The Real Deal New York

As the national housing slowdown pervades even New York City — a
previously unthinkable prospect — brokers are scrambling for tips on
how to make the best of the downturn. New terrain forces brokers to adjust” class=”read-more-link”>[more]

Despite a slight drop in its broker ranks, Prudential Douglas
Elliman reigns supreme as Manhattan’s biggest residential brokerage.
But the Corcoran Group, the second-biggest firm in terms of the number
of agents, inched out the archrival this year in exclusive sales
listings. Manhattan’s biggest firms
” class=”read-more-link”>[more]

Chalk up another monster sale for Del Nunzio, the top-grossing townhouse broker in the city.
The
petite, Vassar-educated former ad exec with the clipped English and
prim manner knows a thing or two about marketing homes to New York’s
mega-rich. Top townhouse broker speaks” class=”read-more-link”>[more]

This month, The Real Deal has decided to lift the curtain and
take a look at the health of real estate education. It turns out that
the scope of programs is as varied as the industry. Heading back to school” class=”read-more-link”>[more]

As the real estate world waits to see if Harry Macklowe can save
his real estate empire, a smaller contingent is anxiously watching to
see if he can pull off a minor miracle by completing his speculative
office tower at 510 Madison Avenue. Macklowe tower rises under radar” class=”read-more-link”>[more]

Land is often the crux of a great development deal, but in New York
City, where developable land is scarce, it often comes with an
expensive price tag. Now, some developers say they are seeing signs of
change.
Dirt cheapens at building sites” class=”read-more-link”>[more]

Soaring rents and competition from online retailers such as Amazon.com
are pressuring Barnes & Noble (with nine Manhattan stores) and
Borders (with five Manhattan stores) to carve out a more affordable
real estate model that includes multi-level stores and basement
locations. Bookstores move to the basements” class=”read-more-link”>[more]

The credit crunch and economic slowdown are significantly lowering
purchase prices for Manhattan office properties, while rents have so
far stayed mostly flat. [more]

Macklowe’s Midtown towers for sale

The seven former Equity Office buildings that Harry Macklowe bought for $7 billion last year have started hitting the market. Eastdil Secured is marketing the 1.76 million-square-foot 1301 Sixth Avenue, also known as the Credit Lyonnais Building. Richard Baxter, Ron Cohen, Scott Latham and Jon Caplan of Cushman & Wakefield are marketing the two smallest of the Macklowe-Equity buildings as a package: The price tag for 850 Third Avenue and the Park Avenue Tower at 65 East 55th Street could be $1 to $1.2 billion, the New York Post reported. Deutsche Bank is offering financing for the properties.

Midtown office towers on the market

A 42-story, 400,000-square-foot office building at 1450 Broadway is on the market and could sell for around $200 million, or $500 per square foot, the Post reported. The tower is owned by Joseph Moinian of the Moinian Group, which purchased it for $124 million in 2004 from Murray Hill Properties and ING Realty Partners; Joseph Chetrit and Edward Minskoff are partners in the property. The joint venture is also looking to sell a 45-story, 1.2 million-square-foot tower at 500-512 Seventh Avenue for an undisclosed amount. Douglas Harmon of Eastdil Secured is marketing both properties.

UES mansion on the block

A five-story, 22,000-square-foot former art gallery at 22 East 71st Street is on the market with an asking price of $75 million, the New York Times reported. Though the Salander-O’Reilly Galleries had seven years remaining on the lease, the tenant was expected to give up the property at the end of April. The upper floors of the 45-foot-wide mansion were recently used for offices. The property features an additional 13,000 buildable square feet. A $75 million sale would equate to the highest price ever for a mansion in Manhattan. Serena Boardman and Meredyth Hull Smith of Sotheby’s International Realty are handling the sale.

Midtown office building for sale

A five-story, 33,340-square-foot office building at 233-239 West 54th Street is on the market and could trade in the mid-$60 million range, the Post reported. The vacant property, owned by Joseph Moinian, has 80 feet of sidewalk frontage and can support a 23- to 27-story development of up to 120,495 square feet. The current zoning permits apartments, offices, retail, a hotel or some combination of them. Ron Cohen, Richard Baxter, Jon Caplan and Scott Latham of Cushman & Wakefield are handling the assignment.

Tribeca portfolio on the market

Three mixed-use buildings in the Tribeca East Historic District are on the market with an asking price of $45 million. The properties include a six-story, 20,200-square-foot building at 76-78 Leonard Street; a six-story, 26,815-square-foot building at 80-82 Leonard Street; and a five-story, 20,700-square-foot building at 79-81 Worth Street. The site permits a residential development with 13,886 buildable square feet of air rights. The ground floor and most of the below-grade spaces are leased until 2046 at submarket rents, but all upper-floor residential units will be delivered vacant. Brian Leary of Massey Knakal is marketing the properties.

Chelsea development site on the block

A development site at 39-41 West 23rd Street is on the market with an asking price of $45 million. The property, located in the Ladies’ Mile Historic District, can support a 25-story tower. The owner has secured a change for the site from commercial to residential use, allowing a developer to build a hotel, a residential condo or a mixed-use project. John Ciraulo, Jonathan Hageman, Robert Knakal and Craig Waggner of Massey Knakal are handling the sale.

Bronx waterfront development site for sale

A 133,700-square-foot development site at 101 Lincoln Avenue, in the Port Morris section of the Bronx, is on the market with an asking price of $43.5 million. The property includes an L-shaped warehouse building with a connected two-story office building. The zoning permits a residential, commercial or manufacturing development ranging from 670,000 to 870,000 buildable square feet, depending on the type of project. Thomas Donovan and David Simone of Massey Knakal are handling the assignment.

New York’s red-hot hotel industry is beginning to fear a slowdown.
Though most business metrics are positive, rising inventory and fear of
a recession are beginning to push many hoteliers to develop plans for a
weaker environment. [more]

When the No. 7 subway emerges from beneath the East River on its way to the heart of Queens, a color-splashed former factory looms on the horizon like an apparition. As the train roars along an elevated platform past the building, passengers get a closer look at the block-long structure, a five-story building in Long Island City almost entirely covered with graffiti.

But this is not an abandoned building being tagged by teenagers. Its owner actually welcomes the art — at least for now. Jerry Wolkoff, who bought the property 36 years ago, is waiting for the real estate market to improve. But in the meantime, he said, the artists can do their thing.

“What most people call graffiti, I call aerosol art,” said Wolkoff, who owns several properties in the city and on Long Island. He’s allowed graffiti at the factory building bordered by Jackson Avenue, Crane and Davis streets for over a dozen years. “The artists have to go through a committee; it’s not just put up at random. And no one gets paid; it all comes from the heart.”

The pristine murals that cover the
prime spots are indeed of high caliber. The building, a 200,000-square-foot structure known as 5 Pointz, is a regular stop for top-flight artists from around the world.

Picture the dominant motif in the loading dock at the moment: figures with robot-like qualities vanquishing their enemies. Many murals consist of the tag of a particular artist, signatures that can be 5 feet high. Teams of artists climb over the roof looking for good spots — especially treasured are prominent locations between the building’s third and fourth floors.

“We’re not patrons of the arts, but we like to give back to the community, and this is one way to do it,” said Wolkoff’s son, David, who plans to commission a work by an aerosol artist that will hang on a large wall in his Upper East Side apartment.

Current manufacturing tenants and artists’ lofts cover the building’s taxes, maintenance and utilities.

“Eventually we will build there, but in the meantime, we’ll still let the artists go,” said Jerry Wolkoff. “We have some plans and renderings, but nothing concrete.”

The Wolkoffs visit two or three times a week. From the beginning, there has been a steadfast policy for artists: no nudity, politics, ethnic disparagement or other
negativity. They once painted over a mural that depicted a devil and a cross after someone complained.

The building’s aerosol program was founded in 1996 by Pat DeLillo, who called it the Phun Phactory. A former plumber who once worked as a community activist with the Graffiti Terminators, which painted over graffiti works around Queens, DeLillo realized that he couldn’t beat graffiti artists, so he decided to join them and champion their work.

The Wolkoffs gave him the keys to the castle that is 5 Pointz based on a handshake and a promise — not a dime changed hands. DeLillo established the practice of issuing painting permits and also started giving tasks to kids passing through the court
system who were required to perform
community service. More importantly, he provided a space for the artists to promote their talent.

Aerosol artists, known for their stealth and outlaw ethos, rarely get the chance to craft large, well-executed murals, called “pieces” in the genre’s parlance, to differentiate the better work from crude and indiscriminate markings, derided as “bombing” or “tagging.”

Now, in the stairwells and other nooks, artwork fills the walls. The best work is to be found in the loading dock, at eye level along the sidewalks, and on a fence at the back of the dead-end block, which faces a nexus of rail lines for the 7 train, Amtrak and the Long Island Rail Road.

Admittedly, it took a while for this
corner of Queens to accept the concept of legal street art. DeLillo and his artists
routinely ran afoul of the police and the Queens DA’s office, which had difficulty understanding that the artists had the building owner’s blessing.

The program’s current administrator, Jonathan Cohen, known as Meres, took over in 2002 after DeLillo moved to Pennsylvania. Cohen, who is certified by the Board of Education, offers classes, cultivates his own career as an artist and curates the offerings at the Wolkoff building, which he dubbed 5 Pointz after the city’s five boroughs.

Depending on the quality and the reputation of the aerosol artist, pieces can stay up for as long as several months, especially in the coveted loading dock area, where even dumpsters and vehicles are tattooed with color.

The most prominent structure on the multi-lot property is the five-story factory built in 1900. The Wolkoffs carved the bulk of it into 90 artist studios called the Crane Street Studios; the warren of rooms includes sculptors, painters and other visual artists, some of whom have achieved a modicum of fame.

The rest of the building’s space, around 20 percent, consists of light manufacturing, mainly in the garment industry.

The Wolkoffs’ portfolio includes four other buildings in New York City, a small fraction of the family’s growing empire. Jerry, the patriarch, started as a floor waxer who eventually built over a thousand houses in Brooklyn and Staten Island. He moved his focus to Long Island and built the 400-acre Heartland Business Center in Edgewood and the 240-acre Heartland Executive Park in Hauppauge.

In 2001, he bought 460 acres of the former Pilgrim Psychiatric Center in Brentwood for $20 million. Plans for the property, now before the Town of Islip, call for a 9,000-unit development called Heartland Town Center.

Wolkoff is now waiting for the fortunes of Long Island City to change. For now, 5 Pointz will remain what he calls “the largest aerosol art building in the world,” but he is looking to leave a legacy for his grandchildren.

David Wolkoff said that the neighborhood shows promise, but has yet to reach what he termed “critical mass,” or “bodies on the streets.” Standing on the roof of 5 Pointz, which offers a 360-degree view that includes a sideways glance at the Manhattan skyline, he pointed toward proposed development sites nearby, envisioning his project’s place among them.

“There’s been a big difference in the last five years,” he said, nodding toward Queens West along the East River, the recently completed Citicorp 2 office complex and Arris Lofts. “Is it downtown Brooklyn? No. But it will come.”

The lot is zoned for manufacturing, office and residential use, said Jerry Wolkoff. Depending on how the project is assembled, the property could easily accommodate a 1.2 million-square-foot high-rise.

A buildable square foot is worth from $150 to $200 in the area, said David, whose maternal grandfather, Jack Entratter, owned the famous Sands Hotel and Casino in Las Vegas in the 1950s during the reign of the Rat Pack. Wolkoff the younger married a woman who also has an interesting pedigree: Stephanie Winston, granddaughter of famed jeweler Harry Winston.

The next incarnation of 5 Pointz may include an artistic component — studios, perhaps, or a gallery.

“We have options and we’re keeping our eyes open, but we’re enjoying the way it is now,” Wolkoff said. “We’re not looking to squeeze every dollar out of it; we get a kick out of this.”

Last year Capstone Equities purchased 14 Wall Street, a 1 million-square-foot building in the heart of the Financial District, for $325 million, and the firm immediately embarked upon a capital improvements project that has resulted in more than $25 million being invested in the Class A structure so far.

Along with standard improvements, like a renovation of the building’s lobby, Capstone introduced a new amenity for tenants that may set a standard for luxury office buildings in Manhattan: A private concierge is now available to every employee who works in the skyscraper.

Early last month, Capstone tapped Abigail Michaels, one of the city’s leading concierge companies, to start offering its services, which can include anything from getting an organic dinner delivered late at night to dispatching a dog walker to someone’s apartment.

“Tenant retainment is very important for us,” says Daniel Ghadamian, a Capstone principal. “We’re not looking to just move tenants into our building and forget about them … this is just an additional service we’re providing.”

Ghadamian says that the building, where rents start in the mid- to high $40s per square foot and range up to almost $60 a square foot, was 68 percent leased when Capstone purchased it — and it is now more than 90 percent occupied.

New tenants include New York University and F.J. Sciame Construction Co. Other businesses with offices at 14 Wall Street include TheStreet.com and the New York Stock Exchange.

Abigail Michaels has been in business since 2002; most of its clients are residential buildings. The company provides building-wide services for all of the Related Companies’ rental portfolio, such as Chelsea’s Caledonia and the Upper East Side’s One Carnegie Hill.

Abbie Newman and Michael Fazio, the founders of Abigail Michaels, say that when they started their company, they wanted to get commercial buildings as clients, but, as Fazio puts it, “The residential side just took off.”

Newman notes that servicing a commercial building is a “natural” fit.

“Given the fact that people spend an average of 50 hours a week in their workplace, it makes a lot of sense,” she says. “This sort of thing lends itself perfectly for retention in a building like this.”

While having a concierge service in a commercial building is not a new phenomenon — for example, in the late ’90s a firm called Executive Concierge was tapped to work onsite out of all Midtown properties represented by Cushman & Wakefield, according to an article in a weekly trade publication — Abigail Michaels’ model is very 21st century in that all of their work is done virtually.

“We have a team of 15 people working out of an office that you reach when you use us,” says Newman. The firm has a database with local businesses that it can tap.

“We’re becoming the bridge between work and life,” argues Fazio.

Michael Morris, the president of Concierge Service International, a company that competes with Abigail Michaels and services the Gotham Organization’s residential portfolio, says making the jump to commercial buildings is the logical next step for the concierge industry.

“The real chance for growth in this industry lies within the real estate market, whether it’s commercial or residential,” says Morris. “Developers are really starting to take a look at these companies and see the value they add. I wouldn’t be surprised if a developer brings in a management company and the management company partners up with a concierge service. It legitimizes your decision. It’s really where everybody’s heading.”

While leasing activity ticked up in March from the previous month, it is hard for commercial brokers to remain upbeat: They say they are doing fewer showings to future tenants.

Manhattan showed a slight increase in leasing activity, rising to 1.52 million square feet in March from 1.32 million square feet the previous month, according to a market report from brokerage CB Richard Ellis. It is higher than the 1.42 million square feet leased in March 2007.

“It’s not like there is zero activity and dire straits; there is still activity in the
market,” said Grant Greenspan, managing director in charge of leasing for the Kaufman Organization. “The difference is that now, it is all the more difficult to find potential customers.”

Abraham Hidary of Hidrock Realty said the market for smaller spaces, 10,000 square feet and under, while not hit as hard as the market for larger spaces, has shown a slowdown, though it is still moving relatively healthily. Hidary handles three buildings with spaces in that range.

“We had 40 or 50 space showings in March, down from 100 in February. There are [fewer] interested parties, but still enough for our needs,” he said. “But I would say it is probably still to get worse.”

Greenspan said that the drop in showings has driven some landlords to be more receptive to the brokerage community, including offering incentives such as lunches, giveaways and parties, to create buzz about a building with vacancies.

He predicted that a slowdown in the market could last as long as 24 months from January, when his firm first felt its effects. Because the onset of the slowdown lagged behind the economy by about six months, he believed that recovery will take around that much longer as well.

The borough’s overall vacancy rate increased slightly, to 5.5 percent in March from 5.2 percent in February, according to CBRE’s report. The vacancy rate was 5.0 percent in March of 2007.

Matthew Astrachan, executive vice president at Cushman & Wakefield, said he believes that less sublease space will come to the market in 2008 than in previous slowdowns because one of the biggest tenant sectors, financial services companies, has “wised up” after previous recessions.

“[Financial services companies] used to have 4 or 5 percent vacancy in their
own portfolio just to account for the ebb and flow of employment,” Astrachan said. “This time around, most of them have reduced their working vacancy to below 1 percent, and as a result, their liquidity of space has increased, even during [a period of layoffs].”

The average asking rent in Manhattan continued to increase, to $70.72 per square foot in March, up from $69.56 per square foot in February and $58.88 per square foot in March of 2007, according to CBRE.

Midtown

Midtown experienced an uptick in leasing activity, to 1.13 million square feet in March from 1.02 million square feet in February, according to CBRE’s report. Leasing was also up 32 percent from 770,000 square feet in March of 2007.

The report also showed that the vacancy rate remained flat in March from the month before, at 4.7 percent. It was up slightly from 4.4 percent in March of last year.

Midtown’s average asking rent increased to $85.61 per square foot in March, up from $84.27 per square foot the previous month, and an 18.5 percent increase from $72.25 per square foot in March 2007.

Midtown South

Midtown South saw a 77 percent increase in leasing activity, to 230,000 square feet in March from 130,000 square feet the month before, according to CBRE’s report. The market was also much more active than in March 2007, when leasing activity was 140,000 square feet.

The vacancy rate rose incrementally to 6.6 percent in March, from 6.5 percent in February, according to CBRE. Vacancy was up from 4.4 percent in March 2007.

The average asking rent in Midtown South was up 21 cents to $53.15 per square foot, from $52.94 per square foot in February. It increased 28 percent from $41.43 per square foot in March 2007.

Downtown

The gap between rents in Downtown and Midtown is finally beginning to widen once again, after a two-year period during which Downtown rents rose faster and the gap closed, according to Barry Hersh, clinical associate professor at New York University’s Real Estate Institute.

While the average asking rent still increased Downtown, it inched up just 9 cents, compared to the $1.34 increase seen in Midtown, CBRE’s report showed.

“When the market was at its absolute height, in 2006 and 2007, the gaps became smaller,” Hersh said. “Now that the market is more balanced, there’s more of a differential in Downtown again … closer to the historic gap.”

The average asking rent in Downtown was up to $49.00 per square foot in March, from $48.91 per square foot in February and $42.76 per square foot in March 2007.

Leasing activity remained flat in Downtown, at 160,000 square feet in both March and February 2008, down from 500,000 square feet in March 2007, according to CBRE.

The vacancy rate jumped 1 percent to 6.7 percent in March, from 5.7 percent in February. Downtown’s vacancy was 6.8 percent in March 2007.

He’s a rabbi to the stars in real estate. Israeli wheelers and dealers in New York City real estate consult Rabbi Yishayahu Yosef Pinto when it comes to business and personal matters.

Rabbi Pinto, who has no formal business education, only speaks Hebrew and won’t meet with women, is considered by Israeli real estate professionals as well as people in other professions and of different faiths to be a holy man. His supporters credit him with helping hundreds of thousands of people.

Some line up for hours to meet with the rabbi, who makes himself available to the public outside of synagogue services and the classes he runs, one day a week. He sees 5,000 people a day in Israel and 200 or 300 in New York, giving most people a quick blessing and others more time, claimed Ofer Biton, one of the rabbi’s two New York assistants and translators.

“I think I was very lucky to meet him at a very crucial part of my life: when I was 40 years old,” said Israeli native Ofer Yardeni, principal and co-founder of Stonehenge Partners. “I started making money and thought I was God’s gift [to
the world]. He gave me the wisdom to listen to people, not to think with ego, but to think with the heart and the mind. He balanced my life very, very much.”

Yardeni said Rabbi Pinto is “a huge part of my life,” despite Yardeni’s not being religious.

One time, the rabbi had the foresight that Yardeni should not sell a building despite the exceptionally good price he was being offered for it. Office tenants who were underpaying for their space in his building ended up going out of business, so Yardeni recaptured the space; now, the building is worth double what it would have been had he sold it, Yardeni said.

“The rabbi has a lot of power,” said Biton, the assistant. “I saw a lot of miracles with him.” Biton said that the rabbi was not available to talk to The Real Deal, and an e-mail sent through Rabbi Pinto’s Web site went unanswered.

Rabbi Pinto, 35, is head of two Israel-based organizations, one for men and one for women, that focus on the study of
Jewish teachings and outreach to the
poor. The rabbi established synagogues and schools and does charitable work all over
the world, in Los Angeles, Israel, Venezuela and Moscow.

Rabbi Pinto’s New York City synagogue, Shuva Israel, is at 328 East 61st Street, not far from his East Midtown home where he lives with his wife, Rivka, daughter of Rabbi Shlomo Ben Hamo, the chief rabbi of Argentina, and 6-year-old son, Yoel. The spiritual guru has written more than 25 books and descends from a long line of prominent rabbis including his father, Haim Pinto.

But some people think that Rabbi Pinto is not entirely free from the influence of money and that not all of his followers are interested in spiritual development.

“He’s going to hook you up with a lot of people,” said an Israeli broker who asked that his name be withheld. Though the broker said the rabbi supports a lot of good causes, he thinks Pinto’s attention to his minions is about “how big a contributor” someone is to the charities.

The broker is religious but does not want to live his
life under the direction of one person. “It’s not my cup of tea,” he said.

Ilan Bracha, an executive vice president at Prudential Douglas Elliman and co-founder of B+B Investment Group, considers him a spiritual advisor and guide.

“He’s like a father; he’s like a teacher; he’s like a friend,” said Bracha, who made Pinto his son’s godfather.

Bracha is working with B+B cofounder Haim Binstock to build a synagogue on 72nd Street between West End
Avenue and Riverside Boulevard, to provide a second
Manhattan space for the rabbi.

Rabbi Pinto first came to New York City from Israel more than seven years ago. Believers credit Rabbi Pinto with
providing relief from health troubles and teaching them how to conduct themselves in business and at home.

“He inspires a lot of people. His blessings help many, many people,” said Israeli Ben Suky, head of real estate investment firm Livorno Properties in New York.

Rabbi Pinto’s popularity appears to have created a domino effect. Suky said that may explain the large following among New York City Israeli-born real estate brokers, developers and investors in the last couple of years.

But not everyone can get the access to the rabbi that they want. “I met Rabbi Pinto and appreciate his teachings,
values and his extraordinary contribution to people in need, but I don’t base my business decisions on going and asking the rabbi because I don’t want to bother his busy schedule,” said Tamir Shemesh, a managing director at Prudential Douglas Elliman.

A handful of well-capitalized property developers say they are being contacted to form joint ventures with struggling smaller developers.

The changing lending climate has left some small developers stranded in the middle of projects that have had financing terms altered or haven’t gotten financing at all.

For larger developers, it makes sense to try to buy into a deal that’s already been through the acquisition phase. In some cases, the financial stakes are high for developers to try to establish themselves as “go-to” firms for these types of deals. While developers did not name specific joint ventures, several said their phones are ringing.

Daren Hornig, managing partner of SAXA, a real estate development firm, said he anticipates completing three deals by the end of the quarter involving equity partnering with smaller developers in order to complete their New York City projects.

“We’re being approached by a lot of developers who just can’t get their own financing because of cash issues and/or they don’t have the credibility so that banks will lend to them at the construction phase, even though the project may make good sense,” Hornig said.

Hornig said typically, smaller developers are seeking assistance once they’ve received acquisition financing to purchase land, which they are carrying, but they now cannot obtain a construction loan in the cautious lending climate.

Louis Dubin, president and CEO of the Athena Group, a private real estate investment and development company, said his firm is considering joint ventures in other parts of the country.

“We’re looking at a potential joint venture in Las Vegas with two very talented young developers who have some great opportunities but need the capital and some more infrastructure behind them,” he said. “We’re also looking at a prospective joint venture in Los Angeles.”

Dubin said opportunities to help smaller developers are not just occurring on residential projects, but also office, retail and mixed-use projects. “Because of the credit crunch, this applies to everybody,” he said, referring to residential and commercial developers throughout the country. “Everyone’s having problems getting credit for projects.”

But other large developers, financiers and lenders said they hadn’t seen an increase in joint ventures as a result of the credit crisis.

“I’ve sat with two significant groups that have a lot of capacity and are eagerly
looking for good deals that they can now
find their way into,” said Scott Singer, executive vice president at the Singer & Bassuk Organization.

“I think a pervasive sentiment among the very strong private owners is that the opportunities they expect to see have not presented themselves yet,” he said.

Rick Lavrich, a senior vice president at Helaba Landesbank Hessen-Thüringen, a German bank, also said he has not seen an escalation in partnerships. “Where we’re seeing joint ventures is when somebody owns the land to be developed, but that’s been happening all along,” Lavrich said. “Perhaps it’s happening a little more because sites are getting harder and harder to find.”

Also, sometimes smaller developers will approach larger developers to get them to guarantee completion of the project, said Steven Kohn, president and principal of Cushman & Wakefield Sonnenblick Goldman. “Even in good market conditions, that was happening,” Kohn said.

He said he has seen no instances of joint ventures being formed as a result of the credit crisis.

While the Kibel Company recently transferred a site at 305-309 East 33rd Street to a joint venture with the development behemoth Toll Brothers, that deal was not a result of the credit crisis, said David Von Spreckelsen, a senior vice president with Toll Brothers.

The problem for smaller developers who approach larger developers is that often, the larger developer essentially buys out the project, Kohn said.

“You may see a smaller developer who had already invested in a site and can’t get financing, who in effect almost needs to sell it to a larger developer,” he said. “Maybe they’ll keep a residual interest. But at the end of the day, if the initial developer is not contributing much equity and is certainly not going to control the development if they’re bringing in a larger developer, then is that really a joint venture?”

What may be more likely to happen is that lenders might urge their struggling
developer clients to form partnerships to carry out a development deal. Hornig said he believes lenders are also reaching out to seasoned developers.

