See page 23 WWW EAL COM NEW Y R E ... - The Guberman Group · opers Group. Construction per-mits...
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WWW.TRDEAL.COM NOVEMBER 2004 T HE R EAL D EAL N EW Y ORK R EAL E STATE Vol 2, No.10 WWW.TRDEAL.COM $3.00 NOVEMBER 2004 FACT Page 28 See page 23 f it’s location, location, loca- tion that sells property, then it’s reputation, reputation, repu- tation that sells brokerages themselves, particularly in the New York metro area. The same market dynamics that will drive up a sought-after piece of property are at work in the real estate brokerage market, where successful smaller opera- tions can fetch between three and 6.5 times their annual earn- ings in a merger or acquisition transaction, depending on the size of the business. What a brokerage is worth begins with its EBITDA, or earn- ings before interest, taxes, de- preciation and amortization, or more simply put, its annual cash flow. “The whole process begins with what your EBITDA is,” says David Michonski, chief executive of Coldwell Banker Hunt Kennedy, which is itself a merger-created company that How to buy the firm CARL UNEGBU he pace of luxury development in Brooklyn is picking up as builders expand on the borough’s high-end potential, ticking off a slew of projects that started with David Walentas’ 1998 conversion of Dumbo’s Clock Tower Building into luxury lofts. Bored by brownstones and clamoring for the contemporary, buyers in Brooklyn are seeking out new residential projects in massive numbers today - and de- velopers are delivering. At least 130 new projects have been constructed in Brooklyn since Walentas gambled on the Clock Tower conversion, with neighborhoods such as Dumbo, Williamsburg and the edges of Park Slope leading the way. What’s already built is only a drop in the bucket compared to the del- uge about to come, developers and brokers say. In this issue, The Real Deal takes a comprehensive look at new development in Brooklyn, with an in-depth chart on pages 16 and 17. While Manhattan may have led the city in new residential con- struction during much of the 1990s, these days Brooklyn leads the pack. Overall, Brooklyn is projected to have more than 5,000 new apart- ment units within the next two years, according to Elan Padeh, CEO and president of Brooklyn- based marketing firm The Devel- opers Group. Construction per- mits for more than 3,800 units were granted through July of this year, compared to permits for 2,200 units in Manhattan. The borough has -to an extent - The Real Deal/Yoav Elkoby Developer Josh Guberman at 101 Wyckoff Avenue in East Williamsburg, one of his new projects. took its current shape in a 1995 deal. But from there, the terms of a brokerage deal differ somewhat from say, a bank merger. “In a service industry like ours, everything gets factored in - your reputation, your years in the business and especially [the seller’s] plans for their role in the company after the deal is completed,” Michonski says. The tri-state area is the sec- ond largest in the country in terms of the value of its transac- tions, and major national firms are constantly consolidating market share with strategic ac- quisitions of smaller real estate companies as they jockey for ad- vantage. The purchase last month of D.J. Knight & Co by global relo- cation services powerhouse SIRVA (see story on page 9)and Halstead’s buy of Heron Resi- ichael Shvo has a vision for this nascent broekrage and marketing company that comes from past ex- perience and what he hopes wil lbe his future competition. “A combination of Douglas Elliman and the Sunshine Group” is how Shvo describes the new company he is in the process of forming. He’ll have plenty of support as he tries to make it happen Shvo, who headed the top-pro- ducing group at Elliman in 2003, resigned last month to start his own firm. He will be joined by his en- tire 20-person group, and is cur- rently finalizing a lease for office space on Fifth Avenue in the upper 50s. Rumors abount over the circum- stances of Shvo’s October depar- ture, though the 