february 12 - 18, 2018 | price $3.00 crains

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VOL. XXXIV, NO. 7 WWW.CRAINSNEWYORK.COM

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THE LISTLargest mergers and acquisitions

P. 14

PRIVATE EQUITY’S

SHOPPING SPREE

P. 15

SEVEN-FIGURE

SOLOACTSP. 20


®

FEASTING

ON HARLEM

How a group of female entrepreneurs,

including Leticia Skai Young of

LoLo’s Seafood Shack, propelled the

neighborhood’s restaurant reviva

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NEW YORK BUSINESS

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FEBRUARY 12, 2018 | CRAIN’S NEW YORK BUSINESS | 3

FEBRUARY 12 - 18, 2018

Quite correctTHE STOCK MARKET is “correcting.” I’m not entirely clear why corrections take place only when markets fall, but such are the ways of Wall Street.

Albany gets nearly 20% of its tax revenue from the city’s �nancial sector, so a bear mar-ket could really put a damper on plans to �x the subway system, build the Gateway rail tunnel and address other big-ticket programs.

But the pundits say stocks have to dip by at least 20%—almost twice as much as they did last week until a late rally Friday—before we’re in a bear market. In the meantime, there isn’t much to do but ask folks who work on the Street what they think will happen next.

Early last week one source who manages a portfolio worth hun-dreds of millions of dollars said, “We have to wait and see how ugly this could get.” �en the Dow Jones Industrial Average fell by more than 1,000 points, the largest single-day point dip in the Dow’s 121-year history. �ree days later it plummeted again. What do we do now? I asked. “We have to be prepared for anything.” What worries you most? “�e things I don’t know enough about.” Such as? “I don’t know, and that’s what worries me.”

Looking for some clarity, I checked out a recent report from the state comptroller’s o�ce and learned that Wall Street �rms today col-lect just 7% of their revenue from trading activity, down from 28% in 1991. At the same time, revenue from wealth management has moved in the opposite direction. �at sounded comforting, until I realized that although volatility is great for traders collecting tolls as everyone races for the exits, it’s bad for wealth managers, who are paid based on how big their clients’ accounts are.

In such tumultuous times, music can be a welcome balm. I recom-mend the song from �e Mikado that goes, “I am right, and you are right, and everything is quite correct.”

4 EDITORIAL No easy �x for city’s taxi woes

5 IN CASE YOU MISSED IT U.S. budget agreement’s local winners and losers

6 ECONOMY Brooklyn Chamber of Commerce’s wish list

7 ASKED & ANSWERED Housing and health care nonpro�t rebrands and expands

8 TECHNOLOGY Reading tea leaves for Google’s two big real estate buys

9 SPOTLIGHT Brooklyn charter school �nds ways to spend wisely

10 REAL ESTATE Incentives spur industrial-zone hotel development

11 WHO OWNS THE BLOCK E-commerce demand is driving warehouse sales

12 VIEWPOINTS Congestion pricing roadblocks; property tax math

14 THE LIST Largest mergers and acquisitions

15 PRIVATE EQUITY AT THE GATE Examining where Wall Street’s biggest fortunes are now made

17 A SEAT AT THE TABLE Women behind Harlem’s restaurant renaissance

20 SINGLE AND WINNING A look at sole proprietorships with million-dollar revenue

24 GOTHAM GIGS A dream to own a clothing store comes true

25 SNAPS Photos from the city’s biggest fundraisers and social events

26 FOR THE RECORD Our tally of the week’s buys, busts and breakthroughs

27 PHOTO FINISH Performers prepare lion dances for Lunar New Year

REAL ESTATE FORUM

Vol. XXXIV, No. 7, Feb. 12, 2018—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for double issues the weeks of Jan. 1, June 25, July 9, July 23, Aug. 6, Aug. 20 and Dec. 24, by Crain Communications Inc., 685 Third Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing of�ces. Postmaster: Send address changes to: Crain’s New York Business, Circulation Department, PO Box 433279, Palm Coast, FL 32143-9681. For subscriber service: Call 877-824-9379. Fax 313-446-6777. $3.00 a copy, $99.95 one year, $179.95 two years. (GST No. 13676-0444-RT) ©Entire contents copyright 2018 by Crain Communications Inc. All rights reserved.

APRIL 13

UP FRONT

ON THE COVER

FEATURESRETAIL REALITY CHECK

With retail rents on the decline but still high by historical

standards, landlords and tenants are both in a bind. Hear from

Saul Scherl of the Howard Hughes Corp., as well as owners, brokers

and tenants, about strategies for survival and success.

NEW YORK ATHLETIC CLUB

8 to 10 [email protected]

FROM THE NEWSROOM | AARON ELSTEIN | SENIOR REPORTER

Chronicled launched as a blockchain company in 2014. This fact was misstated in “Tales from the crypto: An insider guide to the digital-currency craze,” published Feb. 5.

Dr. Dania Rumbak was a physician at New York–Presbyterian Hospital in Washington Heights. This fact was misstated in “Blending faith and medicine,” published Feb. 5.

CORRECTIONS


PHOTO: BUCK ENNIS

P. 20

P. 27

IN THIS ISSUE

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4 | CRAIN’S NEW YORK BUSINESS | FEBRUARY 12, 2018

AGENDAWHAT’S NEW FEBRUARY 12, 2018

It has been a tumultuous few years in the taxi, black-car and livery business, as Uber ushered in a wave of gig-economy drivers and changed the way many New Yorkers get around. Passengers—with the notable exception of wheelchair users—have been the big win-

ners, as they now enjoy a plethora of options at all hours of the day and in virtually every nook of the city. But for many in the industry, there has been tremendous pain.

Owners of taxi medallions have seen their placards—worth upwards of $800,000 apiece four years ago—lose 80% of their value, pushing many to the brink of � nancial ruin and some of them over it. Credit unions that lent heavily to medallion buyers have been seized by the government, and others have ramped up foreclosures to avoid the same fate. Full-time drivers spend more and more time behind the wheel to make the same money that they used to, which generally is about $35,000 a year. And the onslaught of ride-hailing vehicles has congested Manhattan’s central business district like never before and cost the transit system riders as well as revenue.

� e saga took a tragic turn last week, when veteran driver Douglas Schi� er wheeled his black car up to City Hall, pulled out a gun and killed himself—a� er posting on Facebook a tale of declining fortunes that many of his colleagues know all too well. His death called attention to drivers’ plight, as he intended. Unfortunately, there is no easy way to balance the o� en compet-ing interests of medallion owners, drivers, riders and the public at large.

