Month: January 2016

A rendering of the Dekalb Market Hall, set to open in March

From the January issue: More than 500 years ago, Algonquin Indians were trading meat and crops on an area along the Hudson River in Chelsea. In 1993, developer Irwin Cohen paid $9 a square foot for a rundown complex on that same spot and four years later he debuted the Chelsea Market, a gourmet food and shopping hall. At the time, retail rents at the Chelsea Market were $25 per square foot. Today, they are well over $100 per square foot, according to news reports. And the Chelsea Market has spawned roughly a dozen food halls. These markets bring together a wide variety of trendy specialty foods into one culinary potpourri. Where else can you dine on an Iraqi pita pocket, a $17 lobster roll and Japanese-inspired tacos all in one place? [more]

Source: By the Numbers: The wave of new food halls hitting NYC

The Metropolitan Museum of Art on the Upper East Side (inset: Daniel Brodsky)

The Met’s new addition will no doubt be a work of art.

The Metropolitan Museum of Art is planning a new 180,000-square-foot expansion.

The project, led by British architect Sir David Chipperfield, will include new space for galleries that house art from Africa, Oceania and the Americas, along with operational space, the New York Post reported.

“It will be no higher than the existing buildings that are there,” the Brodsky Organization’s Daniel Brodsky, who serves as the chairman of the museum’s board, told the Post. “It goes down and up to a rooftop with a terrace.”

The landmarked, 2 million-square foot museum, located on Fifth Avenue at East 82nd street, completed a new $65 million entrance plaza last year.

Last year, it issued $250 million in bonds last year to fund infrastructure projects, the Post reported.

The Museum of American History is also planning an addition, totaling 218,000 square feet. It’s projected to cost $325 million. [NYP] – Ariel Stulberg

Source: The Met to get 180K sf new wing

Clockwise from top: New York Wheel investors Rich Marin, Eric Kaufman, Meir Laufer, Jay Anderson, Lloyd Goldman and Joseph Nakash and a rendering of the project

TRD Special Report: In September 2014, Rich Marin stood on stage at TEDx St. George and invoked Cornelius Vanderbilt. He spoke of a passion project worthy of the Commodore’s native borough: transforming Staten Island’s sleepy waterfront into “the gateway to America” by building a giant wheel, the world’s largest.

“It’s been said that Staten Island never misses an opportunity to miss an opportunity,” he quipped. “But I like to think that they’ve been smart to wait for just the right opportunity.”

Marin, a tall, beefy man with a professorial air, knew a bit about high-stakes deals. He helped create the derivatives market at Bankers Trust, ran the asset management division at Bear Stearns, and later rescued Lev Leviev’s Africa Israel USA after a disastrous boom-time acquisition spree. The project he spoke of that day in St. George, the New York Wheel, was meant to be his “legacy to the world.”

But this legacy appears at risk. The wheel is now estimated to cost north of $500 million, more than twice the original figure. Critics say its revenue projections are wildly optimistic. And vicious infighting has ripped apart the fabric of the development team. All the while, the public officials and government agencies that threw support behind the project for the past three years have suddenly gone quiet.

“No one is really sure how it got to this point,” said one person with knowledge of the situation.

Origin story

A view from inside the London Eye

To understand the challenges facing the developers of the 630-foot-tall wheel, it helps to jump back to 2008, when Meir Laufer first visited the London Eye.

Laufer, CEO of Plaza Capital Management, a small Financial District-based developer, began studying every aspect of Britain’s most-visited paid tourist attraction. Why, he asked himself, did his hometown not have something similar?

“I thought: ‘Why not New York, and why not me?’” Laufer told Jewish newspaper Hamodia in 2012. “I knew that one day New York City would have such a wheel. I was utterly convinced that this was going to happen. I got to work right away.”

Laufer pitched the project to his connections, including eventual investor Eric Kaufman, a developer and a former top broker at Colliers International. Some of them scoffed. But once he struck an exclusive construction deal with Starneth, the engineering firm behind the London Eye, he and Kaufman were able to use the agreement to entice deep-pocketed investors.

Starting in 2010, the partners started looking for a suitable site, working with NYC & Company, the city’s official marketing arm, as well as with the city’s Economic Development Corporation. After flirting with the idea of South Street Seaport and Governor’s Island, they secured an eight-acre waterfront parcel on Staten Island’s North Shore.

The partnership grew to include prominent New York businessmen such as Andrew Ratner and Jay Anderson of the Feil Organization, Joseph Nakash, co-founder of jeans giant Jordache Enterprises, and Lloyd Goldman, nephew of the legendary Sol Goldman and founder of BLDG Management.

Laufer and Kaufman served as chairman and CFO, respectively, of the operating entity, New York Wheel LLC. Marin, who had been brought in earlier by Laufer and Kaufman, officially became CEO.

Rich Marin

“One of the puzzles the city had been trying to solve for years was how to take the tourists who ride the Staten Island Ferry every year and convince them to get off the ferry and explore Staten Island,” said Seth Pinsky, the former head of the New York City Economic Development Corporation and now a top executive with RXR Realty. “What we liked about the wheel was that it was a unique attraction that could pull people off the ferry.”

In September 2012, then-Mayor Michael Bloomberg unveiled the plan to the public. “The New York Wheel will be an attraction unlike any other in New York City — even unlike any other on the planet,” he said. “It will offer unparalleled and breathtaking views, and is sure to become one of the premier attractions in New York City.”

Whose wheel is it anyway?

Meir Laufer stands next to then Mayor Michael Bloomberg as the wheel is announced

At the press conference announcing the wheel, a beaming Laufer stood next to Bloomberg, clearly relishing the spotlight and his ascendance to macher status.

But his euphoria didn’t last long. He claims he soon found himself sidelined by the other investors, who by now held the majority equity stake in the project. He alleges he was discriminated against in part due to his Hasidic background, which his partners supposedly said was bad for business. 

“Because of his Hasidic garb and ethnic appearance, Laufer was treated differently than other investors and board members,” his lawyer claims in court documents filed in response to a July 2015 lawsuit from fellow investors. “Marin was even so bold as to tell Laufer that, in order to attract investors, the project could not have ‘more than one board member from your ‘community.’”

Laufer further claims he was removed from press releases, excluded from project updates and even barred from speaking publicly about the wheel. Things got so nasty that when he attempted to confront Marin he was told to “suck d**k,” he claims.

As costs began to skyrocket, the partners tussled over their equity positions in the project. As per the wheel’s original operating agreement from 2012, Laufer had a 33 percent ownership stake, court papers show. Wheel Estate LLC, an entity held by Feil, Goldman and Nakash, invested $7 million for a 51 percent stake; Marin, the CEO, had 8 percent; and Kaufman had 4 percent.

But since then, the Wheel Estate investors have allegedly moved to dilute Laufer and Kaufman’s equity positions by making several unnecessary capital calls to the board. Since June 2013, the board has opted to raise an additional $20 million from board members, rather than raising outside capital, the duo claim. Since their wealth didn’t match that of their fellow investors, Laufer and Kaufman haven’t been able to meet contribution demands and so were sidelined, they claim.

In August 2015, Wheel Estate asked a judge to approve reducing Laufer’s stake to just 11.08 percent and Kaufman’s stake to just 1.08 percent. Meanwhile, Feil, Goldman and Nakash want to up their combined stakes to 78.84 percent, saying they had to inject additional equity to cover Laufer and Kaufman’s obligations.

But Laufer and Kaufman claim the capital calls breached the terms of the project’s operating agreement. They insist that at the time, the project was on firm financial footing and wasn’t experiencing any shortfall (which they said was a prerequisite for a capital call).

“Wheel Estate has engaged in an egregious scheme to deprive the originators of the groundbreaking New York Wheel attraction of their rightful ownership interest in the project,” Kaufman’s attorney Marc Kasowitz told The Real Deal. “We are confident that this litigation will finally put an end to Wheel Estate’s abusive pattern of withholding critical financial information and attempting to improperly increase its own financial interest at the expense of the originators.”

Kaufman has also alleged massive financial bungling at the project, saying the wheel had no valid business plan in place, weak management and several unexplained cost overruns. 

Marin dismissed the claims as sour grapes, saying the original founders simply didn’t have the funds to keep up with the big boys.

“These two shareholders, who have no money, are sore about getting diluted due to this project costing more than we had originally thought,” he told TRD. “They should be thankful that we did not just throw in the towel but kept moving forward.”

Breaking down the capital stack

A rendering of the New York Wheel

So, just how much is this wheel going to cost?

When Marin and Laufer responded to a request for expressions of interest (RFEI) from the city in 2011, they estimated a total cost of just $250 million, inclusive of an adjacent terminal building (for $17.5 million) and visitor parking (for $36.8 million), documents obtained by TRD show. 

By the time the project was officially approved by the City Council in 2013, and further research had been carried out, the project’s total cost was up to $350 million.

But now, the project is slated to cost a total of $534 million, a 114 percent leap from original projections, despite no significant changes to the initial development plan, documents show.

