CHRISTIE SCANDAL Cuomo aides look to fill Port Authority’s power vacuum THE INSIDER CRAIN’S® PAGE 8
NEW YORK BUSINESS ap photo
VOL. XXX, NO. 2 WWW.CRAINSNEWYORK.COM JANUARY 13-19, 2014 PRICE: $3.00 Business THE DEVELOPER WHO HIT braces for PARTNER KENT SWIG council’s WITH AN ICE BUCKET new boss Allies of Melissa Mark-Viverito try to calm fears as lefty SEEKS A SECOND firebrand takes helm
BY CHRIS BRAGG
CHANCE—IN THE Moments after being crowned the new City Council speaker last week, Man- hattan’s Melissa Mark-Viverito re- vealed her priorities for the next four years: improve schools, reduce home- REAL ESTATE BIZ, lessness and lower housing costs. “We’ve got to get to work,” Ms. Mark- Viverito said. “There’s a lot to do.” But many business leaders are wary THAT IS of what she will do to them. Ms. Mark-Viverito’s See COUNCIL on Page 60
MADAME Yair Levy wants back in the game, SPEAKER: Melissa Mark- despite a lifetime ban imposed by NY’s Viverito AG. Here’s how he hopes to pull it off ap photo
BY DANIEL GEIGER When Yair Levy, 64, emerged late last year as the buyer behind a row of The tweet buildings in Tin Pan Alley, he wasn’t simply trying to rebuild his real estate empire, which he once estimated to have been $400 million. He was looking for redemption. heard by “Most people went through tough times in 2008,” Mr. Levy said. “People think I have a bad name,and that’s why I am trying to explain this story.[People the Street are] mistaken as far as what happened in the past.” Mr. Levy’s story, like so many others’ before him, begins with immigrant entrepreneurship and streetwise investing that turned modest buildings into Drugmaker faces impressive moneymakers.The Great Recession toppled him from his heights, questions on timing STANDING TALL: Yair and a theft scandal led to a lifetime ban from selling real estate securities, Levy disputes the facts during stock offering handed down by the attorney general. that led to his ban from the condo industry by But what cemented his reputation was the incident with the ice bucket. Attorney General Eric BY AARON ELSTEIN In an hourlong interview with Crain’s in December, Mr. Levy said he was Schneiderman. humbled by his losses. No longer would he build high-rise luxury Two years ago, April Moundzouris condominiums like the 58-story residential tower on West 57th Street called was diagnosed with amyotrophic later- al sclerosis, or Lou Gehrig’s disease. buck ennis See DEVELOPER on Page 59 Last week, she shared a glimmer of good news on the Internet: She’s re- sponding well to her treatment in a 02 REPORT REAL ESTATE clinical drug trial. 5 Surprisingly hot properties: Bidding wars are “I believe I’ve been given more time and quality of life,” Ms. Moundzouris breaking out for industrial leases P. 13 wrote on her blog Jan. 4. “I can say be- fore this Neuralstem study, nothing THE LIST Top NYC property sales P. 16 else came close to these results.” NEWSPAPER See BIOTECH on Page 59 71486 01068 0 20140113-NEWS--0002-NAT-CCI-CN_-- 1/10/2014 7:29 PM Page 1
EDITOR’S NOTE
D-i-v-o-r-c-e FYICRAINSNEWYORK.COM A veteran Crain’s reader with a reputation as an ideas guy visited last Thursday to talk infrastructure, JPM’s missed Madoff signals about the same time New Jersey hen Charles Ponzi concocted the Gov. Chris Christie was on TV scheme that bears his name in 1920, uttering his umpteenth apology for the Hanover Trust Bank of Boston the scandal known as Bridgegate. W handled his deposits and withdrawals. Investors “Why does there even have to be a Glenn Coleman ended up losing about $225 million in today’s Port Authority of New York and dollars. Bernard Madoff’s Ponzi scheme lasted New Jersey?” the visitor asked. for decades and cost investors about $18 billion, “Why can’t there be a Port Authority of New York and he conducted it “almost exclusively” and a Port Authority of New Jersey?” You mean a through his accounts at JPMorgan Chase starting divorce, I said. He shrugged.Things change. You back in 1986, according to last week’s settlement move on. “But what about the children?” I asked. bloomberg news between the bank and federal prosecutors. Not Christie and Cuomo.The assets: the airports, Documents released by the Justice Department show that some JPMorgan bankers sensed the PATH trains, the World Trade Center. Who something was amiss with Mr. Madoff fairly early. In 1994, one banker complained that he was gets what? How do you split the GW Bridge? “Paint kiting checks—moving money between accounts for the purpose of making them look larger a line in the middle of it?” he coyly suggested. Maybe and collecting more interest—but a more senior banker said that was all right because Mr. he’s right.The two-state marriage that created the Madoff was making so much money for the bank. Later, others in the bank sensed Mr. Madoff Port Authority back in 1921 was a good-government was running a Ponzi scheme and his investment performance was too good to be true.They went innovation that leveraged unprecedented resources so far as to alert British law-enforcement officials, but not U.S. authorities. to construct massive bridges, tunnels, airports and Over and over, different people in different parts of the vast JPMorgan empire came to more. Now it’s less about building the new and more understand something was off about Mr. Madoff, but the pieces were never quite knit together about maintaining the old. It’s a real estate portfolio internally.This says something about the nature of very big banks:They are collections of different that generates $4 billion a year in operating revenue large organizations united by the chief executive’s force of personality. —aaron elstein to help pay off $20 billion in bonds. As for good government, Bridgegate sheds light on one of many CHRISTIE ‘BRIDGEGATE.’ An “embar- rid of $65 million worth of invento- political realities at the Port Authority.This is a joint rassed and humiliated” New Jersey ry and new merchandise from its 39 HOORAY! run by two governors and their patronage Gov. Chris Christie axed a top aide, stores and Rutherford, N.J., distri- THE NEW YORK Bridget Anne Kelly, after emails bution center. … CLOSING THE ROAD RUNNERS appointees. Hundreds of millions of dollars in linked her to George Washington BOOKS ON FIFTH. Barnes & Noble will allow 5,000 more runners to contracts are steered to vendors who often spread Bridge lane closures.The act was one shuttered its outpost on Fifth Av- take part in campaign contributions on both sides of the of political revenge after Fort Lee’s enue and East 18th Street last week. March’s half- Hudson. Splitting up this family would hike the cost mayor declined to endorse the gov- The store’s 56 employees will be laid marathon. ernor for re-election. Mr. Christie off by the end of January. The shop of borrowing for repairs and new infrastructure, but apologized but insisted that he had was the company’s first college book- not prohibitively so, since each state enjoys excellent no prior knowledge of his staff ’s ac- store. Just a half-dozen retail loca- bloomberg news bond ratings. And some Port Authority children tions. (See Page 8.) … EAST VILLAGE tions remain in Manhattan. Mean- OY VEY! GETS IBM’S WATSON. IBM plans to while,the bookseller named Michael remain shared responsibilities. But turning one MORE THAN 100 retired NYPD and FDNY spend $1 billion to create a new busi- Huseby, who currently heads its workers were charged with faking mental overly politicized bureaucracy into two smaller ness centered around Watson, its su- Nook unit,as CEO.… MACY’S POST- illness to get federal disability benefits. bureaucracies would mean a single line of command percomputer best HOLIDAY BLUES. De- from governor to grunt. No more multiple masters. known as a Jeopardy! ‘I do not spite a solid holiday A healthier change for all. champion. The unit, season and prof- with snazzy new believe … in itability over the past headquarters at As- merit pay, but four years, Macy’s THIS WEEK IN CRAIN’S tor Place, already has said it will shed 2,500 more than 2,000 em- I do believe employees and shut- ployees. Watson is ter five stores. The IN THE BOROUGHS------4 expected to help the in special restructuring could IN THE MARKETS------6 Armonk, N.Y., tech help the company giant reach its $20 bonusing for save $100 million a executive director of the South SMALL BUSINESS ------7 billion revenue pro- strategic goals’ year. The shop at the Florida Regional Transportation jections for its big Mall at Bay Plaza, Authority, will succeed him. … THE INSIDER ------8 —Mayor Bill de Blasio, data and analytics Bronx, is still sched- OSCAR’S NO GROUCH. Venture after Gov. Andrew Cuomo BUSINESS PEOPLE ------9 services by 2015. … uled to open this fall. capitalist Joshua Kushner’s health LOEHMANN’S CLEAR- announced his desire METRO-NORTH OPINION ------10 to create a reward system … insurance startup,Oscar,bagged $30 ANCE SALE. A judge PREZ’S FINAL STOP. million in financing, bringing its GREG DAVID------for teachers 11 allowed liquidators A month after a de- total to more than $75 million. The REPORT: REAL ESTATE------13 to begin selling the 93-year-old dis- railment killed four passengers and company aims to use technology to count chain’s assets after it filed for injured more than 70 others, create a flexible, user-friendly REAL ESTATE DEALS------15 bankruptcy for the third time. The Howard Permut announced his re- service. NEW YORK, NEW YORK CLASSIFIEDS ------56 Bronx-based company expects to get tirement. Joseph Giulietti, former —emily laermer Paul Common’s Uncorked is FOR THE RECORD------one of a new breed of wine 58 retailers in the city. P. 61 SOURCE BREAKFAST------62 STORIES TO WATCH THIS WEEK vol. xxx, no. 2, january 13, 2014—Crain’s New York Business (ISSN 8756-789x) is published weekly,except for double issues the weeks of June 23,July 7,July 21,Aug.4,Aug.18 and Dec. 22, by Crain Communications Inc., 711Third Ave., New York, NY 10017. Periodicals postage paid at New York,N.Y.,and additional mailing offices.Postmaster: Send address changes to: Jan. 13-14: First Jan. 14: JPMorgan Jan. 14-15: Jan. 16: Real Crain’s New York Business, Circulation Department, 1155 Gratiot Avenue, Detroit, days of 2014 Chase announces NYU’s Women Estate Board of MI 48207-2912. for subscriber service: Call (877) 824-9379. Fax (313) 446-6777. $3.00 a copy, $99.95 one official business its 4Q results, Entrepreneurs New York’s 118th year, $179.95 two years. (GST No. 13676-0444-RT) ©Entire contents copyright 2014 by Crain Communications Inc. All rights reserved. for the state kicking off bank Festival annual banquet Legislature earnings season.
