The Week in Real Estate: 7.31.09

After selling her Web site for $23 million, Laurel Touby told The Times that she had somewhere between $9 million to $11 million in her bank account after taxes. "I had all kinds of illusions about how far the money would go and what I would enjoy, but they’re not true," The Times quoted her saying. "I thought, 'O.K., a car and driver and a new apartment and a whole new life.' In fact, I can only afford two out of three."

So Ms. Touby either has a car and a driver but not a whole new life, or a whole new life but no car and driver: According to city records, she just closed on a $3,905,000 penthouse loft at 43 East 19th Street. According to a listing, the 4,100-square-foot full-floor loft, in a 101-year-old limestone building, has four-sided views, three "grand Egg & Dart columns," three bedrooms, and "sole recreational use of the roof." More here.

The dramatic transformation of Manhattan’s far West Side, only two years ago, seemed shiningly imminent.

Mayor Bloomberg had been pushing the grungy, truck-filled area south of the Javits Center hard on the private sector; the city’s biggest developers started planning new hotels and apartment towers; commercial and residential rents seemed on an endless march upward; and the No. 7 subway line was being extended to 34th Street and 11th Avenue, making the area, for the first time, convenient to millions.

Finally, the transformation’s linchpin—the 26-acre West Side rail yards, which represent Manhattan’s largest remaining undeveloped parcel—had attracted bids from New York’s largest developers, partnered with major employers, to build a giant new complex of office towers and apartments. (The site was ultimately awarded to the Related Companies, led by billionaire Miami Dolphins owner and Time Warner Center co-developer Stephen Ross.)

The economic crisis, of course, has obliterated any sense of imminence and removed the far West Side’s aura of inevitability as Manhattan’s next great neighborhood, certainly for the next few years. More here.

The Great Recession has cut into New York's hotels like almost no other real estate sector. Room rates have tumbled from the record peaks of 2006 and 2007, as much as $60 on average from this time last year to about $200 nightly, according to PKF Consulting, which tracks hospitality stats.

Consequently, hotel revenues in the city are down 30 percent, according to John Fox of PKF. He predicts the demand for New York hotel rooms will continue to decline throughout 2009, and won't pick up again until at least 2012. In February, the Bloomberg administration adjusted its tourism projections for 2009 to reflect a 5 percent annual drop in tourism.

So what of the best of the many new hotels opening in Manhattan? They all face the challenge of filling rooms—and, in some cases, selling property shares—amid the greatest economic downturn in 80 years. Some, like the Trump SoHo, seem well enough on their ways. Others, not so much: Four of the top new ones are genuinely distressed, according to Real Capital Analytics: 250 Bowery, the Dream Hotel, the Beekman Tower Hotel, and the Eastgate Tower Hotel. Several of challenged hotels fall downtown, including the W Downtown, 50 West Street and the new Four Seasons.

To wit, the 11 most challenged hotel projects in Manhattan right now. More here.

flank architects.

When an earlier floor plan for 2 N Moore Street was published on Curbed last year, something struck a nerve. “You’re [sic] life must really suck,” one reader told another. “Nobody cares what an [sic] poor and unwashed member of society thinks about a luxury house,” another comment said.

Tribeca mansions with 12,500 square feet, seven levels, five bedrooms, three fireplaces, and one high-speed elevator have that effect. And at $35 million, this was the priciest listing ever in the neighborhood. But the mansion, owned by the former chairman and CEO of New York Mortgage Trust, who built his place by combining a former bar with a new six-story house, has a freshly cut $29 million price tag, and, more importantly, an improved floor plan.

Now readers can join hands and peacefully marvel at the three-car garage, the gas meter room, the courtyard’s vented BBQ grill, the library’s gas fireplace, the master bedroom suite’s loggia and the 50-foot-long indoor pool. More here.


A Times article last Tuesday heralded development in Bushwick with the deadpan headline “Bushwick Is Getting Some Wine Shops.”

