Breaking up is hard to do: Compass and Tessler split at 172 Madison

Brokerage said it resigned “at the request of our team”

Mar.March 02, 2018 04:30 PM

From left: 172 Madison Avenue Yitzchak Tessler, Ori Alon and Robert Reffkin

Compass and Yitzchak Tessler severed ties at the developer’s $300 million condominium development in Midtown. The breakup comes roughly a year after the brokerage came on to breathe new life into the project.

Compass’ new development team walked away from the assignment at Tessler Development’s 33-story, 72-unit tower at 172 Madison Avenue, a Compass spokesperson told The Real Deal.

“At Compass, we put our people first. At the request of our team, we made the unusual decision to resign the project,” said a company spokesperson, who declined to comment further.

Tessler and his representatives did not respond to requests for comment, but sources told TRD the fission was a result of the developer’s expectations for pricing on the project and what the Compass brokers believed the market would deliver.

“I think there was a difference of opinion on the marketing,” said one source who is not involved in the project. “Compass probably wanted to reduce pricing to increase the velocity of sales, and Tessler said he’s not going to do it.”

This is not the first shakeup at the project.

A Compass team headed by Billy Goldstein, a managing director of new development, and Kelly Robinson picked up the assignment for 172 Madison a year ago amid a market-wide slowdown for luxury condo sales. Compass replaced Keller Williams NYC as the new development agent, which had launched the project in 2015.

Goldstein at the time told TRD that the building was roughly 60 percent sold. A Compass spokesperson said the team sold 13 residences (or 20 percent of the building) worth $38 million during its time on the project.

The switch raised eyebrows in part because Yitzchak Tessler’s son, Efraim Tessler, is an agent at Keller Williams who was working on the building. Goldstein said at the time that the younger Tessler may stay on in some capacity. But when reached for comment earlier this week, Efraim told TRD he was not working on the building and was unaware that Compass had resigned.

It wasn’t clear if Tessler, who made a name for himself in the late 1990s converting commercial buildings in Tribeca and the Financial District into condos, has hired a new marketing team.

This is not the first time that Compass – or other new development marketing teams, for that matter – has been party to a change in direction with a developer. Ben Shaoul’s Magnum Real Estate Group last year removed Compass in favor of Douglas Elliman on his 196 Orchard development.

And Ian Bruce Eichner in 2016 switched Corcoran Sunshine out for Douglas Elliman to get some new momentum on his 45 East 22nd Street condo tower.

Douglas Elliman’s Michael Graves said that when sales aren’t meeting expectations, a sponsor will sometimes switch brokerages to try and spark some new momentum. And he said he expects to see more such changes as the market struggles to regain its footing.

“I’m not surprised to see that there’s some developments switching hands at this stage of market, just based on the competitive nature of this environment we’re in right now,” he said.

The 172 Madison condo plan fled with the state Attorney General’s office shows a current projected sellout of $308.61 million.

Tessler last year landed a $164.3 million condo inventory loan for the project from private equity firm TPG and Deutsche Bank.

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