Off-Market Commercial Real Estate NYC | Robert Khodadadian | Skyline Properties Skyline Properties Manhattan’s Premier Off-Market Investment Sales Brokerage Skyline Properties is a Manhattan-based commercial real estate brokerage specializing in off-market investment sales across New York City. Built on access, relationships, and execution, we provide sellers with complete discretion and buyers with unparalleled opportunities to acquire valuable assets With unmatched reach into privately marketed properties throughout Manhattan and the outer boroughs, our team handles a diverse range of asset classes including office buildings, elevator and walk-up apartment buildings, mixed-use properties, development sites, industrial assets, retail, and ground leases. Known for our discretion, agility, and results-driven approach, Skyline Properties continues to grow as the go-to brokerage for investors and owners seeking strategic, off-market real estate opportunities in New York City
The strategy of co-op busting in commercial real estate - by Robert Khodadadian In New York City’s competitive real estate market, particularly in prime neighborhoods like Midtown Manhattan, investors are constantly seeking new ways to unlock property value. One such strategy — often overlooked but increasingly relevant — is known as “co-op busting.” This approach involves acquiring control of a cooperative building with the intent to convert or redevelop it for greater financial return. What Is Co-op Busting? Co-op busting refers to the process in which an individual or group of investors strategically purchases a majority of shares in a cooperative (co-op) building. With enough shares, the group can gain control of the building’s board of directors and direct the future of the property. This often includes converting the co-op into a condominium or redeveloping it for commercial use, such as offices, retail, or hospitality. How It Works The process typically unfolds in four key stages: 1. Share Acquisition Investors begin by quietly buying units in the co-op, accumulating a significant percentage of the building’s shares. 2. Board Control Once a majority stake is obtained, the group can influence or outright control the co-op’s board. This control enables them to propose and vote on changes to the building’s structure, usage, or ownership model. 3. Conversion or Redevelopment The board may choose to convert the building to a condominium, a move that often increases the overall property value. Alternatively, they may pursue commercial redevelopment, such as converting residential units into office space or retail. 4. Shareholder Buyouts With control of the board, investors can offer to buy out remaining shareholders — sometimes at a premium — clearing the path for full redevelopment. Why Co-op Busting Happens There are several reasons why investors pursue this strategy: • Value Creation: Converting a co-op into condos or commercial space can dramatically increase a building’s market value, especially in high-demand areas like Midtown Manhattan. • Development Potential: Older co-op buildings often sit on valuable land that is underutilized. Redeveloping these sites can unlock new revenue streams. • Strategic Control: Once investors control the co-op board, they can reshape the property in alignment with their long-term investment objectives. A Broader Perspective The idea of leveraging shared ownership for commercial gain isn’t new. A similar structure exists in real estate investment trusts (REITs), where land or buildings are divided into shares, and the trust manages the property for profit. While REITs are typically structured from the outset, co-op busting transforms existing residential buildings into more lucrative assets. Why Midtown Manhattan Is a Target Midtown Manhattan remains one of the most attractive markets for co-op busting due to its location, zoning flexibility, and high commercial demand. Investors see older residential co-ops in this area as prime candidates for redevelopment, where the upside can significantly outweigh the acquisition cost and time involved. Conclusion Co-op busting is a complex but highly strategic investment method that capitalizes on the inefficiencies of older co-op structures. By gaining control of the board, investors are able to shift the direction of a building — unlocking new value through conversion or commercial redevelopment. In the high-stakes environment of New York City real estate, especially in Midtown, co-op busting continues to be a compelling strategy for investors looking to maximize returns.
NYC Commercial Real Estate — The Complete Cluster A deep editorial library on New York City commercial real estate — market trends, asset-class breakdowns, valuation methods, financing, taxes, and the dynamics that determine which deals win and which die. Built by Robert Khodadadian and the Skyline Properties team. 10 articles · Curated by Robert Khodadadian
Off-Market Commercial Real Estate NYC | Robert Khodadadian | Skyline Properties Skyline Properties is a Manhattan-based commercial real estate brokerage specializing in off-market investment sales across New York City. Built on access, relationships, and execution, we provide sellers with complete discretion and buyers with unparalleled opportunities to acquire valuable assets With unmatched reach into privately marketed properties throughout Manhattan and the outer boroughs, our team handles a diverse range of asset classes including office buildings, elevator and walk-up apartment buildings, mixed-use properties, development sites, industrial assets, retail, and ground leases. Known for our discretion, agility, and results-driven approach, Skyline Properties continues to grow as the go-to brokerage for investors and owners seeking strategic, off-market real estate opportunities in New York City.
