November 02, 2009 07:00AM
By Candace Taylor
During the boom years, Manhattan real estate seemed like an open book.
As prices climbed higher, news of record-breaking Manhattan deals --
like Harry Macklowe's $60 million Plaza buy or Jonathan Tisch's $48
million co-op purchase at 2 East 67th Street -- was reported not just
throughout the country, but all over the globe. With city data about real estate transactions being published
online, some brokers jockeyed to have their names linked with
high-profile sales. Buying or selling a high-priced Manhattan apartment
became a badge of honor.
Still, there was an element of polite society that preferred its
real estate quiet, working with discreet brokers who could be trusted
to keep their names and activities out of the headlines.
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November 01, 2009 12:00AM
By Alison Gregor
While prices and sales activity have picked up in New York in the last couple of months, a number of analysts are predicting a second round to the downturn here, with prices likely to fall. Estimates range from a drop of a few percentage points to up to 17 percent. Barry Ritholtz, the New York-based CEO and director of equity research at Fusion IQ, an online quantitative research firm, noted that "there's still some downside to prices" in New York. "The good news is, the worst of the bloodbath is probably behind us in terms of falling prices," he said. "The bad news is, unemployment continues to tick up and foreclosures continue to ramp up. I do not think New York is at a bottom quite yet." Financial analysis firm Fiserv predicted last month that the New York City metro area will underperform the nation as a whole over the next two years, with prices falling another 17.4 percent by June 2011.
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November 02, 2009 07:00AM
By Candace Taylor
A few months ago, Michele Colen found the apartment she had been
searching for: a newly renovated, no-fee Upper East Side studio in a
building that welcomed Leo, her golden retriever-dachshund mix. That day, she swiped her debit card twice: once for the security
deposit, and once for the first month's rent, plus a $50 credit check
fee. Her bank statement showed that the funds had left her account, so
she was baffled when, a month after moving in, she received a statement
from her landlord showing an outstanding balance. It turned out the $1,500 security deposit check that Manhattan
Apartments Inc. -- her real estate firm, also known as MAI -- had
written to the landlord on her behalf had bounced.
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November 02, 2009 07:00AM
By Adam Pincus
Contrary to popular belief, commercial lenders did not throw out all of their standards in the recent cycle of easy credit.
When developer Aby Rosen structured his $133 million loan for the
acquisition and development of the Shangri-La hotel at 614 Lexington
Avenue in April 2007, the mortgage document included a personal
guaranty to cover losses in the event of a default. Similarly, when Kent Swig negotiated $49 million in loans with
Lehman Brothers Holdings to develop a hotel and condo project at 45
Broad Street in the Financial District in 2006 and 2007, the bank
demanded a similar guaranty in the mortgage documents.
And other big-time borrowers such as developer Yair Levy and
investor Steven Elghanayan have made the same types of commitments to
convince banks to make loans on their projects.
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November 02, 2009 07:00AM
By Sarah Ryley
New York's real estate market is at something of a crossroad. For more
than a year now, the industry has been dealing with the fallout from
Wall Street and the credit crisis, leaving brokers, developers, city
officials and everyone in between groping for strategies to keep
financially afloat. While it's hard to fault real estate professionals
for throwing any ideas they have at the problem to see which ones
stick, some of those approaches have worked better than others. This
month, The Real Deal dissected some of the biggest policies and proposals that are being used -- or considered -- to help shore up the industry.
The goal was to see which ideas have helped get the market moving,
and which have fallen flat, and to examine how much promise the ideas
being bandied about now have.
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November 02, 2009 07:00AM
By Candace Taylor
A year after the financial crisis, Manhattan real estate brokers report that the market is finally returning to normal. But they don't mean the lightning-fast sales and skyrocketing prices of the recent real estate boom. They're talking about a more moderate, predictable real estate market, the likes of which hasn't been seen in Manhattan for years. "The last three years have been very interesting," said Jill Bane, an associate at Leslie J. Garfield & Co. Before the market cratered as a result of the subprime crisis, "prices were very high and there always seemed to be several competing bids," she said. Now, however, "a sense of normalcy has returned to the market," said Bane. Bane represented a townhouse at 17 Bank Street, on the market for $10.5 million, that recently went into contract. "People are buying; they are just not as irrational as the prior two to three seasons."
