It’s hard to find a real estate figure with a better reputation for timing the markets than Sam Zell. The blunt, motorcycle-riding, Chicago-based mogul is known for snapping up distressed assets when prices hit bottom. No surprise, then, that a spate of unexpected, high-profile deals involving the Zell-chaired REIT, Equity Residential, is generating a growing sense of elation among local real estate players desperate for signs of a recovery. “Does it get any better than when Sam Zell starts buying property in your market?” said Dan Fasulo, managing director at Real Capital Analytics. “I don’t know how much more confidence investors need to start making decisions. Everybody has got to realize that the world is not over.” [more]
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When it comes to real estate scams and crimes in New York, no economic cycle is spared. As The Real Deal and other publications have documented, a number of cash-strapped industry players have turned to devious acts during the recession as finances have grown tight. But it’s not just the bad times that breed bad behavior. Many of the scams now being discovered and prosecuted have their roots in the mid-2000s era of lax underwriting standards and easy credit. This month, The Real Deal dissected some of the crimes and scams now afflicting the industry. We took an in-depth look at three criminal cases to learn just how different kinds of scams can play out. [more] -
There’s a recession. Deals are scarce. Commissions are shrinking. It’s a great time for broker rustling. Commercial services firms are aggressively poaching their competitors’ brokers and research analysts, figuring they will be better positioned to win market share once a rebound takes hold. The slow transaction volume means fewer money-making deals are tying brokers to their firms, creating ripe opportunities for rival firms to exploit the age-old tension between the lower-ranked agents and their senior producers. [more] -
99-cent stores are proliferating all over the city because of the down economy.Bargain retailers are having a New York City moment. Emboldened by recession-friendly rents, local 99-cent stores are spreading their wings in the outer boroughs and eyeing Manhattan. Other discount stores — from Costco to outlet store Nordstrom Rack — are also in a New York City growth spurt. “We came out of a retail climate where credit was king, and everyone traded up,” said Andrew Mandell, a broker with Ripco Real Estate. “Now rents have come down, and people have traded down in terms of what they are purchasing.” Rick Stassa, executive vice president of Friedland Realty, sees 99-cent store activity all over the Bronx and Upper Manhattan. [more] -
The interior of 25 Rawson Road in Sag Harbor. The home is listed for rent with Sotheby’s International Realty for $350,000 for the season.Every year, Hamptons broker Jane Gill gets a call from the same Wall Street trader, looking for a summer rental with a fenced-in yard, an acre of property and a garage for his Ferrari. He always calls at the last minute, usually around Memorial Day, hoping to get a good deal: a $200,000 property for about $75,000. “He works with every broker,” said Gill, a vice president at Saunders & Associates in Bridgehampton. [more] -
From left: 1600 Broadway, Cipriani Club Residences and 555 West 23rd StreetOne in every 13 homes is in pre-foreclosure. Half are listed for rent or sale. This predicament isn’t taking place in the outer boroughs. It’s happening in Manhattan at a luxury condo. The building is one of dozens in Manhattan where multiple owners have fallen behind on their mortgages. This month, The Real Deal put together a top 10 list of buildings in Manhattan with the most units that received a pre-foreclosure filing in the last year. [more]
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HUD Secretary Shaun DonovanShaun Donovan is dealing with the worst housing crisis in generations and is at the center of the fight to staunch a historic flood of foreclosures. Being the nation’s chief housing czar might sound stressful, but for the 44-year-old policy wonk it’s a dream job. In an exclusive interview with The Real Deal, Donovan, the city’s former housing commissioner and now an Obama cabinet member, talked about life in Washington, from HUD’s new focus on cities to Ping-Pong with the president. [more]
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Charles CohenCharles Cohen is the president and CEO of Cohen Brothers Realty Corporation, the company founded by his family in the 1950s. CBRC owns and manages more than 12 million square feet of office space and design centers across the country, including 623 Fifth Avenue, the Decoration & Design Building and the Pacific Design Center — designed by Argentine architect César Pelli — in West Hollywood, Calif. He was also the coproducer of the film “Frozen River,” which in 2009 received Oscar nominations for best original screenplay and best actress. [more] -
Amir KorangySeven years ago this month was the release of the first issue of The Real Deal. From the very beginning, my small staff and I agreed that The Real Dealshouldn’t be influenced by anyone or any entity — that we would stick to our guns and report the news as we see it. We found real estate reporting at the time to be fluffy at best and incredibly influenced by advertisers at worst. As the second-richest industry in New York City, I felt that the real estate community deserved better. Things are quite different today. For starters, we’re no longer headquartered in my two-bedroom Brooklyn co-op. [more] -