“These construction lenders — or sometimes acquisition lenders, be it mezzanine or senior debt — they’re starting to call to feel us out as to our appetite for stepping into troubled situations,” he said.

Hornig said it makes sense for a large developer to look for opportunities to form joint ventures later in a development cycle. “Why buy a raw piece of land that will take you three years to develop when you can come in later and joint venture a piece of land that’s already been through a development cycle, and you don’t have to do acquisition financing?”

Adam Rose, president of Rose Associates, which has done many joint ventures with other developers in good and bad markets, said he has not yet seen smaller developers approach larger developers.

“Is it likely that some smaller firms will bring deals to us in the next 12 to 18 months? Yes, it’s very likely,” Rose said. “Do I have one I can point to? No, I don’t.”

Rose said he has, however, spoken with lenders about possibly assisting on some floundering projects.

“We’ve had some very preliminary conversations with a couple of money sources who said, ‘I don’t think my guy’s going to deliver,’ or, ‘The project has stalled,’ or, ‘They don’t have the credibility or depth’ or whatever, ‘Would you be interested in coming in?’” he said. “The answer is, ‘Of course we would.’”

Andrew Gerringer, executive vice president of the development marketing group at Prudential Douglas Elliman, said he is working with one developer who has been approached with buyout offers.

“Because they’re a very strong developer, property owners who can’t get financing have been coming to them to present opportunities to buy their properties,” he said. Gerringer also said he’s seeing more nontraditional sources of capital.

“Teaming developers up would make sense, but there may be some foreign banks that are starting to step into the picture to pick up some of these pieces,” he said. “That’s what I’m hearing now.”

Shaun Osher, CEO and founder of CORE Group Marketing, which does development consulting, said he is seeing developers without the clout or capital seek out sources of financing that traditionally have not loaned on real estate such as smaller venture capital funds and high-net-worth individuals.

Kohn agreed that the list of unorthodox sources of capital to help out struggling developers is growing to include private equity funds, hedge funds, opportunity funds, pension funds, insurance companies, offshore investors and community banks, among others. Some larger developers are even providing financing on some deals.

“There are even some larger developers — well-capitalized developers — who are providing what I would call ‘mezzanine debt capital’ for others,” he said, “though I see that happening more on existing assets than new developments.”

Singer said urging their struggling developer clients to form a joint venture, as opposed to defaulting on a loan, is a constructive way for lenders to work with borrowers. But worries about a takeover may induce borrowers to resist forming a partnership.

“The question becomes, is that big developer willing to work constructively with the small developer, or are they really just trying to take over and push them out?” Singer said. “I think some of each is very likely to happen.”

For sale at 446 West 14th Street: a landmarked building with nearly
15,500 square feet of space in the Meatpacking District, one of
Manhattan’s fastest-growing centers for high-end retail. The catch?
Whoever purchases the four-story building has to remove the third floor
in order to develop it.

“The
air rights were sold, and the owner sold more air rights than they
actually had, necessitating the removal of one of the floors in the
existing building,” said Robert Knakal of Massey Knakal Realty
Services, which is representing Thor Equities, the seller.

In
other words, when developed, the outside of the building, which is
between Washington and 10th streets, will remain the same height. What
will change is the number of floors inside the building, which will go
from four to three.

At first blush, the situation sounds rare.

“[Most
building owners] don’t normally sell 100 percent of a building’s air
rights,” said Stuart Saft, a real estate partner at the law firm Dewey
& LeBoeuf. “There’s no way of predicting future energy and
technology needs of the building, so we always leave a sleeve of air
rights, 10 or 15 feet above the building, as an envelope.”

That
said, it’s not unheard of for a building owner to accidentally
overbuild, or even to oversell his air rights. Saft recalls a situation
at a building at 96th Street between Park and Lexington avenues, where
the architect misunderstood the available floor area ratio and
overbuilt by 12 stories. Before the developer could attain a
certificate of occupancy from the city, he had to remove the top 12
floors of the building.

What’s
uncommon, as far as 446 West 14th Street goes, is the circumstance
under which the oversell took place — namely, that it wasn’t an
accident.

At
the time, Charles Blaichman, the developer who transferred the air
rights, owned both 446 West 14th Street and the building next door, 450
West 14th Street. Initially he planned to develop the structures
together, but he decided against it and sold 446 West 14th Street
instead. But before he did that, he transferred 10,000 square feet of
development rights from 446 West 14th Street to 450 West 14th Street.

“We
were always going to transfer the ceiling and get the benefits of the
air rights on top of 450,” said Blaichman, explaining that since 446
West 14th Street is landmarked, “you couldn’t really modify the
building anyway.

“We thought [the extra 10,000 square feet] would be more valuable on top of 450,” Blaichman noted.

The
building has changed hands two times since. Thor Equities, the current
owner of 446 West 14th Street, did not return calls for comment.

However,
now, while 446 West 14th Street sits vacant, 450 West 14th Street, a
15-story building that has the elevated High Line going right through
it (that’s right, it straddles the High Line), is under construction.
When it’s finished, likely in January of 2009, it will have 100,000
square feet of rentable office space and 8,000 square feet of retail
with “very high ceilings,” said Blaichman. “Almost 20 feet. Because
it’s the bottom of the High Line, so the tracks go right over it.”

“For
the sake of property A, he forsakes property B,” explained Luigi
Rosabianca, a real estate attorney. “[The owner of 446 West 14th Street
will] always be stuck with a three-story building. He has diminished
the value of the property forever for the benefit of the adjacent
property.”

As
the seller’s broker Knakal pointed out, because the ceiling heights on
the third and fourth floors of 446 West 14th Street are so low (a mere
8 feet apiece), it actually behooves a developer to remove a floor,
creating a 16-foot ceiling height.

“Eight-foot
ceiling heights are too low to warrant utilization,” said Knakal. “It’s
not an attractive space, whether it’s office or retail.”

What
remains to be seen is whether the next owner will go ahead and develop
the building (read: spend the money to take out the third floor) or
whether it will get flipped again.

“A
lot of buildings are flipping down there because there is a lot of 1031
[tax deferment] money,” said Karen Bellantoni, executive vice president
at Robert K. Futterman & Associates.

When
Thor and Massey Knakal initially put the building back on the market a
little more than a month ago, it was listed at $50 million.

“We’ve now taken the price off the building because we’re flexible on the number,” said Knakal.

“Fifty
million is a tough sale. It’s not a substantial building, unless there
are more air rights to sell, which I don’t think so,” said Rosabianca.

For his part, Knakal said there had been quite a bit of
interest since the building went on the market.

“It’s
a great location, and you have to bank on what’s happening in the
Meatpacking District; it’s one of the fastest-growing areas of the
city,” added Bellantoni. “There are a lot of retailers who want to be
down there.”

The Albany District Attorney’s office recently announced that it was investigating 31 New York State brokers, including top Brown Harris Stevens earner Kathy Sloane, for allegedly failing to pay taxes on their income. Eleven of the brokers, including Sloane, are based in New York City.

In a recent Webcast interview, The Real Deal’s Jen Benepe spoke to tax attorney Robert Ladislaw about what the investigation will mean for the brokers. Ladislaw also discussed why brokers might have a harder time managing their taxes than people in other professions.

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

The Real Deal: Thirty-one brokers, 11 of them operating in the New York City market, are facing tax evasion charges. One broker, Kathy Sloane, who works for Brown Harris Stevens, made $200 million in sales last year. How serious are these charges?

Robert Ladislaw: If she is one of the people who hasn’t filed for three consecutive years, she could go to prison for up to four years.

TRD: The brokers allegedly failed to file
returns, or they underreported their income. How often do people go to jail for this kind of thing?

RL: We don’t know the facts of this case or how this came to be on the DA’s plate. But I suspect — or, my experience has been — that the state will send several notices and will try to work with the taxpayer to get the taxpayer into compliance before they actually refer a case for prosecution.

TRD: [What happens] if they are arraigned?

RL: First, the person being arraigned has to plead guilty or not guilty. Often, they can enter into a plea-bargain agreement with the prosecutor. The prosecutor may want to avoid a trial, because in addition to not filing returns in order to obtain a conviction, you have to prove intent: You have to prove that the people not only did not file, but they intended not to file. Ignorance of the law is no excuse, but when it comes to filing tax returns, if you didn’t file them for whatever reason — you legitimately and believably thought that you didn’t have to file your tax returns — you don’t have to go to jail.

TRD: But it’s unlikely that they didn’t know, because they were given all those notices.

RL: I agree.

TRD: The DA, David Soares, said that these brokers allegedly failed to report a total
of more than $13 million in income and evaded more than $650,000 in state income taxes. Do you think this is a more common problem among brokers than among other people?

RL: Brokers are treated as independent contractors. A successful broker in New York City probably has to put aside 50 percent of his or her commission check towards taxes. So it can be a bigger problem for brokers than most other people, because most other people are employees; they receive W-2s, and taxes are withheld from their salaries.

TRD: Can we read into any of this action as pinpointing this group of people?

RL: It’s possible. Reading a press release from the DA, it appears that he may have been trying to send a message, since he released 31 names all at the same time. There’s obviously a concern in the New York State tax department that an unacceptably high percentage of brokers are not filing their income tax returns.

TRD: With the added burden for brokers to file on their own, does it make it more likely that the self-employed will not file?

RL: It does make it more likely that they won’t file, because oftentimes people — especially when they are starting out in a small business — haven’t put aside enough money to pay their taxes because they’re putting their money back into building the business.

TRD: Is that an excuse?

RL: That’s not an excuse. If you don’t have enough money to pay your taxes in full, they can set up an installment plan with you. And if you’re in bad enough financial shape, you can actually get your tax liability reduced.

TRD: Can they negotiate with the DA on this?

RL: If they come clean and do a plea bargain agreement, possibly, with the DA, where they file their back taxes, pay their taxes and their penalties and the interest, and if they can convince the DA that they’ve righted their ship and they know they have to put aside money to pay taxes and file their tax returns, the DA may be more lenient.

TRD: Let’s say some of these brokers are innocent. They’ve just had their names and their companies’ names splashed all over the newspapers. Can they sue the state or the IRS for publicly libeling them? Or do they have any other avenues of recourse to reestablish their reputation?

RL: Unfortunately, that’s very unlikely. You have to show that either the investigator or the prosecutor knowingly lied about the facts they used to bring the prosecution against you.

TRD: Why is it that this industry has been allowed to use brokers as independent contractors for so long?

RL: The brokerage industry, as we know, is a very powerful industry and has a big
lobbying presence in Washington, and they are not going to allow — if they have any say in it — that rule to be changed.

While segments of the real estate market are showing signs of softening, the Downtown loft market appears to be holding its own.

Real estate experts say the market for lofts below 14th Street continues to remain strong and that the limited, albeit rising, inventory of loft apartments is attracting Uptown transplants and keeping prices stable.

Ariel Cohen, executive vice president at Prudential Douglas Elliman, sold a number of the 382 units at 15 Broad Street, the Philippe Starck building, which four years ago was converted to lofts from the former JPMorgan Chase headquarters site.

Cohen purchased a 2,000-square-foot loft in the building himself, paying $800 a square foot. That space today would cost around $1,100 a square foot, he said.

According to the appraisal firm Miller Samuel, which released a first-quarter market report last month in conjunction with Elliman, the median price of a Manhattan loft dropped to $1.6 million, down 1.8 percent, between the last quarter of 2007 and the first quarter of 2008.

However, all other price indicators in
the loft market were up. The average price per square foot of a Manhattan loft increased to $1,246 in the first quarter, up 2.6 percent from the same time last year. And the average loft sales price increased to $2.2 million, up 7.8 percent from this time last year.

While the report is not specific to Downtown, nearly 300 of the 494 lofts tracked, or about 60 percent, are located there. So the statistics speak more to the Downtown market than they do to any other neighborhood of Manhattan.

Loft inventory rose 5.1 percent, but the length of time it took to sell a loft remained virtually unchanged, the report noted.

Brokers said the price increases are tied to the fact that lofts tend to be more expensive, and the high end has fared better than other sectors of the real estate market.

Many developers working on loft
conversions Downtown have tried to lure buyers with classic details like large rooms, high ceilings, hardwood floors and open floor plans.

“I think prices have gone up because people purchasing lofts want larger spaces in specific neighborhoods and because their inventory is low,” said Cliff Finn, director of on-site marketing at Citi Habitats.

At the Machinery Exchange, a new loft condo at 136 Baxter Street, where Soho, Little Italy and Chinatown converge, developer Max Protetch and architect Mark Dubois restored many of the original details of the prewar building.

The average price per square foot at the condominium — which originally served as a police horse stable and later a warehouse for machinery equipment — is about $1,500. As of last month, eight of the 14 loft units in the building, which was finished last September, had sold.

The six unsold units include a 1,300-square-foot, one-bedroom loft, listed at $1.6 million, and a penthouse with over 2,500 square feet of space priced at $4.5 million.

Michael Chapman, executive vice president of Stribling Marketing Associates, which is handling the building’s sales, said one buyer at the Machinery Exchange combined two loft units to create a three-bedroom, four-bath residence. “It’s a sign of the family-minded luxury buyer moving Downtown,” he said.

Brokers agreed that the changing demographics of Downtown have helped to keep the loft market robust. It’s no longer an office community that empties at night.

“Families are getting larger; parents need bigger homes; hence the luxury loft market is incredibly active,” said Danny Davis, senior vice president at Citi Habitats.

Meanwhile, at Loft 25 at 425 West 25th Street in Chelsea, which is partly under construction, 50 of the 79 lofts have sold. And an additional 16 (including four penthouses) were put on the market last month. Prices range from $850,000 to $3.5 million. Interior designer Antony Todd has purchased there as well as the Chinese artist Ai Wei Wei, whose work has been shown at the Guggenheim and who is now creating pavilions for the Olympics.

Still, brokers said the days of frenzied buying in the loft market are over, in the same way they are in the rest of the market.

“Today’s buyer is more selective and tends to window shop,” said Julie Friedman, executive vice president at Bellmarc Realty.

Because buyers are more cautious, sellers have had to adjust their pricing and willingness to negotiate. “If an apartment is overpriced, it will languish on the market,” said Davis. “But if it is priced appropriately, it will get offers quickly and, in many cases, go over asking price.”

The shaken economy is steering some potential buyers to rent for the next year or two. At 95 Wall Street, an office tower recently converted into 507 loft-style rental apartments, rents are around $80 per square foot. The asking rent on a 500-square-foot studio is around $3,300.

Finn, the director for onsite marketing there, said 15 apartments rented within the first week of the official opening.

“People are willing to pay more to live Downtown, and building owners are stepping up their game,” he said.

Manhattan

Chelsea

$2.75 million

245 Seventh Avenue

2-bedroom, 2.5-bath, 2,258 sf condo in prewar elevator building; 24-hr doorman, concierge; large windows, high ceilings, washer/dryer, central a/c; pet-friendly building has common roof deck and private storage; maintenance $1,571; taxes $1,024; asking price $2.8 million; 21 weeks on the market. (Broker: Joanne Douglas, Corcoran)

Chelsea

$750,000

77 Seventh Avenue

1-bedroom, 1-bath, 800 sf co-op in postwar building (the Vermeer); renovated open kitchen, updated bathroom; maintenance $841; 40 percent tax-deductible; asking price $765,000; eight weeks on the market. (Broker: Kathi Jacob, Halstead)

Chelsea

$575,000

135 West 16th Street

1-bedroom, 650 sf condo in renovated prewar building; high ceilings, hardwood floors, newly renovated bath; building has laundry facilities and storage space; common charges $253; taxes $184; asking price $585,000; 20 weeks on the market. (Broker: Jeanne Voisin, Halstead)

East Village

$1.426 million

39 Bond Street

2-bedroom, 1-bath, 1,200 sf co-op in prewar elevator building; vaulted ceilings, hardwood floors, renovated marble bath; common roof deck, basement storage; common charges $500; asking price $1.4 million. (Broker: Chris Au, Bond New York)

East Village

$735,000

425 East 13th Street

527 sf studio condo in newly constructed elevator building (A Building); 24-hr doorman, concierge; floor-to-ceiling windows, wood floor, open kitchen; building has rooftop sundeck with pool, fitness center, courtyard garden; common charges $524; taxes $70; asking price $735,000; four weeks on the market. (Brokers: Christine Pon Chin, Bellmarc; Alexander Liu, Cantor Pecorella)

East Village

$559,000

55 Avenue C

2-bedroom, 1-bath, 700 sf co-op in prewar building; live-in super; high ceilings, parquet floor; maintenance $300; 38 percent tax-deductible; asking price $579,000; 50 weeks on the market. (Broker: Richard Lech, Halstead)

Flatiron

$1.299 million

225 Fifth Avenue

1-bedroom, 1-bath, 881 sf condo in prewar elevator building (Grand Madison); concierge; building has fitness center; common charges $289; taxes $1,021; asking price $1.325 million; 13 weeks on the market. (Brokers: City Connections; Domus Realty)

Lower East Side

$750,000

249 Eldridge Street

2-bedroom, 1-bath co-op in prewar walk-up building; recently renovated unit has skylight, hardwood floor, washer/dryer; maintenance $689; asking price $735,000; 12 weeks on the market. (Brokers: Glenn Schiller, Lauren Powell, Corcoran)

Midtown

$1.21 million

425 Fifth Avenue

1-bedroom, 1.5-bath, 975 sf condo in newly constructed building (the Davis Building); washer/dryer, hardwood floors, river views; common charges $899; taxes $303; asking price $1.225 million; nine weeks on the market. (Brokers: Mindy Diane Feldman, Halstead; Kipton Davis, Prudential Douglas Elliman)

Midtown

$710,000

400 East 56th Street

1-bedroom, 1.5-bath, 1,025 sf co-op in postwar building (the Plaza 400); closet space, kitchen with delivery entrance; maintenance $1.412; 49 percent tax-deductible; asking price $760,000; 19 weeks on the market. (Brokers: Robin Foxx, Halstead; Brown Harris Stevens)

Midtown West

$1.14 million

322 West 57th Street

1-bedroom, 1-bath, 796 sf co-op in postwar building (the Sheffield); 24-hr doorman, concierge; building has garage, laundry facilities and rooftop health club and pool; common charges $453; taxes $665; asking price $1.16 million; 31 weeks on the market. (Broker: Ruth Hercolani, Halstead)

Murray Hill

$1.158 million

201 East 37th Street

2-bedroom, 2-bath, 1,450 sf co-op in postwar building; marble baths, Jacuzzi; maintenance $1,626; 50 percent tax-deductible; asking price $1.199 million; 24 weeks on the market. (Broker: Laura Lawrence, Halstead)

Murray Hill

$860,000

630 First Avenue

2-bedroom, 2-bath, 1,100 sf condo in postwar building; doorman, concierge; high ceilings, separate dining room, marble baths, hardwood floors; building has garage, health club and pool; common charges $847; asking price $925,000. (Brokers: Joseph Robinson, Bond New York; Brian Chiusiano, Prudential Douglas Elliman)

Upper East Side

$3.5 million

825 Fifth Avenue

1-bedroom, 2-bath, 1,300 sf co-op in prewar building; private dining room, room service; maintenance $4,460; 37 percent tax-deductible; asking price $3.8 million; 40 weeks on the market. (Broker: Laura Lawrence, Halstead)

Upper East Side

$2.1 million

935 Park Avenue

2-bedroom, 2-bath, 1,450 sf co-op in prewar building; wood-burning fireplace, eat-in kitchen; maintenance $2,744; 38 percent tax-deductible; nine weeks on the market. (Broker: Dan Danielli, Halstead; Corcoran)

Upper East Side

$1.625 million

151 East 83rd Street

3-bedroom, 2-bath, 1,400 sf co-op in prewar elevator building (the Cherokee); 24-hr doorman; wood-burning fireplace, hardwood floors, new kitchen, washer/dryer, renovated baths; pet-friendly building has bike room, laundry room, storage room, common garden; maintenance $2,282; 48 percent tax-deductible; asking price $1.695 million; 20 weeks on the market. (Broker: Julia Hoagland, Corcoran)

Upper East Side

$527,000

330 East 70th Street

1-bedroom co-op in postwar building; 24-hr doorman; dining area, renovated bath, closet space, custom window shades; building has laundry room, outdoor space, garage; maintenance $1,051; asking price $536,700; five weeks on the market. (Broker: Jamie Breitman, Bellmarc)

Upper West Side

$2.05 million

565 West End Avenue

3-bedroom, 3-bath, 1,800 sf co-op in prewar building; 24-hr doorman; southern exposure; building has gym and laundry facilities; maintenance $1,917; 40 percent tax-deductible; asking price $2.2 million; 11 weeks on the market. (Brokers: Ed Cruz, John Termin, Bellmarc; Lauren Wagner, JC DeNiro)

Upper West Side

$839,000

170 West End Avenue

1-bedroom, 904 sf condo in postwar building (Lincoln Towers); completely renovated unit has granite kitchen, audio wiring; maintenance $1,325; 50 percent tax-deductible; 20 weeks on the market. (Broker: Mark Lynch, Halstead)

Upper West Side

$544,500

51 West 81st Street

450 sf studio in prewar building (the Galaxy); 24-hr doorman; tall windows, high ceilings, renovated kitchen and bath, wood floors; building has laundry facilities and planted roof deck; maintenance $632; 49 percent tax-deductible; asking price $549,000; eight weeks on the market. (Brokers: Kathy Gulrich, Bellmarc; David Thompson, Klara Madlin)

West Village

$650,000

88 Charles Street

1-bedroom, 1-bath co-op in prewar walk-up building; high ceilings, dishwasher, washer/dryer, renovated kitchen, storage, hardwood floors; building is pet-friendly; maintenance $595; 46 percent tax-deductible; asking price $648,000; three weeks on the market. (Broker: Kristina Leonetti, Corcoran)

Brooklyn

Park Slope

$657,000

162 16th Street

2-bedroom, 2-bath, 913 sf condo in newly constructed building (the Vue); high ceilings, private balcony, washer/dryer, cherry wood floors, custom bathroom, floor-to-ceiling windows; building has landscaped front courtyard, meditation garden, fitness center, children’s playroom and private storage facilities; maintenance $257; taxes $59; asking price $657,360. (Broker: Brendan Aguayo, Aguayo & Huebener)

Prospect Heights

$535,000

457 Prospect Place

2-bedroom, 2-bath, 1,080 sf condo in converted prewar building; high ceilings, hardwood floors, whirlpool bath, washer/dryer; building has storage facilities and roof deck; common charges $250; taxes $3,850; asking price $549,000; four weeks on the market. (Broker: Stephen Winterrowd, the Developers Group)

Williamsburg

$1.39 million

49 North 8th Street

3-bedroom, 2.5-bath, 1,466 sf condo in newly constructed elevator building (North8); part-time doorman; closet space, washer/dryer; building has fitness center, courtyard, on-site parking and cabanas; maintenance $1,243; taxes $75; asking price $1.388 million; 12 weeks on the market. (Broker: Sandra Cordoba, Corcoran)

The doormen are dressed in liveried dark gray suits, and the elevator walls consist of antique wooden panels. However, most of the typical features of an Upper East Side prewar building end at the door to Barbara Fox’s penthouse.

Fox, the founder and president of the high-end boutique brokerage firm Fox Residential Group, and her husband, James Freund, a retired attorney and former partner at Skadden, Arps, Slate, Meagher & Flom, bought the two-bedroom penthouse, which is just under 2,000 square feet, three years ago when they were looking to downsize from a 6,500-square-foot historic townhouse on the Upper West Side.

Fox, a North Carolina native who still has traces of a Southern accent, started her firm in 1989 with only five brokers, targeting high-end properties on the Upper East and Upper West Side.

She now has a staff of more than 40 brokers, and the firm has a strong foothold throughout Manhattan, with sales to celebrity clients like legendary newsman Walter Cronkite and actor Robert Redford to boot. A veteran broker, Fox worked at several firms before starting her company, including Stribling & Associates and Cross & Brown, where in the 1980s she created a 60-broker residential division. And she has managed to excel by staying ahead of the market, most recently by launching a new international division headed by four of the firm’s multilingual brokers.

She and her husband moved into their current apartment after a gut renovation that included demolishing interior walls and punching out exterior walls so that they could install large picture windows in every room. To the left of the entranceway is a large open living area. To the right is a door that leads to the private living quarters and master bedroom.

Adjacent to the bedroom is a short open passageway lined with built-in cabinets that leads to Freund’s study, which has an electronic piano he sometimes plays late at night. A long galley kitchen with a striking greenish-yellow countertop sits off the living room — Fox says that she doesn’t like to waste space on kitchens.

Fox notes that here on the Upper East Side, she would have a hard time getting by many stringent co-op boards. “There are probably not 10 buildings on the Upper East Side that would allow six animals, which I had at the time,” says Fox, a petite redhead whose casually elegant outfit consists of black suede loafers, black pants and a green turtleneck with a double-breasted olive-colored blazer.

“They either don’t allow pets at all, or they don’t allow pets over 15 pounds,” she adds, as a small, white terrier mongrel barks in the background. “But one of the real benefits of this building [a co-op] is that it is very pet-friendly.”

Perhaps the most significant feature of the apartment on East 79th Street is the wraparound terrace, which serves as a run for the dogs and a breakfast spot for their owners. “The only prerequisite was outdoor space,” says Fox of her apartment, which is on the corner of Third Avenue.

Fox did away with the elevator foyer, which she bought from the building, so that the elevator now opens directly into the apartment. “We did not have an elevator [previously], and there comes a time when it gets harder and harder to get up and down the stairs,” says Fox, who just returned from a ski trip in Colorado but will not divulge her age. “Even though we are both very athletic, we thought that it was probably a good time to move.”

Fox has a youthful demeanor, and many of the objects in her home are connected to the couple’s active life and wide-ranging interests. In the living room, there is a large stand-up vibraphone, a piano and a small box of assorted instruments. “When we have a party and people are here, everyone is playing an instrument,” Fox says. “It is very noisy.”

