The best worst-case scenarios for how the b-word could play out How high can it go?” class=”read-more-link”>[more]
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During the past year or so, it seemed no expert or news outlet could stay mum when the housing market came up in the national conversation. Here is a digest of the speculation from major media regarding the much-disputed bubble. The housing bubble? Glad you asked…” class=”read-more-link”>[more]
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Bests building benchmark: a look at new condos by neighborhood Brooklyn by the numbers
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New condos rise with park views High times along the High Line” class=”read-more-link”>[more]
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Lower Manhattan office market emerges from summer in recovery mode; AmEx lease at 7 WTC helps [more]
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Perhaps it’s his West Coast background and sometimes casual surfer style that makes Kent Swig the exception among city office landlords. It also might be his approach to Lower Manhattan.
Swig, whose company Swig Equities is the fifth-largest Downtown commercial landlord, has worked to keep his 3.4 million square feet of properties as office space while much of the area converts to residential.
Swig also sounds like a bit of a contrarian when he discusses the area’s rebuilding effort, calling the Freedom Tower less important than adequate transportation planning. “That’s Gov. Pataki’s legacy,” he says, “not another tall office building in Manhattan.”
Swig is also co-chairman of Terra Holdings, which owns brokerages Brown Harris Stevens and Halstead, and he was recently involved in the purchase of the Sheffield, the largest residential building sale in the history of the U.S.
The Real Deal sat down in mid-August for a chat with Swig as part of our weekly podcast series. The complete audio interview can be heard at TheRealDeal.net.
The Real Deal: In your approach to real estate, you seem to be bucking the conventional wisdom on a number of fronts. You have a lot of great buildings that are prime for condo conversion, yet despite the hot residential market you’ve passed on going residential Downtown.
Swig: That is true. The first building I purchased was in March of 1998, which was 48 Wall Street. And, actually, originally we were going to convert that into a residential rental building. At the time, the market was about evenly split for a residential building and commercial building or even a hotel evenly balanced in terms of the income production that would be generated for the building. As it turned out, the commercial market caught on fire and we decided to keep it commercial. Based on that success, we rolled into 5 Hanover Square, 44 Wall Street, 80 Broad Street, and 110 William Street.
TRD: Does your staying commercial reflect any concerns over a potential condo glut in Lower Manhattan?
Swig: I hope not. We have a building at 25 Broad Street that we are closing on in a couple of weeks, with 347 units and about 600,000 square feet. So we’re a big believer in residential as well.
If anything, Downtown is building up on itself where actually the residential market is enhancing the commercial market, and the residential market itself is building on itself to bring in more people, which is creating a better synergy in the marketplace.
As far as a condo glut, everything that’s on the drawing board, if you look at history, never gets built all at once. It just doesn’t happen.
TRD: So much office space has been converted to residential Downtown, yet it doesn’t seem to have driven down the vacancy rates by much. Is this impact still to be felt? What is your outlook for vacancy levels?
Swig: It’s interesting there are actually 36 buildings in Downtown Manhattan, representing 10.1 million feet, that had been taken off the market for residential conversions many of them rental, not condo. Plus, another 13 million feet that has been taken out of the marketplace as a result of Sept. 11 and the destruction of the World Trade Center.
That represents almost 22 percent of the entire commercial Downtown market taken out since 1995. And one would say, with all that taken out, why wouldn’t it be lower?
The answer actually is the opposite as a result of 23 million square feet taken out of the Downtown market, 23 million square feet of tenancy was taken out of the marketplace because those spaces weren’t vacant.
So you have shrunk the commercial population which means fewer people working there, fewer people going out, etc. That has taken away some of the synergy that Downtown had and actually caused the vacancy rate to increase. However, in a longer perspective, the residential population has reinvigorated Downtown into a 24-hour city, and more tenants want to be located down there.
TRD: What is your outlook for rebuilding Downtown?
Swig: Four of the largest transportation hubs in the United States individually are being built Downtown. One is finished the Whitehall Street ferry station; the other one is the ferry station being built at the foot of Battery Park; the other is the Santiago Calatrava PATH station, which is going to be started in September; and then the other one is the Fulton Street Broadway station which will be, quote, the Grand Central of Downtown Manhattan, which will incorporate every single subway line in there.
Before, the subway stations were terrible. There was no central station where you could go and get connections, like Grand Central and Penn Station now you are going to have two of them.
That’s the legacy. What Robert Moses did with the infrastructure. That’s the thing New York needs to do.