31-year-old top broker said the move was something he has been working towards for a number of years. “There is only so much you can grow within a company,” said Shvo, who after starting at Elliman five AVERAGE PRICE PER SF FOR NEW BROOKLYN PROJECTS $0 $600-$900 $1,000 DUMBO WILLIAMSBURG $0 $550-$900 $1,000 COBBLE HILL $0 $600-$650 $1,000 PARK SLOPE (4TH AVE) $0 $485-$600 $1,000 DOWNTOWN BROOKLYN $0 $500-$550 $1,000 Source: The Developers Group BEDFORD-STUYVESANT $0 $325-$400 $1,000 Ten to 15 percent of all home loan applications involve some fraud or misrepresentation. AT A GLANCE INSIDE Page 6 Lala Wang vs. REBNY Page 8 Transformation of 260 Park Ave. Page 9 Commercial Market Report Page 12 Graduating From Rentals to Sales Page 16 Brooklyn New Project Map Page 18 Top Commercial Deals in NYC Page 24 Trends in Top 10 U.S. Markets Page 25 Buying vineyards in France Page 27 $70M Apt for Sale Page 30 Residential Deal Sheet THE DEVELOPMENT FORUM Garment District Shedding Clothes Businesses outside of the apparel in- dustry are giving the Garment Dis- trict a gradual makeover of its com- mercial tenant base, but its mantle as the next trendy locale for offices isn’t quite ready-to-wear. Page 11 Apartment Market Sees Inventory Rise After a weak September apartment market, October appeared to mark a return to somewhat more normal con- ditions. Uncertainty created by the presidential election appeared to give the market some pause, however. The proportion of deals done at the lower- end of the market have been increas- ing and there has been a marked in- crease in this segment as well. Page 3 Midtown Dominates Office Market The outlook is improving in the city’s three principal office markets, accord- ing to a recent report, which found Manhattan’s office vacancy rate drop- ping to its lowest level in 26 months. Midtown represents 70 percent of all leasing in Manhattan this year, ac- cording to estimates. Page 9 Continued on page 29 Shvo Goes Solo STUART W. ELLIOTT WILL SWARTS Continued on page 3 T Brooklyn Rises in Developers’ Eyes I Top brokerages can fetch six times earnings when bought M Continued on page 15
Transcript of See page 23 WWW EAL COM NEW Y R E ... - The Guberman Group · opers Group. Construction per-mits...
WWW.TRDEAL.COMNOVEMBER 2004
THE REAL DEALNE W Y O R K R E A L E S T A T EVol 2, No.10 WWW.TRDEAL.COM $3.00NOVEMBER 2004
FA C T
Page 28 See page 23
f it’s location, location, loca-tion that sells property, then
it’s reputation, reputation, repu-tation that sells brokeragesthemselves, particularly in theNew York metro area. The same market dynamicsthat will drive up a sought-afterpiece of property are at work inthe real estate brokerage market,where successful smaller opera-tions can fetch between threeand 6.5 times their annual earn-ings in a merger or acquisitiontransaction, depending on thesize of the business. What a brokerage is worthbegins with its EBITDA, or earn-ings before interest, taxes, de-preciation and amortization, ormore simply put, its annual cashflow. “The whole process beginswith what your EBITDA is,”says David Michonski, chiefexecutive of Coldwell BankerHunt Kennedy, which is itself amerger-created company that
How to buy the firm
CARL UNEGBU
he pace of luxury developmentin Brooklyn is picking up as
builders expand on the borough’shigh-end potential, ticking off aslew of projects that started withDavid Walentas’ 1998 conversionof Dumbo’s Clock Tower Buildinginto luxury lofts. Bored by brownstones andclamoring for the contemporary,buyers in Brooklyn are seekingout new residential projects inmassive numbers today - and de-velopers are delivering. At least 130 new projects havebeen constructed in Brooklynsince Walentas gambled on theClock Tower conversion, withneighborhoods such as Dumbo,Williamsburg and the edges ofPark Slope leading the way.What’s already built is only a dropin the bucket compared to the del-uge about to come, developersand brokers say. In this issue, The Real Dealtakes a comprehensive look atnew development in Brooklyn,with an in-depth chart on pages16 and 17.