2 | Crain’s New York Business | January 13, 2014 20140113-NEWS--0003-NAT-CCI-CN_-- 1/10/2014 6:18 PM Page 1
Mayor vs. Governor To tax or not to tax is the question dividing New York’s alpha males. Both can’t get what they want
BY ANDREW J. HAWKINS
Mayor Bill de Blasio wants to tax the rich.Gov.Andrew Cuomo wants to give them a tax cut. The mayor just won a landslide victory and has political cap- ital to spend, while the governor enjoys broad popular support and is aiming for a historic re-election in November. With the elements for a classic political fight in In his corner: place, the two Democrats will need to reach a compro- mise on taxes between now and the April 1 state budg- high approval et deadline. And Mr. Cuomo appears to have the up- per hand: The city depends on Albany for billions in ratings, veto state aid each year, as well as to set income-tax rates. With that leverage, Mr. Cuomo can pressure Mr. de power Blasio to ease off his populist mes- In his corner: sage and accept whatever can be squeezed out of the budget for uni- unions, Dems versal prekindergarten, the mayor’s signature campaign proposal. in the Senate “Mayor de Blasio won’t be able to unilaterally raise and Assembly taxes in New York City on high-income earners,” said Heather Briccetti, president and CEO of the Business Council of New York State, which supports tax cuts proposed by Mr.Cuomo.“He’ll need the agreement of the Legislature and the governor, which means he’ll need HIKE: Mayor Bill de Blasio wants to some kind of deal if he wants to get that done. And I just don’t see it CUT: Gov. Andrew fund universal pre-K happening.” Cuomo has embraced with new taxes on But Mr. de Blasio has cards to play. Both Assembly Speaker Sheldon Sil- pre-K but doesn’t want to the city’s rich. See ALPHA MALES on Page 60 pay for it with a tax hike. ap/wide world photos
January 13, 2014 | Crain’s New York Business | 3 20140113-NEWS--0004-NAT-CCI-CN_-- 1/10/2014 6:18 PM Page 1
IN THE BOROUGHS QUEENS Family reinvests in LIC Third generation heeds grandfather’s words: Stay very local
BY CARA S. TRAGER
Two years ago, Matthew Quigley plunked down a tad under $100,000 NOT SO LUCKY: Lucky to buy an aging Rhode Island ferry Lee said it’s getting and turn it into a dockside Long Is- harder to deliver her land City,Queens, hot spot offering tomatoes to her food and drink restaurant customers. with a stunning view of the Man- buck ennis . 1M hattan skyline SIZE of That project family’s LIC has since tem- holdings in porarily sailed square feet Stand still and hope to deliver under the radar, but for Mr. Quigley, the 1950 DATE founder restaurants scurrying to make Delivering tomatoes to the heart could gain traction. third-generation Louis Pfohl Bike lanes, dearth of meals for the midtown lunch of Manhattan has never been easy, The Department of Transporta- scion of a family moved to LIC parking spaces have crowd. The distance she had to go but with the city growing, along tion, under the recently departed that owns more and set up shop was a mere 12 blocks. But as usual, with the number of restaurants, Commissioner Janette Sadik- than two dozen delivery businesses traffic on Lexington Avenue was transportation planners are re- Khan, aggressively reorganized city properties in jammed. thinking ways to get goods into and streets, creating pedestrian plazas Long Island 10 waiting—for answers STORIES in “Midtown lunch service starts out of the central business district in Times and Herald squares, as City,the idea still family’s Hunters around 11 at many places, and without having to make huge in- well as 83 miles of bike lanes in makes sense. It Point Plaza office BY THORNTON MCENERY kitchens need my tomatoes in time vestments in infrastructure, such as Manhattan alone since 2006. still fits into his building for prep,” said Ms. Lee from the a cross-harbor freight tunnel or en- Those projects earned the depart- family’s grand Lucky Lee had a problem. It was passenger seat of a box truck as her acting politically unpopular meas- ment a reputation for being anti- plan to make Hunters Point, on the 9:47 a.m. on a recent Thursday,and deliveryman, Gustavo Navarro, ures like congestion pricing. In- car, a reputation that newly ap- southwestern tip of Queens, into a the owner of Lucky’s Real Toma- turned right onto East 37th Street. stead, ideas like nighttime pointed Commissioner Polly place that can draw tech entrepre- toes had less than 30 minutes to get “If we don’t get there in time,they’ll deliveries (tested a few years ago as Trottenberg will have to confront. neurs to work and perhaps live, and her delivery truck to her customers: turn us away.” a pilot program) and cargo bicycles See WAITING on Page 58 See FAMILY on Page 12 NYU expansion hits bump STATS AND THE CITY by Nicholas Wells DEEP FREEZE: The polar vortex disrupted travel and set new records in winter Zipper Building, arguing that piece- Legal and political hurdles block finish line electricity usage in the city. A total of 2,155 flights were canceled into or out meal construction without state ap- of the three major area airports between Jan. 4 and Jan. 7. ing stopping it from beginning its proval constitutes a different project BY JOE ANUTA first planned complex in the 20-year that requires more study. project—the nearly 1 million- NYU may try to change the con- 4° -15° A state Supreme Court ruling last square-foot, mixed-use Zipper struction staging to avoid using the TEMPERATURE recorded in LOWEST TEMPERATURE week did not technically kill New Building at the corner of Mercer green spaces, a move that the uni- Central Park on Jan. 7—the lowest recorded to date in Central Park, York University’s controversial ex- and West Houston streets—be- versity’s land-use attorney, Bryan reached in the city since 2004 on Feb. 9, 1934 pansion plans, although it set up po- cause the construction area is not Cave partner Philip Karmel, con- tentially costly political and legal situated on any of the three parcels. tends it has every right to make hurdles that now cloud the 2 million- “Certainly there is no injunction without another public review. But 500% square-foot development’s future. 317% INCREASE in against NYU proceeding with the that would likely prove another av- INCREASE in New York City-based State Supreme Court Justice portions of the project that were not enue through which Mr. Mastro heat-related Google searches for “space heater” Donna Mills decreed last Tuesday upset by the court,”land-use attorney would argue the project needed to complaints to between Dec. 4 and Jan. 4 that three parcels of land that NYU Howard Goldman said.“The issue is go back to the drawing board. the city’s 311 planned to use as construction stag- whether going ahead with a portion Of course, NYU could also win hotline between ing areas were actually public parks. of the project would require new the appeal, which would allow it to 9,063 Dec. 28 and Ms. Mills’ decision prevented the land-use or environmental review.” proceed with the original plan. The MEGAWATTS of power reached on Jan. 4 school from undertaking any con- Should NYU file for those per- university could also obtain state ap- Jan. 7 at 6 p.m., the day’s peak—a struction activities that would affect mits, which it has said it will not do proval to use the newly designated record for electric usage in the city those pieces of land pending ap- until it gets the results of an impend- parkland. The state typically defers Sources: Global Gateway proval from the state Legislature. ing internal study,opposition groups to the local representative on ques- during the winter Alliance, National Weather Service, National Oceanic and “This does not mean, however, would have more fuel for lawsuits. tions of repurposing parkland, who Atmospheric Administration, that NYU will ultimately be prevent- Randy Mastro,a lawyer at Gibson in this case is Assemblywoman Deb- HOURS that travel was banned on NYC OpenData, Google Trends, the Long Island Expressway as part of Consolidated Edison, New York ed from going forward with its proj- Dunn who is representing the plain- orah Glick, D-Manhattan. She is 8 State Department of Transportation
Gov. Andrew Cuomo’s snow emergency on Jan. 3 world photos wide ect,”Ms.Mills wrote in her decision. tiffs, could claim NYU had violated opposed to the project. / The university announced after- Ms. Mills’ edict should construction “Nobody is putting a shovel in ap ward it will appeal Ms.Mills’ruling, begin or he could also file suit against the ground tomorrow, let’s put it ADDICTED TO NUMBERS? GET A DAILY DOSE AT @STATSANDTHECITY but in the meantime there is noth- the city should it issue permits for the that way,” Mr. Goldman said. Ⅲ
4 | Crain’s New York Business | January 13, 2014 CN016412.indd 1 1/9/14 10:31 AM 20140113-NEWS--0006-NAT-CCI-CN_-- 1/10/2014 6:19 PM Page 1 IN THE Aereo nabs $34M in funding MARKETS The Long Island City, Queens- kets, and will launch in five more by by Aaron Elstein Now flush with cash, based company streams local chan- the end of the first quarter, Mr. controversial Web TV nels via tiny remote antennas, and Kanojia said. argues that subscribers have a right Subscribers pay $8 a month for startup will expand to receive that programming and to the service, or $12 for additional into new regions copy it, through a cloud-based DVR storage. DVR, for their personal use. In December, rather than con- Skeptical view BY MATTHEW FLAMM tinue fighting lawsuits in different Aereo does not divulge how regions, Aereo agreed that the many subscribers it has or how Last week was a big one for Aereo. broadcasters’ appeal should go be- much revenue it generates. Even The streaming television service fore the Supreme Court. The court with its success with financing and raised $34 million to continue its announced last Friday that it would court victories, some analysts re- national rollout. And the U.S. take the case. main skeptical about its long-range Supreme Court agreed to hear the In an interview last week, Chief prospects as a stand-alone business. appeal brought by the major televi- Executive Chet Kanojia said that At a conference last month, Mr. sion broadcasters, which want to he—and his in- Kanojia said that the shut it down. vestors—were con- Despite legal service could break The new investment brings fident that Aereo even in a given mar- Aereo’s financing total to nearly would continue to challenges, ket with only 5,000 $100 million, and adds celebrated prevail. “We to 6,000 subscribers. names to the company’s existing demonstrated the ‘the law was Dan Rayburn, a
backers: Joining the Series C round law was on our side principal analyst world photos wide / of funding were Gordon “Gordy” [from the start],” on our side’ with consulting firm ap Crawford, one of the most promi- Mr. Kanojia ex- Frost & Sullivan nent media investors of the past few plained. “And since from the start who covers the decades, and Li Lu, the Chinese then we’ve demon- streaming-video in- human-rights activist behind strated it four times. —CEO Chet Kanojia dustry, said he didn’t Alcoa foiled by Himalaya Capital Management. Obviously that adds see how that was to the confidence.” possible, considering Court battles He added that it the costs for band- pension burden Aereo, which streams broadcast was especially im- width, subscriber ac- television programming to sub- portant to have Mr.Crawford’s sup- quisition and antennas. scribers’ mobile devices, announced port: “He’s a well-respected, almost “They’re going through a lot of he CEO of Alcoa, Klaus Kleinfeld (above) must’ve the funding last week. Originally iconic investor in the media and tech money, and this is not a mass- backed by IAC Chairman Barry space. He’s seen how industries market product,”he said,citing con- been glad to see 2013 end.The aluminum maker Diller, the company has been fight- evolve,and he shares our view where tent offerings that are limited to posted a $2.3 billion net loss last year, as lower metal ing—and winning—legal battles T the future lies.” broadcast networks and niche chan- prices forced it to write down the value of acquisitions by since its launch in 2012, when the Aereo will use the financing to nels like Bloomberg and shopping $1.7 billion.The company and a joint venture it controls also major broadcasters joined together bring its infrastructure-heavy serv- network HSN. “Netflix and others and sued it for copyright infringe- ice to new regions. During the past are successful because they have agreed to pay $384 million to settle Justice Department ment because it transmits their pro- year, it has expanded beyond its breadth of content. Aereo has the allegations of bribery in Bahrain. Adding insult to injury, the gramming without paying for it. home base in New York to 10 mar- [least] content around.” Ⅲ company, which lists its “principal office” on Park Avenue but its “corporate center” in Pittsburgh, was booted out of the Dow 30 after 54 years in the index. Perhaps worst of all, Alcoa’s pension plan remains underfunded even after the market’s mighty rally in 2013. Alcoa will be shoveling in REFRESHINGLY TRANSPARENT billions over the next few years to help make up the shortfall. Here’s the drill: Alcoa’s employ- bonds—a natural response, perhaps, ee pension had $11 billion in assets but that meant missing much of the at the end of 2012, according to its ensuing recovery in shares and hold- most recent annual report, yet it ing a lot of low-yielding bonds. had $14.7 billion worth of commit- Alcoa now has to pour cash into ments to retirees.That means it was its pension plan ($460 million last $3.7 billion short,or just 75% fund- year).The company said in its most ed, going into 2013. recent annual report that pension This isn’t an unusual situation in contributions would be its largest pension land. New York City’s em- cash expense over the next two years ployee pension plans are 65% fund- after energy costs and raw material ed, and Verizon’s is 67% funded.The purchases. That, of course, is mon- reason for these gaps is mainly be- ey it can’t invest in its business. cause bonds have yielded precious Rising stock prices and interest little for years. Pension funds are rates help relieve the pressure, but big bond investors because they only to a degree. In a conference call generally consider the stock market last week,Alcoa said its pension plan too volatile for them to commit ended 2013 underfunded to the most of their money. tune of $3.2 billion. Still, the com- JetSuite is still the only private jet charter operator to instantly Alcoa, however, bet heavily on pany said, it would contribute an- provide and guarantee all-in quotes online. With JetSuite, you will stocks last decade to turbocharge its other $625 million this year. pension fund’s growth. In 2006, Alcoa may not be alone. Big in- know–to the penny–what you are going to pay before you fly on shares made up 57% of assets, pre- dustrials like Verizon and IBM will our WiFi-equipped jets. JetSuite Edition CJ3s priced best East of the cisely the wrong place to be when the be releasing full-year results soon. market tanked two years later. The They,too,may be forced to commit Mississippi; Phenom 100s priced best West of the Mississippi. plan slashed its stock holdings to hundreds of millions annually to 33% of its portfolio and bought more their pension plans. Ⅲ JetSuite.com 866-779-7770 APPROXIMATE SHARE of annual sales generated during the holiday season by ARGUS PLATINUM RATED 27% Tiffany & Co. Last week, the retailer said it sold ©2014 JetSuite® All Rights Reserved. All fl ights operated by JetSuite Air, FAR Part 135 Certifi cate #9SUA667M. $1.03 billion worth of jewelry during the two
bloomberg news months ended Dec. 31.
