficking knockoffs, the city has not been shy about taking action against them in cases where they may have turned a blind eye to illicit activity.

Since December 2003, the Bloomberg administration has executed 26 search warrants in connection with counterfeiting of trademarked goods in Manhattan. Those warrants have resulted in 22 civil lawsuits against landlords and property owners in Manhattan and shutdowns in the same 22 buildings, a spokesperson for the mayor, Jason Post, told The Real Deal.

Cumulatively, the city has pulled in more than $3 million in fines and settlements from landlords and property owners related to counterfeit suits. Fines have ranged from $4,500 to more than $200,000 in one case, Post said.

Late last month, the city raided dozens of storefronts at what it dubbed the “counterfeit triangle” in Chinatown and seized fake Rolex, Coach, Fendi, Dolce & Gabbana, Gucci and other name-brand goods that Bloomberg said had a street value of more than $1 million.

In an accompanying lawsuit, the city also won a temporary restraining order to shut down the storefronts on Canal, Baxter and Walker streets that housed the counterfeit rings. The owners of those buildings will have to replace counterfeit vendors with legitimate businesses and pay a “substantial fine” before they can reopen, according to a news release put out by the mayor’s office.

Elsewhere, the city’s crackdown has centered on the stretch of Broadway south of 34th Street, which has been dubbed “counterfeit alley” by NYPD officials.

One operation on the upper floors of 1145 Broadway, near 26th Street, which was busted by the city in August, yielded millions of dollars worth of fake Louis Vuitton, Gucci, Coach, Prada and Nike goods, as well as 20,000 bootleg adult and standard DVDs and CDs.

The case is pending in New York State Supreme Court, but floors two through five of the building are currently shut down, Post said. The rest of the building is functioning normally.

According to Matthew Kasindorf, co-chair of the real estate department at Meister Seelig & Fein, a landlord who is aware of any sort of counterfeit activity and turns a blind eye is considered a perpetrator, not an accomplice.

Kasindorf cited a federal law called the Lanham Act, which deals with anti-counterfeiting and governs national trademark law.

“From the real estate side, a landlord who knows that there are illegal activities going on can be sued as if he were the person manufacturing or selling the illegal goods,” Kasindorf explained. “The statute is pretty clear that a landlord can be held jointly liable with the infringing party.”

But what if a landlord genuinely doesn’t know that a tenant in the building is manufacturing Prada knockoffs?

“If you sign a lease and agree to be a normal office with normal office hours and such — and then, every night, you’re making fake pocketbooks from 3 to 6 a.m. — you’re in violation of your lease,” Anton said. “If a landlord is made aware of this type of situation and doesn’t take action, then the city is going to come down pretty hard.

“But if a landlord is not aware of it, or if he becomes aware and then takes action, the city would likely work with him to solve the problem.”

Anton suggests that landlords draft leases with “as many permutations as possible” to avoid potential problems.

“This [decision to come down on counterfeiters] is a relatively new thing,” he said. “Maybe in the future, these kind of activities will be more at the tip of lawyers’ tongues when they begin negotiating leases.

“If you’re an owner, the last thing you want is a tenant doing things that are illegal.”

Even when certain provisions are included in a lease, they do not always mean a free pass for landlords if law enforcement officials discover a counterfeit operation.

“The fact that a lease says the tenant will not use the space for illegal activities only gives the landlord a right to bring about an action for breach of the lease and, therefore, terminate that lease and evict the tenant,” Kasindorf said.

The statute, he said, further states that if a landlord is aware of the activity, and does nothing about it, he or she can be held jointly liable. “A landlord’s liability cannot be absolved by simply drafting something into the lease,” he said.

Both Anton and Kasindorf noted that the property value of a building that once had a counterfeit operation often depends upon the landlord.

Anton said a building where the owner has cleaned things up would be “looked upon favorably by tenants,” while a building with a landlord who fails to deal with violations would be viewed as negative. Yet he said that in a strong rental market, many tenants will suffer a bad landlord in order to get a discount on rent.

“Leasing is slowing up a bit,” he added, “so there may be more focus on the quality of [a building's] ownership as we move into 2008.”

A glossy glass exterior that bathes the space in natural light, white marble floors, and shelving and display cases in warm polished gold: The new Gucci flagship at 725 Fifth Avenue in Trump Tower is not only an unabashed shrine to luxury, but, according to brokers familiar with details of the renovation, likely the most expensive store build-out ever on Fifth Avenue.

The rent is also steep. Brokers familiar with the deal say Gucci is paying above $1,500 per square foot for the 6,200 square feet it occupies at ground level.

If so, that marks a record.

“It’s a record for the gross value of a lease for a specialty store in the city,” said Andrew Goldberg, executive vice president of CB Richard Ellis.

Brokers estimate that the other 40,000 square feet, spread over two floors, are being leased for between $350 and $400 per square foot. If those figures are accurate, Gucci is spending in the neighborhood of $22.6 million per year for rent, significantly more than the previously reported figure of $16 million.

Much has been made about how Gucci’s new 46,000-square-foot store, at the location that used to house Asprey, represents the latest in ultra-luxury shopping. But while the store is poised to draw international tourists, the super-wealthy and aspirational affluents, some brokers speculate that its location along high-traffic Fifth Avenue sends a different message: Despite the gloss, Gucci is determined to court a clientele that is simultaneously broader and more middle-brow.

“To be on Fifth Avenue is center stage in the world marketplace,” said Ben Fox, president of Winick Realty Group. “This is a major international statement they’re making. If you’re looking to broaden your audience, you go to Fifth Avenue as opposed to Madison.”

Although Trump Tower, where the new Gucci occupies three levels, might have lost some of its tony sheen in the past two decades, Goldberg notes that it is still one of the top tourist attractions in New York.

For its part, Gucci Fifth Avenue is the biggest and grandest of Gucci’s 200-plus international stores. The new megastore marks a major investment by the fashion house — it cost between $50 and $70 million to build, brokers estimated — and a high-profile brand-building statement. But the payoff could be sweet, too: The store has the potential to generate over $100 million in annual revenue, sources said.

From a business perspective, “it’s going to be huge,” said Goldberg, who brokered the lease.

For one, the location is the stuff that retail dreams are made of. The space has “the widest and longest frontage and presence of any store on Fifth Avenue,” Goldberg said. “It’s on the best block.”

Of course, Gucci isn’t the area’s only luxury retailer. The megastore is situated in a neighborhood that is an iconic hub of upscale shoppers and tourists from around the world. That strip of Fifth Avenue alone is home to tony merchants such as Bulgari, Tiffany and Bergdorf Goodman.

Yet with this store, Gucci seems to be upping the ante in an effort to outshine its retail neighbors. It’s a race, since more luxury rivals are on the way. Giorgio Armani plans to open a 47,000-square-foot retail store on Fifth Avenue this fall, and the former Gucci location at 685 Fifth Avenue will be replaced by a Hugo Boss store.

The 685 Fifth Avenue site “was an old and tired store,” Goldberg said. “They were ready for a new look and feel for the brand. This space better fits their needs, he said, calling it “dramatic and sleek.”

Indeed, Gucci has infused the store with a rarefied air; its design draws inspiration from the Art Deco era. As the Gucci press materials put it, “it is a grand departure from codified retail spaces and paves the way for Gucci’s 21st century modern look.”

The product mix — apparel, jewelry and accessories — will be peppered with revolving exhibits of merchandise exclusive to Gucci Fifth Avenue.

One broker noted that the neighborhood’s round-the-clock appeal has been increased recently by the 2006 debut of the Apple Store, which is open 24 hours a day, at 767 Fifth Avenue between 58th and 59th streets.

“People are gravitating towards the area seven days a week,” she said.

But while the Gucci store reinforces the area’s highbrow aura, it’s not expected to make a transformative retail imprint on the neighborhood, already a long established center of upscale merchants — and where retail space is maxed out.

“It’s another pretty face in a sea of pretty faces,” Fox said.

The Beatles, Bob Dylan, Jimi Hendrix, the Rolling Stones: Almost every major musical act of the last 75 years has a signed photo hanging on the “Wall of Fame” at Manny’s Music, the longest-standing store along fabled Music Row on West 48th Street in Midtown.

While there are several music stores on the western end of this block between Sixth and Seventh avenues in a cluster that feels frozen in time, many fear that the volume will soon be turned off completely. The culprit: Times Square rents that have reached record highs. The property Music Row stores are sitting on would make any developer drool.

“It’s inevitable that Music Row is going to end,” said Paul Ash, president of Sam Ash Music, which has operated stores on the block since the mid-1970s. “One day, both of these corners will be built up like [they are] on the other end of the block, and we’re just waiting for the shoe to drop.”

On the southern corner of Seventh Avenue and 48th Street stands the three-story Sage Theater and sundry retailers. A grimy, century-old, 15-story commercial building occupies the northern side. The fear among music store owners is that the premium location of their walk-ups could be used for skyscrapers that would pay far more lucrative rents.

“Those are prime corners, and developers are getting very aggressive trying to assemble larger lots by making unsolicited bids for buildings,” said Mark Spinelli, director of sales at Massey Knakal. “The Rockefeller Group owns a few properties over there and is looking to pick up a few more pieces. In 10 years, it’s going to be completely different.”

Indeed, some of the transformation has happened already. One by one, smaller music store owners in the area have gone under, said Alexander Kolpakchi, whose small second-floor store on 47th Street sells wind instruments. “I couldn’t get my nose on 48th Street; the prices are too crazy,” he said.

Along 46th Street, three drum shops and several other music stores survived into the 1990s and then shuttered. The only remaining outposts, Drummer’s World and Roberto’s Winds, are located on the third floors of their buildings. One former music store tenant, the Manhattan Drum Shop, moved to a third-floor space on West 38th Street two years ago and then relocated to New Jersey in November.

The problem on Music Row, like in many other parts of Manhattan, is rising rents that the small businesses are struggling to pay. Ground-floor retail rent on or near Seventh Avenue runs $100 per square foot — and increases to $300 closer to the heart of Times Square, said Spinelli. Second-floor retail is 50 to 60 percent lower than ground floor prices. A recent report by the Real Estate Board of New York found that on Broadway, from 42nd Street to 47th Street, rents now range from $538 to $1,000 per
square foot.

“Rents are rising astronomically, and profit margins are small,” said Barry Greenspon, owner of Drummers World. “We do
an online business, but our customers need to play and touch a lot of the [instruments and equipment] we sell.”

Greenspon, who has six years left on his lease, isn’t sure about the future. He noted that when he renewed his lease four years ago, the landlord doubled his rent.

Both he and Ash declined to disclose what they pay in rent.

The history of Music Row dates to the early 1930s, when the musicians’ union moved to Sixth Avenue and 50th Street, and the stores followed suit, said Ash. Rehearsal spaces, studios and repair shops soon began to mushroom in the area.