The couple also has a striking variety of art. Several works are haunting, Edward Hopper-like paintings. There are also a half-dozen neo-realist paintings by several Chinese artists, whom Fox became familiar with during a visit to Hong Kong. Fox and her husband also have their own art displayed. Photographs from his book, “Central Park: A Photographic Excursion,” adorn one wall. And in the den/dining room, there is a small abstract stone sculpture that she made. “It is very cathartic to do sculpture,” she says. “You get all of your hostility out by just beating on a stone.”

The Upper West Side townhouse where Fox and her husband lived for 21 years after they were married had a conventional layout and was furnished with antiques and traditional furniture. But Fox says she wanted to make a change. “The townhouse was very traditional, but here we went in an entirely different direction. We created a Downtown loft uptown,” she says.

Rather than doors compartmentalizing the space, most of the rooms flow into each other. Fox says she had originally intended to move Downtown but decided it was too far from her Madison Avenue office.

In addition to redoing the layout, Fox went through a complete domestic makeover with the help of her sister, Marjorie Hilton, a Manhattan interior designer. Most of the furniture from the townhouse did not get moved into the apartment. Fox either got rid of it or sent it to her 200-year-old country house in Connecticut.

On 79th Street, sleek modern sofas and chairs in dark colors punctuate the décor. Each piece has a unique feature, such as the leather couch with a purple hue and the custom-made round wooden table that comes with an expansion leaf to seat 12.

Interspersed with the larger streamlined pieces is an eclectic assortment of smaller items, such as a nicked church pew in the bedroom, a freestanding mid-century modern fire screen and a couple of wooden end tables with sculptural elephant bases. There are also seven plush animal beds scattered throughout the unit. Two of the dogs are rescues from Woof Dog Rescue, an organization Fox founded.

Although Fox has a strong aesthetic sensibility, she says she does not try to impose her design ideas on her clients.

“It is interesting because I can walk into an apartment house now, and I know exactly what I would do with it,” she says. “But I have to be careful, because a lot of people either don’t like, or have, my taste.”

The redesign and the furnishings added substantially to the value of the new apartment, Fox says. However, she adds that
the additional expenses were worth it because they plan to live there for the rest of their lives.

“If we were to buy it today, I probably would not get the money out of it that I put into it,” she says.

“It has been a mindset that people have come to accept that if they buy something, it should enhance in value. I sell things to people, and they call me three or six months later and ask me, ‘How much is it worth now?’ And I will say, ‘It is worth how much you paid for it — it doesn’t enhance that quickly.’

“And things can always go down, but we don’t discuss that. You do it because you want to live there.”

Go to Chart: Breaking down the New York real estate foreclosure spike

This month, for The Real Deal’s Q&A, brokers shared their
concerns about the changing market and their strategies for dealing
with everything from the slowdown in sales activity to the
doom-and-gloom media reports. [more]

Fear has prevailed among landlords of high-end Manhattan rental
buildings in recent months. An increasing number of their plush units
remain vacant as, perhaps not coincidentally, an increasing number of
deep-pocketed Wall Street employees find themselves out of work.

Building owners try to
downplay the effect widespread layoffs in the financial industry will
have on the real estate market. But they are holding their collective
breath, hoping that the rental market’s recent slip doesn’t leave them
holding onto new, luxury developments with few tenants willing to pay
the premium rents they banked on.

“We can see they are
very, very concerned about vacancies,” said Laurence Rosenberg,
president of RDNY.com, a Web site that provides information about
no-broker-fee apartments in the New York City region. “The renter has a
little bit of the upper hand.”

Many landlords point
out that Wall Street is just one of many industries fueling New York
City’s economy. Still, the depth of the Wall Street-based cuts cannot
be ignored: The city’s Independent Budget Office estimates that by the
end of 2009, the financial sector will have slashed 20,200 jobs. Also,
as economic woes widen beyond those of the investment banks, New
Yorkers in all industries are cutting expenses.

The specter of rampant
job loss has led even wealthy residents to reduce their spending. Marc
Kaplan, vice president of leasing at Stonehenge Management, which owns
18 rental properties throughout Manhattan, noted that an increasing
number of tenants have asked whether they could lower their rental
rates, or perhaps move into a smaller, cheaper unit.

“I’ve spoken to five to
10 Bear Stearns employees,” he said. “I can’t predict their future.
It’s almost as if I’ve become a therapist. We realize there’s a lot of
unrest and uncertainty.”

Kaplan, whose company
rents one-bedroom units that range from $2,000 to $4,500, said he has
encouraged renters to meet with him to talk about their concerns. The
majority of his tenants are staying put, but “the concern is definitely
there,” he said.

Matthew Buckle, a
trader on Wall Street who’s currently between jobs, said he had many
properties to choose from in his budget range — a maximum $9,000 a
month for a two-bedroom — as he hunted for an apartment a couple of
months ago. His ideal apartment had to fulfill several criteria. A
large, newly renovated, high-end kitchen was at the top of the list.

“There’s obviously
loads of apartments advertised to rent,” he said, adding that he was
frustrated by a lack of pictures on numerous sites he trolled through.

Buckle eventually found a $5,000-a-month one-bedroom unit in a refurbished Soho brownstone that met his needs.

Buckle
said some Wall Street colleagues have held off on buying property until
they have a better sense of the direction of the city’s housing market.
But he didn’t know whether people had changed their hopes for rental
units as a result of the current economy.

“It’s not something you normally talk about with your colleagues,” he said.

The
city’s rental market has long been tied to economic cycles. In
Manhattan, rents jumped by almost 16 percent from 2005 to 2007 during
the height of the real estate boom and a stronger economy. Now those
record-high rates are dipping, according to data compiled by Citi
Habitats.

In the first quarter of
2008, for example, rates for studios declined by 2.1 percent compared
with the first quarter of last year. Rents for two-bedroom apartments
dropped 4.9 percent, and prices for three-bedrooms decreased by 7.6
percent.

One-bedroom apartments
were the lone bright spot: Rates there increased 3.7 percent. Vacancy
rates also inched upward during the first quarter, increasing from 1.12
percent in 2007 to 1.30 percent in 2008, according to Citi Habitats.

Gary Malin, Citi
Habitats’ president, said his company is “getting calls from all the
banks” to find fully furnished apartments for relocating employees. “I
haven’t seen a slowdown in that set,” he said.

In general, Malin said,
market players are taking “a wait-and-see approach” with the effect
Wall Street’s slump will have on their properties.

“There are all these question marks,” he said. “People really say it’s not necessarily
a crisis.”

Daniel
Baum, CEO of the Real Estate Group New York, said in some seasons, he
doesn’t have much inventory to show clients due to the tightness of the
market. But this year, Baum said, prospective renters will have more
options.

However, the city’s increasing vacancy rates are not spread evenly among neighborhoods and income brackets.

“So
far, it seems to be disproportionately at the luxury ends on
Manhattan,” RDNY.com’s Rosenberg said, referring to apartments that are
priced above $2,700 a month for studios and above $3,500 a month for
one-bedrooms. “We have not seen that at all on the bottom.”

Upscale apartment
owners are shelling out incentives — such as one month’s free rent — to
fill empty apartments. New developments in Battery Park City are among
the hardest hit, Rosenberg said.

In its quarterly report
released on April 14, Citi Habitats reported that Battery Park City
properties saw their vacancy rates rise from 1.06 percent in January to
1.25 percent in March.

City residents have
also been looking for smaller apartments in recent months, when
possible, Baum said. “Studios have fared the best, one-bedrooms after
that,” he said. “People will continue opting for smaller units.”

While wary of potential
economic troubles to come, landlords have managed to keep rental rates
relatively stable in the past few months. According to the Real Estate
Group New York, March rental rates were on par with February’s. This
relieved some building owners, whose rates, especially for properties
in the Financial District, plummeted late last year.

However, rental rates usually increase in March after the traditionally sleepy winter season.

Baum
said he expects prices to rise in late spring and summer, which tend to
be the busiest for rental properties. But “our data indicates that this
spring could be less lucrative for landlords than the warmer months of
the past few years’ unprecedented rental boom,” his March report said.

“Nobody wants to be a
pessimist, but at the same time, you have to look at the practical
reality,” Baum said. “Many owners will not be happy with their own
vacancies.”

It’s a buyer’s market out there: The average apartment is sitting on the market for 146 days, 11 percent longer than a year ago, and inventory is up 20 percent over last quarter.

In response, many in the brokerage community are shifting their emphasis from chasing seller listings to representing buyers. In some cases, brokers say they are now representing twice as many buyers than they did in previous “boom” markets.

During the recent bull market, it made sense for brokers to represent sellers. Virtually every apartment listing would sell for above asking price, so snagging a listing practically guaranteed a commission. Much of the challenge for brokers was waiting to see which buyer emerged victorious.

“Prices were skyrocketing, and there were constant bidding wars,” said Jonathan Miller, president and CEO of Miller Samuel, the appraisal firm that supplied The Real Deal with the market statistics. “Brokers were virtually ignoring buyers.”

But now, even though prices are still rising in New York, sales volume is slowing dramatically — as much as 34 percent from the comparable quarter last year. So brokers are going where they can get deals done. Some brokers even claim there are more buyers out there than before, even if they clearly aren’t always pulling the trigger — “twice as many buyers than before,” according to Gilad Azaria, a partner with Prudential Douglas Elliman’s Bracha Group — and brokers are moving to service them.

“I’ve seen an increase in brokers who want to work with buyers,” said Azaria.

Miller said the current market is fueling the trend.

“Because of the market, it is more costly, time-consuming and possibly frustrating to be a seller’s broker,” he said.

The crop of shoppers in the market is enjoying their new-found leverage. Priced out and ignored during the height of the market, many are now at least saying they are ready to buy. “They know the prices are great. It’s a wonderful time to get a deal. Before, no one could buy anything,” said Azaria.

Halstead sales associate Terrence Le Ray said that before, “many brokers didn’t want to deal with these buyers because they knew they could make a lot more on a good seller with less time spent.”

Azaria said his business is actually better now than it was last year because he is representing multiple buyers.

Moreover, there is a larger proportion of actual homeowners shopping — and fewer investors. According to Miller, within the past year, investors have been accounting for only 4 percent of sales, compared with over 30 percent in the 1980s.

These buyers are smart, not greedy. “They waited and realized that what goes up must come down,” said Miller.

“Buyers know that most sellers here in New York are not in a position where they must sell in order to live, as we are seeing across the country,” argued Klara Madlin, president of the Manhattan Association of Realtors and president of her own real estate agency.

The new wooing of buyers has shifted the brokerage scene.

“Lots are making the switch. I see much more competition out there as a buyer’s broker,” said Le Ray.

Gea Elika opened Elika Associates, a Manhattan brokerage serving buyers only, seven months ago.

“When we first opened, we had no inquiries from brokers wanting to join us,” Elika said. “Then in January, we started getting calls from brokers who were noticing the trend of more buyers. Now we are getting an average of five calls a week from brokers wanting to join us.”

And these are not just new agents. “We have people call from every well-known top brokerage house in New York City,” he said.

But will this trend be gone before it gets really big?

“We will have to see if the economy continues to decline and if jobs continue to be threatened,” said
Miller. “If that is the case, I project that buyers will actually be more worried about making the investment of buying a home in such uncertain times. So even though it’s a buyer’s market, less and less people will want to buy.”

A grey cloud hovers over the Manhattan real estate market as buyers
and sellers wait to see how the market adjusts to last summer’s credit
crisis, how deep the Wall Street job cuts will actually be and how much
the housing market will be affected.
[more]

Not only is the era of windfall sellouts over for independent real estate firms in brownstone Brooklyn, but community storefronts may be in for tough times as the economy falters and outer
borough properties take a hit.

As prices in Brooklyn have leveled off, and in some cases dropped, the powerhouse firms that were once gobbling up their independent counterparts have slowed their acquisitions. Yet the competition they’ve created could make it harder for the remaining independent firms to compete going forward, especially as they have smaller budgets.

Diane Ramirez, the president of Halstead Property, one of the firms that has expanded in Brooklyn in recent years, remembers how small- and mid-size firms folded in the 1990s “because they couldn’t pay the bills” when things got rocky.

While Ramirez, whose firm is headquartered in Manhattan, was decidedly bullish on today’s market, she said, “in a challenged market, I would say the most vulnerable
are small and mid-size firms.” She noted
that profit margins are strong now, but the future “has to do with how much they can control the bottom line, and the expenses and the income.”

“I don’t think we’re in that situation
yet,” she said, referring to tough times. “Certainly, we will have to see where the marketplace goes, but the most vulnerable are
the small and mid-size [firms] because
properties will stay on the market a bit long,
and they have to continue advertising and [paying] staff and that sort of thing. It’s
more challenging.”

William Ross, who sold his Brooklyn firm William S. Ross Real Estate to Halstead in 2004 and is now executive director of sales at the larger firm, said established independent firms weather downturns better than newer startups.

“If you have a storefront, rents can be pretty big, and advertising is an enormous expense. If the velocity of sales isn’t strong enough, you can’t generate enough income,” he said.

Ross said firms have no choice but to advertise any exclusive listings they get. “At a time when sellers are fearful and buyers are demanding, I think sellers might gravitate toward firms with deeper pockets that could help them more,” he said. “Whether that’s true or a misconception, it doesn’t really matter if the sellers believe it.”

Although the larger firms tend to snag exclusives on many of Brooklyn’s newest multi-unit developments, independent brokers still largely rely on personal referrals and handle single co-op and condo sales and rentals.

Some of the small firms are now offering lower commissions in order to compete with Corcoran, Prudential Douglas Elliman, Halstead and Brown Harris Stevens, to name some of the Manhattan-based firms that have expanded in Brooklyn in the last few years. While few independent brokers are willing to publicly declare how low they’ve gone on commissions out of fear that prospective clients might expect to begin negotiations at that figure, many privately concede they have dropped to as low as 3.5 or 4 percent. The large firms typically charge 6 percent.

Allen Barcelon started Boerum Hill Realty three years ago and has just two agents working for him out of a storefront on Atlantic Avenue near Smith Street. He said business is still relatively good.

After Halstead Property’s high-profile acquisition of Harbor View Realty last fall, someone from the firm approached Barcelon about buying him out, he said. However, he decided he wanted to stay small.

“I’m not convinced I need to go there,” he told The Real Deal. “I’m not making a ton of money, but I’m really happy being able to support myself.”

Barcelon has not had any buyout offers since Halstead’s, a reality that might have been different a few years ago when the
big brokerages were in aggressive expansion mode.

Nearby, Pietro Costa opened Vespa Properties on a stretch of Court Street that’s home to at least three other independent brokers, as well as offices for Halstead
and Elliman.

Costa, an artist, and his business partner, Denver Butson, a poet whom he worked with at another independent Brooklyn brokerage, opened Vespa in January 2007.

Costa noted that the wave of buyouts that swept through Brooklyn “happened when the market was booming.

“I think were they making those decisions today, they might not have done that,” Costa said.

He said that he and Butson did not start Vespa hoping for a big buyout down the
road and have not been approached about selling. But he said they would not consider selling anyway, as they started an independent firm because they wanted control over their work hours and business.

Vespa offers a stark contrast to the corporate brokering of the big firms it competes with. Alongside its co-op and condo listings, it hosts musical performances, art exhibits and poetry readings at the office.

Costa described working for a large corporate firm as being “like trading stocks on Wall Street.”

Vespa employs three agents and an administrative assistant in addition to the two partners. The agents had no prior real estate experience when they were hired.

Frances Kipito, a broker for Vita Realty, another independent firm on Court Street, said while they still are getting customers in to their open houses, buyers are more hesitant to make the decision to buy property. She also said although most of Vita’s business comes from local Brooklyn residents and referrals rather than responses to advertisements, competing with the advertising power of larger firms can be difficult.

“Advertising costs are very high, of course — that’s a given,” Kipito said, explaining that the reality holds true no matter what market conditions are like. “Any larger company will have more advertising dollars than a small broker.”

In the past, firms generally could count on getting between 3 and 6.5 times their EBITDA (earnings before interest, taxes, depreciation and amortization, a measure of annual cash flow) if they were bought out. According to Real Trends, a real estate data and analysis firm, this figure has dropped to around 2.5 to 3.5 percent.

Marilyn A. Donahue, who sold her self-named Brooklyn Heights firm to Elliman four years ago, said: “I think they would have paid more before than now. Before, they needed the bodies and the information.”

Some say that after poaching agencies over the past few years, the bigger firms now have the foothold they need and that they aren’t willing to risk further expansion right now.

One independent Brooklyn broker, who declined to give his name, said he was approached about selling his firm several years ago. But he admitted that his business has dropped about 30 percent since 2004 and said he doesn’t expect it to pick up any time soon, particularly because he can’t afford the same kind of advertising that his bigger competitors can.

“We’re very hands-on,” he said. “We see everybody. It’s probably a way of doing business that’s doomed … I can’t run a full-page ad in the New York Times.”

The broker pointed out that while business is down from several years ago, he is still turning a profit. He said he would still consider selling if a buyout offer was sufficient and he could quit, rather than working for a new employer. (Many contracts for buyout deals require principals of the boutique firms to work for the larger company for two to five years.)

Still, Janet Guerra, associate broker at Brownstone Realty in
Cobble Hill, said that in some ways, smaller firms are better positioned to get business during a slowdown, because clients believe they will get more attention.

“They [smaller firms] have actually been busier than ever getting listings,” Guerra said. “We haven’t really felt [the downturn].”

Apartments on Central Park South still have a prestigious address, and it’s often reflected in multi-million-dollar prices.

While bookended by the gleaming new Time Warner Center on the west and the newly renovated Plaza Hotel on the east, many of the buildings on Central Park South date back to the 1960s and do not offer the latest amenities. Compared to new construction, some of those Central Park South apartments also have dated décor and layouts.

A survey of apartments on the south end of the park includes many units that brokers might market as “easy to renovate,” rather than “ready to move into.”

Certainly, grand-scale renovations are probably in store for prospective buyers of Leona Helmsley’s 1971 Park Lane Hotel, now selling for $800 million. But except for the Ritz-Carlton and the Jumeirah Essex House, both renovated in the last few years, many Central Park South buildings have not had recent makeovers.

Still, brokers said that units on the stretch are competing well with the newer luxury apartment buildings because they offer something different. Prospective buyers noted that the age of a building is secondary to its proximity to the park and the Theater District. The location, they said, is worth walking to a gym and knocking down a wall or two. For their part, brokers noted that many individual units are renovated.

At a recent open house at 200 Central Park South and Seventh Avenue, a 14th-floor co-op apartment was on
the market for $1.29 million with monthly maintenance of $1,474.

The 35-story building, which was built in 1963, has a lobby that was renovated just a few years ago, three elevator men, a doorman and a concierge. But the apartment itself was a contender for some upgrades.

“Many of these walls can come down,” said broker Anne Graber of Prudential Douglas Elliman. “These walls aren’t load-bearing and would open the place up.”

The bright one-bedroom, one-and-a-half bathroom
unit measured 1,100 square feet. It had a small kitchen with older appliances, and a 200-square-foot terrace that faces east.

Graber said the unit — which has floor-to-ceiling windows facing east and views of the southern tip of the park and the very ornate Alwyn Court building — had been on the market for less than two months.

One woman was there looking for a place to move into with her husband.

Note: Correction appended.

The woman, an opera singer from London who has been in the United States for about three years, said one of her friends has an apartment in the same building on the eighth floor.

“I am living in a small apartment right near here
on Central Park South and Sixth Avenue,” she said. “My
husband and I want a bigger place, and this is a nice size
for a couple. Also, we like to be near Lincoln Center and the park. It gives us privacy.”

Also at the open house was Howard Stark, a doctor based in Georgetown who said he also owned property in South Beach, Fla. Stark and his partner, Rene Rodriguez, an architect, said they would replace the windows.

“Newer windows would block out the sound,” said Stark, 53, who used to live in New York City. He added, “We visit throughout the year, and we need a place in Manhattan. We want to be near all the activities like Lincoln Center and the Theater District.”

Stark said he wasn’t interested in living in luxury apartment towers offering white glove services and amenities.

“I think they even have too many elevator men in this building,” he said about 200 Central Park South.

For his part, Rodriguez was thinking about which walls to tear down to open the apartment up.

“We’re used to doing construction,” he said. “We renovated our Florida apartment and it didn’t work, so we tore it down and started over.”

Rog Tarie, who is in the import/export business and lives on 56th Street in a rental, was also at 200 Central Park South looking to buy.

He asked Graber if the co-op board was strict about making changes to the apartments. “This is a good location, and I like the neighborhood,” he said. “But the apartment needs a lot of work.”

Graber assured him the board was reasonable about such matters.

Nancy Candib, senior vice president and managing director at Brown Harris Stevens, is selling a 2,800-square-foot penthouse at the newly renovated Essex House at 160 Central Park South that needs some updating. The duplex, with park views from all the major rooms, “is selling for $9.5 million, and [in new construction] you can’t get near what this apartment has to offer for the price,” Candib said, comparing it to a 2,300-square-foot apartment at 15 Central Park West — which is “in a brand new building and is selling for $14 million.”

Candib said her clients have no problem considering a building without the latest bells and whistles. “I can get people past having a gym. They can go to the Equinox at the Time Warner Building, the Ritz-Carlton Hotel or the Essex House [hotel]. If they want glitzy, they pay double.”

Even considering the amenity differentials, the older buildings, she said, “because of the space and the views, are much better values.”

At 116 Central Park South, a third-floor condo with monthly maintenance of $740 was on the market for $899,000.

The unit, located in an 18-floor building constructed in 1962, was just over 600 square feet, with a large private
terrace that spanned another 300 square feet. Ready Group broker Janet Resino said the apartment had been on the market for about three weeks.

Off the “L-shaped” living and dining area, a double
bed just fit into a small curtained alcove. This was
adjacent to a combination dressing room and closet and adjoining bathroom.

“This apartment is really a loft, not a studio. It can be made into a junior one,” said Resino, noting that the
current tenant renovated the apartment four years ago when she moved in.

The kitchen, which included a stainless-steel Miele dishwasher and a Sub-Zero refrigerator, has a pass-thru out to the living room and dining room.

Anthony Surratt, who is moving to New York from Atlanta, was on hand checking it out.

Surratt, 40, said he wanted an apartment close to his job at Century Cable in the Time Warner Center. He was joined by his partner, Todd Harrington, 45, who is in nursing school.

“We have two dogs, and we want to be near the park,” said Surratt. Harrington said they preferred an older building without fancy amenities. “We can get things like a health club somewhere else,” he said.

Resino said there was a small gym in the basement along with a laundry room and a bike storage room.

Meanwhile, a luxury co-op at 210 Central Park South
was on the market for $2.4 million — a price drop of $200,000 — with monthly maintenance of $2,034. A few weeks after this open house, the price was dropped again to $2.35 million.

The two-bedroom, two-bath unit had major renovations 10 years ago, when the current owner turned the second bedroom into a dining room/library.

The kitchen includes granite countertops and custom mahogany cabinetry; most of the floors in the unit are cherry wood. The views from both the north and south sides of the apartment overlook the park and the Manhattan skyline.

“This is not really a residential area,” said Sotheby’s agent Reginald Fairchild, who was hosting the open house. “It’s really for tourists who want a pied-à-terre.”

Traffic to see the apartment was light. Fairchild said most people viewing an apartment this exclusive wanted private appointments.

The building had recently made many capital improvements, such as re-pointing the exterior and adding a
courtyard. There is a 24-hour doorman, elevator attendant and garage.

Fairchild said the value of the apartments would go up because the building next door, 220 Central Park South, was being torn down and a new tower was going up with a circular driveway.

“That means that the west side of this building will open up, and people can put in more windows,” he said. “It will change this building dramatically, and it will be worth much more: about $5,000 to $6,000 per square foot.”

Before the subprime debacle hit last summer, the term “short sale” was not in New York City’s real estate vocabulary. Now, while short sales are far more prevalent outside New York, some brokers in Upper Manhattan and in the outer boroughs are not only aware of the term, but can probably provide an extensive definition.

A short sale occurs when a homeowner, in order to prevent foreclosure, is allowed by his lender to sell the home for less than the balance owed on the mortgage loan. The homeowner is considered “underwater” or “upside down” on his mortgage, which means the loan balance is higher than what the home is worth.

“A year ago, hardly anyone knew what the term ‘short sale’ meant,” said Jeff
Silverbush, president of Elmhurst-based Century 21 Best, one of the largest real estate brokers in Queens. “There was a certain deniability about it on the part of buyers, sellers and banks. The expectation was that when they sold their homes, they were going to get more money. Guess what? The worm has turned.”

Median home prices in Queens fell 9.8 percent to $438,000 in January from a year ago, according to the Long Island Multiple Listing Service.

Silverbush said that short sales take
up more than 25 percent of his firm’s business and that they are becoming more common in northern Manhattan and in the outer boroughs.

On Staten Island, Jim Athens, CEO of Weichert Realtors Vitale Sunshine, noted, “In my office here, to be conservative, one in every 10 listings on the market are basically in a short-sale situation.”

Athens said that single-family home prices are down about 12 percent to $475,000 in the borough, and that people who bought houses during the boom years from 2003 to 2005 are now facing higher interest rates after their adjustable rate loans reset.

Meanwhile, foreclosure auctions in the outer boroughs skyrocketed during the first quarter, according to PropertyShark.com, with Staten Island auctions rising 411 percent and Queens auctions rising 90 percent. Many buyers are unable to work out their loans or sell their homes for a profit, leaving a short sale as the only alternative to complete foreclosure.

“It’s a large portion of the business now,” said Moses Seuram, vice president of the Queens Board of Realtors and associate broker at CNC Equity in Richmond Hill. “Queens has a lot of difficulty with sellers [whose loans are] upside down.”

A nationwide survey of 3,000 real estate agents conducted by Washington-based Campbell Communications found that almost 20 percent of listings are short sales. While local figures were not immediately available, Moody’s Economy.com estimated that across the country, about 9 million homeowners owe more than their homes are worth.

