Hmmm... do I take the pay cut?

On Sept. 2, Mikhail Prokhorov, billionaire owner of the soon-to-be-Brooklyn Nets, announced he would consider a run for the Russian presidency this winter if the political party he created, Right Cause, does well in parliamentary elections in December. (The Transom first learned of this from a friend who is a journalist in Moscow, and confirmed it with English-language reports of Mr. Prokhorov’s comments.)

So, if Mr. Prokhorov, the central-casting projection of modern muscular Russia, does, in fact, edge out his friend Vladimir Putin or Mr. Putin’s hand-picked successor, Dmitry Medvedev, what will it mean for the borough’s b-ball? Can one man be the leader of a superpower and the owner of a powerhouse at the same time?

Yes. There is nothing in the N.B.A.’s charter that precludes a foreign head of state from owning a team, though none ever has (the closest analogy might be U.S. Senator Herb Kohl, who has owned the Milwaukee Bucks since 1985; George W. Bush sold his stake in baseball’s Texas Rangers before he became president).

Where it gets a tad dicey for a 46-year-old President Prokhorov is that he would have to spend much of his time in his country rather than, say, in David Walentas’s Clock Tower penthouse in Dumbo, or some other suitably baronial domain for an oligarch abroad.

“It would very much change his ownership style with the Nets,” said Robert Boland, a clinical associate professor of sports management at N.Y.U. “He’s a very hands-on guy. From everything that I’ve observed about him, he likes to be involved firmly, he likes to own the franchise.”

Mr. Boland said that in sports ownership the best owners are either highly involved or not really involved at all, turning over management to pros. Seizing a middle-ground tends to breed ineptitude. (The Dolans and the Knicks, anyone? The Wilpons and the Mets?) So if a freshly elected Mr. Prokhorov had to shed management responsibilities vis-à-vis the Nets, it would not necessarily hurt the franchise, Mr. Boland said.

In fact, his presidency could help the N.B.A.

“The N.B.A. is ripe to expand globally,” Mr. Boland said. “Suddenly, here’s an N.B.A. owner with a hugely important political role in Europe and Asia. He might become very important to the N.B.A. in terms of expansion or movement abroad.”

And, somewhere, Marty Markowitz lays out a suit for the inauguration.

tacitelli@observer.com :: @tacitelli

Tara Stacom of Cushman & Wakefield.

“I’m more bullish today than I was in 2007,” said Cushman & Wakefield’s Tara Stacom of  1 World Trade and the outlook for the 1,776-foot tower that will offer 3.1 million square feet of Class A office space. “I did not think one of the first tenants would be a million-plus feet.”

Signing the lease with Condé Nast in May of this year was, for lack of a less hackneyed term, a game-changer for downtown Manhattan, especially as the area emerges not only from the Great Recession but from the malaise that characterized so much of the area since 9/11.

Other media companies have been part of the change, taking the baton, as it were, from the FIRE firms that traditionally power Class A space, in downtown or elsewhere in Manhattan. Spin magazine, the Daily News, American Media (publisher of The National Enquirer among other titles) Mansueto Ventures (owners of Fast Company and Inc. magazines) and Omnicom Group have all signed leases in or relocated to downtown Manhattan (for more on recent relocations to downtown, check out The Commercial Observer’s exhaustive chart, starting on page 14, from the Alliance for Downtown BID and Jones Lang LaSalle).

“We’re seeing interest from tech firms, more creative [firms],” Ms. Stacom said of 1 World Trade Center in particular, echoing the larger leasing trend for downtown. “And, of course, from law firms and government.”

Ms. Stacom believes the Condé Nast move will reverberate in ways yet imagined. “There will be a different mix of retail”—more Marc Jacobs than Brooks Brothers. “Downtown’s recovery has been far quicker than we anticipated. It’s just an extraordinary story,” said Ms. Stacom.

Tallying Tenant Incentives

The tenants have different reasons—an iconic address, the new construction, the architecture, modern amenities—but tenant incentives (T.I.’s) perhaps loom the largest when it comes to the recent shifts in downtown leasing.