In the past year, New York City renters have come to expect a bevy of incentives, like months of free rent, landlord-paid brokers’ fees, and even — in the case of boutique luxury rental 436 West 20th Street — a butler. Could these perks be disappearing? In recent weeks, brokers have reported that landlords are doing away with concessions, and even increasing rents. “As their vacancies begin to drop, landlords around Manhattan are beginning to test rent increases,” noted Daniel Baum, CEO of the Real Estate Group New York, in a January market report. “Some of the major players, and even a few small outfits, have begun to remove concessions and bump up prices … around $100 to $200 per unit.” [more]
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On its Web site, the marketing pitch for the Fitzgerald, a condo in Harlem, has a decidedly pre-recession ring: “Where the living is grand and the financing is easy.” The mortgage terms sound that way, too: 5 percent down, with no worries about pesky approval requirements from a nitpicking bank. “The developer … will give you up to a 95 percent mortgage at favorable rates with reasonable conditions,” the Web site reads. But the reason buyers don’t have to concern themselves with a bank is very much related to the recession. [more]
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The Atelier rents out its roof deck for $5,000 to $10,000. The extra income has helped it reduce common charges.It might be the real estate equivalent of coupon clipping or small-time political fundraising: Many condo and co-op boards in New York are keeping a sharp eye out for creative ways to trim their common charges and bring in extra revenue for their buildings. The strategies run the gamut from hosting photo shoots to scaling back on electrical usage, but the goal of improving the building’s finances is always the same. For example, the Atelier, a 478-unit condo at 635 West 42nd Street, is renting out its Sky Lounge roof deck year-round for private parties. Hillary Clinton and Lindsay Lohan have each already rented out the space, according to Dan Neiditch, the president of the building’s condo board. [more]
Although they may be just beguiling mirages that will fade upon approach, there are some submarkets where asking rents have jumped in the past months, a trend that runs counter to the dour predictions from Manhattan leasing brokers that taking rents won’t rise for more than a year. In the Meatpacking District, for example, Charles Blaichman’s CB Developers High Line building that remains under construction at 450 West 14th Street has asking rents above $100 per square foot. The space was added to the availability list in January, driving up average rates in the district, the most recent figures from commercial firm Jones Lang LaSalle show. [more]At night, the sidewalks around Steven Kamali’s office in the Meatpacking District teem with partygoers. The location seems appropriate for Kamali, whose hospitality firm helps launch restaurants and clubs in Manhattan’s trendiest neighborhoods. But his latest project is outside the familiar West Village and West Chelsea terrain: He’s searching for someone to run a supper club planned for Times Square’s Paramount Hotel. Work may take him Uptown, but don’t expect him to relocate anytime soon. “I don’t think I would get the same results for my business if it were in Midtown,” he said. Comments
The Toren in Downtown BrooklynConstruction update
Harlem
The Balton and Douglass Park311 West 127th Street and 300 West 128th Street
Construction has begun at the Balton and Douglass Park, two new affordable housing developments in Harlem. The buildings will consume almost an entire city block between 127th and 128th streets and St. Nicholas Avenue and Frederick Douglass Boulevard. Combined, they will provide 226 new housing units. The Richman Group Development project, which is being built in part through funds from the Tax Credit Assistance Program and is expected to create about 1,050 construction jobs, is seeking Silver LEED certification. Contact: www.thebalton.com [more]
Stuyvesant TownAs Tishman Speyer’s $5.4 billion acquisition of Stuyvesant Town and Peter Cooper Village transitions from the biggest deal in American real estate to the biggest debacle, the impact on New York residential real estate appears to be profound. Tishman and its investment partner, BlackRock Realty, agreed in January to hand over the keys to lenders after failing to make a $16.1 million interest payment. Negotiations then fell apart, and the senior lender filed to foreclose. The buyers’ initial assumption that they would be able to deregulate the complex in three years would have been “nearly impossible,” regardless of whether the economy collapsed or the boom continued, noted Jonathan Miller, president of Manhattan-based appraisal firm Miller Samuel. “In hindsight, it was based on a false premise of being able to decontrol all 11,000 units in the buildings,” said Miller. [more]