Sunday’s open house at 38 Wilson Avenue, however, was more of a beer-and-hotdogs gathering. Broker Alex Gandelman manned the rooftop grill in between escorting visitors through the development’s one-bedroom condos. It was, he declared, “the funnest building ever.”

“Funnest” is subjective, but the building certainly seemed to reflect the emergent recognition (witness the Billyburg bust) that outer-borough pioneers probably don’t want slick corporate homes. The economy might put on a damper on Brooklyn gentrification’s outward march (Manifest Destiny for the early ’00s)—but at least 38 Wilson offered homes that were at home in their neighborhood.

The building features corrugated metal paneling that echoes the facades of older, neighboring structures. More here.

How are things going these days?

I’m not a contrarian when it comes to the economy. I think we have a very tough road ahead of us. I think we have a resetting of our world, and certainly our industry. So thankfully for us, as a company, we’ve been fairly conservative about the things we’ve done over the last 20 years.

How so? You guys build everything.

We didn’t take on a lot of debt. … We’ve resisted the temptation to do what a lot of companies do in this boom time and that is expand wildly and not put the right management structure in place. More here.

Ryan Meehan.

Even though it took Alex Reyfman, the former head of credit derivatives research for Bear Stearns, four price cuts before he finally sold his Upper West Side co-op, he ended up getting only $540,000 less than his first asking price.

Another former Bear Stearns executive won't be as lucky.

According to a Corcoran listing, Jeff Urwin, who had been co-head of investment banking at Bear Stearns (and a member of the firm's management committee), has cut the price of his townhouse from $32,750,000 to $26 million. The 21-foot-wide mansion, that listing says, has a 35-foot-long music room; a garden and two terraces; "indulgent" and "top-of-the-line" kitchen appliances; a master bedroom suite "with his-and-her baths and dressing areas" (with custom cabinetry); and a basement that's "a haven for exercise and relaxation." More here.



A year and a half after Ashkenazy Acquisition and the Carlyle Group joined forces to purchase the incredibly well-placed skyscraper at 650 Madison Avenue—a mere block from Central Park and the Plaza Hotel, and couched snugly inside New York's fanciest office district (dubbed, appropriately enough, the Plaza District)—the developers have hired real estate advisory firm Eastdil Secured to search for a capital injection.

The landlords are quietly looking for ways to pay down the tower's $500 million in debt, according to an industry souce. Options they are considering: either a sale of its retail space; or allowing an investor a preferred equity interest in the building. As is, the retail space, between 59th and 60th streets, is supposedly encumbered with long-term, below-market leases signed in the early '90s. More here.


Patton Boggs, the venerable D.C. lobbying and law firm, has doubled the size of its New York office at 1185 Avenue of the Americas, signing a new, 60,000-square-foot sublease for a term of five years, with an option to extend.

It’s good news for SL Green, which owns the so-called Stevens Tower, all steel and glass and vertical lines topping out at the 42nd floor. Mark Weiss of Newmark Knight Frank represented Patton Boggs, and Richard Bernstein of Colliers ABR represented sublessor King & Spalding with Susan Kahaner of CB Richard Ellis. More here.


Law firm Orrick Herrington & Sutcliffe was expected on July 24 to sign a lease for approximately 220,000 square feet at CBS' 38-story granite slab known as Black Rock, at 51 West 52nd Street, according to industry sources.

As part of the deal, Orrick is taking the space being vacated by UBS and Cushman & Wakefield, which will consolidate its midtown offices at 1290 Avenue of the Americas. Sources say that UBS paid more than $32 million to terminate its lease early, money which CBS applied to the Orrick deal to absorb the costs of Orrick's build-out of the noncontiguous space to the tune of $150 a square foot, and which will reduce the firm's rent in the building. More here.


"Operating in this economy is sort of like a game of dodgeball."

So said Brookfield Properties CEO Ric Clark during his firm's second-quarter investor call on Wednesday morning. Brookfield Properties owns and manages 75 million square feet of office towers in Canada and New York, including the Grace Building at 1114 Avenue of the Americas and the mammoth World Financial Center in Lower Manhattan.