Consider calls for a cap on vehicles. Medallion owners say it worked for taxis, pre-Uber. But while it made them wealthy, it served the public poorly because many hacks bypassed black customers and were loathe

to leave Lower Manhattan and Midtown. And rides were hard to � nd at peak times.

� e gig economy solved that by putting more drivers on the road when demand surges, but it has eroded the earnings of full-time drivers.

We have no perfect solution, only a few principles. Ride-hailers in transit-rich areas should pay extra to help fund the subways. Motorists should pay not just for entering congested areas but for time spent driving in them, to reduce tra� c and idling. � e incen-tives that add cars when people (especially

the disabled) need them should be enhanced. And with naive driving recruits being lured by ads and � rst-month bonuses, we need transpar-ency about what driving entails and pays. As bad as things are now, they will be worse when other jobs become harder to � nd. As tra� c consultant Bruce Schaller warns, “Just wait until we have a recession.”

There is no easy way to balance the competing interests of medallion owners, drivers, riders and the public

BY AARON ELSTEIN

ANIMAL SPIRITSMARKETS RISE AND—like they did last week—fall. But Wall Street � rms usually churn out strong earnings no matter what the Dow does. The exception was 2008, when the Street lost a massive $27.7 billion. But even that was followed the next year by record pro� ts of $40 billion.

STATS AND

THE C

ITY

25 WORDS OR LESS

— THE EDITORS

After years of turmoil, a tragic turn in the for-hire vehicle industry

DRIVEN TO HIS DEMISE: Schifter’s suicide called attention to the plight of for-hire drivers.

BUCK

EN

NIS

FINE PRINT City rules require property owners and occupants to clear their sidewalks of snow and ice, but when they must do so depends on when precipitation stops. If it’s between 7 a.m. and 5 p.m., New Yorkers have four hours to act. Otherwise they have 14 hours or until 11 a.m., whichever comes � rst. Snow or ice too frozen to be removed must be covered with sand, sawdust or (yes) ashes. Fines range from $100 to $350.

FPO

Wall Street earnings, shown with the S&P 500 gain for that year

20162015201420132012

$23.9

16%

$16.7

32.4%

$16.0

13.7%

$14.3

1.4% $17.3

12%

■ Earnings (in billions)■ S&P increaseThey smell sweet,

and they look like gummy bears. They might as well say ‘bite me’ on them.”—State Sen. Brad Hoylman on Tide detergent pods, which have been connected to scores of poisonings this year, including teens acting on dares

“

ADDICTED TO NUMBERS? GET A DAILY DOSE AT @STATSANDTHECITY SOURCE NYS Comptroller

P004_CN_20180212.indd 4 2/9/18 8:23 PM

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IN CASE YOU MISSED IT

News-weakNewsweek Editor-in-Chief Bob Roe, executive editor Ken Li and reporter Celeste Katz were �red by Newsweek Media Group. All three had been cover-ing Manhattan District Attorney Cyrus Vance Jr.’s probe into possible money laundering by Newsweek’s parent com-pany. Veteran journalist Matt Cooper resigned in protest.

Diamonds and pearlsJulien’s of Los Angeles will auction Prince memorabilia at New York’s Hard Rock Cafe May 18. Items include cloth-ing, jewelry and a white Cloud guitar Prince commissioned to replicate the one he played in Purple Rain.

School’s outDays a�er �ring CEO Jeremiah Kittredge for “inappropriate behavior,” a New York City–based charter school advocacy group, Families for Excellent Schools, closed its doors. �e group made a costly bet when it poured $20 million into a Massachusetts pro-charter ballot initiative that was soundly defeated.

A movable feast�e 120-year-old family-run market Sahadi’s, which has been in Brooklyn Heights since 1948, is set to open a second outpost in the fall. �e Middle Eastern grocery plans to build its new market—including a dining section and a full-service bar—in Sunset Park’s Industry City, joining 25 other food and beverage purveyors.

High water markWhen luxury condominium Brooklyn Point opens in 2021, its roo�op salt-water in�nity pool likely will be the city’s highest swimming hole. Extell Development is building the 68-story, 458-unit tower at 138 Willoughby St.

Broadway comes to BAMDavid Binder, the Broadway producer behind the revivals of Hedwig and the Angry Inch and Of Mice and Men, will become the Brooklyn Academy of Music’s artistic director. He is succeed-ing Executive Producer Joseph Mel-illo at the end of the year. BAM has a $50 million budget.

Big hitterHoward Milstein, chairman and CEO of New York Private Bank and Trust, which runs Emigrant Bank, bought Meredith Corp.’s Golf Magazine and golf.com. �e deal is estimated to be worth about $15 million. Time Inc. had put the properties up for sale last year, before Meredith took over as publisher.

Short-circuited�e Committee to Defend the President rented a Times Square digital sign to decry Hillary Clinton donors and the mainstream news media. Complaints prompted billboard owner SL Green Realty to pull the ad a�er one day.

Banana splitsGap Inc. is peeling o� its Banana Republic headquarters in the city. One-third of the sta�ers are relocating to San Francisco. Other brand employees will remain at 55 �omas St.

D.C. budget deal creates winners and losers in NY

THE TWO-YEAR BUDGET DEAL reached in Washington on Friday ensures no draconian cuts in federal aid to the state and city, undercuts arguments to raise some

local taxes and portends problems for Gov. Andrew Cuomo as he exaggerates the impact of Congress’s tax bill on New Yorkers.

Longer term, the tax and budget bills might be disastrous for the economy as huge federal de�cits send in�ation soaring, but that’s pretty far o� in the future.

�e budget deal increases nondefense spending by about 10%, provides much more money than expected to the city’s ailing hospitals and makes it virtually impossible for Republi-cans to slash entitlement programs such as Medicaid.

One caveat is that funding for the Essential Plan, which covers about 700,000 New Yorkers, still might be in jeopardy. Only New York and Minnesota enacted the plan, which eliminates most out-of-pocket expenses for low-income users ineligible for Medicaid.

�e D.C. deal is bad for those proposing a state tax increase on wealthy households who got a federal tax cut. Progressives might �nd other rationales for their positions, but the most compelling one is o� the table.

Cuomo’s plan to counter the tax bill is in trouble as well. �e governor o�en has said the bill will cost New Yorkers $14 billion. Last week his budget director conceded that �gure re�ects only the cap on state and local tax deductions. But lower rates, higher standard deductions and other provisions will reduce that �gure enormously. Data from the Partnership for New York City show that most single residents making about $200,000 or less will see their federal income taxes go down, as will some families making up to $500,000 or more.

