Wednesday, July 27, 2011

Court Tosses $1.5M Parking-Garage Verdict Against Beauvallon Condos

DENVER — Condo developer Craig Nassi and Beauvallon Corp. are off the hook for a $1.5 million verdict a lessee won against them in a lawsuit over parking spaces, the Colorado Court of Appeals ruled Thursday.

Matrix Fitness and Spa sued the owners of the Beauvallon condos on Lincoln Street between 9th and 10th avenues for promising exclusive use of 150 parking spaces for its customers, but only delivering on 75 exclusive spaces and 75 shared spaces.

Following a June 2009 trial, Denver District Judge Norm Haglund found Nassi and Beauvallon fraudulently induced Matrix into signing the lease. He awarded Matrix $1.5 million, a figure based on expert testimony about the amount the 75 spaces could have generated through subleases.
But a three judge panel of the Colorado Court of Appeals reversed the decision.

“We conclude that the lessee did not provide competent evidence of its damages and, thus, failed to prove its claim,” wrote Judge Russell Carparelli in the court’s opinion.

The expert opinion of the parking spaces’ value ($130 a month each) was flawed, the appeals court said. Matrix’s expert based the value on the amount the fitness club could have made subleasing the spaces, but there was nothing in the lease to indicate Matrix could have subleased the spots, which were designated for use by the club’s patrons only.

Matrix gave no other evidence as to the value of the the parking spaces, the court held:
“[T]he lessee presented no evidence that the shared use of 75 spaces rather than the exclusive use of those spaces during the relevant period caused:

• payment of excessive rent;
• any of the lessee’s customers to be unable to find a
parking space in the garage;
• the lessee to have fewer patrons or to lose revenue;
• the lessee to incur expenses to pay for customer parking
• a reduction in the value of the lessee’s business;
• the lessee’s business to fail; or
• other adverse effects to the lessee’s business.

Nassi was represented on appeal by Jennifer Fischer of Schlueter Mahoney & Ross, while Beauvallon was represented by Lisa Secor of Secor Law in Fort Collins. Matrix was represented by Erich Bethke and James Bailey of Senn Visciano Canges.