Down market? What down market? In the wake of one of the biggest housing declines since the Great Depression, some New Yorkers saw the values of their homes rise last year — on the city’s tax records. Townhouse prices in Manhattan were down 32 percent in 2009 from 2008, according to data from Miller Samuel. And yet the city’s Department of Finance hiked the market values of some townhomes in Upper Manhattan by as much as 20 percent. (Co-ops, as a class, were up 1.8 percent on average.) In the eyes of the city Department of Finance, the market value on Meghan Beard’s two-family Harlem townhouse increased from $1.15 million to $1.32 million in the last year, which will apply to the tax year beginning on July 1. Alan Wang’s one-family, meanwhile, rose from $1.05 million to $1.2 million. Comments
Mayor Michael Bloomberg announced his plans to pour another $1 billion into an affordable housing buildup effort during a recent talk at New York University’s Furman Center for Real Estate and Urban Policy. During the speech, made at the school’s inaugural event for its new Institute for Affordable Housing Policy, Bloomberg said the majority of the funding would come from reserves in the city’s Housing Development Corporation, rather than from additional tax revenue. While the city plans to create or preserve 165,000 affordable housing units by 2014, only about 100,000 have been created or saved so far, including 12,500 last year. [more]
Michael Campbell at 65 Fen, a wineshop he opened in December in Prospect Lefferts Gardens.Prospect Lefferts Gardens, the Brooklyn neighborhood that hugs the east side of Prospect Park (effectively mirroring Park Slope on the west), has been touted as an up-and-coming neighborhood for more than a few years now. But somehow it’s never quite caught on in the way that some other neighborhoods have. Though the area is full of tree-lined streets dotted with well-priced limestone townhouses that sit back on their own lawns, there are only a few restaurants, cafés, boutiques and other stores to speak of. “Amenities like restaurants and stuff [are] definitely sparse compared to other neighborhoods,” said Victoria Hagman, owner of Realty Collective and Manzione Real Estate. “But I think people are beginning to realize that it’s an untapped market.” PLG residents, however, don’t seem interested in waiting for others to appreciate their “untapped market.” Instead, they are taking matters into their own hands, determined to help transform their neighborhood. [more]
During the boom, purchasing a new condo was like buying Manolo Blahniks or an Armani suit: Shopping in an elaborate showroom, buyers wouldn’t dream of offering less than the sticker price. These days, the showrooms are still around, but the process is more like haggling at a flea market. Asking prices for new condos — the figures quoted in online listings and in advertisements — now have little to do with the final sale price. While developers are reluctant to lower their official prices, units are selling for anywhere from 5 to 30 percent less than the sticker price, brokers say. That’s a huge change from just a few years ago, when the prices of new condos were considered nonnegotiable. [more]
Real estate scams are the crime du jour, it seems. In the 2000s, the era of easy credit and lax lending standards created a compelling motive for fraud that legal experts say is still being uncovered. Even now, with prices down from the peak, New York City real estate is pricey enough to tempt would-be criminals. “You’re going to have a big problem with this kind of fraud [when] there’s so much money to be made,” said Richard Farrell, head of the Brooklyn District Attorney’s mortgage fraud and real estate crimes unit, which was created last year. [more]
As developers of struggling new condos grow more desperate for cash, some may be pilfering funds from their own projects, industry insiders say. The reserve fund — a sort of rainy day fund for capital improvements at condo conversions — is particularly vulnerable because developers have easy access to it, experts said. Former Sheffield57 developer Kent Swig and Rector Square’s Yair Levy are the most high-profile examples of sponsors who’ve been accused of depleting these funds. But attorneys and other sources say many more developers are likely misappropriating funds, using residents’ money to pay their bills and falsely inflating costs. [more]
A crackdown on kickbacks in the 1990s forced New York’s residential management industry to clean up its act. Several recent cases involving managing agents, however, are raising eyebrows about corruption in the industry again. In August, Queens firm Charter Management abruptly went out of business after the district attorney began an investigation into whether the company had improperly commingled and stolen clients’ funds. A few months later, building manager Mark Modano pleaded guilty to charges of stealing over $1.3 million from the operating accounts of six clients. [more]
Ed Koch1981: KOCH REVERSES POSITION ON PARK SWAP WITH TUDOR CITY, ANGERING HELMSLEY1958: CITY REVEALS REPORT SUPPORTING CONTROVERSIAL WEST SIDE RENEWAL PROJECT
1920: RECORD CITY AUCTION FOR ASTOR HOLDINGS IN TIMES SQUARE [more]