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Buildings like new Chelsea Arts Tower are stoking debate over leasing vs. buying workspace [more]
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Properties recently placed on the market [more]
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Nondisclosure agreements are on the rise in New York real estate [more]
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TV production new focus as Barbara Corcoran steps down as brokerage chairman [more]
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As the summer ends amid record housing prices, brokers expect a market correction, not a bubble [more]
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Brokerages tout benefits of walk-in clientele, branding boosts in retail space [more]
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In a city awash with publicists, real estate seeks that extra buzz [more]
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Chelsea
501 West 17th Street
Edison Properties applied for a special permit from the city’s Planning Commission to develop its parking lot site, which occupies the block bounded by West 17th and West 18th streets and 10th and 11th avenues. The company plans to build 869 residential condominium units. The site is now occupied by a 377-space parking lot leased by the Drug Enforcement Administration. The lease runs through 2007, the New York Sun reported.Flatiron
55 West 25th Street
A rental building is going up in place of one of the last Sixth Avenue flea markets. Rose Associates and Alan Locker plan to build a 36-story building for about $205 million. The building is expected to have 407 units and 20 percent of those will be reserved for people with low incomes, the New York Post reported.Gramercy Park
231-235 East 17th Street
Vesta Development will renovate the 31,000-square-foot building to create 13 luxury condominiums. The units will range in size from 1,200 to 3,500 square feet and are expected to sell for more than $900 per square foot. The property also features a dramatic two-story chapel.Greenpoint
The Park Tower Group is working on a 20-acre development along one half-mile of the East River waterfront. The development will create approximately 4,000 apartments within towers, lofts and townhouses and incorporate street-level retail and parking. Allen Dzbanek, previously of Hudson Waterfront Associates, the managing partnership developing Trump Place, was hired last month to direct construction.Harlem
103 West 118th Street
Developer Steve Judelson did a complete gut renovation of the elevator property to create seven condominium units. The building features a duplex apartment on the first floor, penthouses with access to a roof deck and 1,650-squarefoot full-floor units. Prices for the condos range from $299,000 to $889,000. Occupancy is expected in October 2005. Warburg Marketing Group is the exclusive sales agent. All the units are offered to qualified buyers selected through a lottery.Harlem
125 Central Park North
The 11-story, 17-unit building is the first condo on Central Park North, according to Halstead, which is marketing the property. Two- and three-bedroom condos, as well as full-floor homes, are priced from $729,000 to $1.6 million. Queva Lutz and Sara Olsen are the developers. Norman Horowitz of Halstead will oversee sales.Harlem
Carriage House Loft Condominium
458 West 146th Street
The former stable will feature eight 1,800-square-foot lofts priced from $935,000 to $1.296 million. The building will be done in January 2006, the Post reported.Harlem
Uptown NY
The City Environmental Quality Review process is proceeding for the $140-million mixed-use development that is expected to bring 1,500 units of mixed-income housing and 700,000 square feet of retail and commercial space to a multi-block area bounded by 125th and 127th streets and Second and Third avenues. The developer is Urban Strategic Partners, a joint venture of Grid Properties and the Gotham Organization. The project could break ground next year and is expected to be completed by 2016, according to GlobeSt.com.Lower Manhattan
Site abutting 2 Gold Street
Rockrose Development Corp. bought the last piece of land it needed to build a second apartment building next to its 51-story rental tower at 2 Gold Street. Zoning allows for 181,000 square feet of residential development on the block’s southeast corner. The northeast corner can support a 260,014-square-foot, 41-story hotel with 416 rooms. CB Richard Ellis is marketing the site, the Post reported.Lower Manhattan
90 William Street
Mario Procida and Louis Greco are planning to convert the 146,000-square-foot Class B office building to condos, the Post reported.Madison Square Park
31 East 28th Street
Developer Henry Justin is in contract to convert the building into 20 condo units and two duplexes. The conversion of the commercial building will cost about $19.5 million and will leave the developer with around 43,000 square feet available for residential sale. The condo units will range from about 1,775 to 1,950 square feet.Park Slope
198-210 16th Street
The five-story, 32-unit luxury condominium was designed by architect Karl Fischer, with interiors by Andres Escobar. It will offer a full gym, parking and extra storage. Aguayo & Huebener Development is preparing to market the one- to three-bedroom apartments, which include duplexes on the upper and lower floors. The developers are Mordechai Hirsch and Joseph Gruber. Construction should be completed within the next 12 months.Soho