The developers have already scored about $476 million of that sum, including $80 million of their own equity, $195 million in senior debt secured from JPMorgan Chase subsidiary Highbridge Capital Management last May, $174 million in mezzanine financing through Canam Enterprises, an EB-5 regional center, and $31 million raised from smaller investors through securities firm Houlihan Lokey.

In September, the board announced its intention to raise an additional $30 million through North Capital Private Securities, a Utah-based broker-dealer that would sell New York Wheel shares via its 99Funding online crowdfunding platform and other crowdfunding sites. The wheel, Marin said, will raise this funding by January.

As for a $20 million sponsorship deal the developers hoped to secure with sponsors such as Google, GE and Coca Cola, that plan was nixed after a provisional deal with insurance giant New York Life fell through and another willing suitor couldn’t be found.

Marin downplayed the overruns and attributed any escalation in costs to the evolving financing and construction environment in the city and to specific challenges associated with the waterfront site.

“While some of this is due to the passage of time, a lot of this is due to the site conditions requiring more extensive site preparations and foundations,” he said. “We are paying extra to meet the high resiliency needs of the New York Harbor location and quite a bit extra to set a standard of security for this site that makes it a safe site in an increasingly uncertain world.”

He continued: “We have been building this project in a robust New York City building environment where we compete for subcontractor and vendor services with many other large projects underway in New York City. This has undoubtedly contributed to considerable cost escalation, just as it has for many other projects.”

Construction costs have certainly risen at a brisk clip since the project was launched, including expenses for labor, concrete, electrical and insurance, as TRD reported in October 2014.  But New York Wheel insiders said too much of the project’s additional burden was due to interest payments on the senior debt from Highbridge, which, unusually, is far costlier than the mezzanine debt arranged by Canam.

The Highbridge debt carries an annual interest rate of 10.25 percent, documents show, while Canam’s mezz debt interest rate is just 2.75 percent. Therefore, for every six months the project is delayed, the development team must fork over nearly $10 million to Highbridge. The documents aren’t clear on the length of the Highbridge loan. A representative from Highbridge did not respond to a request for comment.

Marin said the project would be absorb these financial issues.

“We are about 35 percent complete with the construction, so we have the utmost confidence that everything is and will remain on track, he said. “Fortunately, the robust business model underlying the wheel’s economics can, we believe, support these added costs.”

Representatives for Starneth didn’t respond to multiple requests for comment.

More popular than Lady Liberty

(Video by Alistair Gardiner for TRD)

The financial projections distributed to would-be investors in 2015 differ dramatically from what Marin and Laufer first projected in their response to the city’s RFEI in 2011.

In its first year of operation, the wheel was originally slated to earn $15 million from admissions. But now, after jacking up the proposed price of a ride to $35 from $15, the developers are projecting $95.9 million in admissions, more than six times that amount.

And the optimism doesn’t end there. Projected gift shop revenues have jumped to $8.75 million from $1.25 million (a sixfold increase), parking revenues are expected to be $2.5 million, up from $250,000 (a ninefold increase), and event revenues are projected at $3.52 million, 27 times more than the $125,000 originally projected.

Overall, documents distributed to investors last year predict total revenues of $127.85 million for the wheel’s first year in business, more than six times the $20.73 million projection made to the city in 2011.

Those projections rely on the wheel drawing more than 4 million riders in 2017, its first year of business, and 3.5 million riders annually in successive years. Marin said the wheel would be starting at an advantage, given that the Staten Island Ferry carries about 2.5 million tourists annually.

“When you’re looking to do 3.5-plus million visitors, having 2-to-2.5 already sort of on the boat is a very good start,” Marin said in a recent promotional video for the wheel.

By comparison, the Empire State Building observatory drew 4.3 million visitors in 2014, according to Empire State Realty Trust, the entity that owns the skyscraper. The Statue of Liberty draws an average of 3.5 million visitors per year, according to the National Park Service, and the Top of the Rock draws an average of 2.5 million visitors per year.

The politicos and government agencies which championed the project for the past three years now have little to say about the wheel.

“We don’t have any comment regarding this except to say we’re very excited about the project and its future impact on New York City tourism,” said a spokesperson for NYC & Company, which once billed the wheel a key fixture of “the new New York.”

Staten Island Borough President James Oddo, a longtime wheel supporter, declined to comment other than to say that the project still had his backing.

Comparing wheels

The proof of the pudding will be in the eating — or, in Ferris wheel terms, in the riding.

As developers of other giant wheels can attest, projections don’t always pan out.

Caesars Entertainment’s High Roller, a 550-foot-tall giant wheel that opened on the Las Vegas Strip in 2014 at a reported cost of $175 million, has reportedly fallen well short of its attendance projections.

While numbers have been climbing, the company said early last year that High Roller was averaging just under 5,000 riders per day (1.83 million annually), compared to projections of between 8,000 (2.92 million) and 11,000 (4.02 million) a day, the latter of which would have yielded annual revenues of up to $60 million.

And what of the London Eye, the inspiration for Laufer’s vision?

Built at a cost of $100 million in 2000, the Eye is estimated to earn $78 million a year, based on 3.6 million visitors and an average ticket price of around $22, according to a report by consulting firm Roland Berger.

But Marin, in the thick of building his legacy, isn’t interested in cautionary tales.

“Dream no small dreams,” he said during his TEDx talk, channeling Victor Hugo, “because they have no power to stir the hearts of men — or women.”

Source: Is the New York Wheel spinning out of control?

Sample work of Floored, 158 West 27th Street

From the January issue: Every real estate startup under the sun is looking to become the industry’s next tech mainstay, but not every one makes the cut. The Real Deal sifted through dozens of startups this month and found several interesting tools that could have a significant impact on the industry. [more]

Source: The 5 startups that could forever change the face of real estate

Amir Korangy

The Real Deal, long considered the bible of New York and South Florida real estate and finance, is thrilled to bring its award-winning mix of breaking news and in-depth analysis to Los Angeles.

As the county sees an unprecedented amount of development, with both domestic and foreign capital continuing to flood the area, it’s all the more important that L.A.’s complex and varied submarkets get the serious journalistic coverage they deserve.

I am very pleased to announce that the steward of our newest publication is Hannah Miet, who led real estate coverage for the Los Angeles Business Journal before joining The Real Deal Los Angeles as managing editor. Her work has appeared in the New York Times, Newsweek, the Washington Post, Complex Magazine, the Times-Picayune and the Atlantic Wire, among other publications. Hannah lives in Los Angeles’ Echo Park neighborhood.

I know that TRD’s signature blend of up-to-the-minute real estate news, profiles of key and up-and-coming players, industry rankings and behind-the-scenes views will fast become mandatory reading in the L.A. market, as it is in both New York and South Florida, where we have upwards of 2.5 million visits a month online, and a print circulation of nearly 128,000 readers.

We look forward to feedback from our readers on what they’d like to see covered. Also, if you have any news to share, please let us know at LANews@TheRealDeal.com.

Cheers to what’s ahead,

Amir Korangy
Publisher

Source: Letter from the Publisher: We’re live in Los Angeles

From left: 10 Hudson Yards, on the left, the Bank of America Tower and the GM Building

Related Companies and Oxford Properties saw 10 Hudson Yards’ “market value” – assessed for tax purposes – grow by nearly $250 million year-over-year according to city assessments released Friday, the largest increase of any property in the city.

The city valued the property at $332.8 million, up from $84 million the previous year.

Vornado Realty Trust’s 1.8 million-square-foot hotel and retail building at 1375 Broadway saw its city-assessed market value climb by just over $200 million, to just over $1 billion.

In total, 15 city properties crossed the $1 billion threshold this year, including the Bank of America Tower at One Bryant Park; Boston Properties, Safra Group and Zhang Xin’s GM Building; and Stuyvesant Town, recently purchased for $5.3 billion by the Blackstone Group and Ivanhoe Cambridge, along with city landmarks like John F. Kennedy and LaGuardia airports, Yankee Stadium and Citi Field.

Tentative 2017 “market value” assessments based on data from FY 2015

The city’s figures – despite measuring what’s known as “market value” – are not in fact meant to estimate the price of properties were they to be sold on the market.

For commercial properties, the estimates are often as little as 50 percent or less of the true market value. In addition, these figures are based on income and expense figures filed with the city for the calendar year 2014, so the values lag the current market by a few years.

As an example, the assessed “market value” of the GM Building – which was valued at $3.4 billion when Zhang Xin and Safra bought their stakes – was pegged by the city at $1.7 billion.

All together, the city valued New York real estate at just over $1 trillion, a 10.6 percent increase from the previous year.

Source: 15 NYC real estate properties assessed at over B

(Illustration credit: Noah Patrick Pfarr for The Real Deal)

As the city’s real estate industry comes to terms with Friday’s expiration of the 421a tax abatement program, there remain questions over what the development landscape will look like without the abatement, and whether industry interests and construction unions can agree on terms to extend or replace a tax break many consider essential for building multifamily housing in New York.

