News

Lucrative Super Bowl Listings Tempt Brokers — Despite Risks

The Real DealJanuary 31, 2014
The number of short-term rental listings – and their prices – have skyrocketed ahead of Super Bowl XLVIII, and not even New York City real estate brokers are immune to the siren call of potential cash.

Airbnb, arguably the most popular site for short-term rental wheeling and dealing these days, still has more than a 1,000 listings available for this weekend only two days before the big game. The site has seen a 46 percent week-over-week increase in bookings on listings near MetLife Stadium in New Jersey, a spokesman for the company told The Real Deal. Bookings in the surrounding area – including the five boroughs – are expected to double from their volume at the same time last year.

The boom has prompted users to dramatically lift their rates, much as the city’s hotels commonly do during especially busy periods. Some hosts are charging as much as $1,000 per night for their pads over the weekend and are pointedly courting gridiron junkies.

“Perfect party space for Super Bowl weekend,” reads one StuyTown offering asking $6,500 for six nights. Even famous faces are getting in on the action, with Kevin Jonas, eldest of the eponymous brothers, renting out his Denville, New Jersey home (near the game site in East Rutherford) for $20,000 per night. The five-figure tab does include tickets to the game, at least.

Brokers are tempted by the potential windfall as much as anyone else. Several told The Real Deal that they have been approached by past or long-term clients seeking help marketing their property as a Super Bowl outpost.

“I had a client ask me to deal with her Staten Island lease for the weekend for $20,000,” said Jonathan Tager, managing director of MNS Real Estate. He didn’t wind up taking her up on the offer, he said, but was intrigued enough by the possibilities to list his own Brooklyn apartment for $6,500 per night after the inquiry. (As of press time he hadn’t snagged any takers.)

He isn’t the only one. Morgan Graham, a broker with Miron Properties, said that the Super Bowl isn’t on his radar but that he “sure as H-E-double hockey sticks” would rent via Airbnb if he had the space. “I live in Hell’s Kitchen and this neighborhood is very Airbnb-friendly. During the summer I meet several random Europeans in my building who are staying for the week [because of the] convenience of Midtown.”

Though it’s quicker and cheaper to list an offering themselves on a site like Airbnb, Roomorama or HomeAway, going through a broker may ease worries of party destruction over a beer and buffalo wing-filled weekend. The peace of mind, some brokers said, is what often makes a broker’s involvement, and commission, worth it.

“The reason I think they would use a broker is because they want the tenant vetted,” said Emily Beare, a broker with the CORE Group. “Most people do post it themselves, but I think that is the reason.”

The rush to cash in on the weekend’s potentially pricey rentals flies in the face of New York City’s 2010 illegal hotel law, which bars residential apartment rentals for fewer than 30 days. New York Attorney General Eric Schneiderman is currently on the march against Airbnb to this end, having subpoenaed data on the site’s 15,000 hosts in October. Most brokerages and individual agents are aware of the risks, and quite a few told The Real Deal that they are steering clear of short-term Super Bowl listings to avoid any potential legal fallout.

Others, however, appeared unfazed by the potential dangers.

“I would totally do it regardless of the risks,” Graham said. “And landlords seem to be okay with it because their rent is still getting paid, if not being paid quicker and in full.”

Ismael Leyva Snaps Up 57th Street Pad in Building He Designed

The Real DealJanuary 30, 2014
Ismael Leyva, the architect behind notable Manhattan buildings such as the Yves Chelsea, has nabbed an apartment at a Midtown building he designed.

The Mexican-American design guru paid $3.91 million for a three-bedroom, three-bathroom pad at Place 57, the same 36-story story tower at 207 East 57th Street in which chat show host Oprah Winfrey previously owned an apartment, according to public records filed with the city today.

Blu Kokin of residential brokerage CORE represented Levya in the deal. The sellers, Brian and Kathryn Ballard, were represented by Mark Schoenfeld and Brandon Cohen of the Corcoran Group.

As the architect of the building, Levya knew the property well prior to the deal, Schoenfeld said.

“There was very little due diligence to do,” he said.

Neither Kokin nor Levya were immediately available for comment.

The 30th floor apartment has a triangular living room, mahogany floors and views reaching as far north as the George Washington Bridge, according to the listing. The building has a 24-hour concierge, a fitness center, a conference room and garden.

The deal follows the sale of Levya’s former home at 353 Central Park West in August, for $7.55 million. He had owned that property since 2007.

Levya’s more recent projects include the Charles Condominium at 1355 First Avenue. He was also recently tapped to design the new School of Visual Arts dormitory at 407 First Avenue on 24th street on behalf of developer Magnum Real Estate Group.

Oprah’s penthouse at Place 57 sold to London-based hedge fund partner Mark Hillery and his wife Melissa for $7.9 million in 2012.

Record $1.98 Million Sale in Windsor Terrace

BrownstonerJanuary 29, 2014
A house at 107 Terrace Place set a record when it sold for $1,980,000 this month, according to The New York Daily News. The previous record was set by 18 Sherman Place, which traded for $1,900,000 in 2007, said the story.

The 1960s house at 107 Terrace Place was extensively renovated and came with a garage. The floor plan is unusual, with the kitchen and dining room on the same floor as the bedrooms, but the living room is on the ground floor. The five-bedroom home has 3,500 square feet of space and a top-floor rental unit.

The story asked if Windsor Terrace could be “the next Park Slope” and noted soaring multi-million-dollar prices there are pushing up prices in Windsor Terrace and elsewhere throughout Brooklyn.

Very Suburban $2M Windsor Terrace House Sets Record

CurbedJanuary 29, 2014
A two-car garage, a big back yard, wall-to-wall carpeting—everything about the stand-alone house at 107 Terrace Place screams "suburbia"—except for the fact that it's located in Brooklyn. Though some might scoff at the suburban-ness of it, it's those characteristics that led to the house setting a price record for Windsor Terrace when it sold for $1.98 million earlier this month. The Daily News reports that the previous neighborhood record was held by a much more New York-esque limestone house at 18 Sherman Street, which sold for $1.9M in 2007. The sellers of the two-family house on Terrace Place bought it in 2011 for $1.2M, and they fully renovated it to create a three-bedroom rental on the top floor and a 3,500-square-foot owners' unit on the lower two floors.