209-211 Hester Street
The industrial building will be converted into 16 condominiums, including three triplex townhouses and two duplex penthouses. The units are expected to sell for between $1,100 and $1,300 a square foot, with the penthouses approaching $5 million. Construction is expected to begin in late fall and be completed by late 2006. Sonnenblick-Goldman Co. arranged the financing; total project costs are anticipated to be $20 million.Tribeca
Tishman Speyer Properties has become the top contender to buy land being sold by New York Law School, with a bid of $153 million. The 12,500-foot parcel can support a 306,155-foot residential tower with no height limit on the northeast corner of the block bounded by West Broadway and Worth, Leonard and Church streets. The deal also involves the construction of a new 300,000-square-foot law school, while other current facilities would be redeveloped, the Post reported.Upper East Side
206 East 95th Street
Perry Finkelman of American Development Group and Mark Engel of Langsam Property Services have formed a joint venture to renovate the 18-story glass-and-brick building. With architect Reuben Gross of Reuben Gross Associates, the team will design and construct 43 condominiums. The project is expected to generate sales in excess of $55 million. The marketing agent is Shvo Marketing. Sales are expected to start later this year, according to GlobeSt.com.Upper West Side
Fifteen Central Park West
Zeckendorf Development unveiled details about its new 202-unit condo project on the site of the recently demolished Mayflower Hotel. Plans for the site include two buildings designed by Robert A.M. Stern one 20 stories, the other 43 that will connect at the base. Units will range from full-floor penthouses of more than 6,600 square feet to one-bedrooms at just over 1,000 square feet. Move-in for the first residents is slated for early 2007. Zeckendorf Marketing is the sales agent for the development.Construction Update
Greenpoint
The Glass House
190 Green Street
The 10-unit condominium with eight two-bedrooms, a two-bedroom penthouse and a two-bedroom duplex is set to open this summer. Apartments start at approximately $549,000. Contact: Patrice Mack, Prudential Douglas Elliman, 212-683-0190.Harlem
The Langston
68 Bradhurst Avenue
The Richman Group Development Corporation and Gotham Organization broke ground in August for their second Harlem residential development. The 10-story building will have 180 one- to three-bedroom condo units, as well as a 24-hour concierge, fitness facility and 37,000 square feet of ground-floor retail space. Manhattan Apartments Inc. is the exclusive sales and marketing agent. Apartments will be marketed through a city-supervised lottery that gives a preference for half of the units to income-eligible residents of Harlem Community Boards 9 and 10. Contact: Anthony von Meyers, Neil Tilbury, 212-835-1001 or www.thelangston.com.Lower Manhattan
Five Nine John Lofts
59 John Street
Prudential Douglas Elliman announced the beginning of sales for the condo building. Studios to three-bedrooms are asking $350,000 to $1.225 million. Andres Escobar designed the interiors. Contact: Richard Shade, David Wanamaker, 212-349-5900.Financing
Bushwick
Montrose Flats
204-206 Montrose Avenue
The New York Mortgage Company provided financing for the buyers of the two-building, 15-unit condominium redevelopment. Halstead Property is marketing the units, which start in the mid-$300,000 range. Michael Zazza is the developer.Chelsea
Chelsea House
130 West 19th Street
The Clarett Group obtained a $17.5-million mezzanine construction loan for the 13-story, 64-unit condominium. Sonnenblick-Goldman Co. arranged the financing. A union pension fund adviser provided the funding.Flatiron
Sky House
11 East 29th Street
Sonnenblick-Goldman arranged a $30.4 million mezzanine construction loan for The Clarett Group. Clarett is developing the 54-story, 139-unit luxury condominium, which overlooks the landmarked Church of the Transfiguration. ASB Capital Management Inc. provided the funding. The total project cost is approximately $165 million.Greenwich Village
135 West 4th Street
CapitalSource Finance provided a $12 million acquisition and construction loan for the conversion of the former Washington Square United Methodist Church into an eight-unit residential condominium. The development plan involves maintaining the existing landmarked exterior while performing interior construction and adding five floors. The ground floor will consist of two apartments with outdoor patios, and the fourth and fifth floors will contain two penthouse duplexes. Construction will start as soon as permits and zoning permissions are received. The project should take nine to 12 months to complete, and the units are expected to go on sale next summer, according to reports.Sales Update
Bryant Park
Bryant Park Tower
100 West 39th Street
More than 65 percent of the 94 luxury apartments were sold in their first four days on the market. Marketed by Shvo Marketing, the 45-story tower hit the market on July 19 and more than half of its luxury spreads were sold for at least $1,300 a square foot by July 23. Two of the tower’s four penthouses sold for more than $2.1 million. The interiors of all the apartments were designed by Brian Callahan of Kondylis Designs.Chelsea
