The New York housing market garnered headlines across the nation in October. That’s because the average and median sales prices for Manhattan apartments dropped, according to different third-quarter market reports, causing many to cluck that the housing boom may be over. Apt. market: Life after the boom” class=”read-more-link”>[more]
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A former Corcoran Group broker is set to go to trial against the brokerage firm this month after winning a legal decision this summer over whether information on her company computer could be taken from her as she left the company. The decision highlights what information brokers can take from firms when they are fired.
On a Monday in March 2002, Corcoran executive vice president Tresa Hall called broker Sarit Shmueli into her office and dismissed Shmueli from her contract, supposedly for cursing in the office. Shmueli, according to a lawsuit she filed against Corcoran and Hall, returned to her desk and found the access code on her company computer changed, freezing her from information she had accumulated in her six years as a Corcoran broker.
A state Supreme Court justice ruled in August that the information on Shmueli’s computer could, like information on paper, be stolen (or, to use the legal term, “converted”). Corcoran had filed a motion claiming that the information on the computer belonged to the firm because the computer itself belonged to the firm. Justice Herman Cahn, however, dismissed Corcoran’s motion.
“Plaintiff [Shmueli] had an access code which presumably protected the materials she put on her computer from being read by, or forwarded to, others, without her consent,” Cahn wrote in his civil court decision. “This would be similar to a paper list being kept in plaintiff ‘s desk or file cabinet, furnished to her by Corcoran. Either the computer or the desk or the file cabinet could, in final analysis, be opened over plaintiff ‘s objection by someone who had another key or a record of the access code.”
The electronic information, Cahn decided, could be converted just as easily as information on paper. His decision allowed Shmueli to go forward with her lawsuit claiming that Corcoran had done just that.
“The court added that it was not extending [theft] laws to intangibles, generally, like Internet domain names,” Craig Ball, a forensic technologist and attorney, wrote in an email to The Real Deal, “but that two documents one virtual and the other tangible shouldn’t be treated differently simply because they are separated by the push of a print key.”
A Nov. 17 trial start date has been set in state Supreme Court to decide the lawsuit, said Barry Viuker, a lawyer with the law firm representing Shmueli. Shmueli declined to comment for this article, but did in August provide The Real Deal with a copy of a letter she sent to Hall on Mar. 19, 2002, that details what she wants from Corcoran, including a handwritten list of 380 investors, and information on former clients that she claims was on her Corcoran computer. The Corcoran Group, according to a spokesperson, does not comment on pending litigation involving the firm.
At this point, Viuker said, Shmueli seeks damages from Corcoran because of business lost from not having the list or the information. He couldn’t give the specific compensation amount, but Cahn’s August decision lists Shmueli’s desired compensation at $3 million.
Cahn’s decision on Corcoran’s motion isn’t likely to set a precedent for future lawsuits because it’s a trial court ruling, according to Ball, but it may serve as a touchstone for fired employees in situations involving electronic information. This may be especially true in the real estate industry, where brokers like Shmueli are independent contractors and not necessarily full-time employees.
“What is seen in this case locking the plaintiff out of the computer system is,” Ball explained, “increasingly common practice on the discharge of an employee. Shmueli’s status as an independent contractor distinguishes this case. Were the plaintiff an employee, the results might very well have been different. An independent contractor’s business connections probably don’t belong to the entity engaging the contractor. It’s a good idea to define these issues through a reasonable non-compete or employment agreement.”
Longtime residential market expert Paul Purcell speaks his mind hear the podcast [more]
Bryant Park
485 Fifth Avenue
The 185,000-square-foot office tower that once housed Tommy Hilfiger’s headquarters will be converted into luxury loft condos overlooking Bryant Park and the main branch of the New York Public Library. The property will also offer more than 26,000 square feet of retail space, according to its new owner, Belfonti Capital Partners, a national venture capital firm that partnered with the Carlyle Group to buy the property. The condo conversion may cost as much as $160 million. Kelly Mack, Beth Fisher and Dan Cordeiro of the Corcoran Sunshine Marketing Group will be responsible for the residential sales and marketing. Contact: 212-634-6500Carroll Gardens
L3 Condominiums
191-193 Luquer Street
Sales began in September at the four-story, 12-unit condominium, which integrates a 19th-century convent with two new buildings. Duplexes, loft-like spaces and penthouses from 850 to 1,900 square feet start at approximately $600,000. JC Keeler and Peter Guthrie are the developers. The Developers Group is the sales and marketing agent. Contact: 718- 222-1545.Downtown Brooklyn
Lookout Hill Condominiums
199 State Street
Alchemy Properties’ new 11-story, 46-unit building will open for sales this month, with an October 2006 move-in date. Studios measuring 677 square feet start at $470,000, while a 1,629-square-foot three-bedroom penthouse starts at $995,000. Some of the units will have private patios, and the four penthouses will have rooftop terraces. The building will sell at about $665 a square foot, inclusive of the penthouses, the New York Post reported. That is 5 percent lower than market value, according to Alchemy Properties president Kenneth Horn.Downtown Brooklyn
7 Metro Tech Center
The landmarked former Verizon Building will be converted into condos. Owner Berkshire Capital recently secured a $165 million financing package to complete the 244-unit project. The 27-story, 509,000-square-foot Art Deco building, built in 1930, will have a mix of studio, one-, two- and three-bedroom condos, along with 34,000 square feet of retail space.East Harlem