The Next Park Slope? Unique Windsor Terrace Home Sells For Record $1.98 Million

New York Daily NewsJanuary 28, 2014
The new, most expensive home in Windsor Terrace is not some glorious rowhouse facing Prospect Park or a wood-framed, 200-year-old beauty.

But the home at 107 Terrace Place, which just sold for $1.98 million, boasts a feature the competition is missing, something even more valuable than original molding or parquet floors a two-car garage.

It also comes with the neighborhood’s quickly increasing cachet.

“Windsor Terrace always had this suburban feel, but now it’s getting much cooler, too, and I think this house, which is two blocks from the park and the cafes, is the perfect marriage of the two Windsor Terraces,” said CORE broker Doug Bowen, who had the listing.

The five-bedroom detached home was actually built in 1960 by a bridge contractor as his own residence, which accounts for its unique layout.

The current owners, who purchased the property for $1.12 million in 2011, undertook a full renovation to open up the lower floors, creating a grand 3,500-square-foot home of modern proportions, with two bedrooms and a kitchen, dining and living rooms that sharing an open space. A den and game room are on the floor below, alongside the garage.

The previous record in Windsor Terrace was for a traditional limestone townhouse at 18 Sherman Place, which sold for $1.9 million in 2007, during the last boom.

As prices continue to rise to the north, buyers who want to stay in Brooklyn, rather than following their parents to the suburbs, are bidding up prices all over.

“When a typical brownstone is going for $3 million and even $4 million now, it’s going to push people to Windsor Terrace, and it’s going to push up the prices in Windsor Terrace,” Bowen said.

The sellers are actually bucking this trend. They just had their second child and have decided to relocate more upstate to Rhinebeck, since the husband splits his work in the high-end summer camp sector between Manhattan and upstate.

The buyers, meanwhile, are leaving behind a rental in Park Slope. They were among a number of bidders for the home, which was originally listed at $1.95 million.

And even though they will be waving goodbye to their beloved Slope, Bowen said his family will be gaining so much more.

“The joy of never having to fight for a parking space again,” he said. “Can you imagine?”

A Look at the Swankiest Bathrooms on the Market

The Real DealJanuary 25, 2014
Luxury homebuilders often tempt buyers with massive and spectacular bathrooms. But these gorgeous en suites from around the country go far beyond the high-end status quo.

Here is a look at the swankiest bathrooms on the market, according to Bloomberg News.

Homes for Sale with Spectacular Bathrooms

BloombergJanuary 24, 2014
Manhattan, New York
For sale: $8,995,000

23 Downing Street is a 3,700-square-foot, single-family residence located in Greenwich Village. The five-floor home boasts a large master suite, three additional bedrooms, four full baths and two half-baths, spacious living areas and 900 exterior square free, including a private garden and rooftop terrace.

Money Talker

Fox BusinessJanuary 17, 2014
Certified Career and Life-Purpose Coach Maggie Mistal, luxury real estate developer Jarrod Guy Randolph and Marie Claire Features and Special Projects Director Lea Goldman offer tips for boosting your salary.

Artsy Condo Projects Take Advantage of Museum Proximity

The Real DealJanuary 17, 2014
Sales are booming in buildings clustered around New York City’s public art destinations, as evidenced by the success of buildings near the Museum of Modern Art and the New Museum.

1280 Fifth Avenue, which is anchored by the Museum of African Art, wasn’t doing so hot in 2011, according to the New York Daily News. Only 16 of its 90 units had sold when brokerage firm CORE took over and rebranded the building as One Museum Mile. But things took off in 2013; a $3.6 million property sold there last year set the record for home sale price in East Harlem, as The Real Deal reported.

“Now we’ve only got eight left,” CORE broker Tom Postilio told the News.

250 Bowery’s developer, VE Equities, is also taking advantage of its artsy neighbor the New Museum — actress Scarlett Johansson checked out the property, for instance, according to the News. A penthouse there for $2,500 per square foot – the highest price per square foot ever on the Bowery — in 2013, in a sale brokered by Douglas Elliman’s Fredrik Eklund.

Other museum-friendly buildings include 1001 Fifth Avenue near the Metropolitan Museum of Art and a $1 billion tower called Torre Verre near MoMa by Jean Nouvel in the works.

Condos That Are Close to Arts Institutions like MoMA, The Met and The New Museum Get a Big Lift

New York Daily NewsJanuary 17, 2014
The Whitney isn’t the only condo development capitalizing on its proximity to a top arts institution. Being next door to — or in some case on top of — a museum can provide a project with serious cachet.

MoMA practically pioneered the practice when it developed Museum Tower in the 1980s, which poured millions into the institution’s endowment.

Here are some recent examples:

One Museum Mile

When brokerage Core took over 1280 Fifth Ave. two years ago, only 16 of the 90 units were sold. But after the building’s name was changed to One Museum Mile — a hat tip to the Museum of African Art downstairs — sales started booming.

“Now, we’ve only got eight left,” says Core broker Tom Postilio.


250 Bowery

The New Museum capped the Bowery’s transformation from skid row to high brow. As a result, 250 Bowery has attracted the likes of apartment shoppers Scarlett Johansson and other celebs.


1001 Fifth Ave.

Since it opened in 1902, the Met has been giving brokers something to crow about — as if park views weren’t enough.

“Savor the quintessential view of what New York City has to offer by waking up to one of the world’s most famous museums, the Metropolitan Museum of Art,” writes Kristen Magnani in her listing for a $2.8 million two-bedroom.


Torre Verre

The Museum of Modern Art quite literally has the most obvious museum-driven development in the works: Jean Nouvel’s $1 billion Torre Verre, which will rise 1,050 feet, as high as the Chrysler Building and with views of Central Park.