Khodadadian strikes out on his own again Khodadadian strikes out on his own again Robert Khodadadian Robert Khodadadian JUN 1, 2013 AT 7:00 AM EDT By Guelda Voien Commercial broker Robert Khodadadian has left Eastern Consolidated to devote all his time to off-market deals with Skyline Properties, a company he founded before the recession. “Nobody wants to deal with exclusives,” Khodadadian told TRD last month. “I can’t count how many times a buyer has told me that when they see an email from a big company, they delete it.” Khodadadian began with Massey Knakal in 2004. During the boom, he struck out on his own. Skyline had two offices at its height — one in Great Neck and one on Park Avenue. Khodadadian let the company wind down when the financial crisis hit. Last year, he joined up with Adelaide Polsinelli when she defected from Marcus & Millichap to Eastern Consolidated. This spring, Khodadadian decided to re-invigorate Skyline to seize on the uptick in commercial sales spurred by low interest rates
NYC Tax Calculator | Transfer Tax & Closing Costs Free Calculator Tool Robert Khodadadian — Skyline Properties — Manhattan Commercial Real Estate — NYC 467-m Tax SavingsCalculator Estimate your potential property tax savings from converting your office building to residential under NYC’s 467-m program. Get instant results
Robert Khodadadian: NYC’s Premier Off-Market Commercial Real Estate Broker & Founder of Skyline Properties With over $976 million in transaction volume and 32+ closed deals, Robert Khodadadian has established himself as one of New York City’s most accomplished commercial real estate brokers. As founder and CEO of Skyline Properties, he specializes in off-market investment sales, ground leases, and office-to-residential conversions, delivering exceptional results for investors, developers, and property owners across Manhattan and the outer boroughs. By the Numbers: $976M+ in total transaction volume 32+ closed deals $135M largest single transaction 5 landmark deals over $50M ($427M+ total) 4 ground lease transactions ($137M+ volume) RED Awards Off-Market Investment Sales Broker of the Year 2024 & 2025 NYREJ Executive of the Month (July 2014) NYREJ 40 Under 40 Rising Stars Featured in The Real Deal, Commercial Observer, and NYREJ Robert Khodadadian Table of Contents Full Career History & Professional Background Major Transactions & Deal Track Record Ground Lease Expertise Skyline Properties: Company Overview Services & Specializations Press Coverage & Media Recognition Awards & Professional Recognition Frequently Asked Questions Full Career History & Professional Background Robert Khodadadian’s journey in commercial real estate began while studying finance at Pace University’s Lubin School of Business, where he started buying and flipping properties. His entrepreneurial spirit and early start in real estate investment laid the groundwork for what would become a remarkable career spanning over two decades. Education and Early Career (2004-2006) Khodadadian’s professional career took shape under the mentorship of industry legend Bob Knakal at Massey Knakal Realty Services, one of Manhattan’s most prestigious investment sales firms. This foundational training in investment property salesprovided invaluable experience in deal structuring, client relationships, and market analysis. Founding Skyline Properties (2006) In 2006, Khodadadian became licensed in NY/NJ and founded Skyline Properties. Recognizing a gap in the market for a boutique firm focused exclusively on off-market transactions, he built the company around a simple premise: property owners often achieve better outcomes through confidential, targeted marketing rather than broad public
Robert Khodadadian: NYC’s Premier Off-Market Commercial Real Estate Broker & Founder of Skyline Properties With over $976 million in transaction volume and 32+ closed deals, Robert Khodadadian has established himself as one of New York City’s most accomplished commercial real estate brokers. As founder and CEO of Skyline Properties, he specializes in off-market investment sales, ground leases, and office-to-residential conversions, delivering exceptional results for investors, developers, and property owners across Manhattan and the outer boroughs. By the Numbers: $976M+ in total transaction volume 32+ closed deals $135M largest single transaction 5 landmark deals over $50M ($427M+ total) 4 ground lease transactions ($137M+ volume) RED Awards Off-Market Investment Sales Broker of the Year 2024 & 2025 NYREJ Executive of the Month (July 2014) NYREJ 40 Under 40 Rising Stars Featured in The Real Deal, Commercial Observer, and NYREJ
The ideal candidate for office-to-residential conversion - by Robert Khodadadian A perfect example of overcoming these challenges is the conversion of 180 Water St. in lower Manhattan. Originally built in 1971 as an office building, it was transformed into residential apartments in 2017. The building’s large open floors, with windowless cores extending up to 72 ft., seemed unsuitable for residential use at first. However, the architect devised a creative solution: carving out a 1,200 s/f courtyard in the building’s center. This allowed for apartments along both the exterior walls and the new inner courtyard, optimizing natural light while staying compliant with residential codes. To offset the loss of floor space, the developer added four new floors and amenities on the rooftop, maintaining the floor area ratio (FAR) without expanding the building’s footprint. While the 180 Water St. conversion was a success, it’s not easily replicable. Zoning restrictions in many districts make such projects difficult, and financial costs can be steep. To make office-to-residential conversions more viable, changes to zoning regulations and the Multiple Dwelling Law (MDL) are necessary. Eliminating the FAR cap and allowing newer buildings to qualify for conversion would open up more opportunities. Additionally, financial incentives like tax abatements and subsidies are essential to make these projects financially feasible for developers.