118-122 East 124th Street
Developer Harout Derderian is converting the two commercial loft buildings into rental and condo units. The condos will likely sell for $400 to $600 a square foot; the rentals are expected to fetch $1,600 to $3,000 a month. Construction began this fall and the lofts will be finished by fall 2006, according to Chris Halliburton of Warburg Realty Harlem, which is representing the properties.East Harlem
The Crown Condominiums
2132-2136 Second Avenue
The newly constructed 9-story luxury development has 30 residential condominiums and three retail stores. Prices for the one- and two-bedroom units range from $249,000 to $720,000. Warburg Realty Harlem is the exclusive sales agent; Brian Thornton and Chris Halliburton are marketing the property. Occupancy is slated for this fall.East Village
One Avenue B
Construction has started on the 24-unit condominium, located on the former site of a Gaseteria gas station on the corner of East Houston Street. When it opens in early 2007, the 8-story building will offer studio, one- and two-bedroom units ranging from 456 to 1,252 square feet, the Post reported. Units will go on sale next spring. Citi Habitats is the exclusive marketing agent for the building.Long Island City
Q Plaza
42-11 Vernon Boulevard
The motel, which has been picketed by neighbors for allegedly allowing prostitution, is being transformed into an upscale boutique property, according to owner Ravi Patel. Steven Kratchman Architect PC will add balconies to each of the 78 rooms, which will have views of the Manhattan skyline, Crain’s reported.Lower Manhattan
270 Greenwich Street
Edward Minskoff is scheduled to begin construction later this year on the 1.1-million-square-foot complex bounded by Warren, Murray, Greenwich, and West streets, the New York Sun reported. When completed in 2007, the project will include 230 condominiums and 162 rental apartments. Its retail component will include a 55,000-square-foot Whole Foods Market, the first major supermarket in the area.Lower Manhattan
4 Albany Street
Developer Joseph Moinian is expected to start laying the foundation soon for a soaring hotel and condo building on the vacant site. The tower will be 468 feet high — the equivalent of a 46-story residential building — and have 38 floors, according to a plan recently filed with the city Department of Buildings, the Daily News reported. There will be 77 apartments on the top 11 stories, and 232 hotel rooms on the floors below.Lower Manhattan
be@90
90 William Street
Perkins Eastman was selected as the architect for the conversion of the 16-story commercial building into 128 studio, one- and two-bedroom condo units.Lower Manhattan
120 Greenwich Street
Larry Devine and partner Charles Cecil of Barrington Equities are converting the 13-story rental apartment building into a 102- unit luxury condominium. Thirty- five of the units will have a view of Ground Zero and Tribeca when the Deutsche Bank building is demolished. The state has not yet approved the offering plan, but prices are expected to start in the $400,000s, the Daily News reported. Contact: 212-366-4877, www.greenwichplace.com.Madison Square Park North
76 Madison
76 Madison Avenue
The 32-unit condo-conversion building opening next summer will have its own chef. Geoffrey Zakarian, the chef behind the forthcoming Country (the Downtown counterpart to his Town restaurant on West 56th Street), will provide private catering to residents, the Post reported. Prices for the units will range from $995,000 for an 800-square-foot one-bedroom to $2.95 million for a 2,300-square-foot three-bedroom. A 2,600-square-foot penthouse is on the market for $5 million. Prudential Douglas Elliman is the exclusive sales and marketing agent. Contact: 212-431-7696, www.76madison.com.Soho
40 Mercer Street
Sales are now under way at Andr Balazs’ 15-story luxury condominium. The building, designed by French architect Jean Nouvel, is topped by a 3,500-square-foot duplex penthouse — where the glass wall of the east-facing living room slides open to transform the entire space into a terrace. Other units range from one to three bedrooms and have 12-foot ceilings. Hines is the developer; SLCE is the project architect. The Corcoran Sunshine Marketing Group is the marketing and sales agent. Contact: 212-925- 5050, www.40mercersoho.com.Upper East Side
Sutton 57
212 East 57th Street
The 24-story tower constructed of rose-colored brick and cream-colored limestone will feature 38 one-, two- and three-bedroom residences with no more than three units per floor. One-bedrooms are priced at $975,000 for 780 square feet, and two-bedroom, 1,260-square-foot units range from $1.445 million to $1.65 million. Three-bedroom floor-through apartments begin at $2.3 million and go as high as $3 million. A 3,000-square-foot duplex penthouse with a terrace is priced at $6 million, the Post reported. Occupancy is expected in early 2006. The Marketing Directors is the sales agent for the property. Contact: 212-829-0057.Upper West Side
Casa Rohan Condominium
70 West 107th Street
The project by Mehta Real Estate features four full-floor apartments and 2,300 square feet of commercial space. Three of the residential units have two or three bedrooms in 1,434 square feet. The fourth unit is a 2,368-square-foot, four-bedroom duplex with a private balcony and a 450-square-foot terrace. Prices range from $1.18 to $1.6 million, with occupancy slated for November. Dhia Barnes and Elizabeth Steele of the Warburg Marketing Group are handling sales.Upper West Side
The Hudson
225 West 60th Street
The new 80-unit luxury condominium is slated for completion in May 2006. Its one-, two- and three-bedroom apartments will range in size from 612 square feet to 1,776 square feet, and the seven penthouses will range in size from 1,036 square feet to 1,656 square feet. Opening prices will start at approximately $600,000.Construction Update
Long Island City
45-56 Pearson Street
Demolition is under way at the site, where developer Mark Junger plans a 20-story tower with 120 condos. The building will have a swimming pool with a retractable dome and a running track. Marketing will begin early next year, and sales will start in the spring, the Daily News reported.Lower Manhattan
133-135 Greenwich Street
Developer Haysha Deitsch’s project is on hold while he seeks approval from the federal Environmental Protection Agency for a plan for asbestos abatement inside the small buildings currently occupying the site, the Daily News reported. He plans a 33-story, 101- unit glass tower designed by Costas Kondylis and Partners.Midtown