The Aging Ingenue of Neighborhoods: Long Island City Has Been on the Cusp for 30 Years

New York ObserverJanuary 13, 2014
All neighborhoods are somewhat in thrall to Manhattan, but Long Island City is haunted by it. By day, it’s noisy with the squeal and clatter of elevated trains, the rumble of delivery trucks on the 59th Street Bridge and the hum of subways beneath the sidewalks—a cacophony of people and paraphernalia, all shuttling across the East River. In the evening, the neighborhood is illuminated by the pale glow of Midtown skyscrapers and the streets hue yellow with the tide of returning taxis.

That Long Island City should be the next up-and-coming neighborhood has seemed obvious for decades; New York magazine christened it the next hot neighborhood in 1980, an imprimatur it would not give to Williamsburg for 12 more years. “Plainly, something is happening in Long Island City,” the magazine wrote and plainly, something was. Condos and chic restaurants were in the works, giddy developers were throwing around phrases like “Soho-plus” and “oil field,” and Robert Redford and Dustin Hoffman were zipping over to play afternoon games at Tennisport. Its vast stretches of sparsely populated land were so obviously ripe for redevelopment that its ascendance seemed all but inevitable—a fait accompli that for reasons no one ever quite seems able to account for has always fallen just short of accompli.

In the decades since, it has been called the next Williamsburg, the next Dumbo, the next Bushwick, Astoria-lite and, most inelegantly, “Fort Greene 10 years ago”—its arrival just as inevitable and just as elusive as it has always been, a thing that must be and yet is not.
To walk Long Island City’s wide sidewalks is to find evidence that the neighborhood has, at long last, arrived. There are haute comfort-food purveyors and classic cocktails cooled by hand-cut ice, a climbing gym and a weekend flea market, coffee shops, gourmet groceries, wine bars, breweries, art galleries, waterfront parks and an ever-multiplying number of luxury towers. Murakami has a studio there; so does David Byrne. M. Wells, the adventurous Quebecois steakhouse, recently reopened in an old garage by Court Square.

There’s even a rooftop farm and a pop-up ramen bar. On a Saturday afternoon this fall, hordes of canvas-bag-toting twenty-somethings emerged from the G train, setting off for either P.S. 1 or 5Pointz.

And yet, while it would be easy to fashion so many pieces into an argument for the place’s vitality, the truth is that they do not cohere. The spaces between the wine bars and art galleries are desolate, darkened expanses of low-lying warehouses, parked waste-oil trucks, taxi lots and auto body repair shops.

It is a neighborhood at odds with itself, a place that can neither shake its potential Manhattanness nor its pervasive otherness, the vague loneliness that comes with being on the edge of a great metropolis, beyond the crowds and the busy cheer and the all-night cafés. It has the kind of unsettled quality that makes some people a little uneasy, like the late-middle-aged couple I passed on the street one night not long ago. They were standing, watching a young man fumble with the front-door lock of a begrimed apartment building on Jackson Avenue. The couple wore the apprehensive expression of parents seeing the grim New York apartment their adult child now calls home.

Sensing their discomfort, the man turned, gesturing Manhattanward with his chin. “Look,” he said. “You can see the Empire State Building.”

A Scarcity of New One-Bedrooms

The New York TimesJanuary 10, 2014
For decades, one-bedroom apartments have been a fixture of New York. But finding one going forward, at least in new developments, may become as hard as hailing a cab in a downpour.
Developers convinced that buyers want extra legroom — and often seeking to recoup their own sky-high investments in land — are phasing one-bedrooms out of new buildings in favor of much more spacious units.

“I don’t know that one-bedrooms will ever become extinct,” said Charles R. Bendit, a chief executive at Taconic Investment Partners, “but I think the nature of the city is changing. Young kids aren’t leaving as quickly as they once did, and people who are making an investment are investing in a family home.”

Mr. Bendit is putting his analysis to the test as he develops Sterling Mason, a once-stalled condo at 71 Laight Street in TriBeCa. When conceived during the last real estate boom, by a different developer, the project was to have offered five one-bedrooms out of 36 units, in a complex made up of a new building and a renovated one, side by side.

But after buying the building for $65 million in 2012, Taconic decided that bigger would be better, and it reconfigured the interiors to allow for larger apartments, a process that involved removing two elevator banks and stairways. Today there are no one-bedrooms at Sterling Mason, which has 32 units, 14 of them three-bedrooms.

And the bet may have been a smart one. Since last summer, when sales began, eight of the units have sold, at an average of $2,700 a square foot, according to Streeteasy.com. And “no one is coming in to say, ‘Gee whiz, I wish you had one-bedrooms,’ ” Mr. Bendit added.

Whether to be family-friendlier, or for reasons affecting the bottom line, developers generally appear to be decreasing the supply of new one-bedrooms.

At the start of this month, there were 104 for sale in new condos in Manhattan, out of 654 units in total, or a 16 percent share, according to research from the Corcoran Sunshine Marketing Group.

Over the same time last year, there were 194 one-bedrooms for sale out of 718 units, or a 27 percent share, the data show. Similarly, at the beginning of 2010, there were 463 one-bedrooms on the market, out of 1,798 units, or a 26 percent share.

Even when resale units are taken into account, the one-bedroom market seems a shade of its former self — though of course the shortage bodes well for anyone with a one-bedroom to sell.

Last week, there were 1,227 one-bedrooms for sale in Manhattan, according to Streeteasy.com.
The units, mostly south of 110th Street, were listed at a median price of $745,000, or about $1,130 a square foot, the data show. At their peak in December 2008, by contrast, the number of one-bedrooms in Manhattan reached 3,257, according to Streeteasy.

As the recession roiled the market, one-bedrooms encountered strong headwinds; many of the first-time buyers drawn to these starter apartments were unable to get loans, which caused units to linger and dip in price. Since then, in the last couple of years, as the housing and lending markets have improved, one-bedrooms have practically flown off the shelves. Sales, in fact, made up about 41 percent of all deals in the fourth quarter of 2013, according to the Miller Samuel appraisal firm; the quarterly showing was the strongest since 1997, when they represented about 43 percent off all deals.