Fred Harris, vice president at AvalonBay Communities, which is constructing its first Brooklyn project, a 631-unit tower on Gold Street in Fort GreeneA handful of major real estate management and development firms that have long avoided Brooklyn — even as housing prices in the borough shot up and brokerages rushed in — are finally venturing across the river. The reasons are twofold. First, new high-rise, high-end construction in Brooklyn fits their business model. And second, values of these new Brooklyn buildings appear to have tumbled further and faster than their Manhattan counterparts, according to brokers and developers. “Developers are looking for opportunities, 100 percent,” said David Maundrell, a Dumbo resident and the president of aptsandlofts.com, a brokerage with a Brooklyn focus. [more]
Click the chart for a larger versionDeclarations that Manhattan’s commercial real estate market has “hit bottom” are usually met with a response somewhat akin to a boy crying wolf: It has been uttered so often that it has lost much of its resonance. But with the catastrophe that was 2009 over, some say that at least part of Manhattan’s commercial real estate market is ready for an upswing. Could it be true this time? The Real Deal parsed through some of the arguments — for and against — whether the market has hit bottom. [more]
The Cassa at 70 West 45th Street is set to open in about two months — though it may not look like that today. At ground level, the whole place is bristling with scaffolding and teeming with hard hats. But construction sites have a way of looking like war-torn Kabul only days before the wooden boards fall away to reveal the perfected results, so we shall see. When it does open, the Cassa, which was designed by Enrique Norten and developed by the Miami-based Desires Hotels, the boutique division of Tecton Hospitality, will contain condos as well as hotel rooms. In this regard it follows the trend set by the Plaza and Mark Hotels, and like them, it promises to cater to the “privileged few who will call it home.” (I quote the remarkable claim of Cassa’s Web site.) [more]
Click for a larger versionAfter steamrolling across the city, the condo boom headed to Harlem, promising high-end buildings in a neighborhood more known for historic brownstones. Many of those condos are now hitting the market during the bust, and developers are doing more than just dropping prices. They are looking for ways to trim costs, scale back amenities or squeeze margins. The list of Harlem projects that have either just come on the market or are getting ready to launch is long. In December, the 11-unit Sedona at 346 East 119th Street had a soft market launch, as did the 13-story Metropolis, which has 13 units, at 51 East 128th Street. The Douglass, at 2110 Frederick Douglass Boulevard, added 38 units to the market. At 2131 Frederick Douglass Boulevard, LivMor’s 73 condos were listed in January. The Madera, at 18 West 129th Street, has 12 units on the way. The Embelesar, at 152 East 118th Street, has 14. And the list goes on. [more]
The Intercontinental Times Square is set to open in July.Just as New York City’s painful and protracted hotel sector slump finally seems to be hitting bottom, the industry has a new problem on its hands: It’s about to be slammed with a dramatic increase in new hotel rooms. Research by The Real Deal and by hospitality analyst HVS found at least 28 new hotels slated to open this year or next. The largest is the more than 600-room Intercontinental Times Square, which is set to debut in July; the smallest is the boutique 56-room Habita Hotel on the High Line on the West Side. [more]
Like flavors of ice cream, every year real estate investors choose a preferred asset class, from multifamily residential to office buildings, anchor retail to hotels. The flavor for 2010 is obviously the distressed debt or note. Investors are coming from divergent backgrounds. But we all know that the cast of characters seeking distressed debt (or a mortgage that is more than 90 days past due) have one thing in common: They all want it at a bargain-basement price. A number of banks are now selling this distressed debt — just not at those deeply discounted prices. [more]
Leonard Steinberg, managing director at Prudential Douglas Elliman It’s not your average buyer who can afford a Manhattan townhouse during the good times. And now, because the wealthy have been hit hard by the downturn and have less purchasing power, the pool of townhouse buyers has shrunk even more. This month, The Real Deal talked to analysts and townhouse brokers about how one of the most specialized residential sectors of the luxury market (a market that has suffered severely since the downturn started) is holding up. According to one report, townhouses have seen an average sale price drop of 32 percent over the past year. [more]
The Vancouver skylineSpurred by foreign buyers, Vancouver has started the year as one of the most active residential real estate markets in the northern hemisphere, according to the International Property Journal. Meanwhile, Hong Kong-based development group Shanghai Forte is set to purchase the Goldman Sachs Group-owned Garden Plaza, a Shanghai residential complex, for $328 million. And, just in time for the high season, Sotheby’s International Realty Affiliates announced last month that a British Virgin Islands affiliate has joined its “network” of luxury real estate listings. Click here for more news from the hottest real estate markets across the globe. Compiled by Amy Tennery [more]
