When Craig Nassi founded BCN Development in 1994, the city's landscape was a whole lot different. At his peak, the chief executive and his group were investing in $300 million projects, including 315 Park Avenue South, where Credit Suisse is headquartered. As a reaction to the downturn, BCN adjusted its ambitions by focusing on smaller projects. As a result, the group is among a shrunken pool of firms currently developing right now. Mr. Nassi, 41, talked about his strategy, making changes in a tough environment and the advice the part-time professor gives students.
The Commercial Observer: BCN Development is among a small pool of developers that are actually developing in New York City. How are you making that happen?
Mr. Nassi: Well, we've been around for about 16 years, and in 16 years you see how trends consistently move; and the directions they've moved in today, for developers, is that you need to find deals that have an upside that can be nontraditionally financed. And what I mean by that is, it used to be where you could go to a bank if you found a deal, and you say: 'We've got a great deal. And we want you to finance 85 percent of it, and we'll put the rest in.' Or the rest will be mezzanine above that, with a small piece of equity.
Today it's different. Today, what we're doing is we're finding deals that we can go to our investment groups and investors with and say, 'Hey, look, we found a deal that's manageable to do with all equity, and we can get it done in a 12-month period, and be in and out of there, make some money and move on.' So the days of big, huge mega-deals that take five years to do ... Those days are over.
It seems counterintuitive to be building in this economic climate.
Not at all, because in New York City—specifically in Manhattan neighborhoods—it's not a matter of the market being bad or good. The market is actually good in New York. We're still seeing $2,000-, $3,000- and $4,000-a-square-foot sales in New York City for residential. We're seeing $700- and $800-square-foot sales on large office buildings in Manhattan. We're seeing retail rents at $300 and $400 and $500 a square foot. So New York City is really not in a recession. In fact, it's just getting stronger and stronger every day we move through the national recession, in that our inventory is getting absorbed daily and there's slowly but surely becoming a lack of product types.
Are you seeing some of your peers in the development world following suit?
There is a lot of niche development happening. If you drive around any given neighborhood, you'll see that people are doing six- and seven-story buildings. They're doing renovations. They're doing stuff that's not as complicated and crazy as the stuff you saw happening four or five years ago.
BCN Development's strategy has been focused on smaller projects. Was that the idea from the outset, or did you downsize in the past several years?
We went from doing 100 and 200 and 300 million dollar deals to now doing niche developments that are from $3 million to $40 million.
Did you shift your building strategy right at the downturn?
Yeah, the last two or three years we've been doing this. We found our way into it because we were at a roadblock for finding investors and financing for bigger projects. Bigger projects just aren't happening.
How are you financing these projects? You mentioned investment banks earlier.
Mezzanine is a word that has almost vanished. It was a relatively new word in the dictionary about 15 years ago, and came about and was very hot for a while, and now it's a word you really haven't heard in many peoples' vocabulary in three years.
Right now a lot of people are taking advantage of refinancing. Are you?
Yes, we have. We've refinanced some things and we've taken advantage of the extremely low interest rates. But, again, banks are very cautious and they're not fast to refinance and get deals done the way they used to. So a refinance today could take four to five times as long as it used to.
You're about ready to begin construction on an additional 43,000 square feet at an existing building at 45 East 33rd Street in Manhattan. What's the status on that project?
That's a project that we felt the market right now wants—smaller units at a price point under $1,000 a square foot. And that kind of thing is financeable today. So when we're selling these things to people, people have a true vehicle to finance these things through. Construction begins in the middle of next year.
That's a residential condo project. Is that your focus now, or are commercial projects equally as lucrative right now in this economic climate?
We're not really looking at commercial as much. There's a lot more commercial office space in Manhattan that could be considered maybe a little like a flood. We feel a little more comfortable with niche residential than we do commercial.
Before the downturn, were you focused more on commercial development?
Well, in 2006, we bought 315 Park Avenue South, and that's a 330,000-square-foot building that is Credit Suisse's United States headquarters. We bought it because it had great tenancy, but we specifically bought it because there was great financing for it. That, again, was a time when they were doing amazingly leveraged financing on AAA assets like this.
What is the status on the building? Is it all leased up?
The status is that it's all leased up. It's 100 percent occupied through 2017. And we're very excited about the building and the possibilities in 2017, and maybe turning it into a world-class condominium asset or a hotel. It's a great neighborhood for that.