Given that one-bedrooms constitute such a large portion of the market, one might think developers would want to build more of them. But many developers have had to shell out more for land purchases — in Manhattan, prime lots can cost around $850 a square foot — so there is often pressure to build the larger, more expensive units, said Jonathan J. Miller, the president of Miller Samuel.

“It’s not that there is no demand for one-bedrooms,” he said. “It’s that there is no demand for one-bedrooms at $4,000 a foot, which would make some of these sites feasible.”

The market share of one-bedroom sales is expected to drop further in 2014 as new multi-bedroom products begin to work their way through the system.

The list of condominiums with few one-bedrooms is long and splashy. Walker Tower, the conversion of a former telephone building in Chelsea, on West 18th Street, had just three one-bedrooms out of 53 units. Closings there began in November.

There are only eight one-bedrooms, out of 145 units, at 56 Leonard in TriBeCa, according to a spokeswoman for the Alexico Group, a developer in the project. At One57, the skyscraping condominium from the Extell Development Company on West 57th Street, just eight of 94 units are one-bedrooms, according to a company spokeswoman. Brokers say that one-bedrooms are often used for nannies. But at Walker Tower, which ended up with a total of 47 units in the building, some of the scarce one-bedrooms were combined, according to Michael Stern, the managing partner of the JDS Development Group, which developed the building, along with Property Markets Group.

Even smaller projects are supersizing: the Schumacher, a condo conversion at 36 Bleecker Street in Greenwich Village, has no one-bedrooms among its 20 units, according to its website, though it does have several four-bedrooms.

Still, even though one-bedrooms seem to be fading in importance in the sales market, they are plentiful as rentals, brokers point out. Nor are all Manhattan developers eschewing one-bedrooms, which make sense for some projects’ economics. When they are offered alongside larger units, they can prove more popular, as at 530 Park Avenue, a 109-unit condo conversion on the Upper East Side, at 61st Street. Since last spring, 60 units have sold, 22 of them one-bedrooms, according to Aby J. Rosen, a principal of RFR Holding, its developer. Only three one-bedrooms are left, he added.

In less affluent areas, where land prices are lower, one-bedrooms may be a better fit.

At Edgecombe Parc Condominium, a project underway at 456 West 167th Street in Washington Heights, more than half the units, or 27 out of 49, are one-bedrooms. Seventeen have sold since marketing began in November, according to Ilan Bracha, a broker with Keller Williams New York City, which is handling sales. Prices at the building, which is being developed by Gleam Realty, have averaged $700 a square foot, Mr. Bracha said.

Large units in areas like TriBeCa attract families in part because of the top-rated public schools. But in neighborhoods like 530 Park’s, where the schools are not as much of an attraction, family-size units can be a harder sell, said Mr. Rosen, adding that many one-bedroom buyers have said they will use them as pieds-à-terre.

“Everybody is chasing the $50 million buyer,” he said, “but I would rather focus on the $7 million to $10 million buyer.”

Sometimes the sites themselves determine the sizes of units. “You don’t want to bastardize the shape of a building; if it dictates larger apartments, it’s better not to create tiny units,” said Doron Zwickel, a Core Group broker in charge of sales at 93 Worth Street, a 91-unit project in a former textile factory in TriBeCa. “But this was not a very deep building, with lots of windows, so it was very efficient to do.”

At 93 Worth, there are 16 one-bedrooms, or 18 percent of the total, as well as 22 studios; eight units remain for sale after a little over a year of marketing, Mr. Zwickel said. Average sale prices have been $1,850 a square foot.

At a new condo that Mr. Zwickel is marketing at 241 Fifth Avenue, the one-bedroom count is even higher: 35 percent of the listings, or 16 out of 46 units. Only one of the units remains.

“I believe that most of the product in the works is still geared toward the high end and the mega-rich,” he said. “I think it would be wise to create more variety.”

CORE Duo Singing Their Way to Success

Brokers WeeklyJanuary 09, 2014
At a past showing on East 83rd Street, Tom Postilio decided to go with his gut. The tour of the apartment was almost over and he felt the interested couple needed a final nudge. So Postilio stopped in his track and started singing Frank Sinatra’s “All the Way” – the couple’s wedding song.

What would be weird coming from any other broker worked for Postilio, who had spent years singing Sinatra on stage. “That sealed the deal,” he said.

With college and graduate degrees in real estate mushrooming across the country, more and more people are entering the field as fully trained professionals. But Tom Postilio and his partner Mickey Conlon at CORE are living proof that an unconventional background can still be a big advantage.

HAVE YOU HEARD: One World Property Advisors takes over leasing at 66 Franklin Street, CORE agent featured on “Selling New York”

Brokers WeeklyJanuary 09, 2014
New York’s “pre-sale” apartment stylists James Hart and Barbara Brock of Sold with Style, were featured on HGTV’s Selling New York Jan. 7 episode along with Core agent Lisa Graham.

The pair staged 4,500 s/f 30th floor duplex penthouse at 211 Madison Avenue listed for sale for $5.595 million.

Graham sought out Sold with Style’s expertise when she was faced with selling the five bedroom, six bathroom apartment that had not been upgraded since it was built in the 1980’s.

A health and wellness enthusiast, Graham enlisted help from Big Apple Feng Shui expert Ann Gallops who called in Hart and Brock.

They brought in some amazing pieces of furniture and accessories from their 5,000 s/f.

The apartment is now in contract.

Money Talker

Fox BusinessJanuary 03, 2014
Jarrod Guy Randolph, James Freeman and Remi Spencer on a new study showing that many workers don't trust their bosses and want to quit.

Broker vs. Broker: How Low Can You Go on Commissions?

The Real DealJanuary 03, 2014
The Manhattan residential inventory crisis is forcing brokers into a tight corner when it comes to negotiating commissions and terms of exclusive agreements with sellers, brokers told The Real Deal.

With brokers competing for work thanks to the overwhelming shortage of exclusive product, savvy sellers are pitting agents against each other in an attempt to secure advantageous arrangements. Some of the things these sellers are after? Paying lower commissions, of course, and shorter exclusive arrangements (often three, instead of six, months.)