Place 57
207 East 57th Street
Construction topped out in October on the Clarett Group’s 36-story glass and steel-clad luxury condominium project. Occupancy is expected by summer 2006.Upper East Side
170 East End Avenue
The former Beth Israel Hospital North Singer Division has been demolished, and excavation is under way by Skyline Developers, an affiliate of New Jersey-based Garden Homes. Construction will soon begin for a 19-story, 110-unit condominium tower. Prices for apartments are expected to start at nearly $2,000 a square foot, the New York Sun reported.Williamsburg
184 Kent Avenue
The Landmarks Preservation Commission has designated the Austin, Nichols & Co. Warehouse. The landmark designation may interrupt developer Louis Kestenbaum’s plans to turn the 90-year-old, 6-story building into 240 luxury condos by 2008. Among Kestenbaum’s plans for the warehouse are four new floors and a new open-air courtyard, the New York Observer reported.Development in Brief
Manhattan (from north to south)
157 East 84th Street
Josh Guberman of Core Development Group plans to develop a condo at the site.1438 Third Avenue (at 81st Street)
Broad Street Development plans to convert the 31- story, 147-unit rental building into a condo with 47 one-bedroom and 40 two-bedroom units.515 East 72nd Street
David Werner, along with C& Properties and other investors, plans to convert the 410-unit River Terrace rental building into condos.Corner of East 67th Street and First Avenue
Demolition has begun at the site of the Collegiate Church, across from Memorial Sloan-Kettering Cancer Center. Developers Simon Elias and Izak Senbahar plan to build residential condominiums.Site next to 420 East 61st Street
Demolition of the five-story parking garage is scheduled to begin for a new residential tower by Sheldon Solow.1123 York Avenue (at 61st Street)
The Manhattan borough president’s office and Community Board 8 approved plans for the Witkoff Group’s 26-story, 100-unit residential condominium tower.250 East 60th Street
Developer planning a 10-story residential tower with affordable housing on the site.946-950 First Avenue (at 52nd Street)
A residential tower is planned.936 First Avenue (at 52nd Street)
A 2-story addition is planned for the vacant four-story building. When it is completed next year, the property will have five full-floor residential units.342 and 344 East 50th Street
Time Equities is converting two brownstones into 15 condos. Across the street, American Development Group and Langsam Property Services are doing a gut renovation of four 5-story buildings.250 East 49th Street
A developer is building a 20-story condominium tower with 31 residential units.563-569 11th Avenue (at 43rd Street)
The Moinian Group bought the 6-story Verizon Building and will demolish it for residential condos next year.396, 398 and 400 Fifth Avenue (at 36th Street)
Developer Yitzchak Tessler is planning a 50-story condominium.11 East 36th Street
The 12-story mixed-use office building is being converted into 68 residential condos and three commercial condominiums.30 Park Avenue (at 36th Street)
A condo conversion is likely.1 East 35th Street
Commerce Bank provided a $40 million financing package to 35th Street Associates LP, which is building a 91-unit residential apartment building at the site.35th Street between Fifth and Madison avenues
A local developer is building a 20-story rental tower for low- and middle-income tenants.47-49 East 34th Street
Demolition of the vacant buildings is planned for a residential condominium.232 East 25th Street
Arthur Leeds & Associates is developing a 13-story, 54-unit residential condominium building.122 East 23rd Street
A new residential tower is expected on the parking lot site.254 Park Avenue South (at 20th Street)
Local investors are converting the property to condos.72-76 Greene Street
Red Brick Properties is planning a conversion into residential condos with a single retail component.Queens
6th Avenue and Fourth Street
Brooklyn developer Shia Ostreicher plans to build a condominium on the East River waterfront in Astoria, Crain’s reported. The site can support nearly 155,000 square feet of development.13-11 Jackson Avenue
Developer Ron Hershco is laying the foundation for a 13-story building with 55 apartments in Long Island City. The Developers Group will start marketing the units early next year, and sales are expected to start in the spring, the Daily News reported.41-17 Crescent Street
Developer Ari Chitrik plans a 17-story development in Long Island City called the Crescent Club, which will have 119 condos with a lap pool and a putting green in a landscaped back yard, the Daily News reported.42-37 Crescent Street
A new condo building is planned for the site in Long Island City, the Daily News reported.5-03 50th Avenue
JCE Construction is planning a new condo building on the waterfront site in Long Island City, the Daily News reported.A look at big new condo projects in the suburbs of New York City Condos in the Country” class=”read-more-link”>[more]
A project-by-project look at Manhattan condos; where buyers are biting New developments: still selling?” class=”read-more-link”>[more]
From Sheepshead Bay to Riverdale, the boroughs are seeing brisk development, but generally dropping [more]
Despite lure of converting completely to condos, some hang on to commercial space [more]
Design and project management roles dovetail as art and commerce meld [more]
Securitized commercial mortgage loans break into condo construction, help drive conversions in NYC [more]
Hefty documents tell buyers and brokers what to expect in new developments and scrutiny can pay of [more]
At up to $6,000 a square foot, Stern’s opulent design on Mayflower site lures bluebloods with greenb [more]
Conversion from rental stalls 555 West 23rd marketing efforts, not sales; design challenges for building [more]
Buyers seek serenity in new projects, and developers find that it sells [more]
Though they may share developers, Miami and Las Vegas broker fresh projects a little differently tha [more]
Condos in Miami and Las Vegas are often larger, shinier, and more elaborate than those in New York. And developers in those sunnier lands are more inclined to help buyers flip their newly bought apartments. Loosely coined the Miami Model, the process involves bringing investors in at a very early stage.