Tuesday, June 28, 2011

Developers are getting the urge for condo conversions

Next month, 55 condominiums in a classic prewar building on Fifth Avenue overlooking Central Park will hit the market at prices starting at $1,000 per square foot. The opening comes after 18 months of work to convert the 15-story, brown-brick and white-limestone property, which once housed Mount Sinai Medical Center staffers, into modern luxury residences.
“This was a unique opportunity,” said Harold Fetner, president of Durst Fetner Residential, which bought 1212 Fifth Avenue for $42 million in 2009 and is spending $100 million to convert it. “It's all about location.”
These days, a growing number of developers are also betting that it's all about timing. In fact, the apartments at 1212 Fifth will be just the first in a new wave of condo conversions expected to hit the market in coming months.
Unable to secure financing from still-leery banks to build condos from the ground up, developers across the city are settling for a cheaper and easier alternative. They are snapping up existing rental or office buildings and converting them, wagering that the paucity of construction in recent years and an improving economy will combine to create a strong sellers' market.
“Now is an opportune time to do a conversion,” said Craig Nassi, chief executive of BCN Development, which is working on two condo conversions—one at Union Square and another in Brooklyn Heights. “Coming out of a three-year recession, inventory is drying up.”
BCN Development's projects are among at least a dozen condo conversions planned or in the works across Manhattan and Brooklyn. These projects include conversions of 93 Worth St., a 165,000-square-foot downtown Manhattan office building, and of 530 Park Ave., an Upper East Side rental-apartment building.
In an encouraging sign for sellers, the number of apartments listed for sale slipped in the first quarter to its lowest level since 2007, falling 5.3% from the year-earlier period, to 7,605, according to a report by Prudential Douglas Elliman and appraisal firm Miller Samuel Inc.
Some experts, however, warn that developers may be getting ahead of themselves. “Everyone is banking on the market improving,” said Jonathan Miller, chief executive of Miller Samuel.
Mr. Miller notes that the city's “shadow inventory” remains high. The term refers to the apartments that developers aren't actively marketing because they are part of projects halted during the downturn or are units in new developments and older conversions that have yet to sell out.
He also points to other danger signs: a high percentage of deals being done on an all-cash basis—which indicates that homebuyers are still having a hard time getting mortgages—plus stubbornly high unemployment and forecasts that profits on Wall Street could be crimped for years to come.
Even developer Mr. Fetner admits there is “still some uncertainty” in the market. Nonetheless, he's bullish on his property's prospects—and with good reason. So far, 500 people have signed up to preview the units at 1212 Fifth Avenue. Traffic to the project's website has run as high as 1,000 visitors a day.
Others are also getting upbeat.
“We feel that market conditions have stabilized, and we are looking for new product for conversion,” said Roberta Axelrod, director of condo sales and conversions for Time Equities Inc., a real estate firm that has completed a number of condo conversions in Manhattan.
Shlomi Reuveni, executive vice president at brokerage Brown Harrison Stevens Select, said he is working with developers on three new rental-to-condo conversion projects in midtown east and the Upper West Side. He expects units from those projects to hit the market in six months to a year.
“Development is a complicated business,” Mr. Reuveni said. “I strongly believe that if you build it correctly and offer a quality product, you will have a successful project in any given market.”
Similarly, BCN's Mr. Nassi is filing conversion plans for 9 E. 16th St. He expects to spend up to $3 million transforming the 15-unit, 30,000-square-foot rental building, which he bought for $17 million.
BCN expects to close on the purchase of 184 Joralemon St. in Brooklyn Heights next month. The plan is to spend up to $9.6 million turning the 12-story, 32,000-square-foot property into condos.
“It's a prestigious block, and there is a lot of financing out there for smart projects,” Mr. Nassi said.
Even some of those who got scorched during the downturn are starting new projects. Sources said Harry Macklowe, who once owned the GM Building and other midtown towers before losing them to his creditors, is in the process of scooping up a prized prewar rental building with 108 units at 737 Park Ave. to convert to condos. The price is expected to be $250 million to $255 million.
Just last week, a participant confirmed, Mr. Macklowe closed on the $70 million acquisition of a 34-unit rental building at 150 E. 72 St., which is also expected to become a condo property.
Not exactly the GM Building. But as they say in many boom-and-bust industries, you gotta restart somewhere.

Saturday, May 14, 2011

Union Square Rental Building Sells for $17M, Will Go Condo

Unlike other upcoming condo conversions we've mentioned lately, 9 East 16th Street should have a relatively easy time of it. The Union Square-area, Louis Korn-designed building has only market-rate tenants, the Post explains, who'll leave once their leases are up, making way for the just-announced conversion of around 15 units by BCN Development, which just purchased the building for $17 million.

A press release fills in a few more deets: work on the conversion will likely start at the end of the summer or in early fall, and the result will be one-, two-, and three-bedroom condos. No word on pricing yet, but the going condo conversion rate is high.

'MIB3' is groovy on Greene

The "Men in Black III" movie is turning a Greene Street loft into a back-to-the-sixties party palace. The upcoming flick, starring Will Smith, Alice Eve and Josh Brolin as the young Tommy Lee Jones character, Agent K, has rented the 9,000 square-foot second floor of 38 Greene St., where it intends to film a crucial scene.

The space has 20 wrap-around windows on Greene and Grand streets.
"The party is going to have an Andy Warhol theme, and they got the most charming loft in SoHo," said building owner David Zar, who was told he could dress up and be an extra in the film if only the busy real estate owner had time to stand around for hours.