“They’ll say ‘X, Y and Z broker offered to go as low as this,’” said Ryan Fitzpatrick, director of sales at residential brokerage CORE. “‘Can you match that?’”

Brokers who are hungry for listings, particularly those without long track records or with smaller firms, are agreeing to those terms in order to break into the deal stream, sources said. But that, in turn, is putting pressure on the residential brokerage community at large.

“The brokers that are desperate are using that angle to get work,” said Mara Flash Blum, a broker at Sotheby’s International Realty who recently pitched against a broker willing to take a lower commission. “I said ‘I’m sorry, I can’t do that,’ ” she said.

The inventory crunch shows little sign of letting up. In the fourth quarter of 2013, inventory dropped to 4,164 co-op and condominium units, a 12.3 percent dip from the fourth quarter of 2012, according to brokerage Douglas Elliman. That’s the lowest inventory level since Elliman began tracking the data in 2000. The drop was even more pronounced for new development units, whose availability fell 19.6 percent year-over-year.

The situation was much better on the luxury end of the market — the top 10 percent of all units — where the listing count was 1,190, a 24.9 percent increase over the same period in 2012.

At the same time, turnover of product in the market is still happening at a fast pace. The absorption rate in the fourth quarter was 3.8 months, nearly two months faster than the 5.5-month pace in the prior-year quarter.

“There are a lot of agents competing for a small number of listings,” said Fitzpatrick. “It makes for a very intense playing field. Most sellers are savvy. They realize they have options. They realize that they can call the shots in some respects.”

The standard commission for a deal is 6 percent — 3 percent for the seller’s broker and 3 percent for the buyer’s — while for luxury properties, it can inch down depending on the price of the unit.
One broker told TRD that he’d been competing for an exclusive against a broker who offered a commission of less than 2 percent on a $2 million property, but he declined to provide specifics.

For brokers at large corporate firms like the Corcoran Group and Douglas Elliman, undercutting on commissions is strongly discouraged, if not tacitly banned.

Indeed, at a recent panel event, Elliman CEO Dottie Herman spoke out against the practice.
“If the only thing you think about is who’s the cheapest, and you couldn’t care less about the service, then I’m not really even going to have a conversation with you, because there’s nothing to talk about,” she said. “Good luck to you.”

Meanwhile, smaller companies, like Miron Properties, have more wiggle room for discussion.

“We have certainly been able to pick up listings where the corporate firms haven’t, because we were able to be creative with fee structures,” said Jeff Schleider, managing director at Miron. “If there’s some special circumstance, like the client is going to be selling and buying with us, we’ll of course work with them on commissions. Before I started Miron, I worked at Corcoran, and agents would lose deals all the time because [they wouldn’t drop their commissions]. Six percent doesn’t always work.”

But many warn that giving up too much on commissions is a slippery slope and, from a broker’s prospective, sets a dangerous precedent for future deals.

“There is a clear value in the work of a professional broker,” said Michael Graves, a broker at Elliman. “A skilled agent will deliver results far beyond the percentages of any discount. Most sellers understand that taking a discount agent is akin to jumping over dollars to reach for pennies.”

CORE’s Fitzpatrick agreed. “We’re not a discount brokerage. We’re not going to enter a race to the bottom,” he said.

“If you go into three plastic surgeons, you’re not going to barter on price. It’s about the results,” he quipped. “You want the broker that’s going to get you the highest price for your apartment. Many sellers respond to that once they understand where we’re coming from. Not everyone, but many do.”

Sellers are also increasingly asking to reduce the length of exclusive agreements to less than six months, because they think that’s plenty of time to sell a well-priced unit in today’s quick market. But experienced brokers said that despite market conditions, three months is rarely enough time to complete a deal.

“The perception is that things are flying off the shelf. But unless it’s new construction, it’s not flying off the shelf,” said Flash Blum.

If a broker is going to invest the time and, in some cases, their own money in preparing the apartment for sale and securing advertising and media exposure for their exclusive, they can’t run the risk of losing the exclusive after just three months, Flash Blum said.

“I don’t like to take a three-month exclusive,” she said. “You lose the first two weeks just getting the apartment ready for sale.”

We Hear...

New York PostJanuary 03, 2014
That American Airlines Arena and Sam Nazarian’s SBE will launch a new, 32-person VIP Hyde suite for Miami Heat games and other events this month . . . That model Julie Henderson hosted the opening of the Professional Bull Riders Monster Energy Buck Off at MSG on Friday . . . That after his Feinstein’s at the Regency shuttered, piano man Michael Feinstein performed his annual New Year’s Eve show in San Francisco at Feinstein’s at the Nikko, where he was joined onstage by Tom Postilio and Mickey Conlon.

Predicting 2014: Pros weigh in on everything from de Blasio to prices, but agree that market can’t keep up with last year’s pace

The Real DealJanuary 01, 2014
Sure, nobody knows what’s actually going to happen in the New York City residential real estate market in the New Year. But it’s still fun to guess.

In this month’s Q&A, The Real Deal asked residential brokerage heads, market analysts and developers to give us their best educated guesses on everything from residential pricing to how the beginning of Mayor Bill de Blasio’s term in City Hall will impact the market.

Most seemed to be in agreement on at least one thing: the 2014 market will not be able to sustain the pace of the 2013 market. But, they said, that’s more a function of the record-setting pace of nearly every metric in 2013 than it is of the coming year.

“It’s unrealistic to expect deal volume to compete with what we just experienced, so I would lower my expectations on the future pace of contract activity and ultimately price action for 2014,” said Noah Rosenblatt, the founder of brokerage and research platform UrbanDigs.

While Rosenblatt and others said a shortage of inventory will continue into the New Year and will lift prices, some said buyers have hit their limit on price increases. That’s partly because much of the inventory that is coming on the market is being “posited toward the ultra-luxury buyer,” said Core CEO Shaun Osher, who noted that the “affordable luxury” sector —between $1.5 million and $3 million — is still seeing a void of quality product. He said anything listed in that price range this year will do well.

In addition, several sources said they didn’t expect de Blasio’s first year in office to impact market conditions immediately, partly because it will be hard for him to get anything passed in Albany because of the state elections this year. But they said, depending on what the new mayor does this year, his presence could impact the pipeline of residential product more long-term.

