Are developers playing "chicken" with the market?

[David Goldsmith]

New Development Sales Surge in New York City

Deals were up by 25 percent in March across the five boroughs compared to pre-pandemic averages, according to data from Marketproof.

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Condo sales are booming in Brooklyn​

Marketproof data reveal March was a hot month across the city
March was a good month for brokers selling condos across the boroughs.
The spring season is starting off hot with 39 percent more deals closed in March versus February, according to data firm Marketproof.

Deals for newly built or newly converted apartments across the city were up by 25 percent compared to pre-pandemic averages for the month. March saw 350 contract signings this year. The average between 2015-2019 was 280.
“In February’s new dev market report we said ‘worry not, new devs did nicely.’ In March, as the Spring selling season begins, deal volume is surprisingly strong,” Marketproof CEO Kael Goodman wrote in his firm’s March report. “New dev buyers seized the opportunity to buy in prime Manhattan and Brooklyn projects.”

Marketproof’s Kael Goodman (Linkedin)
The largest contract to close in March was a $66.5 million ($4,000 per square foot) sale for two penthouse apartments spanning four floors at the top of Naftali Group’s The Bellemont in the Upper East Side. The sale smashed records in the neighborhood.
Over in the Penn District, Aleksey Gavrilov and Joseph Grosso of Corcoran closed 22 contracts at 300 West 30 Street in March, the first development project by Queens-based Hiwin Group USA. Deals at the Mondrian-inspired residence ranged from $950,000 to $1.7 million.
As impressive as Manhattan’s numbers were last month, the sales activity pointed to a shifting tide, with Brooklyn competing for the bulk of the city’s business.
“The shift back to Brooklyn was very visible,” said Marketproof CEO Kael Goodman. “Manhattan’s deals are still bigger but not by much.”

The outer borough saw 145 new development contracts, which is a 61 percent growth over pre-pandemic levels.
Not only are there more sales in general, but also more inventory to sell in Brooklyn, according to Goodman.
In Boerum Hill, Sterling Town Equities’ Post House topped Brooklyn sales, closing eight contracts for one, two and three-bedroom units, with prices ranging between $1 million to just shy of $3.5 million.
The second tallest tower in the borough, Extell’s Brooklyn Point, placed second again, securing six contracts for one and two-bedroom apartments. The Downtown Brooklyn highrise saw prices ranging from $1.2 million to $2.6 million.

Growth dotted the entirety of Brooklyn, with dozens of contracts signed “deep into the borough,” according to Goodman.
That could be linked to a sharp decrease in the demand for luxury units across the city, which are down 31 percent compared to the 2015-2019 average for the month. While more units were sold in March versus February, closings were 12 percent cheaper, with a median price of $5.5 million.
“In Brooklyn there’s a lot more room and more land to build new stuff. The borough is filling the market for more affordable units,” Goodman said.

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[David Goldsmith]

Nir Meir Claims He’s Broke After Living Large in Miami

Embattled condo developer Nir Meir says he is essentially penniless and living at a friend’s house as creditors pursue him for millions.

therealdeal.com

Nir Meir: I’m penniless​

Former HFZ Capital exec says all he has left are the clothes on his back

Nir Meir is a material boy.
Since the spectacular collapse of his former firm, luxury condo developer HFZ Capital Group, Meir has spent the last few years defying his creditors by living the high life in South Florida.

Lawsuits filed in the wake of HFZ’s implosion accuse Meir of splurging on yacht and private jet charters, fine wines, a $135,000-per-month home rental, stays at the Four Seasons and $1.5 million worth of gold, among other extravagances.
But now Meir says he’s essentially penniless. He has $5,000 in his bank account, he stated in an affidavit late last month, and has been staying at a friend’s house.

“All I have left are articles of clothing that I need to survive,” Meir claimed.
Meir’s cry of poverty was submitted as part of a lawsuit brought by Israeli car importer Yoav Harlap, who lent millions to an HFZ project on Manhattan’s Upper East Side. HFZ defaulted on the loan, which Meir and HFZ founder Ziel Feldman had personally guaranteed. Harlap’s company, YH Lex Estates, won an $18.5 million judgment against Meir in 2021 and against Feldman a year later.
The judgment, it turns out, was the easy part.
Meir has stifled Harlap’s attempts to collect on the debt by arguing in court that his lavish lifestyle is entirely funded by his wife, Ranee Bartolacci, who has been described by her own attorney as a “trust fund baby.”
When the couple sold their Hamptons estate to New England Patriots owner Robert Kraft for $43 million in 2021, YH Lex Estates tried to collect on the proceeds. But Meir’s attorneys claimed that Bartolacci was the property’s true owner and that the proceeds were hers.