While the industry remained hopeful as of a few weeks ago that the Real Estate Board of New York and the unions could arrive at some sort of compromise, many players were wary of the unions’ demand for a “prevailing wage” mandate on 421a projects that developers say would render would make construction prohibitively expensive.

“I think we were very skeptical from the beginning that there was going to be a deal,” said David Schwartz, a principal at Slate Property Group who was among a group of developers who lobbied for the abatement in Albany in June.

“From the developer side, you’re adding more affordable housing [requirements from the city] and then on top of that, [additional construction] costs on top of it,” Schwartz said. “We also don’t control land prices, which are high. If you’re adding more affordable units and more cost, it’s not going to work.”

The numbers are tight to begin with to produce affordable housing,” he said. “These rental deals are not like condo deals, where the profits are huge.”

Some observers noted that a 421a deal was doomed from the start, given how the issue “was portrayed as a tax break for developers,” according to political strategist Hank Sheinkopf.

“It was set up for conflict from the beginning,” Sheinkopf noted. “The mayor [Bill de Blasio] set the discussion on affordable housing, and therefore it became almost impossible to have a discussion about tax incentives for developers. That’s the way the conversation was framed.”

The de Blasio administration’s goal of creating and preserving 200,000 affordable housing units in the city over the next decade could take a hit if the abatement is no longer around, sources said.

“Most of the developers I’m speaking to, they just want to make money” said Shaun Riney, the top-producing broker in Marcus & Millichap’s Brooklyn office “They embrace diversity of tenants and different income streams, as long as the city can properly structure the incentives to promote [affordable housing] requirements. They have to create a pathway where a developer can make a profit by doing so.”

Without 421a, the most popular pathway for such developers is now gone. While many builders sought to get projects in the ground before the end of the year to be eligible for the abatement, Riney noted “there has been a pause” in recent months in the market for development sites – “especially larger sites” where the viability of the project could rest on whether or not a tax abatement is in place.

421a also helped developers deal with what many in the industry consider a broken property tax code — with Riney citing “an insane amount of uncertainty as to what [property owners’] taxes are going to be every year” and Schwartz bemoaning the fact that, for all the discussion around 421a, “nobody’s examined the fact that the tax rate on rental housing doesn’t work.”

Unless a new 421a agreement is put in place, Schwartz said he anticipates seeing “a bunch of legacy projects over the next year or two that were grandfathered in” under the tax abatement prior to the Dec. 31 sunset. Otherwise, “the only answer now is to do condos,” he said.

The NYU Furman Center recently released a study that said the expiration of 421a could lead to a drop in land prices in areas where the tax abatement is most popular. But Schwartz said it “was already hard enough to find sites that work as rentals, and now it’s just become impossible. Regulation doesn’t control land prices, the market does. The reason land prices were going up were condos, not rentals.”

Instead of land values declining, Schwartz predicted more condo development across the city as well as more hotel, retail and even office development in lieu of rental housing.

Under such circumstances, the question for most is when – not if – the relevant principals in New York and Albany get together and decide on a resolution that they see is necessary to get developers to build rental units.

“It’ll come down to the [Assembly] speaker, the majority leader of the [state] senate and the governor, ultimately,” Sheinkopf said. “The pressure will be on them from the real estate community and the development world… Unless legislators figure out the means to turn this into an affordable housing [issue], it’ll be very hard to get a tax break passed.”

Riney said investment sales could potentially slow down.

“Uncertainty creates paralysis,” he noted. “That’s why they can’t afford to not do anything. You want commerce to continue.”

Schwartz said he remains hopeful for a deal.

“I don’t know what it will look like,” he said, “but I know there needs to be a solution.”

Source: Developocalyse: The Day After

Michael Meldman

Michael Meldman’s journey has taken him from the beer pong table to the negotiating table. The Arizona-based developer, once “the epitome of a frat boy,” now runs Discovery Land Company, which made over $1 billion in sales last year.

The firm owns 18 private resorts around the country, most of those in California and Arizona.A few are further afield, such as in Hawaii and Southampton.

Homes at the firm’s developments, which Meldman describes as “frat houses for families,” go for between $1 million and $50 million, the Wall Street Journal reported.

Meldman’s extracurricular experiences at Stanford University informed his approach as a developer, he told the newspaper. “I am one of the best beer-pong players in the world,” he said.

“A lot of these guys who made a lot of money don’t have fun and don’t know how to have fun. We show them how to have fun,” Meldman said.

Meldman frequently buys homes in his new developments. Then, he sells them when he begins the next project.

Two of his current homes – a nine-bedroom at Discovery Land’s Los Cabos developer and a 7,900-square-foot pad at its Bahamas community – contain custom beer pong tables, one of which cost $6,000.

Meldman is “a very civilized frat boy now,” his son Hunter told the Journal. [WSJ] – Ariel Stulberg

Source: Meet the Arizona developer who builds “frat houses for families”

From left: SilverTech partners Charlie Federman, Lawrence Wagenberg and Tal Kerret

From the January issue: Roughly $1.5 billion flowed into real estate tech companies in 2015, and those funds came from an increasingly diverse pool of investors.

In addition to about a dozen venture capital firms, institutional and family organizations — which wouldn’t have touched real estate tech 10 years ago — are expanding their hold on the nascent industry.

“You have everyone from the Milsteins to the Rudins to the Wilpons to the LeFraks all doing deals,” said Zachary Aarons, an angel investor and co-founder of MetaProp, a New York City-based real estate technology “accelerator,” which mentors tech startups. [more]

Source: A look at the developers bankrolling real estate tech’s gold rush

Renderings of 520 Park Avenue, 220 Central Park South and 3 Sutton Place

Developers have realized that mechanical space – once considered a necessary evil – can significantly raise the value of buildings when placed strategically.

By increasing the height of mechanical floors – which house the building’s heating, cooling, electrical, ventilation and other systems – and placing them at the bottom of the building, developers are able to build more residential units at higher elevations, which command a premium price.

Vornado Realty Trust deployed the tactic at its 950-foot-tall luxury tower at 220 Central Park South. A full six of the building’s lower floors are given over to mechanical uses, with ceiling heights between 18 to 24 feet. In total, the gambit allowed Vornado to add 100 feet to the tower, Crain’s reported.

Bauhouse Group’s Joseph Beninati, which is looking to build an 80-story condominium tower at 3 Sutton Place, told Crain’s he planned to build 24-foot mechanical floors.

“Higher floors are more valuable,” Beninati said. “It’s a bedrock rule of real estate.”

That’s double the height of most of the building’s residential floors. The trick will add 100 feet or more to the tower’s total height, Beninati estimated to Crain’s. The firm is moving ahead with construction on the project, though it’s reportedly yet to secure financing for it.

“In general, a floor premium, controlling for other factors such as view, is 0.5% to 2%,” Corcoran Sunshine’s vice president of research Ryan Schleis told Crain’s.

Back in September, The Real Deal wrote about another trick developers were employing to maximize space: buildings that widen as they rise, creating an inverted pyramid. [Crain’s] – Ariel Stulberg

Source: Here’s a little trick that developers use to build taller towers

The city has assessed the market value of NYC’s taxable real estate at $1.07 trillion

City tax assessors confirmed what everyone more or less knew: prices have shot up over the last year. The total market value of taxable property crossed the $1 trillion threshold for the fiscal year beginning July 1, a 10.6 percent jump from the previous year. 

That increase is the largest since the last year of the pre-crisis boom, the year ending in June 2008, the Wall Street Journal reported.

Average condo tax assessments rose the fastest among unit types, increasing by 10.7 percent to $9,302. Average taxes on co-ops rose by 6.5 percent to $6,837.

Brooklyn saw by far the largest spike in market values, with a whopping 16 percent increase year-over-year. Queens values climbed by 9.9 percent while Manhattan, which foots nearly two-thirds of the city’s property tax bill, saw values increase by 9.3 percent.

“This year’s tax roll is simply a reflection of New York City’s growing real estate market,” Jacques Jiha, commissioner of the city’s Department of Finance, told the Journal.

Construction of rental properties jumped during the year and now account for more than a third of all construction activity in New York City, and more than half of all construction activity in Brooklyn, Jiha added.

It’s important to note that “market values” as assessed by the city for tax purposes are generally well below actual property values in the investment sales market. The Google Building at 111 Eighth Avenue, for example, was assessed by the city as being worth $827.7 million in 2013, but the search giant bought the property for a cool $1.8 billion in 2010. [WSJ] – Ariel Stulberg

Source: NYC real estate assessed at trillion

Clockwise from left: Domingo Zapata, Sean Combs, Bobby Flay and Susan Bloomberg

From Luxury Listings NYC: A round up of all the deals and steals that have happened this week involving celebs and their homes. [more]

Source: It’s a wrap: this week’s celebrity home swaps

A bathroom in One57

From Luxury Listings NYC: January is a time of renewal, when many of us refocus on our health and well-being. But sometimes you can’t spend a week at Canyon Ranch, or you just may prefer a spa that’s closer to home  —  like down the hall. [more]

Source: How to make a blissful bath

J. Crew CEO Mickey Drexler and 140 Franklin Street first

It’s back! The chic Tribeca apartment of J. Crew CEO Mickey Drexler has listed once again, this time for $25 million.