Most tax experts say a rushed overhaul of the state’s tax code would be irresponsible. Modest �xes are possible this year, but ideas such as replacing the state income tax with a payroll tax need lots of study. — GREG DAVID

RIP, Father PeteThe Rev. Peter M. Colapietro, longtime pastor of Holy Cross Church on West 42nd Street and a beloved denizen of Elaine’s, died Feb. 5. “If there were more Father Petes,” former Police Commissioner Bill Bratton said, “churches would be over�owing.”

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CRAIN COMMUNICATIONS INC

chairman Keith E. Crain

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senior executive vice president Chris Crain

secretary Lexie Crain Armstrong

editor-in-chief emeritus Rance Crain

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DON’T BELIEVE THE HYPE: Cuomo’s tough talk on taxes is looking more and more like empty rhetoric.

— CHRIS KOBIELLA



ACCORDING TO THE GLOBAL CON-

GESTION SCORECARD, THE CROSS-

BRONX EXPRESSWAY IS THE WORST

ROAD IN THE U.S. ON AVERAGE,

DRIVERS WASTE 118 HOURS EACH

YEAR ON THE 4.7-MILE STRETCH.

DATA POINT

P005_CN_20180212.indd 5 2/9/2018 5:59:59 PM


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Dreamy projects envisioned for struggling Brooklyn areasBusiness group seeks major public investment in forgotten corners BY WILL BREDDERMAN

For its 100th birthday, the Brooklyn Chamber of Com-merce is seeking some big gi�s. �e business group

unveiled an economic plan for the next hundred years. Funded by a $100,000 federal grant, the study calls for rezon-ing and policies to spur housing and commercial space. It also urges major city, state and federal investment in overlooked areas.

�at has worked before, the chamber argued, pointing to the government- aided Barclays Center and the New York Marriott at the Brooklyn Bridge as keys to the borough’s renaissance.

“We have to start asking what’s next for Brooklyn, and how do we make sure that this place stays as cool as it is, and as innovative as it is, and as welcoming,” chamber President Andrew Hoan said.

�e report has four major proposals.New mass transit. �e report rates

proposals for a Brooklyn-Queens con-nector, a Utica Avenue 4-line extension

and a 1-line extension into Red Hook as important transit developments for the economy. But perhaps the most ambitious and imposing project it rec-ommends is the three-borough X line, also called the Triborough RX. First suggested by the Regional Plan Associ-ation in 1996, it would link a patchwork of existing tracks and rights-of-way to run a train from Sunset Park to Brook-lyn College, through East New York and into Queens, then up to Yankee Stadium in the Bronx.

�e Metropolitan Transportation Authority could mitigate the massive costs by selling private developers the right to deck over and build atop the tracks, according to the chamber.

“�is, to me, is the project of the cen-tury,” Hoan said. “You already have the pre-existing right-of-way, and our most valuable asset—more land—right there.”

New functions at Broadway Junc-tion. Few areas have proved as immune to Brooklyn’s rising a�uence as East

New York, though the impoverished area is adjacent to Broadway Junction, where the A, C, J, L, M and Z lines con-verge near �ve bus lines and a Long Island Rail Road station. �e report suggests using public properties there to create a commercial center, perhaps with a SUNY or CUNY campus. �at would encourage riders to stick around and create jobs for residents.

“It’s space, it’s education, and it’s transit,” Hoan said. “And we believe that’s the future at Broadway Junction.”

Cooking up Coney Island. �e famed amusement area and board-walk received substantial city invest-ment under former Mayor Michael Bloomberg. But New York’s winters have chilled e�orts to make it a year-round destination, and local pov-erty—in part a result of concentrated public housing far from job centers—has persisted. A remedy, the chamber

suggested, would be a public-private venture involving nearby Kingsbor-ough Community College’s Kitchen Ventures Incubator Program, a hos-pitality- and culinary-training center for residents.

Fort Hamilton Army Garrison. Hoan called the U.S. military’s lone remaining outpost in the city “a remarkable federal asset that we believe is underutilized.” �e way to unleash its potential? Bring a cybersecurity incu-bator and �rst-responder training cen-ter to the southern Brooklyn complex, combining its defense-oriented func-tion with education for a burgeoning sector of the economy. Hoan pointed to past conversions of federal proper-ties—notably the Brooklyn Army Ter-minal and Navy Yard—into hubs for innovation and job growth. ■

A RENDERING of what’s possible above Sunset Park’s rail yards

P006_CN_20180212.indd 6 2/9/18 6:41 PM

INTERVIEW BY JOE ANUTA

ASKED & ANSWERED NONPROFITS

WHO HE IS Chief executive, RiseBoro Community Partnership

REVENUE $130 million

EMPLOYEES 2,000

SALARY $366,000

AGE 39

BORN Tacoma, Wash.

RESIDES Park Slope

EDUCATION Bachelor’s in political science, Brown University

IN NETWORK Short sits on the Enterprise New York Advisory Board as well as the boards of the LISC Partners Policy Council and the Association for Neighborhood and Housing Development, among others.

FOOD FOR THOUGHT RiseBoro serves more than 1 million hot meals each year through various programs.

DOSSIER

“


What is your coverage area, and where do you want to expand?Historically it has been very focused on Bushwick, though we have been providing home care and Meals on Wheels through-out Brooklyn and parts of Queens for more than 20 years. We operate senior centers in Bed-Stuy, Brownsville and East New York, and develop and manage housing across northern Brooklyn. Recently we acquired a Bronx development site in Woodlawn and were awarded the 1,100-unit Hunter’s Point South mixed-income development along with the Gotham Organization. We also won the right to develop a senior housing project in Nolita.

Your core neighborhoods are gentrifying. Has that affected your mission?We’ve seen increased demand in providing legal services to tenants in housing court due to a huge uptick in tenant harass-ment. Some buildings are being purchased at a price that is only justi� able if the buyer gets all the rent-regulated tenants out.

But aren’t there upsides to private investment in these neighborhoods? We strive to ensure that pro� t generated by gentri� cation gets reinvested into the community. That’s the main problem: There is value in low-income communities. When it is exposed, outside in-terests come in, capture that value themselves and take it to their shareholders with mansions in Greenwich, Conn., or wherever.

How do you combat that? It’s important that the city chooses nonpro� ts to develop and op-erate public projects, because that way you have a guarantee the money will be reinvested in the community.

What changes are you seeing in the senior-care part of your business?The state is essentially throwing for-pro� ts and nonpro� ts in the same bucket and making us compete for the same business.