According to Ash, the Rockefeller Group owns most of the block. In the 1970s, the company began amassing large footprints on the block’s eastern end for what is now the News Corporation headquarters and the McGraw-Hill Building.

“They started to buy up property, all anonymously,” said Ash.

Those two skyscrapers displaced a number of music outlets. Manny Goldrich, the founder of Manny’s Music who opened the store in 1935, held out, and the Rockefellers rewarded him with a 34-foot-wide building down the block, twice the normal lot size at the time.

Other stores followed to the western end of the block.

Now, Manny’s — which was bought out by Sam Ash in 1999, but still operates under the same name — is in the middle of the block on what could be part of a mega-lot for a developer looking to assemble adjacent properties.

Manny’s still sits on property owned by its founding family, despite the fact that it operates under the administrative aegis of the Sam Ash empire, which consists of 45 stores in 12 states.

“I get at least a call a day from someone who wants to buy the building,” said Ian Goldrich, Manny’s grandson.

Sam Ash remains the most visible presence on 48th Street, with four separate storefronts sprawling across nine buidlings that specialize in different instruments.

“It was my personal push to be as strong as we can on 48th Street,” said Ash, whose father founded the now-famous store. He ticked off his departed competitors: We Buy Guitars, Stuyvesant Guitars and Alex Music — which still exists, though it sells mostly accordions.

“As others got weak, we would take
over their leases and break through walls,” Ash said.

In 2003, Guitar Center, the country’s biggest music instrument retailer, opened its first Manhattan store on 14th Street. Operators of more than 200 outlets in 42 states, the chain’s 30,000-foot outpost on the Greenwich Village border took some downtown business away from Music Row, said Goldrich. But 48th Street retains its cachet and remains a destination for shoppers from abroad taking advantage of the weak dollar.

“Some day this won’t be Music Row anymore, but you can sell instruments anywhere in the city as long as you’re near a major subway line,” Goldrich said. “We can set up another music row.”

Why is Pottery Barn moving to Brooklyn Heights but not to Astoria? Why does Park Slope have numerous Starbucks while there are none in nearby Fort Greene? And why are store clerks in Williamsburg suddenly asking to know your zip code?

The one word answer is psychographics, an art/science that uses the growing mountain of consumer data now available to help retailers, and marketers in particular, make decisions about real estate.

Analysts use psychographic information to define consumer categories, which are often given colorful names such as “Shotguns and Pickups” and “Blue Blood Estates.” The results are used to decide where to locate stores, restaurants, banks and even medical facilities.

Yet while psychographics hasn’t totally won over retailers in Manhattan, its use in the outer boroughs is becoming more common — especially in changing areas of Brooklyn and Queens.

“In the last few years, studies have shown that Brooklyn has been losing a lot of retail sales to Long Island,” said Jeffrey Roseman, executive vice president of Newmark Knight Frank Retail, a New York commercial real estate broker. “For a long time I don’t think a lot of national retailers understood Brooklyn, but when they realized what was there, many began to look for locations.”

Three notable examples of national retail chains that have recently leased space in Brooklyn include Whole Foods, Trader Joe’s and Urban Outfitters, which last month signed a lease for 5,500 square feet on Atlantic Avenue.

“Hip Nation,” “Urban Elders,” and “Money and Brains” are three psychographic categories of consumers growing in the outer boroughs, one part of the reason some national chains are looking to set up shop.

“Hip Nation,” as defined by Pitney Bowes MapInfo, a firm that conducts psychographic research, is “diverse neighborhoods of minority families, hip-hop aficionados and latter-day hipsters” which “make this neighborhood a study of contrasts reflecting America’s new and old diversity.”

Brooklyn brokers say retailers like Urban Outfitters, American Apparel and Brooklyn Industries, which has four shops in the borough, are responding to “Hip Nation,” a surge in residents between 18 and 31 with disposable incomes.

Similarly, brokers say that Whole Foods and Trader Joe’s are responding to data indicating the number of so-called “Money and Brains” and “Urban Elders” — consumers with attributes like combined salaries above $150,000, one or two children with full-time nannies, who are occasional donors to liberal environment causes — has leapt in downtown Brooklyn this decade.

One place where psychographics is not so widely used is Manhattan. Because of its density and large number of daytime visitors, marketing professionals say Manhattan is, among American cities, uniquely resistant to such kinds of categorization.

“Manhattan has a lot of features that are singular,” said Brian Hill, an executive at Pitney Bowes MapInfo. “You can do psychographic research in Manhattan, but it has to be augmented with on-the-ground knowledge.”

Brokers, as well as managers charged with site selection in the borough, indicate that intuition and gut feelings continue to play significant roles when it comes to choosing retail sites.

“In Manhattan, all that stuff goes out the window,” said Roseman. “You walk out onto 34th Street and Seventh Avenue, and you get bowled over by people. You don’t care what their attitudes are.”

Sometimes psychographics works the other way: Kinko’s, the copy and office services chain, decided after reviewing psychographic data several years ago, that there was enough demand to merit tripling its Manhattan presence.

The combination of psychographics and demographics led Home Depot to open stores in New York City, according to Hill.

Although research revealed the city had a dearth of typical Home Depot customers — single-family homeowners who purchased or refinanced within the past year — demographics showed that the population density would support a big home improvement store.

“There may not be a lot of people buying shingles for their roof, but there are a lot coming in and buying hammers and nails,” Hill said.

One reason psychographics hasn’t caught on in Manhattan is that for retailers of luxury products, pinpointing locations of customers is not as difficult, according to Michael Hoffman, senior managing director for real estate at Colliers ABR, a New York City commercial real estate firm. Unless an area is overcrowded with high-end stores, deciding where to locate may not require psychographics, he said.

“Luxury tends to follow a different path,” Hoffman said.

While intuition is probably most important in siting retail in Manhattan, data about individual neighborhoods can still be useful, according John Yazicioglu, a manager at New York City-based retail consultants AT Kearney.

“I wouldn’t throw demographics and psychographics out the window in Manhattan,” he said.

An outbreak of vacancies on prime commercial blocks in the heart of Park Slope has brokers and store owners questioning whether landlords’ high rents are to blame.

On one block between 2nd and 3rd streets along bustling Seventh Avenue, a sandwich shop, a used bookstore and the popular 2nd Street Café (which underwent a major renovation last year) have all closed in recent months.

Nearby, owners of Maggie Moo’s ice cream shop hung up their scoops last August, and the site of a former D’Agostino grocery has been vacant for nearly a year after the store spent 16 years in the neighborhood.

Rents along Seventh Avenue have risen to as high as $150 a square foot, said Walston Bobb-Semple, a principal broker with Urban View Realty in Brooklyn, and that’s a lot more than many small business owners can afford, he said.

“What I’ve noticed in the last year or so is that the Monday-through-Thursday traffic is not there for the restaurants, and in particular, the average retail shop can only bank on weekends for shoppers,” Bobb-Semple said. “So they can’t make ends meet.”

He and other longtime residents said they are worried that Park Slope is slowly losing more than cafés and bookshops along Seventh Avenue: It’s losing its character.

“I think the landlords and merchants along Seventh Avenue need to take a long, hard look … and realize that the strip needs a broad mix of businesses to maintain a vibrant commercial corridor,” Bobb-Semple said, echoing a common complaint that many mom-and-pop stores in the area have been forced to make way for cell phone stores and bank branches.

Semple speculated that landlords are betting that restaurant owners from Manhattan will come to the neighborhood and think the going rates are a bargain.

Migrating off Seventh

One side effect of the higher rents on Seventh Avenue: New stores for the hip young crowd are migrating beyond Seventh Avenue and blossoming along Fifth Avenue, where rents run about $65 to $85 per square foot, Bobb-Semple said.

Marc Garstein, president of Warren Lewis Realty, estimated that the owner of a 1,000-square-foot store in central Park Slope probably pays more than $10,000 a month in rent. So it’s no surprise to him that Bank of America is expected to move into the space once occupied by D’Agostino at Seventh Avenue and 6th Street. Few others could afford the space, he said.

“Once the rent gets up to $10,000 or $11,000, it doesn’t pay to be there,” Garstein said. “And the landlord is also entitled to make more money.”

Tempo Presto, a sandwich shop, closed in December, and Seventh Avenue Books soon followed. It was right next to another used bookstore, Park Slope Books, and down the street from a behemoth in the book business, Barnes & Noble. But the store closing that received the most attention from residents and blogs was 2nd Street Café, which closed in January.

“It was a shock. It was a place everybody went to, and they just did a renovation,” said Joel Rivera, a manager at Tarzian Hardware, located next door.

It’s unusual to have so many closings at the same time on the busy commercial block, said Barry Lipsitz, landlord of both Seventh Avenue Books and 2nd Street Café. The used bookstore, he said, paid about $7,000 a month and the café about $11,000.

He said the simultaneous closings are due to many factors: The used bookstore, for example, couldn’t compete with Barnes & Noble. But he said he doesn’t know why the café closed. He speculated that perhaps the renovation was too costly or wasn’t attracting enough customers.

“It was very sudden,” Lipsitz said. “They just one day closed, just like that. I had no
inclination about what was happening.”

Since then, several restaurant owners have called to ask about renting the spaces, Lipsitz said, along with many other types
of business owners, such as jewelry and craft makers. He noted that he’d like the new
tenants to be local business owners.

Park Slope Books is also closing in the coming weeks, but high rents are not the prime factor, said manager Tracy Walsh. The rent has always been high, she said.

Instead, the used bookstore is consolidating with its Brooklyn Heights branch
because it now sells more books online than it does in the store.

“Our income isn’t coming from the bricks-and-mortar location anymore,” Walsh said.

Rivera said he’s not worried about the
future of Tarzian Hardware, in business since 1921. It’s one of the only hardware stores in the neighborhood, and its owner, Harry Tarzian, also owns the building. “We’re not going anywhere,” he said.

Back from the brink

Difficulty paying rent was just one of the reasons why Community Bookstore on Seventh Avenue almost closed a year ago, said owner Catherine Bohne. But she wasn’t going down without a fight. The bookstore, open since 1971, is an institution in a neighborhood known for its literary denizens.

Bohne has worked there for nearly 20 years. “There was a voice in the back of my head that said I don’t have the right to take this away,” Bohne said.

She spread the word that Community Bookstore was in trouble, and the neighborhood rallied to her aid. Financial advisors donated their time and helped her come up with a new business plan. About a dozen people invested in the store, too. Sales are up 40 percent since last year, Bohne said.

Last November, Bohne worked with the Civic Council, a local nonprofit organization, to help organize a “Buy in Brooklyn” campaign, with a party for merchants at the Community Bookstore. On Dec. 13, the group sponsored the first-annual Snowflake Celebration, a local shopping event with more than 150 participating stores.

Bohne plans to work with other small business owners to promote ideas such as commercial rent controls and requiring a set time period for lease negotiations so that tenants aren’t kicked out with only a few weeks’ notice.

