From TRD New York: In theory, communism works, and renters love having an on-site fitness center in their buildings. In practice, not so much.

A recent survey from the National Multifamily Housing Council and Kingsley Associates found that while 82 percent of U.S. renters said having an on-site gym is important to them and 55 percent said they wouldn’t rent in a building without one, 42 percent said they either rarely or never actually use these fitness centers, according to the Wall Street Journal.

The survey looked at 272,743 tenants in 4,795 rental complexes across the country and focused on what perks they look for in their buildings and how much they are willing to pay for them. Gyms have become a fairly common perk, with 91 percent of respondents saying they live in a building that has one.

Ulrike Malmendier, an economics professor at University of California, Berkeley, co-authored a study in 2006 finding that most people overestimate how often they will go to the gym and told the Journal she was not surprised by the new survey’s findings.

“I think the phenomenon we documented is very robust and very pervasive,” she said, adding that people “are often still too optimistic about how much use they will make of [fitness centers].”

In 2013, appraiser Jonathan Miller of Miller Samuel estimated that the presence of a gym in a New York City building adds less than 5 percent to an apartment’s total value.

A previous report from the National Multifamily Housing Council with the National Apartment Association found that New York will need 279,000 new apartments by 2030 to keep up with demand.  [WSJ] – Eddie Small

4030 South State Road 7 and Liberty Property Trust CEO William Hankowsky (Credit: Liberty Property Trust and Google)

Liberty Property Limited Partnership, a subsidiary of Liberty Property Trust, just won the bid to develop a 24-acre industrial site in Dania Beach.

The Malvern, Pennsylvania-based REIT submitted a winning bid of $14.25 million to build a 260,000-square-foot industrial/distribution facility, according to its proposal. The city of Fort Lauderdale started soliciting bids for the city-owned property at 4030 State Road 7 in August.

Five teams — including affiliates of Bridge Development Partners, Foundry Commercial, Prologis and a joint venture between Butters Construction & Development and Cabot Properties, Inc. — submitted bids. Minimum bids started at $13.226 million.

Colliers International’s Steve Wasserman, Ken Krasnow and Brooke Berkowitz represented the city in the sale. The trade marks one of Colliers’ first assignments from the city of Fort Lauderdale under its new contract to help manage the city’s real estate and dispose of surplus properties. As part of the deal, Colliers collected a commission equal to 4 percent of the sale price.

The site, just south of I-595, sits near an active landfill. Prior to the sale, the the Fort Lauderdale Police Department used the property, which originally served as a composting site, for motor vehicle training.

Liberty Property Trust has recently been turning its focus on industrial real estate. In October 2016, the REIT sold 108 office and flex properties in Pennsylvania, Florida, Minnesota and Arizona to Workspace Property Trust and its partner Safanad for $969 million.

The REIT owns an $8.5 billion portfolio of industrial and office space spread across 100 million square feet of properties throughout the U.S. and the U.K, according to its website.

Moishe Mana and 3205 Northeast 167th Street (Credit: Facebook)

Developer Moishe Mana just picked up a waterfront spec home North Miami Beach’s Eastern Shores neighborhood, property records show.

Mana’s 3205 Mana Casa LLC paid $5.9 million for the seven-bedroom, 6,500-square-foot home at 3205 Northeast 167th Street. The seller is 3205 Eastern Shores, an affiliate of Emuna Construction.

Records show Emuna filed a notice of commencement for a new single-family home in April. The property last sold in 2014 for $1.6 million.

Emuna’s Gabriel Benhayon, the project manager, and Mana could not immediately be reached for comment.

Mana, who also owns homes on the Venetian Islands and Hibiscus Island, has amassed more than 40 acres in Wynwood, with more than 10 million square feet of development rights. He has also acquired more than 45 properties in the Flagler Street area of downtown Miami, with the potential to develop another 10 million-square-foot project.

Jeremy Shockey and unit 3601 at 1330 West Avenue (Credit: One Sotheby’s International Realty)

Former University of Miami football player and two-time Super Bowl winner Jeremy Shockey has reached the end zone with his Miami Beach penthouse.

Shockey sold his three-bedroom, three-bathroom condo at the Waverly South Beach for $2.4 million, after about two years on the market with One Sotheby’s International Realty agent Reid Heidenry. The nearly 2,600-square-foot unit at 1330 West Avenue traded for about $930 per square foot.

Claudio Benedetti, who developed Artecity Park in Miami Beach, of Bologna, Italy bought the penthouse, according to a One Sotheby’s spokesperson. Max Picchiura of Sobe International Realty brought the buyer.

Shockey played the New York Giants, the New Orleans Saints and more recently, the Carolina Panthers. His penthouse, which he purchased in 2005 for $1.45 million, includes two balconies with views of the bay and Atlantic Ocean.

He put unit 3601 on the market in late 2015 for $3 million, marking a nearly 20 percent difference off the original asking price. It was relisted in December for the reduced price of $2.85 million, according to Realtor.com.

Shockey is developing a home in Miami Beach, Heidenry said.

Joseph Moinian and Moinian Group properties (Credit: Moinian Group)

From TRD New York: Joseph Moinian’s Moinian Group is building up its lending operation with four new financing deals for projects in Brooklyn, Harlem and Miami totaling $216.3 million, according to documents filed on the Tel Aviv Stock Exchange on Wednesday. That puts Moinian’s total lending activity at $513 million, of which $84 million is in mezzanine lending.

Moinian, which has about $2 billion in real estate assets, initially got into the lending game in 2015 with a $65 million loan to David Marx’s Marx Development Group for a Hudson Yards hotel. In 2016, the company launched a dedicated investment platform, offering senior loans above $15 million, and mezzanine loans above $10 million. Since 2015, the company has provided a mix of equity, senior and mezzanine debt totaling $550 million across nine deals, according to TASE documents.

Of the new deals, three loans totaling $116 million have already closed, while the fourth and largest, a $95.5 million loan to Michael Shah’s Delshah Capital is still in final negotiations.

For the Delshah deal, Moinian will provide both senior and mezzanine loans to finance a 180-unit project in Downtown Brooklyn. The $95.5 million will be split into a $61 million senior loan carrying a floating interest rate of Libor plus 6.5 percent, and a $34.5 million mezzanine loan with a floating interest rate of Libor plus 11 percent, according to the terms. Moinian intends to sell the senior tranche to a bank, while holding the mezz piece.

Shah is partnering with John Carson’s OTL Enterprises to build a 20-story building at 22 Chapel Street, replacing a drug treatment facility with a 180 luxury rental units, 30 percent of which will be affordable in order to be 421a compliant.

Also in Brooklyn, Moinian will provide developers Joseph Brunner and Abe Mandel with a $60 million debt and equity package for two residential projects. Moinain will pay $7 million for a 35 percent stake in the projects, and provide up to $53 million in financing, of which the borrowers have so far drawn $12.5 million. The two-year loan will carry a 7.5 percent interest rate, with the option to extend for six months.