555 West 23rd Street
Sales will soon begin at the 337-unit condo project, which comprises two buildings one 15 stories, the other 12 and runs through to 24th Street. The complex, which was initially planned as a luxury rental, will feature a 9,000-square-foot landscaped courtyard. Studios to two-bedrooms range from 460 to 1,230 square feet, with prices from $510,000 to $1.6 million. The 1,190-square-foot two-bedroom penthouses will cost $2.3 million. Stephen B. Jacobs is the architect and Andi Pepper designed the interiors.Harlem
The Walden
65-71 East 130th Street
More than half of the residences have been sold since sales started in April. Brokered by Prudential Douglas Elliman, the Walden includes 25 one-, two- and three-bedroom residences, including six penthouses, priced from $405,000 to $995,000.Jersey City
The Roosevelt
180 10th Street
Renting is under way at the LeFrak Organization’s 7-story, 128-unit apartment building. Studio to three-bedroom units average 430 to 1,308 square feet; rents range from $1,250 to $2,300 per month. The building offers on-site parking, a fitness room and a 4,000-square-foot convenience store.Times Square
1600 Broadway on the Square
1600 Broadway
First residential condo building in Times Square will have 137 units, many with home office, balconies and floor-to-ceiling windows. The building will include a 24-hour doorman, fitness center, entertainment lounge and rooftop terrace. Contact: www.1600broadway.com.Tribeca
200 Chambers Street
More than 40 percent of the 258 units went into contract within three weeks of the start of sales on July 4. The building is a collaboration between famed architect Lord Norman Foster, who was involved in the initial design, and renowned architect Costas Kondylis, who completed the project. The Marketing Directors is the marketing and exclusive sales agent. Contact: 212-334-8383 or www.200chambersstreet.com. -
Rising land prices have made putting together large land parcels a more expensive proposition, but the jury is still out on whether they’ve forced a general scaling back during a roaring real estate market.
Some developers say rising land prices have spurred more landowners to put their properties on the market, which may be prompting developers to assemble lots for development.
“When land was worth $100 a foot, landowners were a lot less motivated than now, where land prices are $300 to $400 a foot,” said Christopher Albanese, principal at the Albanese Organization Inc. Also income from buildings today is typically less than what the building would be worth if sold.
“Now, it’s easier to assemble because the value of the building is a lot greater than the income of what exists,” Albanese said.
But Robert Knakal, chairman and founding partner of Massey Knakal Realty Services, said there are at least two obstacles to land assemblage in the current New York City real estate market.
One is that the market encourages developers to begin building as soon as possible, so buying a single parcel is preferable. Land assemblages can take as long as a decade to come to fruition.
“Given that assemblage can take so long, it’s preferential for a developer to buy a site today where he can get into the ground right away,” Knakal said.
Jon McMillan, director of planning at Rockrose Development, agreed that many smaller developers may feel pressure to develop quickly.
“A lot of developers get a piece of property they pay a lot of money for, and that induces them to go into development right away,” he said. “And because they tend to overpay for properties, that means they have to do high-end condominiums.”
Knakal also said building values are catching up to development values, or at least to a building’s value to developers as part of an assemblage. What makes it harder to quantify is that those values are hard to pinpoint, he said.
“If a seller finds out that you own a large piece [of nearby land], and you’re trying to assemble it, he can try to gouge you,” said Elan Padeh, president and CEO of the Developers Group, which consults with property developers.
Some developers avoid problems like that by purchasing air rights from neighboring lots, which can be bought for about half the cost of the land itself, Padeh said.
Yair Levy, principal of Y.L. Real Estate Developers, recently took advantage of that reduced pricing to complete an assemblage on Third Avenue between 23rd and 24th streets, which, instead of developing, he sold. J.D. Carlisle Development was the buyer, and is planning residential with a retail component for the site, according to reports.
Levy purchased the air rights from the U.S. Postal Service and a neighboring building to turn a lot upon which he could have built to 170,000 square feet into a parcel where he could build to 300,000 square feet.
“When you buy air rights, the price per square [foot] is normally much cheaper, so your average [development cost] per square foot comes down,” he said.
But since Levy wasn’t worried about developing the parcel, he simply collected $85 million upon its sale after purchasing the assemblage for a total of $35 million the year before.
“I was lucky,” he said.
