Jeffrey Ditri

Manhattan House

O'Connor Capital Partners has ousted Prudential Douglas Elliman as the exclusive broker at Manhattan House, the landmark Upper East Side condominium conversion that has struggled under a debilitating credit crisis, The Real Deal has learned.

Elliman Vice Chairman Dolly Lenz, who supervised the Manhattan House sales team, was officially notified of the decision late Monday, following weeks of negotiations involving frustrated apartment buyers, existing tenants and HSH Nordbank, the senior lender, according to sources.

Corcoran Sunshine Marketing Group and O'Connor Capital Partners issued a joint statement confirming that Anne Young, senior managing director of Corcoran Sunshine, will lead on-site sales at Manhattan House, at 200 East 66th Street at Third Avenue.

"We are thrilled to be working together to provide Manhattan House tenants with not only elegant, spacious homes, but also the ultimate lifestyle amenities and service at this historic development," the statement read.

Elliman has been in charge of Manhattan House sales since October 2007, when developer Jeremiah O'Connor, founder of O'Connor Capital Partners, settled a year-long legal dispute with former partner Richard Kalikow. The two acquired Manhattan House for a record $623 million in 2005, and O'Connor has struggled mightily to convert the building into luxury condominiums.

Sources say that only about 25 percent of the building's 583 apartments have been sold and only about one-third of those sales have closed, as many buyers have walked away from their deposits amid concerns about the pace of construction at the building, and commercial banks have tightened financing rules on new condo sales.

Analysts say that Elliman was not entirely to blame for the poor sales effort, but that the building was priced well above its market value.

"The overall problem is that you have an environment where towards the tail end of the housing boom people acquired developments at a premium price, and to justify the higher prices they paid you have to sell at a premium price," said a market analyst, who asked not to be identified.

Streeteasy.com shows that 46 apartment sales have closed at Manhattan House and 33 units are listed at an average $1,607 per square foot.

This is not the only building where Corcoran Sunshine has replaced Elliman.

Corcoran Sunshine took over marketing and sales at Miraval Living at 515 East 72nd Street, as well as at Georgica, at 305 East 85th Street.

205 East 42nd Street

For the first time since the early 1990s, Prudential Douglas Elliman is opening a new office specifically for rentals, according to Stephen Kotler, an executive vice president and director of sales and rentals at the brokerage.

To fill out the new department, the company is recruiting 50 to 75 new agents who will specialize in rentals, Kotler said, and has leased 15,000 square feet of space to house the rental operation.

The space is located at 205 East 42nd Street between Second and Third avenues, where the company currently has an office that handles rentals and sales, with sales comprising the majority of the business. The new rental department will be located in an area of the building that the company had previously subleased to another company, Kotler said.

The new rental space is slated to be up and running in the next 90 days, Kotler said. The opening will be timed to coincide with the launch of a new Web site specifically designed for rentals, with listings in Manhattan, Brooklyn, and Long Island including the Hamptons, as well as Elliman's new rental market report. The report will be prepared by numbers guru Jonathan Miller, president of real estate appraisal firm Miller Samuel, and a regular preparer of the company's sales reports.

The last time the company had an office specifically dedicated to rentals was in 1991, Kotler said, but that office was merged with a sales office two years later "to meet customer needs," he said in an e-mail.

But, now the company has noticed a slight up tick in rental transactions accompanying the economic downturn of the past few months. Each month since July 2008, the number of rental transactions the company has done has been roughly 15 percent higher than the same month in 2007, he said.

"Based on market conditions, more [potential buyers] are moving towards rentals before deciding what to buy," he said. "For us, it was a no-brainer to do more rentals."

Elliman, one of Manhattan's largest real estate firms, is primarily known for its sales business.

"We don't publicize rentals very much," Kotler said. "We have such a big client base, and we need to let our clients know that we're in the rental business."

The expansion comes at a time when real estate firms all over the city, including Citi Habitats and Bellmarc Realty, are closing and consolidating offices, while others are closing altogether. To make up for lower profits, many sales agents are doing more rental transactions.

Elliman will come out of the gate with 800 new rental listings at Columbus Village, an Upper West Side mixed-use multi-building project currently under construction, Kotler said. Five new residential towers are slated to open at the mega-development in the next year, and Prudential Douglas Elliman is the exclusive marketing and leasing agent for all of them. A leasing office for the first of the buildings to open, 808 Columbus Avenue, is slated to open in March, he said, though the project has faced its share of neighborhood protests, scuffles with the city Department of Buildings and legal troubles.

Daniel Segal, an executive vice president, and director of sales and the current manager of the 42nd Street office, will manage the new recruits, Kotler said.

Janna Bullock's townhouse at 9 East 67th Street, at Fifth Avenue, spent nearly three years on the market before closing for $14.925 million, the highest price on an Upper East Side townhouse since the summer. Bullock, a developer, put it on the market unrenovated and invited decorators to dress it up. She took it off the market to renovate the interior and worked with a series of brokers. The townhouse finally sold after Bullock got permission from the Landmarks Preservation Commission to recreate the house's old limestone front stoop and entryway. Broker Richard Steinberg of Warburg Realty brought in a buyer in November, right before his exclusive was set to expire.