The first of the two developments is a planned 157,000-square-foot building at 343 Ralph Avenue in Stuyvesant Heights, with 155 apartments, 20 percent of which will be affordable. The second is a two-building project at 1428 Fulton Street with 123 apartments. Brunner and Mandel’s Bruman Realty bought the three-lot Fulton Street site for $11 million in 2014.

A third deal, with Carthage Real Estate Advisors, will provide $24 million in loans to fund the group’s recent acquisition of a Harlem property from the Abyssinian Development Corporation. In December, Carthage finally closed on the $28.7 million purchase following a legal feud with the seller. Plans for the site, at the Ennis Francis Houses at 2070 Adam Clayton Powell Jr. Boulevard, include 306,000 square feet of residential space and 31,000 square feet for a community facility.

The loan carries an 8.5 interest rate and will mature in 12 months, with two options to extend for six months.

The fourth loan will take Moinian to Miami, where the company will finance the redevelopment of the Greystone Hotel. Moinian provided $36.8 million in loans to Trans Inn Management, B Group and VOS Hospitality for the redevelopment of the historic hotel at 1920 Collins Avenue, and the neighboring Santa Barbara Hotel at 230 20th Street. VOS plans to combine the two properties into a 56,000-square-foot hotel with 92 rooms.

The loan will be split into a $20 million senior loan and a $16.8 million mezzanine loan, which carries a floating interest-rate of Libor plus 10 percent. The terms leave Moinian the option of buying a 23.7 percent stake for $5.7 million after January 2019.

In a presentation to bondholders, Moinian describes its financing activity as “an integral part of our holistic investment approach,” and lists the advantages of debt over equity, which include increased liquidity and lower risk. Another advantage, according to the presentation, is that the “ability to provide flexible financing gives [Moinian] a clear advantage over competitors and access to JV transactions under favorable conditions.”

Moinian also announced plans to raise up to $150 million in a new bond offering in Tel Aviv, the company’s first issuance since 2015, when it first entered that market. It wasn’t immediately clear whether the proceeds from the bond issuance will be used to finance the developer’s lending activity. A Moinian spokesperson was not available for comment.

A list of the projects Moinian has lended on, according to Tel Aviv documents:

Miami Medical Center and Nicklaus Children’s Health System’s Narendra Kini (Credit: YouTube and Nicklaus Children’s Hospital)

Nicklaus Children’s Hospital just paid $88 million for the Miami Medical Center campus near Miami International Airport, property records show.

HC 5959 NW 7th Street LLC, an affiliate of the Carter Validus Mission Critical REIT, sold the property at 5959 Northwest Seventh Street to Variety Children’s Hospital, an entity of Nicklaus Children’s Hospital.

The deal included a 6,336-square-foot office building, a 5.15-acre parking lot and four single-family homes just south of the hospital. Nicklaus will keep the facility closed until it determines plans for the hospital campus, according to a spokesperson.

A for-profit investment arm of Nicklaus, Children’s Health Ventures, was a minority investor in Miami Medical Center. Additional investors included Nueterra, a health care management company based in Kansas.

Records show Tampa-based Carter Validus paid nearly $47 million for the property in 2014. Despite some major renovations, the hospital closed its doors in October. It had been seeking capital and was even considering a sale prior to shutting down, according to published reports.

The hospital included 67 private rooms and 12 operating rooms. It was founded in 1963 by exiled Cuban doctors, and was formerly known as Pan American Hospital.

Art Falcone, Nitin Motwani and Miami Worldcenter (Credit: Miami Worldcenter Associates)

Miami Worldcenter Associates just closed a $43 million construction loan for the retail and parking component of the massive mixed-use project under construction in downtown Miami.

The loan, provided by Fifth Third Bank, brings the project’s total financing up to about $500 million, according to a spokesperson. It’s being used for 53,000 square feet of retail space and a 1,100-space parking garage on Northeast Second Avenue between Eighth and Tenth streets.

Miami Worldcenter developers Nitin Motwani and Art Falcone, along with Taubman Centers and Forbes, are working on leasing the 360,000-square-foot high-street retail component.

The $1.2 billion project will include the 562-unit Paramount Miami Worldcenter condo tower,  the Seventh Street Apartments, a 1,700-room Marriott Marquis Miami Worldcenter Hotel & Expo, and a 600,000-square-foot office tower.

In October, the developers secured nearly $33 million in financing from Bank of the Ozarks. Earlier in 2017, the project’s community development district announced it issued private placement bonds that will fund $74 million of infrastructure upgrades for the project. And Paramount Ventures, which includes developer Dan Kodsi, Falcone and Motwani, closed on $285 million in construction financing for Paramount in March. – Katherine Kallergis

Bob Corker and Mark Warner

From TRD New York: Hedge funds that own billions worth of preferred shares in Fannie Mae and Freddie Mac are keeping an anxious eye on Washington, D.C. as Congress works on a draft bill to determine the future of the two mortgage giants.

The draft Senate bill, authored by Bob Corker and Mark Warner, would put the two mortgage companies into receivership and force them to sell their assets. Two new companies would eventually take up their functions, but under different names.

Still an open question is how the firms’ shareholders would get compensated. If the government walks away from its $195.5 billion in senior preferred shares, other shareholders such as Paulson & Co., the Blackstone Group and Bill Ackman’s Pershing Square Capital Management could see big profits on their investments, Bloomberg reported.

Bloomberg reported that the senators are considering paying owners of preferred shares close to the full book value of their holdings, while owners of common shares would get far less.

Fannie and Freddie buy mortgages from lenders and stamp them with a de-facto repayment guarantee, giving them a key role in the U.S. housing market. [Bloomberg] — Konrad Putzier

(Illustration by Brian Stauffer)

From TRD New York’s January issue:  In early December, at Madison Realty Capital’s rooftop holiday bash at the Top of the Standard, a pumped-up male executive grabbed a colleague by the shoulders and presented him to his buddies.

“This guy!” he bellowed. “This is the Matt Lauer of real estate. This guy is fucking Matt Lauer!”

The overt reference to the sexual harassment charges lodged against the former “Today” show host prompted cheers all around.

At Fried Frank’s annual extravaganza at Cipriani in Midtown less than two weeks later, a husky commercial broker gave his female colleague a bear hug. “Is this sexual harassment?” he shouted as his colleague and others laughed. “Is it?”

For both men and women in the high-octane, high-testosterone New York City real estate world, this kind of frat-boy behavior is par for the course in an industry that is known for its big egos and fierce competition.

And this holiday season has actually been somewhat G-rated, sources say, as the industry takes stock and companies scale back parties amid the market slowdown and a heightened awareness of sexual inappropriateness in the wake of the Harvey Weinstein scandal.

But parties are parties. And in commercial real estate, especially, these events are often 90 percent male. Some development firms and commercial brokerages have even hired agencies to fill their parties with women, including models, to even out the mix.