How is that working out?Nonpro� ts are judged by how low we keep overhead. That sti� es innovation and drives everyone to meet the terms of a contract as cheaply as possible. The world’s most successful companies spend 40% or 50% of their budget on fundraising, marketing and R&D. But a nonpro� t spending more than 10% raises a red � ag.

What does that mean for building home health care business? We can’t pass out � iers to people on the streets or coming out of the hospital, or build relationships with the hospital discharge staff as much as we’d like. We don’t have the marketing budget for that.

Should home health care workers be paid per hour for 24-hour shifts? If people are actually working 24 hours, then they should be paid for 24 hours. A deal needs to be worked out on the state level to make sure that we don’t bankrupt the home-care system but we also pay people for the hours they are working.

Has funding suffered since your advocate in Albany, Vito Lopez, died?Our state funding has actually expanded since Lopez left power. Our challenge is more from the national retrenchment of funding services for the poor. Everyone is asking us to do more with less, and the contracts don’t pay enough to provide the services they ex-pect. Any nonpro� t now must have outside, unencumbered funds. ■

A fter 16 years at the Ridgewood Bushwick Senior Cit-izens Council, Scott Short took the reins of the orga-nization and promptly rebranded it. The housing and health care nonpro� t, created by late Albany power

broker Vito Lopez, is now RiseBoro Community Partnership.

SCOTT SHORT RISEBORO COMMUNITY PARTNERSHIP

Nonpro� ts are judged by how low we keep overhead, but that sti� es innovation

Chief executive, RiseBoro Community Partnership

$130 million

2,000

$366,000

Tacoma, Wash.

Park Slope

Bachelor’s in political science, Brown University

Short sits on the Enterprise New York Advisory Board as well as the boards of the LISC Partners Policy Council and the Association for Neighborhood and Housing Development, among others.

FOOD FOR THOUGHT RiseBoro serves more than 1 million hot meals each year through various programs.

judged by how low we keep overhead,

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In search of more space, Google inks two big dealsChelsea Market and Pier 57 expand the company’s local footprint BY DANIEL GEIGER

Days a�er the news that Google’s parent company, Alphabet, is purchasing Chelsea Market for $2.4

billion, Google reached a tentative deal to grow even more in the city.

Under the proposed arrangement, the $700 billion company will expand at Pier 57, an under-renovation com-plex on the Hudson River across from West 15th Street.

Google had previously agreed to lease 250,000 square feet at the complex and now plans to add 70,000 of o�ce space. An additional 50,000 square feet of its footprint will be used for public, cultural and educational activities and a ferry landing.

Hudson River Park Trust, the city- and state-run entity that controls Pier 57, presented the proposal to Commu-nity Board 4 at a meeting Feb. 8. Mad-elyn Wils, president and CEO of the trust, said its board would vote within the next few months on whether to ap-prove the deal, depending on the feed-back it receives.

“We want to make sure that the community is good with this,” Wils told Crain’s. “We think that they’re getting a lot, and we hope that they like it.”

If the deal goes through, Google will create a 5,000-square-foot public area on the south side of the pier featuring views of the harbor and 24,000 square feet of community and education space partially located in an underwater cais-son—a watertight sub level that was built to provide the pier with enough buoyancy to �oat.

Wils said the trust will use a por-tion for the 400 educational programs it hosts annually for children about cli-mate change and the wildlife and plants in Hudson River estuaries.

“Google acknowledged our edu-cation program and o�ered to give us a space here so we can expand our teaching,” Wils said. “We’re exploring the possibility to have a virtual-reality space where people could actually look and see what’s in the water.”

People’s choiceSeth Pinsky, an executive vice pres-

ident at RXR Realty, which is handling the $350 million redevelopment of

the once-derelict pier along with real estate �rm Youngwoo & Associates, said Google would host technology- education programs for disadvantaged city youth and use the facility for prod-uct demonstrations.

“What makes this such an exciting announcement is that Google is com-mitting to make a very signi�cant con-tribution to the public,” Pinsky said.

RXR and Youngwoo said they will provide Hudson River Park Trust with roughly $20 million in proceeds from the expanded lease during its 15-year term to help fund the entity’s operating budget. �e terms of the lease were not disclosed.

�e deal would repurpose a large area originally envisioned as a cav-ernous food market, which celebrity chef Anthony Bourdain had at one time been negotiating to operate. Un-der the revised plan, that food market will shrink to about 40,000 square feet, about 100,000 square feet smaller than originally planned.

�e pier’s ground �oor will include 20,000 square feet of restaurant and re-tail space, including pop-up stores. A restaurant will be located on the pier’s roof, which will also feature a large public park.

RXR has said it is aiming to �nish the project by the end of next year. ■

THE NUMBER THAT GRABBED every-one’s attention last week was the $2.4 billion Google’s parent company, Al-phabet, paid to buy Chelsea Market. Here is another digit that should get equal attention: 7,000. �at’s the num-ber of people Google currently em-ploys in the city. When it starts to �ll the space it has acquired—which likely also will include Pier 57 (see above)—Google will easily become one of New York’s top 25 employers.

�e company’s big real estate buys are the latest sign of how important the tech sector has become to the city, and it is worth detailing how Google grew here and what those 7,000 people actually do.

�e story begins with the most im-portant New York company of the pre-

vious tech boom. Serial so�ware en-trepreneur Kevin O’Connor founded a �rm in Atlanta in the early 1990s that could place ads on websites as the in-ternet started gaining traction. Atlanta was not a good place for an ad compa-ny of any kind, so he moved to New York and renamed the �rm Double-Click. �e company expanded rapidly and went public. For a brief moment O’Connor’s stock holdings made him the city’s �rst tech billionaire.

Sales savvyBut when the tech bubble burst,

DoubleClick faced hard times and went through repeated rounds of lay-o�s and cutbacks. �e stock tanked. When the market showed some signs of recovering in 2005, private-equity

�rm Hellman & Friedman bought it for $1.1 billion. Two years later, Google swooped in and paid $3.1 billion for DoubleClick, hiring some engineers but, more important, grabbing the internet-savvy salespeople it needed.

Today 60% of those 7,000 em-ployees are computer engineers; the remainder work in sales, operations, public policy and other functions.

William Floyd, Google’s head of exter-nal a�airs, said last month that every business line of the company now has a team in New York, with more work on Google Cloud expected to be done here in the near future. He said Google wanted to grow but was hemmed in by its real estate holdings. Apparently they’re working on a solution to that problem. ■

Google’s New York roots were planted in the 1990s Acquiring DoubleClick was key to local growth BY GREG DAVID

STAYING AFLOAT: Google will occupy more than 300,000 square feet of the under-renovation Pier 57.