A perfect example of overcoming these challenges is the conversion of 180 Water St. in lower Manhattan. Originally built in 1971 as an office building, it was transformed into residential apartments in 2017. The building’s large open floors, with windowless cores extending up to 72 ft., seemed unsuitable for residential use at first. However, the architect devised a creative solution: carving out a 1,200 s/f courtyard in the building’s center. This allowed for apartments along both the exterior walls and the new inner courtyard, optimizing natural light while staying compliant with residential codes. To offset the loss of floor space, the developer added four new floors and amenities on the rooftop, maintaining the floor area ratio (FAR) without expanding the building’s footprint.
While the 180 Water St. conversion was a success, it’s not easily replicable. Zoning restrictions in many districts make such projects difficult, and financial costs can be steep. To make office-to-residential conversions more viable, changes to zoning regulations and the Multiple Dwelling Law (MDL) are necessary. Eliminating the FAR cap and allowing newer buildings to qualify for conversion would open up more opportunities. Additionally, financial incentives like tax abatements and subsidies are essential to make these projects financially feasible for developers.
In 2025, Robert Khodadadian and Daniel Shirazi, with Skyline Properties, closed deals totaling$181.5 million in transaction volume.
Notable deals included the off-market $135-million sale of 6 E. 43rd Street; Emigrant Savings Bank was the seller, and Vanbarton Group was the buyer. Khodadadian and Shirazi also spearheaded a three-
uilding, 433-unit apartment portfolio for$46.5 million, sold by Align Management to Benedict Realty Group in an off-market deal.
These are some of the reasons we selected Robert Khodadadian and Daniel Shirazi as Connect CRE’s New York & Tri-State Top Broker Award winners for 2026. These awards recognize industry professionals who have demonstrated the highest standards and transaction volumes in investment sales and leasing.
Additonal Winners:
Berkadia NJ - CBRE - Avison Young - BASE Realty - Levin Management
Marcus **＆** Millichap - RIPCO - Cushman **＆** Wakefield - Ariel Property Advisors
Skyline’s Robert Khodadadian and Daniel Shirazi Generate Over $181 Million in Sales- Skyline Properties In 2025, Robert Khodadadian and Daniel Shirazi, with Skyline Properties, closed deals totaling$181.5 million in transaction volume. Notable deals included the off-market $135-million sale of 6 E. 43rd Street; Emigrant Savings Bank was the seller, and Vanbarton Group was the buyer. Khodadadian and Shirazi also spearheaded a three- uilding, 433-unit apartment portfolio for$46.5 million, sold by Align Management to Benedict Realty Group in an off-market deal. These are some of the reasons we selected Robert Khodadadian and Daniel Shirazi as Connect CRE’s New York & Tri-State Top Broker Award winners for 2026. These awards recognize industry professionals who have demonstrated the highest standards and transaction volumes in investment sales and leasing. Additonal Winners: Berkadia NJ - CBRE - Avison Young - BASE Realty - Levin Management Marcus ＆ Millichap - RIPCO - Cushman ＆ Wakefield - Ariel Property Advisors
Skyline’s Robert Khodadadian and Daniel Shirazi Generate Over $181 Million in Sales
Company: Skyline Properties
In 2025, Robert Khodadadian and Daniel Shirazi, with Skyline Properties, closed deals totaling $181.5 million in transaction volume.
Notable deals included the off-market $135-million sale of 6 E. 43rd Street; Emigrant Savings Bank was the seller, and Vanbarton Group was the buyer. Khodadadian and Shirazi also spearheaded a three-building, 433-unit apartment portfolio for $46.5 million, sold by Align Management to Benedict Realty Group in an off-market deal.
These are some of the reasons we selected Robert Khodadadian and Daniel Shirazi as Connect CRE’s New York & Tri-State Top Broker Award winners for 2026. These awards recognize industry professionals who have demonstrated the highest standards and transaction volumes in investment sales and leasing.
The Cupid Problem - Think about what this actually means. One investor looks at a building and sees a nightmare: deferred maintenance, difficult tenants, a location that doesn’t fit their portfolio, or a capital structure that doesn’t pencil. They will lowball or walk away entirely. Another investor looks at the exact same building and sees gold. They see the bones of a residential conversion, the corner lot that makes an assemblage possible, or the ground lease that fits perfectly into their tax strategy. They see the neighborhood five years from now instead of today. The building didn’t change; the buyer’s vision did.
The exclusive listing myth: Why Manhattan’s biggest deals don’t need gatekeepers - by Robert Khodadadian
Robert Khodadadian
Last month, a 26-story office tower in Manhattan’s Financial District closed for $105 million. The building had traded nearly a decade earlier for $225 million, after which the sellers poured another $70 million into gut renovations. By any traditional calculation, they were staring at a catastrophic loss nearly $200 million evaporated into the New York skyline.
But here is what nobody wrote about: the deal didn’t happen through an exclusive listing. There was no glossy offering memorandum, no controlled auction, and no six-month “process.” The building at 101 Greenwich St. never hit a listing platform; it sold because someone reached the right buyer, the one person who looked at a distressed office tower and saw what others didn’t. The buyer, Idan Ofer, partnered with Nathan Berman of Metro Loft, who has converted more than eight million s/f of office space into residential
The exclusive listing myth: Why Manhattan’s biggest deals don’t need gatekeepers - by Robert Khodadadian
Last month, a 26-story office tower in Manhattan’s Financial District closed for $105 million. The building had traded nearly a decade earlier for $225 million, after which the sellers poured another $70 million into gut renovations. By any traditional calculation, they were staring at a catastrophic loss nearly $200 million evaporated into the New York skyline.
