Monthly Archives: September 2017

Commercial meets residential: a marketing strategy unfolds

Photo illustration by Jhila Farzaneh for The Real Deal. From left: Mauricio Umansky, Behzad Souferian, Jay Luchs, Carl Mühlstein (Credit: the Agency, JLL, LinkedIn)

From TRD Los Angeles: The brokerage world was traditionally divided into two distinct tribes. Residential brokers were the aesthetes, the innovators, the people who didn’t shy away from using glamour to sell real estate. Commercial brokers, meanwhile, were the jocks and the quants, swearing by spreadsheets to land that plum leasing assignment or investment-sales deal. Never the twain shall meet – or so we thought.

Now, however, the two realms are increasingly overlapping. Office buildings are starting to offer valet services and bars; commercial brokers are selling homes; and residential brokerages are launching commercial divisions within their firms. The crossover is impacting marketing — or at least, industry experts are saying it should.

“What these (residential) brokers will do for a $2 million listing with drones and staging is phenomenal,” Carl Muhlstein of JLL said at The Real Deal‘s Sept. 14 panel event. “So we’ve been applying a lot of those techniques to commercial.” Muhlstein recently returned from a trip to London, where he met with JLL’s European marketing team to discuss ways in which commercial folks can up their game.

“We have noticed that a lot of commercial or office space marketing has become pretty formulaic — email blast, maybe a brochure — and the script always starts with ‘the building,’ Muhlstein said. “I’m experimenting with reversing the script, where we focus more on the people, the neighborhood and the hiring opportunities.”

Commercial meets resi
Behzad Souferian of the Souferian Group launched an entire brand, called “Be,” for hybrid commercial properties that bring in residential and hospitality elements. Its flagship location at 1800 N. Highland in Hollywood looks more like a boutique hotel than office site — equipped with Instagrammable walls and finishes, a concierge-type security post, valet services and a pet-friendly bar.

“When I started evaluating the landscape of commercial real estate, I started noticing a void,” Souferian said. “It didn’t matter how cool my four walls were — there was a disconnect from the rest of the building.”

The Be brand is “at the intersection of commercial meets hospitality,” he said.

The developer isn’t the only one dipping his feet in both ponds.

Jay Luchs is a household name as a retail broker with Newmark Knight Frank, thanks to prolific signage throughout L.A.’s Westside.

He’s solidified leases for clients including Louis Vuitton and L.A.’s first Eataly. But, in recent years, he’s also teamed up with a social media-savvy residential partner, Steven Schaefer. Together, they launched the residential Schaefer & Luchs under the NKF umbrella. The partners represented music producer Jerry Goldstein in the $10.4 million sale of his home in the Pacific Palisades in 2015, and have the listing for a $26.9 million home in Malibu, which hit the market earlier this summer.

Resi meets commercial
Meanwhile, residential firms are also trying to get a piece of the commercial pie.

Residential brokerages Partners Trust and the Agency have both stepped into the commercial market. The newly formed commercial team at Partners Trust grossed $57 million in 2016 sales, according to company statements. The Agency announced the launch of its commercial advisory division, led by Alexander Koustas, this April.

Luchs said those entering the commercial market for the first time must step out of their comfort zone. While Instagram posts, flashy open houses and charismatic personalities typically help when an agent is trying to sell a home, they do not suffice in the world of commercial leasing, where brokers must work with tenants on business strategy and specific goals, Luchs said.

“There’s a landlord, things a client needs to know about the landlord, the different size options [a building] might have — they have to project sales,” Luchs said. “In commercial, a lot of it has to do with how much money will be made for a business. In residential, a lot of it is simply related to the curb appeal of the house.”

Luchs primarily relies on his contacts in the industry and some direct email marketing for his commercial properties. When he’s trying to sell a home, however, he often buys advertisements in magazines and billboards while his partner, Schaefer, posts them on his Instagram page.