“Nir had a healthy lifestyle when he was at HFZ, nothing to apologize for,” Larry Hutcher of Davidoff Hutcher & Citron, Meir’s attorney at the time, told The Real Deal last year. “He was doing well, and his wife has elected to continue to live a lifestyle.”
Harlap’s company is now seeking for a second time to hold Meir in contempt of court. The creditor alleges Meir defied court orders by moving money out of a shell company called Ermitage One, which Meir had said was managed by Bartolacci.
As proof that Meir was in control of Ermitage, YH Lex Estate’s lawyers claim that Meir used the pseudonym “Nir Bartolacci” to purchase gold from an online metals retailer on Ermitage’s behalf. Meir made four calls to the retailer, JM Bullion, ordering hundreds of ounces of Credit Suisse gold bars in Ermitage’s name, according to court documents.
In an April court filing, Meir’s attorney Jonathan Marc Davidoff called the contempt motion “a desperate attempt to extort Meir” and said a trustee’s forensic evaluations showed that as of last July, Meir had liabilities of more than $41 million but just $19,000 in cash and a wine collection valued at $35,000 — his only other asset.
But a day after that filing, Davidoff filed a letter to the judge seeking to withdraw as Meir’s attorney, citing “issues that arose between Meir and the law firm.” Davidoff did not respond to a request for comment.

Photo included in exhibit in YH Lex Estates lawsuit against Nir Meir, showing wine at Meir’s house

Miami meltdown​

As HFZ’s signature condo project languished, unfinished, above Manhattan’s High Line, Meir and Bartolacci weren’t exactly laying low in Miami Beach.
Bartolacci paid $135,000 a month to put the family up in a waterfront home. It may have been a rental, but she allegedly treated the house like her own, pouring $600,000 into improvements including a jet ski dock and a fish pond.

Bartolacci had been renting the seven-bedroom Sunset Islands house from spec home developer and restaurateur Mathieu Massa. That quickly turned into a legal battle of its own. In February, Massa attempted to evict Bartolacci, who was living there with Meir and their children, for alleged failure to pay rent.
Meir hired armed guards to defend the property. The police were called and Massa succeeded in evicting Meir and Bartolacci in March, but only briefly. Within days, Bartolacci’s attorneys got a judge to reverse the eviction, only for her to move out a month later.
Bartolacci’s lawyer is now seeking to claw back some of the rent paid because of a defect with the seawall that allegedly made the property unsafe. An inspector issued an unsafe structure violation at the property in March, Miami Beach city records show.
“It created dangerous conditions,” said Hutcher. “They had no choice but to vacate the house.”
Massa has been left bewildered.

“If any of this was true, why would they have fought to get back in? Why would you continue to live there and pay rent?” said Massa’s attorney, Alan Perlman of Dickinson Wright.
Attorneys for Massa have questioned how Meir can pay his legal fees after facing multiple judgments. Meir stated in the affidavit last month that he has no active credit cards, owns no properties and that his friend charges him no rent and pays for his utilities.
“I pay no rent as I am currently living at a friend’s place temporarily,” Meir stated. “All of my legal bills which are vital to my defense and the protection of my rights are being paid by third parties.”

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[David Goldsmith]

Laborers’ Union Rallies Against Contractor at LeFrak Project

The laborers’ union is hosting a rally in Jersey City against two contractors that were working on LeFrak’s 30 Park Lane development.

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https://therealdeal.com/

Union takes aim at LeFrak, Kushner developments​

Laborers file complaint against contractors at Jersey City site

A labor broker awaiting sentencing in a $1 million construction insurance fraud case in New York is at the center of a fight across the river.
The Laborers’ International Union of North America is taking aim at the LeFrak Organization and nonunion contractors it’s using in Jersey City, alleging that workers were exploited on a waterfront site.

The union plans to rally today outside Kushner Companies’ One Journal Square development, where it believes the contractors were going to be hired next.
The state recently shut down work on 30 Park Lane North in Jersey City, a 387-unit apartment building being developed by LeFrak on the Jersey City waterfront. The New Jersey Department of Labor cited failure to pay workers on time, as well as overtime, and improper classification of construction workers.

