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The market may pose choppier sailing than it did two years ago, but some developers continue plowing ahead regardless. Here, Real Estate New York profiles some of the up-and-coming generation of metro area developers and the ways in which they operate amid the current challenges—and, in some cases, build their businesses around responding to those challenges.

>[IMGCAP(1)]Scott Aaron, Founding Principal, Benchmark Real Estate Partners

Aaron’s career began in 1996 under the tutelage of developer Bruce Eichner at the Continuum Co. The Richmond, the Upper East Side’s first luxury condominium to rise following the real estate crash of the 1990s, was his first development project. During his tenure at Continuum, Aaron spearheaded the Manhattan Club and Brooklyn’s 180 Montague St.

In 2006, as director of development for the Brauser Group, Aaron collaborated with architect Garrett Gourley to produce 100 W. 18th St. in Chelsea. The condo project became one of the most acclaimed in recent years, vaulting into the pages of lifestyle magazines and onto television including profiles on NBC, CNN and Bravo TV. It was at Brauser that Aaron met Scot Heller, with whom he co-founded Benchmark Partners in 2008.

A boutique development firm, Benchmark aims to make lemonade out of the lemons that are “busted hotel and condominium projects,” as Aaron puts it. The new company’s primary focus is to pursue development opportunities in residential rental and hospitality projects, and also to provide alternate exit strategies and workouts for lenders, private equity funds and owners of distressed assets.

Market Overview: “The biggest issue I’m seeing is lack of ability or willingness of most banks to lend on new construction no matter how conservatively underwritten the deal may be. Very few deals of any size will get done in 2009 and 2010. If you can break ground on something in 2010, the project will have two great advantages: low construction costs and very little competition when the units come to market. Of course we are talking about rentals here, and the key factor in the ability to build a rental is the land basis. We’re seeing a reset to the mid 1990′s mindset in my opinion. Higher equity requirements, projects to be underwritten as rentals, the development team and their experience is important and of course a land basis that allows the numbers to work.”

[IMGCAP(2)]Joseph Farkas, President, Metropolitan Realty Associates LLC

Based in Garden City, NY, Metropolitan Realty Associates aims at identifying opportunistic and adaptive reuse commercial real estate investments in select metropolitan markets. Farkas began his real estate career 25 years ago, working with Cushman & Wakefield, Koll Management Services and CB Richard Ellis before striking out on his own as a developer in 2001.

In 2005, MRA bought and renovated the Paul Rudolph-designed, 188,000-square-foot former Endo Labs building in Garden City. Since then, Metropolitan has acquired and redeveloped properties totaling more than 1.5 million square feet. It took delivery in June of its newest project, a 161,000-square-foot office building at the Sunrise Business Center in Great River, NY.

Farkas has three properties on Long Island, one in Houston and another in Manhattan. The Garden City project is 100% leased and two buildings in Great River, 50% vacant when purchased, now are 90% leased.

Market Overview: “The most important issue currently facing commercial real estate development is the availability of financing.”

[IMGCAP(3)]CJ Follini, CEO and Founder, Noyack Medical Partners

Follini, who already had such development accomplishments as the Gun For Hire Production Centers in New York, Los Angles and three other cities to his credit, founded Noyack Medical Partners in 2002 solely to invest in healthcare real estate. He’s since accumulated a $200-million-plus portfolio exceeding pro forma returns for investors amid the current downturn.

For example, in 2005 Follini purchased a 23-acre former hospital campus in White Plains, NY at auction for $28 million. Noyack re-entitled the property as a 730,000-square-foot senior living campus with assisted living and medical offices; the net revenue for the campus is $150 million.

Follini notes that healthcare real estate has become arguably the most attractive commercial real estate asset class and is proving recession-resistant. He’s a frequent speaker on the subject, and also contributes the “Black Swan” blog to GlobeSt.com.

Market Overview: “The big challenge is to come up with a new vision, new ideas and creative execution without creative financing.”

[IMGCAP(4)]Erik Horvat and Steven M. Rosefsky, Principals, Acre Properties LLC

Acre Properties’ strategy is to maximize value creation for properties that are neglected, distressed or underutilized. As senior executives at Lennar Corp. and Edison Properties, Acre’s principals have 45-plus years combined experience working collaboratively with landowners, local and state governments, financial institutions, investors and development partners in the New York metropolitan area.

[IMGCAP(5)]Acre is currently negotiating strategic debt purchases, providing cash flow to municipalities via long-term public-private partnerships and incorporating cutting edge technology into their projects, such as automated parking. Its principals have recently formed a strategic partnership with WSP Group—engineers of record on the Time Warner Center and 1 World Trade Center, among other projects—to provide asset recovery solutions for institutional lenders, mezzanine lenders and equity providers throughout the US.

Market Overview: “The most important issue facing commercial development right now is the protection against continued erosion of asset values in the midst of one of this country’s worst-ever economic crises. Many of the recently completed land, construction, permanent and/or refinanced debt facilities were underwritten with a different economic construct in mind. Without continued economic growth, most of these underlying assets barely support, or do not support at all, repayment to the primary lender much less a return on equity. To battle the drastic downturn, appropriate redesigns along with disciplined asset management will be required to maximize revenues and enhance project marketability.”[IMGCAP(6)]Jeffrey Kaye, VP Development, The Gotham Organization

Before joining Gotham, Kaye was a principal and founder of Sterling Kaye Development, focused on situational development as well as investment opportunities throughout Manhattan. He also served as a director at Anbau Enterprises, a boutique development company known for its high-end residential projects, such as Harsen House and 110 Central Park South. Gotham is a fourth-generation New York City real estate and construction firm, with portfolio operations of over 1.7 million square feet of residential and retail properties.

One of the high-profile Gotham projects Kaye currently oversees is a 19-story luxury rental tower, with almost 50,000 square feet of retail space, now under construction at the intersection of 72nd Street and Broadway. The building is designed to meet LEED Silver standards and is scheduled for completion in late 2009.

Market Overview: “The major issues are the lack of liquidity in the market and the severe disconnect between buyers and sellers that exists today, along with the uncertainty surrounding the government bailout plans and its effectiveness in getting institutions lending again. We are starting to see opportunities in the market, but it is difficult to determine if these opportunities are really compelling enough in a declining market when many believe the worst is yet to come.”[IMGCAP(7)]Ian Reisner, Managing Partner, Parkview Developers LLC

Reisner is co-head of Parkview, a development firm he co-founded in 2003 that focuses on high-end residential development in New York City. Residential projects have included land assemblage, purchasing foreclosed units and improving them for resale, and combining units including total gut rehabilitation and new construction.

Reisner accumulated one quarter of the residences at 230 Central Park South and bought the Carnegie Hotel just before the Time Warner Center and 15 Central Park West elevated Columbus Circle’s standing. He then rolled the proceeds into the 505 in Hell’s Kitchen, a new residential development that began closing in June. Reisner set his sights on Hell’s Kitchen two years before Ogilvy & Mather further validated the up-and-coming area with a planned new 560,000-square-foot headquarters at 636 Eleventh Ave. and also before Kimpton brought a 220-room David Rockwell designed boutique hotel called the Vu to the neighborhood.

Market Overview: “There is limited, if any, construction financing for new development and a major difficulty is refinancing commercial real estate debt with the same principal at maturity.”

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