Partners Trust’s Dario Svidler, who leads the commercial team of six, is taking a more aggressive tact than some commercial veterans like Luchs. He said he is leveraging the resources at his firm — including a full marketing and publicity team — to stand out from his commercial peers. “It’s a little bit of a blend of single-family marketing, combined with the prowess of commercial property,” Svidler calls it.

His “script” changes with every listing. He recently had to do a second drone shoot of a $17.5 million property since the first one wasn’t up to par.

At the Agency, Koustas calls his strategy a “bit of a hybrid,” which might include open house-style events with broker giveaways and influencer marketing, in addition to emails and brochures.

“We make sure that our marketing piece is very simple but gives all the information that anyone would need to dive deeper,” Koustas said.

Let the tenants do the work
Souferian said he’s taken on a “white gloves approach” by letting his tenants market for him. With themed music nights, splashy walls painted by local artists and customizable marketing materials for each tenant, Souferian said he’s designed his commercial sites in a way that makes it easy for tenants to post on social media.

The developer even named the brand, “Be,” to achieve ultimate bandwidth. “We have strategic relationships with other companies,” Souferian said. “For instance, if we do something with someone in fitness world, we market it as ‘BeFit’; If its food and beverage, ‘BeFed.’”

Source:: The Real Deal

Tampa ranks fifth among metro areas in prevalence of all-cash home purchases

Institutional investors largely have withdrawn from the Tampa market as local companies and individuals loom larger in cash sales.

The Tampa area ranked fifth among U.S. metro areas in prevalence of all-cash home purchases, according to a study by ATTOM Data Solutions.

In the second quarter, cash deals accounted for 43 percent of sales of Tampa-area house, townhouses and condos, ATTOM reported.

Cash deals were particularly prevalent in sales of homes for under $300,000 – a price point where many all-cash investors compete against first-time buyers.

Blackstone and other large financial institutions bought thousands of Tampa-area homes during the Great Recession and rented them.

In recent years, however, institutional investors have withdrawn from the market to a large extent as local companies and individual investors have loomed larger in cash sales. [Tampa Bay Times] – Mike Seemuth

Source:: The Real Deal

Related wants to build its first project in Boca Raton at Mizner Park

Mizner Park in Boca Raton

Related Group offered to build a performing arts center in Boca Raton if the city allows the Miami-based company to redevelop a 15-year-old amphitheater at Mizner Park.

Related wants to build 300 to 400 condos or rental apartments plus restaurants and a parking garage on a 3.6-acre site in Mizner Park and an empty lot nearby.

The project would be Related’s first development in Boca Raton.

The 3.6-acre site includes 1.8 acres where the open-air amphitheater opened in 2002.

In exchange for approval to redevelop the amphitheater site, Related offered to fund and build a 1,500-seat performing arts center and a parking garage for the city of Boca Raton.

The city took ownership of the amphitheater from the Schmidt Family Center for the Arts in 2010. [Sun-Sentinel] – Mike Seemuth

Source:: The Real Deal

Jacksonville’s biggest hotel fetches $109.9M

The Hyatt Regency Jacksonville Riverfront hotel

The biggest hotel in Jacksonville has sold for $109.9 million, or about $115,000 per room.

The new owner of the 951-room Hyatt Regency Jacksonville Riverfront is Houston-based Westmont Hospitality Group, which has equity interests in 500-plus hotels on three continents.

Westmont last year paid $120.5 million to acquire the Hyatt Regency Clearwater Beach Resort & Spa.

The Hyatt Regency Jacksonville Riverfront opened in 2001 as an Adams Mark hotel. The hotel sold for $67 million in 2005 and changed hands again in 2014 when Fortress Investment Group bought the property out of foreclosure for $53 million.

The Jacksonville hotel’s general manager said it will retain the Hyatt brand under the new ownership.

The hotel is a vital component of the city’s meetings and conventions business, according to Paul Astleford, president and CEO of Visit Jacksonville. [Jacksonville Times-Union] – Mike Seemuth

Source:: The Real Deal

Naples rental complex sells for $67M in hurricane-delayed closing

The Boca Raton-based owner of a 306-unit rental complex in Naples sold it for $67 million despite a hurricane-delayed closing with amended terms.

