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COLUMN ONE

In New York, the big money's in (covering) real estate

Through boom and bust, the staff at Real Deal magazine have their hands full covering the who, where and how much of New York's inimitable real estate market.

July 30, 2009|Geraldine Baum

NEW YORK — Despite carnage on Wall Street, vacant storefronts on Madison Avenue and pricey restaurants offering "grill menus" (read: cheap burgers), some things remain unchanged in the great metropolis. The price of the average Manhattan apartment is still hovering at more than $1 million.

Signs of the inevitable, however, are everywhere, and nowhere more readable than in the Real Deal, a print and online magazine that mines the big-money, character-rich world of New York real estate as if it were a professional sport.

Here's what its intrepid reporters were chasing for the August print edition:

* A Manhattan developer may demolish a half-built skyscraper because he can't borrow cash to complete it.

* A highly leveraged apartment complex in the outer boroughs is on track to become a homeless shelter.

* A residential brokerage house fired its in-house masseuse.

The staff was also busy assembling a list of "the best and worst" ideas, companies and deals to emerge from the economic crisis stalking the city.

Really, there's no telling how the real estate world here will unravel. Early indications are: not gracefully.

At a meeting this month in the Real Deal's sparely (early-Ikea) decorated Manhattan office, Stuart Elliott, the executive editor, urged his tiny staff to keep tracking the behavior of developers trying to stave off meltdown -- and opportunists positioning to take advantage of it.

They'd already run a map of Manhattan apartment buildings with the highest concentrations of Bernie Madoff victims. They'd described ugly "divorce" battles between developers and their marketers. And they'd reported on a developer who got whacked over the head with an ice bucket during a dispute with his partner over a failing property.

Elliott also checked in with a reporter following up on an earlier story about lenders so reluctant to foreclose on developers with underwater loans that they "extend and pretend" the loan isn't in trouble.

"Push it forward," Elliott pressed the writer. "Look if regional banks are doing the same."

This is relatively new territory for the Real Dealers, many of whom cut their professional teeth a couple of years out of journalism school covering New York's historic boom. In just the last three years, $100 billion worth of New York property was sold -- and now many of those deals are in trouble. The Real Dealers are having to decipher new lingo to understand lawsuits that are piling up.

Of course, people have always been willing to pay for New York because of its location (location, location), beginning with the $24 worth of trinkets the Dutch forked over to the Indians for "Island Manhattes." Undoubtedly, it was a pittance for what would become the most valuable piece of real estate in the world.

But in this last boom, New York prices went out of this world.

As recently as a year ago a condo with a view of Central Park topped the charts at $45 million, and a 50-story tower on Fifth Avenue went for $2.9 billion, the most expensive office sale recorded around the globe.

Amir Korangy, founder and publisher of the Real Deal, says his non-New York friends are always trying to correct him when he describes trading on the modern Island Manhattes:

"I talk about 'billions' and they say, 'You mean millions' and I'm like, 'No, I mean billions.' In New York, numbers are just bigger."

Korangy's magazine -- and a feisty band of competitors including the New York Observer and curbed.com -- has made a sport of trying to be first to report "firsts," "mosts" and other metrics of New York real estate sales. As in, the most expensive co-op sold on the Upper East Side ($46 million) or the increase in prices of downtown town houses sold between 1997 and 2007 (379%) or the first house in Red Hook to sell for more than $1 million.

Yes, Red Hook. That's Brooklyn.

With the rising tide of easy money that was being thrown at New York property, urban gentrification had spread through the outer boroughs, this time reaching not just upper Fifth Avenue in Manhattan but also Fifth Avenue in Flushing (Queens) and Fifth Street in Williamsburg (Brooklyn), and tens of thousands of developers, investors, brokers, mortgage bankers, contractors, appraisers and doormen had flourished along with the neighborhoods.

So did the Real Deal and Korangy, a real-life Horatio Alger story.

In just six years Korangy went from utter obscurity to being hailed among the 100 most important people in real estate, according to a list in the Observer last month. OK, so he's No. 96. But he's only 35.

Korangy, who moved to America from Iran with his family at age 8, got his start as an entrepreneur after college by scraping together enough money to start the Gringo Gazette, a newspaper for Americans living in the Baja area. He sold it within six months for $60,000 after a Mexican advertiser, who refused to pay his bills, began harassing him. Korangy eventually landed in New York, where, after several business ventures, he decided to start the Real Deal.

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