More broadly, the industry has a cemented gender imbalance. In 2015 (the most recent study), women working in real estate in the New York metro area made up 27.3 percent of senior-level positions and 40.4 percent of entry- and midlevel roles, according to the U.S. Equal Employment Opportunity Commission. Those ratios have remained virtually unchanged across the business over the last decade — especially at the executive level (see related story on page 44).

Residential brokerage veteran Barbara Corcoran, who has worked with many condo builders over the years, said the industry is essentially hard-wired for breeding off-color behavior.

“As long as the developers are 100 percent male and hugely successful and powerful and building tall towers, I don’t think you are going to see that much change,” Corcoran said. “Because to get in that position, they have to have a huge ego with no aversion to risk. So you are setting the stage for a personality type.”

Last month, one bouncer working the door at Newmark Knight Frank’s holiday event at Marquee New York in the Meatpacking District incredulously asked, “What kind of company is this? Why is it all men?”

These predominately male events, which typically have open bars, have become fertile ground for less-than-professional behavior. One source told The Real Deal that she’s seen men slip off their wedding rings before making the rounds at industry parties.

At a rooftop event in December 2016, TRD witnessed a male commercial broker bombarding a young woman with questions about her personal life. “Where do you live?” he asked, wielding a drink and a smirk.

When the woman answered that she lived in Harlem, he pressed, “West or East?”

“Oh, good,” the male broker said with mock relief when she answered West. “You’ll have less of a chance of being raped there.”

At the same party this year, where tequila shots and cigars are free for the taking, a female journalist recounted heading upstairs to the roof to take a final lap at the end of the night.

“When I got to the top of the staircase, I paused and looked around to see if I recognized anyone,” she said. “These two men made eye contact with me, and we started chatting. I didn’t quite hear where they worked, but I was trying to keep the conversation business-focused and professional, so I asked, ‘What are you seeing in the market?’

“One of the guys replied, ‘Brunettes,’ obviously referring to me,” she said. “He and his colleague laughed. I then said, ‘No really, what are you seeing in the market?’ And again, he said, ‘Brunettes.’ He followed that up with, ‘I have to try, don’t I?’”

Alpha brokers

That frat-boy mentality is obviously not just reserved for the party circuit. For many, it’s just the way deals get done, whether it happens during after-work partying, on the golf course, during a Knicks game, at a strip club or at a trade show.

It should be noted that the culture is starkly different in different sectors of the industry — from the buttoned-up MBA, corporate world of REITs to the boiler-room-style title insurance business.

But examples of bro-ish behavior are everywhere, according to industry sources. They range from minute aggressions like moving women physically aside by the waist at crowded events and sexual braggadocio over drinks to more serious offenses.

For example, the International Council of Shopping Centers’ annual conference in Las Vegas is not only known for the three-day event that takes place on the venue’s floor. It’s also a haven for extravagant parties, many of them poolside, hosted by developers and brokerages. And many of those events feature scantily clad women and include endless amounts of free drinks.

The event, insiders say, is a major target for local prostitutes, and dealmaking at strip clubs is routine. “It happens all the time,” one ICSC regular said on the condition of anonymity. “So many hookers and naked women at all the after-parties.”

Sources say that drugs, including cocaine, are also common at the parties that take place during these multiday trade events.

A former employee of Newmark’s Los Angeles office filed a lawsuit under the alias “Jane Doe” against the brokerage last April, alleging that she was repeatedly sexually harassed by her superiors at ICSC and other company events.

The lawsuit names Newmark and Michael Arnold, a former managing director who left the firm suddenly in November 2016. He is now vice chairman of corporate services at NAI Global, a commercial real estate brokerage. The suit also named Newmark director of operations John Picard and senior managing director David Kutzer. Kutzer was later dismissed as a defendant. Arnold, Picard and a representative for Newmark declined to comment.

“[Doe] learned that illegal drug use by [the firm’s] executives was so rampant at corporate events like ICSC that junior employees who would ordinarily have chosen to drive to such events would often fly instead for fear that if they took their own cars, senior managers would pressure them to transport large amounts of cocaine across state lines,” the complaint reads.

But in Vegas, bouncers have started cracking down on certain narcotics, driving hard-partying real estate players to alternative substances like MDMA, more commonly known as Ecstasy, according to several sources.

“While we can’t comment on past behavior by ICSC leadership and staff, we can say that we are in a new era under the leadership of Tom McGee [who took over as president and CEO in August 2015],” a  spokesperson for the trade organization told TRD in a prepared statement. “He expects his team to act professionally and represent ICSC by providing world-class service to our members and event attendees.”

Drugs aside, industry executives say that bro behavior (among both men and women) is merely a byproduct of an industry built on fierce competition. “To be successful in New York, you have to be competitive — you have to be driven, and there are some who have sharper elbows than others,” said RXR Chairman and CEO Scott Rechler.

“I meet with a lot of brokers, tenants and real estate groups at big banks, and there are women there and they are negotiating with the big egos,” he added. “I’ve gotten Saturday-morning phone calls that I couldn’t repeat here. You know, ‘f—this’ and ‘f— that.’ And that wasn’t coming from a man.”

Bro vs. bravado

But Jay Solomon, the creative director of Sugar Hill Capital Partners, a private equity fund operating in Upper Manhattan and Brooklyn with roughly 60 employees, said commercial real estate’s bro culture is very cemented due to the ratio of men to women.

He noted that even he, at times, has “felt uncomfortable” with the behavior of some figures in the industry, though he declined to elaborate or provide specific examples.

“The general culture in commercial real estate is very aggressive,” said Jane Roundell, a managing principal at Cresa New York, part of an international firm with more than 900 employees.

“That is not a reflection of the business being male to me, it is just the nature of the industry. The nature of the industry is very competitive, and it’s a difficult job,” she added. “If you are working on straight commissions, that has its own challenges. You are negotiating all the time. I read things about how it’s a boys’ club, and I guess it is. But it is a club that I attend and I know many other women attend.”

Roundell, who’s worked in real estate since 1985, said she has had to learn how to “focus on the big picture,” not let people intimidate her and “just keep going.”

“I have had some interesting deals where the broker on the other side was aggressive to the point that he was yelling at me on the phone,” she recalled. “So I hung up on him. I don’t allow people to treat me that way. Twenty years ago, if someone said something off-color I would ignore it. Whereas now I would probably call them out on it, and I wouldn’t be afraid to do that.”

Nicole Liebman, a salesperson at the boutique commercial real estate investment and advisory firm Hudson, rejected the characterization of the industry as “bro-ish.” But she acknowledged that working in a male-dominated sector means meeting a lot of people who don’t carry themselves professionally. “They do it on purpose” to intimidate people and blur the moral lines, she said.

Roundell said that as with any male-dominated industry, it’s common for women to experience casual chauvinism. She noted, for instance, that she often hears male brokers and developers refer to women as “girls.”

“I think it has sort of just been accepted in the industry,” Roundell said. “I don’t think anyone means anything by it. But it is the way they think.”

In residential real estate, where women have traditionally outnumbered men, Corcoran called “bros” a subcategory of a subcategory.