The affable Mr. Clark did not sugarcoat his firm's predictions for the years ahead.

"Our crystal ball is not calling for a recovery this year nor the first half of next year, if at all next year," he said. More here.

Patrick McCullan.

Even though the dreamy, oft-goateed actor Josh Hartnett spent $2.4 million on a Tribeca apartment a few years ago, he had been renting a relatively modest downtown loft until this month, according to three sources. One of them, who saw the place just after Mr. Hartnett left, said the 2,200-square-foot apartment at 237 Lafayette Street was a mess, but in a chic Soho-cum-Hollywood sort of way: “Organic food everywhere … All that’s left is trash and facial products and stuff.” More here.


You can have it if you want it ... and have $105 million to spend.

The dun-colored, 23-story 475 Fifth Avenue, which lender Barclays Capital earlier this year took back from Westbrook Partners and embattled developer Joseph Moinian, is now quietly letting it be known that it will part ways with the office tower for the aforementioned sum, say industry sources.

Mr. Moinian and Westbrook closed on his purchase of the building on April 2, 2007, amid an epic buying spree, paying $160 million. More here.


When brokers from the most posh Manhattan brokerages filed into a penthouse at 133 East 64th Street for a secret meeting earlier this month, the fact that the place had been seized two weeks earlier by U.S. marshals from contemporary America’s greatest financial villain was not the only thing on their minds.

What must have really bothered the brokers, this small batch in the running to have the odd honor of listing Bernie Madoff’s two-floor apartment between Park and Lexington avenues, is that they were all corralled together. “It was a strange and, frankly, slightly insulting way to handle it,” one broker there said. “Everyone in that room has pitched pretty important exclusives. I’ve never had to go on a cattle call before.” More here.

James L. Ferraro, the prominent Miami trial lawyer who owns the Cleveland Gladiators arena football team, is finally buying a nice Manhattan apartment. This week he’s spending $8,175,000 on a penthouse at the glassy Park Imperial on West 56th Street.

Even though Mr. Ferraro (pictured above left, with his broker Oren Alexander) owns places in Miami and a 14-bedroom Martha’s Vineyard mansion, it had been years since he felt he could get a good bargain in New York. “I thought about it after 9/11, but I didn’t want to buy on a calamity—be a vulture on someone’s property; not that it’s bad karma, it is what it is. But this now is the best buying opportunity you’re going to have in the next 25 years.” More here.

In a marked departure from original plans, City Point, the glass-clad, multi-use complex that was to be downtown Brooklyn’s own Time Warner Center, will now be built in two phases, according to sources familiar with the developer’s intentions.

The developer plans to build the first phase at the east end of Fulton Mall, on the site of the old Albee Square Mall, as quickly as possible. It will likely include affordable housing and some retail of the big-box variety to accommodate a tenant like Best Buy. The second phase, to be built at some indeterminate future point, will include market-rate housing, office space and additional retail space. More here.


It didn’t look like much, the racetrack in Queens. On Monday, the Aqueduct, whose angular Jetsons grandstand must have looked modern when it was built in 1959, hulked empty next to a parking lot, its asphalt crevices luxuriant with weeds. A lone seagull flew overhead, and aside from the distant roar of jets departing J.F.K. and the white din of traffic from North Conduit Avenue, the Aqueduct sat silent.

And fallow.

It is these 210 acres that have caught the gambler’s eye of casino magnate Steve Wynn, who was scheduled to land in New York City on Monday, July 27. On July 29, he is to personally present to Governor Paterson’s office his proposal for the racetrack’s redevelopment. More here.

The Medical Arts Center has signed another industry tenant, in this case N.Y.U. Hospital Center, which has leased 2,094 square feet for—snooze—storage. The tenant signed a three-year lease at 317 East 34th Street, where asking rent is $30 a square foot. Adams & Co.’s David Levy represented both the tenant and landlord The Feil Organization in negotiations. More here.


As a thunderstorm raged outside, the mood of dozens of real estate investors at Wednesday’s Distressed Investing Leaders Forum at One World Financial Center was that of general gloom.