But here is what nobody wrote about: the deal didn’t happen through an exclusive listing. There was no glossy offering memorandum, no controlled auction, and no six-month “process.” The building at 101 Greenwich St. never hit a listing platform; it sold because someone reached the right buyer, the one person who looked at a distressed office tower and saw what others didn’t. The buyer, Idan Ofer, partnered with Nathan Berman of Metro Loft, who has converted more than eight million s/f of office space into residential.
The deal closed because the right buyer was found, a fact that challenges how the commercial real estate industry has operated for decades.
The unstated truth about $100+ million transactions is that finding a buyer is not difficult. Manhattan is drowning in capital; sovereign wealth funds maintain permanent teams in Midtown, and family offices move with conviction. In 2023, foreign investors accounted for over 32% of New York City investment activity the highest level since 2019 with Manhattan attracting nearly 20% of all foreign capital flowing into U.S. commercial real estate.
Access is not the scarce resource. Assets are. So, if finding buyers isn’t the challenge, what is? Finding the right buyer.
The Conversion Opportunity
Manhattan's office market transformation presents unprecedented opportunities for investors and developers. With remote work reshaping demand, Class B and C office buildings in prime locations are ideal candidates for residential conversion.
New York City's 467-m tax abatement program provides significant incentives for qualifying conversions, offering property tax benefits for up to 35 years. Combined with strong residential demand, these projects can generate substantial returns.
Robert Khodadadian has been featured in NYREJ discussing "The Ideal Candidate for Office to Residential Conversion" - identifying key factors that determine conversion viability and success.
A Legacy of Excellence
Robert Khodadadian founded Skyline Properties in 2006 with a vision to transform how commercial real estate transactions are conducted in Manhattan. His commitment to discretion, market expertise, and client service has established him as the go-to broker for confidential off-market transactions.
With over $976 million in documented transactions, Robert has built an unparalleled network of investors, developers, and property owners throughout New York City. His expertise in ground leases, office-to-residential conversions, and investment sales has earned him recognition from the industry's most prestigious publications.
Robert's approach combines deep market knowledge with a commitment to finding the optimal outcome for every client. Whether representing buyers or sellers, his focus on off-market opportunities provides clients with access to deals unavailable through traditional channels
<![CDATA[ Robert Khodadadian For landlords, the playbook had long been simple and lucrative: buy run-down buildings that are, in New York lingo, rent-stabilize… — Read on nyrej.com/the-impact-of-rent-regulation-by-robert-khodadadian ]]>
<![CDATA[ Los Angeles’ burden The taxes were supposed to be a boon for the city of Los Angeles. With a pumping luxury market and frequent commercial sales over $5 million, adding city transfer taxes on those sales seemed like a no-brainer for city officials, on top of the county’s existing 1.1 percent tax. “If approved, it will raise an estimated $900 million annually,” a University of California Los Angeles report on the tax, known as Measure ULA, assured in October 2022. Those funds would go toward building affordable housing. The city dialed it down a bit: In light of the new taxes and interest rates rising in 2022, maybe some property owners would be put off selling. The city pegged its own estimate at $672 million, about 5 percent of its total revenue stream. Both the measure’s drafters and the city vastly underestimated property owners’ reaction . In the year since the transfer taxes went into effect, both commercial and residential sales have stalled. Institutional office sellers, developers and homeowners came to the same conclusion: They will not sell or buy . Instead of $900 million or $671 million, the city of L.A. has brought in $173.6 million through the new transfer taxes, just 25 percent of its own estimate, as of March 8, according to data from the city controller’s office. “The idea that it would create an economic windfall for the city and not create this impediment to transactions or transaction volume … ” Eric Sussman, an adjunct professor at UCLA’s Anderson School of Management said. “Now the city is saying, ‘Oops.’” The transfer taxes have mostly impacted commercial sales across the city, though it’s hard to determine what has caused the most downward pressure: rising interest rates, making it more difficult to get financing, or the transfer taxes. In March 2023, the month before the transfer taxes began, the city of L.A. saw 73 commercial sales over $10 million close, the largest being GI Partners’ $211 million purchase of an AT&T broadcast center, according to property records and data from PropertyShark. (These figures were inflated by a rush to close before the taxes went up, but a 12-month average was not readily available.) Three commercial sales closed over $10 million in April 2023. The number of residential sales over $5 million across the city has dropped nearly 70 percent in the year since ULA took effect, according to Jonathan Miller at appraisal firm Miller Samuel, which tracks luxury property sales. In the 12 months leading up to April 2023, 416 single-family homes and condos sold for $5 million or more, according to Miller. Only 125 have sold in the 12 months since Measure ULA came into