While hard numbers for T.I.’s are difficult to nail down, brokers offered estimates. The standard work allowance package being offered at trophy space downtown is $60 per square foot, according to Peter Riguardi, president of the New York region for Jones Lang LaSalle. He believes 10 to 12 months of free rent can also be standard.

“Tenants definitely want a contribution to their build-out,” Ms. Stacom said. She added that if she signs a deal she is currently negotiating at 1 World Trade, the floors below the sky lobby will be 50 percent leased. Those floors are renting for $75 per square foot, and the rest of the tower, which is constructed up to the 77th floor, has yet to be priced but will be more expensive.

Though the pre-2001 vacancy rate was 3.2 (compared with the current 9.2) and neither occupancy rates nor asking rents downtown have rebounded to pre-2001 levels, optimism remains given the spate of media leases. And, as Ms. Stacom points out, the ascendancy of what will be North America’s highest tower is practically as well as symbolically important. “New Yorkers need this—we need the office stock.”

Compared with other world cities, New York suffers from a stunning dearth of Class A space, and much of what downtown had in particular was destroyed on 9/11 (or converted to condos shortly thereafter as companies fled the area). But as factors like the new Fulton Street transit hub, government incentives and continued residential conversions in the financial district merge, downtown has the potential to rival midtown—with that more diverse tenant base, besides.

Tech Plugs In

Mr. Riguardi said he finds the growth in tech the most notable, as that sector shows huge potential. As noted in a recent Jones Lang LaSalle report on downtown, “technology firms currently account for an aggregate three million square feet of demand throughout Manhattan.” And technology’s traditional stomping grounds, midtown south, are crowded to the point of 0 percent vacancy, according to some estimates. Thus, downtown as a prime option.

The open, collaboration-encouraging space that the large floor plates of 1 World Trade and other newer towers, like Silverstein Properties’s 7 World Trade Center, allow is part of the draw for tech and creative firms, but Mr. Riguardi also believes there is simply more need in general for quality space for tech tenants. In New York City, he said, “our product is so dated.”

1 W.T.C.’s Shadow

One World Trade’s automatic cachet was the entire draw for its second-biggest client after Condé Nast—the China Center, a complex consisting of just under 200,000 square feet on floors 64 through 69, which is being built out and rented by Beijing-based real estate firm Vantone.

“The Chinese feel the site represents validation that you are a global firm,” said Mr. Riguardi, who represented Vantone. Xue Ya, president at Vantone, says 1 World Trade was the only address in New York City that is widely recognized in China.

The 20-year lease with two 10-year renewal options was signed in 2009, though the parties had been in discussions since 2004. While work allowances were a concern, the one thing Vantone would not compromise on was accessibility. The firm wanted easy flow from its offices—which includes an events space, a conference center, a private club and a Chinese restaurant—to the ground level.

Ms. Ya suggested that her company’s move was not only strategic, but prescient, particularly given the past decade’s pessimism regarding development at the World Trade Center site. “We believed in the project from day one,” she said of 1 World Trade. “Too many people questioned us.” The firm hopes to create a haven for Chinese business at the landmark address, and Ms. Ya believes the investment in infrastructure is the key driver for the area. “In two more years, everything will change. The government’s investment will create value.”

As 1 World Trade has finally become a physical presence, other buildings downtown have benefited. For instance, SL Green took control of 100 Church about two years ago, and it is now 80 percent leased, according to Steve Durels, the REIT’s leasing director. Three full floors are still vacant, though Mr. Durels said he is in talks to lease “a significant portion” of what remains. He said asking rents were $36 per square foot. Meanwhile, 4 New York Plaza, where the Daily News moved last spring, has reached full occupancy.

As for perhaps the most closely watched prospective tenant for the area, Mr. Riguardi does not believe that Citigroup will make the move downtown. “They are still evaluating lots of alternatives. There is emotion,” he said, “and then there’s economics.”

gvoien@observer.com

The Commercial Observer: So, why don’t you assess your progress over your first 60 days at Brookfield?