BUYING THE STORE: Google’s city headquarters is across the street from Chelsea Market.

P008_CN_20180212.indd 8 2/9/18 7:28 PM

SPOTLIGHT NONPROFITS


Charter’s lesson plan for smart spendingSavings create opportunities for school to self-invest BY KIM VELSEY

W hen Matt Harrington graduated from NYU with a master’s degree in education and social policy, he �gured he would become a data analyst crunching stats for the Department of Education. An administrative internship at P.S. 770 in Crown Heights changed his mind. Financial management —espe-

cially �nding cost savings—became his unlikely passion.“I fell in love with it,” said Harrington, now director of operations at �e New

American Academy Charter School. At the East Flatbush elementary school, which opened in 2013, his zeal for rooting out ine�ciencies and being thri�y has produced a $1.3 million cumulative surplus—a feat given that the school lacks a corporate partner and a PTA, relying solely on per-pupil government funding.

While charter schools are known for educational experimentation, their �-nances are o�en a di�erent story. Raj �akkar, founder of Charter School Busi-ness Management, which consults for New American, said it is not uncommon for charters to dismiss �nancial management as a bit of bookkeeping. “But it’s much larger than that,” said �akkar, who has seen schools closed for �nancial mismanagement. “You’re being given millions of public dollars, and there’s a lot of accountability that comes with that.”

New American is a Title I school, meaning that a large percentage of its 365 students comes from low-income households. Admission is lottery-based, with a preference for students from District 18, which includes Brooklyn’s East Flatbush, Canarsie and Brownsville. �e school covers such student expenses as healthful daily snacks, �eld trips and enrichment programs (lunches are free because it is a city public school). It also o�ers scholarships to pay for the required uniforms.

While reading scores rose last year, they are lower than the state average for �nancially challenged students. Statewide, 29% of them achieved pro�ciency in reading, while 21% did at New American, up from 16% the year before. Harrington said New American does not focus on test prep and enrolls many special-needs students. A�er a two-point drop in math pro�ciency last school year, it is sinking money into improving math instruction, in particular to meet benchmarks under the state’s revamp of what had been the Common Core standards.

Freedom to saveHarrington’s passion is �nding cost savings that can be plowed back into pro-

grams for students and teachers. He has made a practice of ordering from vendors that traditional public schools can’t use because of regulations. “We make a lot of purchases through Amazon,” he said. “Why not buy a used library book from Sheboygan, Wisc.?”

Insurance is another big money-saver. New American has conserved thou-sands per year by self-insuring for unemployment rather than using the state’s pooling system. While riskier, self-insurance allows the school to focus on em-ployee retention and reducing turnover.

To that end, Harrington has tried to maximize bene�ts, which include a $1,500 annual “life elective” stipend, which teachers have used for everything from tak-ing a yoga class to becoming a U.S. citizen. Additionally, teachers pay low pre-miums and nothing else for health care, a boon that Harrington engineered by pairing high-deductible health plans with cards that reimburse expenses up to the $6,850 individual out-of-pocket maximum.

�e school allocates resources to its teachers, who can buy whatever supplies they deem necessary. Teacher Jennifer Trani said that at her previous job—in a low-income district in San Diego—she paid for everything from reams of paper to �eld trips out of pocket.

“I was literally photocopying books” she said. “When I came here, I was like, Wow, I can actually a�ord to do the science activity.”

�e school also invests heavily in professional development, paying for pro-grams at Columbia Teachers College and Harvard. Because of this—plus a policy that pairs one “master teacher” per grade with “line teachers,” who do the in-struction—the school has attracted a number of younger, less- experienced edu-cators. �is, in addition to a lean administrative sta�, reduces payroll costs. And the school maintains low turnover by paying salaries that can reach as high as $132,000 for master teachers.

“We believe that the success of our students is contingent on the quality of our teachers,” said principal Lisa Silva. “By e�ectively managing the budget, Matt is able to ensure that all sta� are treated and paid like professionals.”

New American seeks to eventually move to its own building—it currently shares space with the elementary school P.S. 233—and to expand past ��h grade to a K-8 structure. Harrington hopes to model best practices for all schools.

“�at’s one of the ideas of charter schools: to experiment and learn, and to bring those things back to public education,” he said. ■BU

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FOCAL POINTS

INDUSTRY Nonpro�t education

FOUNDED 2013

LOCATION Two �oors of P.S. 233, Langston Hughes School, in East Flatbush

EMPLOYEES 46; STUDENTS 365

REVENUE Approximately $5 million in 2016–17 from state and local aid, plus federal Title I and Title II funding

SURPLUS $260,000 in 2016–17 (going toward a move to its own building)

GROWTH The school started with only kindergarten and �rst-grade classes. It has since expanded to a K–5 setup, back�lling through the older grades, which also increases revenue. This past year economies of scale enabled New American to add a technology teacher and a music teacher.

CLASS ACT: Harrington has saved $1.3 million in New American’s �rst four budget years.

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City curbs hotels, yet keeps giving them tax breaksIncentive program pushes out jobs it was created to save BY DANIEL GEIGER

T he Wythe Hotel in Williams-burg has been so success-ful in recent years that it inspired the construction of

two similarly hip competitors next door.�e new William Vale and Wil-

liamsburg Hotel likewise boast lavish rooms, spacious roof decks and trendy eateries and bars.

And, like the Wythe, they either have secured or sought a lucrative ben-e�t that will allow them to pay little if any property tax for years to come.

Little recent attention has been paid to the tax breaks, which have helped developers build a wave of hotels in onetime industrial neighborhoods—a pattern that Mayor Bill de Blasio has decried for pushing out manufacturers.

�e city’s Industrial and Commercial Abatement Program dates back to the 1970s. ICAP was intended to spur land-lords to invest in their real estate when few were doing so, and to attract and strengthen manufacturers, like those that once thrived in Williamsburg.

�e program nearly zeros out prop-erty taxes for as long as 15 years and discounts them for up to a decade beyond that. �e William Vale, for instance, used ICAP to wipe out about $1.7 million of its roughly $1.8 million recent annual tax bill, according to the city’s Independent Budget O�ce. �e Williamsburg Hotel sought the bene�t but missed a deadline to apply; sources said the developer is still seeking to qualify for the program.

Ironically, the incentive has helped to elbow out some of the businesses it was created to preserve.

