Editor’s note: The benefits of being bold

Most public company heads tend to be pretty circumspect in their statements to the press.

Not Vornado’s Steven Roth, who is the “last in a line of brash hustlers running blue-chip real estate investment trusts,” as we write in a profile of him in this issue. Roth isn’t afraid to call a competitor a “bald-headed chicken fucker,” joke about the greed of other developers, or mention that he has to “suck up” to Chinese banks to get a loan.

But what happens when Roth, who is now in his 70s, turns over the reins? 

He has been successful in recent years following the abrupt departure of his heir apparent, Michael Fascitelli, but the fate of one of NYC’s largest commercial landlords remains up in the air. Check out the story by Hiten Samtani and Will Parker starting on page 84.

Roth is also one of the few who hasn’t been afraid to talk about a weaker climate for retail, saying that landlords holding out for top-dollar rents may not get them.

“We’re not in a hope business, we’re in the realistic business, and I believe rents have gotten to the point where they’re too high,” he told investors on an earnings call recently.

And it’s not just the retail sector that’s at a significant inflection point. It’s the entire real estate market.

On the residential side, clear signs of a buyers’ market have emerged, evidenced by falling prices and concessions, including paid attorneys’ fees, that are being offered as incentives to close deals. It’s becoming a situation where bold buyers who are not afraid to lowball might be rewarded. Check out the story on page 50.

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The softer market is also putting pressure on the brokers who market new condos amid an oversupply of units on the high-end. We go inside their cutthroat world on page 70 and run down how they pitch developers to land new development marketing gigs.

Other tactics to spur sales at new developments are less aboveboard.

In an investigative piece, reporter Konrad Putzier found that many projects that touted early sales (“50% sold in 72 hours”!) weren’t quite as successful as they indicated. Looking back at public records that were available only once the building was completed, we found that the sales numbers being offered up when a project first launched were often bogus. Many, for example, counted contracts that were merely sent out (but not signed) as “sold” units.

As Putzier writes, the tradition of inflated sales numbers began, to some extent, with Donald Trump. The presidential candidate played a pivotal role in the birth of the Manhattan luxury condo in the 1980s, which gave rise to an era of, well, trumped-up sales numbers. As we mention in the story, it’s a practice he described in his book “The Art of the Deal” as “truthful hyperbole.” Check out the article on page 66.

Trump also gave rise to another big story in this issue, on the ways that developers pay — or rather avoid paying — taxes. Trump, we now know, posted a staggering $915 million personal loss in 1995, allowing him to skip out on paying income taxes for up to 18 years. It was one of the biggest bombshells of the election. In a story on page 60, we look at the other ways developers have historically worked the tax code to their advantage.

Finally, while we await the results of the biggest political grudge match of our lifetimes in the form of the presidential election — where I am hopeful that sane heads will prevail — we look at some other heated rivalries in this issue. In a story starting on page 42, we examine the biggest knockdown slugfests in NYC real estate — they include the current battle between Barry Diller and Douglas Durst over Diller’s floating park planned for the Hudson River.

When the smoke clears from the election, we’ll be able to say goodbye to that distraction and get back to business. First on tap for us is Shanghai, where The Real Deal will be hosting a property showcase and series of panel discussions on Chinese real estate investment in the U.S. See our event preview on page 108. More than $215 billion in Chinese investment is expected to pour into the U.S. in the next four years, so the amount of capital flow (and potential deals) continues to be enormous.

We hope you can join us or follow our coverage Stateside!

Enjoy the issue.