6 | Crain’s New York Business | January 13, 2014 20140113-NEWS--0007-NAT-CCI-CN_-- 1/9/2014 7:20 PM Page 1
SMALL BUSINESS No cap on growth Hatmakers diversify $55 million in annual revenue. As a merchandise Nonetheless, to thrive in a tough manager for Bloom- and find new industry, HYP also offers acces- ingdale’s in Manhattan sories as varied as underwear and in the 1980s, Mr. Co- prospects amid tough flip-flops. “This is a business where hen saw the hat depart- you must diversify,” said Howard ment fold into acces- market conditions Levy, another HYP founder. sories. In recent years, BY BILL GLOVIN Increased challenges small U.S. cap makers The company isn’t alone in ex- have also faced height- HAT TRICK: Despite tough aseball cap wholesaler panding its offerings this way. To- ened competition from competition, Mike Pascal’s HYP had no problem day,few companies can afford to fo- giants such as Nike, Manhattan firm, HYP, sells most of attracting retail buyers cus solely on hats and caps, says New Era, Reebok and its hats through major retailers. to its expanded new Marshal Cohen, chief retail analyst Adidas, which have li-
digs on West 37th for the NPD Group, a consumer censing and guaran- buck ennis BStreet last quarter to snap up the market-research firm in Port Wash- teed sales agreements latest neon and bright-colored ington, L.I. with college and pro sports teams have to be careful to keep costs down and military styles. “We were a styles for this year’s back-to-school Though the propensity of and dominate the market. amid growing price pressure. wholesale company founded by our season. Selling most of its hats celebrities like Kate Middleton, The challenges have had a big ef- “When we first started out, there parents in 1982, but two years ago, through big retailers such as Kohl’s Lady Gaga and Kate Moss to wear fect locally.New York state accounts were a handful of domestic manu- we started selling online,” said and Target under various labels,the hats has sparked some interest for almost 20% of all employment in facturers,” said Mr. Pascal of HYP. Laura Ackerman, one of three sib- 25-employee company has reached among women in buying them, the $2 billion hat industry, accord- “By our second order, we realized lings who own the company, which the point where it doesn’t have to go fashion trends have been unkind to ing to a 2012 report by IBISWorld, that to be price-competitive and is profitable.The charms of its mer- to trade shows at the Jacob K. Jav- the headwear market in recent years. an industry market-research firm. meet delivery deadlines, we had to chandise aren’t lost on foreign cus- its Convention Center to pick up “People generally buy headwear to New York City remains one of the manufacture overseas.” tomers. “We do a lot of business in orders. associate with a role model or a suc- few cities in the country with Japan, where American products “We have established relation- cessful sports team, not to protect millinery shops and wholesale dis- Big in Japan such as our fedoras are very popu- ships, so they come to you,” said them from the elements,” said tribution. “It’s comparable to the Expanding into new markets has lar,” she said. Ⅲ Mike Pascal, a founding partner at Karen Giberson, president of the jewelry exchange in the sense that helped fuel growth for family- the profitable firm, which he Accessories Council in Manhattan, while every city may sell diamonds, owned New York Hat Co., which To sign up for Crain’s launched in 1991 with three college a national trade organization. no city sells diamonds like New makes vintage hats like the Cagney, SMALL BUSINESS newsletter, go to basketball-playing buddies and The decline of the headwear York,” said Mr. Cohen. as well as offerings including knit ski www.crainsnewyork.com/smallbiz. which now generates $35 million to market has been long in the making. To stay competitive, hatmakers caps and berets, ladies’ floppy hats
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Brandon Medeiros (212) 206-6161 [email protected]
31st Floor
January 13, 2014 | Crain’s New York Business | 7 20140113-NEWS--0008-NAT-CCI-CN_-- 1/10/2014 7:31 PM Page 1 THE Hospitals finally bid for LICH INSIDER by Daniel Geiger bulance service and a freestanding with at least 350 of those designat- Brooklyn Hospital, emergency department around the ed as affordable housing. NYU pitch housing, clock where noncritical acute ill- But SUNY seems unwilling to nesses or injuries would be treated welcome a newcomer’s proposal at ER and outpatient around the clock. this stage. Other proposed services include “We are adhering to the state’s clinics for ailing site radiology,laboratory and endoscopy well-defined procurement rules,” services,outpatient surgery,an infu- said a SUNY spokesman. sion center, outpatient physical BY BARBARA BENSON therapy and physicians’ offices. NYU floats cancer center Inpatient services would be Meanwhile, NYU Langone is One month ago, SUNY Downstate based at Brooklyn Hospital, about proposing a 60,000-square-foot Medical Center tabled a proposal to 1.5 miles away. The hospital would medical space that includes a free- sell its Long Island College Hospi- build and operate two clinics with standing emergency department, tal campus to a developer after primary and specialty care services cancer center, ambulatory surgery protests from the Cobble Hill com- and two urgent care centers, all lo- center and multispecialty physician munity. Now a competing plan has practice. The real estate develop- ap photo emerged, led by Brooklyn Hospital ment component is unchanged Center, that includes 1,000 mixed- Union and from Fortis’ original proposal, Christie bridge scandal rocks Port income apartments. which SUNY selected from the re- The proposal is meant as a political support sponses to its formal request for ridgegate has been a crisis for New Jersey Gov. Chris Brooklyn-centric alternative to a are needed for proposals. Fortis’ medical partner Christie, but one that New York officials at the Port new plan SUNY is considering from for that plan had been ProHealth Authority of New York and New Jersey don’t intend to NYU Langone Medical Center and latest idea to fly Care Associates, a large physician B Fortis Property Group,the develop- group. let go to waste. er that has a place in negotiations— The inclusion of NYU Langone The scandal, in which Christie appointees shut access unlike Brooklyn Hospital—because is a politically astute play. Last lanes to the George Washington Bridge to punish Fort it was the winner of SUNY’s formal month, SUNY trustees delayed a procurement process for the LICH planned vote on Fortis in part to let Lee’s Democratic mayor for failing to endorse the campus. SUNY trustees could vote cated in LICH’s geographic service Bill de Blasio,who opposed LICH’s governor’s re-election bid, provides an opportunity to curb on the LICH proposal this week. area. Additional services and facili- closure, have a hand as mayor in the dysfunction that results from a division of command ties could be added based on input LICH’s fate. His first deputy mayor Brooklyn Hospital’s plan from the community, unions, clini- is now Anthony Shorris,NYU Lan- between two states with differing priorities. Brooklyn Hospital is teaming up cians and politicians. Laid-off gone’s former senior vice president. Consider that in February, the Port Authority’s nearly with an unnamed private-equity union workers would be placed in “We’re excited about this. We $30 billion capital budget, one of the biggest and most firm and a developer. LICH would the emergency department, clinics think it’s great,” said Dr. Andrew important pipelines of funds for infrastructure spending in close and cease operating as a full- or other facilities within two years. Brotman, NYU Langone’s senior service hospital,according to people LICH’s extensive real estate vice president and vice dean for clin- the region, is expected to finally get the go-ahead from the briefed on the plan. The main hos- holdings would be sold off.The plan ical affairs and strategy.“But we un- agency’s commissioners, more than six months after it was pital site would be repurposed as a calls for the development of 1,000 derstand the politics are extraordi- initially slated for approval. Ⅲ comprehensive care center with am- mixed-income residential units, narily complicated.” The holdup? Officials at the Port Authority said the sprawling agency was devising a more transparent, objective and sophisticated methodology for deciding what projects it
Photo Credit: Buck Ennis undertakes. But rumors swirled that the delays were caused by the typical horse-trading between the New York and, especially, the New Jersey sides of the agency. Such Business Breakfast Forum: negotiations have become a rite of passage in the approval process for the Port Authority’s massive capital budget every Meet New York’s Borough Presidents four years or so. That quid pro quo style of split- Mr. Christie has been served ting up the pot of funds has caused the message the hard way. Several observers of the agency to fret over insiders at the bistate agency say he whether its precious money, in- held up the capital budget in recent creasingly under strain from mas- months so that its announcement sive operating and maintenance would better coincide with his po- costs, is properly being allocated to litical aspirations for higher office. Hear firsthand what each of the Borough Presidents envision for their the most needed infrastructure. Given the bridge scandal, it is in- borough and their top priorities once in office. The agency, for instance, has conceivable that Mr. Christie will had to put off developing a garage get the same mileage now out of Speakers: Tuesday, January 28, 2014 on the West Side of Manhattan unveiling some of the planned › Eric Adams, Brooklyn Borough President The Yale Club of New York City that would save hundreds of bus highlights for New Jersey in the › trips across the Hudson River every next capital plan. Gale A. Brewer, Manhattan Borough President 50 Vanderbilt Avenue › Ruben Diaz, Jr., Bronx Borough President day, while other Port Authority One project he planned to an- › Melinda Katz, QueensEVENT Borough President SOLD8:00 a.m. - 8:30 a.m.:OUT Networking Breakfast projects—such as the $1 billion nounce was a more than $1 billion › James Oddo, Minority Leader of the City Council 8:30 a.m. - 9:30 a.m.: Program raising of the Bayonne Bridge— extension of the PATH train to have been given a green light. connect with the AirTrain to and Borough President-Elect $95 for individual ticket(s). $950 for table(s) of ten. Some observers are hopeful the Newark airport. Greg David, Crain’s Columnist and CUNY J School Director, Business Reporting Program to moderate. George Washington Bridge fiasco In fact, insiders suspect Mr. will help put an end to the political Christie is likely to stay away from dysfunction. Port Authority matters for a good “There’s definitely an effort while—and perhaps to even leave now to depoliticize the agency,” a decision-making on spending high-ranking official at the Port there to transit experts, not politi- You must be pre-registered to attend this event. No refunds permitted. Ⅲ For more information, contact Adrienne Yee at 212-210-0739 or email [email protected]. Authority said. cal appointees. For sponsorship information, contact Lauren Black at (212) 210-0736 or [email protected]. $1.02M Amount spent on transition Sponsored by: and inauguration by Mayor Bill de Blasio
8 | Crain’s New York Business | January 13, 2014 20140113-NEWS--0009-NAT-CCI-CN_-- 1/9/2014 7:18 PM Page 1
BUSINESS 66% Growth in compensation costs of city’s workforce since 2002, despite a 3% drop in head count Sources: Independent Budget Office, PEOPLE comptroller’s office
EXECUTIVE MOVES
Longman Lindsey: John Longman,51, joined the acoustical engineering and consulting company as president, a newly created position. He was previously president at Cerami. STRESS TEST: Regency Hotel Time Out New York: Terri White,34, Managing Director Jim joined the magazine as editor in chief. McPartlin has been working on the property’s refurbishment She was previously executive editor at for the past 10 months. Life & Style Weekly. Julian Wolf Inc.: Cory M. Baker,36, founded the brand management and business development agency, and is principal. He was previously managing director at Infinity Lifestyle Brands. Patricia Lynch Associates: Danna DeBlasio, 27, was promoted to managing director of New York City Council lobbying at the government- relations firm, a newly created position. She was previously manager of Latino affairs. UJA-Federation of New York: Emily Kutner, 43, joined the nonprofit as director of public relations. She was previously media director at BLJ Worldwide. Drummond Woodsum: Elizabeth Wall, 36, joined the law firm as director of marketing and business development. She was previously New York regional marketing manager at Arnold & Porter. Willkie Farr & Gallagher: Kirk A. Radke,