The apartment at 140 Franklin Street first hit the market in early 2015 asking $35 million. The price was then slashed to $29 million. By July, it was off the market.

Now that Drexler is trying again, here is a look inside the highly designed home via Curbed.

Celebrated designer Thierry Despont is responsible for the interiors in the 6,226-square-foot apartment. It has five bedrooms, five bathrooms, three walk-in closets, 11-foot ceilings and a custom “billiards area.”

[Curbed] — Christopher Cameron

Source: J. Crew CEO now asking M for Tribeca apartment

Oft-controversial Republican presidential frontrunner Donald Trump has owned a lot of New York real estate over his decades-long career, but few are as iconic as the Plaza Hotel. Here are 12 facts about how precisely that deal went down and how Trump ultimately lost the Plaza, via the New York Times.

1. Trump negotiated the deal for the Plaza with Tom Barrack — who represented Texas billionaire and Plaza Hotel owner, Robert Bass — in just 30 minutes.

2. The owners expected the hotel to fetch as much as $500 million at auction.

3. Trump paid $407.5 million for the hotel, a tremendous amount for a hotel at the time. But he said: “It wasn’t purely about the bottom line.”

4. Trump agreed to a no contingency deal.

5. A rent-controlled tenant named Fannie Lowenstein stood in the way of Trump’s plans for a condo conversion.

6. To get Lowenstein out, they had to give her a room in the Plaza almost 10 times larger than her studio with a view of Central Park rent-free for life — also, new furniture and a Steinway piano.

7. Trump handled nearly all of the negotiations for the Plaza himself.

8. The Plaza lost $74 million the first year into Trump’s ownership.

9. In the meantime, Trump racked up some $900 million of debt by personally guaranteeing building loans.

10. Trump signed over nearly all of his properties, including the Plaza, his yacht and his jet, in exchange for more favorable terms on his personal guarantees.

11. The Plaza was in bankruptcy protection just one year after Trump bought it.

12. Seven years later, the hotel sold for $325 million to a partnership between Prince Alwaleed bin Talal of Saudi Arabia and CDL Hotels International of Singapore.

[NYT] — Christopher Cameron

Source: A look inside Trump’s famed Plaza deal

Joe Moinian and Joe Chetrit

Joseph Moinian made a name for himself with audacious real estate deals — like the building on John Street that he bought at $12 a square foot and rented out for $58 a square foot. Or his purchase of Chicago’s Sears Tower, which he bought in 2004 with Joseph Chetrit and a number of other investors, paying $840 million. Chetrit’s most recent acquisitions include 620 Sixth Avenue, which houses Bed Bath & Beyond, Filene’s and TJ Maxx. Yair Levy and Charles Dayan were his partners on that $300 million purchase last year.

But ask Moinian, Chetrit, Levy or Dayan about their very first deals, and you’re liable to get stories about an altogether different kind of transaction. They’ll probably tell you about selling pants, shirts and undergarments to the very same kind of business owners to whom they now rent space. Read the full article from the March 2007 issue here.

Source: From the archives: Developers cut from the same cloth

The W New York Downtown

From Luxury Listings NYC: The W New York Downtown is offering one of the most spectacular deals in town. But we aren’t sure which is more outrageous, the offer itself or its name. Called, “Live Like a BO$$,” the hotel is offering an entire floor of the hotel for rent during weekends in February, presumably to a group of deep-pocket party animals. [more]

Source: The W Downtown wants you to “Live Like a BO$$”

From left: Todd Bassen and Joseph Farkas

Todd Bassen, a former top executive at Invesco and co-head of real estate at WeWork, is joining Metropolitan Realty Associates as a managing principal.

“After 15 years of organic growth, the time was right to bring in a seasoned New York investment expert to advance the expansion of the company,” the firm’s founder Joseph Farkas said in a statement.

Bassen was a top acquisitions executive at Vornado Realty Trust, and then spent five years as head of New York real estate acquisitions for asset manager Invesco. In May 2015, he jumped ship to co-working space giant WeWork, becoming its co-head of real estate, but left the firm a mere three months later.

The hiring of Bassen signals a stronger focus on core New York City for Metropolitan Realty Associates, and potentially on bigger projects. The 15-year-old firm, which in the past focused primarily on the outer boroughs and suburbs, is opening a Manhattan office at 555 Madison Avenue. Its most recent major project is Riverdale Crossing, a 159,000-square-foot shopping center in the Bronx which it completed in 2014 and sold to the Vanbarton Group in October 2015 for $133 million.

The firm also developed the Garden City Square complex in Long Island, which it sold to Hampshire Companies for more than $80 million in 2013.

Bassen told The Real Deal that the company will focus on projects between $50 million and $250 million, but could go higher. “After 20 years of institutional investing, working with great companies like Vornado and Invesco, I wanted to do something more entrepreneurial,” he said.

Source: Todd Bassen joins Joe Farkas’ Metropolitan Realty Associates

Michael Shvo and a rendering of 125 Greenwich Street (Credit: ArX Solutions)

Michael Shvo, Howard Lorber’s New Valley and Bizzi & Partners’ soaring condominium at 125 Greenwich Street will house 275 units – nearly 150 more than early renderings for the Financial District tower indicated.

The Rafael Vinoly-designed tower will rise 91 stories with 275 condos spread over 306,312 square feet, according to an offering plan filed with the Attorney General’s office and reviewed by The Real Deal. Prices were not disclosed, but units will range in size from a 403-square-foot studio to a three-bedroom pad measuring 3,625 square feet. The top two floors will have two units each.

Unit 87A at 125 Greenwich Street

Projected operating expenses for the condo tower will top $4 million, according to the offering plan.

Early renderings circulated in the fall of 2014 indicated it would have 128 units, with 10 full-floor penthouses. A 10,600-square-foot duplex was to occupy the top floor. The developer said plans were subject to change.

Unit 87B at 125 Greenwich Street

According to published reports, the building is expected to rise more than 1,000 feet, down from 1,356 feet as was initially reported. Plans filed with the Department of Buildings, however, describe an 876-foot tower.

Shvo partnered with a group of investors, including Bizzi and New Valley, to arrange $240 million of equity and debt for the acquisition and development of the site in 2014.

“D” line on floors 23-32 at 125 Greenwich Street

The developers paid $185 million for the site, where Fisher Brothers and the Witkoff Group had planned a 956-foot-tall rental tower. Shvo and Bizzi are currently looking to raise $175 million for the project through the EB-5 program, which gives foreign investors a U.S. green card in exchange for a $500,000 investment.

In addition to 125 Greenwich, Shvo and Bizzi, along with partner Halpern Real Estate Ventures, are also planning a Renzo Piano-designed, 242,000-square-foot condominium building at 100 Varick Street. The building will house 115 condo units.

Source: Shvo and Bizzi’s 125 Greenwich to house 275 condos

The 421a tax abatement program, which grants subsidies to developers who offer affordable units in new buildings, is officially done — for now. 

The program’s future depended on negotiations between the Real Estate Board of New York and the Building and Construction Trades Council of Greater New York – a union group – over wage requirements for construction workers at 421a sites. Those talks did not lead to an agreement, Politico first reported, and the program is now set to expire at midnight.

John Banks, president of REBNY, bemoaned the breakdown of the talks.

“New York is a city of renters and one that continues to grow,” Banks said in a statement. “Without a program like 421-a, one can’t build multi-family rental housing with a significant below-market, or affordable, component on a scale necessary to address the City’s needs.  We are committed to working with stakeholders to fashion a program that will produce the affordable housing throughout New York City that is so desperately needed, ensures construction workers are treated fairly and creates job opportunities for City residents.”

Jolie Milstein of the New York State Association for Affordable Housing, which represents affordable housing developers, said in a statement that the death of the program meant that “there is an even more urgent need for all stakeholders to work together and create a program to produce affordable rental housing for New York City.”

“There is no time to wait,” Milstein added.

While 421a is expiring for now, it is still possible that the two sides reach an agreement at a later date and the program gets extended after all. 421a briefly expired in June after lawmakers in Albany failed to reach an agreement over an extension, only to be renewed nine days later until Jan. 15, 2016.

“We remain ready to engage with all stakeholders in the weeks and months ahead to achieve our goals of creating needed affordable housing and middle class jobs for New Yorkers,” Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, said in a statement

The 421a program offers tax abatements to residential developers who set aside a portion of a building’s units as affordable. Its expiration is a major blow to residential developers, particularly in the outer boroughs. A recent report by NYU’s Furman Center found that in parts of Brooklyn and Queens where apartment rents are comparatively low, rental development would not be profitable without the tax abatement even if land prices were zero. In pricier parts of Brooklyn and Manhattan, the expiration could lead more developers to switch from rental to condo development, although it could also have the beneficial impact of pushing down land prices.

