Within the lofty heights of New York City commercial and residential real estate world, it’s often a given that as the prices rise, the number of industry professionals equipped to service such buyers and sellers, declines.
Surprisingly, however, this is not the case with attorneys representing buyers at one of the city’s highest priced residential towers, One57, the high-end Extell Development condominium tower at 157 West 57th Street between Sixth and Seventh avenues. While several firms have solid repeat business at the building — most notably the Midtown-based boutique firm Cohen & Frankel — there is no group of firms that dominate the building’s legal matters.
Indeed, The Real Deal reviewed transfer reports for the 30 recorded sales at One57 as well as more than 100 random sales at 15 Central Park West, to find which firms were the most active in this sector of the market. We analyzed 15 Central Park West as a control group, to make sure the data for One57 was not simply an outlier.
“These are high profile deals so I’m surprised that smaller firms have dominated the market,” said Morris Missry, a partner at the law firm Wachtel Missry, which also handles major commercial deals. He has represented buyers in two closed deals.
It turns out, the market is very fractured, looking downright parochial. The reason? Money.
Senior partners at the large — and typically more expensive — law firms charge from about $600 to $1,100 an hour, which could yield a bill of $15,000 to $20,000 for a residential closing. That compares with the fee for a straightforward, high-end residential closing, which is typically closer to $5,000. (However, complex purchases can still cost up to about $15,000 taking into account complicated tax and company structuring issues, insiders said.) So buyers often turn to smaller firms to handle the transactions.
“In buying a high-end condo, the sale itself is the least complicated part because both sides are working off the organizational documents and it doesn’t make any difference how many zeros on the check,” Kenneth Fisher, a partner at Cozen O’Connor, said.
“It’s the tax and estate planning aspects that are the secret sauce, and buyers at this level use boutiques, big firms, and big firms who farm out some of the plain vanilla aspects,” Fisher said.
The most active law firm in closed sales at One57 is Cohen & Frankel, a small Midtown firm headed by Bruce Cohen and Robert Frankel. The firm has represented buyers in five of the One57 sales, including the second-most expensive one recorded yet, Escape From New York LLC’s $31.7 million purchase of of unit 62A. The firm also leads at 15 Central Park West closings.
Insiders said the firm has a strong position in the market because of a good track record and close relations with others in the industry, leading to referrals from brokers and attorneys.
“Bruce and his partner Rob Frankel are very good dealing with foreign buyers who do not always understand US and [New York] laws,” attorney Stuart Saft, a partner at Holland & Knight and chair of its real estate practice group, said. “They actually review the offering plans and raise issues relating to possible contradictions and inconsistencies with sponsor’s counsel.”
Cohen said he works with other real estate professionals to help high-end buyers finalized a purchase.
“In one of these buildings [a buyer] will want a sophisticated ownership structure,” he said. So working with others in the industry, he said, “We help structure the deals.”
There was only one other law firm with more than one sale. At Wachtel Missry, partner Morris Missry represented two buyers who purchased units, each for about $7 million.
“It’s not about the fee we would earn but the relationship that allows us to take on a residential matter,” Missry said. “Obviously complicated tax structuring drives up the cost but residential deals don’t command large fees. If it was a commercial deal that traded for similar prices it would command a much higher fee but again this is about building relationships and accommodating firm clients.”
No other firm represented more than one buyer. The most expensive recorded sale so far was a company called One57 63A LLC paying $32.6 million for unit 63A. Martin Polevoy, of DLA Piper, represented the buyer in that transaction, city records show. Other firms included Gibson, Dunn & Crutcher; Cozen O’Connor; Holm & O’Hara, Isaacs & Associates as well as several solo practitioners.