Amberton Properties LLC sold the Naples property, called Amberton Luxury Townhomes, for an average price just under $219,000 per unit. Affiliates of two Boca Raton companies, Amzak Management and Home Dynamics Corporation, own Amberton Properties.

The Sept. 20 closing of the transaction was nine days after the original closing date, Sept. 11, the day after Hurricane Irma made U.S. landfall in the Florida Keys and moved north through the Naples area.

Law firm Akerman LLP, which led the transaction for Amberton Properties, said in a press release that the seller “made appropriate adjustments to the closing figures negotiated” after assessing Hurricane Irma’s damage to the Naples rental property.

Akerman’s real estate partner Thomas Streit in West Palm Beach led a team at the law firm that worked on the deal.

South Florida law firm Stearns Weaver served as local counsel to the buyer, which was represented by Silberberg & Klein LLP.

The broker of the sale was Tyler Minix of Apartment Realty Services.

Source:: The Real Deal

Duke Realty scoops up industrial project in Fort Lauderdale

CEO of Duke Realty, James B. Connor, and rendering of Bridge Point I-95 (Credit: CBRE, Duke Realty)

Indianapolis-based commercial real estate firm Duke Realty just paid $54.8 million for Bridge Point I-95, a 17.5-acre industrial project in Fort Lauderdale, property records show.

The 306,500-square-foot complex at 2200 West Sunrise Boulevard traded for about $179 per square foot. The recently built development consists of two warehouse buildings spanning about 150,000 square feet each.

Records show Chicago-based Bridge Development Partners is the seller. The firm bought the spec warehouse development site in 2015 for $12.45 million, records show.

The property was the former site of a concrete pipe manufacturing plant. It’s located adjacent to I-95 between West Sunrise Boulevard.

Bridge Development is in the midst of building a separate new distribution facility in Fort Lauderdale, called Bridge Point Riverbend. Just this week it scored a $16.6 million construction loan for a site it bought from developer Dev Motwani in July.

Duke Realty has been active in South Florida. The company notably sold the a 465,592-square-foot office park in Plantation, called Royal Palm Office Park, in 2014 for $128 million. In April it invested $79.97 million in three new warehouses in Hialeah Gardens.

Source:: The Real Deal

Fort Lauderdale condo inventory, sales up: ISG report

Fort Lauderdale (Credit: Wikimedia Commons)

Most new condo projects in east Fort Lauderdale have made sales progress over the last year, a newly released report shows.

Developers have sold nearly 800 units or 57 percent of the inventory of new development condos in Fort Lauderdale so far this cycle, according to RelatedISG’s Fall 2017 Miami Report | Fort Lauderdale Edition. The company surveys the sales centers and sales teams of each project in east Fort Lauderdale.

Of 1,410 units in Fort Lauderdale, 611 remain on the market. The inventory has nearly doubled since ISG released its last report a year ago thanks to projects like the Ocean Resort Residences at the Conrad coming back online, an increase in units at the Four Seasons Private Residences, and the addition of 100 Las Olas, a 120-unit luxury condo project. The Residences at the W Fort Lauderdale was also added to the list.

In September 2016, 59 percent of the 781 units on the market had been sold. Since then, developers and their sales teams boosted sales at projects like Auberge Beach Residences & Spa in Fort Lauderdale, the Gale Residences Fort Lauderdale Beach and Adagio Fort Lauderdale Beach, according to the report.

At Auberge, which the Related Group, Fortune International Group and The Fairwinds Group plan to deliver early next year, sales increased year-over-year from 87 percent to 95 percent in the north tower and from 28 percent in the south tower to 53 percent. The Gale, a 129-unit development under construction at 401 Bayshore Drive, announced earlier this year that it sold out.

