Extell to pay 50% commissions upfront to spur new-dev sales

New broker incentive rolled out at One Manhattan Square, 70 Charlton and the Kent

TRD New York /
Feb.February 02, 2017 01:30 PM

From left: Gary Barnett, One Manhattan Square, 70 Charlton Street and the Kent

Extell Development is wooing brokers for three of its upcoming residential buildings with the promise of cold hard cash upfront.

The company, led by Gary Barnett TRData LogoTINY, said it will advance 50 percent of commissions on new sales at properties now under construction. The properties are One Manhattan Square on the Lower East Side, 70 Charlton in Hudson Square and the Kent on the Upper East Side.

“Talk about turning the brokerage community on. It’s pretty unusual,” said Douglas Elliman broker Michael Graves. “Brokers usually wait way too long to get paid. The market in general is moving but maybe not as fast as Extell is probably used to. They have the financial wherewithal to do this, so good for them.”

Brokers normally have to wait until a deal closes to collect their commissions, but the arrangement means they get paid half their commission upon the signing of a contract.

The commission incentive will remain in effect through April 30, 2017, according to a memo circulated to the brokerage community.

“Given that we handle sales in-house through Extell Marketing Group, a 40-plus-person division of Extell, we have the ability to offer these initiatives because of our financial stability,” said Anna Zarro, Extell’s senior vice president of sales. “We are always looking at ways to support the brokerage community. This is just one of the various initiatives that we plan to roll out.”

The move has echoes of the last cycle.

Extell sued to recover advanced commissions at its Lucida condo project on the Upper East Side in 2010 after the market crashed and deals didn’t close. The Corcoran Group, Douglas Elliman, Sotheby’s International Realty and other brokerages all either returned advance commissions or reached settlements with Extell over the deals.

Zarro declined to comment on sales figures at any of the three properties.

Extell is just the latest developer to target brokers, rather than only buyers, with sweeteners.

In October, Toll Brothers City Living rolled out a portfolio-wide commission incentive that saw brokers get an extra 0.5 percent commission for every additional buyer they bring to a Toll building. Under that system, brokers get 3 percent on the first deal, 3.5 percent on the second and 4 percent on the third. The split is capped at 4 percent from then on.

Toll Brothers president David Von Spreckelsen confirmed that the incentive is still active through the end of 2017.


Related Articles

arrow_forward_ios
One Manhattan Square Extell Development CEO Gary Barnett (Credit: Curbed NY)

Extell lands $690M refinancing package for One Manhattan Square

Brooklyn Point at 138 Willoughby Street and Extell Development’s Gary Barnett (Credit: Alistair Gardiner for The Real Deal)

And you get an incentive! Extell offers to pay carrying costs at Brooklyn’s tallest tower

Raizy Haas and Gary Barnett (Credit: Getty Images, iStock)

One of Gary Barnett’s longtime deputies is leaving Extell

Gary Barnett and 1855 Broadway (Credit: Google Maps)

Gary Barnett assembling Columbus Circle development site

Extell Development chairman Gary Barnett and One Manhattan Square (Credit: Anuja Shakya, StreetEasy)

Rent now, buy later at Extell’s One Manhattan Square

José Cuervo owner Juan Beckmann Vidal and 1010 Park Avenue (Credit: Getty Images, StreetEasy)

Mexican billionaire buys Park Ave pad for $25M amid shopping spree

From left: 241 East 73rd Street, 1514-1528 First Avenue, and Extell Development's Gary Barnett (Credit: Google Maps)

Here’s what the $10M–$20M NYC investment sales market looked like last week

Check out the video above to see reporter Erin Hudson explain what's happening with the proposed legislation and where the real estate industry stands right now.

WATCH: How the real estate industry moves to kill a bill on rental commissions

arrow_forward_ios