Mr. Rudin: It’s been terrific. I wouldn’t quite call this my midterm report card, but I’ve been here for two months, and to the extent that there have been any surprises they’ve all been pleasant.

What kind of surprises?

I wouldn’t even call them surprises, but the quality of the people, the strength of the office, and the individuals in New York and the other people I’ve met, both in New York and around the country, have been outstanding.

How have you been spending your time since joining Brookfield?

One of the things I endeavored to do was get to every office right away, which I did. My last visits were to Denver and Minneapolis, and I accomplished that two weeks ago. And I was very impressed, as I said, by the portfolio and the people.

I’ve been to, in this order, Boston, Washington, Houston, Los Angeles, San Francisco, Denver and, finally, Minneapolis. I would say that, certainly, each marketplace has a different dynamic, but I would say we have top professionals in each of those markets. Each one has a different dynamic depending on where the market is.

When I started, I wanted to get an understanding of the organization, both with and without New York City, and I’ve really gotten the opportunity to understand the capability of the key individuals here. And I happened to join at an opportune time. We really have a tremendous amount of leasing activity throughout the portfolio—so part of my job is not to get in the middle of anything and not foul anything up.

Do you worry that, as you continue working at Brookfield, your allegiances will shift to Canada? Is there any chance of your turning into a Canuck?

Well, I have been to Toronto, and I’m catching up on my hockey rules.

It’s probably not a huge surprise to many real estate brokers here in New York, but I wonder if a lot of people forget just how big Brookfield is? Behind SL Green and Vornado, it’s the third largest office landlord in the city.

We’re a very understated organization, with one of the best portfolios in the city. But I’ll tell you one thing: when I thought about making this change I was coming from a 100-plus-year organization with a very strong culture and going to a 100-plus-year-old organization with a very strong culture. And that’s what facilitated my decision; and now, whether we call it a midterm review or just two months, the transition has been as easy as can be.

And, while I look back very fondly at the years I spent with CB Richard Ellis and its predecessors, this opportunity has proven to be extraordinary in the short term, and I expect even better as we move into midterm and long term.

What is the latest to happen with Brookfield’s mixed-use project on the Hudson Rail Yards near Ninth Avenue? Is there any progress since earlier this year?

We’re going ahead with the platform in the first quarter of next year. It’s been designed and we have most of the approvals in place. We’ve substantially value-engineered it so that it will be coming in at some number well under $300 million.

And with the site itself—while we have been fairly quiet—we’ve had a number of selective and good conversations with people about it. Many of them were unaware of a few things: first, that the cores of the two lead buildings will be on terra firma; also that we can develop and deliver the first building in 2015; and that the deck, as I mentioned, is designed, approved and being brought in at a manageable price.

One thing Ric Clark had mentioned to me earlier this year is that, while many other developers were scrambling at the outset of the downturn, Brookfield immediately contracted a new engineering study at the site, which resulted in a lot of savings.

We definitely put that time to good use. And we’re seeing that, with new technology, it will be safe, secure and also completely value-engineered.

Nearby that site, Brookfield is also repositioning 450 West 33rd Street, the former Daily News and U.S. News & World Report building. What’s happening at the site now?

We’re in the process of developing a scheme for that building. We have an architect engaged to start looking at some different scenarios. That has attracted a lot of attention, both because it sits in the middle of that neighborhood and also because its footprint provides a cost-effective alternative for a lot of different types of users, from financial services to those in the publishing or advertising arenas.

Do plans for that building run in tandem with the plans for the rail yard project, being as they’re so close to one another and that they’re both being envisioned as part of a project to create something of a brand-new neighborhood in Manhattan?

There is a separate ownership, in part, but we think that they’re going to be synergistic. So you have an opportunity to go into a state-of-the-art new product or you have the opportunity to go into a more cost-effective alternative in a building that’s among the most solidly built in the City of New York—and with larger floor plates and ceiling heights in a location that’s only going to be improving with time.