“We know as brokers before everybody else knows, because when the house is in trouble, [the lender] will call their asset manager, and the asset manager will call me trying to find out how much the house is worth,” said Willie Kathryn Suggs, owner-broker at Willie Kathryn Suggs Harlem Real Estate, who works in a community with a long history of speculative real estate deals.

Suggs said she is currently working out short sales on million-dollar row houses uptown. One of her clients took out a $1.5 million loan with a major U.S. bank to buy a four-story row house on 159th Street, which is considered by some to be one of the toughest blocks in Washington Heights. Six months after taking out the loan, the client defaulted on the house. She said the client will be lucky if he can get $1.2 million for the property.

Heavily leveraged buyers with low down payments, or subprime borrowers with exploding adjustable rate mortgages, are often most likely to end up candidates for a short sale. Still, there are serious considerations from a client perspective about whether a short sale makes sense, experts warn. According to real estate lawyers, short sales can do major damage to a client’s credit report, rivaling a foreclosure or bankruptcy in the severity of the financial blemish.

However, the U.S. government recently made a change to the tax law to help homeowners. Previously, the Internal Revenue Service had taxed the difference between a homeowner’s loan balance and their short sale price. The Mortgage Forgiveness Debt Relief Act signed by President Bush in December will make that amount exempt from taxation between now and 2009.

Fannie Mae and Freddie Mac, the biggest buyers of home mortgages in the country, are also in talks with the banking industry for further mortgage regulation reform. The government-backed companies are working on plans that would allow brokers to proceed with a short sale on distressed properties if the sale doesn’t fall below a pre-approved minimum price.

What puts a homeowner on the short sale path? If an owner cannot make their mortgage payments and their real estate attorney or broker cannot work out an agreement with the bank to reschedule payments, then a short sale may emerge as the final alternative before a foreclosure.

Lawyers say that policies will vary depending on whether the bank is willing to accept a sale that falls below the appraised value of the home, and whether the bank is willing to eat the difference.

“Most often times, by the time they come to us, the damage is done,” said Luigi Rosabianca, a Manhattan-based real estate attorney. “Your job is one of damage control. If you’re fortunate, you can have reasonable negotiations with the lender.”

For real estate agents, the three biggest problems with short sales appear to be the time it takes to complete the deal, the excessive amount of documentation required, and disputes over the commissions paid by the lender.

Brokers complain that banks take more than a month to get back in touch with them when they have lined up a buyer for short-sale deals, so that by the time the banks respond with an answer, the buyer has gotten a response on another house through another broker.

For their part, lenders, who were reluctant to give many details about their short-sale business, admitted that they are struggling to keep up with the demand.

“Part of it is, we’re getting people up to speed and getting enough bodies to
do it,” said JPMorgan Chase spokesperson Tom Kelly.

Kelly said his bank’s policy is to do
everything possible to keep the homeowner in the house, and if that is not possible, the bank has to determine how to get the biggest return out of the property.

“If somebody can’t afford the house, first you work through whether you can modify [the loan]. Then you work through, ‘Do they have an offer [for the house]? Is it a legitimate offer, and is it a reasonable offer?’ Finally, you ask, ‘Can we sell the house for more out of foreclosure?’”

As far as paperwork, the documentation required in short sales is almost as comprehensive as the documentation for an original purchase. The seller must prove that he or she is in such a high level of financial distress that a short sale is their only alternative.

Finally, there’s the commission problem. In short sales, the agent representing the buyer often gets a smaller commission than the listing agent. And in certain short sales, a broker can get stuck without any commission from the lender.

“The short sale is the most difficult sale to pull off,” said Alexander Levin, a veteran short sale specialist and broker at Staten Island Dreamhouse Real Estate. “It’s such a pain in the neck, I don’t have words to describe it.”

As average sales prices fall in Long
Island, the number of member offices of the Long Island Board of
Realtors, which includes Queens, has fallen by nearly 5 percent since last quarter.

Although the absolute number of brokers’ licenses is slightly up in Suffolk County, sources say the fallout from the subprime crisis and economic woes is taking its toll.

Joseph Mottola, CEO of the Long Island Board of Realtors, said local membership was down 6 to 7 percent and that he knew of several brokerage offices that had closed or consolidated in the past year.

A broker who spoke off the record said that the Remax Summit and the Gateway Realty office in Greenlawn had closed or been absorbed by another realtor.

As in other real estate down cycles, Mottola said brokers are working flexibly. “What they are saying is, ‘I am reducing my expenses at this time; I have been through this cycle before, and I am going to work for someone else until it all blows over,” he said.

Even seasoned agents are facing a tough slog, as houses spend more days on market and buyers negotiate every penny. While the number of brokers’ licenses has been flat in Nassau County, some say agents leaving the business are holding on to their licenses “just in case.”

The Long Island Board of Realtors bylaws require that licensed brokers retain their membership in the organization as long as they still have their licenses, even if they are not working as brokers, which might inflate the membership numbers.

Katy Anastasio, principal at Anastasio Realtors in Huntington and a National Association of Realtors committee leader, said the numbers mask a grimmer reality because real estate brokers are likely to hold onto their $400-per-year memberships and licenses in the event they can sell the house down the street while working in another field.

“I have noticed some of the offices closing down in the area,” said Anastasio, who would not name the businesses, though in most cases the offices closing are branches of brokerage chains.

Some brokers are leaving the business because they have no choice.

“We absolutely have had brokers leave the business,” said Terry Sciubba, owner of Sherlock Homes on Long Island, which covers six Nassau County North Shore communities including Sea Cliff and Glen Cove. In her own office, four out of 45 brokers have left for regularly paying jobs at hospitals, doctor’s offices and other businesses. “Some of them needed to get benefits, and some of them just needed money,” Sciubba said.

Nationwide, membership in the National Association of Realtors has fallen by 6 percent since March of 2007, according to an organization spokesperson.

Lauren Rivera, a spokesperson for the New York Department of State, said a breakdown of how many new salespeople were entering the industry was not available.

Slowly adjusting market

The ailing state of the Long Island market, which is seeing a significant slowdown for mid-priced properties, is driving people away from the business, brokers said.

Average contract prices in Long Island were down by 5.7 percent and 4.0 percent, respectively, for Suffolk and Nassau counties in March 2008 compared to a year ago, according to the Long Island Board of Realtors. The number of units sold showed bigger percentage declines, however, at 22 percent and 43 percent in Suffolk and Nassau.

Sciubba said there was significant weakness in the mid-priced market ($400,000 to $600,000) in Glen Cove. In her higher-end market in Sea Cliff, houses were staying on market much longer than last year.

For her part, Prudential Douglas Elliman broker Joyce Coletti estimated sales volume in Long Beach was down 20 percent.

The crunch requires more hard work, said brokers. The 80/20 rule, where 20 percent of the brokers typically bring in 80 percent of the business, becomes wider during a downturn and becomes more like 90/10, said Coletti.

“Now you really have to work hard to sell, you have to negotiate and you have be a psychiatrist to make it work,” added Sciubba.

Stuart Epstein, a principal at Devlin McNiff brokers in East Hampton, confirmed that the number of real estate transactions on Long Island had been halved since their high-water mark in 2005 and 2006.

Despite the fact that Long Island has continued to gain jobs overall in 2008, the real estate business is suffering due to a large number of subprime loans and foreclosures, noted Pearl Kamer, chief economist at the Long Island Association, one of the region’s largest business groups.

She said 3,200 financial jobs had been lost in the region from February 2007 to February 2008, and that the rental and leasing category — the closest category that New York State tracks to brokers, but that includes other workers related to real estate — had shed 500 positions in the same time period.

She noted that potential homebuyers are sitting on the sidelines. “They think housing prices will continue to go down way into 2010, so if that is the case, they are thinking, ‘Why buy now; why not wait?’” she said.

Because of the buyer unwillingness to commit, the real estate industry is contracting on Long Island, and “rising food and energy prices have put a toll on spending, and discretionary spending has been cut back,” said Kamer. She expects to see more of the same through late 2009 and early 2010.

After that, the economy may improve 2 to 3 percent, she predicted. Until then, she said, “it will be tough.”

It’s hard to imagine coping with the loss of a teenage child, but Halstead Property associate broker Rena Goldstein dealt with that and other tragedies since her son’s death in 1988.
Her son Scott Goldstein was diagnosed at age 4 with incurable central nervous system disease, a neurological problem
affecting his brain, and was given six months to live. Instead, he lived until age 15 but faced numerous hospitalizations, operations, partial paralysis and intermittent blindness.

(This reporter went to school with Scott, but the two were not close friends and the reporter did not know his mother at the time.)
As if that wasn’t the worst one could possibly imagine, Goldstein’s other son was developmentally delayed and her husband also became ill, prompting her to enter the real estate industry after 30 years as a homemaker, with a small side business designing jewelry. Goldstein went from not knowing how to turn on a computer to being a successful associate broker with a $14 million listing at the Plaza. [more]

Big banks are increasingly cracking down on developers
for being out of compliance with the terms of their construction loans.
[more]

Astoria

The Astoria

21-24 30th Avenue

The Criterion Group launched sales at its six-story, 27-unit condominium, designed by Nyron Hall, in late March. The one-bedroom units range in size from 701 to 854 square feet and have private balconies and terraces. Prices start at $473,000, and amenities include a roof deck, terrace, covered parking units, storage space and fitness center. Prudential Douglas Elliman is the exclusive marketing and sales agent. Contact: www.heartofastoria.com.

Chelsea

High Line 23

Construction is underway at Alf Naman’s 14-story condominium, designed by Neil M. Denari Architects. The building has units that range from 1,850 to 3,600 square feet, and prices run as high as $10.5 million for the penthouse. The building will have LEED gold certification and will also house art galleries.

Fort Greene

Toren

150 Myrtle Avenue

The 38-story, 240-unit condominium developed by BFC Partners launched sales in late March. The Skidmore, Owings & Merrill-designed building will have studio, one-, two- and three-bedroom apartments ranging in size from 442 to 1,967 square feet. Prices range from around $350,000 to $1.7 million. Amenities include an outdoor screening area, fitness center, swimming pool, library, lounge and attended parking garage; it will also have retail space. The building also will have an environmentally friendly cogeneration power plant and a silver LEED rating. Contact: www.torencondo.com.

Gravesend

The Venetian

431 Avenue P

The sales office opened at the Sitt Asset Management development. Prices range between $700 and $1,000 per square foot, Brownstoner reported. Amenities include a courtyard, fitness center, lounge and secure parking. Contact: www.venetiancondony.com.

Midtown East

211 East 51st Street

Occupancy at HJ Development’s 14-story, 73-unit condominium is expected to begin this summer. The building, designed by Shamir Shah Design, has one-, two- and three-bedroom residences ranging in size from 505 to 2,400 square feet and prices starting around $600,000. Amenities include a fitness area, lounge and spa. AnneMarie Alexander is the exclusive sales and marketing agent. Contact: www.211east51.com.

Murray Hill

303 East 33rd Street

Toll Brothers and the Kibel Company are building the 130-unit condominium, and sales are expected to begin in the spring or summer of 2008. Completion of the project is slated for fall 2009.

Upper East Side

Georgica Residential Tower

305 East 85th Street

The Ascend Group launched sales for its 20-story, 58-unit condominium in March, and construction is underway with completion slated for 2009. The Cetra Ruddy-designed building will have two-, three- and four-bedroom residences ranging from 1,298 to 3,000 square feet in size, with prices averaging $1,500 per square foot. The 134,000-square-foot project cost $90 million to develop. Amenities include a fitness room, children’s playroom and a roof deck. The exclusive sales and marketing agent is Prudential Douglas Elliman. Contact: www.georgicalife.com.

Upper East Side

East Hill

212 East 95th Street

Sales have begun at the boutique-style 26-unit condominium designed by architect David Black. The building has one-, two- and three-bedroom units, which range in size from 913 to 1,875 square feet; prices start at $800,000. Amenities include an exercise room, common roof deck and individual storage space. Occupancy at the building is slated to begin in September. Prudential Douglas Elliman is the exclusive sales and marketing agent. Contact: www.easthillcondominiums.com.

Upper West Side

535 West End Avenue

Extell Development’s 20-story, 22-unit condominium, designed by Lucien Lagrange, had three units on the market as of early April, Curbed reported. The building has apartments ranging from 3,744 to 8,451 square feet, with prices ranging from $8.75 to $21 million. Amenities include a private lounge, billiards room, fitness center and swimming pool. Corcoran Sunshine is the exclusive marketing and sales agent. Contact: www.535wea.com.

Upper West Side

Ariel West

245 West 99th Street

Developer Extell unveiled a model home and fitness center as construction nears an end at the 32-story, 73-unit development. The building, designed by architect Cook and Fox, has two- to five-bedroom units with prices starting at about $1,900 per square foot. Amenities include a private theatre, fitness center, billiards lounge, children’s playroom, pet spa and garden. Corcoran is the exclusive marketing and sales agent. Contact: www.arielcondos.com.

Williamsburg

The Edge

Sales were launched in early April at Douglaston Development’s two-tower, 575-unit mixed-use development. The buildings, which are 15 and 30 stories tall, were designed by the Stephen B. Jacobs Group. The project’s studio, one-, two- and three-bedroom apartments range in size from 490 to 2,275 square feet. Prices for the units range from $420,000 to $2.83 million. Amenities include a year-round open-air pool, fitness facilities, yoga studio, spa, screening rooms, lounge areas, private party room and refrigerated storage. The Developers Group is the exclusive sales and marketing agent. Contact: www.williamsburgedge.com.

Williamsburg

Home

154 Skillman Avenue

Sales are underway at Ore International’s six-story, 12-unit condominium, which has studios, one- and two-bedroom apartments as well as townhouses. Prices range from $495,000
to $795,000, Curbed reported. Amenities include a fitness center, indoor parking spaces and private cellar space. The exclusive marketing and sales agent is aptsandlofts.com. Contact: www.homewilliamsburg.com.

Williamsburg

66 North 1st Street

Sales will soon begin at the 21-unit factory restoration, designed by Scarano Architects. Prices for the first units will range from $499,000 for a 632-square-foot studio to $1.045 million for a three-bedroom duplex penthouse. The building has a common courtyard as well as private courtyards and roof terraces that can be purchased. Aptsandlofts.com is the exclusive marketing and sales agent.

Construction update

Greenpoint

110 Green Street

The six-story, 130-unit condominium, being developed by Magic Johnson and other investors, is topping out more than a year into construction, Curbed reported. The Meltzer/Mandl-designed building will have a 360-foot window of colored spandrel glass, and amenities will include a rooftop terrace, pool and a children’s playroom.

Sales update

Greenpoint

Canvas

118 Greenpoint Avenue

Four of the development’s 15 apartments were sold as of early April, according to Brownstoner. The building has a mix of studios, one- and two-bedroom units that range from 527 to 1,352 square feet. Prices range from $415,000 to $729,000. Units have washers and dryers, large storage spaces and private roof decks. Aptsandlofts.com is the exclusive marketing and sales agent. Contact: www.canvascondos.com.

Lower Manhattan

20 Pine

The first sales have closed at
developer Leviev Boymelgreen’s 409-unit condominium. Armani/Casa is the interior designer for the project, which has units priced from $600,000 to $4 million. Amenities include a pool, spa,
club and several lounges. The exclusive marketing and sales agent is Shvo Marketing. Contact: www.20pine.com.

Murray Hill

45 Park Avenue

SJP Residential Properties’ 21-story, 105-unit condominium was sold out as of mid-March. The building is designed by architect Costas Kondylis and has one-, two- and three-bedroom units with hardwood floors,
washers and dryers and Juliette balconies. Prices range from around $900,000 to $2.32 million. Amenities include a health club, lounge and two-story atrium. Contact: www.45parkave.com.

Murray Hill

Twenty9th Park Madison

39 East 29th Street

Developer Espais Promocions Immobiliàries’ 34-story, 142-unit condominium was 50 percent sold as of late March. The building, designed by H. Thomas O’Hara Architects, has one- and two-bedroom homes ranging from 536 to 1,309 square feet as well as 2,070-square-foot, two-bedroom penthouses. Prices at the building, which is slated for occupancy in summer 2008, range from $600,000 to around $4 million. Amenities include a fitness center, refrigerated storage, on-site parking and storage units. Coldwell Banker Hunt Kennedy is the exclusive marketing and sales agent. Contact: www.Twenty9th.com.

Tribeca

Artisan Lofts

143 Reade Street

The $10 million, 38-unit condo conversion was 80 percent sold as of mid-March. The building, designed by BKSK Architects, has lofts ranging from 1,860 to 3,374 square feet. Prices range from $2.895 to $11 million. The building will host rotating gallery exhibitions from the McNeill Art Group in its lobby and will have a fitness center, children’s playroom and roof deck. Corcoran Group Marketing is the exclusive sales and marketing agent. Contact: www.artisanlofts.com.

Williamsburg

One Hanson Place

The 190-unit condominium, developed by the Dermot Company, was 74 percent sold as of the end of March, Curbed reported. Prices range from $900 to $1,400 per square foot. Amenities include a children’s room, gym, public terrace, business center and sky lounge. Contact: www.onehanson.com.

Williamsburg

The Pad

196-200 South 2nd Street

The 30-unit condominium was 20 percent sold at the end of March. The building has studio and one-bedroom homes ranging in price from $395,000 for a 560-square-foot studio duplex to $689,000 for a one-bedroom penthouse duplex. Amenities include a gym, billiards room and furnished outdoor roof deck. The exclusive marketing and sales agent is aptsandlofts.com.

Chairman and principal of three affiliated companies: Levine
Builders, Douglaston Development and Clinton Management. Levine has
overseen the new construction or rehabilitation of thousands of rental
and condo properties. [more]

Next April will mark 400 years since the Dutch, a people obsessed with architecture, set sail from Amsterdam, a city lined with single-family homes, to seek a place to build luxury high-rise condominiums.

So it seems fitting that the first major American building by acclaimed visionary Dutch architect Ben van Berkel — and the first residential high-rise for an important Dutch designer — will be opening in 2009, the quadricentennial of the original Dutch settlement of Manhattan.

Van Berkel’s new building, Five Franklin Place, is a stunningly articulated, 20-story glass-and-aluminum-banded condominium nestled on a one-block cobbled side street on the outskirts of Tribeca, a large-scale urbanized revision of the design he created a decade ago in his famous Mobius House, a private residence in Amsterdam.

Designed to accommodate the lifestyle of a professional couple and their family, the Mobius House, which was showcased in 1999 at the landmark exhibition “Un-Private House” at the Museum of Modern Art, contains flowing spaces for living, working and sleeping. By comparison, at Five Franklin, van Berkel has created a series of interactive but separate environments within which occupants can lose themselves — “where you come home and you feel you’re really out somewhere else,” he says, “that you really have your holiday home at home.”

While the building has a façade on Broadway, residents will enter the building on Franklin Place, a sequestered narrow lane that will be cleaned, re-pointed and fashioned with period lighting and plantings to evoke the atmosphere of old New York.

The condominium will contain 55 one-, two- and three-bedroom residences, from 1,200 square feet to 3,400 square feet, including duplex lofts and three soaring duplex penthouses with interior elevators and landscaped rooftop terraces. Marketed by the Corcoran Sunshine Group, the properties will range from $2 to $16 million.

The residences are offered in three design palettes according to their position in the building. The architect says, “On the lower floors, where there is a need to maximize daylight, we have specified the lightest-colored floors and fixtures and wall colors throughout. On middle floors, where there is more daylight because the residences are above adjacent buildings, we have a more cream-colored palette, softer because there is more natural light and less need to push for its reflection into the homes. And on the top levels of the building, where there is very abundant light, we have used richer, deeper colors and finishes.”

On the lower floors, van Berkel notes, “we knew that you would not have so much light as on the top of the building, so we have really spectacular double-height ceilings in the living room with a [mezzanine level] inside and two floor spaces, and possibly a library in the loft space where you can grab a book.”

The developers, David Kislin and Leo Tsimmer, principals of Sleepy Hudson, which is also the general contractor on the job, brought in the contracting division of Italian furniture maker B&B Italia from the beginning to fabricate the interiors. All of the millwork is done in Italy and will be installed in New York by an Italian team.

The builders used the construction of the building’s sales gallery, which opened recently at 7 Harrison Street, to test the innovations van Berkel’s firm UN Studio and B&B invented. “We made this the crucible for a lot of these crazy things that have never been done before,” says Paul Bonner, manager of the interior construction team.

One of these crazy inventions is a rotating wall: The master bathrooms will contain circular walls that can turn and open completely to the larger bedroom suite and let in the light and views.

The kitchens, meanwhile, are sculpted in Corian. “Corian is so nice,” says van Berkel, “because if you melt it into the corners, all the objects in the interior look like they are carved out of one piece of marble.”

No easy feat. The kitchens are completely open to the living area, and the cabinets share a wall with the dining area. To create a seamless flow, says Bonner, “we’ve designed a special reveal molding and had it fabricated by a company in Brooklyn that allows us to make the adjacent [dining area] wall flush with the backsplash. It’s almost as if we took the whole kitchen wall and recessed it slightly so that the sheetrock is flush with the backsplash.”

Flattening out all the divisions between adjoining elements creates a perception of spaciousness. “There is nowhere for your eye to rest,” says Bonner. No details to get hung up on. Even the door frames are invisible, with just a hairline space between the edge of the door and the wall. “Everything just flows,” adds Bonner. “It’s very modern, obviously, and I think it’s very serene.”

The exterior of the building is also meant to flow within its larger context, the rectilinear blocks of Manhattan. The undulating horizontal black steel bands that ribbon the building, says van Berkel, “form a kind of formal simplification of the [Manhattan street] grid, abstracted even more.”

Also, the banding around the façade,
explains van Berkel, “comes from the iron work we found in Tribeca,” prevalent in the 19th-century cast-iron commercial buildings there. “We picked up the strong horizontal cornices and decorative details of Tribeca’s architecture,” he adds, “re-formed them and transported them onto our building in a very contemporary way that makes them truly functional, but that still has a lot to do with pure surface decoration.”

The dark aluminum bands were lacquered seven times to a glossy finish and
fastened to the structural steel beams to form balconies for the residences and to deflect the sun, mirror the building’s surroundings, frame the views from the interior and enhance the sense of privacy.

The building’s softly lit lobby will contain curved white lacquer fixtures, built-in burgundy leather seating areas and a violet glass-chip mosaic floor. A curved stairwell leads down to the private spa and fitness
center. The wet spa is encased in deep blue tile, which, says Berkel, “gives you more depth than, say, the color red or orange or white. And blue picks up a lot of other colors.”

Robert Kloos, director for Visual Arts, Architecture and Design at the Dutch Consulate in New York, calls the building a “collaborative effort,” reflective even, he says, of the founding of Manhattan itself.

Note: Correction appended.

“More than 50 percent of the people that were sailing in the East Indian Company under Henry Hudson were international people,” says Kloos. “It was very much a collaborative effort and very much a multicultural effort.”

He says, “This is really something that we in the Netherlands can learn from again. And if you see now how this project is happening, where you have a Russian developer, Dutch architect and American builders, it’s really great.”

It’s a sign of the times. Marketing companies are relying more heavily on creative guerrilla-style street-level advertising to kick-off pre-sales at new condominiums.

One approach involves blanketing a location with so-called wild postings or street posters, an outdoor advertising tactic more commonly used to promote album releases, concerts and store openings.

Core Group Marketing is hitting areas in Chelsea, the Lower East Side and multiple neighborhoods in Brooklyn with wild postings for the new residential development 125 North 10th Street in Williamsburg. A series of the same 2-by-3-foot poster is pasted up at entrances to subway stations, on construction fences and on outside billboards.

Doug Bowen, a Core Group vice president and director of sales for 125 North 10th Street, said that in some places, there are as many as 16 posters.

“It has been nothing but wildly successful,” Bowen said, based solely on feedback from potential and actual buyers.

For all the sites, hundreds of posters went up in 30-day cycles for between $5,000 and $10,000 a blitz, Bowen said. The wild
postings went up when Core launched sales in January.

Bowen said the tactic is just about creating traffic, not trying to do deals without co-broking. “We’re completely co-broke friendly,” Bowen said.

Another new development, Toren, a condo in Fort Greene, is also pasting ads on surfaces in Manhattan, Curbed.com reported.

One problem with any type of outdoor postering is that there is no policing to
prevent people from covering each other’s posters.

A sign advertising a development at the site of the building to come is permitted,
according to the city’s Department of Buildings. Advertising signs elsewhere are permitted only in certain zoning districts, and any poster on a construction fence is illegal. Violations can result in fines or other penalties.

Postering would not suit all projects — namely ones that are luxury condos.

“This was a perfect fit for this building. We have a very made-in-Brooklyn kind of concept here,” Bowen said. But he added, “I don’t think if I was marketing the Lucida [on East 86th Street] I’d be using this campaign. I’d be taking out an ad [in a newspaper].”

In other ad campaigns, typical promotions at construction sites — signs with little more than sales contact information on them — are being scrapped in favor of more sophisticated, comprehensive and bolder promotions selling a lifestyle.

“Today, since there are so many buildings competing for the same buyer pool, the
signage has to be strong enough to pique prospects’ interest enough to motivate them to go to the sales gallery to get more information,” said Jacqueline Urgo, president of the Marketing Directors. “They tell a much more complete product story in order to
accomplish just that.”

At the Platinum at 247 West 46th Street, for example, Marketing Directors used poster-size ads on the base of the construction site with renderings of the interiors and the lobby and a list of amenities.

The more comprehensive visuals “set the tone for the brand so there’s consistency in all the promotional materials,” Urgo said.

Also investing in signage is the Developers Group, which has posted ads on the outside of buildings and construction sites, telephone kiosks and subway station entrances. The company wrapped the Edge development in Williamsburg in signage. Uptown Partners, the developers of Harlem’s Fifth on the Park, hired an actor to ride around the Upper West Side in a rental truck plastered in “Fifth on the Park” billboards. He stopped intermittently and handed out brochures.