Developers sell pre-constructed units to investors and then work with them to market and resell the same units via an in-house sales team. As a result of the flipping, units are built, bought and sold at a much quicker rate. The developers keep a percentage of the investors’ transaction fees (usually between 0.25 to 10 percent); the investors make a quick buck and the end buyer is satisfied with his or her state-of-the-art condominium.
New York developers, who have traditionally shied away from flip closings, are beginning to see advantages to this approach, and the sales model is being touted by some brokers.
“It’s more of an intelligent model,” said Eddie Shapiro, CEO of Nest Seekers, a brokerage in New York with an office in Miami, “where the developers are more of an investor’s friend. Instead of fighting investors and saying, ‘You’re making money while I don’t,’ they’re saying, ‘Fine, you want to make money on this thing, let’s share the profits, let’s share the risk.’”
So it’s likely that by the time a building has been fully constructed, a unit in it may have been sold multiple times, at appreciating values, though none of its owners have lived in it or even seen it. Some industry experts are dubious about whether the method would work in New York’s expensive real estate market, though Shapiro remains confident.
“You’re selling investors a commodity that they’re buying as an investment,” Shapiro said. “They’re not buying it to live in it, they’re buying it to make money on it.”
JC DeNiro & Associates, another brokerage with offices in New York and Florida, plans to market projects in Manhattan based on this model, managing partner Christopher Mathieson recently told the New York Times. Mathieson’s plans include one project Uptown and two Downtown, though he declined to provide specifics.
Andrew Heiberger, founder of developer Buttonwood Real Estate and former CEO of brokerage Citi Habitats, is toying with a slightly different angle.
“Most condos,” Heiberger said, “don’t want investors, as they end up leaving the buildings potentially unstable for occupancy.”
His main concern is whether to allow unit owners to resell units, once all the condos have been sold out. This approach, he said, will reverse the no-flip New York policy and will make it more amenable to users. Heiberger is gearing up for the start of sales at Sundari Lofts & Tower, on Madison Avenue and 32nd Street, expected to hit the market at the beginning of November.
Working as a broker, Heiberger said one of his clients bought a unit in Miami’s opulent 10 Museum Park for $815,000. He flipped the sale for $1,300,000 and walked away with a total profit of $394,000, after paying a developers/marketing fee of $91,000.
“Most commonly,” Heiberger said, “when people flip their units, they’re looking to make a profit, but what if somebody has a life-changing circumstance they lose a job, lose security, and basically need to get out of a contract?”
Nonetheless, Mathieson sees the model coming to the Big Apple.
“It’s going to be done more and more in New York,” he said. “The condo craze is 13 to 14 years old in Miami. In New York, it’s just a few years old.”
Kevin Small, director at marketing firm Alpha Vision, agreed. That firm is involved in marketing projects in Miami and New York.
“I’m optimistic about the growth for the investment model in New York,” he said. “There’s a generation of big-time investors who will be eager to capitalize on it. After all, New York is New York.”
Philadelphia: America’s Next Great City?