“I would say [in residential] there are two clubs: ‘bravado’ and ‘I understand, dear.’ You have the guys that are as close to you as your local hairdresser, and the women tell them all the things that their husbands won’t listen to,” the real estate mogul and investor on ABC’s “Shark Tank” explained. “But for the other guys, I think the bravado works to their advantage. They are making a lot of noise in front of other people who like to be noisy.

“There are a lot of ‘I’m bigger than you’ personalities in New York,” Corcoran added. “So there is a need for people who can sell to that.”

Veil of silence

While the fist-bumping boys’ club may seem harmless (albeit inappropriate) in some scenarios, it clearly crosses the line in others.

Since October 2017, when news of the Weinstein scandal broke, hundreds of women across the country have come forward to share their stories about sexual harassment and assault at the hands of powerful men.

Yet real estate — which also involves exorbitant amounts of money and situations ripe for abuses of power — has not yet seen a major tycoon brought down on account of sexual charges. While Donald Trump, for one, has been accused of harassment and assault by several women, he is currently residing in the White House and continues to deny all claims against him.

Among the biggest national cases in recent years were lawsuits naming star designers and hotel executives.

In May 2016, “leather daddy” designer and architect Peter Marino faced a sexual harassment lawsuit from an employee, accusing him of making homophobic slurs and sexually suggestive comments. And this wasn’t the first time. A similar suit against Marino from 2015 alleged that he regularly referred to female employees as “cunts” and made racist statements about black people.

Last October, Alexander Mirza, the former CEO of Cachet Hospitality Group, accused the firm, which is bringing a Playboy Club-anchored hotel to Midtown, of firing him to prevent an investigation into sexual harassment claims against its partner. Mirza alleged he learned in July that three women were pursuing allegations of sexual harassment and gender discrimination against Adam Hochfelder — a onetime star New York real estate investor who served a two-year jail stint for fraud in the early 2010s.

An attorney for Cachet, however, told TRD at the time that Mirza was terminated “for good cause,” and said that Mirza himself was being investigated by the firm for misconduct including sexual harassment and gender discrimination.

And last November, at least four women accused celebrity hotelier André Balazs of groping them, according to the New York Times. In one instance, he allegedly reached under actress Amanda Anka’s skirt at a movie premiere party at London’s Chiltern Firehouse.

“It’s not that there hasn’t been scandal in the business, there just hasn’t been much of any scandal that we know about publicly,” said Leonard Steinberg, president of the tech-focused residential brokerage Compass. “I would suspect that there is a lot of scandal out there that has been quieted with a lot of money.”

To Steinberg’s point, more than half a dozen men and women interviewed for this story revealed that bad behavior in the real estate industry had crossed a line on multiple occasions over the course of their careers.

In addition, TRD has received tips about men in the industry who’ve been fired from brokerages and development companies after being accused of harassment by female colleagues. One female broker alleged that a male superior discriminated against her after she refused his sexual advances. Another tipster said that a male broker hired a female assistant only to demand sex and barrage her with abusive emails and texts. But most of those cases are nearly impossible to pin down through lawsuits and settlements.

In general, there is a veil of silence in place in the industry. Steinberg attributed that silence to self-preservation. 

“I believe that money is the ultimate power, and speaking up is a very scary thing to do,” he said. “It takes intense bravery for these women to step forward. But a lot of these cases are decades old, and you have to remember that for several decades people have been scared to speak out.

“It’s especially difficult in real estate as an independent contractor. This is your livelihood,” Steinberg added.

Corcoran recounted one disturbing example from her early days in real estate — though she declined to name names.

“When I was about 28, I was trying to get my business into the onsite arena, meaning that you have a whole building to sell,” Corcoran recalled. “I pitched a young developer and thought I did a great job. I got a call that afternoon from his secretary — who apologized profusely — and she said, ‘I am embarrassed to ask you, but my boss asked me to call you to see if you would sleep with him in exchange for the building.’ I couldn’t believe my ears.”

Corcoran said she eventually landed the building without needing to “sleep with the bastard.”

A co-ed fraternity?

“In a way, it is like a lion pack and we are on the plains of Africa. You have to hunt for your kill,” said New York developer Alex Bernstein. “It is a fraternity, whether you are male or female, because you know what it takes to make a kill.”

That mentality has the potential to permeate beyond gender — some insiders say it plays into the way business is conducted more broadly.

It’s an issue that permeates commercial real estate, yet is hardly unique to it. The culture of finance isn’t quite what was depicted in “The Wolf of Wall Street,” and advertising is decades beyond its “Mad Men” era, but those industries will likely continue to attract bad actors as well. Real estate, in that sense, is part of a much larger picture and it’s cases of institutionalized sexism are part of a much broader problem.

Tim King, a managing partner at the commercial brokerage CPEX Real Estate who has worked in the business since the 1970s, said some simply believe that lying and fudging the facts are the norm in real estate.

“The same person who acts in a chauvinistic fashion and displays a lack of respect won’t have business ethics,” he said. “How can you have ethics and not respect? It’s all part of a package.”

But King argued that even though there’s a “cowboy mentality” in the industry, the toxic components of the culture are hardly unique to real estate and much of the “silliness” has actually waned.

“I’ve seen the culture shift 180 degrees,” he said. “Men still outnumber the women by a retarded factor. But having said that, those women who stick with the business have an outsized impact. Some of the most successful people in the business are women. Just look at Mary Ann Tighe and MaryAnne Gilmartin. Real estate is a great opportunity. It really is a meritocracy of epic proportions.”

Many of the women TRD interviewed actually echoed that sentiment.

“The value that women bring to the business is now undeniable,” said Marla Siegel, an attorney and the executive director of property administration at Sugar Hill. “I think that companies are looking for the best person for the position rather than the best man.”

Party over, dudes!

With dozens of women accusing Hollywood bigwigs, journalists, politicians and business executives of sexual harassment, sources say commercial real estate’s bro culture is becoming less sustainable and destined to wane.

And many New York City real estate firms seem to be going out of their way to avoid bringing the industry into the same klieg light as Hollywood and media.

Despite the tales of buffoonery at holiday parties in recent years, there’s little doubt that the usual bravado among New York’s real estate bros will remain subdued for the time being.

The fêtes that went off in 2017 were for the most part tame and professional — that is, if they went off at all.

Town Residential called off its annual party, known as one of the biggest and most extravagant in the industry, as did the Moinian Group.

Joseph McMillan’s DDG Development — which hosted an upscale celebration at the Whitney Museum with a live band and private tours of special museum exhibits in 2016 — kept it employees-only in 2017. And while JDS Development Group’s annual bash at Morimoto was always must-attend on the party circuit, the company scaled it back in 2017 to staff and family only.

But industry players insist that the lower-key events are simply more a function of market dynamics than anything else.

“Retail got formally destroyed this year,” Town’s CEO, Andrew Heiberger, told TRD in early December. “The hotel market is in distress. Luxury sales above $4 million are way off, and the high-end rental market is frozen with the exception of some prime, prime pockets. I just didn’t think that throwing a gala-sized party this year was consistent with the market, even though a lot of good brokers had really good years.”