Backyard putting greens, bowling alleys, and other touches from more spacious areas lure buyers [more]
The search for building sites gets tougher as prices keep rising [more]
Atlanta
Residential
There’s a newly named neighborhood in Atlanta Midtown West. Close to Midtown and to transportation toward Downtown, it’s a former industrial zone in the city’s northwest corner, and, according to the Atlanta Journal-Constitution, one that developers have only recently discovered. The first condos in Midtown West are going up on the site of a former lumberyard at the corner of Marietta Boulevard and Elaine Avenue. As of mid-July, all but 28 of the 183 loft-style townhouses had been sold.Residential/Commercial
The Lindbergh area is the site of Atlanta’s briskest commercial and residential development. New BellSouth office buildings and a shopping center have opened near the metro station in Lindbergh, and as many as 1,500 new apartments are planned for the area. Developers have also bought existing apartment buildings in anticipation of greater residential growth, according to the Atlanta Business Journal.Boston
Residential
Single-family home sales in Massachusetts continue to struggle. After two months of 10 percent-plus drops in sales volume, home sales were nearly flat in June, compared to June 2004, according to the Massachusetts Association of Realtors. The number of single-family homes was up 0.5 percent in June to 6,084 houses. At the same time, according to media reports, the median sale price of a single-family home continued to climb statewide. The median price was up 4.8 percent in June to $373,500.Residential
Boston has the riskiest housing market in the United States, according to a recent study by PMI Mortgage Insurance Company. Why? The Boston metro area has lost thousands of jobs in recent years, and housing prices in the area have nevertheless increased steadily and sharply. The study gave Boston real estate prices a 53 percent chance of experiencing a net decrease over the next two years.Charlotte
Residential
Sales for existing homes in one of the nation’s fastest-growing metro areas increased 10 percent in June. Some 3,589 existing homes in the Charlotte metro area sold in June, according to the North Carolina Association of Realtors, up from 3,258 in June 2004. The average sales price for an existing home in the area, according to the Charlotte Business Journal, increased 1 percent to $214,144.Chicago
Commercial/Residential
Chicago developer Christopher Carley in late July unveiled plans for what would be the tallest building in the United States. The 115-story tower and its steel spire would clear 2,000 feet, soaring higher than Chicago’s Sears Tower which, at 1,450 feet, is the nation’s tallest building and the proposed Freedom Tower in Lower Manhattan. Designed by Spanish architect Santiago Calatrava, the tower, tentatively named the Fordham Spire and planned for completion by 2009, would rise next to Lake Shore Drive near the entrance to Navy Pier, according to media reports. It would include a hotel as well as condos.Residential
Streeterville, a small Chicago neighborhood along Lake Michigan, is seeing some of that city’s biggest residential development. At least 13 high-rise residential towers are expected in Streeterville in the next five years, according to the Chicago Tribune. That will boost the supply of apartments there by more than one-third, to 12,523 units, and could bring in as many as 5,250 new residents.Las Vegas
Residential
Las Vegas’ status as one of the hottest housing markets in the nation should easily last through the autumn. June was one of the busiest months ever in the city for residential real estate. A record 3,387 new homes were sold during the month, the Las Vegas Sun reported, and more than 5,500 existing homes were also sold, the highest monthly number so far for 2005. Ninety-eight percent of homes in Las Vegas in June sold for the list price, too.Residential
Las Vegas real estate is being discovered as an investment opportunity by more and more people outside the city. Of the estimated 53,000 new condo units currently planned in Las Vegas, as many as 80 percent of buyers are from outside the city, In Business Las Vegas reported. These outsiders want to invest in a growing housing market, but not necessarily live in the condos they buy.Los Angeles
Residential/Commercial
In a trend sure to drive real estate prices in Los Angeles, population growth in Los Angeles County is slowing as more people move east into areas such as San Bernardino and Riverside counties, where housing is generally cheaper. L.A. County added 77,000 residents between July 2003 and July 2004, the Los Angeles Business Journal reported, for a growth rate of 0.8 percent. That was down from 97,000 added the previous 12 months. Riverside and San Bernardino counties, meanwhile, added a combined 148,000 new residents from July 2003 to July 2004, a 4.1 percent increase.Residential
The assessed value of Los Angeles County properties increased almost 10 percent during fiscal year 2005 to $856 billion, according to recent government records. That’s a record value for the county, the Los Angeles Daily News reported, driven mostly by a steady increase in home sales. Through the end of June, home sales in the county were 8 percent ahead of where they were at the same time in 2004.Miami
Commercial
The owners of the South Beach Marriott plan to create the third-largest hotel in Miami Beach. They bought the Eden Roc resort in late July, and announced plans to add a 20-story tower with 300 rooms to the oceanfront resort, the Miami Herald reported. The expansion would give the Eden Roc 649 rooms and is expected to cost between $15 million and $20 million. The expansion comes at the same time as the Eden Roc’s neighbor, the Fontainebleau, also adds hundreds of new rooms and remakes its interior.Philadelphia
Residential
The Philadelphia suburb of Moorestown, N.J., was proclaimed the best place to live in the United States in a recent issue of Money magazine. The magazine analyzed towns and cities with populations of more than 14,000, and rated them on such things as school quality and real estate. Moorestown, with a population of less than 20,000, has a median single-family home price of $375,000, driven in large part by Philadelphians moving to the suburb for quieter living.Residential/Commercial