“The most optimistic thing I heard today is we won’t be like Japan. It won’t be 20 years,” said Jan Jekielek, the Epoch Times’ director of human resources. “What the Fed did now, it took [the Japanese] six to seven years to do.”

In one panel, Mr. Jekielek recalled, people asked whether China can pull the world out of the recession. Panelist Joel Holsinger, managing director of Fortress Investment Group, said that since China is now undergoing their own Industrial Revolution, it is going to take them another 15 to 20 years to move from a manufacturing economy to a consumer-based economy. More here.


The City Council approved the Bloomberg administration-backed rezoning of Coney Island on Wednesday afternoon in a 44-2-1 vote. While the city is still negotiating with the rezoned area’s main private landlord—Thor Equities’ Joe Sitt—the two long-opposed parties may be close to reaching a final deal.

The rezoning plan would turn vacant lots currently zoned for amusements into a residential area, and would allow some hotels, retail, and indoor amusements into the central amusement area of the historic entertainment hub. The plan, which has been in the works for nearly eight years, must now pass through the chaotic gates of Albany before it’s signed into law. More here.


The widely feared divorce lawyer who helped Mayor Bloomberg, Uma Thurman, Henry Kravis, Christie Brinkley, Tommy Mottola, Grace Hightower, James Gandolfini, Ivana Trump, Marla Maples and, of course, Swedish countess Marie Douglas-David leave their special someones has bought a nice comfy apartment with his wife.

According to a deed filed Thursday, attorney Robert S. Cohen and his wife, Stephanie J. Stiefel, paid $4.4 million for a co-op at the plush and prestigious co-op One Beekman Place. More here.


The Upper East Side as Hip: Neighborhoods of burgeoning trendiness inspire tomfoolery aplenty. But when the neighborhood in question is one whose desirability is long established, the lies become a little more transparent.

A $1,395 studio “in the heart of the Upper East Side”: The generous reader can only assume that 1366 York 3C, dangerously close to the East River, is the neighborhood’s heart in some non-geographic sense. Or that an honest mistake has been made, as in the case of an “Upper East Side” apartment at West 72nd and Riverside Drive.

But another significant issue is misunderstanding why someone would want to live on the Upper East Side in the first place. This problem plagues a landlord offering $595 to $795 for rooms in shared apartments on York Avenue. “Students, young adults and young professionals hang out in hip and trendy bars, clubs and restaurants that are the hallmark of this area,” we learn. “Numerous Bars and Nightclubs are within walking distance in this Hip part of town.” More here.


It’s the end of July, and for the brokerage community, that means one thing: Crain’s publishes its biannual list of Manhattan's top office leasing deals, using data from CoStar. Though, frankly, publishing the list this annus horribilis—and then writing about the publishing of the list—seems to border on the sadistic.

But hey! It’s our job!

Let's get the obvious out of the way. CB Richard Ellis, the city’s (and country’s) largest commercial brokerage firm, retained its position atop the heap, representing the tenant or landlord in 22 of the 50 biggest leasing transactions of 2009. As we said, that’s not surprising. Nor should we be surprised that the sum total of all 22 of those leasing transactions was pitifully small—but we were, because apparently we still retain some capacity for shock. Those 22 transactions totaled a mere 1.75 million square feet. This time last year, when CBRE also topped the list, its transactions totaled 4.9 million square feet.

In a market where everybody’s suffering, you find solace where you can. More here.


She could have been talking about the weather.

On Thursday afternoon, at the Department of City Planning conference room at 22 Reade Street, Hudson River Park Trust president Connie Fishman revealed the blockbuster news that the Trust had awarded Youngwoo & Associates development rights for the West 15th Street pier with the aplomb worthy of a proctor announcing the end of an exam.

Nobody batted an eye.

That's likely because Youngwoo & Associates' two competitors for the Pier 57 rights—the Related Companies and the Durst Organization—had apparently backed away from the project when the various limitations became too onerous. According to sources, the project ceased to strike them as feasible in its current form and with the current state of the credit markets (frozen). More here.

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