Crains New York - August 20, 2012 - (Page 14)

REPORT REAL ESTATE DEALS S Chicago firm buys Essex House again trategic Hotels & Resorts likes the Jumeirah Essex House so much that it has purchased the Central Park South hostelry for the second time, sources familiar with the deal said. The Chicago-based company paid between $350 million and $400 million to buy the 509-room establishment from Dubai Investment Group. Even the top end of that spectrum would still put the price below what Dubai paid Strategic for the place in 2005—about $440 million. What’s more, Dubai reportedly spent about $90 million renovating it. However, some of the best rooms in the hotel have been converted to condominiums, which drove down the price. The sale price is also below initial expectations cited in published reports earlier this year, when it was disclosed that the hotel was on the market. At the time, experts predicted the Essex House could fetch between $375 million and $500 million. Dubai handed control of its real estate portfolio to Silverpeak Real Estate Partners, a firm that includes Mark Walsh, the former head of Lehman Brothers Holdings Inc.’s real estate group, published reports said. Real estate executives are closely watching Mr.Walsh’s moves at Silverpeak because bad real estate deals played a major role in Lehman’s bankruptcy. A Silverpeak spokeswoman didn’t return a call for comment. A Strategic —theresa agovino spokeswoman declined to comment. of the year. The Madison outpost, owned by landlord Fernbach LLC, includes a 100-square-foot mezzanine. Its asking rent was $450 a square foot. The asking rent at West Broadway was $600 a square foot. “These were two very attractive neighborhoods for us for two very different reasons,” said Giovanni Lepori, general manager for the Americas at Aesop. Christopher Owles, a Sinvin Real Estate broker, along with colleague Sarah Shannon, represented Aesop and its respective landlords in both leases. —adrianne pasquarelli BARE BONES 399 PARK AVE. ASKING RENT; TERM: Undisclosed; 15 years SQUARE FEET: 25,000 TENANT; REP: The Jordan Co.; David Hoffman Jr. of Cassidy Turley LANDLORD; REPS: Boston Properties; Adam Frazier of Boston Properties and Peter Turchin of CBRE BACK STORY: The private-equity firm is one of the three recent leases signed at the 1.75 million-square-foot tower for space that opened up when law firm WilmerHale moved to 7 World Trade Center. 1001 SIXTH AVE. ASKING RENT; TERM: $44; 10 years SQUARE FEET: 8,715 on 21st floor TENANT; REPS: R.G. Vanderweil Engineers; Bret Varricchio and Garett Varricchio of Murray Hill Properties LANDLORD; REP: Undisclosed; Douglas Regal of ABS Partners Real Estate BACK STORY: The Boston-based engineering consulting firm will double its space in its move from 499 Seventh Ave. 535 FIFTH AVE. ASKING RENT; TERM: $56; undisclosed SQUARE FEET: 7,300 TENANT; REPS: Sandeep Diamond Corp.; Michael Heller and Michael Rudder of Rudder Property Group LANDLORD; REPS: The Moinian Group; Andrew Sachs and Ben Shapiro of Cushman & Wakefield BACK STORY: Cushman & Wakefield is also marketing two blocks of 13,000 square feet and one of 19,000 square feet in the building, according to The Commercial Observer. Film firm inks Starrett-Lehigh deal A24 Films,a fledgling film-distribution firm, has inked a five-year deal for 3,100 square feet at the vast Starrett-Lehigh Building, sources familiar with the deal said.The company is at least partially funded by Guggenheim Partners,a private global financial-services firm, the sources said. A24 is currently housed in temporary space in the building, which takes up an entire block in Chelsea between 11th and 12th avenues and West 26th and West 27th streets. The asking rent for the deal couldn’t be determined, but sources said the price for other transactions there have been about $50 a square foot.The company is slated to move Aussie brand adds two locales Australian skin-care brand Aesop is soaking up two more locations in Manhattan. The company, which already boasts two stores here and has another one on the way on Bleecker Street, recently signed deals for two additional shops. It has agreed to 10-year leases of 250 square feet at 1070 Madison Ave. and 400 square feet at 438 W. Broadway (left), between Prince and Spring streets. Both new spots are expected to open by the end in by the end of the year. RXR Realty, the building’s owner, represented itself in the transaction, while Newmark Grubb Knight Frank brokers E.N. Cutler and Tay- lor Scheinman negotiated for A24. Representatives from RXR, Newmark and A24 either didn’t return calls or declined to comment. —theresa agovino Brooklyn’s miracle makers Continued from Page 13 A BROKER RIDES W’BURG WAVE LANDLORDS AND DEVELOPERS may be among the biggest beneficiaries of the Williamsburg boom, but they are far from the only ones. Just ask David Maundrell, who started out as a broker for a small Queens real estate firm a dozen years ago. In those days, he was renting out basement apartments for $600 a month. “It all started with me cold-calling landlords from Village Voice ads,” said Mr. Maundrell. Encouraged by what he clearly sensed was a fast-rising market, two years later the St. John’s University graduate started his own brokerage, Aptsandlofts.com, close to home. Its first office