For more on which areas of the city are expected to do best and worst, what developers are looking out for, and what to anticipate in

terms of a residential bubble, we turn to our panel of experts.

Shaun Osher: founder and CEO, CORE

NYC’s residential market has strengthened beyond what many could have anticipated a year ago. What are you expecting to see in the New Year? Where do you expect the market to be a year from now?

A year from now I think we will be in a more stabilized place and I don’t think there will be the rate of appreciation in property value that we have seen over the last 12 months. We have actually seen a bit of a slowdown in appreciation on values and a little bit of a slowdown on some absorption.

The residential inventory shortage is obviously one of the big factors driving market conditions right now in NYC. What are you expecting on the inventory front in the coming year?

There is not much of a pipeline of new product coming on the market in terms of numbers. We are still historically low with respect to inventory. There are less than 5,000 available units on the market right now. We are at 50 percent of where we should be. There are a number of new projects coming on the market, but in total unit numbers, it’s going to have an insignificant impact on inventory. I think there is going to be a housing shortage and I think the shortage is going to be exacerbated by the fact that a lot of the inventory that we are going to see coming on the market is going to be posited toward the ultra-luxury buyer.

Residential sellers had the upper hand in 2013. Do you expect that to continue in 2014 or do you expect that dynamic to change?

I expect the dynamic to change slightly because buyers feel that value has reached a threshold. Buyers are going to start saying no to irrationally exuberant values. So I think we are going to see a more stabilized market where the momentum will go more to the buyer and there will be more equilibrium.

Sales volume hit the second-highest level in Manhattan in 24 years in 2013’s third quarter. What are you expecting when it comes to deal volume in the coming year?

It’s going to have to slow down at some point, but I don’t see that happening over the next 12 months because of the shortage. Absorption on market-rate properties will be very quick. Good product in a strong market will always sell very quickly.

The luxury market obviously did extremely well in 2013, but some have expressed concerns that developers are now paying too much for land and banking on getting per-square-foot prices that are unrealistic. What do you expect from the luxury sector in the coming year?

I agree with that statement and I think that the luxury sector of the market is going to feel some pressure, especially where developers need to meet certain prices because of the land cost and construction cost. Any developer that is expecting prices in a neighborhood that won’t command them will be caught with their pants down.

Which sectors of the market do you expect to perform well in NYC this year?

The market that has the largest void is the affordable housing in the luxury segment — anything priced between $1.5 million and $3 million. There is a void of good quality product in that category. Anything at that price point should do better than any other segment of the market.

Which geographic areas do you expect to struggle most in NYC in the coming year?

Anywhere that is too pioneering, where they are demanding prices that are too high for the neighborhood. It will be interesting to see what Hudson Yards does, but I am very bullish on West Chelsea and Tribeca and the fringe areas around those neighborhoods. The neighborhoods that could be disappointing would be Hell’s Kitchen and pockets of the Far East side.

What are your thoughts on a residential bubble? Do you have concerns about that in the coming year?

I think certain segments are in a bubble. There is always a concern about an unforeseen event that is going to initiate a correction or adjustment.

What new, big residential projects (other than One57 and 432 Park) do you expect to generate the most buzz in the NYC residential market in the coming year?

Larry Silverstein’s Four Seasons [hotel and condo] project in the Financial District will be one to pay attention to because it’s uncharted territory where prices have not been tested.

What impact, if any, do you think the new mayoral administration will have on the residential market in the coming year?

In the next 12 months, almost none. But it will have an impact into the pipeline of product for the next five years.

The $40 million buyer: They’re often not bold-faced names, but understated billionaires in obscure fields

The Real DealJanuary 01, 2014
Forget fame and glamour: The buyers of Manhattan’s most costly real estate are often not the boldfaced names that appear in the gossip pages.

Those spending $40 million or more on a home are seldom bankers, starlets, tech billionaires or Russian oligarchs and their children, brokers say. Instead, these big spenders often tend to have roots in the working classes, making their fortunes from manufacturing, inventions and sales.

“Everyone expects buyers at this price point to be extremely glamorous, but really they are the minority,” said Leonard Steinberg, who leads the luxury brokerage team at Douglas Elliman. “Ninety percent of buyers in the $40 million-plus range are just extremely clever people that have invested wisely, or invented something extraordinary.”

Steinberg is currently marketing a 7,250-square-foot condo penthouse at the Elad Group’s 250 West Street, for $39.5 million. And despite the apartment’s hefty price tag so far, the potential buyers coming to view the property have been largely under-the-radar players with unrecognizable names.

And while Steinberg stressed the growing influence of highly cosmopolitan foreign billionaires on the New York market —from places like China, Russia and Western Europe, as well as new wealth emerging in countries like Nigeria, South Africa and Mexico — he said Americans are still the primary buyers of this type of home.

For example, one potential buyer who recently viewed the property was a towel manufacturer. But the buyer’s fortune was not built on a recognizable name brand of bath or beach towel, nor through sales at big retail chains. Instead, she produced towels distributed exclusively at wholesale centers — hardly haute couture.

“You have to think, who invented the technology in your keyboard? Who manufactured the screws and hinges in the products all around you? Who innovated the latest medical device?” Steinberg asked.

“Buyers in this market usually aren’t people who got rich raping the system. They tend to be either ingenious or rather lucky.”

While Wall Streeters, technology millionaires, heirs and TV, movie and sports stars obviously have millions to spend, brokers say those buyers usually top out below the $40 million price point. There are, of course, exceptions — like Leslie Alexander, the billionaire owner of Houston Rockets, who snapped up a $42 million unit at 18 Gramercy Park South last year (see “A drop at the top”).

But more often than not, the $40 million-plus buyers work in obscure fields. Indeed, while senior executives at the big global banks often earn total compensation packages that come in around $20 million, in many cases much of that headline number isn’t in cash. Typically, half or even two-thirds of their total will come from restricted stock awards or options that vest over time, making their fortunes less liquid.