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November 01, 2009 12:00AM
By C.J. Hughes
For the megadeveloper Forest City Ratner Companies, the last few months can be seen as a tale of two projects. The worst of times seems to have taken hold at Atlantic Yards, the proposed 22-acre development of apartments, offices and a basketball arena in Brooklyn. In June, Forest City dumped architect Frank Gehry, whose eye-catching designs helped generate much of the project's initial excitement. And last month, the Empire State Development Corporation, the state authority backing the project, had to face the state's Court of Appeals in a case about the legality of its eminent-domain actions after being sued by a community group. But in Manhattan, after a rocky start, it seems to be the best of times -- or at least somewhat more favorable ones, for Beekman Tower at 8 Spruce Street in the Financial District.
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November 02, 2009 07:00AM
By Barbara Thau
After the binge comes the purge. The condo auction market is heating up in Jersey City, as developers look to move the glut of apartment inventory amassed during the heady building boom in recent years. Distressed sales of properties are also expected to accelerate in the area, with lenders increasingly looking to wipe their hands clean of troubled mortgage loans. The urge to purge is the fallout from a frenzied period of condo construction in Jersey City -- a stone's throw from Wall Street -- where about 5,000 new units came on the market at premium prices, sources estimate. Condo prices in Jersey City, which saw a steep run-up during the boom, have dropped between 15 and 25 percent since the height of the market in 2006, experts estimate. Meanwhile, the number of condos closing today in Jersey City is down about 45 percent compared to the peak of early 2007, according to the Marketing Directors, which sells new developments in markets across the country, including Jersey City.
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November 01, 2009 12:00AM
By Vanessa Weiman
The rental market in New York is not exactly known as a bastion of transparency: To fill the information void, several competing rental market reports have recently emerged and are going head-to-head. However, in a puzzle for the industry, the reports sometimes feature wildly divergent information. Ubiquitous appraisal firm Miller Samuel launched its first-ever rental report a few months ago; rental brokerage giant Citi Habitats, long a provider of rental statistics, released a new "peak season" rental report in September; and newly merged TDG/TREGNY is continuing to publish its frequently cited Manhattan monthly report, which it has been doing since 2007. But while it may seem that a sudden increase in rental information would help paint a clearer picture of New York's long-mysterious rental market, there have been significant differences in some key numbers.
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November 01, 2009 12:00AM
Daun Paris is president of Eastern Consolidated, the brokerage company she co-founded in 1981 with partner Peter Hauspurg, whom she married in 1983. Since then, Eastern Consolidated has grown into the largest single-office commercial real estate investment services firm in the United States, with over $4 billion in annual sales. Paris directs day-to-day operations and handles the firm's strategic direction.
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November 01, 2009 12:00AM
By Katherine Dykstra
For those looking for a veritable timeline illustrating the evolution of Manhattan's boom and bust, 23rd Street west of Ninth Avenue offers a perfect case study. The street has a slew of modest new condo buildings, the first-built ones that effectively tested the residential waters -- in this case, 555 West 23rd Street as well as the Tate at 535 West 23rd Street. Then there are the tall and glassy followers, built during the go-go real estate days -- HL23, Neil Denari's under-construction cantilevering glass-and-steel tower, and High Line 519, the Sleepy Hudson-developed silver structure. And finally, there is evidence of the downturn -- a gaping hole in the ground on the corner of 10th Avenue, where work on 10 Chelsea, a rental tower planned by developer Shaya Boymelgreen, has stopped, and the recently shuttered Mediterranean restaurant Il Bordello. "It's a mixed bag over there. There are super-high-end, architecturally significant condos, then there are [modest] buildings, [and then there's] the gritty stuff," said Charles Summers, a vice president of Bellmarc Realty, who lives at 555 West 23rd Street.
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November 02, 2009 12:00AM
By Adam Piore
If you happen to take the Van Wyck Expressway to work, you might have seen it for yourself one morning during rush hour last year: In the breakdown lane a few miles past John F. Kennedy International Airport, an amiable-looking man with closely cropped curls, round glasses and a well-tailored suit sat in his black Lexus LS, gesticulating angrily and screaming into a cell phone. That man was Phil Rosen, co-head of Weil Gotshal & Manges' real estate practice; he was trying to save a client from probable ruin. On the other end of the line: A team of attorneys representing creditors. In the wee hours of the morning, they had agreed to multiple restructurings after two days of around-the-clock negotiations. Now, just hours later, the attorneys on the other side wanted out. "This is the deal," Rosen, 53, yelled. "You can't re-trade or you'll end up with nothing." He continued: "This is the deal -- it will not change." It was a high-stakes, emergency roadside rescue job. And, after an hour and a half, Rosen prevailed.