She was lucky that her landlord was also the former owner of the bookstore.

“She was understanding when things got tough,” she said.

Despite worries that the credit crunch could lead to a broad economic slowdown, New York’s retail scene continues to show strength. A number of retailers are looking to expand, both in Manhattan and the outer boroughs, but they are sounding notes of caution about their approaches. For this month’s special retail Q & A, The Real Deal spoke with officials at three companies about their strategies for 2008. Here’s what they had to say:

John Catsimatidis owner, Gristedes supermarkets

How do you choose new sites?

Location, location, location. Price, price, price. I rely on a combination of market research and gut instincts. Right now, we’re looking for areas with high densities and disposable incomes. The ideal size for our stores in Manhattan is between 10,000 and 12,000 square feet. We’re looking at locations on avenues, but also on some side streets.

Do you have an expansion strategy?

We’re only looking to expand in Manhattan, and maybe parts of Brooklyn. We’ve gone down by about 10 stores in the past three years, but our strategy is to add five to 10 in the next year. We sold nonperforming locations. Other locations, where we’ve thought about expanding, we were outbid by banks.

Whole Foods and Trader Joe’s seem to have a lot of momentum. What are you going to do to compete?

We’re looking at ways to change perceptions. One way could be to offer more organic food. Five years ago, organic food was only 2 percent of sales. These days, it’s about 5 percent of our sales. But I think the jury is still out on the success of stores like Whole Foods. Whole Foods does well in sales, but at the same time … they went after locations without regard for cost, and so when their profits disappointed Wall Street, their stock tanked.

Randy Plemel site selection consultant, American Apparel

What’s your expansion strategy?

Right now, we’re covering our bases. We have 16 stores in the city, and this year we’re opening three more: on 125th, on Ninth Avenue and on Broadway at 72nd. We’ve had stores on Broadway near NYU, which was our first store in New York City, in Williamsburg and on Smith Street in Brooklyn for a number of years. Now we’re looking to infill. We look for high traffic areas where we won’t cannibalize sales at our other stores. But it’s very tough for American Apparel because we need a certain size store, between 3,500 and 4,000 square feet.

How do you choose sites?

Everyone at American Apparel has the same approach, which is that we walk around a neighborhood and talk to other store owners and people walking by. Sometimes, we have more than one option for the same neighborhood. In that case, I’ll just stand in front of both potential locations for a whole day. I take notes on what each site is like at different times. I record answers to questions like: Who’s walking by? Which side of the street gets more people at different times of day? What kind of people walk by? How quickly are they walking? I do this because while it’s important to pore over the numbers, there’s always the chance that numbers lie.

Curt Huegel director of development, Lenny’s sandwich chain

What’s your expansion strategy?

Right now we have 10 stores, and we’d like to have 20 by 2010. At the same time, last year, we decided to hold off opening new stores for another year because we felt that rents were out of control. Now it’s starting to look like rents are becoming more sane. We’ve got four or five offers out to [Manhattan] landlords.

How do you choose locations?

We’re trying to set up the ability to cover all of Manhattan below 96th Street. Half of our business is delivery, so new stores have to fill in gaps. We have shops in prime locations on the avenues, but we also have some on side streets. Stores on side streets do the same amount of business, but we recognize we need both. The minimum lease we’ll look at is for 10 years with an option to renew for five. We’ve never taken a lease for more than $25,000 per month. Other stores are spending more on rent, but we’re feeling out this market.

What kind of space are you looking for?

We look to be in spaces with about 2,000 square feet. It’s daunting to find this kind of space in Manhattan because the fast casual food market is intensely competitive, and everyone is looking for the same thing. When we look at locations, we always run into our competitors.

A roll call of landlord preferences:
Just what are landlords looking for in a tenant?

When picking tenants for ground-floor retail spaces, landlords can be choosy — evaluating credit, cleanliness, image and amenity value. “There are landlords who will just take the most rent and not care much about image, but those landlords are farther and fewer between,” said Jeffrey Roseman of the real estate advisory firm Newmark Knight Frank.

Checks of references (yes, landlords will do their homework) can make or break a tenant’s chances of getting a space. “What you did in a previous space is going to be held against you forever,” said Roseman.

Based on interviews with commercial brokers who represent tenants and landlords, here’s the basic pecking order of tenants, in order of preference:

1. Banks

If finding an ideal tenant for a retail space is like playing poker, “a bank, from a credit standpoint, is a full house,” said Roseman. Leases are backed by corporate guarantees (as opposed to security deposits). “You can go to bed at night knowing you’re going to get a check every month,” said Joanne Podell, executive director for the retail services group at Cushman & Wakefield. Also, banks are neutral from an image perspective, and have an overriding plus: no vermin.

2. National brand stores

As with banks, leases are often backed by corporate
guarantees, and bankruptcies are rare. “With local tenants, they walk away. With public companies who’ve decided a location doesn’t work anymore, they would look to the retail community to put someone else in the space,” said Podell.

3. Delis/bodegas

Some landlords view them as amenities, but these food-based businesses pay slightly higher rents to account for possible vermin and unattractive storefronts. Despite being iconic New York retail, “Bodegas are pushed out [of neighborhoods] slowly if the retail climate is really strong right there,” said Jonathan Anapol, president of Prime Manhattan Realty.

4. Restaurants

With high turnover and the possibility of food odor and vermin, restaurants are sometimes charged more than “dry goods” outlets. While some brokers say restaurants are “the last choice,” owners who install kitchen equipment improve the value of a retail space. Because of this investment, restaurant tenants who go out of business are more likely to sublease to another restaurateur, offering the landlord some downside protection.

5. Bars

“They go into neighborhoods where there is high turnover,” said Podell. “The landlords expect that.” There’s the prospect of smokers congregating outside and crowd noise, which invite complaints. Like restaurants, bars can be risky, but high profit margins can also fund higher lease payments.

Retailers seeking space in Manhattan are used to scanning avenues and side streets for vacant storefronts. Yet in the next several months, four examples of a rarer type of retail property — multi-level vertical space — are making debuts on Manhattan’s Upper West Side.

While vertical retail spaces are common in other large North American cities, outside of department stores here like Bloomingdale’s and Filene’s Basement, as well as large bookstores, such space is rarer in Manhattan.

Yet now, because of sharp increases in Manhattan rents, brokers say that more tenants are looking for spaces that allow them to lease smaller ground-floor areas while also spreading onto other levels — above or below ground — where rents are less expensive. These spaces are particularly popular with “big box” tenants who operate warehouse-style stores in suburban malls that blend over two or three floors.

Landlords and brokers of these new vertical spaces are quick to distinguish them from their urban shopping center cousins, including Manhattan Mall, Time Warner Center and Trump Tower, by the fact that they do not feature any common area that is not leased by a specific tenant, like food courts or hallways.

One of the new vertical spaces is located in the back of 15 Central Park West, the new ultra-luxury condo that straddles a block
between Central Park West and Broadway along 62nd Street. Part of the vertical retail space available there has been leased by Best Buy, the consumer electronics chain. Best Buy occupies 45,000 square feet over three floors, two of them below ground, with access along Broadway.

There is 40,000 square feet of retail space remaining at the building, which could hold up to three more tenants, according to Cushman & Wakefield, which is the leasing agent for the project.

A second example of new vertical space is Columbus Village, a massive new mixed-use project going up along Columbus Avenue between West 97th and West 100th Street. The Chetrit Group, the developer, is putting up 320,000 square feet of retail space spread over three floors.

Tenants who have already signed on include Whole Foods, Duane Reade, Chase, Modell’s and Bank of America. The Winick Group, which is handling leasing at the project, declined to say what tenants were paying in rent.

Yet according to Joanne Podell, a senior director at Cushman & Wakefield, which leases retail spaces throughout Manhattan, ground-floor retail rents on the Upper West Side, on the avenue, tend to run between $275 and $375 per square foot. Conversely, Podell said that space below grade usually goes for between $100 to $125 per square foot.

Big-box retailers aren’t the only group excited by the possibilities of vertical retail in Manhattan. Brokers say a growing number of landlords are getting excited too.

“I think if second-floor [retail] rents were still $25 to $50 per square foot, that more developers would still be thinking, ‘I’m just going to put apartments on the second floor,’” said Robin Abrams, executive vice president of Lansco, a real estate consultant company. “But at $100 per square foot or more, which is what they’re getting, it makes more sense for them to make it retail.”

Those are the types of prices a new vertical retail development at Broadway and 72nd are asking. The project, created by the Gotham Organization, the real estate development and construction firm, affords each tenant some ground-floor space, mostly for entrances, and escalators leading up or down to the principal sales floor.

The project’s ground-floor space has an asking rent of $550 per square foot. Prices for the mezzanine are $125 per square foot, and space on the second floor goes for $200 per square foot. Negotiations will start at $75 per square foot for the first floor below grade and $65 per square foot for the lowest level.

Although Robert K. Futterman & Associates, the project’s exclusive leasing agent, said it could not reveal the prospective tenants, the firm indicated that deals could be finalized as early as next month.

The fourth vertical retail space, on the border of the Upper West Side, is happening at the Argonaut building at 57th and Broadway. The project is being undertaken by M1 Real Estate, a Monaco-based development firm. As part of a $45 million revamp, the Argonaut, a landmarked prewar office building, is getting a new three-story retail component.

The addition of escalators is expected to increase the value of its retail space above and below the ground level.

“The more you go vertical, the more important the layout of your vertical transportation becomes,” said Alan Napack, a senior director at Cushman & Wakefield.

Altogether, the ground level will include 10,400 square feet of space. Another 14,000 square feet of retail space will open on the second floor, with 5,000 to 10,000 square feet below grade, according to Ed Brock, managing director of GVA Williams, the firm managing the building and handling leasing.

M1, which has a 99-year lease for the 10-story Argonaut, said it’s targeting high-end retailers for the space, which could accommodate between one and five stores. According to Moustapha El-Solh, CEO of M1, there is interest from several international luxury brands, at least one of which might take the whole space for its flagship U.S. location.

“I think that retail definitely used to be the stepchild [on the Upper West Side], and when somebody developed a building, the retail was an afterthought,” said Abrams of Lansco. “Now, with retail rents so aggressive, developers are rethinking how they want to allocate their space.”

For those who might have expected the Related Companies to build on its major stake in music retailer
Virgin Megastores, the new owner now seems to be singing a different tune: edging the retailer out the door.

The Related Companies, which bought its majority stake last year, has put the music retailer’s huge 57,000-square-foot Union Square space on the market.

The fate of Virgin Megastores, which has 11 U.S. locations that sell CDs, books and T-shirts, is as murky as Related’s plans are unclear. Business at music retailers has been declining over the last few years as CDs have been steadily losing sales to digital music.

Related took a 51 percent stake in the company, and Vornado Realty Trust took 49 percent. The two real estate companies, among the city’s largest, are currently collaborating on the massive Moynihan Station/Penn Station project.