It’s an interesting building. I used to work there.

And, as the world goes around, in my prior life at Edward S. Gordon, I was part of the leasing team for the building many years ago. So it’s déjà vu all over again.

jsederstrom@observer.com

Mr. Lieber joined Silverstein in 2003.

Uniformed men milled about, waiting for Leon Panetta, the newly appointed Secretary of Defense, to embark on his morning tour of 7 World Trade Center. At the same time, the leader of one of the city’s most powerful trade unions was being greeted as he crossed from the building’s elevator bank to a floor model of the World Trade Center site. Heavyset and stoic, that labor leader was there to address the members of Helmets to Hardhats, an organization that assists soldiers in their transition from battlefields to construction sites.

A few hours earlier, Mayor Bloomberg had arrived in Lower Manhattan along with his own entourage, calling for the end to “Ground Zero” as the shorthand to describe what, over the course of a decade, has changed from a pile of smoldering ashes to the early metallic seeds of a transit hub, a memorial site and a massive complex of skyscrapers.

Such was life at the World Trade Center complex in the week leading up to the 10th anniversary of 9/11. City, state and federal officials come and go, events flood in and out, and security clearances are de rigueur.

“It is always emotional—every single day,” said Janno Lieber, the man who, probably more than anyone else, is responsible for making sure that the World Trade Center project remains on course. “If there are bumps, and if there are slow-downs, and if there is not progress, or if there are any struggles—it’s always a challenge, and it’s all right outside of our window. So that never goes away. That sense of mission and that special importance rises up as we come up toward the anniversary every year.”

In the eight and a half years since Mr. Lieber and other colleagues working with the developer Larry Silverstein relocated offices to Lower Manhattan, Ground Zero, and all that it has come to represent, has been a daily presence. But mixed among the fear and sadness, Mr. Lieber insisted, is an emerging story of hope.

With all but three higher-story floors leased at 7 World Trade Center since construction ended five years ago, any lingering doubt of whether businesses would return to the area following the terrorist attacks has diminished. Besides Moody’s Corporation, which occupies 17 floors and 670,000 square feet of space at the 52-story tower, others like law firm Darby & Darby and West LB, the German investment bank, have inked deals for many of the top floors while Silverstein Properties occupies a 38th-floor office overlooking the main site across the street.

More recently, WilmerHale, among the nation’s largest law firms, chose to relocate its longtime headquarters from Park Avenue, a traditional hub for the legal industry, to four of the high floors at 7 World Trade Center. That 210,000-square-foot deal, which was inked in April, includes a clause that will allow the firm to share in energy-efficiency costs and benefits linked to the tower, which in 2006 became the city’s first LEED gold-certified asset.

“Interestingly, that was much less of a concern than anyone could have really anticipated,” said Mr. Lieber, 49, who noted that remaining floors are expected to be leased up by the end of 2011. “The premium and attraction of views have remained in this building as much as it has always existed in the rest of the New York City office tower market.

“We have a couple of tenants who are seriously looking at the space,” he added. “It’s financial service firms, it’s creative companies and it’s the law firms—but this is the premium space that’s available right now downtown, and there are a lot of companies that want to take advantage right now.”

With occupancy nearly full at 7 World Trade Center, Mr. Lieber, the president of Silverstein’s World Trade Center Properties LLC, has been shifting his focus to the construction of 3 and 4 World Trade Centers and 1 World Trade Center. The latter, of course, is where Condé Nast in May signed that one-million-square-foot lease that seeks to do for Lower Manhattan what the magazine publisher helped do for Times Square nearly two decades ago.

With the publisher expected to move its 5,000 employees—from a litany of titles that includes The New Yorker, Vanity Fair and Vogue—to floors 20 through 41 by 2014, many analysts believe the deal will prompt others in publishing and new media to follow suit. For Mr. Lieber, however, the Condé Nast deal confirmed what he and many at Silverstein Properties already knew.