Projects that are new to the list reported the following sales figures:

  • The Residences at W Fort Lauderdale: 52 percent sold of 171 units
  • The Ocean Resort Residences at Conrad: 40 percent sold of 290 units
  • 100 Las Olas: 13 percent sold of 120 units

Fort Lauderdale is faring slightly better than Miami, according to ISG principal Craig Studnicky.

Projects that are under construction, like Jade Signature, Muse Residences and Residences by Armani/Casa in Sunny Isles Beach, are discounting their remaining inventory, he said.

In Sunny Isles, developers sold 146 units more by August as compared to April, according to ISG data. Less than 400 units are available for sale in Sunny Isles of more than 2,100 units planned, under construction or completed this cycle. Developers have sold 1,720 units in the Sunny Isles market since the beginning of the cycle.

Discounts range from 10 percent to a whopping 30 percent to attract Latin Americans who have stayed away from South Florida because of the dollar’s strength.

“It’s been a solid two years since we’ve seen robust sales from South America,” Studnicky said. “The South American buyer will return.”

Source:: The Real Deal

Victory is ours — say both sides in the war surrounding Privé at Island Estates

Prive at Island Estates and BH3’s Charlie Phelan, Greg Freedman and Daniel Lebensohn and Gary Cohen

A judge granted partial ownership of the marina at Privé at Island Estates in Aventura to nearby homeowners, amid the tumultuous, years-long war pitting neighborhood residents against the developer of the condo project.

Yet both sides declared victory in the ruling issued this week by Miami-Dade Circuit Judge William Thomas.

The judge gave developers Gary Cohen and BH3’s Greg Freedman, Dan Lebensohn and Charles Phelan development access rights to its two-tower, 160-unit project under construction on an 8-acre island at 5000 Island Estates Drive.

In a 26-page opinion, Judge Thomas ruled as invalid the developer’s previous access easement agreement which gave unlimited access over the South Island Homeowners Association’s common areas to get to and from the Privé project on the North Island. In the ruling, the judge said the developer “acted for its own self-interested concerns without any regard for the proper operation, maintenance, general health, welfare and/or safety of the South Island.”

The future owners of the Privé condos will have only a common law implied “easement of necessity” according to the ruling. That means they can use the road to get to and from their project, said Susan Raffanello, partner at Coffey Burlington, who represents the homeowners.

“That is a far cry from the unlimited and unfettered access to future Privé residents over the South Island that existed under either of the two agreements that were declared void,” she said.

Yet according to Lebensohn, “We have absolute right to traverse the South Island through our easement as further affirmed by the judge, and it is without restriction…. It is unfettered. The only fettered access is in plaintiff counsel’s mind.”

The developer was also ordered to convey title to the marina — including 18 marina slips owned by the homeowners and submerged land — to the association for the South Island homeowners, as well all the common areas within six tracts of land which include bridges, road, traffic circle and other areas on the plat that the developer had wrongfully failed to convey in 2013, according to Rafanello.

But the developer maintains its ownership of more than 30 unsold boat slips, Lebensohn said.

“The court entered judgment in the association’s favor on each of the associations’ counts, which included invalidating two prior easement agreements, and forced the developer to convey common areas to the association that were wrongfully and maliciously withheld by the developer for years,” Raffanello said.

Privé Developers LLC’s principals said in a joint statement that they were “grateful” that the court acknowledged their “long-standing rights.” They say the project will be delivered in late November.

A spokesperson for the homeowners’ association said in a statement that “while the association is pleased with the verdict, it may seek further relief, in addition to the removal of the buildings, if necessary.”

In June, Judge Thomas ruled that the statute of limitations had long expired for the Island Estates Homeowners Association and the Williams Island Property Owners Association to challenge a vested rights determination agreement.

The legal wranglings have dragged on for years. Homeowner associations first sued the developers in 2013 in an attempt to stop construction of the Privé condo development on the basis Cohen had agreed in the late 1990s to only build single-family homes on the project site, which is on an isle north of Williams Island.