Presently, the Union Square location, a two-level space that is located on the corner of Broadway and East 14th Street in a Related-owned building, is being shopped around by Winick Realty Group, a New York-based commercial firm.

Its purchase of Virgin Megastores isn’t Related’s first foray into retail. In 2006, the company bought Equinox, a nationwide chain of upscale gyms, for $505 million.

Though ground-level retail space facing Union Square Park commands $400 a foot, the Virgin Megastores space could fetch even higher prices “since it’s an aberration in terms of location and size,” said Benjamin Fox, Winick’s president.

Any new tenants could subdivide the space, which has huge floor plates, or
add new entrances to the 14th Street fa & Ccedil;ade, he added.

While Virgin Megastores could still downsize at the same address, relocate or close altogether, existing space will likely contain new tenants by this time next year, Fox said.

Virgin Megastores did not return a
call for comment. Related declined to comment.

Swapping out Virgin Megastores for another tenant or tenants could be advantageous for Related, as commercial rents in the revitalized and fashionable Union Square neighborhood have soared since the retailer debuted there in 1998.

For the retailer’s part, a move could also
be financially beneficial, as a shutdown would let it avoid having to break a lease, which could require a crippling payout, brokers said.

“There are clear advantages for both sides,” Fox said.

While Vornado owns Virgin Megastores but not its Union Square building, which is topped with luxury rentals, it would seem to still have some fingerprints on the deal.

That’s because stretching back decades, Vornado has a history of buying struggling retail companies to get a hold of their undervalued real estate, particularly with shopping centers.

It’s a key reason some brokers are waiting to see what happens with Virgin Megastores’ other Manhattan property, a 60,000-square-foot three-story space at 1540 Broadway in Times Square, near West 45th Street; it’s located inside a Vornado-owned commercial condo.

So far, that space is not on the auction block, according to a Vornado source who asked to remain anonymous in step with the company’s longstanding policy of not speaking to the media about specific properties.

However, two other spaces in the Vornado-owned portion of 1540 Broadway are on the market.

The first is a 20,000-square-foot two-level berth that once housed Bar Code, a video-arcade-cum-restaurant. The other is a 40,000-square-foot below-grade movie theater that used to be run by Loews. It’s being shopped as an entertainment space.

Leases for both spaces are “now under discussion,” said the source, who would not comment on asking rents.

Average street-level store rents in Times Square are now close to $800 a square
foot, according to the Real Estate Board of New York, though non-ground-level spaces would probably be a few hundred dollars less, brokers said.

In Union Square, music lovers will likely bemoan the loss of yet another place to buy recorded music, and others might miss a place to keep warm while waiting for movies to start at the 14-screen theater next door.

Yet community leaders seem to be taking the change in stride, pointing out that retail spaces, even large ones, don’t sit empty for long here.

“The transformation of the 14th Street corridor has been nothing short of astounding,” said Jennifer Falk, executive director of the Union Square Partnership, a combination business improvement district and development corporation.

“In the last few years, Whole Foods, Trader Joe’s, DSW, Puma and a host of
new restaurants have opened,” Falk said, “and the neighborhood continues to be an in-demand location for national retailers and eateries.”

Along with starting coffee shops and founding gourmet bistros, entrepreneurs trying to take that perfect ride up the gentrification arc are taking
a chance on an increasingly popular retail item: wine.

Over the last few years, stores specializing only in wine have been sprouting up across the city. According to the New York State
Liquor Authority (SLA), there are 24 stores in the five boroughs with wine-only licenses, compared to just eight in 2003.

Conversely, licenses for new liquor stores in the city, which allow the sale of both
spirits and wine, are up less than 10 percent, to 1,066 compared to 972 in 2003.

Retail brokers and wine store owners say opening a wine store poses unique, and sometimes costly, challenges.

“Getting a license means going through a rigorous process including a background check, and applicants have to be squeaky clean,” said Tim King, a senior partner with Massey Knakal and an expert in retail real estate. “This may sound draconian, but the process of getting a permit to sell alcohol is like the process of getting a gun permit.”

Restrictions also exist on where a wine store can open: The SLA prohibits stores that sell alcohol from opening within 200 yards of either schools or places of worship. Also, in order to determine if there is demand for another wine or liquor store, the SLA performs a public convenience and advantage review, wherein the SLA reviews the sales receipts of the four nearest potential competitors to determine if there is enough local demand for another store.

A hearing is also held where those competitors are allowed to weigh in before shops are granted new licenses. Sometimes, their objections can delay wine store openings by months.

It took Brian Robinson, the owner of Gnarly Vines, a wine store in the Fort Greene/Clinton Hill area, more than three years to bring his dream of an independent wine shop to life due to the arduous process of getting a license. According to Robinson, resistance from another Fort Greene store initially prompted the authority to deny his license. In the end, Robinson sued the state for unfairly denying it and won.

Delays in waiting for a business license can also make leasing space quite expensive. As with anyone who applies for a
state liquor or wine license, Robinson was required to sign a lease for his space at the outset, which meant he was liable for
rent on the space long before he opened
his business.

Robinson’s landlord gave him a break on his lease payments while he was fighting to get his liquor license; he eventually subleased the space while waiting for approval. “But it still took a pound of flesh from me,” he said.

Other wine shop owners similarly have to plan for how to pay for a space months before the doors open for business.

In place of an already-leased space, the liquor authority will accept a “letter of
intent” stating that a lease will go into
effect once a license is granted, but it’s
almost impossible to get such a deal in
New York. Few landlords would hold open a retail vacancy and not collect payments while waiting to see if a hopeful shop
owner gets licensed.

However, being the first wine shop in an area undergoing rapid change puts a
retailer at an advantage, because it can
argue against later license applications.

These factors are one reason why the strongest growth in boutique wine stores hasn’t been in well-heeled areas like the Upper East Side or Tribeca, but in emerging neighborhoods like Bushwick and Clinton Hill, places where oenophiles were few and far between a decade ago.

For instance, the neighborhoods of Fort Greene and Clinton Hill in Brooklyn are now home to at least four shops. The Greene Grape on Fulton Street was the
first to open, in 2004; it was followed by Thirst Wine Merchants on DeKalb Avenue, Olivino Wines (also on Fulton) and Gnarly Vines on Myrtle Avenue, which just opened in November.

In Harlem, meanwhile, Harlem Vintage on Frederick Douglass Boulevard and
121st Street, which opened in 2004, was
the first boutique vintner in the neighborhood. Co-owner Jai Jai Greenfield admitted that opening the shop was “risky,” but
with new developments in the neighborhood and the affluence of new residents, she said she and her partner felt Harlem was “primed” for a proper wine shop. The shop, she said, also benefits from steady business from Columbia University, which receives deliveries for university functions.

Greenfield and her partner, Eric Woods, have seen revenue growth every year they’ve been open and plan to launch a wine bar next door to their shop this spring.

Sometimes, shops inspire more shops: After watching Uva Wines on Bedford Avenue in Williamsburg grow and prosper along with the neighborhood it served, four partners decided East Williamsburg was ready for a specialty wine shop.

Co-owner Dave Danzig said the shop, Vino Verde, will likely open within three months at 638 Grand Street on the east side of the Brooklyn-Queens Expressway. As with Gnarly Vines, Vino Verde is taking longer to open than Danzig and his partners had hoped.

They’re moving into an area where
six condo projects with about 130 high-end units are under construction within
a four-block radius — and where, so far, their only close competition is liquor stores where bottles are exchanged for money
with a cashier sitting behind bulletproof glass.

“We knew going into it that the best-case scenario would be four months,” said Danzig, who added, “We’ve already waited more than seven.”

You can’t be too rich: As news reports point to declining sales in America’s retail sector, one area that has been experiencing strong growth is luxury retail in Manhattan.

Like Manhattan’s residential real estate market, which has remained robust in the face of sharp declines experienced elsewhere in the country, the borough’s high-end retail sector also remains buoyant.

“Things have quieted down in the U.S. overall, but Manhattan still seems to be
the hole in the doughnut,” said Jim Downey,
senior director of national retail services
for Cushman & Wakefield. “Retail sales
here do not seem to be impacted by the economic slowdown.”

At the moment, many of the city’s main luxury retailers are putting on outward
displays of confidence. For instance, in February, Gucci opened a huge new flagship store on Fifth Avenue.

Foreign retailers are one reason no slowdown has been apparent. Many of the luxury retail stores in Manhattan’s high-end retail enclave are owned by non-U.S. companies, which can hedge declines in one
region with stronger sales elsewhere.

For example, French firm Moët Hennessy Louis Vuitton (LVMH), the world’s largest luxury brand conglomerate, had only 26 percent of its global sales in the U.S. in 2006. France alone accounted for 15 percent, while the rest of Europe contributed 22 percent to sales that year.

LVMH, which has a Louis Vuitton showpiece store on Fifth Avenue, said it is unconcerned with the possibility of a struggling U.S. economy. Sales for full year 2007 were up 12 percent from 2006, and the company’s CEO, Bernard Arnault, confirmed a “tangible” rise in sales for 2008.

At a press conference in early February, Arnault predicted a recession in the U.S. would have a “limited” or “even non-existent” impact on his firm, as demand elsewhere would make up for it.

Another factor buffeting Manhattan’s luxury retail sector is increased tourism. A sagging U.S. dollar is luring record numbers of foreign shoppers to the city, many of whom consider an afternoon on Fifth Avenue as de rigueur as a trip to a museum.

Those domestic tourists gawking around places like Rockefeller Center can also be counted on to splurge in Manhattan. International and domestic tourists spent $24.7 billion in 2006 in New York City, according to NYC & Company, the city’s tourist bureau.

The city’s most expensive retail space is along Fifth Avenue in Midtown, where rents average between $1,250 and $1,400 per square foot.

Soho and Madison Avenue above 57th Street are among the other most expensive retail enclaves. Average rents on Madison Avenue are currently around $1,050 per square foot, while Soho rents hover around $270 per square foot, according to brokerage firm CB Richard Ellis.

In 2007, the firm reported retail rents in Soho alone jumped 27 percent from 2006 to 2007. Tellingly, the vacancy rate for all three areas is about zero, and brokers say that even rumors about a vacancy can light up switchboards at real estate offices.

In a further sign of the strength of the city’s luxury retail market, high-end stores are returning downtown, seeking to capitalize on proximity to Wall Street and a retail scene that’s finally recovered from Sept. 11. Last October, Tiffany & Co. opened an 11,000-square-foot store at 37 Wall Street, and in July, high-end menswear retailer Thomas Pink opened a 3,000-square-foot location nearby.

Tiffany, for its part, predicts 2008 overall sales will increase 10 percent and said U.S. retail sales will see a “high single-digit” percentage increase.

Downtown shopping is about to be reinvigorated in other ways, too. In January, the Port Authority inked a $1.4 billion deal with the Westfield Group to put in 488,000 square feet of retail space in the future transit hub and towers in the area. Westfield plans to lease the new space and manage it upon completion.