The stop-work orders were issued in late April against Signatura Laboris, a company registered to labor broker Salvador Almonte, and against the site’s concrete contractor, Concrete Rising. The order against Concrete Rising has since been lifted.
A representative for the Department of Labor declined to comment, citing an ongoing investigation.
“We take great pride in our job sites and the teams that work on them,” a spokesperson for LeFrak said in a statement. “We have no direct connection to the company in question, which was a subcontractor of a subcontractor, and is no longer involved with this project.”
Almonte was convicted in March for lying about the size of his companies to avoid paying $1 million in insurance premiums. At the time, Manhattan District Attorney Alvin Bragg said Almonte was “putting workers’ lives at risk all in the name of saving a buck.” He is slated to be sentenced this month.
Almonte has operated under a number of entities, providing construction workers to sites. He was released without bail after his 2019 arraignment, the New York Daily News reported at the time.

“He came across the river and started doing it again,” alleged Nicole Vecchione, a research director with an organizing fund for the union’s eastern region. “At some point that cycle needs to be broken.”
When Almonte was indicted in 2019 in the insurance fraud case, the Manhattan district attorney alleged that more than a dozen of Almonte’s workers had been injured on the job in the preceding four years. One, Juan Chonillo, died after falling from Fortis Property Group’s 161 Maiden Lane in 2017. SSC High Rise, which pleaded guilty to manslaughter in Chonillo’s death, had used Almonte’s labor services, according to authorities.

​

The union has targeted so-called “body shops” in New York, a term it uses to describe what it considers exploitative companies that provide construction labor to sites. The Mason Tenders District Council of Greater New York and Long Island, which is part of the Laborers’ International Union of North America, got a law passed that requires such companies to obtain licenses.
Opponents of the measure viewed it as another market-share grab by the union. They say some brokers of nonunion labor provide jobs to people living at the margins, such as new immigrants and recently incarcerated people unable to get union jobs.

But Vecchione said small unlicensed companies like Almonte’s assume the liability posed by unsafe work conditions. She and the union are pushing for that responsibility to trickle up the hierarchy to the general contractor and developer on a project. Labor brokers tend to use numerous LLCs, which can make them more difficult to track from job to job.
“It is a shell game,” said David Johnson, director of the organizing fund. “This is one company of several that we’ve come across, and it seems like it is just getting more and more prevalent.”
The Laborers Eastern Region Organizing Fund has also filed a complaint with the National Labor Relations Board against Almonte’s company and Concrete Rising. The union fund alleges that the companies interfered with workers’ attempts to unionize and retaliated against those workers by reneging on promises of future work.
An attorney for Concrete Rising said his client disputes the allegations in the NLRB complaint, and any other accusations of wrongdoing. Almonte could not be reached for comment.
One worker, who asked to be referred to as Garcia, described working long hours at 30 Park Lane with no breaks and finding that his paycheck was hundreds of dollars short. He described an incident earlier this year where another worker was injured on the 32nd floor. He said a crane was used to transport the worker from the project in a construction trash container.

“Many of the workers didn’t like how he was treated,” Garcia said in Spanish.
“Wage theft and safety issues go hand in hand,” Vecchione said. “When a worker was injured, they got him off the site in a garbage bin. That tells you everything you need to know about how they treat workers.”

 

[David Goldsmith]

NYC New Development Condo Sales Slowed in April

Signed contracts for new development condos slowed in April after a busy March, but are still up 8 percent year-to-date compared to prior years.

therealdeal.com

New condo sales slowed in April, especially in the luxury market​

Signed contracts still up 8% this year over pre-pandemic average

After a crackling March, the city’s new development market slowed to catch its breath again in April. Sales volume and median prices both declined, while the luxury segment logged its worst month since the start of the year.
Buyers signed contracts for 282 new development condos in April, down 19 percent compared to March, according to a Marketproof report. The slowdown was not enough to undo a relatively hot February and March: On a year-to-date basis, contracts are still up 8 percent compared to the pre-pandemic average.

Sales volume fell 21 percent to $600 million, compared to $763 million in March, while the median price for new condos slipped 7 percent to $1,581 per square foot.
“After a very active March, demand contracted in April,” Marketproof CEO Kael Goodman wrote in the report, “but that’s to be expected.” March is typically a peak month in the spring selling season, Goodman noted.

But even when accounting for the seasonal slowdown, brokers at the highest end of the market seemed to have a difficult time finding buyers last month. Signed contracts for luxury apartments priced at $4 million and above, which are heavily concentrated in Manhattan, tumbled 38 percent compared to March. The $4 million and up segment logged its slowest month since December, with 23 percent fewer deals than in a typical April.
Three luxury pads at Extell’s Central Park Tower, which recently took on a $500 million inventory loan, went into contract with a combined asking price of $38 million, and one closed for $5,300 per square foot. The Witkoff Group and Len Blavatnik’s One High Line — formerly HFZ Capital Group’s the XI — found buyers for two units in Chelsea asking a combined $35 million, including a penthouse that asked $4,900 per square foot.

