Some New York City real estate professionals likely can’t wait to see 2012 in the rearview mirror.
Between the Grubb & Ellis bankruptcy, One57’s dangling crane and the Katan Group’s Domino Sugar sale, some high-profile firms and developers experienced mishaps last year.
Among the biggest real estate–related fumbles was the implosion of California-based Grubb & Ellis, considered by many to be a man-made disaster. In 2011, as the firm was struggling financially, Grubb spoke with potential suitors to either invest in or buy the company. But those talks collapsed and Grubb & Ellis filed for bankruptcy in February, scattering its Manhattan brokers to more than half a dozen other companies. BGC Partners bought it out of bankruptcy for about $49.5 million in April, and the firm became known as Newmark Grubb Knight Frank.
The other headline-grabbing bankruptcy was that of the law firm Dewey & LeBoeuf in May. The company’s large Manhattan-based real estate department, including prominent attorney Stuart Saft, was sent scrambling. Saft landed at Holland & Knight, while another group of lawyers left for Schulte Roth & Zabel, and a third ended up at Venable.
And last month, 28-year-old rental brokerage Manhattan Apartments closed its doors, after years of financial trouble and litigation. Brokers and agents were given the option to join rival residential firm AC Lawrence, now a division of the Bellmarc Group.
The Domino Sugar Factory site
Some real estate–related mistakes actually cost lives. In March, a construction worker died in Upper Manhattan when a Columbia University–owned structure collapsed in the process of being demolished. And in September, a worker was killed in Fort Greene when the roof of an under-construction building collapsed, crushing him.
But the year’s most visually dramatic real estate–related glitch was the dangling crane atop Extell Development’s under-construction condo tower, One57. Hurricane Sandy’s winds flipped the boom over backwards on Oct. 29, causing the crane to hover 1,000 feet over Midtown. No one was injured, but city officials halted traffic, and nearby buildings, including Vornado Realty Trust’s 888 Seventh Avenue, were closed. The crane was secured and traffic reopened on Nov. 5.
Extell experienced another high-profile setback in 2012 when the developer and its partner, Carlyle Realty Partners, lost a battle in a New York State appeals court last month over buyers at the Rushmore condominium breaking their sales contracts. The court ruled that the state attorney general correctly ordered the return of $16 million in escrow deposits for apartments at the Rushmore.
Another state appeals court decision left the Katan Group, an investor in the Domino Sugar Factory development on the Williamsburg waterfront, with a red face after months of legal jostling. Katan, a co-owner of the site with Community Preservation Corp., had fought to sell its share to the Chetrit Group and David Bistricer, thinking a sale price reached with developer Two Trees Management was too low. But in October the court threw out Katan’s lawsuit, and Two Trees closed on the land for $185 million.
Not all legal issues were handled in civil court. In a high-profile case, Rabbi Yoshiyahu Yosef Pinto, an advisor to many real estate professionals in New York City, was arrested in Israel in October on money-laundering charges. Then in late November, Israeli media reported the government was close to indicting him for allegedly attempting to pay a $200,000 bribe to an Israeli police officer. A spokesperson denied the allegations in the news reports.