Nov 28, 2017
When StreetEasy debuted its Premier Agent in March, it was met with anger and condemnation by the brokerage community. But now, agents and brokers are fighting each other for a seat at the table. Thanks to auction-based pricing, the cost to participate in StreetEasy’s agent advertising program — where agents purchase buyer leads in specific ZIP codes — has shot up over the past few months. On the Upper West Side, for example, the price per lead skyrocketed 183 percent to $196.88 in October, compared to just $72.07 in May, according to data obtained by The Real Deal. On the Upper East Side, the cost per lead climbed to $166.84 from $107.08 over the same time period.
StreetEasy’s parent company, Zillow Group, acknowledged the price jumps last week, when it reported revenue from Premier Agent rose to $197 million during the third quarter, up 24 percent year over year. CEO Spencer Rascoff said Premier Agent’s rollout in the five boroughs “exceeded” expectations, and fees have gone up “materially” as a result of the auction-based pricing model. While Zillow doesn’t break out revenue from New York, the real estate giant made over $600 million off Premier Agent last year. And it could make $86 million more off New York agents over the next two years.
Following initial protests over Premier Agent from some of the city’s biggest residential brokerages, several firms — including the Corcoran Group, Douglas Elliman, Nest Seekers International and BOND New York — signed on to participate in “Premier Broker,” a version of the program that lets companies purchase bundles of buyer leads. Halstead Property adopted Premier Broker two months ago, and has put together an “e-team” of 15 agents to manage the leads as part of a six-month beta test.
Jim Cahill, executive vice president and chief information officer of Halstead’s parent company Terra Holdings, said the brokerage is currently advertising in various markets — from the Upper East Side to Long Island City — to measure the effectiveness. Ultimately, how much the firm spends will be dictated by those results. “It’s a lot of work to make it work,” he said. “We’re evaluating how it goes.”
One of Manhattan’s biggest contractors filed for bankruptcy Wednesday, leaving the Manhattan West and One Vanderbilt projects mired in uncertainty. For now work at the two sites continues, but the contractor Navillus said in the filing that they face “numerous issues” due to union payments owed. On Sept. 22, a judge ordered Navillus to pay $76 million into union funds, which the company claims forced it into bankruptcy.
Navillus, which specializes in concrete and masonry, had allegedly set up two non-union, alter-ego companies to avoid these payments, spurring a lawsuit. Navillus is currently negotiating a $135 million loan to allow it to continue working on the two job sites.
At One Vanderbilt, SL Green Realty is building a $3.17 billion office tower next to Grand Central Terminal. Manhattan West, developed by Brookfield Property Partners and Qatar Investment Authority, is a $8.6 billion mixed-use development near Penn Station.
Redfin, the online brokerage, generated $109.5 million in third-quarter revenue — up 35 percent from the prior year — even as tight inventory took a bite out of potential home sales.
The Seattle-based firm said last week that net income for the quarter has increased over 85 percent from the prior year . But CEO Glenn Kelman told investors that the profits were seasonal, and Redfin still does “not expect money on the full year.”
Overall, he said Redfin gained market share during the third quarter, several months after raising $159 million in a highly-watched IPO. Kelman said “Our agents have as much demand as they can handle, so there hasn’t been as much pressure on ad driven contact growth,”.
Redfin, which charges buyers a lower commission rate, said it saved customers $37 million in fees during the third quarter. Traffic to its website — growing exponentially even before the company’s IPO — grew 38 percent to an average of 24 million monthly visitors during the quarter. That’s almost double what it was 2 years ago. Redfin, which Kelman described as the “Amazon of real estate,” recently launched a mortgage origination business.
The industry has been watching Redfin’s performance closely, treating the company as a barometer for the potential for technology to disrupt real estate. Its IPO in July was seen as a boon to other real estate tech companies. But Wall Street is still getting a feel for Redfin, whose stock dipped 6 percent after its earnings report last week after missing its revenue target.
Part of investors’ questions have to do with profitability. The Seattle-based brokerage generated $267 million in 2016 revenue, but losses totaled over $22 million.
For nearly five years, Compass’ rivals have strongly doubted their methodology. The company’s $100 million funding round this week has prompted a gut check from industry stalwarts, however, who are no longer predicting Compass’ demise. Compass’ successful Series E — along with Redfin’s IPO in July — are a proxy for how investors view real estate tech. “People are willing to bet on it,”.
There’s still plenty of skepticism from traditional operators who said it’s unclear how Compass can justify a $1.8 billion valuation. The company has raised $325 million to date from investors, and the latest round included funding from Fidelity Investments, IVP and Wellington Management.