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Manhattan’s 118 new signed contracts last month were down 18 percent from April’s pre-pandemic average and 34 percent from March. At 300 West 30th Street in Chelsea, the 69-unit project by Queens-based Hiwin Group USA saw 16 units go into contract, and Extell’s One Manhattan Square, in Two Bridges, sold six units.
In Brooklyn, new contract signings fell by a third compared to March. But April’s 96 deals were still 20 percent more than an average April from 2015 to 2019. Extell’s Brooklyn Point in Downtown Brooklyn sold six apartments and CIM Group and LIVWRK’s 111 Montgomery Street in Crown Heights had five units go into contract.

The priciest unit to go into contract was a penthouse at Tishman Speyer’s 11 Hoyt Street in Downtown Brooklyn asking $6.1 million. It was the only unit in the borough that sold for north of $4 million.
In Queens, Chris Xu’s Skyline Tower notched four new contracts after investor Risland took on a $60 million inventory loan, and ZD Jasper’s 130-unit offering recorded 49 contracts for the month, most of which actually sold in prior months but were not reported.

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[David Goldsmith]

Buyers, Brokers Being Wooed to Make Deals

Brokers and buyers in New York City are up for perks like Taylor Swift tickets, Vespas and gym memberships aimed at closing deals.

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Perks rise for buyers, brokers to make deals​

Cars, gym memberships and Taylor Swift tickets among incentives on the table

New York City’s slowing residential market means more gifts are dangled in front of buyers and brokers to get deals over the line.
Perks tend to rise as the market falls, and gifts are mostly being distributed by developers of new properties trying to set themselves apart from the luxury glut, the New York Post reported. But Redfin’s lead economist Taylor Marr told the outlet what’s going on now is unique.

“We’re seeing an unprecedented number of these incentives out there,” Marr said.
In the U.S., 46 percent of sellers have recently offered a gift with a sale, according to an analysis by Redfin. That’s the highest mark in the past decade. In New York, one in every six sellers offered a gift, averaging between $5,000 and $10,000.

Serhant tried to raise buzz for sales at Quadrum Global’s 171-unit The Huron at Greenpoint by offering brokers the chance to score a set of Swift tour tickets. On top of a broker boat party, the raffle was part of an effort to inspire agents to score signed contracts before official sales even launched.
But most incentives are targeting buyers, who could score a wide variety of offers from mortgage buydowns to expensive gifts.

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At CPPC Development’s Three99 in the East Village, a $2.8 million condominium comes with a $6,000 Vespa. One bid for the three-bedroom unit came directly as a result of the perk, according to co-listing agent Malessa Rambarran of Brown Harris Stevens.

The gift of $25,000 in flexible furniture from Bumblebee could be swaying some buyers at NOVA, a Long Island City condo project developed by SB Development. More than half of the units have been sold and many have praised the perk, according to principal Joe Stern.

Other gifts being offered include gym memberships and WeWork access to those at One Wall Street, 2 percent annual mortgage buydowns for three years at Extell Development’s Brooklyn Point and One Manhattan Square, and luxury gifts for homes at the high-end of the market, such as $25,000 Amex gift cards and in one off-market Hamptons sale, a Lamborghini.

 

[David Goldsmith]

Fortis’ Leaning Tower at 161 Maiden Lane Fined as Fire Hazard

The standpipe at Fortis Property Group’s stalled tower project at 161 Maiden Lane was broken and went unfixed for a year.

therealdeal.com

FiDi’s leaning tower fined as fire hazard​

Broken standpipe at stalled Fortis project went unfixed for year

Fortis Property Group’s luxury tower at 161 Maiden Lane has yet to welcome its first official resident, but one person couldn’t wait to move in.
The receiver managing the unfinished condominium told The City that sometime before June 2021, a possibly homeless intruder turned on the motor that powers the standpipe, a crucial piece of equipment that allows firefighters to quickly hose down blazes on the upper floors of skyscrapers.

The motor broke, disabling the standpipe, which remained out of service until late in the summer of 2022. One reason it took so long to fix is that a hoist needed to haul a replacement motor up into the tower was also broken, the receiver, Richard Cohn, told the outlet.
A spokesperson for Fortis told The City that the developer wasn’t aware of any problem with the standpipe before Cohn began managing the tower in June 2021. It had been found operable the month before.