What, right now, would be an ideal commercial opportunity for you?
I think an ideal commercial investment is in the Rockefeller Center core. I think the Park Avenue core, from the Pan Am building to 57th Street, is great commercial. I think also the core of midtown south is really coming back strong as well, which is where our building is at right now. I think people really like that area right now.
You're a part-time professor at N.Y.U., teaching a course called Real Estate Development. What advice are you giving students right now in this climate?
I always tell any young, aspiring real estate person that you have to look for assets out there that have value-add to them. Which means, buy something vacant where you're willing and able to put some sweat equity into it by repositioning it and getting brand-new tenants in there who will pay the price—market or even above-market—for having great finishes, new finishes, new lobbies, new entries, cosmetic jobs that make the asset look nice. These are the kinds of things they should do.
Thursday, December 02, 2010
Monday, September 20, 2010
BCN Development reported planning to create 108 condo apartments at 45 East 33rd St.
BCN Development of which Craig Nassi is a principal has a contract to buy the six-story mid-block building at 45 East 33rd Street where he plans to add about 12 floors and create a 108-unit residential condominium building, according to an article today by Adam Pincus at therealdeal.com
The article said that "several sources put the price at approximately $20 million," adding that "the building would be delivered vacant."
According to the article, "the property was tied up in litigation for nearly a year after a development entity called Empire 33rd LLC, which included the builder of the Toren condominium in Brooklyn, Donald Capoccia, failed to conclude the purchase of the building after signing a contract in March 2007 to buy it for $34.9 million."
"Cappocia's group," the article continued, "also paid $13 million for neighboring properties and air rights to build its project, where it planned to build a hotel, court papers indicate. In April, a judge ruled against Empire 33rd, and it lost its effort to win back its $5.3 million deposit."
The building is owned by the Forward Association and Workmen's Circle/Arbeter Ring.
Mr. Nassi began developing real estate in Colorado, "but in recent years he turned his attention to Manhattan, where in 2007 he paid $265 million for 315 Park Avenue South," the article said, adding that "the office building was purchased at the height of the market, and now the $219 million loan is on a watchlist along with many Manhattan commercial buildings, but is performing in part because the building is 85 percent leased by lender Credit Suisse until 2017, securitized loan documents show."
The article said that "several sources put the price at approximately $20 million," adding that "the building would be delivered vacant."
According to the article, "the property was tied up in litigation for nearly a year after a development entity called Empire 33rd LLC, which included the builder of the Toren condominium in Brooklyn, Donald Capoccia, failed to conclude the purchase of the building after signing a contract in March 2007 to buy it for $34.9 million."
"Cappocia's group," the article continued, "also paid $13 million for neighboring properties and air rights to build its project, where it planned to build a hotel, court papers indicate. In April, a judge ruled against Empire 33rd, and it lost its effort to win back its $5.3 million deposit."
The building is owned by the Forward Association and Workmen's Circle/Arbeter Ring.
Mr. Nassi began developing real estate in Colorado, "but in recent years he turned his attention to Manhattan, where in 2007 he paid $265 million for 315 Park Avenue South," the article said, adding that "the office building was purchased at the height of the market, and now the $219 million loan is on a watchlist along with many Manhattan commercial buildings, but is performing in part because the building is 85 percent leased by lender Credit Suisse until 2017, securitized loan documents show."
BCN Development reported planning to create 108 condo apartments at 45 East 33rd St.
BCN Development of which Craig Nassi is a principal has a contract to buy the six-story mid-block building at 45 East 33rd Street where he plans to add about 12 floors and create a 108-unit residential condominium building, according to an article today by Adam Pincus at therealdeal.com
The article said that "several sources put the price at approximately $20 million," adding that "the building would be delivered vacant."
According to the article, "the property was tied up in litigation for nearly a year after a development entity called Empire 33rd LLC, which included the builder of the Toren condominium in Brooklyn, Donald Capoccia, failed to conclude the purchase of the building after signing a contract in March 2007 to buy it for $34.9 million."
"Cappocia's group," the article continued, "also paid $13 million for neighboring properties and air rights to build its project, where it planned to build a hotel, court papers indicate. In April, a judge ruled against Empire 33rd, and it lost its effort to win back its $5.3 million deposit."