The expiration is also a blow to Mayor Bill de Blasio, whose pledge to create or preserve 200,000 affordable housing units depends in no small part on the 421a program. Many of the changes to the program that were passed — such as an expansion of the affordability component and the exclusion of condo projects from the program — were championed by City Hall.

Under the old program, first introduced in the 1970s, condo projects could qualify for the abatement. Extell Development’s luxury tower One57 famously benefitted from the program, costing the city $65.6 million in lost tax revenue. Some rental developments, such as Tishman Speyer’s latest Long Island City project on Jackson Avenue, could qualify for the program without setting aside any units as affordable.

New York’s state legislature approved a 421a extension in June 2015 with significant changes to the program, but Gov. Andrew Cuomo added a provision that REBNY and labor groups first reach an agreement over whether developers should be required to use union contractors to qualify for the abatement. These talks have collapsed — at least for now.

“If we all agree that we need to expand the supply of rental housing and that the over-assessment of rental housing creates economics that are simply not feasible, then I would hope we can count on Albany to support economic development,” said David Kramer, principal at development firm Hudson Companies. “Our company survived two exhausting, stressful nail biters to start foundations on two separate rental projects by June 15 and Dec. 31 respectively of this year, and it would be highly appreciated if Albany could provide a regulatory environment that offers some certainty and stability.”

Source: Developocalypse: 421a expires

From left: Rupert Murdoch, 2 World Trade Center (credit: BIG) and Larry Silverstein

Rupert Murdoch’s 21st Century Fox and News Corp. will not move their New York headquarters to Silverstein Properties’ planned 2 World Trade Center Downtown, raising questions about the future of the Bjarke Ingels-designed office tower that the companies were supposed to anchor.

The media giants “have decided to maintain” their Midtown headquarters at 1211 and 1185 Sixth Avenue, 21st Century Fox and News Corp. confirmed in a joint statement, citing “extension options that could continue or occupancy on Sixth Avenue through 2025. The companies’ current leases run through 2020.

Despite signing a non-binding letter of intent in June to take 1.3 million square feet of office and studio space at 2 World Trade Center and anchor the 2.8 million-square-foot property, top executives at both Fox and News Corp. decided the move “would be a huge distraction for the companies’ global operations,” sources told the New York Post.

A copy of the internal memo sent out to News Corp’s employees

While acknowledging that he was “disappointed” by the decision in a statement, Silverstein Properties chair Larry Silverstein noted his belief that “it won’t be long before we find a great company to anchor 2 World Trade Center.”

But the decision will undoubtedly be a blow for Silverstein Properties, which successfully lobbied for sizable rent subsidies for the Murdoch companies from the Port Authority of New York and New Jersey and talked up 2 World Trade Center as representing a “new downtown” geared toward creative and media businesses.

Sources told the Post that Fox and News Corp’s 1211 Sixth Avenue landlord Callahan Capital Properties made a “compelling” offer for the companies to remain in their space, including promising building modernization and public space improvements. The tenants are not understood to be negotiating a new lease beyond their five-year extension option, however. [NYP] ­– Rey Mashayekhi

Source: Murdoch nixes move to Silverstein’s 2 WTC

Coney Island (inset: Bill de Blasio)

New York City will seize 75,000 square feet of beachfront property in Coney Island as part of an effort to spur long-delayed economic development in the area.

The eminent domain seizure would include a 60,000-square-foot property that once housed the original “Thunderbolt” wooden roller coaster, which was demolished in 2000. The move is expected to enable the city to make infrastructure improvements that would help bring new attractions the world-famous beachfront neighborhood.

It would also help the de Blasio administration move forward with thousands of units of affordable and market-rate housing that was approved through a 2009 area rezoning of the area, according to the New York Post. The city could obtain the properties within a year, given there are no legal challenges to the move by opponents.

But there has been little opposition to the plan, given that most of the property seized is owned by absentee landlords who have allowed their sites to fall into dereliction. [NYP] – Rey Mashayekhi

Source: City’s eminent domain play in Coney Island moving ahead

Melissa Burch (Photo: Max Dworkin)

From the January issue: It’s hard to miss Melissa Burch.

For starters, as a top executive at construction giant Lend Lease, she’s a woman operating in what’s commonly seen as a man’s world. Second, at six feet tall — without heels — the statuesque brunette stands out before even uttering a word.

“I still do a double-take sometimes when I see pictures of myself with other people,” she joked. “I forget how tall I am.” [more]

Source: Meet the exec behind construction giant Lend Lease

Bobby Flay and his duplex apartment at the Chelsea Mercantile at 252 Seventh Avenue

Bobby Flay’s Chelsea duplex apparently didn’t sell fast enough for his taste.

Now, the restaurateur and TV star is looking to rent his 3,200-square-foot unit at Rockrose Development’s Chelsea Mercantile at 252 Seventh Avenue, asking $22,500 a month.

Flay put the three-bedroom duplex three-bedroom, which features an impressive chef’s kitchen, as one might expect, up for sale back in October, when the asking price was $8 million.

The chef lived there with his ex-wife Stephanie March, with whom he recently divorced, possibly explaining his eagerness to leave the unit.

Meris and Kenny Blumstein of the Corcoran Group are marketing both the rental and sales listings, the latter along with their daughter Sydney, the New York Post reported. [NYP] – Ariel Stulberg

Source: To go, please: Bobby Flay renting out Chelsea Mercantile pad

(credit: Credit Suisse)

China is letting the renminbi devalue. The economy is slowing. Their debt is growing ($28 trillion!). And that means the Chinese are having more difficulty paying their US dollar-denominated debts as time goes by.

So how much money, exactly, is fleeing from China right now?

Credit Suisse analyst Helen Haworth and her team produced these two slightly terrifying charts showing the scale of capital flight out of China right now.

The left chart shows China’s reserves in decline, as banks there use their foreign currency holdings to buy all the renminbi everyone is selling. Note that the scales on the graph are in billions of US dollars.

The right chart shows capital leaving China as a percentage of GDP. Note that it is accelerating over time. We haven’t seen those dips since the 2008 crisis.

Christopher Wood and his Greed & Fear gang at CLSA have a similar chart that shows a little more detail. China’s foreign currency reserves have declined by what looks like roughly $600 billion from their peak and capital is fleeing at a rate of $100 billion a month, in some months:

Bear in mind, the FX reserve can go negative, as it was for much the early 2000s. It’s just that when that happens, the renminbi is relatively worthless. Analysts disagree about how much capital is exiting China. (It’s not the most transparent place, after all.) RBS, for instance, believes the situation is even worse, and that $170 billion in capital left China in December.

Source: Here is all the money leaving China right now

Bill de Blasio and Andrew Cuomo

Gov. Andrew Cuomo’s new budget plan included provisions that could have shifted as much as $800 million in costs related to CUNY and the city’s Medicaid program from the state to the city. But now the governor seems to be backing off in the face of protest from Mayor Bill de Blasio and others.

Cuomo’s $145 billion budget, presented with his State of the State address Wednesday, would have had New York City shoulder 30 percent of the cost of CUNY’s budget. Right now, the city pays virtually nothing to support CUNY.

The plan would have also required the city to cover the increases in the cost of the city’s Medicaid program, the New York Daily News reported. Put together, the CUNY

De Blasio pushed back fiercely against the proposals, calling the moves “harmful” and “debilitating. He vowed to sink the plan and cited civil rights leader Malcolm X:

“There’s a phrase from American history, ‘By any means necessary.’ I would invoke that phrase,” the mayor told the Daily News. “We’ll do whatever will work.

But by Thursday, Cuomo was already backtracking.

“This is the beginning of the budget process. The budget process goes on for months. This is really the beginning of the discussion,” the governor told NY1.

“At the end of the day, what you’ll see is it won’t cost New York City a penny,” Cuomo told the channel. “We have to reduce the cost of the bureaucracy at CUNY. We have to reduce the cost of administration for Medicaid.”

The battle is the latest in a string of face-off’s between the two politicians. [NYDN] – Ariel Stulberg

Source: Cuomo backpedals: CUNY, Medicaid “won’t cost NYC a penny”

The Park Imperial at 230 West 56th Street in Midtown (inset: Sean Combs)

He is a man of many names — the rap impresario who ushered in the “shiny suit era” of hip-hop with tales of glamorous lifestyles filled with luxury. But Sean Combs is having a hard time getting anyone to buy his Park Imperial apartment.

The 2,300-square-foot unit, located on the 66th floor of the celeb-heavy Midtown condo tower at 230 West 56th Street, is back on the market for just under $7 million.

The new asking price is down a cool million-and-a-half from the apartment’s original 2012 ask of $8.5 million. It’s not the first time Puffy has lowered his expectations on the unit, having dropped the asking price to $7.9 million in 2014.

The two-bedroom, two-and-a-half-bathroom condo features floor-to-ceiling windows, an eat-in chef’s kitchen and expansive views of Central Park, according to the New York Post.