After brokers, the greatest amount of traffic is garnered through ads posted on construction sites, Urgo said.

Construction site signage prices can range from $20,000 to $150,000, she said. A full-page ad in a high-profile newspaper could run in the five digits for one shot. “It’s a one-time payment that lasts a long time,” Urgo said, and it can be cheaper than ongoing advertising in more traditional print media and the Internet.

Some facts about modern New York apartments: They’re expensive. They’re in short supply. And if they’re newly constructed condos, they’re usually delivered late.

In the previous strong market, delayed closings didn’t usually raise eyebrows. Buyers felt lucky to lock in a unit early before its price could climb. Construction costs escalated, yes, but developers could offset those expenses with higher prices when selling remaining apartments.

But in a softening market, delays can be disastrous. Costs rise while apartment prices drop. Lenders blanch at the prospect of weak sales and pull financing. And with employers slashing jobs on Wall Street, a buyer could lose their job in those extra months, upending the sales equation.

Of course, all this means ruined deals for brokers.

Although in recent years, buyers have rarely walked away from apartments once they’ve signed contracts, that could soon change, according to brokers, attorneys and developers.

“In a jittery market like this, time is the enemy of the developer,” said Cary Tamarkin, a Manhattan-based residential developer. “These are scary times.”

Under state regulations, a buyer can break a contract with security deposit in hand if a year has passed since his contract signing and the building doesn’t yet have at least a temporary certificate of occupancy, which is required before anybody can move in.

None of Tamarkin’s buildings have ever experienced “rescission” like this. But in his offering plans, Tamarkin often adds six months’ wiggle room to expected completion dates, just to be safe, he said.

That’s the case with two new projects, 397 West 12th Street and 456 West 19th Street, where offerings promise spring 2010 completion dates, though building should actually wrap up by late 2009.

The first building will offer five condos, starting at 3,000 square feet and priced from $5 million; sales still require attorney general approval. The second building, also waiting on state approval, will feature 22 duplexes, ranging from $1.5 million one-bedrooms to $8.75 million four-bedrooms, Tamarkin said.

Wild underestimations of how long
projects will take, a favorite marketing ploy of scheming developers, can increase the likelihood that buyers will jump ship, lawyers said.

“You are shooting yourself in the foot if you go in aggressively early,” said Allan Starr, a senior partner with Starr Associates, a Manhattan-based law firm that specializes in condo offering plans. “It’s better to be conservative and realistic.”

Ultimately, buyers have other tools at their disposal, even if they are used rarely. For example, if midway through the construction process the developer submits a revised offering plan showing common charges rising by more than 25 percent, buyers can break their contracts, he said.

At the time of a contract signing, buyers can also tack on a special rider stipulating an “outside closing date,” which usually requires them to be moved in six months hence.

But developers are generally loath to
lock themselves in this rigidly, so only
about 3 percent of New York condos have been sold with those riders in recent years, Starr explained.

Those safeguards, though, aren’t extended to brokers, who typically will lose a commission if an apartment never closes; for them, the increased risk of having deals scuttled reinforces the need for developers to be straightforward.

“Developers tell blatant lies. It’s disgraceful,” said Leonard Steinberg, an executive vice president with Prudential Douglas Elliman who claimed that delays have wrecked two major deals for him.

One happened at the Tribeca Summit at 415 Greenwich Street, where in July 2006 a couple signed a contract for a three-bedroom, two-and-a-half-bath unit for $3.2 million, thinking it would be ready in a year.

But 15 months later, the apartment was still under construction, and the couple, frustrated, backed out, Steinberg said.

(A spokesperson for Ethan Eldon, a co-developer of Tribeca Summit, said he was unavailable to talk because the building’s units are now closing.)

Tribeca Summit is a conversion, which can take longer to deliver if there are unforeseen problems. Steinberg said he wishes Eldon was more candid about delays.

“Honesty is a good policy,” he said.

Paying brokers a third of their commissions earlier, at the contract signing, was a technique common with Las Vegas and Florida condos at the boom’s height.

But when buyers bailed on their units, developers were stuck with the losses and were often forced to sue brokers to recover those payments, brokers said.

In New York, the practice is less frequent, though it does pop up where international buyers are a factor, like at Trump Soho Hotel Condominium, located at 246 Spring Street, and Soho Mews, at 311 West Broadway, brokers said.

Generally, brokers should work with developers with proven track records, said Emily Fuller Kingston, an associate broker with Halstead.

Buyers who aren’t well-coached can still raise hackles: In March 2005, some of Kingston’s clients were supposed to move into a new three-bedroom Soho apartment, with three-and-a-half baths and 2,500 square feet, for $2.995 million.

Once that date passed, the buyers summoned their lawyers, threatening litigation, though by May, they had closed on the unit.

“Some sponsors are very reliable, and others are not, and we know about ones that haven’t been able to deliver their buildings,” Kingston said.

Management of clients’ expectations is key, agreed Paul Purcell, a partner with Charles Rutenberg Realty in Manhattan who informs his clients that a few months’ delay is standard. “Tell buyers that it’s not the end of the world,” he said.

While delays of a year are not unusual in New York, others have stretched to four; in fact, in better markets, unscrupulous developers have been known to extend a project’s timeline to exploit rising prices, brokers said.

Still, from a quality of life perspective, buyers may want to sit on the sidelines rather than rush in while plaster dust swirls, said Shaun Osher, the chief executive of CORE Group Marketing, which represents developers.

“This is not a science. Every project has its own set of challenges,” Osher said. “Anyone who has ever done a renovation knows this.”

While by no means the first starchitect-driven residential property in New York City, when it opened, Downtown by Philippe Starck at 15 Broad Street was among the first condominiums to flash a designer brand so flagrantly. And effectively.

The 42-story luxury conversion sold $210 million in condo apartments in just four weeks in the summer of 2004 and helped lift Manhattan’s undervalued Financial District to upscale destination status.

Now that the condo market has cooled, developer Joseph Moinian is turning the Starck star power onto a rental building, betting that the newly honed “YOO by Starck” logo and a marketing campaign featuring seductive images of the ebullient French designer will fill 507 way-above-market rental apartments in the Financial District.

At 95 Wall Street, Dwell, the first YOO by Starck rental building in the world, opens this spring. The building is offering mostly studios, priced from $2,665, one-bedrooms starting at $3,890, loft studios starting at $4,520 and two-bedrooms from $6,260.

YOO, an interior design firm, development company and marketing consultancy, was founded in 1999 by Starck, arguably the most successful designer in the
world, and high-profile London developer John Hitchcox.

Currently, its high-design brand is attached to more than $5.5 billion worth of apartments in New York, Miami, Sydney, Buenos Aires, Israel, Hong Kong, Thailand and other spots around the globe.

YOO’s encore to Downtown by Starck was YOO by Jade, a condominium in Chelsea/Flatiron with interiors designed by
former model, jetsetter and jewelry designer Jade Jagger, daughter of Mick and his former wife Bianca.

Unlike some projects that were condominiums on the drawing board in the glory days and then switched gears when the market began to turn, “Dwell was conceived as a rental from the beginning,” according to Natasha Vardi, director of residential properties for the Moinian Group.

“We were thinking there’s this whole group of people out there who really
love Starck,” added Vardi, “but if they weren’t ready to purchase, they didn’t have much choice.”

Now, with the specter of mass layoffs hanging over Wall Street, fewer consumers are ready to purchase at this time.

“I’ve been predicting the cooling off of the housing market for four or five years now, along with a lot of people,” said Hitchcox, co-founder and chairman of YOO. “It’s gone on much longer than we expected. And when condominiums start to slow, rentals get a little bit more busy.”

According to Cliff Finn, director of new development for Citi Habitats, which is marketing Dwell, “There’s a large group of people who are putting off buying their first homes and want to rent for now, but they want apartments that make them feel like they’ve stepped up in the world.”

Hitchcox said he began to envision a YOO rental product about three years ago.

“Since the advent of the 90 percent mortgage,” he said, “nobody has really set about doing a branded alternative to a for-sale product — a rental with the quality we offer in the condominiums we design. Then Joe Moinian came up with this building, and it was a perfect fit for us.”

Moinian acquired the 22-story 95
Wall Street in 2004 for $130 million. The headquarters for JPMorgan, the 500,000-square-foot modern office tower, was built in 1970. While obtaining approval for a residential conversion, Moinian kept the building commercial until early 2007, when an early termination of JPMorgan’s lease was worked out.

YOO’s London studio manager, Julieann Humphryes, said that when the firm took the commission to design the conversion, “we began to look at the history of
Wall Street, the connotations of that in terms of how we might create a narrative for the interior.”

The design scheme for the lobby, which is office-building small, might be called “Wall Street bling.”

“Joe Moinian wanted it designed to be like a showcase, like a jewel — very intense,” said Humphryes. “We did all the furniture that sits in [the] lobby in gold plating, from the reception desk to the chairs to the benches to the sofas. They’re all shiny sculpted gloss metals in a dark chocolate, which matches the bronze color of the 1970s building. Then we’ve added some bulls and bears to relate to the market to remind you of the location.”

Even the floor says money, literally. “We’ve created a carpet that’s going to be made of over-scaled dollars — coinage — that is going to be inlaid into the floor,” said Humphryes. The surface metal is cast over ceramic, using a process that gives the floor the appearance of solid metal. “It feels like a lot of the turn-of-the-century steel-tiled floors that you get in old Soho — part of original Victorian-age architecture,” she added.

The penthouse tenants’ lounge picks up the gold plating in the lobby but adds some red touches, cushiony seating, a fireplace and a breakfast area that will serve a complimentary morning meal daily. The lounge has a lushly landscaped outdoor counterpart, with intimate seating areas and a winter fireplace.

The penthouse-level amenity space was a construction challenge, as it shares a floor with systems such as the building’s water-cooling plant. The machinery is cordoned off and obscured by specially glazed wall surfaces and plants that redirect the user’s visual focus. Noise, meanwhile, is neutralized through the use of ambient music and white noise.

Dwell’s other amenities include a 24-hour concierge service and doorman, valet services, on-site parking and a fitness center including the Kinesis strength training system. All the equipment in the gym, which is bathed in a calming white, faces the windows and view.

The apartments are offered in an abridged version of the schemes YOO offers in its condominiums. Tenants at Dwell can choose from two styles: classic, installed on the lower floors, which features refined dark wood floors and kitchen cabinetry with Crème de Marfil countertops, and nature, available on the upper floors, which features light wood floors and cabinetry as well as Venatino Marble countertops.

Both styles have modernist kitchens and bathrooms accented with YOO by Starck-inspired fixtures, Jenn-Air cooktops and convection ovens, and wood-paneled Liebherr refrigerators. The spa-like bathrooms are wrapped in marble and contain vessel sinks and handmade Venetian glass mirrors with matching glass sconces.

Each kitchen is adorned with a Swarovski crystal chandelier, a Starck signature touch. “Chandeliers seem to be our thing, actually,” said Hitchcox. “The idea of a chandelier in your kitchen has a degree of decadence and puts a little bit more focus into the kitchen than you might normally get.”

The designers got started on the chandelier thing with the 15 Broad Street conversion. “JPMorgan in the 1930s commissioned one of the largest chandeliers in the world,” said Hitchcox. “We found that chandelier boxed up in a shed in New Jersey. We unpacked it, pieced it back together and put it in the entrance lobby.”

The only comparable new rental building in FiDi may be 20 Exchange Place, a 67-story landmark skyscraper that recently had a “soft” opening, leasing apartments from the 36th floor and up. Prices at 20 Exchange are similar to 95 Wall Street, and according to Prudential Douglas Elliman broker Ariel Cohen, “the reception has been phenomenal. I just rented the entire 37th floor to a client.”

Some landlords are nervous about finding enough well-heeled renters to fill two new, above-market towers in Lower Manhattan. (See related story on page 54 on how new development is faring in the Financial District overall.) But according to Sang Oh, director of sales for FiDi-based Platinum Properties, “It’s a bold statement for the neighborhood that we were able to bring in names like Starck to work on a rental building, something that was unheard of just a few years ago when we were begging people to come down here. Now we’re able to ask for rents that are higher than Midtown.”
Note: Correction appended.

Atlanta

Single-family home prices in Atlanta may have declined 4.8 percent in January of this year from January 2007, but Atlanta-area real estate professionals said sales activity has been stronger in recent months, the Atlanta Journal-Constitution reported. According to research firm Metrostudy, new construction has dropped 56.5 percent since the fourth quarter of 2004, while sales were down just 37.3 percent in the same period; home sales have outpaced new housing starts since early 2007. Still, the firm said inventory is still too high by about two months, and supply could surge in the coming months.

The banks that funded metro Atlanta’s housing development during the boom are now reeling from unpaid loans from developers and builders and the burden of foreclosed property, the Atlanta Journal-Constitution reported. According to real estate research firm Foresight Analytics, of the 93 banks that issued single-family construction loans in the Atlanta metro area last year, 36 posted double-digit delinquencies. Meanwhile, overdue construction and land development loans soared.

Boston

The number of homes going into foreclosure and the amount of foreclosed properties being purchased are continuing to skyrocket in Boston-area counties, the Boston Globe reported. In Essex and Middlesex counties, the total number of filings increased by as much as 50 percent this February compared to the same time last year, according to real estate publisher the Warren Group. In Essex County, 413 foreclosure notices were filed in February compared to 247 last February; foreclosure deeds jumped to 114 from 43 in the same period. In Middlesex County, 472 foreclosure notices were filed compared to 370; there were 116 foreclosure deeds in February, up from 54 in February 2007.

Chicago

Chicago’s office market may suffer greatly in 2008, but tough times could lie ahead for commercial property owners in 2009 as well, according to two recent reports. Cushman & Wakefield’s first-quarter report said asking rents in the city’s central business district increased more than 10 percent from last year, while the vacancy rate fell 2 percent. But 3.5 million square feet of new office space could open in the city next year, the greatest amount of deliveries in a single year since 1980. Jones Lang LaSalle, meanwhile, pegged downtown Chicago’s Class A vacancy rate at less than 8 percent, but that number could balloon to 11 percent by late 2009, the Chicago Tribune reported.

The number of foreclosed homes owned by lenders and investors has doubled to make up 2.5 percent of all Chicago homes, according to research firm First American CoreLogic. Two other housing data firms calculated lower figures, but industry observers said the 100 percent year-over-year increase across the country in REOs, or real estate owned by lenders and investors, could spell trouble for Chicago’s real estate market, the Chicago Tribune reported. Property values could be affected as individual banks either wait out the slump or dump properties on a lagging market. Harris Bank of Chicago saw its REO more than double to $11.5 million in 2007, from $4.9 million the previous year.

Las Vegas

Donald Trump cut the ribbon last month on his $1.2 billion Trump International Hotel & Tower on the Las Vegas Strip, but the picture is not as rosy for a pair of high-profile projects planned for a neighboring parcel: A second Trump Tower and a $6 billion remake of New York-based Elad Group’s Plaza Hotel could be delayed due to rising construction costs and the turmoil in the credit markets, the Las Vegas Review-Journal reported. Trump plans to close all 1,282 units on his first 64-story tower before breaking ground on the second one; sales have topped $1 billion so far, Trump said. Investors had said the Plaza would be on hold until the credit crisis subsides, but Elad Group executives still hope to break ground by fall 2008.

Los Angeles

Even the prices for prime beachfront property in Southern California are dropping, the Los Angeles Times reported. The average of median sales prices in 18 beachfront areas like Santa Monica, Manhattan Beach and Long Beach was down nearly 10.2 percent in February from last year, according to DataQuick Information Systems. In Huntington Beach, the median price fell from the $785,000-to-$1.2 million range
in 2007 to between $635,000 and $827,000 this February. Still, real estate agents are cautioning buyers expecting bargains
that beachfront property in California is still significantly more expensive than inland residences.

Philadelphia

At least 10 major condominium projects proposed in Center City over the past two years have yet to break ground, the Philadelphia Business Journal reported. Developers such as Marc Stein, who had planned Bridgman’s View, a 66-story, $600 million condo that would have been Center City’s tallest residential building, attributed the delays to bad timing: A 22-month moratorium on development along the Delaware Riverfront was just lifted in February, and the credit crisis and lagging housing market continue to inhibit progress. Mandeville Place, a Richard Meier-designed luxury condo at 24th and Walnut streets, and Grasso Holdings’ 1.2 million-square-foot mixed-use project at 16th and Vine streets also have yet to come out of the ground.

Phoenix

Phoenix’s metro area is the 10th-riskiest real estate market in the country, according to Forbes.com. Reasons for the ranking include overbuilding in the area and reliance on the construction industry for job growth. The number of homes on the
market has also increased fivefold from 2005, to 53,000; homes are selling well below their asking prices, and foreclosures are on the rise. The market was also classified as risky due to the proliferation of distressed Alt-A and subprime loans in
the area, based on research from Arizona State University.

The Valley’s commercial real estate market continued to stall in the first quarter of 2008, the Arizona Republic reported. The office vacancy rate increased to 14.9 percent in the first three months of 2008 from
11.9 percent last year, according to CB
Richard Ellis. Net absorption dropped to 50,844 square feet from 379,014 square feet over the same period. In the Valley’s industrial sector, the vacancy rate was up to 10.6 percent in the first quarter, compared to 9.6 percent last year. The retail vacancy rate, meanwhile, increased from 5.1 percent in last year’s first quarter to 6.4 percent this year.

San Francisco

The number of real estate agents is falling rapidly in California as the housing market continues its sluggish pace, the San Francisco Chronicle reported. In the Bay Area, the slowdown in sales made it hard for agents to make ends meet in between commission checks. The number of licensed real estate agents in California fell from 549,244 last November to 548,879 this January; that number is expected to fall as much as 30 percent this year. The number of people signing up for the state licensing exam dropped to 1,324 in January, from 8,765 a year earlier and 14,397 two years ago.

Seattle

Single-family home sales in Seattle decreased 2.2 percent in March from March 2007, while pending sales dropped 29 percent over that period, the Seattle Post-Intelligencer reported. However, other facets of the market in and around Seattle are looking up: The median price for in-city condominiums increased 4.9 percent in March from February, and the median price of single-family homes in the outlying King County grew 2.3 percent. The market is still glutted, though, with 61 percent more condo listings in Seattle, and 64 percent more in King County, than last year.

Washington, D.C.

Numerous municipalities, schools and hospitals in Washington, D.C., are experiencing the fallout of the subprime mortgage crisis as interest rates on unconventional bonds begin skyrocketing, the Washington Post reported. Interest rates have doubled — even tripled — in the District on $601 million of these bonds, leaving an extra $1.2 million in debt payments on the city’s plate every month. City officials said investment banks convinced them that the unconventional bonds, known as auction-rate securities, would be safer and cheaper than traditional borrowing, but the market for these bonds collapsed. Affected bodies include the Washington Nationals’ new stadium, Georgetown University and Johns Hopkins.

Crane accident prompts new rules

A crane collapse at the end of March at the construction site of a Miami high-rise killed two workers and injured four. The crane fell 30 floors at the site of a luxury condo called Paramount Bay and crashed through the roof of an adjacent two-story house that Bovis Lend Lease, the project’s contractor, was using for storage. The house had also been used in the film “There’s Something About Mary.”

The event expedited an ordinance regulating crane inspection and operator certification originally introduced in 2006. Prior to the law’s passage, tower cranes and their operators did not require licenses. The new measure requires workers to pass both
written and practical examinations before using cranes.

Foreclosures up in South Florida

The number of new foreclosures in Miami-Dade County was up 14.9 percent to 2,231 in the first quarter of 2008 compared to the previous quarter, according to a report by real estate research firm PropertyShark.com. This figure represented a 126 percent increase from the first quarter of 2007, when there were 987 new foreclosures. Miami had a higher number of new foreclosures per household than the three other cities surveyed in the report: New York, Los Angeles and Seattle.

Meanwhile, the Cape Coral-Fort Myers metro area had the highest foreclosure rate in the country in February, according to a report by research firm RealtyTrac. The area’s 3,739 homes in foreclosure represented about one per 84 households, a rate almost seven times the national average.

Palm Beach home sells for $81.5M

Sidney Kimmel, movie producer and founder of the Jones Apparel Group, received the full asking price of $81.5 million for his Palm Beach mansion after only 24 days on the market. The price set a record for the county.

The 80-year-old billionaire had bought the 5-acre waterfront property for $5.5 million in 1993 and added a limestone villa. Around the same time as Kimmel’s sale, Donald Trump reduced the asking price on his Palm Beach estate to $100 million from $125 million after two years on
the market.

State proposes property tax change

Florida’s Taxation and Budget Reform Commission approved a proposed property tax amendment to appear on the November ballot, which would reduce the amount of property tax used for school budgets, and cut real estate tax by about 33 percent in Miami-Dade County and 36 percent in Broward. The state legislature will have to decide where money to replace the lost revenue will come from, but it is likely to include sales tax hikes and budget cuts elsewhere.

Also, the Senate Judiciary Committee voted unanimously to approve a bill that would close a loophole that has helped real estate investors save millions of dollars in property taxes since a state Supreme Court ruling in 2005. Since the ruling, companies have forgone paying a 0.7 percent documentary sales tax on trophy properties. The bill awaits approval by the Senate Finance and Tax Committee.

Palm Beach prices show uptick

The median price of a single family home in Palm Beach County was up slightly to $344,600 in February, from $343,200 the month before, according to the Florida Association of Realtors. Condo prices in the county were also up slightly, to a median of $159,300. The median price for a single family home in Martin and St. Lucie counties fell slightly to $172,900, from $175,300 the month before. The median condo price on the Treasure Coast dropped 37 percent to $126,700, from $200,000 in January.

Home resales were generally down in February from the year before, to 401
in Palm Beach County in February and
360 in Broward, according to the Florida Association of Realtors. The median price also fell in both counties year over year, down 15 percent to $307,700 in Broward, and down 8 percent to $344,600 in Palm Beach County.

GL Homes closes on 1,000 acres

GL Homes has closed on a purchase of 1,068 acres of land for $117 million. The land, which lies west of Delray Beach, was under contract during the real estate boom, but didn’t close until last month. According to plans submitted to county officials in 2005, GL plans on allowing half the land to remain farmland in accordance with county rules. Industry leaders said the company may be stocking up on land for use after the recession when land becomes scarce again.

West Palm Beach initiates foreclosure assistance program

West Palm Beach has announced a $1 million program to help homeowners avoid foreclosure. The program, which is being fueled by a developer-funded city trust fund and grant money from the U.S. Department of Housing and Urban Development, will offer up to $10,000 in emergency assistance to eligible city residents. Alternatively, the new Foreclosure Assistance Center will help owners sell their homes if they are worth less than the value of their mortgage.

Now that Gowanus’ infamous calling card, the smell of raw sewage emanating from the canal, is gone, and developers are touting grand plans for the area, artists and manufacturers are fighting to preserve some of the unique aspects of the Brooklyn neighborhood.

Advocates for artists and manufacturers are pushing for a special zoning provision requiring ground-floor light manufacturing space in new residential projects. Without this change, critics say Gowanus will see its industrial and creative culture ebb, as some charge has happened in places like Soho, Dumbo and the Meatpacking District.

The Department of City Planning is considering rezoning 60 industrial blocks, 25 of which would allow housing to accommodate developers’ plans. The draft proposal is expected to be presented this month.

Developers have already staked their claim on many of the prime blocks. More than 2,500 waterfront apartments are proposed, most awaiting City Planning’s decision to rezone the area. Renderings envision a waterborne transportation system of water taxis and kayaks, a modern-day Venice, and a lush green promenade dotted with miniature parks instead of the muddied trash now lining the canal.

In addition, seven hotels have opened or are planned for the area. Lowe’s and Pathmark opened a few years ago, while Whole Foods, the yuppie Holy Grail, is still awaiting permits for a location along Third Avenue.

Time Equities executive Phillip Gesue, project manager of Sunset Market, a manufacturing, wholesale and big-box retail hub being built in Sunset Park, said Gowanus’ “neat industrial buildings and a really beautiful body of water” make it prime
for development, but its gritty aesthetic would have to be tweaked to appeal to the typical homebuyer. “Artists are 5 percent of the people who look for residential space,” he said. “The Meatpacking District was not heavily populated when it smelled
like beef blood.”

Artists and manufacturers, meanwhile, have joined forces lobbying the city to protect their space. “The Gowanus Canal is just sort of an amazing place,” said Sasha Chavchavadze, co-owner of the gallery Proteus Gowanus. “It’s still a neighborhood that hasn’t been transformed into something else the way Dumbo and other neighborhoods have, although I fear it may be headed in that direction.”

The neighborhood is full of old warehouses, trash heaps and industrial silos. According to AGAST, the group that holds the Annual Gowanus Artists Studio Tour, an estimated 500 artists work in neighborhood studios, including prominent artists Tom Otterness and Julian Schnabel. Also, a handful of nightspots, including offshoots of popular Park Slope haunts Union Hall and Bar Toto, have recently opened or are scheduled to open this summer along a canal where an increasing number of people are canoeing every year (see More places to see art, party in Gowanus). Funky shops have opened up, and a broker is marketing two large warehouses for a downsize Chelsea Market-style retail space with room for manufacturers.

Pratt Center for Community Development director Brad Lander said he is not optimistic that the city will be more responsive this time. He said, “We’ve been advocating stronger manufacturing protections and more mixed-use zoning for seven years, and they haven’t done it.” In addition to mandatory mixed-use, he’s pushing for a ban on hotels, big-box stores and large offices in industrial areas.

Brooklyn City Planning office director Purnima Kapur said those suggestions are not being considered.

“The way zoning works and planning works, it’s looking at areas that are appropriate for a set of uses in the long term,” she said. “The market will determine if and when those uses will change.”