In a separate lawsuit, filed by neighborhood resident Dara Clarke against the developer, attorney Matt Leto of Hall Lamb Hall & Leto just secured a court order rejecting the city and developer’s motion to dismiss and paving the way for a trial set to begin in March, according to a spokesperson for Leto. Clarke had sued both entities alleging various violations, including defamation and excessive use of force.

In January, New York-based Maxim Capital and Austin-based Prophet Capital Asset Management provided $102 million in financing to the developers, adding to a previous $25 million loan from Maxim.

Privé topped off in November at 16 stories and is almost 75 percent sold with more than $350 million under contract, according to Lebensohn.

Source:: The Real Deal

National Cheat Sheet: How the GOP’s tax plan could benefit developers, home prices rise as sales slow down & more

Clockwise from left: Secretary of the Treasury Steve Mnuchin, One Manhattan West and Civic Towers in Miami

From TRD New York: Condo developers could benefit bigly from GOP tax reform

A new tax plan proposed by secretary of the treasury Steve Mnuchin and GOP lawmakers might be a boon to Manhattan’s luxury condo developers. It calls for lowering the maximum rate paid by businesses, including many LLCs, which are taxed under the personal income rate, to 25 percent from 39.6 percent, among other alterations. While Manhattan condo developers pay the top 39.6-percent rate on apartment-sale profits, rental developers usually pay the 20-percent capital gains rate (which would not be reduced in the new tax plan). Such a huge decrease in the top income tax rate for LLCs would suddenly make condo development a lot more appealing in relation to rental development. [TRD]

New law bans salary questions, likely putting broker poaching on ice

Better think twice before trying to lure a top broker to change firms. Starting Oct. 31, employers in New York and a few other states will be barred from asking about a job candidate’s current pay, dealing a blow to poaching efforts. The goal is to protect women and minorities from wage discrimination, which often involves setting new salaries based on prior ones, rather than what a candidate may be worth. But this provision is seen by some experts as hurting the efforts of commercial real estate firms to approach brokers with offers to raise their salaries. Candidates can still say how much they make, but they can not be asked during negotiations. [TRD]

Home prices rise in U.S. even as sales slow down

Residential prices nationwide were up in July despite a drop in sales over the summer. According to the Standard & Poor’s CoreLogic Case-Shiller national home price index, there was an increase of 5.9 percent in July from the prior year, reported USA Today, just ahead of the 5.8 increase in June. Fewer homes on the market and growing demand prompted bidding wars, which drove up prices. Seattle, Portland, Oregon and Las Vegas saw the largest increases in July with Seattle rising 13.5 percent year over year. Overall, U.S. housing starts dropped for the fourth time in five months, according to Commerce Department data, revealing that multifamily construction is slowing. [TRD]

MAJOR MARKET HIGHLIGHTS

Luxury condo conversion of drug rehab center in NYC’s Upper West Side priced for $61 million sellout

Developers transforming a former drug rehab center into 14 luxury condos hope for a sellout of $61 million, according to an offering plan filed with the New York state Attorney General’s office last week. Greystone Development is spearheading the 33,000-square-foot project at 164 West 74th Street, formerly Phoenix House, where apartments will average about $4.3 million each. Greystone and partner Prime Rok Real Estate bought the seven-story Beaux Arts property in 2016 for $27 million. [TRD]

Owner of hurricane-damaged apartment complex in trouble with city of Miami

The landlord of a federally subsidized apartment complex where 80 tenants were forced to evacuate just before Hurricane Irma struck is in legal trouble with the city of Miami. A Sept. 15 inspection found Civic Towers unsafe for habitation due to mold and water intrusion from the hurricane, and the city is accusing owner Redwood Housing Partners of Burlingame, California of preventing residents from accessing their belongings, according to a Sept. 20 emergency motion in Miami-Dade Circuit Court. Tenants camped out in cars and in the street surrounding the two towers for nine days before being relocated to hotel rooms. [TRD]