Still, there are worries that if the economy worsens, retail throughout the city could take a drubbing.

“Even a shopping mecca like New York City is directly tied to the fluctuations of the market,” said Stuart Ellman, executive director of New York City-based Judson Realty, which focuses on high-end retail. “New York is dependent on the financial industry, and the market has an effect on shopping. If you lose a million dollars on the stock market … you don’t feel like making that impulse purchase anymore.”

Landlords also will be more flexible when it comes to making deals, Ellman predicts. “Especially on Madison Avenue, landlords are dependent on the high rents and can’t let the buildings sit without being leased,” he said. “There’s a choice if the landlord wants to stick out for the highest rent or get it leased for a little less, and I think that’s what’s going to happen. The landlords are going to be a little more flexible with the rents and the terms of the transaction.”

One indication of how Manhattan’s luxury retail market could fare in a recession can be seen by examining the city’s
last significant downturn, which occurred after Sept. 11.

Then, the downturn in spending caused by fewer tourists and simultaneous stock market losses lasted about two business quarters. But by the second half of 2002, luxury retailers already believed in a bounce. “A lot of them are doing better than anticipated, but it is a holding pattern, and they are hoping for the rebound,” Andrew Goldberg, senior managing director in the retail group at New York-based Insignia/ESG, told the magazine Retail Traffic in 2002.

However, for the moment, brokers are expressing confidence about the top of the retail market.

“There have been five major deals in Soho in the past six months, and two more are pending,” Downey said. “People are still spending.”

If its rents are any indication, Manhattan’s Fifth Avenue is the most desirable place to sell suits, silver jewelry and iPhones. Its $1,350-per-square-foot rates are the city’s highest, according to a fall report from Colliers International.

But the outer boroughs have their own top shopping addresses too, where competition for space, though nowhere near as
intense as in Manhattan, is also pushing prices skyward.

Brokers said that despite fears of a recession, the number of major commercial
corridors is greatly increasing, and retail rents are quickly rising.

“Our market is very much insulated,
and I’m not expecting much of a downturn
at all,” said Tim King, senior partner at Massey Knakal. “The vacancy rate is practically zilch, and recent new leases are setting new records.”

In the Bronx, a consistently strong retail section is along East Fordham Road at Webster Avenue, overlooking a campus of Fordham University. Rents here average between $100 and $125 a square foot, and vacancy rates are low, brokers said.

The area benefits from the student population, but an even bigger boon is its proximity to popular train and bus lines, said Aaron Malinsky, a partner at the Manhattan-based P/A Associates.

In partnership with the developer Acadia Realty Trust, he’s currently building Fordham Place, a conversion of an old Sears building into offices and 100,000 square feet of shops, spread across four stories.

All but 4,000 square feet is spoken for, Malinsky said, by tenants that include Best Buy and Sears, both of which have taken 30,000-square-foot berths. Fordham Place, whose development cost wasn’t disclosed, opens in late summer, Malinsky said.

“This is part of an ongoing retail effort to take Fordham Road to the next level,” he added.

In Staten Island, for years, the most expensive retail rents were found along a one-mile stretch of Richmond Avenue, between Victory Boulevard and Platinum Avenue, in New Springville.

This busy commercial strip features stand-alone stores such as a P.C. Richard & Son, Barnes & Noble and Linens ‘n Things, as well as the Staten Island Mall. Stores here typically command $60 a square foot, said Michael Prendamano, a sales associate
with Casandra Properties, based in Grasmere, S.I.

But Waterfront Commons, an 80,000-square-foot development set for a 25-acre parcel on Richmond Valley Road, by the Outerbridge Crossing, could edge it out, he said.

Opening in 2010, the open-air two-story complex will contain as-yet-unannounced outlet stores, a first for the region, said Prendamano.

He is marketing the project, which is being developed by Brooklyn’s Leib Puretz. “We’ve been trying to get quality shopping here for years,” Prendamano noted. “We want to keep as many people on the island as we can.”

In Queens, five thoroughfares — most notably Austin Street in Forest Hills and Jamaica Avenue in Jamaica — have rents topping $100. The highest per-square-foot rate, though, is along Roosevelt Avenue in Flushing, east and west of Main Street, brokers said.

Smaller berths there can rent for $150 a foot, with prices slightly lower for larger sites, like the 2,500-square-foot, one-level storefront at 136 Roosevelt Avenue that was recently vacated by KB Toys. A fashion retailer opening in March is paying $130 a foot for it in a 10-year lease, said Spencer Ain, president of Flushing-based Kent Realty Company, which manages the property.

“Once people come out here and see how much foot traffic these streets get, they know they want to be here,” Ain said.

And then of course there’s Brooklyn, the borough outside of Manhattan with the retail scene that may be developing the fastest. One recent study by Massey Knakal indicated that the number of retail corridors there has grown from 75 in 2004 to between 125 and 130 today.

In that time, rents have increased some 15 to 20 percent.

While several streets in Brooklyn are becoming enclaves for higher-end retail, the borough’s most expensive retail thoroughfare is the Fulton Street Mall, where most of the stores cater to lower-middle-class shoppers.

The most expensive section is a five-block stretch between Red Hook Lane and Bond Street. Its wide sidewalks, which flank streets that allow only buses and delivery trucks, see 100,000 people a day, said Brigit Pinnell, economic development director for the Fulton Mall Improvement Association. As such, corner ground-level storefronts can command $250 a square foot in rent, with larger multi-level spaces averaging $110, she said.

Though the strip has historically been dominated by citywide chains selling electronics, jewelry and sneakers, national retailers have lately taken an interest, especially with City Point rising on the site of the former Albee Square Mall.

That development, whose 500,000 square feet of stores will constitute one-fifth of the mall’s retail space, will open in 2009, though no tenants have been announced yet.

Rents will trump other affluent parts of the borough not just because of current foot traffic levels, but because vendors will also want to be near the affluent buyers who have increasingly migrated to the borough over the last few years, said Peter Botsaris, president of Botsaris Realty Group, which has leased Fulton stores.

“Retail follows residential,” he said.

First it was the lenders. Now it’s the mortgage insurance industry: Entire product lines are being yanked off the real estate financing shelf, potentially squeezing large numbers of buyers and refinancers out of the marketplace.

Last month, the oldest and largest private insurer of home loans, Mortgage Guaranty Insurance Corporation, issued a bombshell warning that in large parts of the country, it will no longer provide coverage on cash-out refinancings, reduced-documentation loans, mortgages with down payments less than 5 percent, loans for rental houses or other non-owner-occupied investor properties, and mortgages with negative amortization features, such as payment-option loans.

The bans, which take effect March 3, cover four states in their entirety, the District of Columbia and 25 other major real estate markets. The states are Arizona, California, Florida and Nevada. Metropolitan markets on the list include Denver, the Maryland and northern Virginia suburbs of Washington, D.C., Atlanta, Baltimore, Boston, Chicago, Detroit, Minneapolis, the Long Island and New Jersey suburbs of New York, Portland, Ore., and Tacoma, Wash.

MGIC also tightened eligibility standards nationwide on a number of low down-payment loan categories:

• Homebuyers who seek mortgages with less than 5 percent down must now have minimum FICO credit scores of 680, up from the previous 620.

• Cash-out refinancings on all non-owner-occupied rental or investment properties no longer will be eligible for insurance, no matter how high the borrower’s credit scores.

• Borrowers who seek to use reduced documentation plans must now make minimum down payments of 10 percent, have FICO scores of 660 or higher, and be able to demonstrate that at least 50 percent of their annual income is derived from self-employment. The income restriction is intended to discourage “stated income” applications from people who could readily furnish pay stubs or W-2 tax forms, but choose not to do so.

•All buyers of condominiums in declining markets will now need to come up with 10 percent down payments. Buyers of single-family homes in those areas with less than 10 percent down payments will need FICOs of 680 or higher.

Milwaukee-based MGIC is a giant in the industry with nearly $200 billion in insurance coverage in force on 1.3 million mortgages. Like other private mortgage underwriters, it provides lenders protection against losses on low-down-payment loans — those with less than 20 percent borrower equity. Competitors are expected to adopt their own versions of at least some of MGIC’s cutbacks in the coming weeks.

Private mortgage insurers played a key role during the housing boom years of 2001 to 2005 by helping millions of people with modest incomes and marginal credit purchase homes with minimal down payments. But now the industry is facing rising claims on loans that went sour. MGIC estimated that it lost $1.3 billion during the fourth quarter of 2007, consisting of actual cash losses of $280 to $290 million, and slightly more than $1 billion in additions to reserves, according to Michael J. Zimmerman, senior vice president for investor relations.

MGIC’s retrenchment parallels recent moves by mortgage lenders, ranging from investors Fannie Mae and Freddie Mac to regional banks. Most of them are now restricting the hyper-creative financing that powered the boom — zero-down, no-documentation, minimum payment plans and speculator loans — especially in markets where appreciation rates and prices spiraled off the charts. Essentially, the industry is saying: We were willing to go with the flow when all the arrows were pointing up during the boom years, but now that party is over.

What are the emerging cutbacks likely to mean in practical terms? They could be felt almost immediately by buyers who can’t come up with substantial down payments. They’ll need higher FICO scores, plus they may find certain types of loans — for vacation condos and small-scale rental investment properties, to cite just two — unavailable.

The major bright spot still left for purchasers seeking a home with low down payments: FHA. The Federal Housing Administration’s insurance program has no connection with private insurance. Borrowers can still put 3 percent down and qualify for a fixed-rate, 30-year FHA loan that comes with consumer-friendly credit, debt-ratio and other underwriting terms.

The new federal economic stimulus package raises the maximum mortgage amounts for FHA — great news for California, the Northeast, Florida and the mid-Atlantic states. Pending congressional legislation would even sweeten the deal by reducing minimum down payments well below 3 percent.

On the flip side, FHA is a little old-fashioned in some respects. Be prepared to document your income, your assets and debts. And don’t even think about payment-option plans, interest-only, negative amortization and other funny money techniques that were all the rage a few years ago.

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

Just about anybody who bought a home or took out a mortgage in the past five years has run into them in some form: mysterious fees from realty brokers, lenders, builders and title agents — admin, processing, doc-prep and regulatory compliance among some of the opaque names — that lumped $200 to $500 extra onto the consumer’s bottom line at settlement.

You might have asked a realty agent to explain why an administrative fee of $450 was needed when you were already paying tens of thousands of dollars in commissions. Good question. The answer you got might have been something along the lines of: Don’t blame me. My broker requires it. I don’t a get a penny of it.

Now a federal appellate court has weighed in with a decision involving a realty firm’s $149 mandatory add-on fee, and a home buyer who filed suit to challenge it. The U.S. 11th Circuit Court of Appeals reversed a lower court’s denial of class action standing in the suit by Vicki B. Busby of Jefferson, Ala. The class action is intended to cover all consumers forced to pay what the brokerage firm termed its “ABC” fee — an administrative brokerage commission.

