Elliman and Prodigy in, Corcoran Sunshine and Core out
Two more developments have pulled sales-team switcheroos in a tough real estate climate.
Prudential Douglas Elliman has now taken over as the sales and marketing agent at Arris Lofts, a 237-unit condominium in Long Island City. Corcoran Sunshine Marketing Group previously marketed the project.
Meanwhile, the 330-unit William Beaver House in the Financial District has changed sales teams yet again. After a disagreement with the development team of Andre Balazs and SDS Investments, Core Group Marketing is no longer the co-exclusive sales agent at the project, according to Core CEO Shaun Osher. Prodigy International, a brokerage with offices in New York, Miami, Panama, Mexico and Spain, previously handled sales at the development alongside Core, but is now the sole sales and marketing agent, according to Rodrigo Nino, the president of Prodigy.
The project started as a co-exclusive between Prodigy and the Corcoran Group, but developer Andre Balazs fired Corcoran and replaced them with Core in June of 2007.
Switching sales teams has become an increasingly popular sales tactic as new development sales have slowed in the midst of the credit crunch, with developers hoping that a new brokerage will help jump-start sales.
“It’s part of the game when the market is like this,” said Andrew Gerringer, managing director of the Prudential Douglas Elliman Development Marketing Group. “Sometimes [developers] feel like they have to change it up.”
Arris Lofts developer Alexander Silverman, the COO of the Andalex Group, said he hired Elliman because “it’s good to bring in a breath of fresh air.”
While Corcoran Sunshine “did an incredible job” marketing the project, he said he hoped the new sales team would help quickly sell out the remaining units in the building.
“I felt there was a need for a change,” he said, adding that Elliman “has a much larger presence in Long Island City.”
Elliman is also handling sales at other Long Island City residential projects, Crescent Club, the L Haus and the Powerhouse. Long Island City is a strong area for the company, Gerringer said. “People see that we really have a handle on that market.”
Sales have been slow at Arris Lofts, located at 27-28 Thomson Avenue, since the credit crisis this fall. On Corcoran Sunshine’s watch, 90 percent of the units in the building have closed and another 2 percent are in contract, Silverman said. That’s just slightly more than the percentage of units in contract in September 2008, though Silverman said sales have picked up in recent weeks.
Elliman took over the project the week of May 20, Gerringer said, adding that there are 28 units left to sell.
Arris Lofts also has experienced its share of legal drama. In August 2007, a contractor at Arris Lofts, Pavarini McGovern, filed $13.1 million in mechanic’s liens on the property, claiming it had been fired from the project after a dispute over its construction. In September 2008, a judge reduced the lien to $5.6 million, after the developer filed a motion challenging the original claim.
Then in February of this year, Renegade Media, a New Jersey-based media buying firm, filed a lawsuit against the developer of Arris Lofts for breach of contract, claiming more than $170,000 in unpaid expenses and fees.
Jacques Catafago, an attorney for Renegade, said the suit is still pending. Silverman said he expects it to be thrown out as a frivolous lawsuit.
James Lansill, senior managing director of the Corcoran Sunshine Marketing Group, said the company is proud to have sold 90 percent of the units at Arris Lofts.
“Arris can be deemed an exceptional success story, one that has celebrated many records, including several of the highest residential prices and per-square-foot prices ever achieved in Long Island City,” he said in a statement released to The Real Deal. “We have great respect for Arris Lofts and the Silverman family and wish them well as they move toward 100 percent completion of the sales program of this exceptional property.”
William Beaver House
At William Beaver House at 15 William Street, the situation is slightly different.
Core’s Osher called Andre Balazs’ William Beaver “one of the most difficult projects I’ve ever worked on.” After a disagreement with the developer, Osher said, his agents have not been paid for several closed sales in the building. He is considering filing a lawsuit.
Balazs and other members of the development team were not immediately available for comment.
“I love my job, but not that much,” Osher said. “If we go to a closing [we] should get paid a commission.”
Core Group Marketing is also involved in a lawsuit at the stalled condominium conversion project Jasper, where the company claims the developers owe Core a $500,000 termination fee after an exclusive marketing agreement was ended in November 2008.
He added that Core “worked very diligently on the project.”
According to Nino, Core was removed from the project by the developer in part because most of the interested buyers are international, a clientele which is more Prodigy’s focus than Core’s, according to Nino.
“We probably sold six units for every one [Core] sold,” Nino said.
Nino said 169 units — about 67 percent of the total homes in the building — have been sold. The project started closings in late January and 80 units have closed so far, he said.
But William Beaver House has been hit with many of the problems that have plagued the new development market, including buyers walking away from deposits after they lost money in this fall’s stock market crash, or couldn’t get financing for their purchases.
“I will probably lose 10 to 15 percent of the units that were in contract,” Nino said.
Still, he said, the project has an advantage because it was completed this winter, which makes it more attractive to international investors than new developments where construction hasn’t yet started, or is in progress.
“People used to buy preconstruction, now they want to buy existing,” he said. “It’s easier for us to sell something that people can see and touch.”
He said he is currently completing the sale of $40 million worth of units in the building for a group of Italian buyers, and a Colombian buyer is purchasing another group of units.
Many of them are renting out units in the building, he said, adding that that his company is handling 20 rental listings in the building for the owners.
In response to rumors that the remaining units in the building may go rental, he said the sponsor cannot rent out the units because of his commitment to the senior lender.