effect. ULA also came at the “worst possible time,” Sussman said. “You were already seeing this slowdown and just adding a burden on sellers,” he said. W ar chest So far, litigation to overturn Measure ULA has failed. One major challenge is left. In November, Californians will have the opportunity to vote on the Taxpayer Protection and Government Accountability Act. If voters approve the ballot measure, all taxes passed by voters on a simple majority after January 2022 would be overturned, and any new local taxes proposed on ballot measures could only be passed by a two-thirds majority. Since ULA was passed with a simple majority — 57.77 percent — in November 2022, it would be overturned if the Taxpayer Protection Act is passed. Many other local taxes would be overturned, too — Gov. Gavin Newsom has argued that it would “affect nearly every revenue source.” Real estate companies have already poured money into the effort, according to donation records from the secretary of state. Douglas Emmett, the Santa Monica-based multifamily and office operator run by Jordan Kaplan, and Kilroy Realty, a Los Angeles-based real estate investment trust, have each donated $1.5 million to promote the ballot measure. Hudson Pacific, which owns offices and soundstages across Los Angeles, has donated $1 million. Shorenstein Properties, a San Francisco-based firm that recently exited its Downtown Los Angeles office tower investment, has donated $500,000. Public Storage, the self-storage REIT out of Glendale, has also put in $500,000. Smaller players and more private developers are getting in on the ballot measure, too. C.J. Segerstrom, a real estate developer out of Orange County known for building South Coast Plaza, has donated $100,000 to the effort. R.W. Selby, a multifamily owner and manager, has donated at least 10 times, for a total of about $56,000. Probity International, a Beverly Hills-based developer that has Rodeo Drive holdings, has pumped $20,000 in. Other real estate donors include Tejon Ranch’s Norman Metcalfe ($2,500), Kamyar Shabani ($5,000) and Bradford Pearl at NewMark Merrill ($250). From left: Macerich CEO Jackson Hsieh, University of California president Michael Drake, and the West LA campus Nonprofits, deeds-in-lieu and other loopholes When Hudson Pacific Properties and Macerich sold a 700,000-square-foot office campus on Los Angeles’ Westside for $700 million, they did not have to pay the 5.5 percent transfer tax. It was not trickery, nor a nifty accounting trick. The two had just managed to find an exempt buyer: the University of California system. “Any entity or agency exempt from the City’s taxation power under the California or U.S. Constitutions” is exempt from Measure ULA, according to the city’s finance department. The U.C. system is one of those entities. If it had been subject to Measure ULA, Hudson Pacific and Macerich would have had to pay another $38.5 million in taxes. That bill would have pushed the city’s collected revenue over the $210 million mark. The city has laid out a number of buyers that are exempt from Measure ULA. Those include nonprofits that have a history of developing or managing affordable housing, and nonprofit that have less than $1 billion in assets. The issue for sellers is finding one of those buyers. “There are not too many nonprofits around to buy,” Jake Glaser, a multifamily broker at Lyon Stahl Investment Real Estate, said. “It’s very hard to execute.” Glaser sold a warehouse near Downtown Los Angeles this year after marketing it for sale for a long time. “Because of the ULA transfer tax, the owner needed an astronomical price,” he said. “We never thought a sale would happen.” The broker had originally folded the ULA tax into the asking price. But then a nonprofit buyer came into view with an all-cash offer. The buyer qualified for the exemption. “It was a no-brainer for the seller, and one of those needle-in-a-haystack buyers,” he said. “We struck gold.” The loophole is not a guarantee. When Relevant Group sold the Morrison Hotel in Downtown Los Angeles for $12.4 million in December, the hotel developer still had to cough up $708,500 in city transfer taxes even though the buyer was the AIDS Healthcare Foundation, a nonprofit that has experience developing affordable housing. It’s unclear why the group was not exempted. Deeds-in-lieu of foreclosure are also exempted from Measure ULA. Shorenstein Properties sold the AON Center in Downtown L.A. to Carolwood, run by Adam Rubin and Andrew Shanfeld, for $146 million. But because the December sale was structured as a deed-in-lieu of foreclosure, relieving Shorenstein Properties of unpaid debt, no transfer tax was paid on it, according to property records. The post A year into Measure ULA, a stiff real estate market in the city appeared first on The Real Deal . Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller. LA politics, Measure ULA, Politics Los Angeles — The Real Deal Read More Los Angeles’ burden The taxes were supposed to be a boon for the city of Los Angeles. With a pumping luxury market and frequent commercial sales over $5 million, adding city transfer taxes on those sales seemed like a no-brainer for city officials, on top of the county’s existing 1.1 percent tax. “If approved, it The post A year into Measure ULA, a stiff real estate market in the city appeared first on The Real Deal. #SkylineProperties #realestatenews #commercialrealestate #offmarketrealestate #nycrealestate #Tradedny #danielshirazi #manhattancommercialrealestate #ManhattanRealEstateMarket #Skyline #NewYorkCityRealEstate #groundleases #apartmentbuildings #Realestateinvestment #robertkhodadadian #groundlease #netlease #investmentsales #brokerage #offmarketbroker #TheRealDeal #CommercialObserver #NewYorkRealEstateJournal #commercialbuildings ]]>