Since its founding in 2013, Compass has grown to 2,000 agents in 10 regions, with plans to add another 10 markets by 2020. It claims it had $180 million in revenue last year and is on track to make $350 million this year. While brokerage valuations are typically based on multiples of a firm’s earnings, Compass is instead being evaluated as a tech firm — which is why there’s a strong chorus of voices claiming that the valuation is not realistic. Compass has been coy about its endgame — saying it’s backed by patient capital — but many speculate it plans to go public at some point. Even before then, however, it’s likely that investors will want to see returns.
WeWork continues its push into every facet of modern life, with its newest component aimed at children. They recently announced the creation of WeGrow, an elementary school program currently in the first year of its pilot program. The program is currently run out of a New York Chabad school and includes seven children. WeGrow is meant to give students a learning experience more focused on “a culture of kindness,” “conscious entrepreneurship,” and a connection to nature. Focused on participatory and collaborative learning, the 5-, 6- and 8-year-olds have already had hands-on experience raising crops at an upstate New York farm. The children then set up a farm stand at a WeWork location in New York, where they sold their goods and made connections with members, including one child who started a mentorship program with a design-focused member. Next year, when WeGrow launches in earnest, it will be located in WeWork's temporary Chelsea headquarters to encourage future encounters like that — and for members to bring their kids to learn in their parents' workplaces. https://www.bisnow.com/new-york/news/office/wework-school-wegrow-young-entrepreneurs-81203?utm_source=CopyShare&utm_medium=Browser
In Brooklyn news, the Jehovah’s Witnesses have sold yet another of their Brooklyn properties as they make their move to upstate New York. This time, it’s a single-story repair garage at 74 Adams Street in Dumbo. The site was purchased by developer Jeffrey Gershon of Hope Street Capital. Gershon has since filed plans with the Department of Buildings to demolish the one-story structure at the site, but it remains to be seen what he will build in its place.
The site is zoned for a 145,000 square-foot, mixed-used development, so Gershon could create apartments, offices, retail, or a combination. The sale follows the $200 million blockbuster sale of the Witnesses’ Towers building. That property is being converted into a luxury senior home courtesy of a Florida-based developer, this according to NY Curbed. This latest sale means that the Witnesses now have just a handful of properties left to sell from what was once a massive real estate empire in Brooklyn Heights and Dumbo.
In CROWN HEIGHTS news, the City Planning Commission on Monday approved a plan to repurpose the Bedford-Union Armory over community protests and concerns about the controversial redevelopment project. The CPC voted 11 to 1 to give the 540,000-square-foot development a green light as protesters attempted to interrupt the commission’s hearing in Manhattan. The plan still needs approval from the City Council and mayor before it's finalized. Dozens of people opposed to the project chanted throughout the start of the hearing, forcing security staff to move them outside. Two demonstrators were arrested in the process. Jabari Brisport, the Green Party candidate for City Council, and Crown Heights Tenant Union founding member Joel Feingold were led away in handcuffs and issued civil summonses, they told DNAinfo New York.
In Greenpoint news, the developer Halcyon Management is in the process of filing plans for a 33-story, 532-apartment building on the Greenpoint waterfront, putting into focus a flurry of activity at the undeveloped site bound by Quay and Oak streets along the East River. Wednesday’s filing, which is still being processed but was confirmed by a source close to the project, hints that the developer has megaproject aspirations for the waterfront site.
At 33 stories, the tower will be among the tallest new buildings on the Greenpoint waterfront. The developer’s been long at work on nearby sites: In September 2015, it filed for a 19-story tower at 27 West Street with 234 apartments. The developer also filed in September 2017 for a 14-story building at 37 West Street with 92 apartments with 97 parking spaces. That application is still pending with the Department of Buildings, and may be a preliminary filing for the project’s affordable housing component. Halcyon Development is also behind the behemoth Williamsburg rental complex 101 Bedford.
Lonely Planet, the largest travel guide book publisher in the world, named Sunset Park in Brooklyn one of the 10 U.S. neighborhoods you need to visit. The guide touted the booming art and commercial scene in Industry City as well as the community’s diversity as major attractions for tourists from around the world.
It wrote, “On the east side stands Brooklyn’s Chinatown, with its rows of restaurants, bubble tea shops and boutiques. The west is home to a large Latin American community and plenty of friendly bars, not to mention the historic Melody Lanes bowling alley.” Other neighborhoods that made the list include Avondale in Chicago, Frelard in Seattle and Capitol Riverfront and Yards Park in Washington, D.C. Lonely Planet also dubbed Sunset Park one of the “World’s Coolest Neighbourhoods to Visit Right Now,” back in August.
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