An environmental group hopes to protect the area surrounding Los Angeles’ famous Hollywood sign from developmentAn environmental group is in a race against the clock to block the possible development of 138 acres surrounding the famous Hollywood sign in Los Angeles. While the sign is reportedly protected from demolition, a group of Chicago-based investors owns the surrounding area and had planned to build luxury mansions there, according to Desert Sun Wire Services. While the investors originally planned to sell the land to developers for $22 million, they told the Trust for Public Land that they would sell the space to the trust for $12.5 million. [more]
Helmsley Carlton House leasehold for sale
A leasehold interest in the Helmsley Carlton House, a 157-unit apartment-hotel at 680 Madison Avenue, is on the market, Real Estate Finance & Investment reported. Up for sale are the 150 years left on the building’s lease, expiring in 2169. The 17-story, 235,000-square-foot property has a mix of rental apartments, hotel rooms and shops. More than 100 buyers around the world have reportedly expressed interest in the building, which should fetch at least $100 million, according to the New York Post. Darcy Stacom and Bill Shanahan of CB Richard Ellis are handling the sale on behalf of the Helmsley Organization. [more]
Lower Manhattan
$375,000
21 South End Avenue1-bedroom, 1-bath, 560 sf condo in a postwar elevator building (the Regatta); doorman; unit has private terrace, central air-conditioning and washer/dryer; building has roof deck, laundry and storage; common charges $918 per month; taxes $651 per month; asking price $395,000; 20 weeks on the market. (Brokers: Bill Graizel, Gary Seiden, Regatta New York Realty; Brian Peterson, City Connections Realty) [more]
For a recent real estate startup, slow and steady works. After a soft launch in September, Naked Apartments (www.nakedapartments.com) officially launched last month after garnering around 13,000 listings. The self-described “Match.com for New York real estate” helps pair residential renters and brokers by building an online database. The renters’ profiles — crafted based on their incomes, desired rents and move-in dates — are then made available to brokers and landlords. The site aims to make the rental market more transparent, or “naked.” [more]
Cris Herrera and Maura Jarach joined Brown Harris StevensThe Herrera Group, headed by Cris Herrera and Maura Jarach, has joined the Upper West Side office of Brown Harris Stevens for residential sales. The group, previously with Prudential Douglas Elliman, was named among the top 3 percent best-performing brokerage groups in the country within Prudential Douglas Elliman, according to a press release sent from BHS last month. Herrera will serve as senior vice president at the branch, while Jarach has been named vice president and director. The two are the Herrera Group’s founding members. [more]
Newmark Knight Frank Global Corporate Services, the branch of the firm responsible for crafting real estate strategies for larger clients, has hired a new senior managing director, Chris Zlocki. As part of the New York City-based real estate services company, the corporate services division is responsible for creating strategies for its clients’ commercial real estate portfolios. It operates out of two other cities, London and Hong Kong, on top of its New York City location. Zlocki’s 18 years in the field will be integral to his success in the position, said Michael Ippolito, chairman of global corporate services. Prior to joining Newmark Knight Frank, Zlocki worked with HLW International, a New York City-based design firm, and founded his own company, Trace Ventures Associates, a consulting firm. [more]
At 155 Spring Street, in a dusty expanse of nearly 8,000 square feet in Soho, construction workers are laying wires and installing lighting and floors. In a few short months, the tenant, who will operate New York’s first franchise of the Bar Method, an exercise program, hopes to transform the space into a boutique fitness studio, adding to a number of similar spaces that have sprung up in the city in recent years. Other boutique studios like this, such as the celeb-frequented SoulCycle (which debuted a 3,700-square-foot Tribeca branch last month) and the Personal Training Institute (whose 2,700-square-foot Chelsea franchise opened in January), have, surprisingly, continued leasing retail space during the downturn. [more]
Residential
Barak Realty
David Silva and Taryn Matusik joined the company as sales associates.City Connections Realty
Kristin Kogan was hired as director of sales for Parc Standard at 2101 Eighth Avenue, a new development the company is marketing. [more]
Joe Kranz of Turner Construction in HaitiNew York City architecture and construction firms are heading to Haiti in an effort to help rebuild the devastated Caribbean nation, which was hit with a magnitude 7 earthquake in January. The interest from these firms comes as the international response is shifting from short-term assistance to long-term reconstruction. The process, which will likely mean rethinking the way the poverty-stricken country builds everything from homes to hospitals, could cost $14 billion, according to the Inter-American Development Bank, an organization that focuses on economic development in Latin America and the Caribbean. These New York firms plan to offer Haiti the latest technology so that more-secure buildings can rise out of the rubble. [more]