Even at the new, reduced asking price, Combs is due a profit on the $3.82 million he spent to buy the apartment in 2005. Lisa Maysonet of Sotheby’s International Realty is the listing broker. [NYP] – Rey Mashayekhi

Source: Diddy will settle for less — just get him paid

The 27th-floor condo at the Trump Park Avenue on the Upper East Side (credit: Trump International Realty) (inset: Donald Trump)

Maybe Donald Trump is trying to distance himself from New York in the run-up to the Iowa caucuses. Maybe he thinks the market has peaked — or the apartment is a loser.

Either way, the developer and Republican presidential candidate is selling another one of his units at the Trump Park Avenue on the Upper East Side.

Trump parted with his 4,200-square-foot sponsor unit, the 27th-floor of the former Delmonico Hotel at Park Avenue and 59th Street, collecting $14 million, the Wall Street Journal reported.

Trump never lived at the unit, renting it out instead, Michelle Griffith of Trump International Realty, who represented both sides in the deal, told the Journal.

He originally listed it in early December at $16.8 million.

The sale wasn’t about raising funds for his presidential campaign, Ivanka Trump of the Trump Organization told the Journal. The apartments’ buyer is unknown.

“We sell units when the market is conducive to selling,” she told the paper.

Trump bought the 32-story, 119-unit building in 2011 for $115 million, and performed a condominium conversion there. He sold another unit there, the penthouse, last year for $21 million. [WSJ] – Ariel Stulberg

Source: The Donald sells Trump Park Avenue condo for M

NYC Department of Finance Commissioner Jacques Jiha and a rendering of 375 Pearl Street

The city’s Department of Finance is planning to lease 175,000 square feet of office space at Sabey Data Centers’ repositioning of the former Verizon Building at 375 Pearl Street in the Financial District.

The DOF, led by Commissioner Jacques Jiha, is seeking final approval to occupy the 26th through 30th floors at the 1.1 million-square-foot tower Dave Sabey’s Seattle-based firm bought a controlling interest in along with Young Woo and Associates in 2011 for $120 million.

A CBRE leasing team led by Gerry Miovski, Gregg Rothkin and Zakery Snider referred questions to a Sabey spokesperson, who confirmed the deal and said the building’s façade renovation should be completed later this year. Asking rents in the building range from $45 to $51 per square foot.

Rising 32 stories at the base of the Brooklyn Bridge, 375 Pearl is often derided as one of the most aesthetically offensive buildings in the city, with a near monolithic limestone exterior interrupted only by small strips of black windows that, for a long time, were boarded up from the inside.

Sabey and his team are in the middle of a renovation that will remove portions of the building’s exterior and replace them with a curtain-wall structure.

As a result of its former life as a telephone switching center, 375 Pearl is one of the best-connected buildings in the city, and is engineered to withstand a nuclear blast.

Last year, the NYPD leased 18,000 square feet on the building’s 22nd floor.

Source: NYC’s Finance Department to lease 175K sf at former Verizon Building

An aerial view of Pineapple Walk in Brooklyn Heights (credit: Brownstoner)

Another huge tower may soon rise in Brooklyn Heights.

Anbau Enterprises, a NoMad-based development firm, is offering $130 million for a giant 387,000-square-foot development site on Pineapple walk between Henry Street and Cadman Plaza West in Brooklyn Heights. The site, currently home to a row of one-story retail shops, is owned by a co-op, called the Whitman Owner Corp. The group’s shareholders will vote on Friday whether or not to further investigate the offer, the Brooklyn Eagle reported.

Anbau, led by Stephen Glascock and his wife Barbara Van Beuren, hopes to build a 40-story luxury residential tower with ground-floor retail there.

The developer’s offer is a sharp increase from its opening bid of $75 million made late last year.

The project would be the latest in a string of new Brooklyn Heights luxury residential developments. David Kramer’s the Hudson Companies plan for a 36-story condo tower at 280 Cadman Plaza, formerly the site of a Brooklyn Heights library branch, was approved by the City Council in December. [Brooklyn Eagle] – Ariel Stulberg

Source: Anbau offers 0M for massive Brooklyn Heights site

From left: The GM Building at 767 Fifth Avenue, 11 Madison Avenue and 51 Astor Place

Triple-digit rents used to be reserved for just a handful of New York City’s spiffiest office buildings, but a new report sheds light on the dramatic price hikes in the office market. Fifty properties in the city are now renting space at more than $100 per square foot.

That number was up from just 33 buildings in 2014, according to JLL, which authored the report. Properties that joined the club last year include 11 Madison Avenue, 860 Washington Street, 51 Astor Place, and others.

The GM Building, which is owned by a partnership between Boston Properties, Soho China and the Safra family, saw three leases cross the $200-per-square-foot threshold, a new record for the city, the New York Post reported. Investment firm Belfer Management will pay starting rents of $220 per square foot there. But the record isn’t likely to last long, given hedge fund Citadel Management’s commitment to cough up about $300 per square foot for the top floor of L&L Holding’s 425 Park Avenue.

A total of 138 office deals with starting rents over $100 per square foot were done in 2015, according to the Post, a 42 percent year-over-year jump from 97 in 2014. More than half were new lease signings.

A full 25 percent of deals over $100-per-square-foot were at buildings owned by Vornado Realty Trust, according to the newspaper.

The Real Deal chronicled the city’s most lucrative office lease deals in 2015 last month. [NYP] – Ariel Stulberg

Source: 50 NYC office buildings are now in the 0 psf club

From left: 850 Third Avenue and MHP’s Norman Sturner

MHP Real Estate Services is the new owner of 850 Third Avenue, a 614,000-square-foot Midtown East office building for which it paid $460 million.

The seller, Shorenstein Properties, paid $300 million for the 21-story building in 2008. The property, once part of the Equity Office portfolio and briefly owned by Harry Macklowe, hit the market in early 2015.

MHP, formerly known as Murray Hill Properties, acquired it in an off-market deal for just over $718 per square foot. The property, located between 51st and 52nd streets, comes with a cap rate of between 3 and 4 percent, a source told TRD. A JLL team was marketing the building.

Tenants include the media companies Discovery Communications and Radio One and the city of New York.

The building was once part of the Equity Office portfolio that investor Harry Macklowe bought for $7 billion in 2007 and then famously defaulted on after the market crashed. The portfolio included the Park Avenue Tower at 65 East 55th Street and was a key part of “The Liar’s Ball,” Vicky Ward’s book on the GM Building. [NYO] — Konrad Putzier

Source: MHP pays 0M for 850 Third Avenue

From left: Robert Reffkin, Meg Salem and Andrew Saunders

Compass just wants to be left alone.

The startup brokerage – which was sued last month by Hamptons firm Saunders & Associates after a former agent allegedly stole listings and handed them off to Compass – has asked a federal judge to dismiss complaints against it.

In a motion filed in the U.S. District Court’s Eastern District, Compass said it returned the listings data to Saunders and fired the agent in question.

“There is nothing left for Compass to do,” the firm stated in court documents dated Jan. 7. “Saunders is using its suit against Compass in a transparent attempt to stifle legitimate competition from Compass in the Hamptons real estate market… At this point, Compass should be allowed to resume its real estate business without disruption.”

Saunders slammed Compass and former agent Meg Salem with a lawsuit on Dec. 7, alleging that Salem stole more than 11,000 listings from Saunders and turned the data over to Compass. After a judge issued a temporary restraining order, Compass fired Salem, saying that it “holds its agents to the very highest standards and has very clear company rules.”

In the new motion, Compass denied knowing that Salem copied listings from Saunders’ internal database, and said it only learned about the allegations when Saunders filed its lawsuit. Compass said it subsequently returned Saunders’ information.

Saunders, however, alleges that Compass turned over just 220 documents – a fraction of the “thousands of pages of documents” obtained by Salem’s team.

“These listings are the lifeblood of our business and I want them back,” said Andrew Saunders, CEO of Saunders & Associates. “I want to know what happened to them.”

Saunders cited a sworn declaration by former Salem teammate Jess Spooner, who said he saw Salem turn over at least 1,000 sheets of paper to Compass, each one containing multiple listings.

 “There was an outright theft from my company, and mounting evidence that [Compass] not only knew about it, but embraced it and took the information,” Saunders added. “It’s not an innocuous thing.”

 In an amusing footnote in the case, Compass’ motion describes the firm as a “small real estate start-up that launched in 2013.”

But that assertion is somewhat dubious. In September, the firm raised $50 million in a Series C financing round, bringing the total investment to $123 million. Sources have valued the firm, which now has close to 300 agents, at $800 million.

By comparison, Vector Group Ltd. paid $60 million in 2013 for a 20.59 percent stake in Douglas Elliman, New York City’s largest residential brokerage. That deal would seem to value Elliman at just over $291 million.

Compass is using a good chunk of its venture funding to expand into new markets, including several in the Los Angeles area and the Hamptons.

Source: Compass calls itself the little guy, seeks dismissal of Hamptons restraining order

Rendering of 340 Flatbush Avenue Extension in Downtown Brooklyn (credit: SHoP) (inset, from left: Michael Stern and Joseph Chetrit) (Chetrit photo credit: Patrick McMullan)

It looks like Michael Stern and Joseph Chetrit really are going big in Brooklyn.