Gesue said mandatory mixed-use “makes it tougher to finance in this environment, no doubt about it.” He said, “My guess is that residential on the ground floor is a little more profitable, but on the other hand, in the long term, light manufacturing is what’s going to create that flavor.”

Hudson Companies project manager David Kramer said Gowanus is an appealing place to live, “even with today’s status quo.”

His firm’s 44-unit townhouse-style condo project Third & Bond is under construction in an as-of-right location, and the city just awarded it the right to build 774 apartments at a 6-acre site. They may have the option to build 500 more by teaming up with an adjacent property owner.

Toll Brothers started the process this spring of applying for a spot zoning variance to build 447 apartments along the canal. David Von Spreckelsen, vice president, said the project is a favorite among company executives for its proximity to brownstone Brooklyn. He said, “They also see the great potential because, despite what many people in the community will say, there’s really underutilized property.”

Two other developers, the Katan Group and Bayside Fuel Oil Depot, are awaiting a decision on the neighborhood rezoning in hopes that they can build a combined 900 apartments.

Retail the first pioneer

Gesue said Gowanus is also ripe for more destination retail. “The destination retailers work very well in this area because it’s very quiet on the evenings and weekends, and that’s often the times these places will get peak traffic.” As a result, shoppers driving in won’t be stuck in traffic, he added.

Some small, artier shops like PictureBox, a Grammy-winning publisher operating at Third and Bond streets, have opened. Across the street, Massey Knakal’s Ken Freeman is marketing two buildings — one for $15 million and the other for $10 million — as home for a manufacturing and wholesale shopping venue similar to the Chelsea Market. “To me, you have to use the water,” he said. “If you have a little promenade on the water and a café over there, I think you’d be amazed at the amount of people who would sit and eat by the water, or take laptops and work there all day.”

As Gowanus develops, so do its hipster venues. Danny Tinneny, the son of a large landowner on Carroll Street, is opening a coffee shop and wine bar on Carroll Street and the canal this summer, with plans for live music and outdoor seating. Across the street is an old oil silo and yard that for the past three years has hosted performances, movie screenings and festivals. MeanRed Productions took over the venue last year, while former organizers ISSUE Project Room moved to an old can factory across the canal.

Nearby, Gowanus Yacht Club, a restaurant with a menu of frankfurters and wine and beer in disposable cups, is a favorite hangout for the Gowanus Dredgers canoe club after a long night on the canal, said member Ellie Hanlon. “It gets totally packed. It’s great place to sit outside and drink beer.” She said the club has more than 100 members and is growing.

In the more heavily industrial area on the Park Slope side of the canal is newly opened Bar Tano, an offspring of Park Slope’s Bar Toto. Stumbling distance away, another popular Park Slope bar, Union Hall, is opening a 5,000-square-foot venue. Union Hall owner Jack McFadden said even he was surprised by his stroke of good luck picking a location. “We signed the lease way back in September. I don’t think any of us involved had any idea that Gowanus would be coming up so quickly.”

Brendan Aguayo of Aguayo & Huebener Realty Group said he expects more drinking spots to open in the industrial districts, making Gowanus a haven for warehouse parties turned legitimate establishments, similar to the transformation that has taken place in the Meatpacking District. “It’s the perfect area for nightclubs, because you don’t have residential neighbors,” he said.

Some people imagine Gowanus becoming the next hot spot for art opening crawls capped off by a night of drinking and dancing. “You’re going to see more individual buildings or individual spaces emerge, kind of like the art galleries and little café [that's] coming to Carroll Street,” said Bob Zuckerman, president of the Gowanus Canal Conservancy.

One place for up-and-comers is Brooklyn Artists Gym, similar to a sports club except that paints, not sweaty socks, are stored in lockers. “We’re one of the only studios that has gallery space. I wish there was more gallery space, but one of the difficulties is getting people to come from Manhattan,” said owner Peter Wallace.

Over the past five years, Lower Manhattan has become one of the city’s
fastest-growing residential areas. But some observers say that the boom
has peaked and that the area might be due for a Wall Street-influenced
bear market. [more]

The Manhattan office market is still wallowing in a slowdown that is expected to continue, though many brokers bet Midtown South neighborhoods will weather the storm better than their neighbors to the north and south, a shift largely attributed to its lower rents.

CB Richard Ellis reported average rents in the $40s in Midtown South throughout last year, making it an attractive alternative to Midtown, which reached peak average asking rents in the $80s.

The Midtown South market saw extremely low vacancy rates throughout
2007, as low as 4 percent in the spring of 2007, according to reports from CBRE.

The same trends can be seen in data collected by Colliers ABR, which had a higher estimate of the vacancy rate and slightly lower estimate of average asking rent (see chart on right).

While vacancy rates have clearly crept up in recent months, businesses looking
for less costly space in an uncertain economy could help boost leasing activity in
Midtown South’s neighborhoods — including Penn Plaza, the Garment District, Flatiron and Soho — and help the area avoid the substantial rent reductions predicted for Midtown and Downtown over the next six months.

“There is a big difference between the per-square-foot drop you may see in Midtown South, and the per-square-foot corrections you can expect in the northern Midtown market,” said Fred Posniak, senior vice president of W&H Properties, which manages properties both on the northern edge of Midtown South, including the Empire State Building, and in Midtown. “The prices have escalated more in Midtown, and they will drop more there on a percentage basis in the next six months as a result.”

He said that in the Penn Plaza District, neither W&H nor its competitors have reduced rents.

Midtown South, as defined by research firm CoStar, includes the Penn Plaza/
Garment District, Chelsea, Flatiron, Gramercy, Hudson Square, Soho and Greenwich Village.

Esther Zar, vice president of the tenant representative agency Metro Spire, observed that certain niche submarkets in Midtown South cater to such “culture-specific” prospective tenants — creative media and advertising businesses seeking open lofts, for example — that they have been able to hold higher prices. She includes Flatiron, Union Square and Soho in this list. “Certain tenants will go there, and they will go there no matter what,” she said.

Another reason why Midtown South may fare better in coming months: The companies hit most directly by the credit crunch, those in the financial services, are located mainly in large spaces in upper Midtown and Downtown.

Posniak predicts that the Sixth Avenue corridor in Midtown, from 42nd Street to Central Park, will see a significant slowdown in leasing throughout the remainder of the year. “There will be less 800-pound gorillas, the ones who eat up 30,000- to 100,000-square-foot spaces.”

His point is backed by data. The first quarter of 2008 saw a noticeable slowdown in leasing of large spaces, over 30,000 square feet; the market for smaller spaces, however, has remained healthier, and many experts expect this trend to continue.

Matt Bergey, senior associate at CB Richard Ellis, believes that most large tenants will hesitate more, and hold off on signing leases until at least the third quarter to the end of 2008.

This trend will boost areas with
smaller floor plates, which largely includes Midtown South districts. They’ll fare better than their big-space counterparts, experts said.

“If you look at buildings down there [in Midtown South], they have anywhere between 2,000- and 5,000-square-foot floor plates, and a lot of them are smaller,” Bergey said. For loft space on side streets, floor plates can average 4,000 to 8,000 square feet in Midtown South, according to Zar.

Some outliers exist, including 111 Eighth Avenue and 601 West 25th Street in Chelsea, which have extremely large floor plates. Bergey said these buildings are likely to suffer from the tenant slowdown as well.

But for the most part, the office buildings in Midtown South neighborhoods have smaller spaces than in Midtown and Downtown, and tenants looking for smaller locations often behave differently than their larger counterparts when searching for space.

“Smaller tenants are more flexible than larger ones, because their decision-making is more nimble,” said Howard Dolch, executive vice president of Lansco.

Abie Hidary of Hidrock Realty, which specializes in spaces between 3,000 and 10,000 square feet, said that tenants in that range are still signing leases.

In the past few years, Midtown South has seen a slew of office buildings converted to residential. The conversion of 141 Fifth Avenue in the Flatiron District to high-end residential condominiums is a recent example.

The effect of this has been twofold: It both decreases the amount of office space available for leasing in the market as it brings more people to the area, making it a more desirable place to live and work.

“There are so many office buildings that became office condos or residential [in Midtown South] that even ignoring the increased demand there in the last year, we would have seen escalating rents just from the decrease in supply,” said Matthew Astrachan, executive vice president at Cushman & Wakefield.

And in the footsteps of new residential projects, an addition of restaurants, retail and other neighborhood amenities has turned many areas between 14th and 42nd streets into 24-hour communities.

“The area around Seventh Avenue, from 27th to 34th Street, is seeing more higher-end retailers and banks moving in,” Zar said, mentioning a Washington Mutual moving in to Seventh Avenue and 30th Street.

“In terms of tenant desirability, Midtown South has great access to both Penn Station and Grand Central, and now it has more amenities, making it more socially acceptable,” said Barry Hersh, clinical associate professor at New York University’s Real Estate Institute.

Beside the price point, Dolch points out an often overlooked advantage to areas south of 42nd Street. “Very often I run into clients who, price notwithstanding, prefer being in Midtown South because you’re not surrounded and closed in by high-rise buildings,” he said. “The scale is more humane.”

JPMorgan Chase’s federally backed buyout of Bear Stearns in March
may have averted a meltdown on Wall Street. But at the other end of the
subprime mortgage crisis are neighborhoods like Brooklyn’s Brownsville
and Ocean Hill, where an increasing number of homeowners are also
desperately hoping for rescue. [more]

Development that’s remaking pockets of New Jersey’s Hudson County has taken hold in West New York.

But the revamping of the mostly immigrant, working-class community is
following two tracks: higher-end projects for the waterfront area,
which has been revitalized by the Port Imperial project, and smaller
projects along interior streets that still retain a blue-collar feel.

But both these high-end and more modest visions are getting clouded by
the national economic slowdown. Sales of new construction have trailed
off throughout the town of 46,000, and brokers report declining prices
at smaller projects.

Prior to the economic crisis, new construction was already less
expensive than other northern Hudson County hotspots. Expanded
transportation options drew buyers to West New York. The 2005 expansion
of the Hudson-Bergen Light Rail into the town, prompted in part by Port
Imperial’s development, helped spur other development in the area. The
light rail connection means the PATH stations in Jersey City and
Hoboken are 15 minutes away. There is also a ferry from Port Imperial
and commuter buses that access Manhattan.

Buyers “are willing to sacrifice [the amenities and proximity to
Manhattan of] Hoboken or downtown Jersey City,” Len Turi, a broker with
Century 21 Turi Realty in West New York, said. “With the light rail,
they can get to the PATH or the ferry.”

Elayna Center, a sales agent with Remax Villa in West New York, said
many more affluent New Yorkers have turned to West New York. They’ve
also headed to other northern Hudson communities, including Guttenberg
and Weehawken, in search of more space at prices lower than Manhattan.
Many of Center’s clients looked in Jersey City and Hoboken before
casting their eyes farther north.

“It’s gotten very expensive in Hoboken and Jersey City,” Center said.

The jewel of new development is Roseland Property Company’s Port
Imperial project, a two-mile-long planned community along the Hudson
River that spans the three adjacent waterfront communities of West New
York, Guttenberg and Weehawken. The developer has built 6,000
townhouses, condos and apartments, and new properties are still coming
online. Henley on Hudson, a new project next to the Port Imperial Ferry
Terminal in Weehawken, is opening for occupancy within months, with
multimillion-dollar townhomes and condos under contract.

The Port Imperial development has brought new retailers to the area.
Center said River Road, which runs through Weehawken, West New York and
Guttenberg, has gained new shops and restaurants like Whole Foods and
Starbucks.

The interior portions of West New York, though, are served by
Bergenline Avenue, a retail strip that feels largely untouched by
development. The street is a mix of mom-and-pop stores, ethnic
restaurants, 99-cent stores and fast-food franchises, and there is not
a Starbucks in sight for a population where 80 percent of people rent
and earn an average household income of $34,000.

Turi said many of the lower-priced condo units in West New York start
at $200,000 for a one-bedroom. Newer construction, especially in Port
Imperial, can push prices up to the $600,000 range for a larger
apartment without a view, and more for a better view of the city.
Center noted many clients are willing to pay in the high six figures
for city views.

In comparison, new construction in Hoboken runs somewhat higher. The
113-unit, 10-story Metro Stop by Metro Homes, at Ninth and Jackson
streets, right by a light rail stop, has one-bedrooms with 786 square
feet starting at $400,000; two-bedroom with two baths start at
$600,000.

The housing stock in the other, interior section of West New York is
mostly single or two-family homes with a handful of towers, some on
John F. Kennedy Boulevard East, or Boulevard East, as the locals call
it, some of which have been renovated recently. Many have striking
views of Manhattan across the Hudson River.

Away from the waterfront, Turi said West New York’s new development
projects are typically smaller-scale buildings by local developers who
have purchased a few houses to assemble parcels of land. These are
mostly multi-unit developments and don’t have the pools or doormen of
their riverfront counterparts, though they can have upscale finishes in
the units.

While new construction offers more upscale inventory, “this is a blue-collar town,” Turi said.

Marie Episale, a sales agent with Century 21 Crest in Pompton Plains,
is representing new smaller-scale condo development in the interior
section of West New York. One project is a 60-unit development by
Capodagli Properties, a block off the main drag, Bergenline Avenue, and
four blocks from the waterfront.

The Capodagli project has set aside 20 units for senior citizens. The
project’s units start in the $200,000 range with amenities such as
modern kitchens, hardwood floors and large closets.

Episale noted that Capodagli is currently planning another condo
development in West New York, featuring over 100 units, a few blocks
from Bergenline Avenue. The buyers are mainly New York commuters who
may be priced out of Port Imperial.

“In Port Imperial, it is more expensive,” Episale said. “But some of
the people buying in the interior want the sense of community. They
want to walk to the store. When you are at Port Imperial, you have to
drive to it.”

But the economic slowdown is taking its toll on West New York. Episale
said that while the Capodagli condos were priced in line with the area,
the prices have dropped a bit recently. Center noted that Port Imperial
will most likely see a drop in sales volume, along with the rest of the
Gold Coast communities, as many of the buyers come from the hard-hit
financial sector.

“You have the Bear Stearns [collapse], and that will have thousands of
people out of work,” Center said. “Everyone is putting a hold on
buying.”

As construction safety becomes an increasing priority, building contractors and developers throughout the five boroughs are feeling the effects of the city’s recent inspection crackdown in their wallets.

Industry experts say the multi-day or multi-week work stoppages that sometimes follow an inspection can cost a developer or contractor millions of dollars in loan interest payments, rental costs of machinery and lost labor. And now, after several high-profile accidents — including the East Side crane collapse that killed seven people in March — and the resignation of the Department of Buildings’ commissioner, Patricia Lancaster, last month, the crackdown is likely to intensify.

Days after stepping in, Robert LiMandri, who was named acting buildings commissioner in the wake of Lancaster’s departure, said the city is prepared to
issue more stop-work orders if necessary.

“If safety rules are not observed and sites are unsafe, our inspectors are prepared to stop work until the sites are made safe. … Nothing gets an owner’s attention like a stop-work order, as the cost of construction delays can run into the tens of thousands of dollars per day,” LiMandri said during testimony to an Assembly committee.

Last year, construction sites throughout the city got slapped with 9,929 full and partial stop-work orders. That was up from 6,829 in 2006 and 3,319 in 2005, according to data from the DOB. Meanwhile, so far this year, 13 people have died in city construction accidents, including at sites like the crane collapse and the Trump Soho building, where a worker fell 42 stories to his death after a concrete molding collapsed. Those casualties compare to 12 in all of 2007.

The Trump Soho project was shut down for six weeks until the DOB partially lifted the stop-work order on Feb. 21. The partial stop-work order was still in effect at press time, according to the agency.

While there seems to be a consensus that more needs to be done to stem accidents and beef up safety, especially with so much building going on throughout the city, stop-work orders can lead to mounting bills. Contractors can face financial penalties from developers if their schedules are pushed back, and for developers, a delay in a project could mean missing their target market.

“We’re struggling to get our arms around this process because we’re all focused on the same goal [of safety], but the financial consequences and the time it takes to address the remedies for a particular stop-work order have tremendous financial implications,” said Louis Coletti, the president of the Building Trades Employers’ Association.

To put an actual price on the cost of a stop-work order depends on a host of factors, including how long the suspension is in effect, how far along the project is, how much of the construction loan has been drawn down and the kind of interest costs a site is carrying, explained Marolyn Davenport, a senior vice president at the Real Estate Board of New York.

“It could be $15,000 a day, or it could be almost $1 million a day for a really large site,” Davenport said. “It’s a huge variation. It’s just impossible to quantify.”

The DOB has hired nearly 150 new inspectors in the last six years. In fiscal year 2008, there are 426 budgeted inspectors, up from 278 in 2002. According to LiMandri’s Assembly testimony, by the end of the year, all inspectors will have hand-held computers with access to property information, including a history of violations.

Joel Klein, a developer in Williamsburg, recently discovered that if a project is delayed for an extended period of time, interest on loans starts to get expensive.

Klein said last year, the DOB approved a design for a seven-story Williamsburg condo project he was involved in, but that a department inspector later rejected the plan when he toured the site. The original design called for the building to rise 70 feet from the street without a setback, but, according to Klein, the department decided it needed a 10-foot setback from the street, or the building had to nix its seventh floor.

Klein said the eight-month stop-work order, which went into effect when the project was 70 percent complete, cost $1 million in loan interest costs. He said the two sides struck a deal that made no major changes to the original design.

The bank, Klein said, was “very upset.” Also, the project was hurt because it ended up hitting the market at a weaker time. “It was the best time of the market for Williamsburg, but now it’s not,” said Klein, who declined to specify the address of the building.

David Schwartz, principal of a local development firm in Williamsburg and a colleague of Klein’s, said he understands the need to put a hold on construction sometimes, but that getting things back on track can be frustrating and costly. “Everyone can understand safety, but it’s not always safety,” Schwartz said. “There’s definitely a need for [stop-work orders] to make sure that people are following the rules. My only gripe is getting them to come back once it’s fixed.”

Schwartz said he was working on a new 30-unit condo in Williamsburg last summer when a stop-work order over a building code discrepancy prompted a three-and-a-half-week halt in construction. He said he submitted and got approval for an underpinning plan, or the explanation for how his project would stabilize neighboring buildings during construction. But when construction began, the department changed procedures, and an inspector wanted more detail.

“We were able to update the drawings within a few days, but because there are only so many building inspectors, it took three and a half weeks to get them out again,” he said.

Coletti said what is most confusing to the industry are the discrepancies over why the stoppages are issued and the time it takes to get them lifted. “Right now, what seems to be going on is clearly, when there’s a safety violation, the Buildings Department issues stop-work orders. [But] there are times stop-work orders are administered for administrative reasons,” Coletti said.

Industry leaders said it’s not the violations that upset them; it’s the time it takes for inspectors to return to the site and lift them. Currently, representatives from the industry, including Davenport, are in talks with the city to draft standardized procedures for lifting stop-work orders.

Davenport said the process is laden with paperwork and is “very cumbersome.” Oftentimes, she said, a stop-work order is lifted but then put back in place or not updated in the computer system right away, leaving the construction site in limbo.

“The lack of standard procedures for getting a stop-work order lifted is a problem,” she said. “No one knows exactly what the procedures are, and they change from one project to the next. Papers get lost.”

A spokesperson for DOB, Kate Lindquist, said, “The department issues stop-work orders when safety hazards pose dangers to the workers and the public. Contractors can avoid stop-work orders by prioritizing safety instead of ignoring it.”

Meanwhile, developers said one of the biggest problems they face when slapped with a stop-work order is the threat of missing their target market. “We haven’t yet seen the depth of some of the problems in the housing market that are occurring in other parts of the country, but who’s to say that we won’t?” Coletti said. “All of that becomes critical to the timing of when a developer knows his project will be completed and when he can start renting or selling those units.”

Other problems arise when workers, sent home after a site is shut down, find work elsewhere the next day. Coletti said once the order is lifted, new workers must be trained for the project.

Industry experts said there are too many moving parts to prevent work stoppages and that many construction budgets leave wiggle room. But while developers work some of those possible costs into their budgets, it is impossible to predict the future, said Richard Anderson, president of the New York Building Congress.

“There are contingencies built in, but construction can be quite unpredictable,” he explained. “Some of the accidents we’ve had in the last few months have been extraordinary, and there’s no way you can price that in. If you price that into every job, a lot of construction would not be undertaken.”

City Council majority denounces Willets Point plan

The seven-month review process for the 61-acre redevelopment of Willets Point got off to a rocky start last month, as 29 New York City Council members formally denounced the plan as “deeply flawed.” In a letter to Deputy Mayor of Economic Development Robert Lieber, the Council members cited the displacement of 250 businesses and the lack of affordable housing as unacceptable. “If the plan does not meet basic standards of public benefit, there can be no justification for this broad use of public authority and funds, and we will not allow the redevelopment to take place,” the letter read.

Lawsuit targets Brown Harris Stevens over rentals

Renters last month filed a class-action lawsuit against Brown Harris Stevens for discouraging families with children to lease certain properties, in violation of the Fair Housing Act. Brown Harris brokers allegedly claimed that homes were not fit for children because of lead paint and refused to show them on that basis.

Greenwich, Conn. sees foreclosures spike

Foreclosures in Greenwich, Conn., one of the richest towns in the tri-state area, have increased recently, the New York Times reported. Foreclosure notices were up to 34 there in January, from an average of six in previous months, according to data from RealtyTrac. Sales are down too, with 160 condos, co-ops and single-family homes sold through April 23 this year, compared to 240 over the same period in 2007.

City evictions, possessions reach 10-year high

Evictions and possessions in New York hit a 10-year high, according to new figures reported in an annual housing survey by the New York City Rent Guidelines Board. The numbers do not appear to be driven up by the city’s wave of foreclosures, but by an increase in city marshals, who enforce evictions, said Ken Kelly, executive director of the New York City Marshals Association. The increase in evictions could be tied to aggressive landlords seeking higher rents, according to experts.

Harlem’s 125th Street rezoning wins key vote

The rezoning of Harlem’s 125th Street commercial corridor appears headed toward approval, after the City Council’s influential land use subcommittee on zoning and franchises last month voted 9-1 to approve a modified plan. Tony Avella, a Queens Democrat and chair of the subcommittee, cast the lone opposing vote. Critics say the zoning to allow more building would lead to small businesses being displaced.

Tudor City residents fight Solow’s plans

The residents of 5 Tudor City Place announced a lawsuit against the City Planning Commission to stop Sheldon Solow’s $4 billion development of the former Con Edison site, AM New York reported. The suit alleges that in approving Solow’s plans, the City Council and Planning Commission ignored the wishes of the local community board, which expressed fears the project will cause noise and pollution during construction and overshadow Tudor City once it is built. Solow’s plans call for 3,000 apartments and 1 million square feet of commercial space on First Avenue between 35th and 41st streets.

Nouvel’s MoMA tower panned at hearing

At a Landmarks Preservation Commission meeting last month, opponents slammed the Tower Verre, designed by French architect Jean Nouvel and planned for 53 West 53rd Street. The 75-story tower would include apartments, a hotel and gallery space for the Museum of Modern Art. At 1,155 feet high, the tower would be about 100 feet taller than the Chrysler Building. The local community board called on the commission to reject what it called an “eccentric, asymmetrical tower.” State Senator Liz Krueger said that the tower “would be grossly out of scale with the other buildings in the area,” the Times reported.

City landlords say a new law that makes it illegal for them to turn away tenants who use Section 8 vouchers to pay their rent is going to cost them both time and money.

“I have two people who work full time in my office whose sole responsibility is to deal with tracking money owed by Section 8,” said Mark Engel, who owns 8,500 units, about 1,500 of which are rented to tenants using the voucher system.

“It places an unfair burden on property owners,” said Engel, whose apartments are in four boroughs of New York City and in lower Westchester. “We’re a large company, and we can handle it. A smaller owner can’t carry the arrears or keep up with the paperwork.”

The law passed the City Council in late March and was implemented immediately. Mayor Michael Bloomberg, who vetoed the law before the council overrode him, said that while he supports the expansion of the Section 8 subsidy program, this approach unfairly turns a voluntary federal program into a mandatory one.

The vouchers, issued by the Department of Housing and Urban Development and administered by local agencies, pay landlords up to 30 percent of a tenant’s monthly adjusted gross income for rent and utilities. To qualify in the city, the current income threshold is around $38,000 a year for a family of four. The tenant makes up the difference in the rent of the market-rate unit.

While housing advocates have applauded the move as a groundbreaking measure that will give lower-income tenants more options, the landlord community is looking into the possibility of a legal challenge. New York City currently has roughly 85,000 Section 8 residents and expects to add another 22,000 to the system.

“We think there are grounds for legal action, but we haven’t determined if we will proceed,” said Frank Ricci, director of government affairs at the Rent Stabilization Association, which represents landlords.

The chances of overturning the law seem unlikely. Several other cities (including Washington, D.C., and Chicago), along with the state of New Jersey, mandate that landlords accept Section 8 vouchers. Court rulings have upheld state and local laws.

Engel said he knows of several Section 8 horror stories, like the tenant who refused to allow access to an apartment even though it needed significant repairs. While the tenant held out, the voucher payments ceased, and the landlord lost six months of rent.

Engel also said some annual lease renewals aren’t processed for two or three years, and the voucher payments don’t reflect the increases. He noted the new law, which allows tenants who believe they have been victims of discrimination to file a claim before the city’s Commission on Human Rights, has negative implications for all landlords.

“I’m concerned about if I turn down tenants for bad credit or for not paying rent, and before we get to housing court, they take me to the commission and blame it on Section 8 — and not the real reason why they’ve had housing problems,” Engel said.

The country’s two largest sources of mortgage money have a blunt warning for anyone thinking about joining the growing “walkaway” trend, where homeowners stop making payments and months later send the house keys back to their lender: You will feel the pain.