But the awareness surrounding sexual inappropriateness is undoubtedly heightened in real estate and beyond.

That is especially true in the title insurance arena, a more than $10 billion sector of the real estate industry. While title insurance agents have gained a reputation for their hard partying — and for the sometimes-sleazy ways that they entertain clients, sometimes at strip clubs — most are bracing for a sober 2018.

And the days of scantily clad waitresses serving shrimp to rowdy brokers in private boxes at Barclays Center may not just fade away for a season. They may disappear for the long haul, with the schmoozing that the industry so heavily relies on soon to be outlawed.

New state rules, which are set to take effect on Feb. 1, will crack down on how title insurance firms spend their marketing dollars. In an effort to curb excessive inducements and conflicts of interest, the new regulations prohibit title companies from paying for clients’ (or prospective clients’) meals, vacations, parties or other forms of entertainment.

However, the new rules, which have already been delayed once, are expected to be challenged in court.

“Taking a client out to lunch and dinner — those are things that every business in America does,” said real estate attorney Adam Leitman Bailey, who frequently works with title insurance firms. “Why are they taking it away from title companies?”

Still, those changes suggest that the tide in New York real estate may be shifting. Bernstein, for one, said the industry’s bro culture is evaporating, in large part, because more real estate firms are now publicly held or work with clients that are.

“Twenty years ago, the business was less institutional,” he noted. “The SL Greens, Vornados, equity funds and CMBS banks didn’t dominate the scene to the same extent, and those corporate cultures are, usually, more equitable.”

But while real estate is gradually adjusting to new realities, there will always be people who thrive on bad behavior.

“Some people like working for extreme egos,” Bernstein said. “They are like the suckers on the bottom of a shark.”

—Additional reporting by TRD staff

Lakeside Plaza and Dominic Montazemi (Credit: Cushman & Wakefield)

A Hollywood-based real estate investment firm just scooped up an office building in Fort Lauderdale for $17.7 million, according to a press release.

Naya USA Investment & Management LLC bought the 119,370-square-foot Lakeside Plaza at 6301 Northwest Fifth Way for about $150 per square foot.

Lakeside IV, a company tied to Delma Properties Inc., is the seller. Records show Delma bought the property in 2005 for $15.8 million. The real estate firm is headquartered in New York City and has property management offices in Miami, Fort Lauderdale and Baltimore.

Cushman & Wakefield’s Dominic Montazemi, Scott O’Donnell, Greg Miller and Miguel Alcivar, represented the seller. Travis Herring and Deanna Lobinsky of Cushman’s office leasing team also worked on the deal.

The five-story building is located within Corporate Park at Cypress Creek. At the time of sale, Lakeside Plaza was about 75 percent leased to tenants including Bosch Security Systems, the Early Learning Coalition and Allied Universal, according to the release. Records show it was developed on a 6-acre lot in 1984.

The business park is in Fort Lauderdale’s uptown neighborhood, which surrounds the Cypress Creek Tri-Rail Station. Envision Uptown , a nonprofit group of city planners and leaders, is trying to establish the neighborhood as a transit working hub. Microsoft Latin America’s headquarters is also located in the urban village.

In October, Naya USA and Coast Capital Partners paid $40 million for Lennar Corp.’s Miami headquarters. – Amanda Rabines

Clockwise from top left: Atlanta’s Westin Peachtree Plaza hotel is one of the late John Portman’s iconic buildings, Senators Bob Corker and Mark Warner are debating Fannie and Freddie’s future, and Macy’s is closing its historic location in downtown Miami.

From TRD New York: Senate proposal would force Fannie and Freddie to sell assets
The future of Fannie Mae and Freddie Mac is being debated in Congress, and the owners of billions of dollars worth of shares in the mortgage giants are anxiously awaiting the outcome. A draft Senate bill would put Fannie and Freddie into receivership, forcing them to sell their assets, but how shareholders would be compensated remains an open question. Bloomberg reports that the Senate proposal, authored by Bob Corker and Mark Warner, could pay owners of preferred shares close to full value, while owners of common shares would get far less. That would mean hedge funds such as Paulson & Co., the Blackstone Group and Bill Ackman’s Pershing Square Capital Management would make big profits on their investments. [TRD]

U.S. office market leasing hits lowest level since 2012
Net office absorption of office space fell to it lowest level since 2012, with 21 million square feet absorbed in 2017, according to a report by research firm Reis. Rents grew a mere 1.8 percent in 2017, compared to double-digit growth before the Great Recession. The Wall Street Journal notes that the pace of new office construction has slowed, which should help stabilize the market. [TRD]

Leadership changes at Douglas Elliman lead to rumors about what’s next
Rumors are swirling at residential giant Douglas Elliman after the firm shook up its management structure and promised more aggressive expansion. Elliman chairman Howard Lorber recently announced the promotion Scott Durkin to president, a title previously held by CEO Dottie Herman, which has some questioning her future. Lorber denies any shakeup and says the management changes are a sign of how much the firm has grown. Some Elliman insiders, however, believe that the move lays the groundwork for Susan De França, the firm’s development chief, to eventually take over for Herman. [TRD]

Renters say a gym is an important amenity but many never use it
Eighty-two percent of renters say an on-site gym is important to them, but 42 percent also said they either rarely or never actually use their building’s fitness facilities, a recent survey from the National Multifamily Housing Council and Kingsley Associates found. The survey asked 272,743 tenants across the country what they looked for in a building or apartment complex. Almost all, or 91 percent, of respondents said they already lived in a building that had a gym, the Wall Street Journal reported. [TRD]

Lenders want Fannie and Freddie to accept new credit score
The Federal Housing Finance Agency is debating whether or not to allow Fannie Mae and Freddie Mac to accept a new credit-rating system when reviewing potential loans. FHFA currently requires banks to check FICO credit scores, created by the Fair Isaac Corp., but non-bank lenders are pushing for FHFA to start accepting VantageScore, a rival credit scoring system created by Equifax, Experian and TransUnion. They argue that FICO is too restrictive and excludes millions. [TRD]

MAJOR MARKET HIGHLIGHTS

The glass ceiling hasn’t broken at New York City’s top commercial real estate firms
While women are better represented at top of residential real estate firms, the development and commercial sectors are dominated by men, a TRD analysis found. Most of the largest commercial and development firms in New York have leadership teams that are 70 percent male and only three of the top 20 commercial brokerages come close to having an even split of male and female brokers. Whats more, there has been very little change in the gender breakdown of New York’s real estate top executives since 2007 with women occupying the same 27 percent share of executive-level managerial positions. [TRD]

LA-based ex-Agency broker busted in Colorado with 52 lbs. of pot in car
A Los Angeles-based broker was arrested this week in Colorado after a state trooper discovered 52 pounds of marijuana in his car, authorities said. Jonas Heller, who most recently was with the Agency, had been pulled over on Interstate 70 in Mesa County, according to the Colorado State Patrol, when a trooper found two suitcases full of pot in the the backseat. Agency co-founder and president Billy Rose said Heller is no longer with the company. His now-deleted profile on the company’s website said he has done more than $1 billion in sales. [TRD]

