Crains New York - July 30, 2012 - (Page 20)

IN THE BOROUGHS BROOKLYN, MANHATTAN, QUEENS F train’s hot roll: tech magnet Continued from Page 1 ON THE LINE Hundreds of tech outfits have clustered around the F train. ROOSEVELT ISLAND Future home of CornellNYC Tech, opening in 2017 14TH AND 23RD STREETS (AT SIXTH AVE.) Firms: 114 Including: Bitly, Jibe, Yodle SECOND AVENUE (AT EAST HOUSTON STREET) Firms: 8 Including: Sqoot, Justmap.it, Gin Lane Media YORK STREET (DUMBO) Firms: 80 Including: Etsy, Huge, Pontiflex 21ST STREET-QUEENSBRIDGE (QUEENS) Possible future home of Cornell spin-offs in speeches as “the F-train tech corridor,” is counting on. He hopes the campus will stretch the tech industry across the East River and deeper into Queens neighborhoods such as Long Island City. In much of the F train’s 27-mile, three-borough range, the signs are already there. “In a number of neighborhoods around the corridor you go into a coffee shop and you hear tech chatter and see people with laptops writing code,” said Dan Huttenlocher, dean of CornellNYC. That’s the case in Brooklyn neighborhoods as far out as Gravesend, where creative folks are drawn by larger apartments that rent far below Manhattan norms. Rents rise 10%, 20% and 30% as the F train tracks head toward Manhattan,and Brooklyn landlords are generally more inclined than their Manhattan peers to successfully cope with renters who, yes, have a low base pay, but just may have a higher capacity for racking up overtime or landing stock options. “Tenants have a chance at charming the landlord,” said Anthony Lolli, founder of residential broker Rapid Realty. “Brooklyn landlords are more accepting and willing to give them a shot.” In Manhattan, meanwhile, some of the best bets that techies have for finding affordable housing lie along the F train’s early stops in the borough, down in the Lower East Side. There, Mo Yehia moved to a fifthfloor walk-up on Orchard Street. Today, from that three-bedroom apartment that he shares with two others, he runs his startup, Sqoot, a local ad network and merchant-insights provider. He starts work each morning at 9, after his roommates leave for their jobs. No suits hanging around “I picked the Lower East Side because it’s a good vibrant area and all my professional outings and events are a couple of subway stops away,” said Mr. Yehia, a former investment banker, who also likes the area for what it doesn’t offer. “You don’t get suits living in these areas, and you don’t get too many tourists.” Similarly, Kip DeMane, a programmer at Expo Communications Inc., recently moved to an apartment on Clinton and Rivington streets, a stone’s throw from the nearest entrance to the Delancey Street station, where he rides the F uptown four stops to West 14th Street and Sixth Avenue, near Expo’s office and the offices of many other tech-related outfits. The mile-long greenway, built with funds from the city’s PlaNYC 2030 for a “greener, greater” New York, runs from Beach 32nd Street to Beach Ninth Street, east of Rockaway’s most popular sun-and-surf spots. Already open are sprawling lawns, a playground, a skate park and rebuilt handball courts. A new performance stage hosted its inaugural production—Hamlet— last week. Next up is a 2,700-square-foot pavilion with bathrooms, picnic and Ping-Pong tables, and a shaded public area that is expected to open later this summer. WXY Architecture and Urban Late last year, San Franciscobased Yelp opened its New York headquarters at 104 Fifth Ave., where Apple has an office for its mobile-advertising business. AOL recently moved its 200-person Patch division, which covers local news, from SoHo to a Sixth Avenue building between West 21st and West 22nd streets that also houses a Trader Joe’s supermarket. “I have so many clients that have to live on the F line,” said Kira Saltzman, a broker at Town Residential. “The cool thing about the F is it reaches so many different neighborhoods.” Tech funders,too,are increasingly feeling the pull of the F train. Earlier this month, venture capital firm FirstMark Capital moved four subway stops south to West 15th Street and Fifth Avenue. “This is the center of innovation,” said Amish Jani, founder and managing director of FirstMark, a $225 million fund that was previously at West 49th Street and Sixth Avenue in midtown. “Many of our portfolio companies are in the area.” That success, however, is coming at a price.Rents are rising in Dumbo, where office vacancy rates are in single digits, and in midtown south, where the vacancy rate, at 6%, is the Design, which collaborated on the pavilion, gave it a whimsical, wavy roof meant to mimic the ocean and hopefully endear the building to the local community. “That’s the challenge,” said Claire Weisz, an architect at WXY. “To do something that will be well loved for decades.” —cara eisenpress Manhattan Queens Brooklyn JAY STREET (DOWNTOWN B’KLYN) Firms: 5 Including: MakerBot, Q-Sensei Source: New York City’s Made in NY Ditgital Map lowest in the entire nation. In response, some firms are eyeing untapped areas like downtown Brooklyn, near the F train’s Jay Street stop. Others hope that CornellNYC will stretch the tech corridor into Long Island City. Hip problems Right now, that area remains a tough sell to the tech community. The F’s only stop in the neighborhood is at 21st Street-Queensbridge, an area dominated by the huge Queensbridge Houses, a public housing development, and scattered industrial companies. Despite bargain office rents as low as $19 per show. It is about a neighborhood that, in a heyday spanning four decades from the 1920s onwards, housed one of the city’s biggest economic engines, the garment industry. Back in the day, the area boasted the “largest collection of skyscraper factories in the world,” according to Carol Willis, director and curator of the Battery Park City-based museum. The show includes photos of many of them, as well as models— some five feet tall—of loft buildings on West 37th Street. Drawings, advertisements and period