Residential/Commercial
Philadelphia’s real estate tax abatements are starting to change the residential reality of the city. The abatements for developers are helping spur an unprecedented construction boom in even Philadelphia’s most marginal neighborhoods, according to the Philadelphia Business Journal. In 1997, the City Council passed a 10-year real estate tax abatement for developers who convert commercial buildings into residential; in 2000, the council passed a similar abatement for developers of new residential construction. Since 1997, 328 properties across Philadelphia have been converted, the Business Journal reported, reversing a trend in a city that has been steadily losing residents for the past few decades. There are now more than 9,000 fresh residential units in the pipeline. This residential growth is part of the reason that National Geographic Traveler in its October issue dubbed Philadelphia America’s “Next Great City.”–
AtlantaCommercial/Residential
September saw the unveiling of plans for one of the biggest new redevelopment projects in Atlanta. The city will vacate City Hall East on Ponce de Leon Avenue and sell the old warehouse to a developer who wants to build a live-work-play community, the Atlanta Journal-Constitution reported. The community will include 1,600 residences, nearly 200,000 square feet of retail, and 155,000 square feet of office space, plus 3,500 parking spaces.Commercial
Hurricane Katrina may have speeded up construction on Atlanta’s newest office tower. The developer, fearing construction costs from the hurricane’s impact, broke ground in late September, earlier than expected, according to the Atlanta Journal- Constitution. The 18-story, 300,000- square-foot building on Peachtree Street does not yet have any tenants and will cost about $60 million.Boston
Commercial
Blocks of office space greater than 100,000 square feet are dwindling in the suburban Boston commercial market. Landlords in three suburbs Andover, Waltham and Quincy recently signed leases of more than 100,000 square feet, according to the Boston Business Journal, shortening significantly the list of options for tenants who don’t want to pay commercial prices in Boston proper.Residential
The housing market in Massachusetts may soon favor buyers over sellers. In late September, 25,843 single-family homes were on the market in the Bay State, the Boston Globe reported, the highest number of homes on the market since at least 1998. The market had about seven and a half months of supply, leading some to speculate that the state’s housing market outside of Boston may gradually edge toward buyers selecting from sellers who are tired of having their houses on the market.Chicago
Residential/Commercial
Downtown Chicago is undergoing its third big wave of condo conversions within the last 35 years, according to the Chicago Tribune. Downtown could see more than 4,000 conversions this year, as commercial buildings are changed over and rentals, too, are converted to capitalize on demand for condos. The rate of conversion from rental apartments to condos in Downtown is more than four times the annual average over the last 15 years, the Tribune reported.Residential/Commercial
Huge housing developments of 1,000 to 3,000 homes are under way in several locations southwest and northwest of Chicago. These suburban mega-developments, the Chicago Tribune reported, include the 2,000-home Talamore development in the suburb of Huntley and the 1,030-home Southbury development in Oswego.Las Vegas
Residential/Commercial
Tishman Construction was selected to oversee the 66-acre, $5 billion MGM Mirage development, Project CityCenter, in the heart of the Las Vegas Strip. The mixed-use development will be the largest U.S. construction project, the New York Post reported.Residential/Commercial
A second tower will be added to the Majestic Las Vegas resort. Originally, only one tower was slated for the condominium-hotel resort on the Strip, but the developer decided in September that the construction costs justified a second one. One of the towers will be a 60-story Conrad Hotel, part of the Hilton brand, with more than 500 suites around 800 square feet each, according to In Business Las Vegas. The second tower will be a condo-hotel hybrid with 40 stories and at least 560 units.Residential/Commercial
About 8,000 condo units in Las Vegas were under construction or about to start by late September. Much of the demand for the fresh condo construction is being fueled by investors and buyers well outside of Sin City, the Los Angeles Times reported. Among the projects, Donald Trump is building the Trump International Hotel & Tower a short distance from his ex-wife’s new condo development, the Ivana Las Vegas.Los Angeles
Residential
If the first six months are any indication, Los Angeles is on pace to easily have a record housing sales year in 2005. Through June, the Los Angeles Daily News reported, sales in L.A. County were 8 percent ahead of the first six months of 2004. New home construction is also ahead of last year’s pace which was the strongest since 1989 up 1.9 percent through the end of June over the first six months of 2004.Residential
And home prices, like home sales, are also up in L.A. County. The median price of an existing home there rose 23.9 percent to $564,340 in August from $455,590 one year earlier, according to the California Association of Realtors. The August median was 3.8 percent higher than the $543,890 median price for a single-family home in July, the Los Angeles Business Journal reported.Miami
Residential
The median price for an existing single-family home in Miami-Dade County dropped to $356,000 in August from $363,800 in July, the Miami Herald reported. That marks the first month-to-month decline in the county in nearly a year, but the August number was still 26 percent ahead of August 2004′s median price. In Broward County, the Herald reported, the average median price increased $1,400 over July to $387,000 in August. That’s a 33 percent increase over August 2004.San Diego
Residential
A group of San Diego developers calling itself the Downtown Residential Marketing Alliance recently pooled resources for a $40,000 advertising blitz to entice condo buyers under 40 to move Downtown. The group reasons that San Diego adults under 40, according to the San Diego Union-Tribune, are the likeliest buyers for units in Downtown’s growing collection of mid- and high-rise condo complexes. A recent survey of Downtown sales offices by the group concluded that three-fourths of recent condo buyers there were 40 or under.San Francisco
Commercial
A group of Hong Kong investors in September bought the landmark Bank of America tower in San Francisco for a reported $1.05 billion. In a 1031 exchange, the investors, Hudson Waterfront Associates partners with Donald Trump on this past spring’s record Riverside South sale on the far West Side intend to use proceeds from that $1.8 billion deal for the tower purchase. (Some reports said Trump himself was part of the deal; he was not involved.) The 1.8-millionsquare- foot Bank of America tower went for $583 per foot.Commercial
A major new commercial complex is going up in the heart of San Francisco’s Jazz District. Em Johnson Interest, a Bay Area developer, is working on a $68 million, mixed-use complex at the corner of Fillmore and Eddy streets, according to GlobeSt.com. The complex will include a public parking garage as well as a commercial base topped by 80 mixed-income condo units in a 13- story tower.Washington, DC
Residential
In a sign of the rising demand for Washington housing, the number of affordable houses and apartments in the District of Columbia dropped by nearly 12,000 in 2004, according to a Washington Post analysis of U.S. Census data released in September. Once generally abandoned by middle-class home buyers who fled to the suburbs, according to the Post, the District is now a boomtown driven by high demand for increasingly more expensive homes.