"MIB 3" is paying "quadruple" the normal rent, which Zar is splitting with another film industry tenant that is now waiting to move into the loft once filming is over.
The tenant-in-waiting, Logan Media, is a production and post-production facility that is now a block away at 155 Wooster St. The asking rent for its seven-year lease with options was $43 a square foot, so you can imagine what "MIB3" is paying.
Logan was repped by Glenn Teyf, who is now with Gideon Group, while Zar did the work for his own building.
"MIB3" has also rented several other Zar-owned spaces in the area to handle hair, makeup and places for those extras to hang out when they are not actually in front of the cameras.
The 1896-era residential loft building at 9 E. 16th St. by Union Square is in contract to be sold to BCN Development for around $17 million by an entity controlled by Maurice Laboz and William Punch. BCN will take over the current $9.975 million mortgage with Sovereign Bank.
Craig Nassi, CEO of BCN, said, "It is an amazing building with a gold-mine location, as there is a pent-up demand from people who want to live and own in the Union Square area."
The 50-foot-wide and very ornate building was designed by Louis Korn with 13-foot ceilings and lots of arched windows overlooking the park and a low-rise building to its rear.
As most of the tenants have market-rate deals, the sponsors will have about 15 units for sale once the leases are up and the plan is approved by the attorney general's office in about nine months.
Renovations to the lobby, elevators and other common elements will start as soon as they close on the project in August. Nassi is also thrilled the building has Steak Frites as its retail anchor tenant.
"It's nearly impossible to find great deals like this," said Nassi of the off-market transaction. "Most buildings like this have too many rent-regulated tenants."
The UK-based online fashion retailer, Net-a-Porter, just signed a 10-year, 32,144 square foot lease at 100-104 Fifth Ave. for the entire 11th and 12th floors. The asking rent was $55 a square foot for the recently purchased building. Launched in 2000, Net-a-Porter has 800 employees in the UK, and this will become its first US office. The company's 3 million fashion customers come from 170 countries, and 90 percent of them are women.
Owen Hane of Cushman & Wakefield represented Net-a-Porter.
"This is the first deal we've done post-closing," said Grant Greenspan of the Kaufman Organization who represented the building along with Michael Kaufman and Elliot Warren. Kaufman purchased the building for $93.5 million in December. "Every floor but one has a lease out for signature," Greenspan said.
Just in time for the International Council of Shop ping Centers big powwow in Vegas at the end of the month, where more than 20,000 brokers and re tailers are ex pected, Thor's Joseph Sitt is expanding his business inter ests with the founding of a new retail and investment company called Thor High Street Advisors.
Veteran retail brokers now on board include Chris DeCrosta, Robert Draizen and Mitchel Friedel. No one responded to repeated inquiries even though a Web site is already up and running.

BCN Development betting on condos in Union Square, Downtown Brooklyn

BCN Development is moving forward with two condo conversion projects, with the mindset that local scarcity will lead to success in two different neighborhoods.

The developer is in contract to purchase a rental building at 9 East 16th Street for around $17 million, which will begin conversion later this summer.

“It’s a beautiful, ornate building,” said Craig Nassi, CEO of BCN. “The reason we like the deal is because it’s just so hard find any product in that submarket.” BCN was involved in a bidding war with three other developers for the building, but eventually prevailed, he said.

The Post, which first reported the deal, noted that most of the rental tenants in the property are market rate, and BCN expects to have around 15 condos to sell when the leases expire. Maurice Laboz and William Punch were the sellers.

According to PropertyShark, the 30,680 s/f building is split between 26,430 s/f of residential space and 4,250 s/f of retail. It was built in 1900 and designed by architect Louis Korn. The restaurant Steak Frites is the retail tenant.

The 50-foot-wide building will have one, two and three-bedroom condos with 13-foot ceilings, with the conversion scheduled to begin after the deal closes later in the summer. BCN will also renovate the lobby and retrofit the elevator. It has not yet selected a brokerage firm.

At 184 Joralemon Street in Downtown Brooklyn, BCN is in the clear after a lawsuit involving the building’s sale was dropped, and no appeal was filed.

United American Land, the developer of Soho Mews, had filed a lawsuit in January against Brooklyn Law School, which sold 184 Joralemon to BCN for $12 million in January. United American claimed it had a contract to buy the building for $9.2 million and a lis pendens was filed, but was later dropped.

184 Joralemon was a Brooklyn Law School dormitory for over 30 years, and is included in a proposed “Brooklyn Skyscraper” historic district by the Landmarks Preservation Commission. Joan Wexler, president of Brooklyn Law, testified against the building’s inclusion in the district, which she said would raise the rents of students. In a historic district, landlords are required to maintain their buildings’ fa├žades, which may require additional expenses.

Now, BCN plans to spend $3 million to $4 million in renovating 184 Joralemon, and it plans to start sales at the building in August. The property’s 24 condos will start at $750,000. It is in talks with brokerages and plans to select a marketing agent soon.