dresses are also featured. Today, most of the factories are tile takeover for $174 million. Mr. Stahl, who passed away in 1999, is probably best known for being the target of a murder-for-hire scheme in the mid-1990s by another prominent real estate executive, Abe Hirschfeld. The Stahl Organization, launched in 1949, owns 5 million square feet of commercial space and 3,000 apartments,including 277 Park Ave. and the Upper West Side’s Ansonia. square foot, versus $30 in Dumbo and double that in midtown south, tech companies aren’t coming, according to John Reinertsen, a commercial broker at CBRE. “It’s cheap here, but LIC does not have the hip, cool factor yet,” he said. Farther up the line, however, are Queens neighborhoods, including Jackson Heights and Kew Gardens, where relatively reasonable home prices and rents could yet become big draws for tech workers, students and professors alike. LISTEN to a discussion at CrainsNewYork.com/podcasts FROM AROUND THE CITY QUEENS Park takes root on Far Rockaway The abandoned properties and parking lots that once dotted the landscape along the ocean at the eastern end of Rockaway Beach in Queens have largely been supplanted by a $30 million park, whose official opening is expected soon. MANHATTAN Revisiting garment center glory Last week, the Skyscraper Museum unveiled its new Urban Fabric money on a loan: It says only $5.6 million, or a tiny 0.13%, of its $4.4 billion loan portfolio is nonperforming. Such extreme caution allowed Apple to navigate the storms of recent years with nary a blip. Net income last year was about $42 million, 14% higher than the result for 2010. It never lost a dime during the crisis years that nearly sank some of its larger competitors. The worst year it had was 2009, when it earned $21 million. “We don’t do anything unique,” said Mr. Matera, who has worked at the bank since 1991, the same year Chief Executive Alan Shamoon joined. “We haven’t forgotten what we are. We’ve always been a savings bank and are happy to remain that.” It can remain that way because it doesn’t have a slew of shareholders clamoring for growth. The bank reports to only one owner, the estate of Stanley Stahl, a real estate developer who bought Apple in a 1990 hos- long gone, production having moved overseas years ago. More recently, many designers have also decamped, switching to trendier parts of the city like SoHo. As a result, the area bears so little resemblance to the one featured in the show that two months ago the local Fashion Center Business Improvement District announced it was weighing a name change designed to help distance the area from its garmento roots. In a tribute to what once was, the Skyscraper Museum show will run through Jan. 20. It is expected to draw 12,500 visitors. —adrianne pasquarelli legations. Neither Apple nor PwC would comment on the litigation. While the litigation has played out, the Stahl estate appears to have taken significant sums out of the bank. In 2008, the bank paid out a $125 million dividend and, after paying no dividends over the next two years, paid out $20 million last year. Asked if the dividend payments mean the Stahl estate is cashing out and looking to sell the bank or perhaps take a piece of it public, Mr. Matera said, “Not that I know of.” As for Apple’s decision to acquire the Emigrant branches from the Milstein family, a real estate dynasty that owned them for 25 years, Mr. Matera said an unusual opportunity triggered an unusual response. “It helps us expand and fill in our footprint,” he said. “We like New York.” LISTEN to a discussion at CrainsNewYork.com/podcasts Apple Bank expands Continued from Page 1 team that stubbornly refused to loosen standards or veer into new types of lending during the boom years. Apart from adding ATMs and online banking, Apple has spurned almost every trend in finance over the past 30 years. Even its modest marketing campaigns recall another era. “We advertise mostly in print newspapers,” said Jim Matera, senior vice president for consumer banking at Apple. “Our marketing budget is designed to grow our deposit franchise.” A low-risk loan portfolio Apple has 630 employees and $8 billion in assets, most of them real estate loans or investments and nearly all of them low-risk. Many are guaranteed by government agencies such as the Export-Import Bank or the Small Business Administration. And although the bank doesn’t lend much to low- or moderate-income customers, a report last year by the Federal Deposit Insurance Corp. described the bank’s level of investment in governmentand nonprofit-backed communitydevelopment projects as “extraordinary.” On a risk-adjusted basis, Apple’s capital is equal to 25% of its assets—more than double the amount required by regulators for a well-capitalized bank. Still, the bank’s defensiveness comes at a cost. It means it earns a lot less on its loans than others do. It collects an average yield of just 3.6%, well below its peer-group average of 5.3%, according to data filed with FDIC. But on the flip side, the bank almost never loses Prepping for a sale or IPO? Mr. Stahl’s death remains an issue at Apple, which has been locked in a lengthy legal battle with its former accounting firm over a matter stemming from his demise. The bank sued PricewaterhouseCoopers in New York state court, alleging that bad advice from the firm resulted in Apple paying $12 million in back taxes and interest after it bought back stock from Mr. Stahl’s heirs to help them pay a $190 million estate tax bill. PwC disputes the al- 20 | Crain’s New York Business | July 30, 2012 http://www.CrainsNewYork.com/podcasts http://www.CrainsNewYork.com/podcasts

Table of Contents for the Digital Edition of Crains New York - July 30, 2012

Crains New York - July 30, 2012
Contents
In the Markets
The Insider
Business People
Real Estate Deals
Opinion
Alair Townsend
Greg David
Small Business
Corporate Finance
Classifieds
For the Record
From Around the City
New York, New York
Source Lunch
Out and About

Crains New York - July 30, 2012