“It appears to have fostered hotel growth in areas like Gowanus, Sunset Park, Williamsburg and other neigh-borhoods that were once primarily industrial,” said Doug Turetsky, chief of sta� at the IBO, which has studied ICAP and its predecessor, the Industrial Commercial Exemption Program.

Hotel development has spread rap-idly into those areas as tourism in the city has set record highs year a�er year.

Because hotels such as the Wythe tend to be more lucrative than indus-trial and other commercial uses in many areas of the Bronx, Brooklyn and Queens, hotel developers can a�ord to pay more for land. Also, unlike retail and residential uses, hotels generally have not needed special permission from the city to be in areas zoned for manufacturing. �e result has been that hotels have been supplanting man-ufacturing and industrial businesses that once populated Williamsburg, Long Island City and similar areas.

Program promotes development Real estate investment �rm Mad-

ison Realty Capital has estimated that 10 million square feet of industrial space has been converted to hotels or other uses in the city during the past decade. �e tax break has fueled that.

“ICAP is a blunt instrument and unquestionably results in unintended or unforeseen consequences,” said Seth Pinsky, a former president of the city Economic Development Corp., who helped reform the program in 2008. “It would surely be in the interest of the city to look closely at ICAP again to ensure that it aligns with the needs and policy goals of today’s New York.”

�e city’s Department of Finance said 61 hotel properties have received ICAP bene�ts since 2012, costing the city $87 million in forgone taxes.

Even as the mayor has expressed concerns about hotels encroaching on industrial areas, his administration has done little to examine ICAP’s role or to suggest changes. A boundary commis-sion, a body controlled by the mayor that is charged with evaluating the program, has not met since 2015. �e commission and the city may not alter ICAP, but they can ask the state Legislature to do so.

“�ere are internal discussions about next steps with the program,” said a spokeswoman for the EDC, which helps promote ICAP and other city subsidy programs. “However, we don’t have any updates to share at the moment.”

Instead, de Blasio has sought to require a special permit for any hotel project on property zoned for manu-facturing, a process that entails City Council approval. �e City Planning Commission is said to be readying to begin a review in the spring that is nec-essary to institute that special permit.

�e real estate industry is opposed, calling such a regulatory hurdle oner-ous and unnecessary.

“�e special permit requires a devel-oper to go through a uniform land-use review process that is e�ectively two years long, which is time-consuming, unpredictable and expensive,” said Mitch Korbey, chairman of the land-use and zoning group at the law �rm Herrick Feinstein. “It will have a chilling e�ect on hotel development at a time when we need hotels to accommodate our boom-ing tourism and growing economy.”

Korbey favors a more compre-hensive approach to protect the city’s industrial centers. “Zoning is a blunt instrument,” he said.

�e Real Estate Board of New York, the industry’s biggest lobbying arm and professional association in the city, has spoken against the special permit.

“It is vital that hotel development not be constrained so that supply can keep pace with demand,” the group stated in testimony to the Planning Commission

in November. “�e proposed action is an unnecessary constraint on the rights of property owners.”

Some observers have posited that instituting a special permit rather than tweaking ICAP to deter hotel develop-ment is being done at the behest of the Hotel Trades Council, which represents workers at many city hotels. �e polit-ically powerful union has long pushed for various special-permit require-ments, which its opponents say allow it to pressure mayors and City Council members to block hotels that would not use union labor. Almost all hotels built in recent years in manufacturing areas have been nonunion.

�e Hotel Trades Council denies that is its motivation.

“�e proliferation of hotel over-development in out-of-context areas, such as manufacturing zones, threat-ens the safety of neighborhoods and leads to an oversaturation of the city’s hotel market, which is a key driver of our economic engine that creates good, middle-class jobs for tens of thousands of New Yorkers,” said Jason Ortiz, the council’s political director.

Opponents of the special permit and those who also favor the status quo on ICAP say the current loose restrictions on development and big tax incen-tives available to builders have aided the tourism boom by allowing tens of thousands of rooms to be created in recent years. �e added supply has kept pace with increased visitation and has prevented room rates from soaring, according to industry analysts. ■

Loophole exploited by tower developers may be closedBuilders have used stilts to jack up heights—and prices BY JOE ANUTA

THE DE BLASIO administration is tak-ing aim at developers’ practice of stack-ing luxury condos atop multistory hol-low spaces to achieve greater heights and more lucrative sales.

�e Department of City Planning is working to change how it treats such large voids, which do not count against a building’s density cap. Limiting the size of what are essentially stilts would shrink the height of future towers.

“�e notion that there are empty spaces for the sole purpose of making the building taller for the views at the

top is not what was intended” by the zoning code, said Marisa Lago, chair-woman of the City Planning Commis-sion, at a recent town hall meeting. “We are already working under the may-or’s direction with the Department of Buildings to see how we can make sure that the intent of the rules is followed.”

Tall ceilings for equipmentPutting a building on stilts is a

common gambit used by luxury- condominium developers to boost a project’s height while complying with

zoning. It works because �oors for mechanical equip-ment are exempt from the limits. By stretching the ceil-ing of one or more mechan-ical �oors to an extreme height, developers create a pedestal upon which to stack pricey units.

“We have a building on 62nd Street that we have challenged … that has a 100-foot �oor-to-�oor void in the middle,” Rachel Levy, executive director of the Friends

of the Upper East Side, said at the town hall.

How the city will close the loophole remains un-clear. �e Buildings De-partment has repeatedly signed o� on the voids, ruling that they do not violate the zoning code. To change things, sta� members could start in-

terpreting the code di�erently, or the city could simply rewrite the rules, a process that generally takes months. ■

THE WYTHE, in Williamsburg, and other hotels receive a bene�t intended to aid industry.

REAL ESTATE

P010_CN_20180212.indd 10 2/8/18 5:47 PM

WHO OWNS THE BLOCK


E-commerce delivers increased demand for local warehouse spaceA deal in an industrial enclave of Queens hints at change on the horizon

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BY TOM ACITELLI

Sky-high towers will always get the head-lines in New York City, but a decidedly unsexy sector of real estate has emerged as a hot investment: warehouses. A recent

deal in a corner of Maspeth, Queens, near the bor-der with Brooklyn, highlights this reality.

San Francisco–based Prologis is buying a new 362,000-square-fooot warehouse along New-town Creek in Maspeth for about $265 million. �e seller, Charlotte, N.C.–based SunCap Prop-erty, bought the parcel for less than one-fourth that in May 2016 and developed the warehouse for FedEx. A spokeswoman for Prologis declined to comment on the deal, which has not closed.