buck ennis 55, joined the law firm as a partner in its private-equity practice group. He GOTHAM GIGS was previously a partner at Kirkland & Ellis. Kaufman & Co: Jeffrey L. Loop,49, joined the law firm as a member. He was previously counsel in the litigation and intellectual-property departments at Carter Ledyard & Milburn. Restoration period Tradition Energy: Jeffrey Wall, 50, joined the energy risk-management and procurement advisory firm as senior energy adviser. He was previously Jim McPartlin preps Regency Hotel for reopening energy portfolio manager at Con Edison Solutions. Sabre Real Estate Jim McPartlin’s 10-month-old job as managing also was overseeing the training of some 400 Group: Raymond ‘It’s all director of the Loews Regency Hotel has been employees, half of whom are new. ¶ Though his Harari, 32, joined all-consuming. Most nights he wakes at 3 a.m., boss is a co-owner of the New York Giants and a the firm as associate coming director. He was worrying about work. “It’s a good stress, the kind member of the Super Bowl host committee, Mr. previously an together. of anxiety that moves things along,” he insisted.¶ McPartlin knows nothing about football, except associate director at CPEX Real Estate. This is the The Park Avenue property, owned by Jonathan that he’s expecting the property to be sold out for Magnusson Tisch, has been closed for a $100 million year- the big game Feb. 2. ¶ Mr. McPartlin, 51, grew Architecture and Planning: Fernando Villa, 52, was promoted to associate fun part long renovation.The Regency, a power breakfast up in rural Davenport, N.Y. (population: 2,965). principal. He was previously an spot, wants to be a contender for lunch, dinner His father was a printer; his mother worked in a associate. now’ and drinks, too, to attract younger guests. Its factory. He was the first in his family to attend Mayer Brown: Hannah Y.S. Chanoine, 38, was promoted to counsel in the reopening this week will unveil a new restaurant, college, having graduated from the Rochester litigation and dispute-resolution bar, meeting spaces and lobby, and its 379 Institute of Technology. But it was a 1980s practice at the law firm. She was previously an associate. revamped rooms will cost up to 25% more than a television drama, Hotel, starring James Brolin, Jennifer M. Rosa, 34, was promoted to year ago. ¶ “The Regency was brought down to that sparked his interest in the business. ¶ Mr. counsel in the litigation and dispute- its studs,” said Mr. McPartlin, “but it’s all coming McPartlin has worked for celebrity hotel owners resolution practice. She was previously an associate. together.This is the fun part now.” ¶ In the days Ian Schrager and André Balazs and opened four Mashable: Jason Abbruzzese, 30, before the grand reopening, the hotelier was properties since 2006. “I always dreamed of joined the media company as a business reporter. He was previously a focusing on the details: floral arrangements, running a fancy hotel on Park Avenue,” he said. Web editor at the Financial Times. lighting levels, music in the public spaces. He “And here I am.” —lisa fickenscher —eva saviano
January 13, 2014 | Crain’s New York Business | 9 20140113-NEWS--0010-NAT-CCI-CN_-- 1/9/2014 7:19 PM Page 1
OPINION CRAIN’S NEW YORK BUSINESS
Pre-K’s missing pieces editor in chief Rance Crain publisher, vp Jill R. Kaplan he hottest policy debate in New York is national ones such as Head Start, have found that benefits EDITORIAL editor Glenn Coleman not whether to implement a citywide tend to be modest and fade over time, sometimes leaving managing editor Jeremy Smerd children no better off than those who entered school at age deputy managing editors Valerie Block, prekindergarten program, but how to pay Erik Ipsen for it. Mayor Bill de Blasio wants to fund 5. Mediocre teaching is a major reason (one 11-state study assistant managing editor Erik Engquist found effective teacher-student interactions in just 15% of senior news producer Amanda Fung its first five years with a temporary, state- contributing editor Elaine Pofeldt imposed tax surcharge on city households pre-K classrooms), while chaotic home environments are a columnists Greg David, Steve Hindy, Alair Townsend factor as well. crain’s health pulse editor Barbara Benson earning $500,000 or more. Gov. Andrew senior reporters Theresa Agovino, Cuomo wants taxes cut, but will try to find money for pre-K The mayor speaks almost daily about taxing the rich more Aaron Elstein, Lisa Fickenscher, Matthew Flamm, in the budget. but hasn’t uttered a word about how he will ensure pre-K Daniel Geiger, Adrianne Pasquarelli T reporters Joseph Anuta, Chris Bragg, This argument, while necessary, ignores crucial questions students get a well-trained teacher rather than glorified day Andrew J. Hawkins, Thornton McEnery reporter/videographer Ken M. Christensen about adding an early grade. Cobbling together the cash— care. And what space will they use? Pre-K classrooms in news producer Emily Laermer more than $500 million a year—to offer all city kids pre-K struggling schools go web reporters/producers will be easy compared with building a program that actually unfilled each year, Nazish Dholakia, Irina Ivanova The mayor has art director Steven Krupinski works from today’s patchwork of classes. Mr. de Blasio has while in successful deputy art director Carolyn McClain staff photographer Buck Ennis yet to cite a model that he would emulate. Oklahoma and not explained schools they are copy desk chief Steve Noveck Georgia have statewide pre-K programs, but the jury is out packed. copy editor Thaddeus Rutkowski how his program data editor Suzanne Panara on their effectiveness. Other questions researchers Eva Saviano, Nicholas Wells Supporters take it as gospel that pre-K would be a wise would work abound. Will the city’s ADVERTISING, MARKETING AND PRODUCTION investment.They cite various analyses over the years program shift jobs from senior account managers Irene Bar-Am, Jill Bottomley Kunkes, Courtney McCombs, claiming that early-childhood education pays for itself by private pre-K schools Suzanne Wilson putting youngsters on the path to becoming taxpayers rather to the teachers’ union? director of custom content Trish Henry What year would sales coordinator Lauren Black than burdens on society. But these studies brazenly events coordinator & scheduler extrapolate from experiments involving tiny, high-quality classes begin? Despite his focus on income inequality, Mr. de Alexis Sinclair credit Todd J. Masura (313-446-6097) programs, notably the 1960s Perry Preschool study of 123 Blasio has also avoided the touchy issue of bad parenting, director of audience & content high-poverty 3- and 4-year-olds. which is not merely a result of poverty but often a cause of it. partnership development Michael O’Connor senior marketing manager No U.S. city has actually brought an intensive effort like The mayor is asking New Yorkers to hand over another Catherine Schutten Perry to the scale envisioned by Mr. de Blasio. Studies of half-billion dollars a year. It’s time for some answers about director of conferences & events Courtney Williams other early-childhood initiatives, from boutique programs to what he would do with it. reprint sales manager Lauren Melesio production and pre-press director Simone Pryce advertising production manager CRAIN’S ONLINE POLL COMMENTS Suzanne Fleischman Wies ONLINE AND INTERACTIVE SERVICES senior web developer, interactive Chris Tumminello Bad judgment in Jersey TO SUBSCRIBE: For print and digital subscriptions or customer service, e-mail [email protected] BRIDGEGATE ing the poor and middle class lization was once necessary for or call 877-824-9379 (in the U.S. and Canada) or more than anyone? school buildings during the 313-446-0450 (all other locations). $3.00 a copy for Re “Christie claims he was Affordable housing built short period when public the print edition; or $99.95 one year, $179.95 two
wide world photos wide years, for print subscriptions with digital access. / misled by aide” (Crains with unaffordable costs for schools experienced a down- ap NewYork.com): Even if Gov. building? Hmmm. turn in population; now those www.crainsnewyork.com/subscribe DO YOU FAVOR GOV. Chris Christie didn’t order the —leonard schools are needed for the lat- TO ADVERTISE: Fort Lee lane closures himself, est wave of youngsters. Contact Lauren Black at ANDREW CUOMO’S PLAN [email protected] or call 212-210-0736. it raises the questions: Who RETHINKING HOSPITALS Make sure that the hospi- TO LEGALIZE MEDICAL would hire someone who tals’ trustees and executives www.crainsnewyork.com/advertise MARIJUANA? would even remotely consider Re “2014 bodes ill for hospitals” are sound, support the debt FOR INFORMATION ON OUR EVENTS: doing something as stupid and ( Jan. 6): It looks as though our service and invite primary care Contact Courtney Williams at horrible as this? What does mayor is going to advocate for services right into those build- [email protected] or 212-210-0257. Yes. It alleviates some people’s suffering. www.crainsnewyork.com/events Better to regulate it than to criminalize it. The this say about Christie’s judg- equality among all boroughs ings. Please use what we have Cuomo plan is a good first step. ment as to whom he considers when it comes to hospital serv- first and fix up these places. TO CONTACT THE NEWSROOM: valued staff? ices. Manhattan is overbedded. Let’s all take a breath and No. 711 Third Ave., New York, NY 10017-4036 It doesn’t work, and it tells young people —fred Queens and Brooklyn are not. think through how important it editorial phone: 212.210.0277 that weed is medicine. Moreover, it’s a power Brooklyn But let’s agree that until we fig- is for chronically ill older adults fax 212.210.0799 grab by the governor. ure out the need for beds, we in Queens and Brooklyn to Entire contents ©copyright 2014 Crain Communications Inc. All rights reserved. ®CityBusiness is a registered trademark Date of poll: Jan. 6 will use the hospitals for needed NEW SPEAKER, have a hospital close to them. of MCP Inc., used under license agreement. 566 votes NEW COSTS health care by reshaping them. How nice it is for our children After all, the reasons these hos- to be born in their own com- CRAIN COMMUNICATIONS INC. BOARD OF DIRECTORS Re “Council speaker winners pitals were placed in the loca- munities, and think about how chairman Keith E. Crain president Rance Crain 10% and losers” (CrainsNewYork tions they are in was for access necessary it is for people with treasurer Mary Kay Crain No .com): Let me see … If all the to the residents who needed mental illness who sometimes Cindi Crain teachers, health care workers, ready care. require short-term care to have executive vp, operations William Morrow hotel workers, builders, etc. get So if it is true that fewer an institution close by. executive vp, director of strategic 90% paid much more and take more beds are needed in these The answer for most of operations Chris Crain Yes sick leave, and have “job for life” places, then why not use them these needs in Brooklyn and senior vp, group publisher David Klein protections, doesn’t that mean for outpatient care and other Queens should not be vp/production, manufacturing David Kamis Anthony DiPonio costs will rise dramatically for services that are sorely needed Manhattan. chief information officer all New Yorkers, thereby hurt- in these communities? Re-uti- —ramon founder G.D. Crain Jr. (1885-1973) chairman Mrs. G.D. Crain Jr. (1911-1996) secretary Merrilee Crain (1942-2012) FOR THIS WEEK’S QUESTIONS: CRAIN’S WELCOMES SUBMISSIONS to its opinion pages. Send letters to [email protected]. Send columns of 475 Go to www.crainsnewyork.com/poll to have your say. words or fewer to [email protected]. Please include the writer’s name, company, address and telephone number.
10 | Crain’s New York Business | January 13, 2014 20140113-NEWS--0011-NAT-CCI-CN_-- 1/9/2014 6:47 PM Page 1
JONATHAN MARVEL
easy, it is pretty much that simple— Micro-units could be Retailers Wholesalers Restaurants Hotels Oil Dealers Social Services and well within the mayor’s purview. The city has a micro-unit pilot project underway that will prove in- housing’s big solution valuable in helping city planners un- derstand best practices for building such housing. Strong design guide- ayor Bill de Blasio has taken office with a man- lines for light,air and common spaces Read Adam Friedlander’s date to act quickly on one of his boldest prom- are imperative. But only with an ad- How to $ave Big on Workers’ Compensation ises: to create or preserve 200,000 affordable equate supply of apartments will we be able to substantially improve housing units.It is a big,complicated problem, affordability, and that can happen Call To Save Today and the solutions he has endorsed are not easy. only if micro-units are a standard op- As an architect who works with the development communi- tion for builders. Coupled with M affordable-housing regulations and Adam Friedlander • 800-394-7004, ext. 206 • [email protected] ty, I would add a simple proposal that is not on the mayor’s list: incentives already endorsed by Mr. www.friedlandergroup.com • www.howtosavebigonworkerscomp.com make micro-units a standard building option, or “as of right.” de Blasio, this would go a long way *Underwritten by the NYS Insurance Fund, 199 Church St., NY, NY 10007 toward achieving his housing goals. What are micro-units and why are of “family-size” units beyond what a After decades of making the in- they crucial? The city’s Department typical family can afford. At the dustrial city more livable and attrac- of Housing Preservation and Devel- same time, some single and elderly tive, New York needs to embark on opment defines a micro-unit as an people keep large yet affordable a new kind of rebalancing. Working apartment of less than 400 square feet apartments while record numbers of people, young people, single people with a kitchen and bathroom. The homeless families are in shelters. and elderly people are vital parts of city has an 800,000-unit shortage of Mr. de Blasio could champion the mix that makes neighborhoods apartments for singles, the result of a the required legislation now. In vibrant, but they can’t find suitable, snowballing demographic trend. Manhattan, two zoning changes are affordable apartments. Micro-unit More and more people choose to needed: Allow apartments to be housing is an essential piece of the live alone—or would if they could smaller than 400 square feet, and puzzle for New York to remain a city find a suitable apartment. Accord- eliminate the density calculation for everyone. ing to research by the Citizens that effectively limits the number of Housing and Planning Council, studio apartments within a build- Jonathan Marvel is the founder and 56% of the city’s housing units are ing. In the outer boroughs, the city principal of Marvel Architects. In occupied by people living alone or would also have to relax the parking partnership with Hamlin Ventures, his sharing with unrelated adults. Mul- requirement for new buildings. design for a micro-unit apartment building tiple wage earners paying rent for While no one would argue that zon- was one of five finalists in the city’s micro- large apartments drive up the price ing changes in New York City are unit design competition, adAPT New York.