The building is owned by the Forward Association and Workmen's Circle/Arbeter Ring.
Mr. Nassi began developing real estate in Colorado, "but in recent years he turned his attention to Manhattan, where in 2007 he paid $265 million for 315 Park Avenue South," the article said, adding that "the office building was purchased at the height of the market, and now the $219 million loan is on a watchlist along with many Manhattan commercial buildings, but is performing in part because the building is 85 percent leased by lender Credit Suisse until 2017, securitized loan documents show."
The article said that "several sources put the price at approximately $20 million," adding that "the building would be delivered vacant."
According to the article, "the property was tied up in litigation for nearly a year after a development entity called Empire 33rd LLC, which included the builder of the Toren condominium in Brooklyn, Donald Capoccia, failed to conclude the purchase of the building after signing a contract in March 2007 to buy it for $34.9 million."
"Cappocia's group," the article continued, "also paid $13 million for neighboring properties and air rights to build its project, where it planned to build a hotel, court papers indicate. In April, a judge ruled against Empire 33rd, and it lost its effort to win back its $5.3 million deposit."
The building is owned by the Forward Association and Workmen's Circle/Arbeter Ring.
Mr. Nassi began developing real estate in Colorado, "but in recent years he turned his attention to Manhattan, where in 2007 he paid $265 million for 315 Park Avenue South," the article said, adding that "the office building was purchased at the height of the market, and now the $219 million loan is on a watchlist along with many Manhattan commercial buildings, but is performing in part because the building is 85 percent leased by lender Credit Suisse until 2017, securitized loan documents show."
Saturday, September 11, 2010
Old Forward newspaper building selling for $20M, to become condo
The long-time home of the Jewish Daily Forward newspaper and a Jewish social service agency is in contract with developer Craig Nassi's BCN Development, which plans to build 108 condominium units at the site near the Empire State Building.
The developer has inked a deal to buy the six-story Workmen's Circle building, at 45 East 33rd Street, between Park and Madison avenues, Nassi told The Real Deal. Several sources put the price at approximately $20 million. The building would be delivered vacant.
The property was tied up in litigation for nearly a year after a development entity called Empire 33rd LLC -- which included the builder of the Toren condominium in Brooklyn, Donald Capoccia -- failed to conclude the purchase of the building after signing a contract in March 2007 to buy it for $34.9 million.
The approximately 42,000-square-foot building, owned by two non-profit organizations the Forward Association and Workmen's Circle/Arbeter Ring, comes with additional development rights to build more than 83,000 square feet, PropertyShark.com shows. The conversion comes on the heels of the condo conversion of the old Jewish Daily Forward newspaper building at 175 East Broadway.
Through his BCN Development, CEO Nassi began with projects in Colorado. But in recent years he turned his attention to Manhattan, where in 2007 he paid $265 million for 315 Park Avenue South. The office building was purchased at the height of the market, and now the $219 million loan is on a watchlist along with many Manhattan commercial buildings, but is performing in part because the building is 85 percent leased by lender Credit Suisse until 2017, securitized loan documents show.
The plans for the Workmen's Circle building involve constructing on top of the existing six-story structure to create an 18-story building, the developer said. Nassi paid a hefty nearly 20 percent down payment for the building after signing the contract in May. The closing is scheduled for October with construction set to start early next year, he said.
He expects to charge $900 per foot to $1,100 per foot for the apartments, and plans to finish construction in about 18 months. He has not selected a marketing and sales company, but said he anticipates starting the process in about a month.
Nassi said he was one of four bidders for 45 East 33rd Street. "We were fortunate to win," he said.
Empire 33rd the prior developer who sought to buy the building, went into contract in March 2007 to buy the property for $34.9 million, a lawsuit filed in New York State Supreme Court in July 2009 shows.
Cappocia's group also paid $13 million for neighboring properties and air rights to build its project, where it planned to build a hotel, court papers indicate. In April, a judge ruled against Empire 33rd, and it lost its effort to win back its $5.3 million deposit.
The Forward moved into a space at 125 Maiden Lane in the Financial District after buying a commercial condominium there in July 2008. The Workmen's Circle still occupies the building, and declined to comment. Capoccia did not immediately respond to a request for comment.