<![CDATA[ Los Angeles’ burden The taxes were supposed to be a boon for the city of Los Angeles. With a pumping luxury market and frequent commercial sales over $5 million, adding city transfer taxes on those sales seemed like a no-brainer for city officials, on top of the county’s existing 1.1 percent tax. “If approved, it will raise an estimated $900 million annually,” a University of California Los Angeles report on the tax, known as Measure ULA, assured in October 2022. Those funds would go toward building affordable housing. The city dialed it down a bit: In light of the new taxes and interest rates rising in 2022, maybe some property owners would be put off selling. The city pegged its own estimate at $672 million, about 5 percent of its total revenue stream. Both the measure’s drafters and the city vastly underestimated property owners’ reaction . In the year since the transfer taxes went into effect, both commercial and residential sales have stalled. Institutional office sellers, developers and homeowners came to the same conclusion: They will not sell or buy . Instead of $900 million or $671 million, the city of L.A. has brought in $173.6 million through the new transfer taxes, just 25 percent of its own estimate, as of March 8, according to data from the city controller’s office. “The idea that it would create an economic windfall for the city and not create this impediment to transactions or transaction volume … ” Eric Sussman, an adjunct professor at UCLA’s Anderson School of Management said. “Now the city is saying, ‘Oops.’” The transfer taxes have mostly impacted commercial sales across the city, though it’s hard to determine what has caused the most downward pressure: rising interest rates, making it more difficult to get financing, or the transfer taxes. In March 2023, the month before the transfer taxes began, the city of L.A. saw 73 commercial sales over $10 million close, the largest being GI Partners’ $211 million purchase of an AT&T broadcast center, according to property records and data from PropertyShark. (These figures were inflated by a rush to close before the taxes went up, but a 12-month average was not readily available.) Three commercial sales closed over $10 million in April 2023. The number of residential sales over $5 million across the city has dropped nearly 70 percent in the year since ULA took effect, according to Jonathan Miller at appraisal firm Miller Samuel, which tracks luxury property sales. In the 12 months leading up to April 2023, 416 single-family homes and condos sold for $5 million or more, according to Miller. Only 125 have sold in the 12 months since Measure ULA came into effect. ULA also came at the “worst possible time,” Sussman said. “You were already seeing this slowdown and just adding a burden on sellers,” he said. W ar chest So far, litigation to overturn Measure ULA has failed. One major challenge is left. In November, Californians will have the opportunity to vote on the Taxpayer Protection and Government Accountability Act. If voters approve the ballot measure, all taxes passed by voters on a simple majority after January 2022 would be overturned, and any new local taxes proposed on ballot measures could only be passed by a two-thirds majority. Since ULA was passed with a simple majority — 57.77 percent — in November 2022, it would be overturned if the Taxpayer Protection Act is passed. Many other local taxes would be overturned, too — Gov. Gavin Newsom has argued that it would “affect nearly every revenue source.” Real estate companies have already poured money into the effort, according to donation records from the secretary of state. Douglas Emmett, the Santa Monica-based multifamily and office operator run by Jordan Kaplan, and Kilroy Realty, a Los Angeles-based real estate investment trust, have each donated $1.5 million to promote the ballot measure. Hudson Pacific, which owns offices and soundstages across Los Angeles, has donated $1 million. Shorenstein Properties, a San Francisco-based firm that recently exited its Downtown Los Angeles office tower investment, has donated $500,000. Public Storage, the self-storage REIT out of Glendale, has also put in $500,000. Smaller players and more private developers are getting in on the ballot measure, too. C.J. Segerstrom, a real estate developer out of Orange County known for building South Coast Plaza, has donated $100,000 to the effort. R.W. Selby, a multifamily owner and manager, has donated at least 10 times, for a total of about $56,000. Probity International, a Beverly Hills-based developer that has Rodeo Drive holdings, has pumped $20,000 in. Other real estate donors include Tejon Ranch’s Norman Metcalfe ($2,500), Kamyar Shabani ($5,000) and Bradford Pearl at NewMark Merrill ($250). From left: Macerich CEO Jackson Hsieh, University of California president Michael Drake, and the West LA campus Nonprofits, deeds-in-lieu and other loopholes When Hudson Pacific Properties and Macerich sold a 700,000-square-foot office campus on Los Angeles’ Westside for $700 million, they did not have to pay the 5.5 percent transfer tax. It was not trickery, nor a nifty accounting trick. The two had just managed to find an exempt buyer: the University of California system. “Any entity or agency exempt from the City’s taxation power under the California or U.S. Constitutions” is exempt from Measure ULA, according to the city’s finance department. The U.C. system is one of those entities. If it had been subject to Measure ULA, Hudson Pacific and Macerich would have had to pay another $38.5 million in taxes. That bill would have pushed the city’s collected revenue over the $210 million mark. The city has laid out a number