There are, of course, exceptions — hedger funder Bill Ackman and a group of investors are reportedly in contract for a $90 million unit at Extell Development’s One57 — but there are also more than a few New York City trophy homes listed above $40 million. In fact, approximately 30 homes in the city are currently on the market for $40 million or more, according to real estate listings website StreetEasy.

Sotheby’s International Realty’s Elizabeth Sample, who along with partner Brenda Powers has four properties listed at $50 million or above, added that there are currently at least another five off-market “whisper” listings in the same price range.

But don’t expect Hollywood glitterati or high-visibility TV and music personalities to chase those properties. Stars typically buy at lower price points.

Case in point: Judy Sheindlin, better known as “Judge Judy,” is the highest-paid TV personality in any genre, grossing $47 million a year, according to TV Guide magazine. Yet, as The Real Deal previously reported, the no-nonsense justice spent $8.5 million on her four-bedroom co-op at 14 Sutton Place South in 2013.

Other notables such as Yoko Ono, Lance Bass and Norah Jones all sold Manhattan apartments in 2013 with asking prices ranging from $2.14 million to $8.9 million. And this fall, actress Rosie O’Donnell spent $6.4 million on a Saddle River, N.J., estate.

Another misconception is that the titans of Silicon Valley are spending their hundreds of millions on urban domiciles. But think again: Steinberg says that while older tech billionaires do on occasion buy at this level, many prefer to live more organically, in smaller and more sustainable luxury homes.

As for heirs and heiresses, brokers agreed that there is often a sense of humility that keeps richly bequeathed children from spending too much all at once. Yes, there are twentysomethings like Ekaterina Rybolovleva who settled on an $88 million apartment in the exclusive 15 Central Park West.
(Her father, fertilizer magnate Dmitry Rybolovlev, reportedly bought it for her.) But many of those who inherit their fortunes tend to be more modest — and guilt-ridden about spending too much money.

“[Overall,] the common thread with buyers at this level is that they are often extremely humble,” said
Vickey Barron, associate broker at Douglas Elliman and director of sales at JDS Development and Property Markets Group’s Walker Tower in Chelsea, which is currently listing a full-floor penthouse for $47 million. “These buyers are not wound up. They tend to be gentle souls that just happen to be very successful entrepreneurs, which is refreshing and lovely to see.”

Barron said a more accurate portrait of the apartment hunter with more than $40 million to spend is a salt-of-the-earth businessperson. Sample added that in many cases, the broker is better dressed than the client, sometimes leading to embarrassing mix-ups with owners.

“If you just saw them in a coffee shop, you wouldn’t know they were rich.” Barron said. “These people care about quality, not glitz. They want to fly under the radar; they can even be a little artsy.”

Barron recounted one recent case at Walker Tower involving a T-shirt-and-jeans-wearing apartment hunter interested in one of the building’s lavish penthouse units. When she learned the origins of her client’s fortune, Barron said she was embarrassed to have never heard of the company or the product it sold.

“Their business is crazy successful, but I had no idea what in the world it was,” Barron said. “Later, I learned that it was an expensive product that you wear from a brand that does absolutely no marketing, yet sells over a million dollars worth of product each month.”

The common denominator uniting this demographic of high-end buyer is that they are self-made, according to Emily Beare, a broker at CORE.

“These buyers aren’t Harvard Business School graduates with millionaire parents. They are very savvy and very street smart,” said Beare, who listed 15 Central Park West’s first combination unit for $70 million and represented the same seller, steel magnate Leroy Schecter, in his purchase of the Rothschild Mansion on the Upper East Side for $25 million in 2012. “They like to stay low-key and they don’t want to flaunt their wealth.”

Beare even remembered one client who made a fortune manufacturing machines like the ones used to cook hot dogs in baseball parks and street carts.

Predicting 2014: Pros weigh in on everything from de Blasio to prices, but agree that market can’t keep up with last year’s pace

The Real DealJanuary 01, 2014
Sure, nobody knows what’s actually going to happen in the New York City residential real estate market in the New Year. But it’s still fun to guess.

In this month’s Q&A, The Real Deal asked residential brokerage heads, market analysts and developers to give us their best educated guesses on everything from residential pricing to how the beginning of Mayor Bill de Blasio’s term in City Hall will impact the market.

Most seemed to be in agreement on at least one thing: the 2014 market will not be able to sustain the pace of the 2013 market. But, they said, that’s more a function of the record-setting pace of nearly every metric in 2013 than it is of the coming year.

“It’s unrealistic to expect deal volume to compete with what we just experienced, so I would lower my expectations on the future pace of contract activity and ultimately price action for 2014,” said Noah Rosenblatt, the founder of brokerage and research platform UrbanDigs.

While Rosenblatt and others said a shortage of inventory will continue into the New Year and will lift prices, some said buyers have hit their limit on price increases. That’s partly because much of the inventory that is coming on the market is being “posited toward the ultra-luxury buyer,” said Core CEO Shaun Osher, who noted that the “affordable luxury” sector —between $1.5 million and $3 million — is still seeing a void of quality product. He said anything listed in that price range this year will do well.

In addition, several sources said they didn’t expect de Blasio’s first year in office to impact market conditions immediately, partly because it will be hard for him to get anything passed in Albany because of the state elections this year. But they said, depending on what the new mayor does this year, his presence could impact the pipeline of residential product more long-term.

For more on which areas of the city are expected to do best and worst, what developers are looking out for, and what to anticipate in terms of a residential bubble, we turn to our panel of experts.

A Drop at the Top: 2013’s priciest closed residential deals pale in comparison to 2012’s biggest sales

The Real DealJanuary 01, 2014
With the New Year underway, it’s time for a post-mortem on last year’s residential market. And in an unusual twist, industry insiders who normally rely on statistics to understand the ins-and-outs of the market are saying that it’s best to avoid the numbers when gauging how the uppermost echelon did in 2013.

That’s because while the luxury market got all the buzz last year, some of the numbers tell a different story.