In any event, the Department of Buildings levied a $25,000 fine for the standpipe snafu and a $2,500 penalty for a lack of fire-watch personnel at the building, the outlet reported.

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Construction was halted several years ago when the tower was discovered to be leaning three inches to the north, perhaps because a less expensive foundation was laid to save time and money. It has been stuck in litigation since as Fortis, lenders and contractors fight and negotiate over who is to blame and what to do with the development.
The fear is that whatever caused the building to tilt north — possibly a stiff wind hitting the facade, or the ground shifting under it — could happen again if the project were completed.

 

[David Goldsmith]

Developer kills plan for Harlem's 'One45' complex after local opposition

"It will likely become a self-storage facility."

gothamist.com

Developer kills plan for Harlem's 'One45' complex after local opposition​

The developer of a controversial Harlem complex that would have brought 915 new apartments to an underutilized stretch of 145th Street — half of which would have been income restricted — has scuttled the plan ahead of a subcommittee vote on the project Tuesday morning.
The City Council’s Subcommittee on Zoning and Franchises voted to remove One45 from the Tuesday's agenda because, “the developer submitted a letter saying they’re withdrawing it,” attorney Angelina Martinez-Rubio told subcommittee members at a public hearing.
Bruce Teitelbaum, with PointsFive developers, didn’t immediately return a request for comment.
From the get-go, the proposed 31-story residential towers slated for a stretch of West 145th Street and Lenox Avenue — which currently houses Rev. Al Sharpton’s National Action Network and several other businesses — had faced fierce political headwinds.
Teitelbaum had envisioned a combination of retail and residential space along the sprawling lot, with a rooftop events space and an “ECO-green Quad.” But the local community board and newly installed Councilmember Kristin Richardson Jordan vehemently opposed the project.
Amid the pushback, the developer made several rounds of last-minute concessions, first bumping up the percentage of subsidized units from 25 percent — required through the city’s Mandatory Inclusionary Housing program — to 40 percent ahead of the presentation to the City Council earlier this month. Finally, on Friday, developers agreed to increase the level of subsidized units again up to 50 percent of the development.
The final proposal included 457 market rate apartments, 91 apartments for two-family households earning around 125 percent of the Area Median Income or AMI, 255 apartments at up to 50 percent AMI, and 112 apartments for the city’s lowest income residents, who earn less than $32,040 for a family of two. Supporters of the project say its withdrawal will likely result in no affordable housing being built at the location.

But Councilmember Richardson Jordan insisted the affordability levels still weren’t in line with the needs of her district. She argued all of the apartments in the new complex should be rent regulated with 57 percent of them set aside for lowest income New Yorkers, in a Medium post. The plot of land would be a prime candidate for the city housing agency's Extremely Low & Low-Income Affordability subsidy program, or ELLA, where 80 percent of the units are for low income tenants and 20 percent are for moderate income households, she said.
“Doing a big project in that space with great affordability is not impossible when we take greed out of the equation,” she said. “If the developers are willing to work with me and the community on something that matches our needs better, I look forward on working with them in the future."

The project had received support from the unions 32BJ and Laborers Local 79. And not all city officials were happy about its demise. Manhattan Borough President Mark Levine, who’d initially opposed the development, lamented the project’s loss, given that Teitelbaum had agreed to increase the number of subsidized apartments up to half, the main thing he’d advocated for.
“The site will indefinitely remain as is — a vacant lot, an abandoned gas station, and a small amount of single story retail. If the owner of the property proceeds with development under as-of-right limits, it will likely become a self-storage facility,” Levine said in a statement. “The desperate need for additional affordable housing in Harlem, and citywide, is getting ever more acute.”
Council spokesperson Mandela Jones said city lawmakers remain committed to creating affordable housing.
“There is a baseline expectation for how applicants can work constructively with the Council, local communities, and the administration to advance projects through the land use process that requires active and meaningful engagement," he said in an emailed statement. "We hope the applicant’s withdrawal of the current proposal, given its challenges and lack of community support, opens an opportunity to chart a successful path forward for affordable housing.”

NB How easy it is for YIMBY journalists to make fools of themselves:

Harlem Project is Make-or-Break Moment for NYC Housing Crisis

The One45 proposal in Harlem will reveal whether Mayor Eric Adams and Speaker Adrienne Adams are serious about housing.

therealdeal.com

Real Estate’s Revenge: Harlem Project Killer Out of Race

Kristin Richardson Jordan’s decision to leave the City Council short-circuited a bellwether election. But it’s a win for real estate.

therealdeal.com