Entrepreneurial Russians, some the scions of that nation’s nouveau riche, crash the residential mark [more]
Prospect Heights becomes the latest gentrifying Brooklyn neighborhood to get slate of new projects [more]
The development pattern in neighborhoods where warehouses are the ghosts of industry past goes like this: manufacturing declines, old warehouses become new lofts, and everyone applauds the resurrection.
These transformations are now going on in Williamsburg, Greenpoint and Long Island City. The Gowanus neighborhood in Brooklyn, home to a light industry corridor along the eponymous canal to New York Harbor and, more recently, down Fourth Avenue, is also joining the ranks of the recycled. The only glitch, however, is that industry there is not dead, say opponents of plans to rezone the neighborhood into residences for Park Slope or Carroll Gardens exiles.
Rezoning critics say light manufacturing in Gowanus is, in fact, poised to grow, especially as businesses in other neighborhoods find themselves hemmed in by new residences or are turned away by property owners not willing to give them long-term leases.
The Southwest Brooklyn Industrial Development Corporation, a group funded in large part by the city to create jobs in the community, published a survey recently that said there are 550 businesses, most of them small manufacturing companies, in the Gowanus area, up from 300 since their first survey was published in 1997.
“We have found, by and large, that Gowanus is an active industrial area,” said Phaedra Thomas, the executive director of the group. “And so, while I understand and respect the push for residential conversion, it’s a very tricky question.”
Spurred by the housing boom, developers have snatched up property along the canal, which is already being used by recreational boaters on kayaks and canoes. Plans to develop the area into a residential haven, however, have proceeded haltingly.
In April, the city postponed plans to clean up the canal until 2009. The cleanup was seen as a fundamental prerequisite for luring residential development and its postponement has put on hold some of the largest and most controversial development plans.
One such plan comes from one of the city’s most prolific development firms, Leviev Boymelgreen, which is hoping to build Gowanus Village, a 350-unit complex built on three acres between Carroll and Third streets along the canal.
Details of the development remain under lock and key and a spokeswoman at the firm, Sara Mirski, did not answer a list of questions sent to her or respond to numerous requests for comment by The Real Deal.
Leviev Boymelgreen is one of four developers that has met with community board members and other neighborhood groups to discuss their plans to investigate the soil quality, a critical first step in understanding the cost of development. The other commercial interests include homebuilder Toll Brothers; Whole Foods, which has had to postpone plans to open in 2007; and Bay Side Fuel. Its owner, Vincent Allegretti, wants to convert one of his fuel depots along the canal into residential units.
Critics wonder why soil remediation is being sought before a zoning change for residential development has been granted by the city, but knowing the quality of your soil will determine what you do with it, the district manager for Brooklyn’s Community Board 6, Craig Hammerman, said.
Leviev Boymelgreen has applied for a permit that would compensate the company for their remediation under the state’s brownfield program to clean up contaminated industrial sites. The permit is under review, said Maureen Wren, a spokeswoman for the state’s Department of Environmental Conservation.
The health of the soil will determine how much money developers will have to spend in order to make the land ready for residential units. And tax assistance from the state for remediation efforts will be critical in making development projects affordable.
Thomas worries that the cost of cleanup will make it easier for companies to claim a “financial hardship” having potentially spent millions of dollars to clean up the site in order to receive zoning variances.
“It’s not the right way to enter into a community, it’s just not right,” Thomas said.
The executive director of the Gowanus Canal Community Development Corporation, Thomas Chardavoyne, believes investigating the soil is necessary in order to create a comprehensive zoning plan for the community.
“We’re happy to support any investigation that will tell us more about the condition of the soils on the canal,” Chardavoyne said, adding that before any amount of cleanup begins a developer will first determine its cost.
“If he finds strontium 90, you can rest assured he’s not going to proceed,” Chardavoyne said facetiously. (Developers, of course, will not find strontium 90, a byproduct of the fission of uranium and plutonium in nuclear reactors.)
The community board, meanwhile, is actively looking for funding so they can develop a zoning plan that would include a mix of residential and commercial development.
“The common notion out there is that there is room for everyone,” Hammerman said. “It’s just going to take some planning to decide how the Gowanus Canal should look.”
Owners of commercially zoned warehouses, Thomas says, are weary of giving businesses long-term leases for fear they may miss out on a residential housing boom if zoning laws change. The result, she says, is that business is being stymied.