“It validated what we’ve been talking about for quite some time, which is to push the diversification of downtown away from financial services and more and more toward creative companies who want to be here,” said Mr. Lieber. “I mean, Anna Wintour and Graydon Carter live in the West Village, and one of their senior decision makers lives in Brooklyn. I think they looked at their work force demographics and realized that writers, editors and people in the magazine industry are more likely to live in Brooklyn, New Jersey or Lower Manhattan than over in Connecticut.”

Mr. Lieber would know. An Upper West Side native, he currently lives in Brooklyn with his wife and three children, and was once a journalist at The New York Republic. A Harvard and N.Y.U. Law grad, he worked as an attorney and in the Clinton-era Transportation Department on his way toward the real estate industry.

Even with all the activity of late—and the understandable spotlight it draws globally—late last week was a time for Mr. Lieber and others to once again mourn the 2,819 men and women killed in the attacks.

“Every year we stop work and observe at the same time that other people are observing outside at the site,” he said. “But the other thing that’s happening is that all of the things we hoped about downtown are really starting to come to pass. That’s exciting and positive.”

jsederstrom@observer.com

Coffee Bean & Tea Leaf

The deal at the base of the 24-story, Harbor Group International-owned building brings occupancy to 95 percent occupancy, brokers told The Commercial Observer. The company, which operates at 750 locations worldwide, has, until now, not peddled its iced coffee, green teas or signature brews from a Manhattan store.

“We are very pleased that a world-renowned brand sought us out for its New York flagship,” said Jordan Slone, chairman and chief executive of Harbor International, who added that the deal was a direct transaction between the landlord and tenant. “The property has quickly become a success story for HGI, and in the nine months since its acquisition has already achieved a high level of occupancy.”

jsederstrom@observer.com

The deal for 76,483 square feet will allow the company to expand to a total of 114,815 feet on the Trinity Real Estate-owned asset’s fourth, seventh, eighth, 15th and 16th floors. Asking rent at the building is in the mid-$40s-per-square-foot range. The deal—which brings the building to 100 percent occupancy—was handled by Peter Fontanetta and Marc Packman of Trinity Real Estate.

“While Hudson Square has emerged as a hub for creative, media and arts tenants, Two Sigma’s expansion underscores the neighborhood’s appeal to a broad spectrum of businesses,” said Jason Pizer, president of Trinity, in a statement. “This area is home to a rapidly diversifying community of tenants and we are delighted to count Two Sigma among them.”

jsederstrom@observer.com

How the Lower Manhattan skyline changed—slowly—over the last decade. [Curbed NY]

3 Columbus Circle ready for its close-up. [Crain's]

Mayor Bloomberg's ex- goes to contract at One Kenmare. [NY Post]

Ralph Gardner Jr. sleeps with the Apthorp, tells. [Journal]

Resolved: the doorman is pointless. [Real Deal]

Avenue U out of juice because of a fire. [Sheepshead Bites]

And this Fort Greene house made us pause and stare wistfully out the window. [Brownstoner]

Cassidy Turley research guru Robert Sammons on private-sector job gains and the Manhattan office market:

What double-dip recession? What jobless recovery? There has been so much doom-and-gloom economic rhetoric circling the globe lately that the new jobs numbers just released by the City Comptroller’s Office appear, on the surface, to be totally contradictory. Figures for 2011 through July show that New York City has added 73,500 private sector jobs, though this number is, as always, subject to revision. And, more than likely we will see that revision as education positions were up a whopping 13,300 in the month of July alone and are sure to be adjusted lower as the year moves along.

That said, when education is taken out of the mix all together, the city still added some 6,000 private-sector jobs during the month.

And it wasn’t just July that saw a bump in the numbers, either, as the city has gained private-sector jobs each month in 2011--as few as 1,200 in May and as many as 21,800 in January. But there have been chinks appearing in the New York’s armor with both banking and securities dropping jobs for the last three months in a row. Professional services, though, has rocketed higher; and information services, after a couple of down months, has turned the corner and is now positive for the year. Even the dear, old real estate sector has added jobs in five of the last seven months.