of buyers that are exempt from Measure ULA. Those include nonprofits that have a history of developing or managing affordable housing, and nonprofit that have less than $1 billion in assets. The issue for sellers is finding one of those buyers. “There are not too many nonprofits around to buy,” Jake Glaser, a multifamily broker at Lyon Stahl Investment Real Estate, said. “It’s very hard to execute.” Glaser sold a warehouse near Downtown Los Angeles this year after marketing it for sale for a long time. “Because of the ULA transfer tax, the owner needed an astronomical price,” he said. “We never thought a sale would happen.” The broker had originally folded the ULA tax into the asking price. But then a nonprofit buyer came into view with an all-cash offer. The buyer qualified for the exemption. “It was a no-brainer for the seller, and one of those needle-in-a-haystack buyers,” he said. “We struck gold.” The loophole is not a guarantee. When Relevant Group sold the Morrison Hotel in Downtown Los Angeles for $12.4 million in December, the hotel developer still had to cough up $708,500 in city transfer taxes even though the buyer was the AIDS Healthcare Foundation, a nonprofit that has experience developing affordable housing. It’s unclear why the group was not exempted. Deeds-in-lieu of foreclosure are also exempted from Measure ULA. Shorenstein Properties sold the AON Center in Downtown L.A. to Carolwood, run by Adam Rubin and Andrew Shanfeld, for $146 million. But because the December sale was structured as a deed-in-lieu of foreclosure, relieving Shorenstein Properties of unpaid debt, no transfer tax was paid on it, according to property records. The post A year into Measure ULA, a stiff real estate market in the city appeared first on The Real Deal . Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller. LA politics, Measure ULA, Politics Los Angeles — The Real Deal Read More Los Angeles’ burden The taxes were supposed to be a boon for the city of Los Angeles. With a pumping luxury market and frequent commercial sales over $5 million, adding city transfer taxes on those sales seemed like a no-brainer for city officials, on top of the county’s existing 1.1 percent tax. “If approved, it The post A year into Measure ULA, a stiff real estate market in the city appeared first on The Real Deal. #SkylineProperties #realestatenews #commercialrealestate #offmarketrealestate #nycrealestate #Tradedny #danielshirazi #manhattancommercialrealestate #ManhattanRealEstateMarket #Skyline #NewYorkCityRealEstate #groundleases #apartmentbuildings #Realestateinvestment #robertkhodadadian #groundlease #netlease #investmentsales #brokerage #offmarketbroker #TheRealDeal #CommercialObserver #NewYorkRealEstateJournal #commercialbuildings ]]>
<![CDATA[ Los Angeles’ burden The taxes were supposed to be a boon for the city of Los Angeles. With a pumping luxury market and frequent commercial sales over $5 million, adding city transfer taxes on those sales seemed like a no-brainer for city officials, on top of the county’s existing 1.1 percent tax. “If approved, it will raise an estimated $900 million annually,” a University of California Los Angeles report on the tax, known as Measure ULA, assured in October 2022. Those funds would go toward building affordable housing. The city dialed it down a bit: In light of the new taxes and interest rates rising in 2022, maybe some property owners would be put off selling. The city pegged its own estimate at $672 million, about 5 percent of its total revenue stream. Both the measure’s drafters and the city vastly underestimated property owners’ reaction . In the year since the transfer taxes went into effect, both commercial and residential sales have stalled. Institutional office sellers, developers and homeowners came to the same conclusion: They will not sell or buy . Instead of $900 million or $671 million, the city of L.A. has brought in $173.6 million through the new transfer taxes, just 25 percent of its own estimate, as of March 8, according to data from the city controller’s office. “The idea that it would create an economic windfall for the city and not create this impediment to transactions or transaction volume … ” Eric Sussman, an adjunct professor at UCLA’s Anderson School of Management said. “Now the city is saying, ‘Oops.’” The transfer taxes have mostly impacted commercial sales across the city, though it’s hard to determine what has caused the most downward pressure: rising interest rates, making it more difficult to get financing, or the transfer taxes. In March 2023, the month before the transfer taxes began, the city of L.A. saw 73 commercial sales over $10 million close, the largest being GI Partners’ $211 million purchase of an AT&T broadcast center, according to property records and data from PropertyShark. (These figures were inflated by a rush to close before the taxes went up, but a 12-month average was not readily available.) Three commercial sales closed over $10 million in April 2023. The number of residential sales over $5 million across the city has dropped nearly 70 percent in the year since ULA took effect, according to Jonathan Miller at appraisal firm Miller Samuel, which tracks luxury property sales. In the 12 months leading up to April 2023, 416 single-family homes and condos sold for $5 million or more, according to Miller. Only 125 have sold in the 12 months since Measure ULA came into effect. ULA also came at the “worst possible time,” Sussman said. “You were already seeing this slowdown and just adding a burden on sellers,” he said. W ar chest So far, litigation to overturn Measure ULA has failed. One major challenge is left. In November, Californians will have the opportunity to vote on the Taxpayer Protection