The Real Deal - August 2008 - (Page 46) THE CREDIT CRUNCH Stephen Ross, chairman, CEO and founder of the Related Companies. The Related Companies might have a chance to leave more of an imprint on Manhattan than any other developer over the course of the next several decades as a result of their 26-acre Hudson Yards win earlier this year, which will give them an undeveloped site bigger than even Ground Zero, which is 16 acres, to work with. Related, along with Goldman Sachs, grabbed the project away from Tishman Speyer when the latter’s deal for a $1 billion redevelopment of the yards fell through. “The Hudson Yards is a once-in-a-lifetime, generation-defining opportunity, and we are ecstatic,” Ross said. “All of us at Related are passionate about this historic opportunity to create New York’s next great neighborhood.” The company is moving forward with condo and rental projects around Manhattan but isn’t shy about heading to outer boroughs that other major developers steer clear of. In April, city officials formally announced Related’s third major project in the Bronx, the redevelopment of the Kingsbridge Armory into a retail center. “We have tremendous confidence in the future of the Bronx and our current retail developments in the borough have been very successful,” Ross said. “As an area, it is statistically under-retailed, and the transformation of the Kingsbridge Armory into a retail and entertainment destination is a great opportunity that we are pleased to be a part of.” It hasn’t been all positive results, however. Related lost its bid for a proposed entertainment center at the site of Pier 40. Also, the Moynihan Station project, which is being developed by the city and state as well as developers Related and Vornado Realty Trust, has been slow to get off the ground. though the building is not slated to be complete until fall 2009. Although the record was struck down just two months later, in March, the building scored the then-highest price for Brooklyn’s most expensive condo with the sale of a $6.6 million penthouse apartment to Elizabeth Stribling, founder of Stribling & Associates, which is marketing the project. John Sexton, president of New York University and NYU Law School’s dean emeritus; Lee Bollinger, president of Columbia University With fierce community opposition to its plans to add 6 million square feet of space by 2013, NYU has taken some steps to assuage community concerns that the additions will dominate Greenwich Village. It signed a lease for housing in Brooklyn Heights and bought land on Roosevelt Island for faculty housing. Provincetown Playhouse The school recently got a foothold in Brooklyn by acquiring Polytechnic University, which could allow classroom space to be moved to Brooklyn from Manhattan, but opponents claim it was just a move by NYU to lay claim to Polytechnic’s Downtown Brooklyn real estate. Regarding Downtown Brooklyn, “we haven’t come out there with any firm plans yet,” said Alicia Hurley, vice president of government and community affairs at NYU. And, she said, the school is considering growing in remote locations like Governors Island. Hurley said the school is trying to be community-friendly by being transparent and engaging in a dialogue with the community early in the process. Also, the school made a decision to stop demolition plans for the historic Provincetown Playhouse, while the community board supported its decision to demolish neighboring buildings. The school did an about-face and said it would lend its support for the landmark designation of I.M. Pei’s Silver Towers complex. NYU has moved ahead with some Manhattan expansion plans, like constructing a dormitory on 12th Street between Third and Fourth avenues for about 700 students, and in the spring the school bought Gramercy Green at Third Avenue and 23rd Street to house around 900 undergraduates. NYU is not alone in continuing to expand successfully in the face of opposition. Farther uptown, Lee Bollinger, president of Columbia University, is also successfully taking steps to meet the school’s goal to expand its campus, in the face of some community opposition, by 17 additional acres near its campus in the next 15 to 20 years. In its most recent deal, the school paid nearly $7 million last month to purchase a property in the footprint of its planned expansion, at 2293 12th Avenue. Also last month, Columbia was poised to acquire a Metropolitan Transportation Authority property on 131st Street within the school’s expansion zone. A month earlier, Columbia had a small victory, the New York Times reported, when a Washington Heights holdout, who was demanding the use of eminent domain to remove her from the school’s expansion area, negotiated a deal to move. The school has to contend with two more landlords. Robert Levine, president and CEO of RAL Companies & Affiliates. After more than two decades of wrangling over plans for One Brooklyn Bridge Park in Brooklyn Heights, the biggest conversion project in the history of Brooklyn, RAL’s project saw success. The first