Of course, jobs numbers are not forward looking and, if better economic news doesn’t appear on the horizon soon, the local figures are bound to weaken.

A winter of discontent coming?

The summer our discontent behind us, the weight of inaction threatens anew. It is readily apparent from the most recent data that economic growth and labor market trends slowed markedly during July and August. Yet precious little has been accomplished over this same period to seriously assess or offset the deficiencies in the recovery.

Absent politicians in Washington calming down, or new private or public sources of stimulus, the near- and medium-term outlook for the economy remains clouded. Would that policymakers could approach the growth and employment conundrum with the same zeal—and occasional ferocity—as they approached the budget debates over the past few months, we might be in a stronger position two years after the recession reached its putative end.

Growth and Jobs

In the waxing days of summer, leading indicators of economic and labor market activity were generally improving, albeit at a frustratingly slow pace. In a late-May column for The Commercial Observer, I wrote that “the near-term outlook is still clouded by an unusual degree of uncertainty … this summer will prove critical in narrowing that uncertainty along several dimensions, including the direction of policies related to monetary interventions.” As for the potential of a budget impasse to upend the recovery, I hypothesized that “a failure on the part of Congress to reach a compromise will derail the economic recovery.”

In the months that have followed those assessments, the buffeting of consumer and business confidence by a dysfunctional policy environment at home and a recalcitrant debt crisis in Europe have brought growth to a standstill. Data for August, in particular, show that downside risks to the recovery remain real concerns and that we cannot dismiss the possibility of a relapse into recession.

The most recent estimate of second-quarter G.D.P. growth shows the economy expanding at an annualized rate of 1 percent. That falls short of the level required to motivate an uptick in private-sector hiring. Nor does it suggest improvements in local, state and federal revenues of an order that will alleviate the structural crises in public finance.

Second-quarter personal consumption expenditures registered their smallest contribution to growth in two years, with increases in spending on services undercut by a drop in auto purchases. Private investment increased at a moderate pace. Declining government spending, principally at the local and state levels and in federal nondefense areas, was a drag on growth.

For commercial real estate investors and lenders, the headline growth statistics are secondary to the data on jobs. Corporate profits in the second quarter were observably higher than during the prerecession peak but have not fueled hiring. Last Friday’s employment report showed the extent of businesses’ reservations toward ramping up expenses.

As expected, state and local government shortfalls are forcing cutbacks in these subsets of the labor force. At the federal level, and apart from current negotiations relating to the budget, public-sector payrolls will come under increasing pressure as the Postal Service edges closer to default. Without sufficient funds to meet September and October obligations—including a $5.5 billion prefunding contribution for retiree health benefits and a $1.2 billion payment for workers’ compensation, according to the National Association of Letter Carriers—large downward adjustments in federal jobs may be just around the corner.

Controlling for government cutbacks, but including the impact of 45,000 striking Verizon workers, the establishment data show that private payrolls expanded by just 17,000 jobs, the weakest result since February 2010. One month does not constitute a trend, so let us return things to their broader context: there were more American jobs 10 years ago, in the middle of the 2001 recession, than there were last month.

An understanding of sector-specific employment trends can be instructive when assessing the commercial real estate outlook. Geographically, states like Texas have outperformed the national trends. The Northeast has also recouped losses, while large parts of California, the Midwest and the Southeast are continuing to struggle. In some of the industries that are most closely associated with office space demand, the trends are nuanced. Professional and business service jobs have rebounded, but a large part of the increase has been in administrative and temporary services. At the national level, financial services employment has stagnated.

What’s Gone Wrong and How to Fix It

The assessment of the faltering jobs recovery is cannon fodder for today’s political ideologues. That is deeply regrettable. Many businesses leaders report that uncertainties stemming from current legislative and regulatory priorities have made it difficult to invest in new employees or capital. And while productivity gains have slowed, uncertainty regarding the outlook for demand is also tempering firms’ hiring decisions.