Busby filed suit against RealtySouth, a large Birmingham-based broker, charging that in addition to paying a substantial commission to the firm and its sales agent, she was nonetheless required to pay the ABC fee. Busby said there was no evidence that the firm had actually performed any extra services — above and beyond the brokerage services compensated by the commissions — and therefore the ABC fee violated federal law.

The appeals court ruled that the lower court had erred in not considering the factual issue — Was any specific work done to justify the extra charge? — in making its decision to deny Busby’s request for class action certification. The case, which now goes back to the district court, is the latest in a long-running battle pitting realty, mortgage and title companies against consumers protesting so-called “junk fees” and settlement sheet add-ons.

The Department of Housing and Urban Development has ruled for years that any fee imposed in connection with a residential real estate transaction must be for services actually rendered. Some federal courts have disagreed with HUD’s interpretation of the Real Estate Settlement Procedures Act. Others have agreed.

In the Busby case, the appeals court
“bolstered HUD’s interpretation that if a
real estate broker cannot produce evidence of the services it performed for the administrative (or other add-on) fees it charges,
a violation may exist,” according to Washington attorney Phillip L. Schulman of K & L Gates, an authority on real estate settlement issues.

In an interview, Schulman said the court’s ruling is not the final word on the matter, but it “underscores the importance of performing actual services in exchange for” fees charged in connection with real estate and mortgage transactions.

In other words, a brokerage firm cannot simply dream up new fees and force them upon their unwitting clients. Many brokers have imposed extra charges because their sales agents demanded higher splits of the listing and selling commission dollars.

Laurie Janik, general counsel for the
National Association of Realtors, argued that brokers are fully within their legal rights to receive compensation “for the increasing costs they incur to run their businesses” — communications technology, taxes, lease payments and marketing, to name
just a few. They should be able “to recoup these legitimate expenses,” especially in an environment of declining commission rates and higher splits with agents.

Janik said brokers should consider
moving to a standardized, well-disclosed flat fee-plus-commission approach to handle the problem. For example, listing and sales agreements could specify that a firm charges a base fee — say $500 — plus commissions of 4 to 6 percent of the property’s selling price, split between listing and selling agents.

Using that approach, according to Janik, consumers, agents and brokers “all know upfront” where the fees will flow. “If the sellers or buyers don’t like that arrangement, they can walk down the street to another broker.”

How should consumers handle the issue in light of recent court rulings? No. 1: always ask agents upfront about the existence and size of administrative or processing add-
ons beyond the commissions. If the answer is yes, ask what specific services are
rendered to earn them, and who pockets
the money.

If you don’t like what you hear, shop around for a better deal. Remember: In real estate transactions, all compensation is negotiable. If you don’t push for lower fees, you’ll usually pay the max.

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

Europeans buying units at Morocco’s resorts

European investors have already begun grabbing units at Morocco’s Mediterrania-Saidia, which will be North Africa’s largest luxury resort when it opens in 2010. Around 50 percent of the apartments sold there have been to British, Irish and Spanish buyers, according to the International Herald Tribune.

Located in the economically depressed Oriental region along the Algerian border, Mediterrania-Saidia will be one of six luxury resorts in the country’s so-called Plan Azur developments, a $4.4 billion government plan to bring foreign investment and tourism into the country’s poorest areas. The other five Plan Azur projects are on the nation’s west coast.

In addition to the plan, there are more than 14 major developments underway at the juncture of the Atlantic and Mediterranean, near the city of Tangier.

Spanish developer Fadesa owns most of Mediterrania-Saidia, which will include 3,000 luxury apartments. Units there have sold for $210,000 for a 1,184-square-foot unit.

Hot Panama market may see cooling

Panama City, which has been advertised as the “Miami of Central America” for its incredible rate of economic growth, real estate appreciation and rapid building in the past couple years, might also be seeing the negative effects of overbuilding familiar to its namesake.

In the last two years, the average price of a high-rise apartment in the city has leapt from around $140 to around $280 per square foot, the International Herald Tribune reported.

There are 35 towers, each 20 stories or more, under construction, and another 350 such developments in preconstruction stages, representing a total of 40,000 planned units, according to government estimates.

But now the first signs of a cooling market have appeared, starting with cancellations of three of the city’s largest projects last year, including the 104-story Ice Tower, which would have been the tallest tower in the city. And in response to complaints that a majority
of current building investment there is speculative, a law passed last year will require developers to have at least preliminary government approval for projects prior to soliciting buyers.

Still, foreign investment in Panama was up 20 percent in the first half of 2007 compared to the same period of 2006. Construction activity increased 17 percent over this time.

Meanwhile, investment from the city government seeks to address its traffic and pollution problems, including long-term plans to build new roads and a seven-year, $300 million project to clean up sewage in Panama Bay.

Japanese townhouses see renewed demand

A renewed interest in the Kyo-machiya, a traditional urban Japanese townhouse built between the 1860s and the end of World War II, has recently brought a diverse herd of Japanese and international renters and buyers to Kyoto, where more than 20,000 of these homes exist, according to the International Herald Tribune.

The structures typically have little street frontage but extend far back from the street — they are an average of 17.5 feet wide and 65.5 feet deep. Although the old buildings are prone to tilting and insulation problems, construction techniques make them very resistant to earthquake damage or collapse.

An average sized Kyo-machiya in central Kyoto, around 540 to 860 square feet, would rent for about $935 per month in good condition. However, structural problems can bring rents to half that.

A fixer-upper Kyo-machiya typically sells for around $92,000, but could require up to twice that investment in renovations.

When Nathan and Sharon Laufer began looking for an apartment in Jerusalem four years ago, times were different. It was the tail end
of the second intifada (“bombs were still
going off,” said Laufer), and real estate prices, for both rentals and sales, were pretty reasonable.

At the time, the Laufers and their four children — 14-year-old triplets, two girls and a boy, and an 8-year-old son — were in Israel on a trial basis. They still owned their home in Teaneck, N.J., and rented a 1,720-square-foot, four-bedroom apartment in Jerusalem’s popular German Colony neighborhood.

But “once the bombs stopped,” and quiet began settling on the security-conscious city, Jewish foreign buyers from France, England and the U.S. began looking for their piece of the rock in Jerusalem, and prices started to rise.

An apartment on the Laufers’ block that was listed as $775,000 in 2005 rose to $900,000 in 2006 — and finally sold for $1.55 million last year.

During the last two-and-a-half to three years in Jerusalem, there was a “kind of craze in prices, from the never-ending demand of foreigners who wanted an apartment in Jerusalem,” said Benny Loval, who runs the Anglo-Saxon Jerusalem real estate office. “It was an emotional, not a purely financial, investment, although many understood that it was a good real estate deal.”

In response to the demand from foreign buyers, local developers began building luxury apartment buildings throughout the city at an unusual rate, added Loval. “It’s never been like this,” he said. Now there are more than 1,000 units under construction that will be ready within the next two years.

It’s a “glut of luxury housing,” said one agent who is marketing one of the complexes. In this city of 800,000, which has a large number of Arab and ultra-Orthodox Jewish families and is considered one of Israel’s poorest, the luxury buyers, she said, are American, French and South American, as well as a few locals who are downsizing.

“It’s very ‘in’ to have an apartment in
Jerusalem,” said Loval, referring to the
foreign buyers.

The new developments are termed “luxury” because of the prices, added David Benninga, another local realtor. “But what’s luxurious about a 265-square-meter to 300-square-meter apartment?” he asked. “What’s luxurious is the prices, which start at around $800,000. There are no prices for locals. If you want to spend $400,000 to $600,000, you have to go to Mevasseret,” a suburb outside Jerusalem.

That thought had crossed the Laufers’ minds, although they were also considering Modi’in, a suburb located between Jerusalem and Tel Aviv where there is a synagogue similar in spirit and community to the one in which they are members in Jerusalem.

When they began looking to buy, they knew they wanted to stay in the general area of German Colony or Baka, two quaint, adjoining neighborhoods that are dotted with standard Israeli apartments as well as the more desirable Arab-style houses and houses that have survived from the German Templar settlement dating from the 1870s. With two main streets — Emek Refaim and Bethlehem Road — lined with cafes, bakeries, restaurants, boutiques and markets, as well as several popular synagogues, German Colony and Baka are both popular with the local English-speaking population.

The problem was, the Laufers couldn’t afford them. “We have four big kids, and we need space for them,” said Laufer. “In Israel, kids come back home, even after they’ve gone to army and university.”

They found that even in Arnona, a nearby neighborhood that is on the other side of Hebron Road, a street that is considered the outer limit of Baka, prices were in the $800,000 range, pre-renovation.

Some locals who want to stay in Baka and the German Colony end up buying apartments in the “projects,” large apartment blocks that were hastily built in the 1950s and 1960s to house the then-large influx of immigrants.

“It’s a great option for young families who want to stay in these neighborhoods but are willing to walk up three flights in buildings without an elevator,” said Alyssa Friedland, the proprietor of Re/Max Jerusalem. “It’s not as expensive. I just sold a three-room for $195,000 and another four-room for $300,000. They’re good starter apartments.”

That wasn’t an option for the Laufers, who recently decided to continue to rent after finding a four-bedroom, three-and-a-half bath, multi-balcony rental in a new elevator building in Baka.

The price is around 3,000 shekels (about $840 USD) per month. It’s tied to the dollar in the owners’ favor, in case the dollar strengthens and falls against the shekel, for a year-and-a-half lease with two one-year options. The family said they feel they are paying what the market is bearing in the neighborhood.

Rentals in Jerusalem can be preferable because the cost of rentals “is very low compared to the cost of property,” said another local who is also on the hunt for an apartment in similar neighborhoods. “You get a lot more for your money, but that does hurt your pocketbook eventually.”

Still, prices may finally be beginning to soften, according to realtors.

“I don’t know if it’s a rationalization from the prices being too crazy, or the subprime situation in the States, or the shekel-dollar rate,” said Loval. “It could also be seasonal.”

“The market is always quiet seasonally,” added Benninga. “The winter is not the time to buy a home, so it’s hard to know if there’s a new trend, or if it’s just a quiet time. It’s hard to say what will be in six months.”

Come Passover in mid-April, Re/Max realtor Friedland will have 15 to 20 American clients coming to look at apartments. But she is also concerned about the effect of sellers quoting their prices in shekels instead of dollars because of the weak dollar.

“The drop in the dollar is increasing the need for the buyer to add more money to the price,” she said. “I take the shekel price and instead of dividing by 4 (the long-standing rate of exchange), I divide it by 3.6 (the current rate), and that’s a big change in price for them. I have a feeling that money is drying up for Americans, and all of a sudden they’re not going to be buying these second vacation homes.”