On March 31, Fannie Mae sent out new guidelines to lenders aimed at walkaways and other foreclosure situations. Fannie will now prohibit foreclosed borrowers from getting another mortgage through the giant investor for five years, unless there are “documented extenuating circumstances.” In those cases, the mortgage prohibition is for three years.

Even after five years, borrowers with foreclosures in their files will be required to make at least a 10 percent down payment, and will need minimum FICO credit scores of 680.

Freddie Mac, Fannie’s rival, counts foreclosures as major credit blots for seven years, and a senior official said the company is now aggressively pursuing some walkaway borrowers “to preserve our deficiency rights” where permitted under state law.

The walkaway trend is particularly noteworthy in former housing boom markets — California, Florida and Nevada, among others — where many homeowners find themselves upside down on their loans, owing tens of thousands more than the current market value of their houses. If they invested little or nothing in down payments, some owners reason, continuing to make payments — even if they can afford to — may be throwing good money after bad.

A number of Web sites have popped up this year claiming to cut the hassles of bailing out of a mortgage. One company promises that clients “will be able to live in (the) home for up to eight months with no mortgage payments,” after paying $895 for a customized plan. The same site says it will provide clients with “legal credit repair” to “improve your FICO scores.”

Another Web site claims that “your credit can be repaired and (you will) be able to purchase a house in as few as two years” — after paying a $495 fee. Still another company says walkaways can expect “up to one year living payment-free” as the lender goes about filing for foreclosure. That company charges $995 for its how-to kit.

Fair Isaac Corp., developer of the FICO scores used in most mortgage transactions, is unhappy at any suggestion that a foreclosure could be minimized or wiped away in a short period of time. Its scoring model counts foreclosure as a long-standing and severe event, nearly comparable to bankruptcy, with negative consequences for all forms of credit that walkaways might seek to obtain. That includes credit card applications, auto loans, student loans and even insurance and employment.

FICO spokesperson Craig Watts said that the impact of a foreclosure on an individual’s score depends heavily on the payment history, length and number of credit tradelines in a consumer’s file, but “it is always significant.”

Robin Stout Migala, consumer outreach manager for Freddie Mac, said in
an interview that “there are so many bad reasons for walking away” from a home loan. Not only are borrowers’ credit standings wrecked, forcing them into excessively high interest rates on any credit they can manage to obtain; they also face other potential problems, including federal income tax liabilities.

Federal legislation enacted last year allows homeowners who negotiate loan modifications with lenders and have portions of their principal debt eliminated to escape income tax liability for the amount forgiven. Walkaway borrowers, by contrast, have nothing forgiven, and the IRS may demand income taxes on the balance they never paid, according to Migala.

Migala said many borrowers facing foreclosure today have endured serious financial crises — loss of employment, loss of an income-earning spouse, medical issues, predatory loan terms — that led to their inability to make mortgage payments.

When they apply for a loan from either Freddie Mac or Fannie Mae, she said, the standard application form asks whether they have ever experienced a foreclosure or handed over their deed in lieu of
foreclosure.

If applicants check “yes,” the loan is immediately shifted to manual underwriting. Every piece of information is scrutinized by underwriters, who probe for the facts surrounding the loss of the house.

For borrowers who faced genuine financial hardships leading to foreclosure, underwriters are likely to be more sympathetic a few years down the road. But
if you walk away, here’s the deal: Don’t
expect to get a new home loan, certainly not one with favorable terms, for five to seven years.

That’s no matter what some promoter online promised you.

Ken Harney is a real estate columnist with the Washington Post.

Partisan politics aside, presumptive Republican nominee John McCain proposed something last month that no other major presidential candidate has advocated in decades: raising minimum down-payment levels for home mortgages.

No more zero-down deals. No more “piggyback” plans that combine 90 percent first loans with 10 percent seconds.
No more “down payment assistance” schemes where sellers indirectly supply all or most of the cash needed for the buyer’s down payment.

Even the 3 percent minimum required by the Federal Housing Administration would be raised under McCain’s plan. That puts him squarely at odds with the Bush administration and Democratic leaders in the House and Senate who are currently negotiating reform legislation that would cut FHA’s minimum to zero, favored by
the House, or 1.5 percent, favored by the Senate.

Proponents of low FHA down payments say they are necessary to allow moderate income families to purchase first homes, and that if properly underwritten and serviced, they do not lead to extraordinarily high
default or foreclosure rates.

McCain also said the giants of the mortgage industry, congressionally chartered Fannie Mae and Freddie Mac, “should never insure loans when the homeowner clearly does not have skin in the game.” He did not specify how much skin would be needed.

McCain’s rationale on tightening up down payments: He thinks a key contributing factor to the current national mortgage crisis was the tiny — or nonexistent — equity contributions required by lenders during the boom years. When the boom fizzled and home values fell, many borrowers found themselves in negative equity positions, owing more on their mortgages than the market value of their homes.

Though neither of his potential Democratic opponents nor the White House has commented on the McCain proposal, efforts to rein in down-payment minimums already are under way by major private mortgage lenders and insurers. Fannie Mae and Freddie Mac both have raised fees on new loans where borrowers have less than 25 percent equity. They also have increased minimum credit scores for low-equity mortgages.

Private mortgage insurers have tightened availability of new loans with less than 5 percent down by sharply raising credit standards for applicants, and refusing to underwrite such loans in markets they designate as “declining.”

The emerging trend in the private marketplace reverses one of the hallmark practices of the housing boom years. When the National Association of Realtors surveyed thousands of first-time buyers in late 2004 and early 2005, it found that a stunning 43 percent had put no money into their purchases. The same study documented the median down payment by first-time purchasers at just 2 percent, which dropped to 1 percent in high-cost areas such as California where zero-down piggyback plans were wildly popular.

The net result, as the real estate market began turning in mid-2005, was that large numbers of people started their home ownership experiences underwater. Research by a subsidiary of First American Corp. found that by 2006, one out of 10 households that took out loans the prior year were already at a zero or negative equity position. Another 5 percent were in negative territory by 10 percent or more, with mortgage debt balances at least 10 percent higher than the market value of their properties.

The same study found that one out of three purchasers nationwide had an equity cushion under 20 percent. Forty-four percent had less than 30 percent equity. Areas where owners had the least equity — California, Colorado, Florida and Ohio — subsequently have seen some of the highest foreclosure and delinquency rates.

What’s the national situation on equity holdings among all American homeowners, including people who took out their mortgages long before the boom? The Federal Reserve Board researches that question periodically through its “flow of funds” studies. Here’s what it found most recently:

From the fourth quarter of 2006 through the fourth quarter of 2007, homeowners lost $387.5 billion in net equity holdings, mainly because of property devaluations in major markets around the country. The year-end $9.65 trillion in equity was the lowest figure since mid-2004.

At the end of 2007, according to the Fed, American homeowners’ equity was 47.9 percent, down a full percentage point from
the third quarter, and 6 percent below 2003. Any way you look at it, $9.65 trillion is a
vast financial resource, and a national “loan to value” ratio around 50 percent means most homeowning households still have hefty cushions.

But don’t look for the return of mass-marketed zero-down mortgages any time soon. Whatever the politicians decide to do, the private marketplace is heading back to more traditional standards, where equity upfront was the rule.

Ken Harney is a real estate columnist with the Washington Post.

Housing prices in many domestic markets may be cooling, but interest in real estate education remains hot. An industry that has always been welcoming of dilettantes and the ladies-who-lunch set is maturing and is creating demands for more trained professionals.

An informal survey of both undergraduate and graduate real estate university
programs around the country reveals that despite a softening in many housing markets, interest from students is growing slightly, and the real estate profession is taking heed.

“It’s become a destination career,” said
Esther Muller, co-founder of New York City’s Real Estate Academy. “People are beginning to plan to go into real estate, gaining master’s degrees and taking more courses. There’s a trend toward making real estate a very serious, respectable profession.”

About 5 percent of undergraduate students at Wharton, the business school at the University of Pennsylvania, choose to concentrate on real estate. An in-house survey done in 2007 shows that among those, 88.5 percent were employed full time upon graduation, with an average salary of $59,960.

The salary was virtually the same for undergrads focusing on real estate at the Stern School of Business at New York University.

According to officials at Wharton’s career services office, many of its real estate alums, both undergraduates and graduate students alike, end up in New York City, where they work on the financial side of the business.

The magazine U.S. News & World Report ranks real estate programs around the country, focusing mainly on undergraduate studies. According to the magazine’s survey, the top three university-level real estate programs in the country are at Wharton, the University of Wisconsin at Madison, and the Terry College of Business at the University of Georgia.

New York University’s Stern School comes in fourth.

On the graduate level, meanwhile, there are now about 35 stand-alone programs in real estate studies. NYU currently has about 440 students enrolled in its Masters of Real Estate program, and another 170 studying for a graduate certificate in Real Estate. Many of these students attend
part time while holding down jobs within the industry.

According to university officials, admittance to these programs is quite competitive. At MIT, the real estate program admits fewer than 40 students each year, out of an applicant pool of about 150; many students already have six to eight years of experience in the field.

The selectivity reflects the fact that real estate jobs can be even more lucrative with a master’s-level education.

Surveys of MIT alumni indicate that the degree helps them improve their salary by about 25 to 30 percent, to about $100,000, within a year of graduation.

A survey of the past three years’ worth of students graduating with a master’s degree from NYU’s Real Estate Institute, an institution separate from the Stern School of Business, indicated an average salary of about $138,000.

Among the graduate-level real estate programs, based on factors like rigorous admittance standards, the credentials of professors and post-graduation salaries, the Massachusetts Institute of Technology, Cornell and NYU are considered leaders.

The programs emphasize that they can cover real estate better than an MBA with a stronger focus. “The real estate field is so rich today, and we’re creating new target slots to develop in,” said Jack Nyman, director of the Steven L. Newman Real Estate Institute at Baruch College. (The Steven L. Newman Institute offers certificates in real estate as part of Baruch’s continuing education program.) “The field offers almost limitless opportunities for learning, creativity and opportunity.”

That view is echoed by officials at MIT.

“We tell prospective students that if they’re interested in business, then they should get an MBA, because it’s more flexible, but if they want a high-powered and rigorous grounding in real estate, they should come to MIT,” said Marion Cunningham, managing director of the program. “We train people to understand the real estate industry.”

While each of these programs concentrates on fundamentals like finance, asset management and development, differences emerge. For instance, Baruch and NYU have strong ties with the city’s development community, and their graduates are snapped up by firms based in New York.

An interesting feature of the MIT program is its international outlook. Recent class outings have included trips to the Middle East and Asia; while many students remain in the U.S. post-graduation, graduates are often offered jobs by foreign developers.

“Most real estate development right now is happening outside the United States, and in some places in Asia, whole cities are being built,” said Cunningham. “It’s not only about seeing opportunities abroad, but how the scale of projects abroad is impacting the cost of materials and development in the U.S.”

While few real estate development firms are big enough to have regular yearly recruiting drives, when they seek to hire, an increasing number of firms are turning to universities for talent. This is seen as a victory for schools that invested in specialized concentrations in real estate, proof that they are
beginning to yield results.

“In a field like sustainability, the compensation is just starting, but it will be worth more in time,” said Nyman. “Real estate always will have deals; there’s always a need
for expertise. The better you are, the more you’re going to make: That’s an old adage that still remains true.”

Every real estate brokerage takes a slightly different approach to training new hires. The Real Deal surveyed six of the city’s largest and busiest residential firms, and found programs ranging from a month-and-a-half intensive curriculum involving exams to one agency where training is comprised of only a truncated discussion on the nuances of co-ops. Executives from all firms surveyed said voluntary continuing education is strongly encouraged.

Bellmarc co-founder Neil Binder didn’t just write the book on selling real estate; he’s written a few. His fourth, “Thinking About Selling,” is due out this June. So naturally, his firm takes broker training to an elevated level: New hires are required to undergo an intense six-week course on the business of real estate. Interestingly, lessons on ethics don’t comprise part of the curriculum. “Ethics is always in the eye of the beholder,” said Binder. “Ethics is something that is grossly, grossly misused. I believe there is one fundamental that we must all do: Obey the law.” What new hires at Bellmarc are exposed to is Binder’s philosophy on negotiation, time and “how they engage in taking action.” Trainees do more than sit at desks taking notes: One lesson famously requires students to repeatedly step on and off a chair, and tests are frequent. Trainees need to memorize all 29 clauses of a standard contract, and cheat sheets aren’t permitted. “Even my competitors frequently send newbies to me,” said Binder. If this training sounds rigorous, it’s because it is: Only two-thirds of Bellmarc’s trainees graduate the first time around.

Most aspiring Corcoran agents make it through the company’s 75-hour, unpaid orientation. But occasionally some new hires, such as those who are repeatedly late or unmotivated, are shown to the door. “[Becoming an agent is] not a slam dunk,” said Mary Jo McNally, Corcoran’s director of education. “It’s not a job, it’s a career.” The course, which stretches over 14 days, involves lessons from 38 in-house top guns who explain how to qualify buyers and prepare a co-op board package, as well as teach ethics, fair housing laws, sales techniques and how to use 11 proprietary computer programs. Role-playing is emphasized, and trainees are assigned homework.

Before becoming agents at Halstead, new hires go through a two-week unpaid boot camp. Training occurs at the Scandinavia House weekdays at 10 a.m.; Fritz Frigan, director of sales and leasing, said Halstead’s courses have such a good reputation that outside brokers occasionally crash the advanced seminars. Training is generally broken up into three or four sessions a day, covering both technical and intellectual nuts and bolts. Role-playing — including a session called “Devil’s Advocate,” led by Vasco Da Silva, a director of sales at Halstead — is frequent. Da Silva also teaches a session on developing business plans. His lessons stress flexibility and teach brokers the difference between strategies for those who want to specialize in the studio and one-bedroom market versus those who will be immersed in the city’s high-end market.

New Sotheby’s agents don’t need training; they’re already top-notch when they’re hired, said Downtown Manhattan office head Diane Levine. “I usually don’t take inexperienced agents, so there’s not really training required,” she said. “They start somewhere else.” But regardless of pedigree, Levine said she personally instructs every new hire on the nuances of co-op sales, a huge portion of the Manhattan market. “People in New York have complicated financial pictures, and brokers need to understand what they’re looking at when qualifying a buyer,” especially considering the lengthy co-op board process, Levine said. She also discusses the art of wooing board members (for example, what buyers should wear, depending on the vibe of the building, and for couples not to argue over answers during the interview). Other than that, continuing education is always encouraged. “We tell our brokers at various times we’re in an Internet age, and encourage them to use modern technology,” said Levine.

Brown Harris Stevens is “kind of like the graduate school of brokerages, so you won’t see a lot of inexperienced brokers,” said communications director Melissa Hill. While there’s no regimented training for new hires, executive vice president Ruth McCoy said the company offers an internship program for those who want to work their way from the ground up. Interns, who must be fully licensed, shadow top brokers for six months to a year, lending a hand while getting hands-on experience. Allowing these new brokers to shadow experts through everyday aspects of the trade is considered important, and mentors don’t usually mind because interns lighten their load. “Maybe they need a second person to help them show a house,” said McCoy. Graduates first become assistants before moving on to making their own sales.

New hires at Williamsburg-based aptsandlofts.com shadow senior brokers for “basically a week,” though they’re usually already experienced, said company founder David Maundrell. Nonetheless, all brokers and agents are required to attend weekly meetings where problems, like difficult landlords and buyers who try to sidestep the brokerage fee, are tackled collaboratively. The mid-size firm handles rentals and sales for a significant portion of new Brooklyn projects aimed at young professionals, and Maundrell said he looks for hires who can relate to that demographic. “Most of the people who work here understand what our market is because they are our market; they dress the role.” Phone manners are especially important to Maundrell, who said, “If I’m walking through the office and I overhear them, I’ll listen in.”

Not long ago, during the peak of the real estate boom, aspiring agents would camp outside the state Division of Licensing Services’ Lower Manhattan office to secure spots at licensing exams. The test was given once a week on a first-come, first-serve basis, and demand was so strong that pushing, shoving and even fistfights occurred.

Since real estate has lost some of its sizzle, fewer people are signing up to take the exam, now administered in a more civil manner online. Also, fewer real estate pros are renewing their licenses after their two-year expiration period. The result is the first drop in the number of licensed agents — and brokers — in several years.

The industry may continue to become less crowded, since stiffer licensing requirements enacted by New York State go into effect this summer, which may cause even fewer people to decide to renew.

While there are still more brokers and agents showing property than at the peak of the boom in 2005, when the state had 146,325 active licenses, the number of people taking the exam has dropped more than 8 percent since then.

According to figures provided by the Department of State, the number of licenses statewide has dropped by 1,736 in just over two months, to 153,467, compared to an increase of 2,764 last year.

Other states report the same trend: California, Florida and New Jersey also saw a drop in licenses over the past two months. New Jersey had the highest recent decrease of 4.6 percent, or 4,387 licenses, despite a slight increase in the number of licensees over last year.

The Association of Real Estate License Law Officials (ARELLO) has noted that nationwide, licensed agents and brokers increased by 11 percent between the fall of 2006 and the fall of 2007. The association won’t compile new national figures until this fall.

“We have not seen the number of real estate licensees going down; it’s actually been consistently increasing over the past few years despite the media reports that the housing market is so bad,” said Debbie
Campagnola, CEO of ARELLO. “For whatever reason or phenomenon, we find that the total overall numbers across the country are rising.”

Diane Levine, Sotheby’s Downtown Manhattan brokerage manager, said the number of aspiring agents and brokers could increase for a time after the economy goes sour. “When you lose your job, it’s something very easy to get into without having to go back to school,” she said.

“Every week now we still get calls, probably about two a week, from people who took the exam and are looking to be sponsored,” said Levine. “People still think of real estate, especially in Manhattan, as being OK.”

Starting in July, sales agents and brokers will have to take 30 more hours of approved classes to obtain a license.

Levine said she recently reviewed a draft of the new Modern Real Estate Practice in New York, the definitive study guide for the licensing exam. She said the book would contain new sections particularly applicable to the New York City market on co-ops, condos and investment properties.

Local firms and REBNY pushed for changes in the curriculum to better prepare new professionals for the Manhattan, and increasingly Brooklyn, market, Levine said, adding that city professionals would still have to pass sections on farmland and
oil tankers.

Amy Penzabene, administrative liaison and system coordinator for the state Division of Licensing, said the state still hasn’t finalized the curriculum. “The department reaches out to the industry,” Penzabene said. “But we’re the ones that ultimately approve the curriculum.”

The new test would debut in July, said Penzabene. Currently, 68 percent of
brokers and 62 percent of sales agents pass the exam.

The New York City real estate frenzy may be over, but the desire for buyers to get a leg up and find deals remains strong. As a result, the focus of courses taught by many “experts” has shifted toward advice on profiting from a souring market. Recently, The Real Deal decided to check out two of the most popular classes.

PropertyShark.com, which has offered online and live seminars in the
past, launched Property Shark University in February. Its seminars include classes on short sales, investing and even home inspection services. Classes range in price from $29 to $199.

“You can do only so much online, and the demand kept building,” said Brian Scully, the company’s vice president of marketing. “We’re selling out almost everything, if not going over capacity.”

A recent PropertyShark.com seminar on buying “distressed properties” attracted hopeful homeowners, brokers and immigrant investors. Held in a Midtown meeting room, the seminar was taught by Matt Lucks, the company’s training director. Lucks opened by describing how he broke into real estate, buying “fix and flip” houses on Staten Island and later moving on to multi-family walk-ups in Brooklyn, where he invests now.

“I don’t have a 401(k). I have these buildings in Brooklyn,” Lucks said.

Promising the class, “I’m giving away all my secrets,” Lucks, with the help of a laptop and projector, guided attendees through the steps of buying homes in pre-foreclosure. Above all, he emphasized that being nice to people who fall behind on their mortgage payments is the key to finding deals.

“Put some humanity into this … if [homeowners in pre-foreclosure] smell money on you, they’re not going to talk to you. But if you’re there to legitimately help them solve their problems, they are more than willing to play ball,” he said. “You don’t want to call people, and you definitely don’t want to visit the houses. I know somebody who used to do that, and I said, ‘It’s just a matter of time before you get a shotgun pulled on you.’”

In addition to telling attendees the ins and outs of buying homes in pre-foreclosure that could be flipped for profit, Lucks gave tips on getting into the “wholesale” market, which he described as “playing fetch for other investors.” According to Lucks, this method costs only time and earns money via finder’s fees by selling buyer
contracts to known investors in various neighborhoods.

Throughout the seminar, some attendees, particularly the investors, asked questions that hinted at a desire to go around the rules in order to make a profit. Lucks steered questioners away from this path, saying of short selling, “There isn’t anything shady here.” Lucks told his students, “Nobody should ever quit their job doing this,” emphasizing that it could take years to build up the knowledge, confidence and contacts to make money as an investor in pre-foreclosure properties.

Real estate instruction offered by
the Learning Annex took a similar tack.
The Learning Annex, which offers instruction in jewelry making, successful dating and wine tasting, has also offered real estate classes for years. Classes usually cost $40 to $60 and are taught by veteran real estate professionals.

At one recent seminar called “Real Estate for Beginners,” Dale Siegel told attendees that when she is asked her profession, she continues to tell people she is an attorney even though she has been working as a mortgage broker for the past two decades in White Plains.

“I say I’m a lawyer because I’m a little embarrassed with what’s going on in the industry,” she told her students.

The two-and-a-half-hour seminar, which ran without breaks, was enlivened by advice from Dina Sussilleaux, a broker with Corcoran, and Jody Fay, a lawyer for a title insurance company.

Sussilleaux made a convincing case that having a broker help fill out a lengthy co-op application, for example, is invaluable. She advised buyers to find a broker whom “you can let your hair down with.” Sussilleaux made a pitch for her own firm and was dismissive of competitors.

Fay explained that “there is no regulation” on legal fees charged in real estate deals, but advised students to stay away from discount attorneys charging less than $1,000 for a closing.

“Don’t go into the yellow pages and pick the guy with the biggest ad,” said Fay. She gave tips like making sure buyers or their attorneys review co-op board minutes before purchasing these apartments to look for upcoming special assessments, for example.

Fay also explained how to take title of a property as an investor using LLCs, corporations, partnerships and trusts. Fay ended her lecture by describing the recently passed Home Equity Theft Prevention Act (which Lucks had mentioned as well). Fay described the legislation, which allows distressed home sellers to potentially reclaim properties up to three years after a sale, as ill-conceived and warned students to be aware of situations in which the act could upend their purchases.

Siegel steered students to the Wells
Fargo bank Web site for current interest rates and advised everyone to pay a reputable service to get their credit score. Emphasizing the subprime mortgage crisis — “As you know, there is a lot going on with the industry, all bad” — Siegel ended the class by informing students of the newer, more stringent requirements for getting a mortgage.

Both seminars emphasized that buyers should expect to do research and avoid shortcuts. Siegel said to stay away from Web sites like LendingTree.com. Lucks advised students to stay away from “get rich quick” schemes, saying that legitimate and profitable investing requires hard work over a long period of time.

National mortgage broker licensing appears on the way to becoming law this year, now that Congress, the Bush administration and the mortgage industry all agree there should be uniform standards for brokers.

But precisely who would be covered by the requirements and how the rules for a national broker registry would be applied remain a matter of debate, both in industry circles and in Washington.

Last month, a presidential working
group chaired by Treasury Secretary Henry M. Paulson Jr. called for a national mortgage broker registry. “Mortgage brokers will be held to strong national licensing and enforcement standards,” Paulson said when he announced the group’s recommendations. “There will be stricter safeguards against fraud, and full and clear disclosure to borrowers about home loan terms, including long-term affordability.”

A bill passed by the U.S. House of Representatives late last year would set minimum education standards and a national registration system for anyone who brokers mortgages, whether that person works as a middleman between consumers and lenders, or directly for a lending institution.

Legislation recently filed in the Senate would establish a similar registry, but some brokers who work for lenders would not be included in the registry, although their employers would be. Today, there is no national broker registration, and state regulations have produced a patchwork system, with wide variations in requirements.

“There are some states that don’t have a licensing requirement at all or don’t have an education requirement at all,” said Frank Bowersox, president of the Pennsylvania Association of Mortgage Brokers.

Regulation is being called for in the finger-pointing that has followed the subprime mortgage collapse. Critics blame mortgage brokers for preying on homebuyers with deceptive loans, then making a quick exit by selling the mortgages to investors.

“There are no national standards for mortgage brokers and lenders today, and this lack of regulation has created an environment in which bad actors can take advantage of American homebuyers,” said Senator Diane Feinstein, a California Democrat and author of one of several pieces of legislation on broker licensing now before the Senate.

Organizations that represent brokers acknowledge the need to weed out individuals who mislead consumers, but they say other players in the mortgage debacle also are responsible. Brokers point out that the products they sell are devised by lending institutions.

“I think to be fair about it, the blame can be pointed at everyone,” said Kenneth Travis, a mortgage broker in Longview, Texas, and a board member of the National Association of Responsible Loan Officers. “Originators did not educate the consumers well enough: Some of it was ignorance, some of it was predatory. The consumer is partly to blame. They signed on the dotted line.”

Regulation of brokers also was inadequate, according to Allen Fishbein, director of credit and housing policy for the Consumer Federation of America. “We certainly think there needs to be a better system,” he said. “It’s very uneven now.”

Bowersox said he supports national registration that would identify brokers who have behaved improperly. “Now, if their boss catches them doing something wrong and fires them, they can go down the street and get a job with another company,” he said.

The mortgage broker profession is divided into several categories. The most common consists of brokers who work as independent middlemen — signing up consumers for products, then receiving a commission from the lending institution. Other brokers have access to their own lines of credit, and they typically structure their own deals with mortgage buyers. In a third category are brokers who are employees of banks or other lenders.

Organizations that represent brokers have backed the concept of broker registration. “We need to make sure there is better regulation of the mortgage industry in total,” said George Hanzimanolis, president of the National Association of Mortgage Brokers.