Record gasoline prices in Philadelphia as high as $2.42 a gallon may ultimately reshape the city’s real estate development, according to experts interviewed by the
Philadelphia Daily News. Commuters strained by high gas costs may be forced onto Philadelphia’s much-maligned mass transit system, and that rise could cause a spur in commercial and residential development around rail and subway stops throughout the city.San Francisco
Residential
A condominium conversion craze is sweeping the San Francisco Bay area. Developers are converting more and more commercial buildings and apartment complexes, according to the San Francisco Chronicle, to satisfy continued strong demand in what is already one of the nation’s most expensive housing markets. More than 700 condo conversion units had been approved by the city as of late July in San Francisco’s central business district alone, with hundreds more on deck. In San Mateo, the old Benjamin Franklin Hotel is being converted into 40 condos. Condos are generally cheaper than houses in the Bay Area, according to the Chronicle. The median price in June for a condo there was $481,000, compared with $644,000 for a detached, single-family home.Residential
Construction on San Francisco’s tallest residential building should begin in September. Developed by New York-based Millennium Partners and scheduled for completion by 2009, the $400 million Millennium Tower on Mission Street will house 420 condos, with earlier plans to include hotel and office space having been scrapped, according to the San Francisco Business Times. At 465 feet, the Millennium Tower will be San Francisco’s fourth-tallest building overall.Washington, DC
Residential
The Washington, D.C.-area housing market has started to slow down. The number of houses for sale in the area has increased by 50 percent in the past few months, according to the Washington Post, driving the available inventory to about 35,300 homes, well above the average of 23,000 for the past three years.
Plans unveiled for 2,000 new apartments in former industrial zone [more]
Lincoln Center renovation to be ringed by at least fifteen new buildings [more]
Once rife with ethnic tension, the neighborhood is snagging the attention of bargain hunters [more]
Bill would restrict issuance of building permits until City Council votes [more]
Study likely to recommend housing for Queens West, once slated to host 2012 athletes’ village [more]
Biotech builder named for Kips Bay
Mayor Bloomberg announced the selection of Alexandria Real Estate Equities to develop the East River Science Park into the largest commercial bioscience center in New York City. The new 870,000-square-foot facility will be built on a city-controlled site on Bellevue Hospital’s campus between East 28th and 29th streets, east of First Avenue. The total cost is expected to be $700 million.City Council bills try to delay new developments
A bill introduced by Council member Tony Avella would put a moratorium on building permits issued to developers between the time the City Planning Commission approves a rezoning and the City Council passes it about 45 days. The Real Estate Board of New York opposes the bill. Another bill, introduced by Council member Michael McMahon, would delay demolition permits from being issued for buildings more than 50 years old until the Landmarks Preservation Commission reviews the property for possible historical significance, Crain’s reported.Vendors group may block Related’s plans
A group of Bronx Terminal Market vendors is trying to block the Related Companies’ plans to build a $394 million, 1-million-square-foot shopping mall on the site of the market. The group of vendors planned to file a motion in court last month seeking to nullify the lease for the site between the city and Related. The group thinks the 63-month lease signed last year violated the City Charter by bypassing normal land-use processes and by not being open for bidding. Construction on the shopping mall could begin in 2006, according to the New York Sun.Feds give $18M to High Line conversion
The conversion of the old High Line train tracks in Chelsea received $18 million from the federal government in August. Rep. Jerrold Nadler and Sen. Hillary Clinton made the announcement during a visit to the tracks.Court ruling may affect co-op subletting, flip taxes
A recent decision by the New York State Court of Appeals could make it more difficult for co-ops to collect sublet fees and flip taxes from investors who own apartments but don’t live in them. The ruling means there are now fewer criteria investors have to meet in order to be considered a “holder of unsold shares,” a status which often means exemption from fees imposed on co-op shareholders, the Times reported.Could the mismatch between short-term and long-term interest rates change the way millions of Americans tap their home equity for remodelings, college tuitions, autos and other big-ticket expenditures?
Market forces certainly are pushing consumers in that direction, and there is evidence the shift is already under way. You can refinance into a conforming 30-year fixed-rate mortgage and take substantial additional cash out for 5.75 percent with little or no closing costs. But a new home equity credit line pegged at prime plus 1 percent would run you 7.5 percent to start. Worse yet, it is highly likely to get more expensive in the coming months under Federal Reserve Board monetary policies. Even equity lines at prime plus zero don’t cut the mustard.
The prime bank rate is at 6.5 percent and it, too, is likely to jump by another quarter to half a percentage point by the end of 2005. Long-term rates, by contrast, are beyond the Fed’s control; they are affected instead by the cost of 10-year bonds in the global capital markets. Though long-term rates could rise modestly by year’s end, according to some economic forecasting models, the gap between short-term home equity rates and long-term prime mortgage rates is likely to persist or even widen.