NYC’S NEWCOMERS Immigration stats Origin 2000 2007-11 Immigrants 50% 33% From U.S.* 50% 67% don’t tell whole story College grads 1985-90 1995-2000 2007-11 hen New York’s Department of City Plan- 39% 46% 56% ning last month issued a third edition of its Median earnings** look at immigration, the headlines trum- 1985-90 1995-2000 2007-11 peted “a wave of newcomers” and high- $45,130 $57,959 $57,399 lighted the fact that foreign-born New *Includes Puerto Rico Yorkers now top 3 million, a record. Some noted that the Chi- **Adjusted for inflation (2010 dollars) Sources: The Newest New Yorkers, Department of City W Planning, 2013 edition nese were likely to supplant Dominicans as the largest immi- grant group. of any immigrant group ($83,000, The more important revelation or 68% more than the median for all was buried in the last chapter: Al- New Yorkers), and Filipinos are not though the total number of immi- far behind. grants continues to rise, the number City Planning doesn’t speculate arriving each year is falling signifi- much on the reasons for all this, and cantly. it is an issue that needs much more Since 2000, says City Planning, analysis.My thought is that it is a re- foreign-born arrivals have fallen by flection of how expensive the city 25% a year, to about 67,000. The has become. Immigrants historical- city’s population is continuing to ly have arrived poor and settled grow because more people are mov- where the rents were cheapest. ing to New York from elsewhere in There are far fewer of those places the country than they have in GREG DAVID today. decades, and they have more than It is also possible that this trend made up for the shortfall in immi- will accelerate if any sort of immigra- grants. only on Wall Street, but also in tech tion reform clears Washington’s Just as interesting, immigrants and in other creative industries. gridlock. The one consensus is that and people who move here from The same trend holds true for the country should open the door other places in the United States are those from abroad, reflecting the wider to people who bring skills and better educated and make more growing percentage of arrivals from to those who come to the U.S. for money.Anecdotally,it is obvious that Asia, and especially India, who have college and advanced degrees.Those much of the domestic influx consists already graduated from college. are exactly the people who gravitate of college graduates coming to make They also get better jobs: Indian to New York and whom the city their marks in the Big Apple—not households have the highest income needs to grow the economy.
January 13, 2014 | Crain’s New York Business | 11 20140113-NEWS--0012-NAT-CCI-CN_-- 1/9/2014 6:41 PM Page 1
IN THE BOROUGHS QUEENS Family builds for tech in LIC Continued from Page 4 1 million square feet of space—as 200,000-square-foot, 10-story of- at the same time give locals reason well as in economic development fice building whose tenants today enough to forgo Manhattan’s and philanthropy. In recent years, include two state agencies. nightlife. that effort has been led by three “Grandfather was a pioneer for “They understood that fostering a cousins ranging in age from their Long Island City,” said Mr. tech community is more than just late 30s to their mid-50s. All are the Quigley’s cousin Andrew Kirby. about the property,” said Jack Fried- grandchildren of Louis Pfohl, “The vision was that this area man, executive director of the a second-generation Austrian- would blossom at some point and Queens Chamber of Commerce. American engineer, lawyer, archi- we would steadily look for oppor- “It’s about creating an environment tect and designer who invented a tunities.” for tech people to live,work and play.” new way to shape plastic in the 1930s and founded Plaxall to do it Power-sharing No incubator on an industrial scale. These days,the responsibility for Another part of that effort was In 1950, after his original facto- running the family’s diverse empire the family’s bid alongside the non- ry in Flushing was condemned to falls to Messrs. Quigley and Kirby profit Coalition for Queens to make way for a housing develop- and their cousin Tony Pfohl. They launch a tech incubator in a family- ment, Mr. Pfohl decamped to Long share the titles of owner and manag- RISING TIDE: The descendants of Louis Pfohl, led by Matthew Quigley, Andrew Kirby and Tony owned warehouse that overlooks Island City. There, impressed with ing director and make all major de- Pfohl, turned profits from plastics into Long Island City real estate. the future site of Cornell Tech. But its proximity to Manhattan and cisions jointly. Mr. Kirby, based at the incubator plan also fell short, transportation links,he began snap- Plaxall’s headquarters, is in charge owing to its failure to secure govern- ping up and developing real estate. of manufacturing and commercial Abraham Lincoln once stayed—that House,a social-services agency.Sim- ment funding. Those purchases included 5-22 real estate,while Mr.Quigley,also at the owners’grandfather purchased in ilarly, Mr. Quigley is an executive And so it goes for the family that 46th Ave., where he built his facto- Plaxall, oversees some commercial the 1960s and that the family reno- board member of the Long Island has transformed itself from the ry, as well as sites for warehouses real estate, along with the family’s vated at a cost of $30 million. City Partnership,which advocates for owner of a plastics manufacturer and, in 1960, a larger plant next to residential holdings. Closer to home, the cousins re- local economic development. called Plaxall Inc. to a big player in the original,which remains Plaxall’s Mr. Pfohl lives in Iowa, where he cently secured a building permit for “We have a lot invested here and Long Island City real estate—with headquarters today.In the 1980s, he oversees the family’s assets.Those in- a property they own on 49th Av- are not going to take the money and properties encompassing more than developed Hunters Point Plaza, a clude a Dubuque hotel—where enue, where they plan to develop a run,” said Mr. Quigley. Ⅲ four-story residential building.Like all the family’s New York holdings, the lots are in Hunters Point—in ac- cordance with their grandfather’s FROM directive. “He said you should al- ways buy things you can walk to,” AROUND said Mr. Quigley. THE CITY The value of the family’s real es- tate portfolio far outstrips that of its plastics business, which today BRONX produces everything from hospital suture trays to industrial packag- Legislator tackles ing. Mr. Kirby said the 25- youth football employee company is profitable but declined to disclose revenue. A Bronx assemblyman’s bill to ban Meanwhile, to boost the for- tackle football for younger children tunes of Long Island City—and is gaining support in Albany but is their properties there—the cousins sending ripples of concern through have thrown themselves into ef- the ranks of youth-football-league forts to establish the area as a coaches. The law would make it il- launchpad for entrepreneurial ven- legal for children in the state under tures.They have backed, for exam- the age of 14 to play tackle football. ple,the two-year-old,1,500-mem- The statute would be the first of its ber Coalition for Queens. Jukay kind in the United States. Hsu, the group’s founder and exec- The bill’s author, Democratic utive director, said that Plaxall has Assemblyman Michael Benedetto, provided it with space and funding cites research from a doctor at for meet-ups and other events that bring tech entrepreneurs together. “They were the first members in the business community that under- stood technology was important to Queens,” said Mr. Hsu. A facilitator The family also connects tenants with one another, and with other TAKE A HIKE: Proposed state legislation Long Island City firms. Through would ban tackle football for kids. one such introduction, two-year- old marketing agency Digital Na- tives, a Plaxall tenant, landed a job Boston University who found that working for the Queens Chamber even lower-impact hits to the head of Commerce.Another helped Dig- can cause damage to still- ital Natives land yet another Plaxall developing brains over time. tenant, LIC Flea, a flea market in “Kids at a younger age can play which Plaxall is a partner,as a client. touch or flag football and then ease “Everyone is trying to raise the into tackle,”said Mr.Benedetto.The tide for all boats in LIC, and the assemblyman said he has at least a Plaxall family is certainly one of the half-dozen co-sponsors for the leg- leaders,” said Ben Guttmann, a islation in the Assembly but does not Digital Natives partner. yet have a sponsor in the Senate. The cousins also work with sever- The proposed law has sparked al nonprofits.Mr.Kirby is treasurer of outrage among youth-football- the Queens Museum and has fol- league coaches, who call it a “ridicu- lowed in his mother’s footsteps as sec- lous overreaction.” retary of the Jacob Riis Settlement —kerry murtha
12 | Crain’s New York Business | January 13, 2014 20140113-NEWS--0013-NAT-CCI-CN_-- 1/9/2014 6:43 PM Page 1
REAL ESTATE INSIDE The List Real Capital Analytics’ top NYC property sales PAGE 16 Forecast Five of the industry’s biggest names weigh in on what to expect in 2014 REPORT PAGE 18 Industrial lease market heats up Bidding wars break out as rezonings lead to space crunch
BY JOE ANUTA
In October, on the very first day that a vacant 6,000-square-foot industrial property hit the market in Greenpoint,Brooklyn,brokers at Kalmon Dolgin Affiliates got three solid offers. Within hours, the contest ended when AIA Sheet Metal beat out its two ri- vals. It carried the day by offering not just to sign the lease immedi- ately, but also to pay $17 per square foot—roughly 30% more than what the space would have rented for just a year earlier. Virtually unheard of in New York $14.25
fred harper City, bidding AVERAGE asking rent per square wars for in- foot for industrial dustrial prop- space in the outer erty leases boroughs in 2013 have become commonplace in the past 12 $11.50 months as an AVERAGE asking outgrowth of rent in 2011 a market that many experts call the most com- petitive in memory. Meanwhile, the far smaller sales market for in- ON THE RISE: (From left) Laurence Gluck, Harry Macklowe and Bruce Eichner dustrial locations is frothier yet. “I’ve never seen a tighter mar- ket,” said Jeff Marshall, a broker at Kaplon Belo Affiliates in Long Island City, Queens. On the leasing side, the new reality is borne out in the data that Return from the depths show the average asking rent per square foot for industrial space in Crash-smashed, Gluck, In many ways, Bruce Eichner, to be one of the best-regarded hotels the outer boroughs jumped to Laurence Gluck and Harry Mack- and resorts on the Las Vegas Strip. $14.25 last year, up nearly 25% Macklowe and Eichner lowe were poster children for the bust $65M The problem was that Mr. Eichner from an average of $11.50 in mid- years, defaulting on a combined bil- AMOUNT Bruce Eichner had originally planned the project,the 2011, according to commercial demonstrate their lions of dollars of loans and handing paid last year for a Cosmopolitan, not as a hostelry but a real estate research firm CoStar. some of the biggest acquisitions and 600,000-sq.-ft. residential condo. That change in course was In the past year alone,the average staying power development projects of the boom building site in Harlem made after Mr. Eichner was forced to rent has climbed an estimated over to their creditors. But the three turn the roughly $4 billion project 10%. BY DANIEL GEIGER men have not only rebounded, they back to his lender, Deutsche Bank, in “Last year was sort of a transi- are engaging in some of the highest- one of the most colossal defaults of the tion year,where pricing power for Five years after the financial crisis profile and most lucrative deals of $700M+ recession. rents returned to the owners and crashed a flurry of real estate deals and their careers. AMOUNT for which Laurence The foreclosure was Mr. Eichner’s the landlords,” said CoStar’s careers, the market in the city has Gluck sold most of second career collapse; he went bust Rene Circ,director of research for bounced back to new heights, bring- BRUCE EICHNER Independence Plaza, a during the recession of the early industrial spaces. ing with it some of the developers During the last real estate boom, 1,300-unit apartment 1990s. But as the Cosmopolitan Many market insiders cite hardest hit by the recession. Bruce Eichner built what turned out building in TriBeCa, in 2012 See DEPTHS on Page 14 See INDUSTRIAL on Page 17
January 13, 2014 | Crain’s New York Business | 13 20140113-NEWS--0014-NAT-CCI-CN_-- 1/10/2014 1:33 PM Page 1
REPORT REAL ESTATE From the depths