But who would be required to register is a matter of debate. The National Association of Mortgage Brokers, which represents independent brokers, wants everyone who sells mortgages included.

“We have to treat everyone fairly and equally,” Hanzimanolis said. “We don’t want to create safe harbors for bad people.”

Meanwhile, organizations that represent banks and their broker employees contend that current banking laws already strictly regulate the companies’ actions. Registering individuals who work for banks is unnecessary, according to Kurt Pfotenhauer, senior vice president for government affairs and public policy for the Mortgage Bankers Association.

“Companies that already comply with rigorous requirements for their employees should not be required to license them individually,” Pfotenhauer said in recent congressional testimony.

The House-passed bill would affect all
categories of brokers. To be licensed, a broker would have to pass a criminal background check, complete 20 hours of education, score 75 percent on an exam and take eight hours of continuing education annually.

The legislation pending in the Senate has similar requirements. Under the congressional bills, states could still have their own registration requirements, but they could not be less stringent than the national standards.

A spokesperson for Senator Feinstein said the senator is looking to advance the bill, which has so far not been taken up in committee. “The window for making these changes is really over the next couple of months,” said the Consumer Federation’s Fishbein.

In the May issue of The Real Deal, “NYC gets Dutch treat with
new condo” originally misattributed a quote about the “collaborative
effort” involved in building Five Franklin Place. The quote was from
Robert Kloos, director for Visual Arts, Architecture and Design at the
Dutch Consulate in New York.

“Starck for rent on Wall Street” originally misspelt Platinum Properties director of sales Sang Oh’s name.

An article posted on The Real Deal’s Web site on Thursday, May 22, incorrectly stated that the Related Companies purchased the Beacon Theater. Related actually purchased a nearby property at 207 West 76th Street.

A story in the April issue, “Luxe gets pinch of reality,” about the top 25 residential sales in Manhattan since the start of 2007, said the top sale in January and February 2007 was a $35 million townhouse at 36 East 75th Street. The deal actually closed in January 2008.

In the chart accompanying the story, the same transaction (ranked No. incorrectly named Brown Harris Stevens as the listing broker for the property. Joanna Cutler of Joanna Cutler Real Estate was actually the listing broker, and Carrie Chiang, a senior vice president at the Corcoran Group, represented the buyer. In addition, 777 Washington Street should have made the list of the top 25 sales. The townhouse property sold for $34 million in a deal that closed on Feb. 26, 2008.

Another story in the April issue, “Making Stuy Town Hip,” about the rebranding of Stuyvesant Town and Peter Cooper Village, incorrectly listed the address in a caption for a photo of one of the buildings in Stuyvesant Town. It is located at First Avenue and 14th Street, not Third Avenue.

The Deal Sheet in the April issue incorrectly listed the tenant representative for a lease at 801 Amsterdam Avenue. Neil A. Lipinski of Colliers ABR represented the tenant, William F. Ryan Community Health Center, in the deal.

The New Residential Developments section in the April issue incorrectly stated that Platinum Properties is now the sales and marketing agent for the Setai New York, and that the Marketing Directors had been previously. In fact, Platinum was granted the exclusive for four units at the project, while the Marketing Directors remains the overall agent.

A story in the March issue, “Tee time in Throgs Neck?” did not include credit for a photo of Ferry Point Park. Cara Sohmers should have received the credit.

Beijing Olympics drive development

Since Beijing was selected as the host of the 2008 Olympics in 2001, the city has invested $40 billion in infrastructure projects and venues and has encouraged the development of retail, office and hotel projects.

Last year alone saw the addition of four shopping centers to the city, totaling 1.2 million square feet in retail space. There were also 14 million square feet of office space and 2,500 hotel rooms brought online in 2007.

So far in 2008, 11 shopping centers are scheduled to open, and 15 million square feet of office space and 11,000 hotel rooms are in the pipeline. Marriott International has taken particular advantage of the boom: It will have opened eight new locations, with a total of 3,000 rooms, in Beijing in the two years leading up to the Olympics.

This growth is surprising considering Beijing’s first modern shopping mall opened in 2001.

Some industry experts are cautious of overdevelopment, pointing to economic slumps that occurred following the 1976 and 2000 Olympic Games, in Montreal and Sydney, respectively.

In another testament to China’s steady growth, when Japanese developer Mori Building’s 101-story Shanghai World Financial Center is completed this month, it will be the world’s tallest building for a reign of about a year — before it is surpassed by the Burj Dubai.

The 1,614-foot-tall tower has been in the making for 14 years.

Prices rise in Sri Lanka

While Sri Lanka’s home sales have slowed over the last year, prices continue to rise, and experts still believe residential real estate is a strong mid- to long-term buy.

After years of strife, a 2002 cease-fire between the country’s government and an opposition group brought many expatriate Sri Lankans back at a time when housing was scarce. That influx, plus a recent increase in demand from foreign buyers — namely Indian, Japanese, Chinese and British — in the island nation’s largest city, Colombo, has led to new development and increases in home prices.

But in 2005, the Sri Lankan government introduced a 100 percent property tax for foreigners who purchase homes. The tax is waived in many instances, but applies to the majority of single-family homes and bungalows.

Despite last year’s slow sales, likely due to the tax on international buyers and fears of a resurgence of political violence, home prices were up.

The average price for the highest-end three-bedroom in Colombo now is $557,000, compared to a range of $464,000 to $511,000 last year. A 1,000-square-foot apartment in the city has a starting price of around $200,000, up from a starting range of $140,000 to $160,000 two years ago.

A four-bedroom of around 2,500 square feet would start at around $500,000 now, up from $350,000 two years ago.

Oman market booms

The Arabian Peninsula nation Oman has enjoyed a strong demand for housing after opening its market to foreign buyers in 2006 in an effort to diversify its historically oil-based economy.

One major project, Al Madina Al Zarqa, or the Blue City, is a planned urban development that will stretch along a strip of desert near the sea and hold 200,000 residents. After its completion in 10 to 15 years, it is expected to be the country’s largest project by far.

In the capital, Muscat, rents doubled in the last few years to $910 to $1,170 per month for
a two-bedroom. To control rent growth, the city has capped rent
increases, and instituted minimum lease terms of four years for residential properties and seven years for commercial properties.

If there were such a thing as a real estate superpower, New York City would be it. The city has held its own when it comes to residential real estate values and has shown the ability to largely withstand the considerable damage happening on the national level.

The latest figures from a leading home price index show that prices across the country are down a record 12.7 percent from the past year. And price declines could nearly double, to 20 percent by 2009, according to a report by the PMI Group.

Price drops of that magnitude are sobering, especially when one considers that home prices fell by 30 percent during the Great Depression.

But our vibrant city continues to chug along. Although it is not exactly business as usual here, it’s still comparatively impressive.

More than a third of the nation’s 51 million households are expected to have mortgages that exceed their home’s value due to dropping prices, according to a recent study, but that’s certainly not the case in New York.

Ironically, those difficult co-op boards, with their tough financial requirements that everyone complains about, have actually helped the city. Co-ops outweigh condos by three to one in Manhattan. By demanding high liquidity and forbidding risky mortgages for buyers, co-ops appear to have safeguarded themselves from the mistakes made by the mortgage and banking industries that now find themselves in so much turmoil.

Not that we are totally immune. For example, in the suburbs and outer boroughs, we are seeing more instances of short sales, which happen when homes are sold for less than the balance owed on the mortgage loan, though this is still happening at a lower rate than in the U.S. as a whole. See our story on page 82, part of our report on brokering in an uncertain market.

In this issue, as we do every May, we take a look at how the top residential brokerage firms are doing, to find out who’s on top in revenues, listings, agents and more. This year, we increased our list to the top 15 firms, since there are just too many good firms to fit within the top 10 or 12 lists we’ve done in the past.

The top firms spread is the only annual feature package we do, and it’s always a well-read item. Soon after the list is published, our editorial staff hears praise from the people included in the list and gets harangued by those who weren’t, including angry calls from communication directors and publicists. If you have a comment, e-mail us at letters@therealdeal.com.

Sometimes an interesting story gets overlooked, especially if the subject is reluctant to talk about herself personally. This is the case with one of New York’s top brokers, Paula Del Nunzio, the No. 1 townhouse broker in the city. She holds the record for the most expensive townhouse ever sold in the city, at $53 million. We sat down with her for her first-ever interview and found she was more eager to talk about a new, possibly record-setting listing she has on the market with the Sloane mansion, listed for $64 million.

We started The Real Deal with the goal of providing accurate and important information to educate our readership. This month, we examine the state of real estate education itself with a special package starting on page 99. Often in a slower market, people go back to school to get a leg up in their profession. We take a look at the different programs available as well as the in-house training that brokerages offer. You’ll want to study up on what this report has to say.

Enjoy the issue,

Amir Korangy

Residential

Barak Realty

Chris Meleco joined the firm’s marketing department. Pulat Batirbaev, Leif Johansson, Jeff Goodman, Max Moondoc and Anthony Gentile joined as agents.

DJK Residential

Brian Skuse joined as a sales associate. He was previously with Prudential Douglas Elliman.

Halstead Property

Robyn Kammerer was promoted to vice president of communications from director of communications.

Commercial

CB Richard Ellis

Scott Gamber was promoted to vice chairman. Ronald Danko, Paul Leibowitz, Paul Amrich and Peter Eppie were appointed executive vice presidents. Ethan Penner joined as executive managing director.

Cresa Partners

Kenneth Witler was appointed vice president. He was previously a director at Cushman & Wakefield. Paul Weir joined as associate.

Eastern Consolidated

Neil Gronowetter joined as director. He was formerly with Massey Knakal.

GVA Williams

James Barile and Sheena Gohil joined as associates. Barile was previously with Newmark Knight Frank. Gohil was previously with Lincoln Property Company.

Liberty Title Agency

Joseph Napolitano joined as chief financial officer. He was previously vice president and New York-area commercial controller for LandAmerica Financial Group.

Northwest Atlantic Real Estate Services

Bruce Shepard joined as a partner.

Ripco Real Estate

Jeffrey Paisner joined the firm.

Somerset Partners

Gregory Knoop joined as executive vice president and director of leasing and asset management. He was previously head of asset management and leasing at Taconic Investment Partners.

Stonehenge Management

Marc Kaplan was promoted to vice president of leasing from director of leasing.

The Staubach Company

Michael McManus joined as senior project manager. He was formerly director and senior project manager at Janet R. Duggan & Associates. Sedge Hahm joined as project manager. He was formerly an associate at RMJM Hillier.

Real estate advisory firm Schonbraun McCann Group was acquired by the global consulting firm FTI Consulting for $125 million in cash and company stock. SMG will continue to operate under its own name, as a division of FTI.

SMG offers real estate consultation for REITs and management firms on investment purchases, mergers and acquisitions, debt workouts, deal structuring and lease analysis.

Previously a national company based in New York City, with additional offices in New Jersey, Florida and California, SMG will now become the real estate arm of FTI, which did not have a real estate division before, at its offices across the country and in Mexico, Brazil, Argentina, China, Australia, Singapore, Japan, England, Scotland and the United Arab Emirates.

Over the past few years, SMG’s biggest clients have expanded operations abroad, including Kimco Realty’s venture into Mexico, Gale Real Estate Services’ projects in Korea and Tishman Speyer and Vornado’s investments all over the world.

“It has been a natural extension for us to follow our clients, and they have taken us all over the world,” said Bruce Schonbraun, managing partner.

SMG will gain clients from FTI Consulting such as financial institutions that do not practice real estate investment, but have large portfolios that need to be managed.

In the past 18 months, SMG has represented firms in more than $100 billion worth of investment sales, portfolio trades and other transactions.

As Prudential Douglas Elliman turned five years old in March, it announced the creation of a new title,
executive vice president of brand management, and the appointment of new hire Jill Harnick to the position. Harnick will work to create a focused image for the company, among its employees and among its eight major divisions, which include sales, rentals, relocation, new developments, retail, property management, mortgages and title insurance.

Most recently, Harnick served as vice president of brand management and institutional marketing for the Teachers Insurance and Annuity Association and College Retirement Equities Fund (TIAA-CREF).

With regard to the branding efforts of broker teams and individuals, Harnick said that her role will not interact directly with those campaigns.

One of Harnick’s first roles in the position is to hold training sessions for new agents, to explain the company’s history and the vision of president and CEO Dottie Herman.

Her training will teach a standard way for agents to deal with customers, from how to answer the phone and write e-mails to what kind of information should be shared with customers.

“If you walk into Tiffany in New York, or Tiffany in Texas, there is a certain way that people are going to greet you that doesn’t change,” Harnick said, citing the high-end jeweler as an example of the level of service Prudential Douglas Elliman aims to provide.

Harnick will also be working closely with chief marketing officer Karen van de Vrande to monitor and revise the company’s newsletter, mail and Web advertising campaigns.

Blackstone raises $10.9B for real estate

The Blackstone Group, the private equity firm, has closed a real estate opportunity fund with total capital commitments of $10.9 billion. The company said the fund, Blackstone Real Estate Partners VI, was the largest real estate fund it ever raised. Blackstone has previously invested in real estate owned by Equity Office Properties, Hilton Hotels Corp. and Wyndham Hotels.

Ex-Property Shark CEO launches new Web venture

Ryan Slack has left his job as CEO of PropertyShark.com, the Brooklyn-based online property Web site, to start a new online networking venture for real estate professionals. The new company, MyDealBook.com, will hold an official launch party this month in New York, and Slack plans to expand it to other big U.S. cities and then overseas. The new venture was formed originally as a subsidiary of PropertyShark.com, but is now an independent entity. Slack said funding will come from his own finances.

Marketing company moving HQ from Miami to NYC

The exclusive sales and marketing agent for Trump Soho Hotel Condominium is soon opening its first New York City office. By June, Prodigy International, which is also co-marketing Andre Balazs’ William Beaver House, is moving its Miami headquarters to a second-floor, loft-style office at 72 Greene Street in Manhattan.

Sotheby’s expanding in Europe

Sotheby’s International Realty Affiliates said it entered licensing agreements to expand in Germany, Italy and four other European markets as part of a plan to grow its overseas real estate business. The agreements come at a critical time for the Parsippany, N.J.-based Sotheby’s International, a division of Realogy Corp., as the weak U.S. dollar and tight credit in the U.S. real estate market is forcing brokers to look overseas for new buyers. The agreements call for 25-year licensing deals in Hamburg and Westphalia, Germany; Venice, Italy; Greece; the Czech Republic; and Slovakia.

New Wiki site wants to wikify real estate

A new Wiki Web site aims to be the Wikipedia of residential real estate and hopes that brokers who use it won’t be too self-promotional. As of early last month, 157 New York agent profiles were listed on the Real Estate Wiki site, www.realestatewiki.com. The nonprofit launched in January and features thousands of entries, ranging from broker listings to frequently asked questions and definitions of real estate terms. Real Estate Wiki, founded by about 20 real estate professionals, is divided into two categories: one for consumers and one for the pros. It functions like Wikipedia, where anyone can post and edit entries.

Trulia teams with Google StreetView

Trulia’s property search engine began offering a street-level view function provided through Google maps. Google’s StreetView images can be used to view additional details of a property and the surrounding neighborhood. The Google feature is available in more than 30 U.S. cities, including all of Manhattan, Brooklyn’s downtown and major streets, and major streets in Queens and the Bronx. Real-time updates to the images are being made as more locations are included, Trulia said in a statement.

Goldman teams up with developer on $100M investment fund

Goldman Sachs is teaming up with L&M Development Partners and launching a $100 million urban investment fund aimed at mixed-income housing and other projects in New York and other U.S. cities. Goldman’s Urban Investment Group has worked with Westchester-based L&M in the past on New York projects, including the Aspen, a mixed-income apartment building in East Harlem, and the Kalahari, a new 249-unit luxury condominium on 116th Street.

Real estate and Broadway shows rarely intersect, especially in the realm of musicals, except for “West Side Story”
and “Rent,” which captured the place and time of their respective neighborhoods.

Attempting to attain a similar achievement, the new musical “In the Heights” chronicles the experiences of residents in an Upper Manhattan enclave and is funded in part by developer Peter Fine. The play, which opened on Broadway at the Richard Rodgers Theatre in March, is booked through September, said show spokesperson Wayne Wolfe.

A recurring real estate-related theme is the gentrification of Washington Heights and the changes it brings to a neighborhood heavily influenced by immigrants from the Dominican Republic, said Fine, president and co-founder of Atlantic Development Group, one of the play’s co-producers.

His lofty title is largely due to his financial contribution,
he said, though he did sit in on read-throughs with the cast. “There are working producers, and there are investing producers. I didn’t work on it day to day, but I had a lot of input on some of the marketing and the direction of the play,” he said.

Fine’s involvement grew from his friendship with the play’s star and creator, Lin-Manuel Miranda. Fine had met Lin’s father, Luis Miranda, a political consultant, through his endeavors in the affordable housing market. After he saw the play’s Off-Broadway guise, Fine agreed to help bring it to the Great White Way.

“Three main producers brought it to Off-Broadway, and then they approached Peter and the other producers,” said Wolfe. The play cost $10 million to produce.

“That’s about average for something that’s a big show, but not a spectacle,” he said. By comparison, “Young Frankenstein” staged for $20 million; “The Little Mermaid,” $18 million.

Though Fine started out specializing in affordable housing, he has branched into more complex developments. His signature project, Boricua Village, underway at 161st Street and Third Avenue in the Bronx, has a Latin theme and will include a million square feet of retail, mixed residential and the new home of Boricua College.

So far, tickets to “In the Heights” are selling briskly, but Fine found that investing in Broadway carries more risk and unknowns than real estate. Still, it offers a great diversion from construction costs and project management.

“I was really the only person involved who is not a theater professional, yet I enjoyed going to the early read-throughs, when the cast would sit around the table and deliver lines and sing,” he said. “Their talent blew me away.”

Fine is pursuing other projects to finance, including plays and movies. He said, “I’d like to do this again, because it was such a great experience. To me, this was an investment based on my emotional reaction to the play more than anything, and I just got lucky. Not only can we tell a great story, but we’ll also make a lot of money.”

Real estate deals and charity generally do not mix, but a California-based real estate broker is hoping to bring to New York a real estate referral service that contributes money to charities.

RealtyGiving.com will contribute half of its referral service fees to local charitable chapters. The company was founded in January in Santa Monica as CFRealtyNetwork.com, with the referral fees initially benefiting organizations supporting cystic fibrosis.

“We’re creating a lead generator for charities, starting with cystic fibrosis,” said founder and broker Rod Aragon, whose sister died from the disease in 1981.

Aragon is launching RealtyGiving.com, which is aimed at consumers who are relocating, and later this year hopes to establish it here while operating out of California. Aragon intends to set up co-branded relationships with charitable organizations so consumers will be able to decide where the referral dollars will go.

“Charities have a very limited way to get funds. We are forming relationships to expand and raise money,” said Aragon, who opened a branch office for Prudential California Realty in Santa Monica several years ago.

Aragon has a Rolodex of 1,000 real estate associates and brokers in more than 500 cities; he has established a formal relationship with 25 percent of them. In New York State there are 24 brokers in his referral pool, of which 12 are based in New York City. The company is vetting agents and is putting his contacts to use.

Without corporate clients, RealtyGiving.com is not likely to generate a lot of money. Take a $1 million residential sale in New York City, with a traditional 6 percent commission that amounts to $60,000. Whether or not the broker represents the buyer, the seller or both, RealtyGiving.com will only receive one referral fee, so that cuts the $60,000 in half. If the company sets a 25 percent referral fee, which is at the low end of the scale, that means RealtyGiving.com’s take is $7,500, with $3,750 given to charity and $3,750 profit.

Kathy Braddock, co-founder of New York City-based referral company Braddock + Purcell, said although the idea is “sweet,” she “wouldn’t choose a relocation firm because they are altruistic. I would choose the firm that has the best knowledge of the market.”

CFRealtyNetwork.com, she added, “is not about finding a good broker. This is about cystic fibrosis.”

To push their properties in less-than-buzzworthy neighborhoods, some marketers are taking a page from new high-end developments that typically offer upscale amenities and tantalizing incentives.

Brokers are organizing transportation and parties to lure buyers to new construction on the fringes of Manhattan and just outside. They’re offering financial incentives and luxe toys like flat-screen TVs more commonly found in higher-end buildings.

At the Peninsula at City Place in Edgewater, N.J., the 201-unit condo conversion recently instituted a rent-to-own program. Tenants sign up for a year-long lease to try out the lifestyle. After nine months, anyone who decides to buy has the rent from this period applied toward a down payment.

One bedrooms go for $1,795; two-bedrooms are $2,525. Condo prices range from $420,000 for a one-bedroom to $1.075 million for three-bedrooms. About 10 deals, including several sales, closed during the program’s first three weeks.

“A development like this takes the lead from what’s going on in Manhattan,” said Cliff Finn, director of Citi Habitats Marketing Group. “First-timers who may be priced out of Manhattan want to buy, but they’re looking for value, and they want to test the market.”

Property tours and open houses are nothing new, but for the last two years, Brian Phillips at Prudential Douglas Elliman, a broker who specializes in Harlem, chartered mini-buses to shuttle between showcased properties. Taking place during the week, the tours mainly attracted brokers.

To build more buzz and attract buyers uptown, last month, Phillips rolled out a weekend Harlem Open House Tour Expo 2008. He chartered two buses to visit more than 40 condos and townhouses for sale.

“I’m trying to create a stir because people are more likely to make offers if they’re not the only one there,” he said.

Several participating developers offered refreshments and souvenirs to intrepid tour-goers, including wine and cheese at the Townhouse at 16 East 130th Street and an elevator ride to the unfinished 22nd floor at Fifth on the Park at Fifth Avenue and 120th Street. Observatory Place, at 110th Street and First Avenue, handed out green housecleaning products.

Several properties partnered with restaurants and businesses for promotions. At the Bridges NYC Condos at Third Avenue and 124th Street, the 10th visitor received a $75 gift certificate at Ricardo Steak House, on Second Avenue.

There are signs that modest incentives are working their way Downtown: 88 Greenwich Street invited prospective buyers to enjoy servings of champagne on Wednesday evenings, a party once limited to brokers; the Clement Clarke at 140 West 22nd Street has offered to pay a buyer’s city and state transfer taxes; and 206 East 95th Street put flat-screen televisions in every kitchen to make an impression on buyers, said JoAnn Schwimmer at DJK Residential.

“These things don’t necessarily help, but they can’t hurt,” she said. “People see so many apartments that they all tend to blend together, so it’s easier to remind a client about a place when you can say, ‘That’s the one with the TVs in the kitchen.’”

1981: Plans released for 7 WTC

The Port Authority revealed detailed plans for 7 World Trade Center, the final structure in the seven-tower complex, 27 years ago this month. Built without a prime tenant lined up, it was the largest speculative office project in the mid-1980s.

Original plans for the 43-story office tower, developed by Silverstein Properties, indicated that it would cost $260 million and be completed in 1984. But the 1.8 million-square-foot building was not finished until 1987, after its height had grown to 47 stories and its budget to $300 million.

The red granite-clad building was 610 feet tall and built on a trapezoidal footprint on land leased from the Port Authority.

In 1986, Drexel Burnham Lambert signed a $3 billion, 30-year lease, which fell through after an insider-trading scandal rocked the firm. As a result, the building remained more than 80 percent vacant in the spring of 1988. Silverstein’s luck turned around later that year, when Salomon Brothers agreed to lease 1 million square feet.

After the World Trade Center attacks of 1993, the city emergency command center was transferred to the building.

The skyscraper was destroyed in the Sept. 11 terrorist attacks by structural damage and fires caused by the collapse of the Twin Towers. Work began on the new 47-story
7 World Trade Center in 2002, and it opened on May 23, 2006.

1951: Empire State trades for record building price

When the Empire State Building sold for $51 million 57 years ago this month, it was the highest price paid for a single building at the time. A syndicate including Roger Stevens and the Chicago Crown family bought the office tower and leased the land from the Prudential Insurance Co. of America.

The Depression-era office tower was sold by the estate of the late financier John Raskob, who had led the group that built the $41 million project.

The 102-story building, which towers above Fifth Avenue between 33rd and 34th streets, replaced the Chrysler Building as the tallest in the world when it opened in May 1931. Despite this distinction, it had difficulty finding tenants for much of its 2 million square feet of office space until after World War II.

The Crown family sold the building and their land-lease in 1961 for $65 million — a new record price for a single building — to Empire State Building Associates, a real estate investment group headed by financier Lawrence Wien. That organization then sold it to Prudential in a complex leaseback deal arranged because the insurance company was not permitted to invest more than $50 million in a single property, according to the New York Times.

Prudential sold the Empire State Building in 1991 to a Japanese investor, who in 2001 sold to a group related to the leaseholders.

In May 1981, both the building’s exterior and lobby were designated city landmarks.

The building was the tallest in the city until One World Trade Center was opened in 1972. Following the destruction of the Twin Towers, the Empire State Building reclaimed its title as the city’s highest building.

1927: First skyscraper in Queens opens

The first skyscraper in Queens, a branch of the Bank of the Manhattan Company in Long Island City, was dedicated 81 years ago this month.

The 14-story tower was the largest office building in the borough and was built at a cost of $1 million, the Times reported. The building, located at 29-27 41st Avenue, has a four-faced clock tower, and was 85 percent leased when it opened.

The tower is now home to unions, professional services and small businesses. During World War II, it housed the offices of the U.S. Employment Office of the War Manpower Commission.

The building is not landmarked and was included in the 2001 rezoning intended to increase density in Queens Plaza. The 52,000-square-foot building is modest by today’s standards and since 1989 has been dwarfed by the tallest building in the borough, the 50-story Citibank tower located several blocks south, at Court Square.

Compiled by Adam Pincus

William Levitt’s legacy goes beyond any one office or apartment
building. The developer’s single-handed creation of Levittown, Long
Island, right after World War II laid the groundwork for modern-day
suburbia and spawned thousands of copycat communities nationwide. [more]