The process in which sellers will be willing to lower their asking prices to sell to locals, to Israelis and not just foreigners, is one “that takes a long time,” said Loval. “It’s hard to imagine a developer selling for $4,000 a meter instead of $8,000.”

And it’s not much different in Tel Aviv, said realtor Rona Zetuni.

“Maybe it’s the recession in the U.S. Because if there’s something going on in the States, especially New York, we eventually feel it here. It doesn’t mean there aren’t deals being closed; there’s just more of a limit of what people are willing to pay, even for the miracle of having a place in Israel.”

I’m hearing a common refrain these days when talking to industry leaders: While there’s concern about the downturn, these folks at the top haven’t been personally affected.

That’s because units are still being sold, although buyers appear to be gaining some bargaining power in the city with a slowdown in sales volume and a noticeable dip in prices this winter. While the residential market has been cyclical for the last decade, this spring will be the real test.

As for the commercial market, it has seen such wild rides in the last several years, with rents reaching as high as $225 per square foot during the recent boom, that some stabilizing might actually be beneficial.

Beyond the city, though, it’s a different story. Across the country, escalating foreclosure rates and growing inventory are dominating headlines. While dramatic, these are not necessarily New York-specific stories, though foreclosures are admittedly rising at alarming rates in some outer-borough areas. The result is tumbling consumer confidence, which further exacerbates economic problems.

But, as usual, New York isn’t following the national playbook.

One of the things that makes New York City, and Manhattan, in particular, so special is its retail — and retail here is very healthy, at least for now, thanks to the city’s concentration of wealthy residents and crowds of tourists eager to spend. This month, in a special report, we take a look at what’s in store for retailers.

Luxury retailing in the city still appears to be as strong as platinum. Case in point is the opening last month of Gucci’s new 46,000-square-foot flagship on Fifth Avenue, the most expensive build-out of retail space on record and a lease that sets a new rent benchmark for boutiques in the city.

Also on the subject of pricey property: the Zeckendorfs’ 15 Central Park West project has tremendous cachet, as demonstrated by the A-listers who have bought into the extravagant building, which has unusual amenities like a private dining room for 60 guests and a professional kitchen with a full-time private chef. This month we bring you a breakdown of the buyers: a veritable who’s who of the upper stratospheres of finance, media, sports, business, entertainment and a few other very rich people.

This month we also break down what went wrong with the conversion of the Manhattan House. The massive $1.1 billion project saw a split between developers Richard Kalikow and Jeremiah O’Connor that hinged on differing visions for the priciest conversion project in the city. One wanted to keep costs down to turn profits, the other wanted to spend more for a more drastic overhaul of the building. Now that Kalikow is out of the picture and sales are underway, observers are waiting to see if the project will be deemed a success.

Finally, we are changing The Real Deal’s annual forum this year from spring to autumn. Why? Well, for a split second we considered moving the venue from Lincoln Center to the Hilton, then decided that our audience required a more distinguished space. So in order to have the same quality experience, the event will be pushed back to September 10th, to be held at Avery Fisher Hall again. More details to follow soon.

Enjoy the issue,
Amir Korangy

Corcoran announces new Williamsburg office
The Corcoran Group recently announced the opening of its first Williamsburg office, a 4,100-square-foot space on Bedford Avenue. Twenty-nine real estate agents from Corcoran and 13 new hires from other brokerage firms were slated to set up shop last month at 241 Bedford Avenue, between North Third and North Fourth streets, said Eric McFarland, the new managing director of the Williamsburg office. The office has room for another 12 agents. Corcoran acquired two street-level retail spaces — one was vacant and the other was an Internet caf & eacute; — last fall and has been renovating the site since.

Durst plans far West Side school
Developer Douglas Durst and a former owner of Esquire magazine plan to build a $200 million, six-story private school at 623 West 57th Street, a block from the Hudson River. The Nations Academy venture is led by Christopher Whittle, founder of education management company Edison Schools. The Durst Organization, which has a long-term lease on the block, will build the 240,000-square-foot school.

Platinum Properties launches new residential services
Platinum Properties, which last year brokered the $33.7 million sale of three penthouse units at Trump World Tower, recently announced four new business initiatives to bolster its line of residential services: the Platinum Concierge, a 24-hour personalized service for buyers and renters; international property management for individual condo owners; a partnership with an in-house direct lender, Golden First Mortgage Corporation; and a revamped Web site with an interactive, three-dimensional neighborhood map of Downtown Manhattan.

Derek Jeter teams up with California health club chain
New York Yankees star Derek Jeter has announced a partnership with California-based health club chain 24 Hour Fitness, which will make a foray into the New York market for the first time in June. Jeter is an equity investor in the clubs, which will be called 24 Hour Fitness-Derek Jeter. The first New York branch will occupy 28,000 square feet of space on Fifth Avenue and 26th Street at Madison Square Park.

At the end of January, four agents moved from Manhattan Apartments to Century 21 NY Metro under the wing of Wesley Stanton, who was hired as executive vice president and leader of what will become a 10-agent team.

These moves happened just months after former Manhattan Apartments vice president Mark Lewis became COO of rentals at Century 21 NY Metro, and on the same day that former Manhattan Apartments executive vice president and director of sales Jorden Tepper started at Century 21 with the same title.

Stanton is bringing along two of his most senior brokers, Chad Schneider and Ian Aldridge, as well as his personal assistant, Georgia Godfrey, who is also licensed. Stanton said that bringing his team members to Century 21 “really didn’t take any convincing at all.”

Stanton has five junior brokers on his Century 21 team in addition to the three he brought over from Manhattan Apartments.

Although Stanton and his team joined on the same day as Tepper, Stanton said the two hires were complete coincidence. However, he was very excited by the prospect of continuing to work at the same company as Tepper, whom Stanton credits with helping along his transformation from a rental broker to sales.

“Jorden was very good at showing me the co-op application process, how to cultivate the trust of a sales client, and really the whole process,” he said.

At his new company, Stanton will be part of the company’s program for training new agents.

He also believes he will have greater influence on company policy than he did at Manhattan Apartments. “The people higher up [at Century 21 NY Metro] are going to consider your opinion. They might not listen to it, but they’ll consider it.

“Century 21 is the largest brokerage in the world, but not in Manhattan … and I think we’re all looking to build a brand here,” he said.

One of Eastern Consolidated’s latest promotions is just 25 years young. Heidi Burkhart, who was promoted in January from the position of director to senior director, already has nine years of sales experience under her belt.

She began her sales career at the age of 16 at Ann Taylor, the women’s clothing store. As it turns out, it was clothing sales that led her to a career at Eastern Consolidated, where she has brokered over $400 million in deals since joining the company in 2003.

At the age of 20, Burkhart had been working two jobs — as a sales representative for pharmaceutical company Ferndale Laboratories and at high-end clothing retailer Anne Fontaine in Greenwich, Conn. — when Eastern Consolidated president Daun Paris and CEO Peter Hauspurg came into her store, and she and Paris
began talking.

“Being a woman, you are naturally attracted to another woman who is so successful running her own business,” Burkhart said. “She also had her family with her, and you could tell that she was very balanced with her life and work.”

Burkhart and Paris exchanged phone numbers, which led to her joining the investment sales company a few months later.

Burkhart has closed on building transactions amounting to more than 3,500 units in the three years she has worked in Eastern Consolidated’s specialized affordable housing division, and she is in contract to sell another 1,600.

Burkhart said that she is looking forward to having more junior brokers and directors work with her in her division.

“I would say that at this point, there are not a lot of brokers who have ventured into this arena,” Burkhart said, referring to the sales and acquisition of Mitchell-Lama and Section 8 housing. “So we look forward to building a bigger base there.”

The third- and fifth-highest grossing sales teams at Prudential Douglas Elliman last year, the Bracha Group and the Roth-Sporn Group, respectively, merged in early February to create one 15-person team that will operate under the Bracha moniker.

Division of labor was a major impetus for the merger. In a new structure for both groups, leadership of specific niches will be allocated to different brokers. Roth-Sporn partner Lenny Sporn will be in charge of the team’s non-agent staff and its international clients; Michael Meier will head the team’s listing department; Gilad Azaria will specialize in the group’s many Trump listings; Mickey Roth will be in charge of the sales team; and head manager Ilan Bracha will head investment sales and new development listings.

“[With the Roth-Sporn Group] I needed to deal with a lot of administration, and it took a lot of my time and a lot of energy,” said Mickey Roth, who had been a leading partner with the Roth-Sporn Group. “The way it works now, it’s like a small army.”

Roth said that in an effort to add only its best brokers to the collaboration, Roth-Sporn had cut from its average membership of around 15 to seven personnel prior to the merge. The Bracha Group had eight members. The 27-year-old Sporn is the youngest Douglas Elliman agent to reach the company’s Top 10 list, while Bracha is the company’s youngest managing director at age 33.

Residential

Barak Realty

Doug Booth, Amy Casey, Eric Rath, Tom Croke, Toby Jenkins and Marni Laboz joined the firm.

Century 21 NY Metro

Michael Blass joined as a sales agent and assistant manager for the new investment sales division.

Citi Habitats

Gary Malin was promoted to president from chief operating officer.

DJK Residential

Frank Davis joined as a sales associate.

Gumley Haft Kleier

Cody Moore and Bonnie Klein joined as sales associates.

Halstead Property

Cynthia Besteman, Peter Cohen, Rosemarie Minniti, Christopher Todd Simmons, Tiffany Stilwell and David Wagenheim joined as senior vice presidents.

The Marketing Directors

Jill Singer joined as project manager.

Commercial

Broad Street Development

David Israni was promoted to managing director.

Carlton Advisory Services

Ernest Rosato joined as managing director. John Raggio joined as managing director. Jeffrey Wyner joined as chief financial officer and managing director.

CB Richard Ellis

Leonard Zimmerman joined as first vice president of the firm’s Downtown office. Noel Caban joined as vice president of retail services. Phil Russo joined as senior director of New York public relations.

Cushman & Wakefield

Paul Glickman was promoted to vice chairman.

Eastern Consolidated

Eric Anton and Ronald Solarz were promoted to executive managing directors. David Schechtman was promoted to senior director. Barbara Byrne Denham joined as chief economist.

Massey Knakal

Thomas Willoughby joined as an associate. Pei Ling Ma was promoted to associate broker.

Meridian Capital Group

Daniel Heumann joined as managing director and senior operating officer.

Newmark Knight Frank

Hal Stein joined as managing principal.

Rose Associates

Amy Rose was appointed co-president.

Sherwood Equities

Ryan Nelson joined as senior vice president of development.

Sinvin Realty

Michael Glanzberg was promoted to principal from managing director and general counsel.

Many New York City developers have mastered the art of conjuring up fashionable and stylish images through their advertising campaigns.

But it seems it’s not just buyers who are taking the bait. A number of high-profile projects are also catching the eye of magazine editors and directors, who are using the new spaces as the backdrop for photo and television shoots.