“We’re in full gear,” said Nassi.

Generally, BCN seeks conversions, rather than ground-up constructions, because of the risks associated with construction lending and the difficulties in obtaining parcels. One exception is 791 Broadway, which fully leased its 11 units in 45 days. Two-bedroom units started at $3,750 per month. The site’s previous building, which was demolished, was formerly the home of poet Frank O’Hara.

BCN had also planned a condo at the Jewish Daily Forward building at 45 East 33rd Street, but ended up flipping the property to NYC Hotel 33 LLC for $20 million, after buying it a few months prior for $18.5 million.

Tuesday, March 22, 2011

BCN Development Unveils Luxury Rental Building: 791 Broadway Read more: NYInc - BCN Development Unveils Luxury Rental Building 791 Broadway

NEW YORK, NY - 791 Broadway, the new luxury rental building by BCN Development LLC, debuts next month for first move-ins. 791 Broadway offers exquisite one and two-bedroom residences in the heart of Greenwich Village. The building is approximately 50 percent leased.

Located on Broadway and 10th Street, 791 Broadway overlooks the infamous Grace Church. The building includes approximately 10 spacious apartments with monthly rental prices starting at $3,750. The residences feature modern kitchens with Carrera marble countertops and state-of-the-art appliances, Italian porcelain bathrooms, floor to ceiling windows and hardwood floors. The building also offers residents a common rooftop garden with breathtaking views of Grace Church.

“The team at BCN Development looks forward to providing our residents with exceptional living experiences in the dynamic neighborhood of Greenwich Village,” Craig Nassi, CEO of BCN Development, said. “The apartments are an incredible value for the neighborhood where there is no brand new inventory.”

791 Broadway is located within walking distance of Union Square, Astor Place, Washington Square Park and many New York City subway lines. The neighborhood presents an eclectic mix of culture, entertainment, restaurants, cafes and world-class shopping. 791 Broadway also has a spacious ground-floor retail space suitable for a boutique or coffee shop.

Tuesday, February 15, 2011

Credit Suisse takes last space at 315 Park Ave. S.

Adds another 48,000 square feet to already-massive space; $70 rent seen as gilded throwback to pre-recession levels
By Theresa Agovino on February 15, 2011

Credit Suisse expanded its presence at 315 Park Avenue South by signing a six-year lease for an additional 48,000 square feet at the property between East 23rd and East 24th streets. The deal means the investment bank now leases about 90% of the 100-year-old, 330,000-square-foot building, which is now 100% occupied.

Most of the Credit Suisse employees housed in that location work in information technology and can always use more space, sources close to the deal said.

Credit Suisse is paying around $70 a square foot, said Craig Nassi, chief executive of BCN Development, which owns the building. He said that is a positive sign for the real estate market because that rent is similar to those the building commanded before the recession.

BCN worked directly with Credit Suisse on the deal, Mr. Nassi said. Credit Suisse declined to comment.

Tuesday, February 01, 2011

BCN Plans Condos for Brooklyn Law School Property

New York–BCN Development has inked a deal with Brooklyn Law School to acquire 184 Joralemon Street, the school’s former residence hall, for $12 million. BCN plans to convert the 12-story, 30,000 square-foot Beaux-Arts style building into 24 two-bedroom condominiums.

The residences will feature Italian-style kitchens, high ceilings, hardwood floors, and washers and dryers, according to BCN. Most of the residences have views of the East River, lower Manhattan or the Verrazano Bridge. BCN also plans to renovate the ornate lobby with a capital improvement campaign of about $2 million and will do renovation work on the units as well.

BCN believes the fact that the building will be condos, as opposed to part of a co-op structure, will be a strong draw for buyers in the Brooklyn Heights neighborhood where the property is located. The company is looking to sell to young professionals and families who are priced out of Manhattan and looking for larger homes elsewhere.

“Brooklyn Heights does not have many new condominium projects coming online, so we know people will be interested to buy from us because it is a desirable street and they can avoid the issues that sometimes arise when dealing with a co-op board,” Craig Nassi, CEO of BCN Development, tells MHN.

