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Witkoff walks the wild side as land prices skyrocket

7:30 am, May 8, 2013

Scott Alper (center) discussed “A Developer’s Perspective on New York’s Future” at the B’nai B’rith monthly luncheon. He is pictured with Joel Breitkopf, Alchemy Properties, and Jeff Mitzner, First American Title Insurance.

By Sarah Trefethen

The Witkoff Group is bullish on New York’s luxury residential market but sees question marks hovering over the city’s office segment, Scott Alper, a principal in the firm, told B’nai B’rith members at the group’s monthly luncheon last week.

“Goldman Sachs used to take a million square feet at a time, or they’d come and rent a building from us for a half a million square feet. You’re not seeing that,” he said. “All you’re seeing is contraction.
“There’s shadow vacancy because the banks aren’t giving the space back, but they have the empty seats. So the tech firms are the only ones today expanding in New York, and they’re not really taking that much space.”

But the developer is keeping busy with residential projects, including 150 Charles St., a new far-west West Village condo building that Alper said is 90 percent sold after just nine and a half weeks on the market.

“It comes back to buying real estate right,” Alpert said of the property, which the investment group purchased back in 2004 and held onto through a series of zoning changes and a recession. Today, he said, “There’s no better market that we could ever have envisioned.”

The former Toy Building property at 1107 Broadway, which the Witkoff Group purchased with Douglas Elliman president Howard Lorber in 2011, is being redeveloped into 125 condos and 20,000 s/f of retail. Sales there will begin next month, Alper said.

And Downtown, the group is involved in converting the former American Stock Exchange building into a rental building.

“We bought it at $170 a foot, so it pencils as a rental,” Alper said.

Within the next 60 days, construction is scheduled to start on a new, 460-key Marriott hotel at 47th and 7th with an 80,000 s/f six-story retail box.

Land prices in Manhattan have reach what Alper called “wild numbers,” noting that before construction at 150 Charles St., offers were coming in for the property at $1,000 per buildable s/f.

But if developers can keep their margins high, he said, the prices can make sense.

“If you buy into this overall pricing of what’s going on in New York, then the land is cheap,” he said. “If you have the use and you have the business model and you can get it financed at attractive rates, it’s making economic sense.”

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