A new zoning plan would take the neighborhood out of its limbo status, Hammerman said.
“We want to lay out ground rules,” he said, “so people know how to play the game.”
WTC commercial and retail may grab headlines, but residential revival is also on the move [more]
REBNY issued subpoenas about commissions, listing service
The Real Estate Board of New York has received federal and state subpoenas requesting data and records about the standardization of commissions and the establishment of a multiple listing service in the city. The deadline for responding to the subpoenas from the state Attorney General’s office and the Federal Trade Commission was Oct. 27, the New York Times reported.Council approves far West Village downzoning
The City Council last month approved the downzoning of the far West Village. The downzoning bars high-rise residential buildings in a 14-block area generally bounded by Horatio Street to the north, Washington Street to the east, Morton Street to the south, and West Street on the west. Two exceptions to the downzoning remain at 150 Charles Street and at Bethune and West streets, both locations of new residential towers.Downzoning for Alphabet City moves forward
Manhattan Community Board 3 approved a downzoning of Alphabet City and a large area of the Lower East Side below Houston Street, the Villager reported. The downzoning, which could be implemented in one to two years after further city approval, would limit the heights of new developments to that of less than existing buildings.City to help fund Brooklyn waterfront project
An affordable housing project marking the first development of the Williamsburg-Greenpoint waterfront since rezoning of the area will get up to $25 million in support, the city announced last month. Construction of 117 units for low- and moderate-income families at Palmer’s Dock in Williamsburg will begin in August. The project is a joint venture between L & L Equity Participants and Dunn Development, Crain’s reported. L & L is also involved in the Schaefer Landing project in Williamsburg, south of the rezoned area.Columbus Circle re-opens after renovation
After more than two years of renovations, Columbus Circle re-opened in late September. The $21.3 million renovation was funded mostly by the city as well as by the Metropolitan Transportation Authority, the Related Companies, and Apollo Real Estate. Columbus Circle is now laid out in a series of concentric rings consisting of a raised area of plantings and fountains in its interior, all surrounding a statue of Christopher Columbus.Chinatown could become Empire Zone
Mayor Bloomberg last month signed a bill that authorizes the city to submit an application for a new Empire Zone in the Chinatown/Lower East Side area, cityfeet.com reported. The program stimulates private investment, business development and job creation through a set of state tax credits and exemptions in areas facing long-term unemployment and economic disadvantage. The city currently has 10 Empire Zones.Officials: Governors Island may need $1B in repairs
Governors Island will need about $1 billion in improvements and repairs before its development potential can be realized, according to government officials. The city and the state bought the 172-acre island between Manhattan and Brooklyn for $1 from the federal government in 2004. Plans for the island have been bandied about ever since, but officials said recently that $290 million would be needed in infrastructure renovations, $60 million in building repairs to stop deterioration, and $650 million to make the island’s buildings usable, the New York Sun reported.Fund to finance 30,000 homes
Mayor Bloomberg last month announced the creation of a $40 million fund to finance at least 30,000 homes for low- and moderate-income people over the next 10 years. The fund will be funded by the city and by five large foundations. The program, the New York City Affordable Housing Acquisition Fund, is being established because the chief source of affordable housing 5,000 vacant lots owned by the city has been sold off over the years, the Times reported.Justice Department tweaks charges against NAR
The U.S. Justice Department last month amended its antitrust lawsuit against the National Association of Realtors. The amendment claims that the trade group’s modified online property listings policy prevents Internet-based brokers from offering lower costs to clients, Inman News reported.Despite doom and gloom reports, late payments on the decline [more]
Study: Vast majority of homeowners plans to pay off mortgages and 25 percent already have; ARM influ [more]
Two major commercial firms announced mergers in late September, and the industry took notice, as executives at competing brokerages dissected what Newmark and Cushman & Wakefield’s moves could mean for an industry where firms increasingly have a global reach well beyond New York.
Mostly, mergers and acquisitions that grow a commercial firm even large ones have beneficial effects, so long as they’re executed properly. As the market gets more competitive, the trend toward consolidation is expected to continue.
“The whole key is to strengthen your platform by acquiring other service lines, other disciplines that strengthen your existing platform,” said Richard Bernstein, New York area president for Trammell Crow Company. “The challenge, of course, is, once the merger is completed, to obtain operating efficiencies where you can maintain and build upon the increased revenue base.”
For Newmark, a relatively big presence in Manhattan commercial real estate, its September merger with Knight Frank gives the firm access to what is the largest privately owned real estate consultancy in the world. The new Newmark Knight Frank the firm’s name as of Jan. 1 will have 240 offices across 30 countries, with about 4,500 employees. Its annual revenues, according to a Newmark release, are expected to exceed $545 million.
Industry giant Cushman & Wakefield, in its acquisition of longtime affiliate Royal LePage Commercial, basically tossed a huge blanket over the Canadian market by taking over one of that nation’s largest commercial real estate services firms. (The acquisition did not include Royal LePage’s residential real estate network.) The new Cushman & Wakefield LePage will have more than 500 employees in at least five Canadian cities.