Continued from Page 13 square-foot residential building at demonstrates, Mr. Eichner has an the site, which had previously been undeniable flair for building real es- owned by Vornado and has seen a tate projects that catch the eye.That raft of development proposals over imagination has won him yet anoth- the years. er career revival. Last year,Mr.Eichner purchased LAURENCE GLUCK a modestly sized development site at Three years ago, Laurence Gluck 41 E. 22nd St., where he plans to lost his biggest office tenant at 2 build a soaring 800-foot tower that Rector St.—the city’s Department cantilevers over adjacent properties. of Transportation—and with it, “He excels at conceiving of and what seemed like his only chance of executing deals that push the enve- holding onto the downtown office steve friedman ap photos newscom lope,” said Jeff Katz, chief executive property through the recession. BRUCE EICHNER, LAURENCE GLUCK AND HARRY MACKLOWE are each working on deals that show how far they’ve come back. of development firm Sherwood Soon after, he defaulted on the Equities, and a peer and friend of 440,000-square-foot building’s Mr. Eichner. “Very few of his proj- $110 million mortgage. a partnership of the Kushner Cos. his hold on several major properties Plaza,Mr.Gluck sold the Milk Stu- ects are ordinary,and when he builds But Mr. Gluck, a 30-year-plus and investment company CIM during that period but held onto dios Building on West 15th Street a something, he swings for the real estate veteran,then turned what Group. others long enough to sell several as- year ago for $284 million, a whop- fences.” appeared to be a certain financial The deal encapsulates the way sets at a substantial profit in the re- ping $120 million more than he Next up for Mr. Eichner is work disaster into an unlikely profit.First, Mr. Gluck has stormed back since cent rising market. bought it for in 2008. And now he on another development site that he he brought in a partner—real estate the depths of the recession, when a “He got caught in a bad market, and partners are renovating the ad- acquired for $65 million last year,on investment firm Savanna—which combination of excess leverage and like a lot of investors did,” said jacent office properties 161 Sixth East 125th Street in Harlem at 1800 injected enough money to avoid plummeting market conditions Stephen Meister, an attorney who Ave. and 233 Spring St. into a com- Park Ave. According to reports, Mr. foreclosure. Then, in 2013, the pair threatened to leave his career and represents Mr. Gluck. “But I think bined 500,000-square-foot com- Eichner is planning a 600,000- sold the property for $140 million to reputation in tatters. Mr. Gluck lost everyone recognized that he was an plex in the heart of the super-trendy honest guy, and when he could no midtown south office market. longer hold onto a property, he turned over the deed.” HARRY MACKLOWE In addition to his troubles at 2 To buy the Park Lane Hotel for Rector St., Mr. Gluck suffered a tri- $660 million in November, investor fecta of other major defaults that Steve Witkoff sourced financing didn’t end as well. He stopped serv- from Wells Fargo,the biggest lender icing the $116 million mortgage for in the country, and brought on a the office building at 1140 Sixth partner from China, home to the Ave. and eventually turned the city’s most active and property over to his lender, the well-capitalized foreign investors. Blackstone Group. But the ace up his sleeve ap- Mr. Gluck also defaulted on the peared to be Harry Macklowe, who Parkmerced housing complex in will take a minority equity stake in San Francisco, which carried a the project but possibly a big hand in mammoth $550 million mortgage, helping Mr. Witkoff reap the full potential from what is widely re- garded as one of the best-located Mr. Gluck ‘got residential sites in New York. Mr. Macklowe’s participation in caught in a bad the deal is an example of how even top developers acknowledge his skill market, like a in development, especially in the city’s priciest and glitziest precincts, lot of investors’ such as the Plaza district and Park Avenue.That reputation has helped allow Mr. Macklowe to re-emerge after one of the most spectacular collapses ever seen in the city’s real and lost control of that deal as well. estate industry. In 2008, during the And in Harlem in March 2010, Mr. financial crisis, he was forced to Gluck gave back the keys to the hand back a $7 billion portfolio of 1,200-unit Riverton Houses apart- Manhattan office towers to his ment complex when his projections lender, Deutsche Bank. of converting its rent-stabilized Six years after that debacle, Mr. units to top-dollar market rates Macklowe,now 76,has launched an proved overly ambitious. unlikely comeback. He is in the He was also dealt a huge blow process of raising what will be, at when a state court ruled that same nearly 1,400 feet, the tallest condo year that he had illegally deregulated building in the Western Hemi- apartments at Independence Plaza,a sphere at 432 Park Ave., in partner- 1,300-unit complex in TriBeCa, a ship with CIM Group. decision that Mr. Meister later got “This was the first project that overturned on an appeal. CIM did in New York,and obvious- The victory on Independence ly quite a massive undertaking,”said Plaza was more than enough to pay Robert Sorin, an attorney at Fried back the other losses. Mr. Gluck Frank who represents Mr. Mack- sold most of his stake in that build- lowe. “They realized that Harry is ing to Vornado in 2012 for more probably the greatest pure develop- than $700 million. er of our generation and that he, “The amount of money he made more than anyone, has the local on that deal alone was enough to knowledge and expertise and cre- make up for everything he lost dur- ative vision to provide the ideas and ing the recession and then some,” the ability to execute that project.” Mr. Meister said. Mr.Macklowe is also working on In addition to the profitable sales converting 737 Park Ave.and 150 E. of 2 Rector St. and Independence 72nd St. into residential condos. Ⅲ
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REAL ESTATE DEALS
floor space was $40 per square foot, 123 William St. BARE BONES but the Spot Experience will enjoy a Bowery fit for period of free rent and funds from unloads entire floor 1140 SIXTH AVE. Silverstein to build out the area. The partnership is the latest be- It hasn’t taken East End Capital long ASKING RENT; TERM: higher-end gym tween the Spot Experience and to begin seeing dividends on its in- $80 per residential developers, including vestment in the downtown office square foot; LeFrak, Argo, Rockrose and Mil- building at 123 William St. The land- 10 years ictoria’s Secret models might soon be mingling with residents of lennium Partners—although this is lord, using brokerage CBRE Group SQUARE the Bowery now that ModelFIT,a fitness program that caters to the first case in which a dedicated Inc., has found a taker for one of the FEET: supermodels,has signed on for a gym in the area.The fitness cen- facility will be set up at the building, 500,000-square-foot building’s va- 12,750 ter completed a seven-year deal for 1,500 square feet on the sec- according to CEO Mitch Marrow. cant lower floors. TENANT; REP: Trilogy Global Advisors; ond floor of 212 Bowery, between Spring and Prince streets. The “We provide the full scope of pet The Institute for Career Devel- Kirill Azovtsev of Jones Lang LaSalle askingV rent was $80 per square foot.The space includes an outdoor patio. services,” Mr. Marrow said. “We do opment has signed a five-year lease LANDLORD; REPS: Blackstone Group; The neighborhood is rapidly developing as the place to be for hotels, re- it as an amenity so developers can for the 27-story property’s entire Douglas Neye and David Wassel of tail stores and restaurants, said Adam Stupak, who represented ModelFIT market this competitive advantage.” fifth floor, a 26,600-square-foot Jones Lang LaSalle along with fellow Task Real Estate broker Jason Sandlofer. “The whole area He hopes the service will take hold space, according to Brad Gerla, a BACK STORY: The financial-services in other enclaves around the city. CBRE Group Inc. broker who helps firm will occupy space on the 18th is hot,” Mr. Stupak said. ates out of a gym in The Spot Experience will use handle dealmaking at the property floor, according to The Commercial “It’s not like the Bowery of TriBeCa, should open in part of the Silverstein space for retail for landlord East End Capital and its Observer. 10 years ago.” about five months in its products, while other portions will ownership partner at the property, The arrival of nearby new space above a kitchen be cordoned off for cageless day care, GreenOak Real Estate. Career Development from mid- retailers such as Intermix supply store. It replaces a separated by dog size, where owners Paul Maas, a broker at Jones town south. “The transit center has and Patagonia has helped photography studio. can monitor their pets’ activities via Lang LaSalle, represented the ten- been a huge draw,” Mr. Gerla said. push ground-floor retail Jean King, a broker webcam, according to Mr. Marrow. ant in the deal. The asking rent for CBRE is close to securing com- rents to about $200 per with NYC Homes, repre- The firm also offers GPS- the space was $37 per square foot. mitments for 123 William’s sixth square foot—still a bar- sented landlord 212 Bow- tracked dog-walking services, and Mr. Gerla, who specializes in and seventh floors as well, another gain compared with SoHo’s $600- ery in negotiations. will set up a therapy and wellness leasing deals downtown and in mid- 50,000 square feet of leasing. plus. ModelFIT, which also oper- —adrianne pasquarelli center.A veterinarian will be on-site town south, said that 123 William The leasing reflects a pickup in with remedies, including underwa- has received a flurry of interest since downtown dealmaking. More tech ter treadmills designed for physical East End and GreenOak purchased tenants are moving to lower Man- Silverstein signs 12th avenues. therapy, and will make house calls. it in October for about $130 million. hattan for its dense transit, low The Spot Experience signed the The facility should be able to ac- The partnership offered millions of rents and growing residential feel. luxury dog house deal as part of a recently forged part- commodate about 375 dogs once it dollars of improvements,including a It’s also increasingly a prime place nership with Silverstein, and will opens as expected in February. new lobby, windows and elevators. to buy office buildings. Insurance An upscale dog-care facility has offer its pooch-centric perks to res- Peter Trivelas from DTZ repre- The work will likely be done by the giant Manulife bought 100 inked a 10-year lease for 9,000 idents in the more than 2,000 units sented the tenant in the transaction, beginning of the second quarter. William St. in October, and Billy square feet at the base of Silverstein at Silver Towers and River Place while Silverstein was represented by The building is across from the Macklowe purchased 156 William Properties’ luxury developments at next door as an amenity. Gary Steinberg of Lee & Associates. new Fulton Street transit hub, St. in November. 620 W. 42nd St., between 11th and The asking price for the ground- —joe anuta which helped lure the Institute for —daniel geiger Honors for industry leaders The Real Estate Board of New York will honor these professionals at its annual banquet on Jan. 16 Stephen L. Green Joel I. Picket Thomas Hill AWARD: Bernard H. Mendik Lifetime AWARD: Kenneth R. Gerrety Humanitarian AWARD: George M. Brooker Management Leadership in Real Estate TITLE: Chairman and chief executive, the Executive of the Year TITLE: Chairman, SL Green Realty Corp. Gotham Organization TITLE: Senior vice president, Boston Properties’ New York Property Management Since founding SL Green in 1980, Mr. Mr. Picket has led the 83-year-old family- Department Green has been involved in the acquisition owned development and construction firm of more than 75 Manhattan office since 1965. During that time, the company Since joining Boston Properties in 1985, buildings totaling in excess of 50 million has built more than 30,000 residential units Mr. Hill has held a variety of ever-bigger square feet. The company posted an in the metropolitan area, as well as a executive positions. He currently oversees estimated $1.3 billion in revenue in 2013. Mr. Green is also number of large-scale hospital and educational projects. He the REIT’s property management and tenant relations actively involved in the Children’s Tumor Foundation, the serves as a board member of the New York Philharmonic, the throughout the city. In addition, he sits on the board of Nicklaus Children’s Health Care Foundation and Hospital, and Park Avenue Armory and the Foundation for the National directors of the Realty Advisory Board on Labor Relations and Citymeals-on-Wheels. He also maintains an endowment for Archives. He also serves as a member of the board of governors on the Management Division Board of Directors of the Real the New York-Presbyterian Global Prostate Cancer Research and executive committee of the Real Estate Board of New Estate Board of New York. He is also active in several local Center and his alma mater Hartwick College. York. industry and civic groups.
Kenneth Fisher Robin Abrams Robert Fink AWARD: Harry B. Helmsley Distinguished AWARD: Louis Smadbeck Broker AWARD: Young Real Estate Man New Yorker Recognition of the Year TITLE: Senior partner, Fisher Brothers TITLE: Executive vice president, TITLE: Director of leasing, the Winter Lansco Corp. Organization Mr. Fisher is part of the third generation to lead his family’s real estate firm. As such, As a company principal, Ms. Abrams With nearly two decades’ experience in the he oversees the leasing, management and focuses primarily on retail leasing and city’s commercial real estate industry, Mr. marketing of more than 6 million square consulting. She works exclusively with Fink oversees all aspects of leasing and feet of Class A commercial office space in companies to secure locations in New marketing for the Winter Organization’s midtown. Outside work, Mr. Fisher is a member of the York City, and has worked with VF Corp., Kellwood Co. and portfolio of commercial properties. Prior to his real estate executive committees of the City Investment Fund and the Donna Karan/DKNY. She was also the recipient of the 2010 career, he worked in marketing and sales at a computer Real Estate Board of New York’s board of governors. He is also Deal of the Year award from the Real Estate Board of New software company. Outside work, Mr. Fink is an active chairman of the Fisher House Foundation, a nonprofit York. She is a member of WX, New York Women Executives member of the Young Men’s/Women’s Real Estate organization that provides homes for those whose family in Real Estate and the International Council of Shopping Association, for which he has served in several leadership members are hospitalized or being treated for injuries. Centers. roles.