residents began moving in last month, al- Peter Fine, president and co-founder of Atlantic Development, which specializes in affordable housing. With the slowdown in the market, some real estate players might have more hobbies or side businesses, but Peter Fine has both. Fine co-produced and partly funded the Tony award-winning musical “In the Heights,” which chronicles the experiences of residents in the Upper Manhattan enclave of Washington Heights. The play opened on Broadway at the Richard Rodgers Theatre in March. “In between closing six construction financing [deals] in the last four months, it certainly was a relief to win the Tony for best musical. It made my mother very happy,” said Fine, who has “always loved musical theater.” He is now looking into setting up a company to evaluate and fund theater and film projects; Fine said he might invest $10 million in the endeavor. But he won’t be giving up his day job. Fine said that his real estate business is holding up. “The credit crunch hasn’t really affected us that much, just marginally,” he said. His firm is perhaps best known for its work on the mixed-use project Boricua Village in the South Bronx, which, like “the Heights,” has a Latin theme. The company did, however, lose the bid to Related Companies to redevelop the Kingsbridge Armory in the Bronx. The two worlds of theater and real estate are not that dissimilar, Fine noted. Both are capital-intensive and require retaining a lot of professionals to “create the end product.” Darcy Stacom, vice chairman and partner in the investment properties institutional group at CB Richard Ellis. Since the building sales market has slowed dramatically following the credit crisis, the city’s top building sales broker has still figured out a way to make a buck — or commissions on more than $4.15 billion in sales since last year. She brokered the sale of the General Motors Building to Boston Properties for $2.8 billion (but not the sale of the three other buildings that brought the total portfolio price to $3.95 billion). The month of the credit crisis, Stacom negotiated the sale of 885 Third Avenue for $607 million. And, the month after the credit crisis, she sold Financial Square at 32 Old Slip for $751 million. While it wasn’t Stacom’s biggest year — 2006 saw her broker the $5.4 billion Peter Cooper Village and Stuyvesant Town deal — her commissions fell less than the overall drop-off in the market. As of June, the last date for which data was available for a year-over-year comparison, property sales (closed and under contract) in Manhattan dropped nearly 60 percent to $13.8 billion from June 2007, two months before the eruption of the credit markets, according to data from Cushman & Wakefield. (See Harry Macklowe and Mortimer Zuckerman.) David Paterson, New York’s 55th and current governor. Governor since March, Paterson got off to a rocky start when he announced his extramarital affairs and other transgressions. But he appears to be gaining clout, as reflected by the $3.3 million campaign war chest he is building up largely from real estate industry contributors — one of the largest amounts ever garnered by a governor not seeking reelection, the New York Times reported. Heavy hitters in the real estate industry appear to be taking him seriously, donating big money to Paterson’s campaign coffers. Contributors have included World Trade Center lease holder Larry Silverstein, developer and former state housing official and investor Royce Mulholland, and developer Donald Capoccia. Paterson looks to be growing comfortable in the new role, even referring to himself as the “new sheriff in town” at Russell Simmons’ Art for Life Benefit in the Hamptons last month, the New York Post reported. He even took a pot shot at the former governor, saying, in response to a standing ovation: “You can slow it down; I get paid by the hour.” (See Eliot Spitzer.) One Brooklyn Bridge Park 46 August 2008 www.TheRealDeal.com www.TheRealDeal.com May 2007 00 http://www.TheRealDeal.com
Table of Contents Feed for the Digital Edition of The Real Deal - August 2008 The Real Deal - August 2008 Lucky few try for more Short on age, long on deals Upping fees to match expectations Can I get the door, hipster? Stitching up a residential neighborhood The Credit Crunch When comps fall short Looking Back National Deal Sheet summary The Real Deal - August 2008 The Real Deal - August 2008 - The Real Deal - August 2008 (Page 1) The Real Deal - August 2008 - Short on age, long on deals (Page 18) The Real Deal - August 2008 - Can I get the door, hipster? (Page 20) The Real Deal - August 2008 - Stitching up a residential neighborhood (Page 42) The Real Deal - August 2008 - The Credit Crunch (Page 45) The Real Deal - August 2008 - The Credit Crunch (Page 46) The Real Deal - August 2008 - When comps fall short (Page 50) The Real Deal - August 2008 - Looking Back (Page 56) The Real Deal - August 2008 - National (Page 66) The Real Deal - August 2008 - Deal Sheet summary (Page 99)
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