JDS Development Group’s latest round of permit applications for 340 Flatbush Avenue Extension in Downtown Brooklyn indicate the planned residential tower on the site will top out at more than 1,000 feet.

The 73-story structure – which will hit 1,066 feet in height, to be exact – will span more than 556,000 square feet in total, according to New York YIMBY. The development is now set to house 417 apartments spread out over more than 463,000 square feet of residential space.

The building’s first four floors will feature both retail and office space, while the fifth floor will hold a residential lounge with an outdoor terrace. Apartments start on the seventh floor, which will house 12 units, while the unit count will gradually decrease as the floors climb – with only two units on each of the 69th and 70th stories.

The SHoP Architects-designed project’s commercial portion, while scaled down from previous plans, will still span nearly 93,000 square feet at the base of the tower. The Tribeca-based architectural firm is also behind JDS’s skinny, supertall residential tower at 111 West 57th Street in Midtown.

JDS and partner Chetrit Group’s initial plans for the Downtown Brooklyn site, which they acquired for $43.5 million in 2014, called for a 775-foot-tall building. But the firms’ subsequent acquisition of the adjacent Dime Savings Bank for $90 million brought it an additional 300,000 square feet of air rights that pushed it above the 1,000-foot mark.

The city’s Department of Buildings has yet to approve the project’s permits, though the development is tentatively set for a 2019 completion date. [NY YIMBY] – Rey Mashayekhi

Source: JDS, Chetrit file plans for DoBro resi supertall

Celebrity photographer Albert Watson is listing his picture-perfect 101 Warren Street penthouse.

Watson, known for shooting the likes of Alfred Hitchcock and Tupac Shackur, is marketing his 3,800-square-foot condominium unit, the building’s second largest.

The shutterbug and his wife Elizabeth renovated the duplex pad, replacing the floors with gray granite and adding a staircase made of glass and steel connecting the floors, Curbed reported. It also features a 1,600-square-foot wrap around terrace.

He bought the apartment from the sponsor, Minskoff Equities, in 2008 for $13.2 million.

The unit is the second major listing at the 35-story Tribeca tower in recent days. “Taxi King” Simon Garber listed his 6,400-square-foot penthouse there last week. [Curbed] – Ariel Stulberg

Source: Photog Albert Watson lists Tribeca penthouse for .5M

From left: 315 Park Avenue in Flatiron and the Equinox gym at 100 10th Avenue in Chelsea

Flatiron residents will soon get another place to exhaust themselves for the sake of their health.

Fitness center firm Equinox signed a 20-year retail lease at Columbia Property Trust’s 315 Park Avenue South, taking 44,000 square feet.

The gym will occupy part of the space occupied by financial firm Credit Suisse Group. Over the next two years, Credit Suisse, which pays a below-market-rate rent, will vacate about 175,000 square feet at the building as its leases expire, the Wall Street Journal reported.

Columbia, a real estate investment trust, bought the 20-story, 356,000-square-foot building last year, paying $375 million to Spear Street Capital.

Fullscreen, a Youtube channel aggregator, took 17,000 square feet there in September. [WSJ] – Ariel Stulberg

Source: Equinox takes 44K sf at Columbia’s 315 Park Avenue South

(Illustration by Chris Manfre)

From the January issue: The failure rate for startups is high — anywhere from 75 percent to 90 percent, according to industry estimates.

And if that weren’t enough, here’s another discouraging fact: Unsuccessful companies typically shutter within 20 months of being funded, according to venture capital database CB Insights.

So despite the enormous amount of capital being deployed to unleash a real estate tech revolution, the chances are strong that the real estate startups currently pushing themselves as the next big game changer will flop. [more]

Source: Welcome to real estate’s tech graveyard

From left: 69-45 Ingram Street in Forest Hills and 165 Columbia Heights in Brooklyn Heights

Three years of “meticulous” renovations seems to have paid off at this 19th Century Brooklyn Heights home.

The three-story carriage house at 165 Columbia Heights sold for $9.8 million in December, making it the most expensive sale of the month, according to data provided by Property Shark. The $5 million renovation included a third-story addition that added a master bedroom and roof terrace, both of which are hidden from street view to maintain the townhouse’s restored historic brick facade. The sale is considerably higher than November’s biggest price tag in the borough, which was a Park Slope home for $6.2 million.

The top sale in Queens was slightly less expensive than November’s most priciest home. A Long Island City condo in the View Condominiums on Center Boulevard sold for $2.3 million. A two-story home in Astoria topped November’s list when it sold for $2.6 million.

Here were December’s priciest sales:

BROOKLYN
1. 165 Columbia Heights
Neighborhood: Brooklyn Heights
Price: $9.8 million
Size: 5,072 square feet
Stories: Three
Built: 1800s
Agents: Gabriele Devlin and Lee Summers of Sotheby’s International Realty

2. 145 President Street
Neighborhood: Carroll Gardens
Price: $9 million
Size: 1,785 square feet
Stories: Three
Built: 1899
Agents: Not available

3. 1 Pierrepont Street #8A
Neighborhood: Brooklyn Heights
Price: $6.5 million
Size: Not available
Stories: One
Built: 1924
Agents: Not available

4. 812 Avenue R
Neighborhood: Homecrest
Price: $6.2 million
Size: 6,050 square feet
Stories: Two
Built: 2006
Agents: Melanie Kishk of MK Realty

28 Garden Place in Brooklyn Place

5. 28 Garden Place
Neighborhood: Brooklyn Heights
Price: $5.2 million
Size: 3,160 square feet
Stories: Three
Built: 1901
Agents: Yolanda Johnson Vogelzang and Vanessa van Der Linde-Brown of Corcoran

QUEENS

46-30 Center Boulevard #1504 in Long Island City

1. 46-30 Center Boulevard #1504
Neighborhood: Long Island City
Price: $2.3 milllion
Size: 1,153 square feet
Stories: One
Built: 2008
Agents: Not Available

2. 50-09 Second Street #1114
Neighborhood: Hunters Point
Price: $2 million
Size: 1,495 square feet
Stories: One
Built: 2008
Agents: Not available

3. 69-45 Ingram Street
Neighborhood: Forest Hills
Price: $1.8 million
Size: 1,992 square feet
Stories: Two
Built: 1940
Agents: Robert Hof of Terrace Sotheby’s Realty

71-41 Juno Street in Forest Hills

4. 71-41 Juno Street
Neighborhood: Forest Hills
Price: $1.6 million
Size: 2,569 square feet
Stories: Two
Built: 1920
Agents: Robert Hof of Terrace Sotheby’s Realty

5. 322 Soundview Lane
Neighborhood: College Point
Price: $1.6 million
Size: 3,397 square feet
Stories: Two
Built: 2007
Agents: Not available

Source: These were the top home sales in BK, Queens in December

Macy’s store in Herald Square

Hedge fund Starboard Value is ramping up pressure on Macy’s, suggesting a scheme by which the firm could purportedly create $10 billion in shareholder value by reorganizing its real estate holdings.

Starboard, which announced its stake in the department store in July, suggested that Macy’s separate its big-city flagship stores from its mall properties, creating joint venture entities for each, in a presentation sent to the retailer.

“Macy’s real estate portfolio is extremely valuable,” Jeffrey C. Smith, Starboard’s CEO, wrote in a letter. “A JV, or series of JVs, can crystallize the value of Macy’s real estate while bringing in a partner with substantial capital and real estate expertise.”

Macy’s, which in November rejected Starboard’s prior calls to reorganize real estate assets into a real estate investment trust, has struggled in recent months with declines in traffic at its stores. The company’s shares lost 47 percent of their value in 2015, Bloomberg reported.

Last week, the firm announced it had hired Eastdil Secured to market its flagship stores, including its Herald Square store, to potential joint venture partners.

Earlier this week, Isaac Chera’s Crown Acquisitions signed a 99-year ground lease at 136-50 Roosevelt Avenue in Flushing, which is home to a Macy’s store. [Bloomberg] – Ariel Stulberg

Source: Activist Macy’s investor ups pressure to cash in on real estate

357 West 54th Street in Midtown

Landlords beware. Not only can a tenant’s illegal Airbnb sublet draw fines from the city, it can lead to your rental building being re-classed as a hotel, with all the attendant requirements.

That’s what happened at 357 West 54th Street in Midtown, according to a new lawsuit filed by landlords Ben and Herman Schulman against one of their tenants, Natalya Bogatyuk.

In May, a Department of Buildings inspector found that tenants at the five-story, 21-unit building, including Bogatyuk, were illegally renting their apartments through Airbnb and similar services. A court issued a series of fines to the landlords, totaling $45,000, according to the complaint.

But the inspector also concluded that the units were being occupied on a “transient” basis, thus converting the building from a Class A permanent residential property to a Class B property, essentially a hotel.

That status brings with it additional requirements for landlords, such as maintaining a more comprehensive fire alarm system and providing a second means of egress. Finding these requirements unmet, the court imposed an additional $16,250 in fines, according to the suit.