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THE Real Capital Analytics’ Top Property Sales LIST Biggest commercial transactions in NYC in 2013, ranked by price
TOP FOUR Sq. ft. or Address/ no. of units/ SALES property type/ Transaction price price per Interest 100% value Close submarket (in millions)1 sq. ft. or unit conveyed (in millions) date Buyer Seller
767 Fifth Ave. (General Motors Building) $1,360.0 2,008,237 40% $3,400.0 5/31 Sungate Trust/M. Safra & Co. Meraas Capital/USREO 1 Office $1,693 Midtown east 30 Rockefeller Plaza $1,300.0 1,384,090 100% $1,300.0 3/13 Comcast Corp. General Electric 2 (GE Building, NBC office condo) $939 Office Midtown west 650 Madison Ave. $1,294.2 595,000 100% $1,294.2 9/30 Crown Acquisitions/Highgate Holdings/ Carlyle Group/Century Plaza 3 Office $2,175 Vornado Realty Trust/Oxford Properties Midtown east Group 550 Madison Ave. (Sony Plaza) $1,100.0 857,000 100% $1,100.0 3/15 Chetrit Group/Clipper Equity Sony Corp. of America 4 Office $1,284 Midtown east LIST RANK 1 1211 Sixth Ave. (News Corp. Building) $854.8 2,014,062 51% $1,676.0 10/11 Ivanhoe Cambridge/Callahan Capital Beacon Capital Partners/Lehman 5 Office $832 Partners Brothers Holdings ADDRESS Midtown west 767 Fifth Ave. 1345 Sixth Ave./605 Third Ave. $825.0 3,000,000 49% $1,650.0 12/27 Rockpoint Group Estate of Daniel Ludwig PRICE PER SQ. FT. 6 Office $550 $1,693 Midtown west/east 237 Park Ave. (Park Avenue Atrium) $810.0 1,251,325 100% $810.0 10/25 RXR Realty/Walton Street Capital Lehman Brothers Holdings 7 Office $647 Midtown east 1 Chase Manhattan Plaza $725.0 2,215,028 100% $725.0 12/17 Fosun International JPMorgan Chase 8 Office $327 Downtown 7 Times Square $684.0 1,245,817 45% $1,520.0 10/9 Norges Bank Investment Management Boston Properties 9 Office $1,220 Midtown west 36 Central Park S. (Park Lane Hotel) $660.0 605 100% $660.0 11/25 Witkoff Group/Jynwel Capital Helmsley Charitable Trust 10 Hotel $1,090,909 Midtown east 825 Eighth Ave. (Worldwide Plaza) $648.0 2,055,583 49% $1,325.1 10/31 American Realty Capital George Comfort & Sons/DRA 11 Office $645 Advisors/RCG Longview/Feil Midtown west Organization LIST RANK 2 425 Lexington Ave. $630.0 748,985 100% $630.0 6/28 JPMorgan Asset Management Hines/Sumitomo Life ADDRESS 12 Office $886 30 Rockefeller Plaza Midtown east PRICE PER SQ. FT. 10 Hudson Yards (South Tower office condo) $530.0 737,774 100% $530.0 4/1 Coach Related Cos./Oxford Properties 13 Office $718 Group $939 Midtown west 1440 Broadway $528.6 740,000 100% $528.6 12/23 American Realty Capital New York Rockpoint Group/Monday Properties 14 Office $714 Recovery REIT Midtown west 195 Broadway $498.5 914,594 100% $498.5 11/26 JPMorgan Asset Management Beacon Capital Partners/L&L 15 Office $545 Holding Downtown 125 W. 55th St. (Avenue of the Americas Plaza) $470.0 590,628 100% $470.0 5/30 JPMorgan Asset Management Boston Properties/Meraas Capital 16 Office $796 Midtown west 400 W. 63rd St./60 Riverside Blvd. $401.0 345 100% $401.0 4/9 GID OBO CalPERS Carlyle Group/Extell Development 17 (Aldyn & Ashley) $1,162,319 Apartment Upper West Side 625 Madison Ave. (land only) $400.0 n/a 100% $400.0 11/20 Ashkenazy Acquisition 625 Ground Lessor LLC LIST RANK 3 18 Office n/a Midtown east ADDRESS 305-311 W. 33rd St. (the Olivia Apartments) $386.8 333 100% $386.8 11/14 SL Green Stonehenge Partners/CDP Capital 650 Madison Ave. 19 Apartment $1,161,562 PRICE PER SQ. FT. Midtown west $2,175 499 Park Ave. $385.0 302,982 100% $385.0 6/30 American Realty Advisors Hines/Sumitomo Life 20 Office $1,271 Midtown east 700 Eighth Ave. (Milford Plaza hotel, land only) $325.0 n/a 100% $325.0 3/8 David Werner/Deutsche Asset & Wealth Rockpoint Group/Highgate 21 Hotel n/a Management Holdings Midtown west 265-275 Cherry St. (Lands End II) $279.2 490 100% $279.2 12/4 L&M Development Partners/Citi Area Property Partners/Pembroke 22 Apartment $569,710 Community Capital/CIM Group Real Estate Downtown 655 Fifth Ave. (Ferragamo Building) $278.0 57,500 93% $300.5 10/7 Vornado Realty Trust Meadow Partners/CPP Investment 23 Office $5,227 Board/LoanCore Capital Partners Midtown east 140 West St. (Verizon headquarters) $274.0 475,000 100% $274.0 11/5 Magnum Real Estate Group Verizon 24 Office $577 Downtown 350 Madison Ave. $261.5 393,687 100% $261.5 3/6 RFR Realty/Qatar Investment Authority Kensico Properties LIST RANK 4 25 Office $664 ADDRESS Midtown east 550 Madison Ave. 1-Partial interest transactions included at the prorated share of the 100% property value. n/a-Not applicable. Real Capital Analytics Inc., headquartered in NYC, is an independent data and analytics firm focused on the investment market for commercial real estate. RCA offers comprehensive data on commercial property transactions that take place PRICE PER SQ. FT. around the world. Visit www.rcanalytics.com. $1,284
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REPORT REAL ESTATE
SWEET TALK: The old Domino Sugar factory in Industrial market heats up Brooklyn has been rezoned for residential towers. Continued from Page 13 residential rezonings and growth in building on the border of Green- three reasons for the surge. For competing uses such as retailing and point and Williamsburg. For two openers, they note that the recover- hotels. In 2001, 37 mostly industri- decades it housed a woodworking ing New York economy has created al blocks of Long Island City were shop, or it did until September, more demand for the types of busi- rezoned for residential and com- when Kalmon Dolgin’s Neil Dolgin nesses that need to be located with- mercial use, and in 2005, nearly 200 and his son Grant brokered a deal to in the five boroughs to serve their blocks along the once-gritty Brook- put consignment-clothier Beacon’s customers’ needs.Think of the food lyn waterfronts of Greenpoint and Closet into it at $40 per square distributor working out of Hunts Williamsburg were similarly re- foot—more than double what the Point in the Bronx, which keeps zoned. There, residential towers property would likely have fetched shelves stocked throughout the bor- now rise on sites that once housed on the industrial market. oughs, or the elevator service com- factories, like the hulking Domino And lastly, while retail and resi-
pany in Brooklyn that needs to haul Sugar refinery. dential users chip away at the dwin- buck ennis heavy equipment around the city. Farther inland from the East dling supply of industrial space, lit- Compounding the space crunch River,retail stores are eating into the tle if any new property has been been a year earlier, according to De- tial offers received last summer. is the rampant erosion of industrial supply of smaller industrial spaces. added. Those few new structures cio Baio, a partner at Pinnacle. Greiner-Maltz’s Sharone Levy put locations in recent years, owing to Take a 7,500-square-foot brick generally have been snapped up im- Increasingly, soaring rents are it on the market in June and saw of- mediately.One of the few such proj- pushing industrial tenants to turn to fers as high as $134 per square foot. ects under construction, a 132,000- ownership.With mortgage rates still Four months later, the landlord SPACE AT A PREMIUM IN NYC square-foot building at 145-68 at rock-bottom levels, the costs of inked a sales contract at $205 per 228th St. in Springfield Gardens, owning have become ever closer to square foot. Industrial square footage declines while rents climb: Queens, already is 100% preleased, those of renting, noted John Maltz, Seasoned industrial brokers such Total space (in millions of square feet) Average rents (per square foot) according to CoStar. president of Long Island City-based as John Reinertsen of CBRE Group The velocity at which old prop- brokerage Greiner-Maltz. Under insist that actual market conditions 206 200 198 $14.25 erties are leased is no less remark- those circumstances, it makes sense are far tighter than CoStar data sug- able. In the fall, Pinnacle Realty of to own. But with relatively little to gest, and they see no sign of any $9.88 New York marketed a lease on a choose from on the sales market, loosening on the horizon. 10,000-square-foot space in Long would-be buyers are discovering “We have a lot of tenants in re- $4.13 Island City and received multiple that sales-side bidding wars are even zoned industrial property who still offers, starting at $13 per square more intense these days. have leases,” he said. “When they foot,before settling on a tenant who A roughly 30,000-square-foot go, someone is going to wind up de- 1996 2003 2013 1996 2003 2013 offered $15.50. That price is about space in Brooklyn’s Sunset Park veloping those properties [for non- Source: CoStar 10% higher than what it would have was bid up to nearly double the ini- industrial uses].” Ⅲ
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REPORT REAL ESTATE
Q: Where will Mayor Q: Will there be Q: With Wall Street Q: With tourism Q: Will foreign Bill de Blasio enough demand and law firms booming, will lenders and investors affect the market to fill the office struggling, will retail rents play a bigger role in most? and retail space demand for space continue their the market? & opening this year suffer? climb? QA at 1 and 4 World Trade Center, plus Forecasts from the revamped five New York Brookfield Place real estate experts and Fulton Center?
His main impact will be on Demand for new office space is The office-space market is Retail rents remain very Populations all over the world ROBERT affordable housing because he extremely high. A huge currently a difficult one to figure underpriced and have are aging [including ours], KNAKAL stressed this during his percentage of our office stock is out. It seems that most renewals substantial room to grow. As a which is stressing economies Chairman, campaign. The industry will functionally obsolete. The new are for less space than the tenant result, retail space is selling for around the globe. This has led Massey likely be willing to work with buildings in the financial occupied before. Tenants appear much less than it is worth today. to uncertainty about Knakal him on this. But real estate taxes district and Hudson Yards will to be utilizing space differently Retail space has become so sustainability and has created a Realty could be a problem, as the new be overwhelmingly successful, today. valuable that it is now having a flight of capital to safety. Our mayor will need revenue to deal as will any other new office and substantial impact on the prices economy and political system Services with the 152 union contracts retail space delivered to the paid per buildable square foot are relatively stable, which is that must be negotiated. I think market. Let’s hope midtown for sites where there is a retail funneling foreign capital into we are all concerned about [a east rezoning makes a comeback opportunity. our market. possible rise in] crime, as and is a bit more flexible with tourism is a key economic regard to its applicability. driver.
First and foremost, the most Downtown Manhattan is The main reason we have seen an Tourism has been one of the great We saw a surge in demand from important responsibility for any changing more rapidly than any increase in vacancies over the success stories for the Manhattan foreign investors in 2013.The leader of the city is the safety of other area. We are already seeing past year has been an increase in economy. It is an important biggest uptick has been from its constituents and visitors. I a significant diversification of inventory.That will definitely driver of the local retail market, Asia/Pacific and the Middle hope that Mayor de Blasio will the tenant base there.This is continue with the completion of but not the only one. Areas that East, with continued strong RON LO be as diligent and thoughtful as particularly true of companies 1 World Trade Center in the are not tourist destinations are appetite from Canada as well as RUSSO the previous administration in having a hard time finding space first quarter. However, we also experiencing healthy retail Europe.This is particularly President, that regard. in midtown south because of a anticipate that after that initial leasing. However, there is no visible in Boston, New York, NY tristate lack of availability or rising rents. spike, vacancies will decline, question that some of the Washington, D.C., San region, We look at downtown as the driven by rising employment in healthiest retail markets are those Francisco and Los Angeles. Cushman & next midtown south—the next many sectors, and I wouldn’t rule where tourism is the strongest, These investors are joining Wakefield market to benefit from the out growth in both the financial and as long as tourism remains forces with local players to co- growth in the tech, advertising, and legal sectors in 2014. strong, retail rents will remain invest, but some are making media and information sectors. healthy. outright acquisitions as well.
I hope there is no negative impact Absolutely! I think the paradigm There is no question that the We see very positive retail We still see New York as the on the city’s recent record on shift downtown is just challenge for our marketplace is fundamentals in Manhattan. leading city for foreign PETER crime. In a city poised to grow beginning. When construction job growth. The market is New York will remain the No. 1 investment globally, whether it RIGUARDI and lift all people, the most is complete, the bridges and adapting to a lack of new jobs destination for tourists in the is among Canadian, Chinese or President, significant factors are safety and a sidewalks finished, the and to firms taking less space country, and the city’s European investors. New York high quality of life. We could use memorial open to the public per employee. However, there population continues to grow. Manhattan is a highly stable operations, more affordable housing, as it and the new transportation are alternative uses for the excess Retail opportunities are more in market, and it remains a great Jones Lang supports a healthy, diverse and hubs open, lower Manhattan is office space, such as hotels, demand. Meanwhile, place to invest. It has been most LaSalle dynamic economy.There are a going to be an even more residential conversions and gentrification and efficient for foreign buyers to number of opportunities to create wonderful place to live, work medical space. It appears that improvements in numerous invest in Manhattan with local affordable housing. It would and socialize. Companies will this will drive the vacancy rate neighborhoods are creating a partners, and this trend will benefit the city enormously if the want to go there. It’s going to down a bit or keep it flat over retail boom in the outer likely continue. mayor is capable of improving become the place to be. the next year or so. boroughs. that situation.