Consumers are constrained in driving aggregate demand because of indebtedness and limited access to new credit. A healthier job market might support consumer activity, but the circularity of household consumption and employment is self-reinforcing.

To trigger a virtuous cycle, policymakers might turn their attention to reducing businesses’ hiring and employment costs. But such directed efforts will not, by themselves, spur new hiring if the entropy of the public-private interface does not abate. For an administration and Congress that are viewed as increasingly ineffectual and prone to puerile squabbling, committing to a sense of normalcy in the balance of government and private roles will be as important as any active policy interventions.

dsc@chandan.com

Sam Chandan, Ph.D., is president and chief economist of Chandan Economics and an adjunct professor at the Wharton School.

­

The Fresh Direct fridge goes here.

One winter evening in 2006, host Martin Bashir’s voice intoned over the opening of Nightline: “Meet the brash, young real estate assassin, selling lavish dream apartments to clients with money to burn.”

The TV screen bled to an earnest-looking Michael Shvo. “When you see a photo of the New York skyline,” the 32-year-old informed us, “these are buildings I made happen.”

And what made Mr. Shvo happen?

The New York condo boom, in no small part a product of 9/11. For several years during the last decade, he ran at the vanguard of a marketing movement for thousands of new condo units, one that emphasized Fresh Direct, spa treatments, 5 percent down for multi-million-dollar properties—and sex. Andre Balazs and partners pitched a steel-and-glass tent at a corner of the financial district, and called it William Beaver House; ostensibly after the corner’s cross-streets but the marketing was all about the middle word’s ribaldry.

Similarly lascivious condos popped up from Harlem to the Lower East Side to Long Island City, changing neighborhood demographics—everyone was to have the tastes of a 27-year-old VP at Goldman Sachs, it seemed—their scaffolding a ubiquitous symbol of the city’s slog back from the terrorist attacks.

Those attacks rendered an already recessionary economy supine. Most tellingly, companies fled, especially from downtown; and borrowing money became much easier for both home buyers and the people building the homes—the Fed, for instance kept the capo di tutti capi federal funds rate at 0 for nearly three years after the attacks.

“What happened was that it created this unnatural affordability for housing,” said Jonathan Miller, C.E.O. and president of New York appraisal firm Miller Samuel. “If we did not have 9/11, we would have probably gone into an expanding recession; and the Fed would have probably lowered rates to respond to the recession. But I think the symbolism of getting the economy back on its feet led them to keep rates at 0 for too long.”

Through this combination of cheap cash and vacant property, more than 6.5 million square feet of office space in lower Manhattan alone was converted to condos in the decade after the attacks, according to brokerage Jones Lang LaSalle—more than three Empire State Buildings’ worth. Much more commercial space would follow, perhaps most tellingly in the old warehouses of the Brooklyn waterfront.

Within a few years, condos were routinely outselling the co-ops that had dominated the city’s for-sale housing for as long as anyone could remember (today co-ops still outnumber condos 3 to 1). In 2006, 57 percent of all Manhattan apartment sales were just newly built condos, according to Miller Samuel. And they were going in Manhattan for well over $1,000 a square foot on average, more than co-ops. Buyers were often allowed to borrow up to 95 percent of the price (a mortgage share most co-ops would never permit). Everyone was winning.

And now? Condos still sell, though at a leaner pace—they accounted for 48 percent of Manhattan apartment trades in the second quarter of 2011. And development has slowed considerably amid a tighter lending climate since the late 2008 collapse of Lehman.

Manhattan condos, looking back, burned brightest between 2004 and 2008, in tandem with the rapid development, the loose money and the seminal marketing. All of that’s over now.

The 200-plus unsold condos at William Beaver House are rentals, acquired through a loan sale late last year by CIM, an L.A. outfit that loves distressed assets. And Mr. Shvo, the “real estate assassin?” Emails to an account that The Observer knows was once hopping were not returned. And a phone call to his offices was answered thusly: “At the subscriber’s request, this phone does not accept incoming calls.”

tacitelli@observer.com