The Schulman’s are seeking damages of $250,000, plus another $50,000 to cover court costs.

Several other tenants were renting their units as well, according to the suit. The landlords filed suit against another tenant, Madalina Iacob, last month, seeking the same amount of money.

The Department of Buildings didn’t immediately return a request for comment.

Airbnb is fighting a package of new City Council bills seeking to regulate its service, including one that would significantly raise the fine for illegal rentals.

The firm is also reportedly in talks with three major national landlords – Equity Residential, AvalonBay Communities and Camden Property Trust – over a possible revenue sharing arrangement for tenants’ rentals.

Source: DOB reclassifies rental building as hotel because of Airbnb sublet: lawsuit

Jakub Nowak and Jonathan Eshaghian with 38-42 12th Street in Long Island City

United Hoisting and Scaffolding Company, one of the city’s biggest scaffold-and-sidewalk-shed suppliers, is looking to sell its large, 1.5-acre yard in Long Island City as a development site that could fetch upwards of $35 million.

“This site is primed for conversion into office, creative or industrial uses, particularly given its proximity to Manhattan and the Cornell Technion Campus on Roosevelt Island,” said Marcus and Millichap’s Jakub Nowak, who along with colleague Jonathan Eshaghian has the listing for United’s site a few blocks north of the Queensbridge F Train station.

The property is made up of two different parcels across the street from each other: the larger one at 38-42 12 Street that holds slightly more than 319,000 buildable square feet, and smaller yard across the way at 38-26 11th Street, which has shy of 49,000 buildable square feet.

United, which is owned by the Halloran family, bought the site back in 1979 when the company relocated from New Jersey.

In recent years the neighborhood, part of one of the city’s Industrial Business Zones (IBZ), has been popular with hotel developers, with 10 new or proposed hotels in an area encompassing about a dozen blocks. But two months ago Mayor Bill de Blasio and the City Council announced they had reached an agreement as part of an effort to preserve manufacturing jobs that would require hotel developers to receive a special permit in order to build in an IBZ.

The IBZ agreement didn’t impact office development, which is still allowed as of right. And Nowak, who last year sold a development site nearby on 11th Street to a hotel developer for $100 per buildable square foot, said that with LIC office rents ranging from $25 to $30 per square foot, the site could very well go to an office developer.

Source: Scaffolding company puts huge LIC yard on the market

Jonathan Gray

The tab is in for Blackstone’s massive 2015 buying spree: $9.6 billion.

That total – which included the purchase of Stuyvesant Town and a partnership stake in a six-building office portfolio – made the private equity giant the city’s most aggressive buyer last year.

The firm also sold $4.2 billion in property, Bloomberg reported, citing data from Real Capital Analytics.

The firm bought Stuy Town along with Ivanhoe Cambridge, from a group led by CWCapital Assessment management, closing in December. The partners paid $5.3 billion (or was it $5.46 billion?)

Earlier this year, Blackstone went into contract to buy a 50 percent stake in a portfolio of six office buildings – including 620 Sixth Avenue, 1330 Sixth Avenue, 340 Madison Avenue and the Starrett-Lehigh Building at 601 West 26th Street – from Scott Rechler’s RXR Realty. The deal valued the portfolio at $4 billion.

Back in August, The Real Deal profiled the firm’s real estate division and its head Jonathan Gray, investigating whether its dramatic growth could continue. [Bloomberg] – Ariel Stulberg

Source: Blackstone bought nearly B worth of NY real estate in 2015

Clockwise from top left: Trump Park Avenue, 152 Elizabeth Street, 36 Bleecker Street and 45 East 22nd Street

Manhattan buyers signed 15 contracts on properties $4 million and up last week, according to Olshan Realty’s weekly luxury market report. But on average, the pricey pads spent nearly a year – 347 days, to be exact – on the market.

The week’s total asking price sales volume was $125.6 million, with an average asking price of $8.4 million. The average discount was nine percent.

The No. 1 contract was a penthouse at Trump Park Avenue at 502 Park Avenue, asking $16.8 million. Measuring nearly 4,200 square feet, the condo has four bedrooms, six bathrooms and a 69-foot library facing Park Avenue. The prior owner paid $7.7 million in 2010.

Coming in at No. 2 was Unit 5 at the Tadao Ando-designed condominium at 152 Elizabeth Street. The 4,094-square-foot unit, which was asking $15.2 million, is one of seven units in the glass-and-concrete development. [Olshan Realty] – E.B. Solomont

Source: 15 contracts signed at M and above: Olshan

From the January issue: Anyone who has banked online, shopped on Amazon or shared digital photos recently can understand why real estate firms are clamoring for new technology.

It’s been a decade since the listings portal StreetEasy debuted, making data accessible to New Yorkers. But there have been few game-changing startups in its wake.

To fill the void, a burst of activity on the real estate tech front over the past two years has challenged the sector’s reputation as slow moving and resistant to change. [more]

Source: Real estate’s tech arms race

Brooke Shields

From Luxury Listings NYC: An artifact from another era, her skin-tight Calvin Klein jeans are now on display at the Fashion Institute of Technology. A pair was previously shown at the Metropolitan Museum of Art. Her oft-controversial childhood portraits have been exhibited in the Whitney, the Guggenheim and the Tate — where the photographs were removed after a warning from the London police. But Brooke Shields, 50, is far from being a museum piece. [mpre]

Source: Endless Brooke

From Luxury Listings NYC: Historic hutong homes — traditional courtyard property lining narrow alleyways — are the hot (old) new thing in the Chinese real estate market. They provide a much-needed sanctuary in the middle of the bustling city of Beijing. Those seeking a more traditional living experience seem to prefer street-level homes to luxury high rises, so these properties tend to be particularly coveted by ex-pats or newcomers to the city. [more]

Source: Well-heeled ex-pats are buying up historic homes in Beijing

Simon Garber, the Taxi King, and his apartment (Photo by Colin Archer)

Simon Garber, aka the Taxi King, has slapped his showy Tribeca penthouse back on the market, this time for $25 million. Here is a look inside.

Garber, who owns Yellow Cab SLS Jet Management Corp. and operates roughly 275 taxis in the city, combined two units on the 32nd floor of the building at 101 Warren Street into one penthouse. Garber is also the founder of the polo club of Colts Neck, N.J., and owns roughly 850 taxi medallions in Chicago.

Garber has previously offered the apartment as a $100,000-a-month rental and listed it for $30 million, then $27 million. The 6,400-square-foot penthouse has now seen another $2 million discount, according to Curbed.

Designer Richard Mishaan gave the apartment its lime green kitchen, mosaic tile motifs and all its other generally over-the-top finishes. Selling this one might require finding a very special buyer.

[Curbed] –Christopher Cameron

Source: Taxi King’s Tribeca penthouse is back, asking M

San Francisco (Credit photoeverywhere in Category North America)

Residential rents in San Francisco have been outpacing NYC’s for some time. But now, San Fran is beating out New York on another front: office rents.

Office rents in San Francisco are in fact the most expensive in the country, with landlords asking up to $72.26 a square foot in the fourth quarter of last year, according to a new report from CBRE Group cited by the New York Times. Manhattan office rents were $71.85 a square foot during the same period.

Moreover, prices in San Francisco rose 14 percent last year, compared with 7 percent in Manhattan.

And of course, the price surge can be blamed on…you guessed it: tech firms. An interesting side note: San Francisco office rents haven’t surpassed Manhattan’s since the dot-com bubble a decade and a half ago. [NYT] – Christopher Cameron

Source: San Francisco office rents now the priciest in the nation

1009 Fifth Avenue

In May, Mexican billionaire Carlos Slim, formerly the world’s richest man, listed his Upper East Side mansion at 1009 Fifth Avenue for $80 million — $36 million more than he paid for it just five years ago. But as of today, the property has been taken off the market.

The Real Deal reached out to listing broker Serena Boardman of Sotheby’s International Realty for comment and to ask if it will be coming on the market with a different price or broker, but she has not replied.

The property has been on the market for roughly eight months, which is not typical period for an exclusive listing.

Built in 1901, the eight-story mansion is one of the few remaining beaux-arts homes remaining on Fifth Avenue.

The facade extends 27 feet along Fifth Avenue and features a terrace that looks out onto the iconic Metropolitan Museum. Inside the property features high ceilings, hard-carved wood paneling, trompe l’oeil accents and an ornate, curved staircase that stretches for five stories.

Source: Carlos Slim’s M UES townhouse is now off the market

Penn Station has a reputation for being one of the worst places in all of New York City. It’s dark, crowded, confusing, and dingy. But does it deserver to be demolished?

It is also the busiest train station in the United States, with roughly 650,000 people and 1,200 trains passing through each day.

New York Governor Andrew Cuomo recently announced a complete overhaul and renovation of the station. The project will take three years to complete and will cost upwards of $3 billion dollars.

We decided to visit Penn Station to see if it really is as bad as everyone says.

Story and video editing by Stephen Parkhurst

Source: We visited the worst place in NYC to see if it deserves to be torn down: VIDEO