Macy’s to close historic downtown Miami location
Amidst a number of nationwide closings, Macy’s will shutter its downtown Miami location this quarter. Originally the flagship of Burdines, a local retailer which first leased the East Flagler Street store in 1917, the location has operated under the Macy’s brand since 2005. Macy’s plans to close 11 stores across the country in the first part of 2018, saving some $300 million per year, according to a press release from the company. [TRD]

Houston office market shows signs of recovery but new supply weighs down the numbers
With 460,000 square feet of new supply added to Houston’s office market in the fourth quarter of 2017, a boom in leasing still couldn’t tame the city’s vacancy rates. Free rent and other financial perks enticed companies to fill empty space, but the year ended with a 23.2 percent vacancy rate. A CBRE report found Houston “on relative solid footing” due to economic strength in Texas and nationally, but worries over stagnant energy industry hiring “could restrain any significant office sector leasing activity.” [Houston Chronicle]

Tishman Speyer plans $540M residential project in San Francisco
Tishman Speyer is proposing a high-rise residential development in San Francisco’s SoMa neighborhood. The $540 million project would eventually host 907 residential units in two 400-foot towers designed by Bjarke Ingels Group. The proposed construction would build more than 1 million square feet, with 26,000 square feet of retail space and 94,000 square feet of below ground parking. The proposal does not include affordable housing, but Tishman plans to meet its affordable housing requirements at nearby developments. [Bisnow]

John Portman, Atlanta’s defining architect and developer, dies at 93
Join Portman, the sometimes controversial architect and developer who shaped much of Atlanta’s skyline, died at the age of 93. Some of Atlanta’s defining buildings, including the Hyatt Regency, Peachtree Center, AmericasMart and the Westin Peachtree Plaza hotel, stand as Portman’s legacy in his hometown. Former Mayor Andrew Young once said that “there is no one who has done more for Atlanta.” He also designed major buildings in New York, San Francisco and Shanghai. [Atlanta Journal Constitution]

Renderings of Gables Station

NP International just closed on a $158.4 million construction loan for its mixed-use Gables Station development, property records show.

Bank of the Ozarks is the lender.

Developer Brent Reynolds plans to break ground on the Coral Gables project before the end of the first quarter, he said. Construction is expected to take about 30 months.

Records reveal the developer also inked a lease for about 90,000 square feet of retail space with LTF Lease Company, led by Life Time Fitness executive Parham Javaheri. The Chanhassen, Minnesota-based health and fitness company has 128 locations in 36 markets in the U.S. and Canada, according to its website.

Reynolds declined to comment on the tenant, and a spokesperson for LTF could not immediately be reached for comment.

In all, Gables Station will feature three towers with about 120,000 square feet of lifestyle-oriented retail space, 500 residential units that include 66 furnished extended-stay hotel units, and open green space.

NP International paid more than $60 million for the 4.3-acre site at 251 South Dixie Highway in 2016. Developer Jeff Berkowitz, who previously planned to build a big-box retail building on the site, sold the property.

Also in 2016, Reynolds’ company secured approvals from the city of Coral Gables for a transit-oriented mixed-use project at the site. NP International agreed at the time to provide public benefits that include funding a portion of the Underline linear park and trail, ground level landscaping, funding the purchase of a trolley and its operating costs, and incorporating Bahamian building design.

Gables Station is one of two developments NP International is building on U.S. 1 in the Gables. Demolition of the Paseo de la Riviera site, which is slated to become an apartment and hotel development, is nearly completed. NP International secured $95 million in construction financing for that project in August.

Palazzo del Sol (Credit: Mzayat Cliparts)

The development of two sister luxury condos on Fisher Island is one step closer to completion.

Fisher Island Investments, the developer behind Palazzo Del Sol and Palazzo Della Luna, just scored a $90 million loan to fund the sellout of the remaining 15 units at Palazzo Del Sol and complete construction of Palazzo Della Luna, the Commercial Observer reported.

New York-based Mack Real Estate Credit Strategies provided the bridge loan. The lender has been busy financing major projects in South Florida. In October, it provided Penn-Florida Companies $318 million in financing for its Via Mizner mixed-use project in Boca Raton.

Palazzo Della Luna will feature 50 units once completed. Residents at the 43-unit, 10-story Palazzo Del Sol include billionaire and former Hasbro CEO Alan Hassenfeld, Yard House founder and CEO Steele Platt, and former Formula One driver Enrique Bernoldi.

Development on Fisher Island, reached only by ferry, boat or helicopter, has been quiet. The Kobi Karp-designed palazzos are two of only three properties to be constructed on the island in the past decade — the third being the 10-story, 29-unit Palazzo Del Mare project built in 2007 on a site east of the towers. [Commercial Observer] – Amanda Rabines

From left: Emad Khashoggi, the Chateau Louis XIV and Mohammad bin Salman (Credit: LinkedIn and Getty Images)

From TRD New York: In 2011, three weeks before construction of the Chateau Louis XIV would finish, celebrity real estate broker Jeff Hyland spent half a day touring Emad Khashoggi’s magnum opus on the outskirts of Paris. He came away impressed by the development’s splendor and attention to detail, but also a little baffled.

Sitting on a 57-acre park a short drive from Versailles, the mansion is built in the style of a 17th-century palace: gold-plated water fountains and marble statues outside, grand staircases and elaborate chandeliers inside. Also included: a nightclub, a movie theater, a moat doubling as an aquarium and two downstairs lounges. As Hyland understood it, one lounge was for men and the other for women. The design didn’t seem like it would appeal to his rich American clients.

“I was racking my brain. Who could I have for it?” the Los Angeles-based broker recalled. In hindsight, he said, the answer was obvious: “[Khashoggi] must have known up front that he’d be selling it to a Middle Easterner.”

[TRDPullQuote align=”right”] “The guy just — for lack of a better term — has huge balls and put them on the table.” [/TRDPullQuote]

Four years later, in December 2015, the property sold to an unnamed buyer for around $300 million. It was reportedly the most expensive home sale in modern history. Last month, the New York Times reported that the mystery buyer was Saudi Arabia’s crown prince Mohammed bin Salman. It was a terribly embarrassing revelation for the crown prince, who’s leading a so-called anti-corruption campaign against the elites of Saudi Arabia and was also recently outed as the buyer of a record-breaking $450 million Leonardo da Vinci painting.

Almost a century after the Treaty of Versailles, a French palace is a conversation topic in diplomatic circles again. Its developer, who happens to be Dodi Fayed’s cousin and the nephew of the world’s most infamous arms dealer, is receiving much less attention. While other builders of luxury homes, such as the Candy brothers, are masters of self-promotion, Khashoggi is a bit of an enigma.

“His brand is nonexistent other than this anomaly,” said Cody Vichinsky, co-founder of the luxury brokerage Bespoke Real Estate. “This sale put him on the global map.”