At the Setai New York, a condo at 40 Broad Street in the Financial District, the building’s developers deliberately put the project’s sales center inside the Setai Club, an event space that includes a bar, lounge, wine cellar and dining room. Since the building opened in April, the developers said they have been approached for several shoots.

“We’ve gotten tons of press inquiries about using the space,” said Atit Javeri, director of investments at Zamir Equities, the building’s developer.

The space has been featured in the pages of Gotham Magazine, which is geared toward an affluent readership.

Last month, Mariah Carey’s manager approached the developers about using the club for her new album cover, according to Javeri. The deal didn’t pan out, but the Setai, where 60 percent of the condos are sold, is now in talks with her reps about making her a member of the club’s board, a panel that already includes celebs like Sheryl Crow, Lenny Kravitz and Heidi Klum.

Meanwhile, another new condo farther uptown has also attracted attention from photo editors. The Atelier on 635 West 42nd Street has been featured in the magazine Lucky, said Jason Gohari, an associate director with the Moinian Group, the building’s developer.

The building’s 28th-floor model home was featured in a spread for a jewelry line, and Gohari said the 360-degree views from the building’s lounge have also been on the receiving end of editorial attention.

“Our views can’t be replicated in a studio,” said Gohari. “Editors have reached out to us.”

So has media buzz helped put the Atelier on the radar of more buyers? “Sure,” said Gohari. The building, where prices started in the mid-$600,000 range, is now 85 percent sold.

If you’re a swimmer, large Manhattan buildings like the Orion, Zeckendorf Towers and Miraval Living boast pools that will allow you to do your thing — but you’ll have to rub shoulders with (gasp!) other people.

For $15,000 a month, however, you can skip the crowds.

At Penthouse A at Le Triomphe, a 1980s-era high-rise at 245 East 58th Street, there is a convertible three-bedroom available for rent that has a 25-foot-long pool. If you’re willing to double your spending, head downtown: Unit 1A at 51 Walker Street (a three-bedroom duplex loft) has a 21-foot pool surrounded by a heated limestone floor. That unit is available for rent for those who can write a monthly check for $30,000 — and for sale for $8.995 million.

Private pools, it seems, are making a splash in Manhattan.

One builder estimated that there are thousands of them, mostly in condos and townhouses.

Vanity Fair recently included a spread of filmmaker Julian Schnabel’s new Palazzo Chupi in the far West Village, pool included. Bob Guccione’s old townhouse on East 67th Street (he lost the place to creditors after he declared bankruptcy, and it was recently sold) has a 32-foot Roman-style pool on the first floor.

Supermarket magnate Ron Burkle paid $17 million for the former Sky Studio at 704 Broadway, which hosted Jerry Seinfeld’s wedding. The pad comes complete with a 25-foot heated pool that has been featured in some “Sex in the City” episodes, and cost the previous owner $500,000 to build.

In the suburbs, a concrete pool starts at $85,000, said David Coonan, general manager of All American Custom Pools in Norwalk, Conn. But a pool in the city with smaller dimensions starts at $135,000 (double for steel). The expense is because of logistics, said Coonan, whose company is working on a pool project on West Broadway.

In one basement near Park Avenue, the back-and-forth over the pool’s exact placement has taken two years. “No one can agree where the pool is going to go,” Coonan said. “We’re talking fractions of inches.”

Indoor pools can also be difficult to maintain. “You start to smell chlorine all the time,” said Claudine DeMatos at Prudential Douglas Elliman’s DeNiro Group, which represents 51 Walker Street.

And, truth be told, not all shoppers need one.

“From a marketing standpoint, what percentage of
the population has to have a pool in their apartment?” said Melissa Brown at the Olnick Organization, which represents Le Triomphe. “It’s just pure opulence to dedicate such a large space to something like that.”

The owners of one townhouse agreed, getting rid of a $500,000 pool put in by heirs to the Johnson & Johnson fortune. “The new owners didn’t like it and covered it up,” Coonan said.

It wasn’t Vegas with strippers and blackjack, but the
Clarett Group recently held a bachelor party of sorts as a marketing play.

This fête was at a model apartment on the 29th floor of the Sky House at 11 East 29th Street between Fifth and Madison avenues.

The 1,600-square-foot display apartment, a one-bedroom, was designed to appeal to a bachelor who could
appreciate the photographs of motorcycle parts that hung in the hallway, the black leather walls in the master
bathroom (which managed to come across
as sophisticated rather than smarmy) and the iPod holder in the foyer that hooked up to an apartment-wide sound system.

In short, the Clarett Group, which was offering the sample pad for $2.3 million, or about $1,435 a square foot, was looking for young Wall Street types.

The group has already sold about 55 percent of the building’s 139 condominiums in the months leading up to the building’s opening to tenants in January.

The marketers seemed to have their customer correctly pegged. A number of the 200 or so guests, who were mostly traders, professed to having fairly tame bachelor pads — ones that at worst could be called messy, and at best were a place they’d be proud to bring their girlfriend’s mother.

For example, trader Chris McGuire said his current Brooklyn bachelor pad has a bunch of Buddha heads and some pictures and sports memorabilia on the wall. In general, he said it is a pretty tidy place. His ideal bachelor pad would be “somewhere I could live alone” and get a peaceful four hours of sleep, from 2:30 a.m. to 6:30 a.m.

With a schedule like that, there’s little time for Bacchanalian reveries; hence the appreciation for the austere urban minimalism on display at Sky House.

“Instead of sex, I went for the industrial [look],” said Bryan Bennett, the director of design resources for Gerner Kronick & Valcarcel Architects, which created the bachelor pad.

The closest thing to a romp through a modern-day “Animal House” was an authentic 1978 Playboy pinball machine that sat against floor-to-ceiling windows with views of Midtown’s nightscape. But that ended up attracting the female guests. Bennett noted that he’d had to lobby for it to be included in the final model unit in the first place. “Meetings were held,” he said.

Apartments at Sky House range in price from $950,000 for a one-bedroom to $7.2 million for a duplex with a terrace on the 51st and 52nd floors.

Carl Annibale, a trader who attended with his wife,
said that a true bachelor pad would undoubtedly be messier and would probably have video games hooked up to the television.

“This,” he said, “is an upscale bachelor.”

The party, which was held on a snowy Tuesday night last month, drew guests who meandered through the display apartment on the 29th floor before going up to an unfinished penthouse on the 55th floor.

The guests drank beer, wine and champagne and
ate salmon with red wine foam, black olive dust and
violet mustard.

While the already purchased apartments in the building were bought by a mix of buyers, Veronica Hackett, managing partner at the Clarett Group, said, “Wall Street is obviously an important part of this.”

Indeed, despite the subprime mortgage debacle and the resulting $150 billion of investment bank losses and some of the financial firms laying off employees, there are still plenty who are making millions.

That translates into spur-of-the-moment real estate purchases, sometimes based on something as simple as a high-tech sound system or a balcony.

One prospective buyer, Alex Shenberg, noted that his perfect bachelor pad would have to have a Jacuzzi and mirrors all over, including on the ceiling above the bed.

“You have to have very comfortable couches,” he said. “The Jacuzzi is basic, for four, six people … You have to make a lot of parties.”

1963: Largest corporate office building opens

When it opened 45 years ago this month, the iconic Pan Am Building, now the MetLife Building, was the largest corporate office building in the world.

The 2.8 million-square-foot, 58-story skyscraper above Grand Central Station was originally built for Pan American Airways. Although it was widely criticized for blocking views down Park Avenue and 44th Street, the building was prized by tenants for its good location and innovative design.

In 1981, the insurance giant Metropolitan Life Insurance Company purchased the building for $400 million. A decade later, when the airline went out of business, MetLife replaced the Pan Am logo at the top of the structure with its own.

The building broke a record for highest sales price of a U.S. office building when it went for $1.72 billion in April 2005 to a group of investors led by Tishman Speyer Properties. The previous record had been Harry Macklowe’s purchase in 2003 of the General Motors Building on Fifth Avenue for $1.4 billion.

The controversial structure was met with opposition before its debut on March 7, 1963 and took five years to build. It was designed by Emery Roth & Sons in consultation with leading architects Walter Gropius and Pietro Belluschi.

1940: Rockefeller Center officially opens

On March 28, 1940, Rockefeller Center, considered the largest private project of its kind in the world, was officially opened with the granting of a temporary certificate of occupancy for its 20-story United States Rubber Building, now known as the Simon & Schuster Building.

Although the complex first opened in November 1933, the city certificate for the last of 14 buildings in the three-block development in Midtown marked the completion of the Depression-era project, the New York Times reported.

Begun in 1930, the $100 million entertainment and commerce complex between 48th and 51st streets and Fifth and Sixth avenues was altered by the national economic downturn following the 1929 stock market crash.

The complex was expanded in the 1960s and 1970s, and it has changed hands several times. In 1985, the Rockefeller family sold 80 percent of the complex to the Japanese company Mitsubishi Estate. But a recession forced Rockefeller Center into bankruptcy, and in 1996, a group led by Jerry Speyer and Goldman Sachs acquired it by paying $306 million for the mortgage and assuming $845 million in debt.

In 2001, a partnership led by Speyer bought out the other owners, including members of the Rockefeller family, for $1.85 billion. The sale marked the end of the Rockefellers’ involvement with the property.

1913: Hammerstein buys site for opera house

In March 1913, Oscar Hammerstein, grandfather of the great Broadway songwriter of the same name, purchased a former hospital property on Lexington Avenue and 51st Street to build a venue to compete with the Metropolitan Opera House.

The theater was not Hammerstein’s first challenge to the Metropolitan. In 1906, he had opened the Manhattan Opera House on 34th Street as an affordable alternative to the leading venue. Within four years, the Met paid him $1.2 million to stop showing opera for 10 years. In 1997, Manhattan Center Studios, which leases the space from the Unification Church, renovated the theater and renamed it the Hammerstein Ballroom in his honor.

Hammerstein, a cigar manufacturer and successful theater impresario, opened the Lexington Avenue Opera House in 1914, but the venue quickly ran into financial trouble. His investment in this second theater totaled as much as $1.5 million, the New York Times reported, but by 1918, creditors had moved to foreclose on a $450,000 mortgage made by Hammerstein Opera Co. and others, and sell the building. He died the next year at age 72.

The opera house was purchased by Loew’s Theaters, which produced vaudeville shows and later ran movies. Loew’s Theaters was acquired by Laurence Tisch in 1960. The theater was demolished that year and replaced by the Summit Hotel, now known as the Doubletree Metropolitan Hotel.

Compiled by Adam Pincus

Samuel LeFrak used to joke that he had cement running through his
veins, an allusion to his heritage as a third-generation builder. And
with his large imprint on the metropolitan area — LeFrak City in
Queens, Battery Park City downtown, and Newport in Jersey City being
the most recognizable — LeFrak’s legacy is part of New York City’s DNA.
[more]