This month in real estate history

1973: Jury orders $2.1 million judgment against Solow

A New York jury ordered developer Sheldon Solow to pay $2.1 million to commercial brokerage firm Williams Real Estate in what was the city’s largest judgment in a lease commission dispute, 36 years ago this month.

Williams sued Solow for unpaid commissions on a $225 million lease signed by Avon Products for space at 9 West 57th Street, which opened in 1972.

The brokerage claimed that in June 1969 it concluded a handshake deal with Solow on behalf of Avon for a 420,000-square-foot lease that was signed in November.

Subsequently, that deal was expanded to include floors 9 through 34, for a total of 600,000 square feet. The bottom two floors had rental rates of $12 per square foot, with the balance at $13.50 per square foot.

Solow denied there had been any verbal deal.

The award consisted of the brokerage fee of $1.7 million, plus an interest charge of $400,000, accruing since December 1969.

Avon stayed in the building from 1972 until 1997, but that was not the end of its litigation with Solow. After Avon left, Solow sued the company for $80 million, claiming that the space was not returned in “original condition.” That dispute was settled after Avon agreed in 2004 to pay Solow $6.2 million.

1943: Fed rules regulate city apartment rents for the first time

National price controls meant to hold down inflationary pressures during World War II placed New York City rental apartment rates under mandatory regulation for the first time ever, 66 years ago this month.

On Nov. 1, the federal Office of Price Administration froze rental prices at the level they had been in March of that year, replacing a voluntary system that had been in effect in New York City.

New York, with an estimated 650,000 rental units in 1942, was the last major American city to come under the mandatory rent control measures.

Landlords were prohibited from raising rents without the permission of the federal agency, but there were exceptions for major capital improvements and other situations.
Franklin D. Roosevelt in 1943, the year federal rules took effect, with Winston ChurchillThe city came under a mandatory regulatory system after surveys indicated that between March and September 1943, landlords raised rents on 100,000 apartment units. “For the average family, rent makes up 20 to 25 percent of the cost of living,” the federal agency said in a report that year. “We would be failing in our responsibility if we allowed rents to continue to move upward in New York City.”

City apartments remained under federal price controls until 1950, when regulation was taken over by the state. After coming under a combination of city and state control in 1962, rent-stabilized and rent-controlled apartments are today regulated by the state Division of Housing and Community Renewal.

1883: Real estate exchange and auction created

A major early forum in Manhattan for the sale of real estate and related securities, known as the Real Estate Exchange and Auction, was formed 126 years ago this month.

The Exchange, located at 65 Liberty Street between Broadway and Nassau Street, gave participants a location to trade properties, which it compared to other commodity exchanges. It had nine commissioners, including Edwin Cruikshank, president of the group, who was the owner of a leading sales and management firm, and Edward Ludlow.

The exchange had several strong years. In one week in March 1888, approximately $1 million in properties were publicly sold. But the auction model began to weaken as competition from private transactions using brokers increased in the late 1880s and early 1890s.

Brokers were able to market properties quietly and keep the sale price confidential, which was impossible with an auction. Reacting to the industry changes, a Real Estate Board of Brokers was formed in 1896 at the same location as the Exchange, but as a separate entity.

The Exchange did not survive the decade, and the corporation sold its property in 1899. The Exchange formerly dissolved in June 1900. Compiled by Adam Pincus