We’ve gotten a smart, pro- It will take some time to lease— Wall Street’s being on the Quality-of-life issues, not to China in the past three years business administration with a except the retail space, which sidelines has given other tenants mention crime and terrorism, bought or financed more than long-term outlook. Change is seems well on its way to being room to grow. Companies in can turn tourism on a dime. If $5 billion in assets. Germany, JOHN P. likely to make people full. We are tracking more than technology, new media, biotech, Mr. de Blasio is vigilant in the U.K., Kuwait MAHER uncomfortable. But Mr. de 60 tenants looking for nearly 20 etc. have given the city new keeping New York safe and and South Korea follow. Executive Blasio is smart. Notwith- million square feet. Competition diversity.That said, expect friendly, tourism and retail will Interestingly, Canada is the vice standing the rhetoric, he is fierce, but the great downtown vacancies to be slightly higher remain strong. While tourism- No. 1 acquirer or lender, nearly president, recognizes that New York is in properties like the new World this year, going to 12.5% from based retail may continue to raise doubling the financing of the CBRE the best condition ever. The Trade Center and Brookfield today’s 12.2%. But the softness rents in traditional locales, new next-closest country. Foreign Group Inc. mayor will see that many of the Place can now compete on will be less about Wall Street and retail districts are the next story. investors will continue to have policies, procedures, personnel something more than price. law firms than new supply Westfield’s work at the World an extraordinary role, and are and investments that the There’s a new, vibrant down- coming on line and all firms Trade Center, Brookfield Place now frequently choosing to be Bloomberg administration put town that enhances the quality looking to densify. and Hudson Yards is highly direct investors. in place are still needed. of the occupancy experience. anticipated.
The city’s economic engine must There’s more than enough It depends. Those submarkets Yes. Ground-floor retail space is Yes. The elephant in the room MICHAEL continue to be stoked, and demand, but those properties that cater to the [older industries the most supply-constrained is China. Chinese investors are T. COHEN today’s engine is predominantly will be competing with Hudson like finance] will now target commodity in our industry. As sitting on piles of dollars and President, fueled by the technology, Yards and midtown.This is a growing sectors, such as tech, long as New York City learning how to maneuver tristate communications and game of musical chairs. When media, entertainment, etc. We continues to grow and attract around their export controls. region, entertainment sectors. The new the music stops at the end of have already begun to see some shoppers from all over the They will certainly become Colliers mayor needs to focus on the the year, some of this space will migration out of the super- globe, retail will continue to major players in the global real International necessary steps to make sure be leased and some will be heated midtown south and appreciate in price. estate market, and their those industries continue to be vacant. In addition, there will be Hudson Yards markets into the presence in New York City has attracted to the city, and to newly created and pending financial district and the mid- just begun to be felt. In thrive. It’s all about jobs. vacancies, as tenants who have town core.This out-migration addition, New York continues committed to the financial has the potential to offset or to be attractive to Western district and Hudson Yards leave weaken the blow [of slower investors. behind their old space. growth among financial tenants].
18 | Crain’s New York Business | January 13, 2014 Special Advertising Section
PS001_CN_20140113.indd 1 1/9/14 3:12 PM New York’s Real Estate Community: Like No Other Special Advertising Section
A NOTE FROM OUR PUBLISHER The real estate industry in New York City is unlike any other in the world: spectacular architecture, iconic buildings, a storied skyline and a consortium of talented professionals who all coalesce to create a bustling and philanthropic business community. To celebrate this distinct group, Crain’s Custom Connections Studio has created this special section, dedicated to showcasing what makes this community tick. In the first article, which starts on Page S4, Crain’s Custom Connections Studio will take a deep look at the philanthropy of the real estate industry, and how marquee-name CEOs and presidents are giving back to their city in the form of generous donations and stunning renovations. We then look on Page S6 at REBNY’s pivotal role in the real estate industry - from creating a sense of community and advocating for its needs to providing educational programs and curating a robust database of real estate information. The last section is a series of interviews with real estate professionals who discuss their thoughts
Special Advertising Section on the industry, their ideas for the year ahead and how the real estate landscape will continue to evolve in an ever-changing marketplace. We hope you enjoy New York’s Real Estate Community: Like No Other, and if you have any thoughts or comments, please reach out to us. We love hearing from our readers. Best,
Jill Kaplan V.P. & Publisher Crain’s New York Business
TABLE OF CONTENTS
S2 Introduction S17 TF Cornerstone S3 New York University S18 Goulston + Storrs S4 In New York City, the Real Estate Industry’s S19 Cushman & Wakefield Philanthropy is a Matter of Course S20 Douglas Elliman S5 U.S. Green Building Council S21 EVO Real Estate Group S6-10 The Real Estate Board of New York: Serving a Community Vital to the City’s Prosperity S23 The Vortex Group LLC S7 Avison Young S25 Paragon S8 Paramount Building – 1501 Broadway S26 The Marino Organization S9 3 Hudson Boulevard S27 Sherwood Equities S11 Lee & Associates S29 Jack Resnick & Sons S12 Moinian S30 Handler Real Estate Organization S13 Emerge 212 S31 PI Capital S14 CBRE S33 Jones Lang LaSalle S15 The Durst Organization S35 SL Green S16-36 Interviews with Industry Executives and Veterans S37 Silverstein Properties
New York’s Real Estate Community: Like No Other is published by Crain’s Custom Connections Studio. For more information, please contact Trish Henry at (212) 210-0711 or [email protected]. The digital edition can be viewed online at crainsnewyork.com/realestate2014. S2
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IN NEW YORK CITY, THE REAL ESTATE INDUSTRY’S PHILANTHROPY IS A MATTER OF COURSE
The city’s iconic museums, performing arts centers and non-profits all benefit from a generous real
estate community The real estate titans who develop and manage the the KIPP NYC College Prep, a charter high school in buildings that define New York City are also pillars of the Bronx. The foundation has also raised nearly $80 philanthropy. They sustain and strengthen a wide-range million over the last quarter century to fund the grants of non-profits by not only providing generous financial for its projects. support, but also sharing their resources and expertise. Annual unrestricted contributions from real estate At Carnegie Hall, a $10 million gift from Judith Res- leaders total about $50 million for UJA-Federation of nick and Burton Resnick – chief executive officer at New York, said Mark Medin, a senior vice president. Jack Resnick & Sons, Inc. – is part of the more than That helps 100 agencies across the metropolitan area $205 million raised towards the $224 million renova- provide human, educational and leadership services. tion of the Studio Towers atop the landmark building. The overhaul, to be completed this year, includes new “The real estate community is among the most, if not ensemble rooms, practice rooms and teaching studios, the most, committed, long-term philanthropic element said Susan Brady, director of development at Carnegie of the New York Jewish community when it comes to Hall. the UJA- Federation as with much of the New York philanthropic community,” Mr. Medin said. Similarly, at Lincoln Center, Tamar Podell – the senior vice president of planning and development – called Larry Silverstein, the chief executive officer of Silver- its 40-year-old real estate development council “a true stein Properties, is among the major players “who give partner in our evolution and development.” The council themselves as mentors, leaders and role models to has raised more than $23 million for the arts organiza- encourage others to become active in supporting UJA,” tions and training academies on the 16-acre campus. Mr. Medin added.
“They made a huge difference, providing unrestricted At the newly expanded Queens Museum in Flushing operating support” that keeps the lights on and helps Meadows-Corona Park, a fundraising campaign asks Lincoln Center bring performing arts programs to developers to “ adopt” for “tens of thousands of dollars” schools, libraries and other communities, Ms. Podell or add models of their new buildings to the 895,000 said. structures in the museum’s 9,500-square-foot Pan- orama of the City of New York, said Tom Finkelpearl, Support from the real estate industry to help the Robin president and executive director. Hood Foundation’s 240 poverty-fighting organizations “is immeasurable,” said Susan Sack, the managing The campaign, which supports educational program- director of real estate. “The real estate community has ming, “has been quite attractive to the real estate com- come in, time and time again,” with expertise to nego- munity,” he said. To date, the real estate industry has tiate a lease, design a building or find the right contrac- brought in about $30,000 of the $100,000 raised. tor, Ms. Sack added. And in choosing to renovate the miniature Battery Park Pro bono help from The Georgetown Company, a City or build a Lilliputian model of the new Yankee Sta- developer, along with reduced fees from the architec- dium, the real estate community upholds its tradition tural firm Gensler and the design consultancy Penta- of enriching the city with its visionary philanthropy. gram, made it possible last fall for Robin Hood to open
S4
PS004_CN_20140113.indd 1 1/9/14 3:14 PM Global leaders like Skanska are using the LEED® green building program to meet their business goals. Better buildings, better business.
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CN016378.indd 1 1/7/14 10:29 AM New York’s Real Estate Community: Like No Other Special Advertising Section
THE REAL ESTATE BOARD OF NEW YORK: SERVING A COMMUNITY VITAL TO THE CITY’S PROSPERITY
REBNY wears countless hats on behalf of the real From the two-family homes that dot Staten Island to “We are non-partisan and support candidates that are the skyscrapers that line the island of Manhattan, the pro-good job creation and pro-environment that would estate industry – city’s real estate industry continues to leave its enduring generate investment for the city of New York,” said signature on residential and commercial landscapes. Mr. Spinola.
from teacher to Fostering a sense of community within the industry And with real estate accounting for 34 percent of the and lending a voice to their concerns in its working locally-generated tax revenues, “the city is dependent advocate to reporter relationships with the city and state – as well as provid- on the real estate industry,” Mr. Spinola added, “and we ing the information, professional tools and networking are dependent on the city. Our objective is to make sure gatherings critical to development, ownership, manage- the city continues to grow so that the 34 percent can ment and brokerage – is the 118-year-old Real Estate continue to rise.” Board of New York (REBNY). A GUIDE TO REBNY’S SERVICES “We bring together every element of real estate – resi- dential and commercial brokerage, owners, managers, Meeting the Industry’s Needs financial institutions, attorneys, architects and plan- A multi-faceted association, REBNY provides a pletho- ners,” said REBNY President Steven Spinola. “And at ra of services. Here’s a snapshot of its activities: different times, every element is sitting in the room, Brokerage Services oversees all issues and meetings sharing their efforts and making it a better and more associated with commercial and residential brokerage. professional industry.” Within commercial and residential brokerage are more As a trade organization, REBNY enables members to than 27 standing committees organized by geographic stay abreast of issues and trends important to their location, according to Eileen Spinola, senior vice presi- work. Its efforts encompass running accrediting licens- dent of brokerage services and education. Meetings are ing programs, seminars and panel discussions, as well opportunities to share timely information about devel- as producing real estate market reports. And last year, opments or trends in specific areas and exchange ideas it implemented a transmission system that updates for strengthening or overcoming a challenge in the shared residential listings every hour. locale. The meetings also facilitate networking among As an advocacy organization, REBNY articulates the members working in those locations. real estate community’s concerns, providing input in Among its other efforts, commercial brokerage bestows the city’s direction and policies, from recommending awards for “The Most Ingenious Deal of the Year for incentive programs that helped in rebuilding Lower Sales and Leasing,” “The Most Ingenious Deal of the Manhattan after 9/11 to proposing ways to protect Year for Retail” and “The Most Promising Commercial buildings from storms following Hurricane Sandy. Sales Person (Rookie) of the Year.” Additionally, “The REBNY’s advocacy work is informed not only by its Louis Smadbeck Memorial Broker Recognition Award” members’ experiences, but also by top experts in vari- pays tribute to a commercial practitioner for lifetime ous fields, such as planners and attorneys specializing achievement. For commercial retail, REBNY bestows in zoning issues. two “Most Ingenious Deal of the Year” awards – one Last year and for the first time ever, REBNY – through for creativity and the other for impact upon an area. its Jobs for New York committee – actively supported Within the residential division, REBNY presents “The 22 city council candidates in local races, with 18 elected Most Ingenious Deal of the Year for Sales and Rent- to office. als Award,” “The Henry Foster Lifetime Achievement
(continued on S10) S6
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s At the new No. 7 Subway Station.
s Anchoring Hudson Boulevard Park.
s On a full city block between 34th and 35th Streets/ 11th Avenue.