Edward Mermelstein, 42, is a partner at law firm Rheem Bell & Mermelstein, which focuses on commercial and residential real estate. In the spring, Mermelstein merged his Edward A. Mermelstein & Associates with Uel Rheem and Christine Bell to form the boutique firm that now has 11 attorneys. He spoke to The Real Deal about the difficulty foreigner buyers have purchasing cooperatives units in New York, the unrealistic expectations some overseas investors have about commercial real estate and that now is the time to buy land in Lower Manhattan.
Why is it often difficult for employees of foreign governments such as United Nations representatives, to get approval from cooperative boards?
Basically financial transparency is very difficult for government employees. It is typical of almost every government where you are showing an income of X amount but your primary source of income is coming from elsewhere.
How does New York rank against other international cities for the number of foreign investors of residential and commercial real estate?
We are definitely trailing London in terms of residential acquisitions. And I think Western Europe is definitely in many ways ahead of us in terms of foreign money that is emanating from the Arab states and the African states.
Are Arab and African investors beginning to increase their spending here?
We slowly are starting to see some funds come in from that part of the world. But what we were seeing prior to 2008 has definitely diminished in many ways by 90 to 95 percent.
Are unrealistic expectations for high capitalization rates holding back foreign investment, despite a desire from overseas to buy modern office buildings in Manhattan?
There is a lot of interest in Class A office properties. I just had a call [yesterday] morning from an investor [who said], “Find me a Class A office property that is a 6 or 7 cap.” I said, “I’m sorry, that just doesn’t exist any more.”
What Manhattan real estate story should be getting more attention from the media?
I think the land prices today, even though many [parcels] are not being marketed, the numbers are down so significantly it makes sense to go after land especially in the Downtown area. If you are making a fair offer in the sub-$200 [per square foot] range, if you can buy land, it may work out in the end.