“In the case of Cushman & Wakefield,” said Michael Colacino, president of Studley, “I think they’re looking to do just two things just reinforce their brand image, which is something that kind of covers the Earth, and to increase the size of their revenue year in and year out. They have to show growth.”
The push for ever greater revenue Colacino estimated that Cushman & Wakefield looks for annual profit margins of 15 to 20 percent means that consolidation may be a hallmark of the commercial industry in the years to come. It’s a quicker way for revenue growth, particularly for larger firms. And, for firms that are smaller than Cushman, like Newmark, mergers also enhance their reach in the market.
“[Firms are] trying to gain, obviously, coverage for a buyer community that is more and more concerned with picking an alliance partner that covers a wide range of areas than picking a single broker for a specific market,” said Peter Riguardi, president of New York operations for Jones Lang LaSalle.
“[The industry's] become more national and more global,” he added, “and people want to spread out their risk from market fluctuation. So I think the industry continues to consolidate.”
Will Silverman, 26, became in October the youngest managing director in commercial brokerage Studley’s 51-year history. Silverman was bumped up from associate director, where he worked closely with executive managing director and big-time building sales broker Woody Heller. Heller brought Silverman to Studley from CB Richard Ellis in 2003 to work with him in the brokerage’s capital transactions group.
Silverman said last month that Heller has served as his mentor for the past few years, taking him from someone with no real estate experience he was a banker at JP Morgan Chase before CBRE to someone who regularly works on all qualitative aspects of Studley’s commercial deals.
“I get an interview with this Woody Heller character,” Silverman said, recalling his initial job interview with Heller in mid-2002. “And the interview begins with me walking into a room, him picking up the phone and talking for 10 minutes, and then hanging up. And then he asked me, ‘OK, what building was I talking about?’ ‘What are the retail tenants in that building?’ ‘What are the cross streets for that building?’… And so on and so forth. We left it at ‘we like working together, but I’m very green.’ I had no real estate experience.”
Heller eventually gave Silverman a one-week tryout including nighttime tutorials on real estate at CBRE that turned into a full-time job. That tryout didn’t come as a fluke: Silverman said he pursued work with Heller for more than four months following their first interview.
Now, while at Studley, Silverman has contributed to closing about $2.1 billion in sales transactions covering more than 7 million square feet, including the sale of 125 Park Avenue and the sale of a 75 percent interest in One Park Avenue.
Coldwell Banker Hunt Kennedy promoted in October two of its residential brokers to key management posts in Manhattan. Ann Guttman, at Coldwell for 13 years, was tapped to manage the firm’s Downtown office. She succeeds Kevin Kovesci, who was named manager of Coldwell’s Upper East Side office.
Downtown now offers its most sales opportunities through its myriad of new developments, Guttman told The Real Deal. Neighborhoods there, she said, tend to appreciate fast something prospective buyers seem to intuitively understand. She will oversee 36 brokers out of an office on Sixth Avenue near Eighth Street, and said the upcoming round of Wall Street firm bonuses could lead to a buying spree Downtown.
“It’s the place people want,” Guttman said of Downtown. “They think that [housing] appreciates a lot if you get in on the bottom.”
For Kovesci, who comes to Coldwell’s office at 81st Street and Lexington Avenue from its Downtown office, the Upper East Side seems a veritable Valhalla for Manhattan home buyers, especially as the sales market cools. He said he sees availability in a range of home sizes. Kovesci manages 65 brokers at his new post.
“Coming from Downtown, I’d say it looks like a bargain to me,” he said. “The Upper East Side seems to be so much more affordable to me than Downtown.”
New York brokerage sprouts around enterprising brothers and their buddies [more]
It would seem natural that real estate, one of the most-talked about topics nationwide, would spawn some sort of (non-reality) TV show.
It did. Alas, that show is “Hot Properties.”
At least, that’s the general critical reception for the new ABC sitcom about four female real estate agents navigating the Manhattan market for their clients and for themselves. The latter seems to be the main bone of contention for critics writing about the month-old show that airs Fridays at 9:30 p.m. and that, according to Nielsen, drew 6.1 million viewers in its debut.
“Location is everything,” New York Times TV critic Alessandra Stanley wrote shortly before the Oct. 7 premiere. “‘Hot Properties’ tries to dazzle with high-rise glamour there are offhand references to ‘a duplex in the Ansonia’ but the series has only a hazy sense of place: it could just as easily be set in Los Angeles or Miami… It’s a very conventional, sedate sitcom about sex.”
Inevitably, critics drew comparisons to another show about four women in the Big Apple, but none of the comparisons were particularly favorable “Sex and the Witty? Hardly” was Newsday’s headline on a review that summed it up as “smutty.”
Warner Bros. Television, the production company behind “Hot Properties” along with Interbang, declined to comment for this story. Brokers, however, did not.
“There is nothing that would give me more pleasure than to comment on this truly third-rate sitcom,” wrote the Corcoran Group’s European sales director, Patricia Warburg Cliff, in an email to The Real Deal. “It is vulgar, inaccurate, and non-representative of 99 percent of this city’s hard-working, professional brokers, many of whom have advanced degrees and come from other respected professions. There are many interesting, quite adventuresome aspects of being a real estate broker in New York City. This sitcom captures none of them.”