was a 650-square-foot storefront on Wythe Avenue, a 15-minute walk BRANCHING OUT: The future Cobble Hill office away from his grandparents’ three-family house on Conselyea Street, where he grew up. “It made sense for me to do business in the neighborhood I have connections in,” said Mr. Maundrell, who moved out of Williamsburg himself 10 years ago. These days, he and his wife and their 5-year-old daughter live in another hot Brooklyn area, Dumbo. Today, Aptsandlofts boasts 45 agents in space at 482 Driggs Ave. that is 10 times the size of its first office, and is selling homes in other parts of Brooklyn and even Manhattan. Most recently, Mr. Maundrell has branched out into brokering commercial real estate. He will also open a new office in Brooklyn’s Cobble Hill. —AMANDA FUNG majority of his interest in a twoblock stretch of land along the East River to Douglaston Development, which built the Edge, a 565-unit luxury condo development there. The second phase of the Edge is still in the works. Good timing “You had to believe at some point the waterfront would have a higher and better use than as industrial,” said Mr. Silverman, now a principal at G4 Capital Partners, a real estate bridge-financing firm he formed after selling the truck company. “I was fortunate that the city shared my vision. The rezoning was where the luck came in.” Donald Capoccia, principal of BFC Partners, has a similar story. He and his partners made their wagers farther inland, assembling a site on the south side of Williamsburg beginning in the late 1990s.In 2001, they started work on Schaefer Landing, a two-tower project made up of 210 condo units and 140 affordable rentals on Kent Avenue. Mr. Capoccia still recalls how difficult it was to persuade banks to finance the project. Not only was the area untested for residential development, but it was dangerous. The closest subway was a 10minute walk away. To help tip the odds in his favor, he and his partners spent $1 million to create, operate and subsidize a water taxi from Manhattan to Williamsburg for a few years. “The water taxi contributed to sales in a major way,” he said, adding that condos there sold for an average of $600 per square foot in 2003. “It ended up being a profitable project. We hit the market at the right time.” Since Schaefer Landing, however, Mr. Capoccia has moved on to other emerging parts of the city. In downtown Brooklyn, he recently completed the Toren, a 38-story, 240-unit luxury condominium, where sales are still going on. He is currently eyeing development on Staten Island. Meanwhile, back in Williams- burg’s biggest, longest-running successes, Louis Kestenbaum. Nearly 30 years ago, he paid $4 million for a long-vacant 500,000-square-foot industrial property on the waterfront at 184 Kent Ave. He installed his sportswear company in part of it and rented out the remainder to a mix of garment-makers, houseware outfits and metalworking shops for up to $4 a square foot. “It was a bargain [to buy] at the time,” said Mr. Kestenbaum. “We were able to fill it up and make money off of it.” ‘I live in the neighborhood, and I had a vision’ burg, people pay $550,000 to $575,000 for a one-bedroom condo. As a result, the price of development sites has soared well beyond the comfort level of most of the pioneers. The clearest exception is the developer behind one of Williams- Tripled income In 1999, he realized that his property’s proximity to the L train and Manhattan would make it an attractive place to live. So he emptied the building and converted it to apartments—a step that quickly tripled his rental income. From there, things only got better for the neighborhood and for his pockets. In 2007, after the rezoning and close to the peak of the market, he was approached by several companies and funds. In the end, he agreed to sell. “I would have kept it if I was not approached,” said Mr. Kestenbaum, who two years earlier had done well just down the street at 2 N. Fifth St., rezoning and then selling land that he had purchased only five years earlier for a reported $23 million to Toll Brothers. There, the big Pennsylvania-based builder constructed One Northside Piers, a 29-story, 180-unit luxury condo. Mr. Kestenbaum, now chairman of Fortis Property Group, a real estate developer in Dumbo, Brooklyn, is busy developing half a dozen condo and rental projects in the area. “We were there in the beginning and we want to continue to be there,” he said. His successor at 184 Kent, having bought in at the top of the market five years ago, has a different perspective, one that many of Williamsburg’s oldtimers can well appreciate. “We have given up on the market,” said Jason Halpern, managing partner at JMH Development, which along with co-investors bought 184 Kent and then upgraded it further into 340 luxury rentals. “It is overheated and too expensive.” 14 | Crain’s New York Business | August 20, 2012 http://www.Aptsandlofts.com

Table of Contents for the Digital Edition of Crains New York - August 20, 2012

Crains New York - August 20, 2012
Contents
In the Boroughs
In the Markets
The Insider
Opinion
Alair Townsend
From Around the City
Report: Real Estate
Real Estate Deals
The List: Top Airlines
Classifieds
New York, New York
Source Lunch
Out and About
Snaps

Crains New York - August 20, 2012