Andrew Heiberger knows about moving on, and moving up.
The founder of Buttonwood Real Estate has taken his new headquarters to the heart of Midtown, setting up shop at 712 Fifth Avenue at 56th Street, where the Manhattan real estate maven will dive into development.
Buttonwood is the latest market foray from the founder and former CEO of Citi Habitats, which Heiberger sold last year to the Corcoran Group. He left his old digs at 250 Park Avenue South and 20th Street a rich man before moving uptown – the company sold for a reported $49.6 million – but continues to maintain ties with his old firm as it merges into the Corcoran fold.
Like an actor who’s always wanted to direct, Heiberger is enthusiastic about moving from brokerage into full-time development. At Citi Habitats, he worked with the new development division, and says, “It’s where I spent a lot of my time.”
Now he’s got free rein and free run, and he’s looking at “investments, development and syndication” – the sort of deal-making that someone who knows the market relishes, even as murmurs of an end to the boom and talk of a bursting bubble temper the times a bit.
Heiberger’s got five employees at his new company, which officially opened its doors May 1. In an interview with The Real Deal, Heiberger said he’s “not going to pigeonhole” what areas Buttonwood will be active in, though the company will avoid commercial deals, except those related to retail, since that’s “outside my area of expertise.”
He’ll have some support from Craig Hantgan, the company’s new chief operating officer, formerly the founder and president of Esquire Properties, a consulting and development firm specializing in retail. Hantgan has worked with an array of clients, including Kohl’s Department Stores, H & R Block, Pathmark, Federated Department Stores, Kmart and Starbucks. Hantgan was also an original investor in Cosi, where he served as vice president and director of real estate, helping to expand the sandwich and salad chain to over 100 locations in 13 states.
As a boutique, Buttonwood will be able to pick and choose its deals, which Heiberger says is the only way to operate in a market some believe is both overheated and uncertain. He plans to work in the Hamptons, Long Island and Manhattan, and says the firm is open to deals that make sense in the current market.
“Someone might come to me with vacant land or a knockdown” that is turned into a high-end development, or “we might be able to reposition a rental to condos, or provide seed money for investment in someone else’s deal,” Heiberger says.
He figures the company will be doing some condominium projects, because “most [development] deals only make sense as condos right now.”
“I feel good about the condo market,” he says. “I feel like it will hold out for a while, especially in certain price points.”
He’s less certain about the rest of the market, though he’s not calling an end to the boom just yet. Although interest rates are rising and the national average has passed 6 percent for a 30-year fixed mortgage, they are still closer to their historic lows than market-killing double-digits.
“A 1 percent uptick in interest rates is not necessarily a warning,” Heiberger says. “Eight percent is the magic number where we’ll see some impact.”
Even then, New York will get some protection from its unusual market composition – 80 percent of Manhattan property owners are also the occupants of the property, in contrast to markets such as Miami and Las Vegas, where over 80 percent of the owners are investors.
That reduces the amount of speculation fueling the market, and will keep apartments that sell for less than $1 million relatively stable in the event of a market slide, he says.
“I don’t see properties in the middle market in Manhattan going down more than 10 percent,” he adds. A bust would affect Las Vegas first, followed by Miami, the Hamptons, and finally Manhattan, driving down $2- to $3-million properties, then $1- to $2-million properties and finally properties under a million dollars, he says.
But there are deals to be done under the shade of Buttonwood, and the search for opportunities accounts for much of Heiberger’s enthusiasm. Part of his job will be matching projects and investors – institutions and high-net-worth individuals who can back a development.
Buttonwood is now “seeking capital on a project-by-project basis,” he says. The company last month issued a statement that it “is in the process of acquiring a luxury boutique condominium site,” which Heiberger declined to comment on. He says the firm will be able to raise money more easily when it creates a track record.