Which leads me to this very practical question: If you need cash for a big expenditure, should you take out a floating-rate home equity line and risk steadily rising monthly payments? Or should you lock in today’s cheaper long-term money by going for a cash-out refi? If you already have a large equity line that is beginning to eat you up with payment increases, should you dump it and opt for a cash-out refi in the high 5 percent range?
Signs are emerging that growing numbers of people are looking again to long-term rates and cash-out refinancings. Mortgage investment giant Freddie Mac reports that cash-out refis last quarter hit their highest level since late 2000. Fully 74 percent of all refinancings involved borrowers increasing their principal balances by 5 percent or more, according to Amy Crews Cutts, deputy chief economist at Freddie Mac.
Though some cash-out transactions add as little as 5 percent, many yield borrowers far more 20 percent to even 50 percent. The owner of a $400,000 house with a mortgage balance of $100,000 can readily refinance, cash out another $200,000 and still have a comfortable 25 percent equity cushion in the property. The extra $200,000 is totally tax-free, and can be spent on whatever the owners choose.
Why the sudden switch to cash-outs? Cutts believes that growing numbers of consumers see today’s long-term rates “as their last chance” to borrow at close to historically low costs.
Bankers are also seeing the first signs of a shift from floating-rate home equity lines to cheaper fixed-rate 30-year or hybrid adjustables. Hybrids typically carry attractive fixed rates for five or seven years before morphing into mortgages with annual rate adjustments.
Ken Koranda, president of MidAmerica Bank of Downers Grove, Ill., a suburb of Chicago, says “it’s happening already and it’s likely to continue if spreads between (home equity lines) and 30-year and 5-1 hybrid adjustables widen.”
Not all current home equity credit line borrowers are necessarily candidates for a transfer to a fixed rate cash-out refi, however, says Koranda. People with relatively small equity line balances haven’t felt much of a pinch from the 2.25 percent short-term rate increases during the past year. Other borrowers may like the convenience of credit lines tapping their equity quickly when they need it, rather than pulling out large chunks through refinancings that might entail closing costs.
Homeowners who used so-called “80-10-10″ piggyback first and second liens to avoid paying mortgage insurance also may not have the flexibility to bail out into a fixed-rate refi unless their property value has appreciated significantly.
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Ken Harney is a real estate columnist for the Washington Post.Standard & Poor’s blows whistle on popular mortgages that allow borrowers to rack up debt [more]
A story on land-lease arrangements in the August issue misstated the name and address of a condop on East 59th Street. The story should have referred to The Grand Sutton at 418 East 59th Street.
A deal at Trump Plaza listed in the retail deal sheet in the August issue omitted the name of the tenant and landlord representative. It was Kim Mogull of Mogull Realty. A deal for West Elm listed as a retail lease should have been listed as an office lease.
A story on the prospect of a condo glut in the July issue incorrectly referred to the number of units approved for sale in the Wellington at 350 East 82nd Street. The correct number is 149.
Changes afoot in the upper echelons of the high-end brokerage; Sonenberg to head project marketing Comments
Halstead Property plans to open its first office in Harlem, which will be the firm’s second new office in the past three months.
Halstead’s Harlem location at 119th Street and Lenox Avenue will compete with the nearby offices of the Corcoran Group, Warburg Realty and Prudential Douglas Elliman, all of which have opened since last autumn in bids to take advantage of a neighborhood that’s become one of the busiest for residential development and marketing.
The new office, set to open in the first quarter of 2006, will house 20 brokers, according to Halstead president Diane Ramirez. It will be in the Normandie, a building marketed by Halstead. Halstead has also brokered deals recently in 125 Central Park North, the first condo building on that stretch above the park, and the nearly 40,000-square-foot Gateway Condominium at 125th Street and Lexington Avenue.
“Halstead has such a development/marketing presence in that area,” Ramirez wrote in an email to The Real Deal. “[It] was a natural fit.”
Halstead opened an office in Hudson, N.Y., in late June to service the Hudson Valley, a market increasingly whetting the buying appetites of Manhattanites priced out of the borough’s housing scene or seeking a second home Upstate.
The nonprofit community increasingly commands a hefty portion of the New York City real estate market, which has prompted commercial brokerage CB Richard Ellis to start a new division to handle the needs of this sizable clientele.
New York is home to more nonprofits than any other city except Washington, D.C., and not-for-profit organizations, from arts groups to social service operations, occupy about 10 million of the more than 440 million square feet of commercial space in Manhattan alone.