“With co-ops, the actual sale transaction can take a long time, dragging on because the buyer needs to go through a lengthy interview process with the co-op board,” Nassi continues. “Personal items come up and most boards require an in-depth look into the buyer’s financials. It feels like an invasion of privacy for some buyers, and many people would prefer to bypass this process, especially when there’s always the chance that the sale can be terminated due to something the board doesn’t approve.”

In late December, Manhattan-based United American Land filed suit against the law school, claiming that the school had promised to sell United American Land the property for $9 million. That case, which did not name BCN, is still pending, and it’s unclear whether it will have an impact on BCN’s plans.

Monday, January 10, 2011

Brooklyn Law dorm to become condominium

Brooklyn Law School has signed a contract to sell its residence hall at 184 Joralemon Street in Brooklyn Heights for $12 million, the Wall Street Journal reported. The buyer of the 12-story, 30,000-square-foot Beaux arts building is BCN Development, which plans to convert the dorm -- currently occupied by graduate students -- into 24 two-bedroom condos. BCN also plans to invest $3 million to $4 million dollars to renovate the lobby and each of the apartments over the summer, using an Italian design. The residence hall is located within the boundaries of a proposed historic district currently under consideration by the city's Landmarks Preservation Commission. Joan Wexler, president of Brooklyn Law School, had voiced opposition to the plan to include the building in the historic, saying it would lead to rent hikes for students. But the upgrades will take place after school finishes and students have moved out, said Craig Nassi, CEO of BCN. Prices on the condos -- including two 2,000-square-foot penthouses with views of the East River -- will start at $1 million

Brooklyn Law Dorm Is Condo Bound

Brooklyn Law School has signed a contract to sell a residence hall in Brooklyn Heights for $12 million, according to people familiar with the deal.

The law school entered into an agreement with city-based BCN Development to hand over its 12-story Beaux Arts building at 184 Joralemon St. BCN Development intends to convert the residence hall into 24 two-bedroom condos.

The developer also plans to invest $3 million to $4 million dollars to renovate the lobby and each of the apartments.

"We are seeking to consolidate our housing and are looking for another project," said Joan G. Wexler, president of Brooklyn Law School, in a statement regarding the sale of the residence hall, which is currently occupied by graduate students.

Once the residence hall is converted into condominiums, brokers expect the units to sell quickly in a neighborhood where co-ops are much more common.

The 30,000-square-foot residence hall was built near the turn of the century. It has been used as student housing for the Brooklyn Law School for more than 30 years. The structure was a commercial building prior to that.

The residence hall is located within the boundaries of a proposed historic district currently under consideration by the city's Landmarks Preservation Commission. The proposed district would include many of the skyscrapers in downtown Brooklyn.

Ms. Wexler had voiced opposition to the plan to include 184 Joralemon St. in the historic district during a landmarks commission hearing in December, saying it would lead to rent hikes for student residents.

Now BCN Development plans on renovating the residence hall using an Italian-contemporary design. Those upgrades are scheduled to take place over the summer after school finishes and students have moved out, said Craig Nassi, chief executive of BCN.

While the units aren't in terrible shape, the student-occupied apartments are far from luxurious in their current conditions, Mr. Nassi said.

"Tired is the right word," he said.

There are two units per floor with most measuring at about 1,000 square feet. On the top floor, the two penthouses are about 2,000 square feet and feature 15-foot windows with views of the East River. Prices on the condos will start at $750,000.

The number of condos the building is slated to bring onto the market is rare for Brooklyn Heights, said Greg Williamson of the Williamson Group, a unit of real-estate company Prudential Douglas Elliman.

Many prospective buyers in Brooklyn Heights would be attracted to properties that would allow them to avoid applying with co-op boards, he said.

"Just the fact that these are condominiums, it will be very desirable," said Mr. Williamson, who wasn't involved with the sale of the residence hall.

Mr. Williamson predicts that the condos would be sold within eight to 12 months once they hit the market.

"Most people buying there are ex-Manhattanites that are priced out of the city," he said of the area.

Write to Joseph De Avila at

Corrections & Amplifications:
Prices for condos planned for a Brooklyn Law School residence hall being sold to a developer will start at $750,000. An earlier version of this article incorrectly said the prices would start at $1 million.