The developer has inked a deal to buy the six-story Workmen's Circle building, at 45 East 33rd Street, between Park and Madison avenues, Nassi told The Real Deal. Several sources put the price at approximately $20 million. The building would be delivered vacant.
The property was tied up in litigation for nearly a year after a development entity called Empire 33rd LLC -- which included the builder of the Toren condominium in Brooklyn, Donald Capoccia -- failed to conclude the purchase of the building after signing a contract in March 2007 to buy it for $34.9 million.
The approximately 42,000-square-foot building, owned by two non-profit organizations the Forward Association and Workmen's Circle/Arbeter Ring, comes with additional development rights to build more than 83,000 square feet, PropertyShark.com shows. The conversion comes on the heels of the condo conversion of the old Jewish Daily Forward newspaper building at 175 East Broadway.
Through his BCN Development, CEO Nassi began with projects in Colorado. But in recent years he turned his attention to Manhattan, where in 2007 he paid $265 million for 315 Park Avenue South. The office building was purchased at the height of the market, and now the $219 million loan is on a watchlist along with many Manhattan commercial buildings, but is performing in part because the building is 85 percent leased by lender Credit Suisse until 2017, securitized loan documents show.
The plans for the Workmen's Circle building involve constructing on top of the existing six-story structure to create an 18-story building, the developer said. Nassi paid a hefty nearly 20 percent down payment for the building after signing the contract in May. The closing is scheduled for October with construction set to start early next year, he said.
He expects to charge $900 per foot to $1,100 per foot for the apartments, and plans to finish construction in about 18 months. He has not selected a marketing and sales company, but said he anticipates starting the process in about a month.
Nassi said he was one of four bidders for 45 East 33rd Street. "We were fortunate to win," he said.
Empire 33rd the prior developer who sought to buy the building, went into contract in March 2007 to buy the property for $34.9 million, a lawsuit filed in New York State Supreme Court in July 2009 shows.
Cappocia's group also paid $13 million for neighboring properties and air rights to build its project, where it planned to build a hotel, court papers indicate. In April, a judge ruled against Empire 33rd, and it lost its effort to win back its $5.3 million deposit.
The Forward moved into a space at 125 Maiden Lane in the Financial District after buying a commercial condominium there in July 2008. The Workmen's Circle still occupies the building, and declined to comment. Capoccia did not immediately respond to a request for comment.
Monday, March 01, 2010
Leucadia holding over at 315 Park Ave. South
BCN Development, the award-winning developer of high-end, mixed-use, luxury properties, announced that it has secured lease commitments from the holding company, Leucadia National Corporation, for over 32,000 s/f of office space through 2017 at its New York City flagship property, 315 Park Avenue South.
The deal is valued close to $25,000,000.
Craig Nassi, CEO of BCN Development, welcomed the news. "It is a pleasure to be able to continue our relationship with one of New York City's fastest-growing companies," Nassi said.
Leucadia National Corporation has been ranked at number 14 on the strength of a 2006 net income of $186 million on revenue of $827.8 million and a share price appreciation of 119.1%
"I am delighted that Leucadia recognizes the desirability of 315 Park Avenue South as the location to continue to grow their business."
The 340,000 s/f 315 Park Ave. is also headquarters to Credit Suisse. The property has a just renovated 50-year-old lobby with a $1-million detailed finish.
BCN just signed a lease with Phoenix Partners Group for more than 16,400 s/f in the building a lease valued at approximately $13 million.
"Leucadia holding over at 315 Park Ave. South". Real Estate Weekly.
The deal is valued close to $25,000,000.
Craig Nassi, CEO of BCN Development, welcomed the news. "It is a pleasure to be able to continue our relationship with one of New York City's fastest-growing companies," Nassi said.
Leucadia National Corporation has been ranked at number 14 on the strength of a 2006 net income of $186 million on revenue of $827.8 million and a share price appreciation of 119.1%
"I am delighted that Leucadia recognizes the desirability of 315 Park Avenue South as the location to continue to grow their business."
The 340,000 s/f 315 Park Ave. is also headquarters to Credit Suisse. The property has a just renovated 50-year-old lobby with a $1-million detailed finish.
BCN just signed a lease with Phoenix Partners Group for more than 16,400 s/f in the building a lease valued at approximately $13 million.
"Leucadia holding over at 315 Park Ave. South". Real Estate Weekly.
Monday, January 25, 2010
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