Real estate royalty

Khashoggi was born in Lebanon into an illustrious Saudi family of Turkish descent. His grandfather served as the first Saudi king Ibn Saud’s court doctor. His father, Adil, made a name for himself in the early 1970s as one of the owners of Triad along with his brothers Essam and Adnan. The holding company had interests in meat canning, oil, real estate and marketing ventures around the globe, according to Peter Hobday’s book “Saudi Arabia Today.” Eventually Adnan bought out his brothers, who each held 20 percent stakes, according to Ronald Kessler’s “The Richest Man in the World.”

Adil became a real estate developer. Adnan’s life took a very different turn: he became a billionaire selling American-made weapons to Middle Eastern countries. At the height of his wealth, he owned a 282-foot yacht (which made a cameo in a Bond film and later sold to Donald Trump) and 12 properties (including a 180,000-acre ranch in Kenya and a two-story apartment at Olympic Tower in Manhattan).

Adnan Khashoggi

Famous for hosting extravagant parties and married three times, Adnan liked people to believe that he was the richest man in the world, even if he wasn’t. “For A. K., there were no laws, no skies, no limits,” Prince Alfonso Hohenlohe-Langenburg of Spain told the Times. His empire began to unravel in the late 1980s amid the Iran Contra scandal and allegations that he helped Philippine dictator Ferdinand Marcos hide his real estate investments, which included the Crown Building, 1 Herald Square, 40 Wall Street and 200 Madison Avenue. By the time of his death in June 2017, Adnan had lost much of his money.

Adil was his brother’s “opposite in almost every respect,” Kessler wrote. He remained married to his first wife and eschewed the jet-set life, spending much of his time in the Saudi capital, Riyadh.

Adnan and Adil had a sister, Samira, who married Egyptian billionaire Mohammed Al-Fayed. Their son Dodi dated Britain’s Princess Diana and died alongside her in a car crash in 1997.

The Road to Versailles

Like his father and uncle, Khashoggi went to college in California, graduating from Pepperdine University in 1987. Two years later he launched his development company, COGEMAD, in Cannes.

The firm’s first major project was the restoration of La Tropicale, a Cannes mansion dating back to the turn of the 20th century. In 1999, he began renovating another turn-of-the-century mansion, the Palais Rose near Paris. And more recently the company, now headquartered in a Paris suburb, built the Palais Venitien in Cannes. The home, supposedly inspired by Byzantine and old Venetian architecture, was on the market for $124.6 million.

Khashoggi got the idea for the Chateau Louis XIV around 2000, he told the French business news magazine Entreprendre.  In 2009, he bulldozed a 19th-century castle in the town of Louveciennes and began construction. About 150 artisans worked on the project for more than two years, according to Entreprendre. The challenge, Khashoggi told the outlet, was “to combine the best in home automation with current building standards and architectural rules from another century over thousands of square meters — and all in two and a half years!”

[TRDPullQuote align=”right”] “[Khashoggi] must have known up front that he’d be selling it to a Middle Easterner.” [/TRDPullQuote]

The finished product looks like a 17th-century castle, except it isn’t. Electric elevators shoot up and down. Water fountains and air conditioning can be controlled by phone. Khashoggi also built an underwater lounge with transparent walls and ceilings into the moat.

COGEMAD did not respond to several requests for an interview.

Every single detail in the building looked expensive to Hyland. “There was nothing in it where corners were cut,” he said.

Like Gary Barnett with his One57 condominium project in Manhattan, Khashoggi timed the market well. As the world recovered from the Great Recession and central banks pumped money into economies around the globe, the ranks of the super-rich grew. So did the demand for luxury real estate.

But Chateau Louis XIV was still an extremely risky bet. “The guy just — for lack of a better term — has huge balls and put them on the table,” Vichinsky said. The danger, he said, lay in the mansion’s “taste-specific” design.

Plenty of people want to look down on Central Park, but few want to look up at the underside of a sturgeon from the comfort of a white, ring-shaped couch in a fake 17th-century palace — especially if the privilege costs $300 million.

“If you saw [Chateau Louis XIV] here in the U.S., you’d say, ‘Oh that’s Las Vegas. That’s so cheap. That’s so corny. That’s someone’s lottery earnings,’” said a luxury real estate broker, speaking on condition of anonymity.

To Vichinsky, Khashoggi placed an all-or-nothing bet and won. Either there was no market for his project and he was completely screwed, or there was one and he had it cornered by default.

“If that guy wants it, he has nowhere else to go,” Vichinsky said, referring to bin Salman. “But he could be one of two people on the planet.”

Murano at Delray Beach (Credit: MapQuest)

ESG Kullen just closed on a bulk condo deal in Delray Beach, and plans to immediately renovate and sell them off individually.

The New York-based real estate firm, headed by Eric Granowsky and Thomas DelPonti, paid $7.5 million for 93 units at the 275-unit Murano at Delray Beach, according to Mark Meland, an attorney who represented the firm. The seller was USO Norge Murano LLC, an affiliate of Norwegian investment firm Obligo. The deal at 15005 Michelangelo Boulevard comes out to about $81,000 a unit.

MidCap Financial Services provided an $8.4 million loan.

ESG will upgrade the condos and hopes to sell them starting in June 2019 for about $200,000 each, Granowsky said.

Records show the Obligo affiliate sold the units at a loss. It paid $8.8 million for the units in 2009.

In October, ESG bought 118 units of the 219-unit Monteverde at Renaissance in Boynton Beach for nearly $18 million.

501 Ocean Boulevard and Mark Barrocas (Credit: Forbes and Realtor.com)

The head of Shark vacuums and Ninja kitchen appliances just swept up a waterfront property in Golden Beach, property records show.

Mark Barrocas, president of Needham, Massachusetts-based SharkNinja, and his wife Irina paid $10.4 million, or $380 per square foot, for the single-family home development site at 501 Ocean Boulevard.

The appliance mogul is planning on building a house on the 27,300-square-foot lot, according to listing agent Samantha Elenson of One Sotheby’s International Realty. It includes 100 feet of ocean frontage.

Records show the seller, 501 Ocean Boulevard, is linked to an address in Toronto. The previous purchase price is not available in public records.

The site hit the market about a year ago with Sue Honowitz of Rusty Stein & Co for $12 million. Elenson, who said the original asking price was too high, took over the listing in November.

Douglas Elliman’s Lauren Barrocas, a relative of the buyers, represented the couple.

The exclusive beachfront town is home to celebrities like Tommy Hilfiger, Mexican billionaire Carlos Slim and Bruce Weber.

NYCHA Marcy Avenue houses, Donald Trump and Ben Carson (Credit Getty Images)

From TRD New York: The Trump administration will delay enforcing an initiative from the Obama administration that required communities to address housing discrimination patterns.

The Department of Housing and Urban Development, headed by Ben Carson, said a rule mandating that communities analyze and submit plans to reverse housing segregation to receive billions in federal aid will be suspended until 2020, according to the New York Times. The agency will also stop reviewing plans that cities have already filed, but it is not completely repealing the rule and maintains that communities are still required to advance fair housing policies.