While Manhattan may have ledthe city in new residential con-struction during much of the1990s, these days Brooklyn leadsthe pack. Overall, Brooklyn is projected to
have more than 5,000 new apart-ment units within the next twoyears, according to Elan Padeh,CEO and president of Brooklyn-based marketing firm The Devel-opers Group. Construction per-
mits for more than 3,800 units weregranted through July of this year,compared to permits for 2,200units in Manhattan. The borough has -to an extent -
The Real Deal/Yoav Elkoby
Developer Josh Guberman at 101 Wyckoff Avenue in East Williamsburg, one of his new projects.
took its current shape in a 1995deal. But from there, the terms of abrokerage deal differ somewhatfrom say, a bank merger. “In a service industry likeours, everything gets factoredin - your reputation, your yearsin the business and especially[the seller’s] plans for their rolein the company after the deal iscompleted,” Michonski says. The tri-state area is the sec-ond largest in the country interms of the value of its transac-tions, and major national firmsare constantly consolidatingmarket share with strategic ac-quisitions of smaller real estatecompanies as they jockey for ad-vantage. The purchase last month ofD.J. Knight & Co by global relo-cation services powerhouseSIRVA (see story on page 9)andHalstead’s buy of Heron Resi-
ichael Shvo has a vision for thisnascent broekrage and marketing
company that comes from past ex-perience and what he hopes wil lbehis future competition.“A combination of Douglas Ellimanand the Sunshine Group” is howShvo describes the new companyhe is in the process of forming. He’llhave plenty of support as he triesto make it happen Shvo, who headed the top-pro-ducing group at Elliman in 2003,resigned last month to start his ownfirm. He will be joined by his en-tire 20-person group, and is cur-rently finalizing a lease for officespace on Fifth Avenue in the upper 50s. Rumors abount over the circum-stances of Shvo’s October depar-ture, though the 31-year-old topbroker said the move was somethinghe has been working towards for anumber of years. “There is only so much you cangrow within a company,” said Shvo,who after starting at Elliman five
AVERAGE PRICE PER SFFOR NEW BROOKLYNPROJECTS
$0
$600-$900
$1,000
DUMBO
WILLIAMSBURG
$0
$550-$900
$1,000COBBLE HILL
$0
$600-$650
$1,000
PARK SLOPE (4TH AVE)
$0
$485-$600
$1,000
DOWNTOWN BROOKLYN
$0
$500-$550
$1,000
Source: The Developers Group
BEDFORD-STUYVESANT
$0
$325-$400
$1,000
Ten to 15 percent of all homeloan applications involve somefraud or misrepresentation.
AT A GLANCE
INSIDE
Page 6Lala Wang vs. REBNY
Page 8Transformation of 260 Park Ave.
Page 9Commercial Market Report
Page 12Graduating From Rentals toSales
Page 16Brooklyn New Project Map
Page 18Top Commercial Deals in NYC
Page 24Trends in Top 10 U.S. Markets
Page 25Buying vineyards in France
Page 27$70M Apt for Sale
Page 30Residential Deal Sheet
THEDEVELOPMENT
FORUM
Garment DistrictShedding ClothesBusinesses outside of the apparel in-dustry are giving the Garment Dis-trict a gradual makeover of its com-mercial tenant base, but its mantle asthe next trendy locale for offices isn’tquite ready-to-wear. Page 11
Apartment MarketSees Inventory RiseAfter a weak September apartmentmarket, October appeared to mark areturn to somewhat more normal con-ditions. Uncertainty created by thepresidential election appeared to givethe market some pause, however. Theproportion of deals done at the lower-end of the market have been increas-ing and there has been a marked in-crease in this segment as well. Page 3
Midtown DominatesOffice MarketThe outlook is improving in the city’sthree principal office markets, accord-ing to a recent report, which foundManhattan’s office vacancy rate drop-ping to its lowest level in 26 months.Midtown represents 70 percent of allleasing in Manhattan this year, ac-cording to estimates. Page 9
Continued on page 29
ShvoGoesSolo
STUART W. ELLIOTT
WILL SWARTS
Continued on page 3
T
Brooklyn Rises in Developers’ Eyes
I
Top brokerages can fetch six times earnings when bought
M
Continued on page 15
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