CB Richard Ellis is the latest firm to start up a nonprofit division, following the lead of Cushman & Wakefield and Colliers ABR in officially dedicating staff to serve the specialized customer base.
Part of an attempt to formalize an ongoing practice, the division is headed by senior vice president Susan Kahaner and recently minted vice president Suzanne Sunshine, who was hired from Cushman & Wakefield this summer.
The new group will handle leasing, sales and acquisitions for nonprofits in the tri-state area and throughout the country. It has already worked on deals in the city for the Foundation Center, the American Ballet Theater, the Actors Fund of New York, and the Phoenix House.
Kahaner has brokered space for nonprofits for two decades. The new group, with Sunshine hired from directing Cushman & Wakefield’s own 2-year-old nonprofit effort, is supposed to heighten CBRE’s focus on the sector. That focus will include targeting nonprofit-friendly landlords, Kahaner said, and helping nonprofits negotiate moves from Midtown and Midtown South to take advantage of incentives for moves Downtown.
“We’re creating a group here that has the ability and the intellectual capacity and capital to service all the possible needs of the nonprofit community,” Kahaner told The Real Deal in late August. “It’s a much more meaningful group in that we really do specialize in market information that is relevant to the nonprofit community.”
Perhaps it’s an homage to her second husband [more]
In the white-hot competitive New York City real estate market, any edge helps. An in with the mayor’s office, a fluency in different languages, the ability to read Alan Greenspan’s mind all can give Broker B a leg up over Broker A in the race for ever more bountiful commissions.
So can looks, of course. But only a few market observers, such as the outspoken New York real estate blog Curbed.com, will actually say so out loud.
Curbed recently held its inaugural Broker Boys & Babes Contest to find the best-looking New York City brokers. Stefani Pac of Dwelling Quest and Devlin Elliott of Fenwick-Keats won the women’s and men’s categories, respectively.
Elliott bested Brad Kroenig of the Corcoran Group, the next-closest nominee, by a mere 19 votes. But Pac walked away with the women’s competition, winning 55.5 percent to 25.1 percent over her closest competitor, Ivana Tagliamonte of Halstead Property.
The contest drew hundreds of votes and allowed participants to vote in both categories. More than 100 nominations were taken at the Web site over several days, and dozens poured in, many of them in praise of youngish-looking Manhattan brokers on the rising bends of their career arcs. Some were obvious PR campaigns touting a particular broker, some were quiet emails of admiration from genuine fans: “He HAS to be the winner,” read one e-mail supporting Elliott, “just LOOK at the picture…”
Elliott, a broker for about one year and an actor and writer in Los Angeles before relocating to New York, laughed off his victory a few days after the contest ended. He said he hadn’t gotten any clients from his win but he was out of town when the results rolled in anyway.
“It’s always nice when people say you’re attractive,” he told The Real Deal. “I don’t see it. But it’s nice when other people say so.”
Pac , a former model as well as marketing executive fluent in three languages, has been a broker for a year and a half. She, too, shrugged off her victory, telling The Real Deal she had received congratulations from colleagues at Dwelling Quest and also a few complimentary emails from would-be clients. But more than anything, she said, the contest served as great publicity.
“The contest didn’t really mean that much,” she said, “But, just to have me out there, it’s a great thing.”
If you shudder at the thought of a housing bubble or you just want to make fun of the real estate frenzy, there’s now a T-shirt for you. And a coffee mug. And a mousepad or a baseball cap.
T-ShirtHumor.com, an Austin, Tex.-based Internet manufacturer, recently debuted products featuring a design centered around a smiling house called Mr. Hou$ing Bubble. The same design can be found on mugs, caps, posters, mousepads, and T-shirts.
On a pink background with several soap bubbles, a nod to the original Mr. Bubble bath product logo, is a smiling Mr. Hou$ing Bubble saying, “If I pop, you’re screwed.” And underneath the heading “Take a bath in the real estate market with Mr. Hou$ing Bubble” is an offer of “Free balloon mortgage inside.” There’s also a disclaimer: “Not affiliated with Mr. Internet Bubble.”
Several hundred Mr. Hou$ing Bubble products were sold in the first three days after their August debut, said Anthony Phipps, T-ShirtHumor.com’s communications director.
“The idea came to us like many others, from the headlines,” Phipps told The Real Deal. “The concerns and the debate over the current housing market was an obvious choice for us.”
The T-shirt may also serve a practical purpose, said Mr. Hou$ing Bubble’s creator, John Baynham, should the real estate good times go suddenly bust.
“If and when this bubble pops,” Baynham said, “a lot of people are going to take a bath and they’re going to need an affordable shirt to put on afterward.”