HUD characterizes the delay as an attempt to help communities that were struggling to comply with the rule and determine how to measure their progress toward fair housing, but advocates have criticized it as a drastic curtailment of one of the first major steps the federal government had taken in decades to deal with race-based housing discrimination.

New York City is scheduled to start community outreach start community outreach for its review later this year. Leila Bozorg, deputy commissioner of neighborhood strategies for the Department of Housing Preservation and Development, told the Times she was “confident in the approach New York City is taking” which “will include working closely with a diverse group of experts, practitioners and advocates and hearing directly from New Yorkers about their housing needs and how where they live impacts their life.” [NYT] – Eddie Small

Corporate Center and founding principal of Stockbridge Terry Fancher (Credit: Regus and Stockbridge)

Corporate Center in downtown Fort Lauderdale just sold to an affiliate of Stockbridge Capital for $41 million, property records show.

The 24-story office building at 110 East Broward Boulevard, which spans nearly 369,000 square feet, sold for about $110 per square foot.

Corporate Center was repossessed by a commercial mortgage-backed securities trust as collateral from a company managed by Boston-based Cabot Investment Properties. Records show a foreclosure action was filed in 2013 against the affiliate.

GCCFC 2006-GG7 East Broward Boulevard, an affiliate of the CMBS trust with LNR Partners, sold the property for $34 million and the ground lease for $7 million.

CBRE’s Christian Lee represented the sellers.

Corporate Center was constructed in 1982 and renovated 17 years later. One of the largest tenants in the building is Branch Banking & Trust.

Stockbridge also recently bought a building in the Miami Design District for $22 million.

From TRD New York: Try to picture this real estate scenario — virtually. Like 90 percent of shoppers searching for a home, you start on the web, checking out listings and locations. You find a house that appears to be what you’re after, and you tap into the photos section of the listing to see the interior shots.

Wow! The house is outstanding for the asking price. Everything appears to be in good physical condition, you’re impressed by upgrade extras such as crown moulding in some rooms, plus granite counters and premium appliances in the kitchen.

You call your real estate agent and arrange a visit to the house. You both walk in and what you find is shocking. The walls have serious cracks, the carpets are stained and dirty. There are no crown mouldings, no granite countertops, no premium kitchen appliances. In fact, the kitchen is swarming with flies because of old food left decomposing in the sink. Get me out of here!

Could this happen to you? Absolutely — thanks to a concept known as “virtual staging.” You’re probably familiar with physical “staging,” where experts come in and de-clutter a house and replace or rearrange furnishings to make it more readily salable. That’s fine.

Virtual staging, by contrast, requires no physical furnishings, just software and imagination. There’s no limit to the types of digital makeovers that are possible. You don’t like the wallpaper? No problem. Get rid of it with a click. Want that sagging ceiling in the bedroom to disappear? Prefer high-end ceramic floor tiles in the master bath instead of the linoleum that’s actually there? More lush looking landscaping? Click, click, click — you’ve got it all.

But here’s the problem: At what point does virtual staging cross the line from spiffing up the appearance of a house to intentionally misrepresenting it, misleading potential buyers? That question has been percolating in the real estate brokerage industry.

Greg Nino, a Texas realty agent with RE/MAX West Houston Professionals [now RE/MAX Compass], ran into the issue painfully. A client fell in love with a house listed by another local agent who included 16 interior photos on her website. But when Nino and his client went to see the house, it was immediately clear that the 16 photos depicted rooms that had been digitally rearranged, repaired and enhanced.

“The house looks like hell,” Nino said in a posting on the “ActiveRain” real estate network. “The carpet is dirty, the walls have dents, scrapes and broken mini-blinds.” Plus there was partially eaten and rotting watermelon in the kitchen.

In an interview, Nino said his client was outraged and blamed him for bringing her to such a blatantly misrepresented house. Nino’s blog post attracted thousands of online visitors and comments from realty agents around the country, many of whom deplored the use of high-tech wizardry to make online listings look much better than they really are.

“This is misleading the public,” said Nino. “It’s bad for the industry, and bad for consumers.”

Real estate staging professionals also are concerned by growing complaints about digital misbehavior. Jay Bell — co-owner of a company in Atlanta that offers both traditional, physical staging and virtual staging — says that digital cover-ups of flaws in properties, including changing wall colors and installing make-believe moulding, are all out of bounds ethically.

“It’s a slippery slope,” he said in an interview. His VirtuallyStagingProperties.com site prohibits alterations of listing photographs in any way that differs from Bell’s physical staging activities, which primarily involve changes to furnishing and decor.

“People ask for this stuff all the time,” he said, “and we’d love the business.” But he says his company refuses to digitally repair or renovate rooms depicted in photos submitted. Bell’s company also requires clients to inform shoppers and visitors online that the interior photos have been virtually staged.

Though the National Association of Realtors has not issued specific guidance to its 1.2 million members on virtual staging, Bruce Aydt, past chairman of the group’s professional standards committee and senior vice president and general counsel of the Prudential Alliance brokerage [now Berkshire Hathaway HomeServices Alliance] in St. Louis, told me it’s all about “truthfulness.”

Putting aside the changes to furnishings, “is the representation of the property what it actually looks like” in reality? Equally important, said Aydt, are there clear disclosures that photos have been manipulated digitally?

If not, he said, then it’s likely they violate Article 12 of the Realtors’ code of ethics, which requires agents and brokers to “present a true picture in their advertising, marketing and other representations.”

Bottom line: Though most online photos have not been digitally altered, be aware that some may be. It doesn’t hurt to ask before you visit.

Rendering of marina component for Resorts World Miami (Credit: Next Miami)

The Miami City Commission took a step toward clearing the way for a marina development along Biscayne Bay just north of downtown Miami.

The commission agreed to accept a deed for submerged land in Biscayne Bay, which the city would lease along with other submerged land for a marina development by Malaysia-based Genting Group.

Genting wants to lease the submerged land for a marina on the waterfront site formerly occupied by the Miami Herald daily newspaper at 1 Herald Plaza.

Genting bought the former Miami Herald site in 2011 for $236 million. The company also bought the nearby Omni retail and hotel complex for $185 million.

A Genting subsidiary is negotiating to lease the submerged land owned by the city of Miami and the Florida Department of Transportation (FDOT) for the development of a 50-slip mega-yacht marina.
FDOT, which acquired a portion of its submerged land from the city to build the MacArthur Causeway, has agreed to transfer ownership back to the city.

The Miami City Commission voted unanimously to direct the city manager to accept the deed for FDOT’s submerged land, which would be leased along with other submerged land to Genting.

The city is negotiating terms of the lease with Genting subsidiary Resorts World Miami LLC. Resorts World also is planning to build a mixed-use project on the former Herald land, which would include two residential towers, a hotel, retail and parking, and an 800-foot walkway along the bay. [Miami Today] – Mike Seemuth