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November 01, 2009 12:00AM
By Candace Taylor
In Manhattan, buyers' brokers are a secretive bunch. When there's a high-profile sale, the listing agent's name is splashed across the headlines: Brown Harris Stevens' Richard Wallgren, for example, closed the sale of a $37 million penthouse at 15 Central Park West in September; Paula Del Nunzio made news for her record-setting $53 million sale of the Harkness mansion in 2006. Less well-known are the brokers who represented the buyers. The identities of buyers' brokers are a jealously guarded secret, never listed in public records and often never revealed. That's the way many brokers -- who pride themselves on their discretion -- like it, especially in a market where lavish spending is viewed with disfavor. Ironically, brokers who represent buyers are taking on a greater significance than ever, even as they're being asked to keep increasingly quiet about their role. Well-qualified buyers are now scarce, and bringing them to the table is crucial to the transaction. Recognizing this, high-end brokers are spending more of their time representing buyers.
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November 01, 2009 12:00AM
By Catherine Curan
One of the most important names in Madison Avenue retail is not lit up in glitzy letters above a swanky boutique. But among those who know Madison Avenue's "Gold Coast," from 57th Street to 72nd Street -- and have watched the strip suffer an uncharacteristic glut of vacancies -- the low-profile Friedland family holds the informal title as the masters of Madison's destiny. Madison Avenue has suffered the steepest rent drops of any major Manhattan retail district -- the average asking rent plunged 41 percent, to $770 per square foot, in the third quarter of 2009 from the fourth quarter of 2008, according to CB Richard Ellis. If that isn't bad enough, numerous sources said asking rents on Madison Avenue have actually plummeted even lower than the CBRE report indicated, to as low as $500 per square foot, while vacancies remain stubbornly high. One broker counted 11 availabilities, both publicly and quietly marketed spaces, just between 66th and 68th streets. Now, as the avenue's leasing limps back to health, the Friedlands are expected to play an outsize role in its future development, tenant mix and rent levels.
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November 02, 2009 07:00AM
By C.J. Hughes
Brooklyn has long been a haven for renters looking for cheaper deals than they can get across the river in Manhattan. In the current downturn, however, rents have dropped faster in Manhattan than in Brooklyn. This month, The Real Deal stacks up the rival boroughs next to each other, comparing year-over-year rent drops to see where the biggest declines have been. According to the real estate Web site StreetEasy, average rental listing prices fell 21 percent in Manhattan between the third quarter of 2008 and the third quarter of 2009, while coming down only 15 percent in Brooklyn. In addition, price declines have been far steeper in certain Manhattan neighborhoods, a phenomenon that has made headlines and prompted many Brooklyn renters to give Manhattan another look. Indeed, brokers say, budget-conscious renters arriving in New York for the first time -- who in the past may have gone straight over the Brooklyn Bridge to hunt for an apartment -- are now weighing Manhattan as a comparable alternative.
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November 01, 2009 12:00AM
By Catherine Curan
The new tax rules handed down by the Treasury Department in mid-September are prompting more lenders to employ already-popular "extend and pretend" and "delay and pray" strategies. These darkly comic catchphrases, of course, are used to describe the practice of extending the maturity on troubled loans rather than working out a deal that would reveal just how little the debt is now worth. Those who follow commercial real estate say the federal government's new regulations -- which were designed to help facilitate the modification process for troubled securitized loans -- give loan servicers greater leeway to extend loans. Attorneys and advisors with experience working on troubled loans say they have seen a big increase in "extend and pretend" transactions this year across various asset classes. They forecast more such deals, thanks to two favorable trends -- the new accounting rules and low interest rates. "Our view is that this condition [of rampant extensions] is going to continue for a while -- the alternative is for lenders to decide they have to recognize losses," said Paul Fried, managing director at advisory firm Traxi.
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November 02, 2009 07:00AM
By Gabby Warshawer
The string of developments directly across from McCarren Park on Bayard Street, dubbed "Karl Fischer Row," has been one of the most talked-about blocks of condos in Williamsburg. All three buildings -- 20 Bayard, 30 Bayard and 50 Bayard -- went into the ground a few years ago and have been move-in ready for more than a year. But how have the buzzed-about projects fared during the downturn, compared to the rest of this struggling neighborhood? For all their notoriety in the real estate media and on the blogs (the stretch was nicknamed by the real estate Web site Curbed.com after the prolific architect who designed all the buildings), brokers say only one building there can truly be considered a sales success.
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