Indeed, 2013’s top five Manhattan residential deals totaled $162.13 million, a 47 percent drop from 2012’s $306.5 million. In addition, the highs weren’t so high: the most expensive closed sale was the $42 million purchase of a sponsor unit at 18 Gramercy Park, compared with the $88 million sale of financier Sanford Weill’s apartment at 15 Central Park West in 2012.

Considering this data, it may seem as though the residential market took a dip last year.
However, most of the year’s priciest sales — including a transaction reportedly in excess of $90 million — won’t actually close until well into 2014, brokers told The Real Deal.

Those deals are expected to break records.

The reason that they’re slow to hit the tape? Those priciest deals are predominantly in new-development condominiums in which closings have not yet begun. So, with the exception of the $42 million deal, most of 2013’s top deals were resales, which are traditionally less pricey than brand-new product, or condominiums that hit the market in 2012.

It is also symptomatic of the lack of available high-end properties, brokers said.

“I would have to assume that the [drop in the numbers] is a function of available inventory and does not necessarily represent a shift in buyer motivation or an exhaustion of the buyer pool,” said Tim Crowley, a broker with Flank Brokerage, the brokerage arm of the development and architecture firm by the same name, who sold the third priciest deal of the year. “There have been contracts signed this year in mega Midtown projects like One57 [at 157 West 57th Street] and 432 Park Avenue that prove this point.”

Those Midtown contracts, which are set to close this year and into 2015, will provide the true and final accounting of how well the market performed in both 2012 and 2013, Crowley noted. (Some of the pending sales at One57 went into contract in 2012.)

Still, not everyone is confident that the demand for units priced above $5,000 per square foot, the norm at towers like One57 and 432 Park Avenue, will continue at the level needed to absorb the supply. Indeed, developers, encouraged by the appetite for those units in the last two years, have brought more of those high-priced residences to market in the last year than in recent memory. Despite the overall inventory shortage, there were nearly twice as many units that came to market asking above $5,000 a foot in 2013 than in 2012, according to data from CityRealty.

“Developers are using One57 and 432 Park as benchmarks for 2014, but it’s difficult to know how deep that market is,” said Emily Beare, a luxury broker at CORE. “One building in a neighborhood does not necessarily make a market.”

Beare, whose $70 million listing at 15 Central Park West was taken off the market in the fall, noted that the $88 million sale last year at 15 Central Park West, the record-setting condo project developed by Arthur and William Lie Zeckendorf, had created an irrational frenzy in the market.

“Once sellers realized that the sale did not truly reflect the market, prices [for comparable listings] came down as much as 25 percent. The sale was an example of the right buyer at the right time,” she said.

But while 2013’s top five closed deals maybe not have matched the deals that went into contract the prior year, they were not shabby, either.

Read on for a closer look at which units made the cut.

Time for Change

Luxury Listings NYCJanuary 01, 2014
Last year was a historic one for New York City real estate, with price records shattered and the luxury market on fire.

Hedge funder Bill Ackman and a group of investors reportedly paid more than $90 million for a unit at Extell Development’s luxury condo tower One57. If the sale closes at that price, it will set a record for the most expensive Manhattan condominium.

With a new mayor and a slew of luxury condos coming to the market, what can we expect this year? Read on for a look at some key issues.

Interest rate jitters

Speculation that the Federal Reserve could begin to wind down its signature easy-money program has renewed buyers’ sense of urgency to take advantage of historically low rates before the cost of borrowing shoots up.

The interest rate for a 30-year fixed-rate loan is currently hovering around 4.6 percent, but experts predict rates could reach as high as 6 percent this year.

Over the past few months, there’s been an uptick in buying—which was already going strong, despite the relative lack of inventory—as interest rates have inched up, said Jordan Roth, a senior branch manager at GFI Mortgage Bankers, a residential mortgage provider in Manhattan.

“If rates had stayed where they were in the first part of 2013, buyers might have stayed on the sidelines,” he said. “Now, we’re seeing people get into the game.”

The de Blasio agenda

Many people are watching to see which of Mayor de Blasio’s real estate-related issues he raised on the campaign trail gets tackled first.

More affordable housing is likely on the way: On the mayor’s agenda is mandatory inclusionary zoning, which would change the rules on affordable housing for developers.

At the moment, many residential projects are planned as 80/20 buildings—a program through which developers receive tax-exempt financing in exchange for making 20 percent of their units affordable—though de Blasio may change that ratio for new residential developments.

The condo concern

Luxury super-towers One57 and 432 Park Avenue hogged headlines last year. Now we’ll see if the batch of high-end projects conceived in the wake of those two high-profile condos can survive.
“Developers are looking at those projects as benchmarks, but they’re on a different playing field,” said Shaun Osher, CEO of real estate brokerage CORE, who predicts that new units coming to market with exaggerated price tags will linger. “Buyers are not going to be foolish.”

Among the most anticipated projects set to go up in Midtown is JDS’ so-called “skinny” tower at 107 West 57th Street, which is slated to rise to 1,350 feet, and the 1,423-foot glassy skyscraper Extell is building at 225 West 57th Street.

The renewal of Seward Park

Big changes are coming to the Lower East Side, which will see a 1.65-million-square-foot, mixed-use project in and around Seward Park, slightly north of East Broadway.

The six-acre site is the largest swath of undeveloped city-owned land in Manhattan below 96th Street.

The project will include 1,000 units of housing (half of which must be permanently affordable) as well as a 15,000-square-foot open space, a school, a community center, 250,000 square feet of office property and a mix of retail spaces.

“Smart people are buying in the area before this is built,” said Stephen Kliegerman, president of Halstead Property Development Marketing. “This is potentially the most exciting mass new development to happen in the city. You’re going to see values in that area jump by 50 percent over the next five years.”

Other large-scale projects to watch: South Street Seaport, the World Trade Center site and Hudson Yards, which is rising on the far West Side.

Aiming High

Luxury Listings NYCJanuary 01, 2014
Basketballer Paul Pierce scored a full-floor loft at Franklin tower, at 90 Franklin Street. The 5,000-square-foot rental—with four bedrooms and a wood-burning fireplace—was asking $35,000 per month. The building is also home to Mariah Carey, who owns the penthouse.
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