�e area around the warehouse is full of simi-lar industrial storage and distribution properties, in-cluding for trucking, ship-ping and waste-carting.

�e city has far fewer such hubs than it used to. Areas such as the Williamsburg-Greenpoint waterfront and Long Island City have been reborn as mixed-use residential in the past two decades.

Northern and central New Jersey now dominate the region’s warehouse market. Cushman & Wake-�eld in October reported demand for industrial space, especially warehouses, was at “century highs.” �e same e-commerce boom empty-ing traditional retail space is �lling up warehouses.

“As online sales steadily grow, the need for both e-commerce and logistics companies to locate near mass-populous regions remains important,” Andrew Judd, a C&W executive in one of the bro-kerage’s New Jersey o�ces, said in the report.

Younger consumers in particular are increas-ingly opting for same-day or one-day delivery. �at means demand for warehouse space near large population centers is sure to grow. ■

287 MASPETH AVE.

Energy giant National Grid owns this more than 5 million-square-foot complex and lot in East Williamsburg.

43-02 57TH AVE.

Jetro also took this 65,227-square-foot lot beside the Brooklyn-Queens Expressway for $6.3 million in 2016. It sold for $8 million in 2005.

57-22 57TH ST.

Maspeth–based Dorose Holding Corp. bought this nearly 111,000-square-foot warehouse for $11.5 million in 2011. The seller was plumbing wholesaler Davis & Warshow. Frank Finkel runs both Dorose and Davis & Warshow—though Ferguson Enterprises, the nation’s largest plumbing distributor, owns Davis & War-show. Ferguson leases the space from Dorose, which it did not acquire.

43-40 57TH AVE.

Jetro bought this more than 75,000-square-foot warehouse from Galasso Trucking for $13.7 million in 2012.

43-10 57TH AVE.

Jetro, a Queens-based restaurant and catering supplier, bought this 111,000-square-foot lot for $7.5 mil-lion in 2012. The site had sold for $8.15 million in 2006, during the pre-vious real estate boom.

48-01 58TH ROAD

The city owns this 162,325-square-foot commercial property. The Department of Sanitation uses it as a garage to service surrounding Queens neighborhoods.

46-06 57TH AVE.

Prologis, a major owner of industrial real estate, is buying this new ware-house, which FedEx plans to use as a delivery hub, for about $265 million, sources told Crain’s. SunCap Property Group developed the approximately 362,000-square-foot property last year. It bought the site for $55.8 mil-lion in May 2016, when it was vacant. The sale included a lot behind it.

44-12 57TH AVE.

Galasso Trucking, a family-run company in Queens, bought this 122,000-square-foot lot for $6.5 million in 2006.

46-06 57TH AVE.

P011_CN_20180212.indd 11 2/8/18 6:51 PM


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Rough road ahead for congestion pricingCuomo has little time and lots of competing interests to please

GREG DAVID

THE BEST near-term step to � x the tran-sit mess—congestionpricing—faces a cru-cial deadline this week, and all eyes are on Gov. Andrew Cuomo.

Last week I wrote that the business

community was MIA on the transit issue. (Kathryn Wylde, president and CEO of the Partnership for New York City, makes the opposite case on the next page.) But let us look at what happens next.

� e story up until now is that the governor, clearly su� ering politically from the transit meltdown, appointed the Fix NYC panel, which produced a report calling for a modi� ed congestion-pric-ing plan. Congestion pricing is the key because it would produce desperately needed money for the Metropolitan Transportation Authority and reduce tra� c in the central business district.

Cuomo generally endorsed the idea. But when he unveiled his state budget proposal for the � scal year that starts April 1, he did not include a speci� c plan that people could support, and the ideas he did propose—such as captur-ing city property tax revenue created by transit improvements and diverting it to the MTA—were simply another way to torture Mayor Bill de Blasio.

� ursday, Feb. 15, is the next deadline for the gover-nor to make major changes to his proposed budget. Business groups and transit advocates are looking for a clear sign that Cuomo is committed to con-gestion pricing and will put all his considerable skills behind getting it enacted.

He will certainly have to present more details on how such a plan should work. In the end it will need to im-pose a fee on cars entering the central business district, add a signi� cant sur-charge to ride-hailing services such as Uber and create a way for government o� cials—especially legislators—to in-

� uence MTA expansion plans. � e MTA has ignored those concerns in the past and created a lot of ill will in the Legislature and City Hall.

� e governor also will have to � g-ure out how to mediate the mayor’s demand that all the congestion fees be spent in the city against suburban leg-islators’ demand that some be spent on their constituents, who will be paying about one-� � h of the money collected. � e budget amendments must spell out the speci� cs or at least outline a way to develop them.

If Cuomo does make his support clear, then business and other groups will publicly launch a campaign to

support his plan. It just might be headlined the Campaign for the 96%, jumping o� a Community Service So-ciety of New York study showing the congestion-pricing fee would be paid by 4% of city commuters—and in gen-eral the ones who can a� ord it.

If the governor doesn’t act decisive-ly this week, then business and other groups will hold back. No one wants to get out in front of a losing issue. It won’t close the door on a solution, but it will make reaching a deal much more di� cult. ■

GREG DAVID blogs regularly at CrainsNewYork.com.

20%SHARE OF congestion fees suburbanites would pay

During a recent radio ap-pearance, Mayor Bill de Blasio said—not for the � rst time—that he has not

raised property taxes. But the property tax levy, which is the total amount the city aims to collect and which the city alone determines, has jumped to $27.7 billion from $20.1 billion when he took o� ce four years ago.

Perhaps the mayor is confused be-cause the average citywide property tax rate he inherited, precisely 12.283%, has remained unchanged. However, no property owner pays that rate, and the mayor doesn’t actually set it. What he determines is the property tax levy. � at has increased year a� er year, thanks to rising property values, and will grow by $1.9 billion in the � scal year starting July 1.

While it is surprising that de Blasio is not accurately explaining how our property tax works, it is understand-able. � e system is opaque and bewil-dering. But whether he misunderstands it or is being disingenuous, it is cause for concern for all New Yorkers.

� e city should consider adopting a law requiring that when property as-

sessments rise, it reduces rates to keep the tax levy � at, or obtain approval for the resulting tax increase.

Such “truth in taxation laws” are in place in Maryland, Tennessee, Tex-as, Utah and Virginia. Before the City Council adopts the annual budget, the city would have to hold public hearings to explain if and why a higher levy was warranted.

