Little Is Big!

Speaking of Burberry, let’s move to retail. You may or may not have heard of CBRE’s Richard Hodos, but he’s one of the rising stars in retail leasing.

His beginnings in the business were not auspicious. Mr. Hodos moved into retail real estate on Black Monday, 1987. Apparently as undeterred by that economic maelstrom as he is by this one, Mr. Hodos carved his niche with luxury clients. That focus has served him well. Until just recently, high-end retail has proven relatively immune to the markets.

“We tend to deal with higher-caliber, better tenants,” Mr. Hodos said. “It always helps if they’re high-image tenants, but if their credit is good … Right now, of course, credit is king.”

This year, Mr. Hodos signed, among other deals, Victoria’s Secret Soho flagship at 591 Broadway and the new Apple store at 1981 Broadway. And just this week, he swiped the coveted Hearst Building agency from his competitors at Cushman & Wakefield. (Word has it that Hearst wanted something like Prada, while the Eighth Avenue market wanted something more like CVS.)


THE REMAINDER OF this year’s power brokers fall into the oft-overlooked small-to-midsize transactions. During building booms and irrational housing bubbles, their deals get overshadowed by the towers that sell for billions, passing from one boldface name to another, steeped in the glamour and sheer virility of the trophy deal.

But absent those transactions—and transactions like those are nothing if not absent these days—the under-$100-million segment of the market has some life left in it.

Bob Knakal, Peter Von Der Ahe, Jon Epstein, Charles Kingsley and Yoav Oelsner, while taking due credit for their reputation, hard work and creativity, said they were grateful to work in a market sector where it’s still possible to get deals done.

“It absolutely has to do with the amount of financing that’s available,” said Mr. Knakal, who this year sold an impressive 53 properties worth a total of $396,000,000. “There’s no doubt that our niche of the market has been helped by the portfolio lenders that have been and remain very active in making loans in our niche. If you look at the appetite that portfolio lenders have, they are generally comfortable with about $30 million on any particular asset.”

In other words, if you’re eyeing a $50 million beauty of a building on 30th Street, a life company may well give you a $30 million loan. But good luck getting anything more.

Perhaps more to the point, some of these deals don’t even require outside financing. “There are a lot of people walking around the streets of Manhattan who have millions and millions of dollars in cash in their bank account,” Mr. Von Der Ahe said.

He would know. In June alone, Mr. Von Der Ahe brokered the sale of a building at the corner of 68th Street and Madison Avenue for $12.2 million; the sale of an 87-unit apartment building on 177th Street for $8.75 million; and the sale of a 5,000-square-foot, mixed-use building at 41 East 41st Street for $4,225,000.

But perhaps the most important asset in brokering a deal these days is moderating your seller’s expectations. There are still sellers out there who, despite the collapse of three out of five major Wall Street investment banks, firmly think it’s a seller’s market.

Mr. Kingsley—who with Messrs. Epstein and Oelsner this year brokered the sale of 12 East 52nd Street for $24 million, 408 Broadway for $29 million, the Dia Arts Center in Chelsea for $38.5 million and Booth House in Union Square for $56 million, among others—said “reasonable expectations in these tough times” are exceedingly important.

“Now is not the time to paint the picture that everything is rosy,” Mr. Kingsley said. “You have to be very, very disciplined in your valuations today.”

“We’ve walked away from transactions where sellers expectations were too high,” agreed Mr. Epstein. “They were being told something else from another broker.”

Little Is Big!