Beverly Hills lot can be yours for $250M — but bring your developer

What can $250 million buy in Beverly Hills? About 97 acres of undeveloped land in the famed 90210 zip code, according to Curbed. The property is made up of 12 adjoining parcels and listing information for 9560 Cedarbrook Drive suggests buyers could build a 75,000-square-foot mansion or a gated community. The asking amount would beat the $200 million price tag on the famed Spelling mansion in Holmby Hills. Branden Williams, Jesse Lally and Michelle Saniei of Hilton & Hyland have the listing. [Curbed]

How to lure shoppers to a mall, Los Angeles style

This may be the ultimate place to shop ’til you drop. At the newly renovated Westfield Century City mall in Los Angeles, which is opening next week, shoppers can visit a cryotherapy clinic, enjoy VIP treatment and pay for parking with their phones. The lavish features are part of a two-year redevelopment to encourage people to shop at the mall instead of online. Look for an outpost of Mario Batali’s Eataly, Amazon Books, San Diego’s Crack Shack and Equinox, Next Health cryotherapy clinic and Gloveworx boxing studio. But the most L.A.-like enticements are likely the luxury VIP lounges, which offer private fittings, gourmet food deliveries and access to secret elevators that lead to every shop and restaurant in the mall. [TRD]

Chicago alone among global cities sees its housing undervalued

Chicago housing values are undervalued, making it the only one out of 20 global cities with that distinction, according to a study reported by Crain’s. Home values in the area are still 30 percent below their 2006 peak, according to the Global Real Estate Bubble Index for 2017, published by UBS Wealth Management’s chief investment office, which blamed sluggish employment and lackluster economic and income growth. UBS expected price growth to continue to lag in future quarters. In comparison, three-quarters of cities in the UBS study are overvalued, with San Francisco the most overvalued city in the U.S. Housing in Boston and New York is deemed at fair value, the report said. [Crain’s]

Source:: The Real Deal

Buyers from New York and Mexico score condos at St. Regis Bal Harbour

Senada Adzem and St. Regis Bal Harbour Unit 1801 (Credit: Douglas Elliman)

Two units sold at St. Regis Bal Harbour this week to buyers from New York and Mexico.

Elliot Azoulay, CEO of New York-based ESI Cases & Accessories, a manufacturer of cellular, gaming, and MP3 accessories, paid $5.8 million for unit 1801 at St. Regis’ North tower.

The unit measures 3,884 square feet, meaning the trade breaks down to about $1,493 per square foot.

An undisclosed buyer from Mexico also bought a unit at St. Regis’ North tower. Records show the buyer paid $5.2 million for unit 1001, under entity Armar Capital USA LLC. A source close to the deal confirmed the buyer was from Mexico. The 3,884-square-foot unit traded for about $1,351 per square foot.

St. Regis Bal Harbour Unit 1001 (Credit: Douglas Elliman)

Douglas Elliman’s Senada Adzem had both listings. She took over the listings from Natalia Cheremeta of Victoria Blintser Real Estate, about a year ago. The units hit the market in 2014, according to Adzem.

Unit 1801 originally asked for $9.5 million in September 2014, meaning is sold at a 39 percent discount off its original asking price. Unit 1001 hit the market in January 2014 for $9.9 million, meaning is sold at a 47 percent discount off its original asking price.

The three-bedroom, three-bathroom units each feature floor-to-ceiling windows and new custom-built kitchens, designed by architect and design firm Archiproject, Adzem said. She said she has two other units at St. Regis Bal Harbour closing soon.

Instead of waiting for buyers to come to Miami, the Douglas Elliman agent said the team arranged events in London, Mexico City, Moscow, Zurich and New York to scout potential buyers.

“Buyers have a lot of [luxury condo] choices, “Adzem said pointing to Oceana and the Four Seasons Private Residences at The Surf Club. “So we had to find a way to differentiate ourselves.”

St. Regis Bal Harbour has been known to capture big price tags. In 2015, Jeff Miller of Brown Harris Stevens | Zilbert was hired to list a full floor in the south tower for $25 million. A year before, the complex’s hotel component was sold to Qatar’s largest development company for an incredible $213 million.

Source:: The Real Deal