Clarett Group launches brokerage services

With few of its own projects coming to
market, developer the Clarett Group has started offering full-service
residential brokerage services.

David
Perry, the director of sales at Clarett, said that under his direction,
the company is now marketing resale units at its buildings and those
constructed by others, and representing buyers as they look for homes
throughout the city.

The Clarett Group handles the marketing,
leasing and sales for all of its developments in-house. But now, the
company has only one remaining sponsor unit for sale: a penthouse at
Sky House at 11 East 29th Street in Manhattan. It also has rental units
available at the Brooklyner in Downtown Brooklyn.

That’s
unlikely to change any time soon, Perry said, since Clarett doesn’t
have any new projects coming online in the near future.

In April, Clarett ceded control of the Forte Condominium at 230 Ashland Place to Eurohypo Bank. After two years on the market, the project was less than 40 percent sold.

The company laid the foundation for a building at 340 Court Street
in Carroll Gardens, Brooklyn, Perry said, but is still working to
secure a construction loan. And years of legal struggles with
rent-stabilized tenants have delayed the company’s plans to tear down a
22-story rental building at 220 Central Park South and replace it with
a 41-story condo tower with partner Vornado Realty Trust.

Perry
said over the years, he has supervised the sale of some 500 apartments
and 200 million square feet of space. It makes sense for the company to
leverage its expertise into brokerage, giving buyers and sellers the
benefit of working with “an experienced developer who knows both
sides,” he said. And since Clarett currently doesn’t have units of its
own to market, the new venture doesn’t represent a conflict of interest.

Moreover,
Clarett has access to a built-in client-base, he said: residents of its
buildings, many of whom Perry and his team of four brokers have already
worked with.

To tap into this group, Perry hosted an event June
22 at the last remaining sponsor unit for sales at Sky House, the
55th-floor penthouse, inviting residents of Clarett-constructed
buildings.

“As an expert in your development, I encourage you
to consider the benefits of retaining the Clarett brokerage team to
market and sell your home should your real estate needs change,” he
wrote in a note sent with the invitations.

As a result of that
event, he said he is now working with six clients who are looking to
buy new homes. He said he is also marketing a resale unit, #40B, at Sky
House.

Clarett is one of many development companies looking for
ways to diversify their business models amid the credit crunch, which
has significantly reduced the availability of construction lending,
said the Marketing Directors’ Andrew Gerringer.

“All the
development companies that aren’t as busy, because there aren’t the
sites or the construction financing [available], are looking for other
outlets,” he said.

It’s important, however, that these models be
“something related to what they do,” he said, noting that residential
brokerage seems like a natural outgrowth of Clarett’s business.

“They’ve
done a lot of brokerage [for] their own buildings,” he said. By tapping
into those building residents as a client base, “they’d have a good
bank of people that they can start off with.”

Not all development companies have the ability, or desire, to take on resales, and it’s somewhat rare for them to do so.

The
Trump Organization is one of a handful of developers with residential
real estate brokerage divisions. Trump Sales and Leasing was originally
created as an in-house service for Trump property owners, but the
business expanded, and owners of non-Trump properties can now list
their properties with the firm.

Trump’s Debra Stotts is the
broker specialist at Trump World Tower at 845 United Nations Plaza. She
handles nearly all of the resales in the building, she said, and
occasionally takes on an outside listing. For example, she is currently
listing 21 East 84th Street for rent at $40,000 for month. The owner is
a former resident of Trump World Tower.

She said developers doing resales is a “niche thing” that is unlikely to become widespread.

“It
works really well with the Trump properties because they’re so well
recognized,” she said, noting that buyers interested in those
properties know to come to the Trump website.

She applauded
Clarett’s attempt to venture further into the world of brokerage.
“Times have changed, and everybody is trying to get creative to go
forward in this economy,” she said.

There are synergies between
real estate brokerage and development. During the boom, a number of
real estate brokers tried their hand at the more lucrative business of development.
And successful developers sometimes purchase brokerage companies, as in
the case of David Burris, Kent Swig, Arthur Zeckendorf and William Zeckendorf, who now own Terra Holdings, parent company of Halstead Property and Brown Harris Stevens.

Got a tip? Candace Taylor can be reached at ct@therealdeal.com.