and Government Accountability Act. If voters approve the ballot measure, all taxes passed by voters on a simple majority after January 2022 would be overturned, and any new local taxes proposed on ballot measures could only be passed by a two-thirds majority. Since ULA was passed with a simple majority — 57.77 percent — in November 2022, it would be overturned if the Taxpayer Protection Act is passed. Many other local taxes would be overturned, too — Gov. Gavin Newsom has argued that it would “affect nearly every revenue source.” Real estate companies have already poured money into the effort, according to donation records from the secretary of state. Douglas Emmett, the Santa Monica-based multifamily and office operator run by Jordan Kaplan, and Kilroy Realty, a Los Angeles-based real estate investment trust, have each donated $1.5 million to promote the ballot measure. Hudson Pacific, which owns offices and soundstages across Los Angeles, has donated $1 million. Shorenstein Properties, a San Francisco-based firm that recently exited its Downtown Los Angeles office tower investment, has donated $500,000. Public Storage, the self-storage REIT out of Glendale, has also put in $500,000. Smaller players and more private developers are getting in on the ballot measure, too. C.J. Segerstrom, a real estate developer out of Orange County known for building South Coast Plaza, has donated $100,000 to the effort. R.W. Selby, a multifamily owner and manager, has donated at least 10 times, for a total of about $56,000. Probity International, a Beverly Hills-based developer that has Rodeo Drive holdings, has pumped $20,000 in. Other real estate donors include Tejon Ranch’s Norman Metcalfe ($2,500), Kamyar Shabani ($5,000) and Bradford Pearl at NewMark Merrill ($250). From left: Macerich CEO Jackson Hsieh, University of California president Michael Drake, and the West LA campus Nonprofits, deeds-in-lieu and other loopholes When Hudson Pacific Properties and Macerich sold a 700,000-square-foot office campus on Los Angeles’ Westside for $700 million, they did not have to pay the 5.5 percent transfer tax. It was not trickery, nor a nifty accounting trick. The two had just managed to find an exempt buyer: the University of California system. “Any entity or agency exempt from the City’s taxation power under the California or U.S. Constitutions” is exempt from Measure ULA, according to the city’s finance department. The U.C. system is one of those entities. If it had been subject to Measure ULA, Hudson Pacific and Macerich would have had to pay another $38.5 million in taxes. That bill would have pushed the city’s collected revenue over the $210 million mark. The city has laid out a number of buyers that are exempt from Measure ULA. Those include nonprofits that have a history of developing or managing affordable housing, and nonprofit that have less than $1 billion in assets. The issue for sellers is finding one of those buyers. “There are not too many nonprofits around to buy,” Jake Glaser, a multifamily broker at Lyon Stahl Investment Real Estate, said. “It’s very hard to execute.” Glaser sold a warehouse near Downtown Los Angeles this year after marketing it for sale for a long time. “Because of the ULA transfer tax, the owner needed an astronomical price,” he said. “We never thought a sale would happen.” The broker had originally folded the ULA tax into the asking price. But then a nonprofit buyer came into view with an all-cash offer. The buyer qualified for the exemption. “It was a no-brainer for the seller, and one of those needle-in-a-haystack buyers,” he said. “We struck gold.” The loophole is not a guarantee. When Relevant Group sold the Morrison Hotel in Downtown Los Angeles for $12.4 million in December, the hotel developer still had to cough up $708,500 in city transfer taxes even though the buyer was the AIDS Healthcare Foundation, a nonprofit that has experience developing affordable housing. It’s unclear why the group was not exempted. Deeds-in-lieu of foreclosure are also exempted from Measure ULA. Shorenstein Properties sold the AON Center in Downtown L.A. to Carolwood, run by Adam Rubin and Andrew Shanfeld, for $146 million. But because the December sale was structured as a deed-in-lieu of foreclosure, relieving Shorenstein Properties of unpaid debt, no transfer tax was paid on it, according to property records. The post A year into Measure ULA, a stiff real estate market in the city appeared first on The Real Deal . Robert Khodadadian has long had a simple philosophy about selling real estate. There are approximately a million buildings in the city, and the broker that gets to sell any one among the multitude that will hit the auctioning block at a given moment is, sometimes, simply the person who happens to pitch their services to the right seller. LA politics, Measure ULA, Politics Los Angeles — The Real Deal Read More Los Angeles’ burden The taxes were supposed to be a boon for the city of Los Angeles. With a pumping luxury market and frequent commercial sales over $5 million, adding city transfer taxes on those sales seemed like a no-brainer for city officials, on top of the county’s existing 1.1 percent tax. “If approved, it The post A year into Measure ULA, a stiff real estate market in the city appeared first on The Real Deal. #SkylineProperties #realestatenews #commercialrealestate #offmarketrealestate #nycrealestate #Tradedny #danielshirazi #manhattancommercialrealestate #ManhattanRealEstateMarket #Skyline #NewYorkCityRealEstate #groundleases #apartmentbuildings #Realestateinvestment #robertkhodadadian #groundlease #netlease #investmentsales #brokerage #offmarketbroker #TheRealDeal #CommercialObserver #NewYorkRealEstateJournal #commercialbuildings ]]>
