The first scene from Akira Kurosawa’s 1961 classic “Yojimbo” shows a warrior tossing a stick in the air and choosing his path based on the direction the stick lands in. He is, after all, a rōnin, a samurai with no master. Which is what Bob Knakal could be as early as January 2018.
As Brett White was engineering his purloin of Doug Harmon and Adam Spies, one of his top dealmakers was rethinking his own future. Knakal, who joined Cushman when his Massey Knakal brokerage was acquired by the firm for $100 million in December 2014, was locked in until December 2019. But while the Harmon-Spies talks were happening, Knakal decided he might want out early and renegotiated his contract, as The Real Deal’s Mark Maurer revealed last week. Under the new terms, Knakal might just have a year and change left at Cushman, and once he’s done, could become a free agent, join another firm or start his own.
It’s worth remembering what the addition of Harmon and Spies could mean for other high-fliers at Cushman: On all deals $75 million and up, brokers are expected to bring in the former Eastdil duo in exchange for a referral fee. Critics have said this could demotivate other ambitious dealmakers at the firm, who wouldn’t get to eat what they kill. But for others, the hires are already paying off: A source on the debt side at Cushman told me that Harmon and Spies’ network of contacts and take-no-prisoners approach have helped raise Cushman’s profile and upped the debt team’s deal flow.
Multifamily’s big week: Blackstone executed the biggest multifamily deal of 2015 with its $5.3 billion purchase of Stuy Town in partnership with Canadian pension fund Ivanhoe Cambridge. If there are no surprises at the end of the year, Blackstone seems set to retain the crown in 2016, after closing on the $620 million acquisition of Kips Bay Court. The deal gives the private equity titan control of nearly 900 rental units, meaning that Blackstone’s total rental portfolio in New York now exceeds 13,000 units, according to a TRD analysis. The biggest landlord in the country now appears to be the second biggest rental landlord in the city.
There were a slew of other big moves in multifamily last week: Northwind and its partners paid nearly $150 million for the UWS luxury nursing home Esplanade, while A&E Real Estate Partners — which is angling to buy the late Harry Silverstein’s portfolio — just closed on a portfolio of 10 rent-stabilized Queens buildings for $130M.
But it was more than just dealmaking that made the week stand out. Some of the biggest multifamily players got together at Aaron Jungreis’ annual bash, a necessary stop on the annual holiday party pilgrimage.
Pain points: About a quarter of all Manhattan residential leases signed in November came with a landlord concession, according to a new Elliman report. That’s up from 13 percent during the same period last year. In Brooklyn, it was a similar tale, with 15 percent of leases signed coming with concessions, compared to just 7 percent during the same period last year.
And then there are the apartments that languish on the market despite heaps of rent chops. This one in Hell’s Kitchen, for example, is looking for a tenant to sign a 2-year lease, which could suggest the landlord is bearish on where rents will end up in the short-term.
Some of these concessions, at least in Brooklyn, can be blamed on a glut of new development rentals, according to appraiser Jonathan Miller, who authored the Elliman report. But it’s also in part a function of the gulf between what landlords want and what tenants are willing and able to pay, according to Citi Habitats’ Gary Malin.
“Many people are simply at their breaking point,” he said.
Resi brokers try to seize the moment — with mixed results: Remember when Bitcoin was a thing in New York real estate? Or Pokémon Go? That’s nothing compared to a marketing initiative a pair of rogue Elliman brokers dreamt up.
Trump Tower’s newfound status as a fortress for the president-elect Has Been A Nightmare For Fifth Avenue retailers, the city’s police force, and residents of the glitzy building, who’ve had to deal with increased security and protesters. But the two brokers saw the presence of the Secret Service as a marketing opportunity for their listings at the building, and sent out a mass email advertising it as “The new aminity [sic].”
“The best value in the most secure building in Manhattan,” the listing states.
The powers-that-be at Elliman weren’t too happy with the stunt. A spokesperson for the firm said the email was “completely unauthorized” and sent without the firm’s knowledge.
(Paydirt is a weekly column that riffs on the biggest NYC real estate news of the moment, providing analysis and historical context on the deals and players that make this town tick. Read more from Paydirt here.)