If the city doesn’t act, the state should. Some jurisdictions, including New York state, have addressed taxpay-er discontent by limiting how much the property tax levy can climb each year. Except in New York City, state law limits localities to increases of 2% or the rate of in� ation, whichever is less. So while the city’s property tax levy has increased dramatically since 2013, other jurisdic-tions have seen modest increases.

For example, the combined levy increase since 2013 for Bu� alo, Roch-ester, Syracuse, Utica and Yonkers has been 5.4%, and just 4.3% for Nassau, Su� olk and Westchester counties—a far cry from the 38% increase in New York City during that time.

Had the city been subject to the cap, the levy today would be only 10.4% higher than it was at the beginning of the mayor’s tenure, or $22.2 billion. � at would, in theory, have le� $5.5 bil-lion more in New Yorkers’ pockets this year. For a population of 8.55 million, that’s an average of $643 per person.

Before we can � x the system, it is im-portant that all New Yorkers know the facts about the city’s property tax and how it a� ects them individually. I tried to do this when I was the city’s � nance commissioner from 2002 to 2009, but explanations on billing statements only go so far.

Among other things, people should understand why their property tax bill is higher when the rate has not increased. � e property tax is too important a rev-enue source—it funds schools, police, � re� ghters, libraries, sanitation services and other government operations—to be shrouded in misinformation.

We need to clear the fog obscuring how the property tax works so a fair and equitable system can emerge. ■

Martha Stark is policy director for Tax Equity Now New York, a coalition of homeowners, civil-justice organizations and rental-property owners suing the city to reform the property tax system, which it calls discriminatory and unfair.

If the mayor didn’t raise property taxes, who did?As levy goes up, we need reform, not doublespeak BY MARTHA STARK

PROPERTY TAX LEVY INCREASE, 2013–2017

OPAQUE SYSTEM: The only thing most New Yorkers know about property taxes is that they keep going up.

0 20% 40%

New York City

38%

Buffalo, Rochester, Syracuse, Utica and Yonkers

5.4%

Nassau, Suffolk and Westchester counties

4.3%

How outer-borough New Yorkers get to work Incomes of outer-borough residents commuting to Manhattan by car

31%

25%

29%

11%

1%

4%

Mass transit to places other than Manhattan

Mass transit to Manhattan

Other modes to Manhattan

By car to Manhattan

Other modes not to Manhattan

By car not to Manhattan

4%

12%

28%

55%

Poor Nearpoor

Moderateincome

Higher income

SOURCE: Community Service Society of New York

4%

12%

28%

55%

OP-ED

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HE BLAMES BIKESI enjoyed “De Blasio warms a bit to congestion pricing as Cuomo plan leaks” (CrainsNewYork.com). What a crisis, but it is deliberately created.

When you install bike lanes that cater to the lowest- velocity, lowest- capacity and lowest- density mode of transportation, you throttle tra� c as you give up 25% of the roadway to an unproduc-tive and slow method. When you place stanchions, planters and other obstructions in the roadway to destroy parking spots, you create confusion for drivers trying to stop. When you devote almost all the tra� c police to enforcement (revenue gathering) rather than coordination, you get gridlock.JOHN WETHERHOLD Manhattan

NIMBY? NAH“Who’s afraid of winning Amazon? Sadly, quite a few

New Yorkers” (Feb. 5) misrep-resented my position on the Tech Hub planned for East 14th Street. � e editorial’s premise is that tech compa-nies bring jobs to the city and adding thousands of tech workers will have minimal impact on rents, claiming that despite the city gaining 502,000 jobs in the past � ve years, “housing costs have actually leveled o� .”

Asking rents for vacant market-rate apartments may have leveled o� citywide recently, but the NYU Furman Center’s annual report on the city’s housing found that in Community District 3, where the Tech Hub is planned, the median asking rent on newly vacant units jumped from $1,728 in 2010 to $3,150 in 2016, an 82% increase. With the surge in asking rents for such units, tenants have come under siege, as speculators � ush with “predatory equity” have bought up rent-stabilized

buildings with the aim of de-regulating them by any means necessary.

It is with the loss of a� ordable housing in mind that community groups have pushed for not just stronger regulatory protections for ten-ants but also appropriate re-zonings, including contextual and mandatory inclusionary zoning, to reduce the risk of demolition and to encourage mixed- income development.

In the areas near the planned Tech Hub, the Greenwich Village Society for Historic Preservation, Cooper Square Committee and other organizations have sought reasonable amendments to bring the commercial zoning in line with the built hous-ing stock. Some 90% of the buildings in the � ird and Fourth avenues corridor below East 14th Street have a built commercial � oor-area ratio of 2.0 or less. However, current zoning allows for new

buildings with a commercial FAR of 6.0 .

Roughly 60% of the build-ings have a built residential FAR under 4.0. Given these disparities, speculators have enormous incentive to buy up several adjacent proper-ties in this emerging Silicon Alley, buy out the remaining rent-stabilized tenants, tear down the buildings and put up o� ces for tech companies. � is is not hypothetical. It is already happening.

Our organizations are not willing to accept a trade-o� that creates jobs for some at the expense of our neighbors’ homes and one that complete-ly transforms a residential community with many long-term tenants into a commer-cial district. � e tech industry is also predominantly white (62%) and male (60%), ac-cording to a 2015 study by the Center for an Urban Future.

My organization and many others can support a Tech

Hub in Union Square if there are ironclad commitments to ensuring that the tech- education and job-training programs that the hub will contain truly serve the most disadvantaged segments of our community and the space being made available to tech startups bene� ts mi-nority- and women-owned businesses.

We also want to see any ap-proval of the Tech Hub linked to a � rm commitment by the city to lower the commercial FAR between � ird Avenue and Broadway below East 14th Street to provide more protection for residential residents who have a target on their back. � e rezoning needs to happen before the Tech Hub is completed or it will be a double-edged sword that cuts down a historic neighborhood.STEVE HERRICKExecutive directorCooper Square Committee


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Business executives have not forgotten civic dutyGREG DAVID is free to question the political clout of the city’s business community, but he has no basis for his doubts about the commitment of today’s business leaders to a � rst-rate transit system (“As subway goes down the tubes, business sits on its hands,” published Feb. 5).

Literally every busi-ness-backed civic, industry and advocacy organization has put the maintenance and modernization of the Metropolitan Transportation Authority at the top of its agenda. � e Partnership for New York City, Regional Plan Association, Citizens Budget Commission, Association for

a Better New York, New York Building Congress, Real Estate Board of New York and many transit and environmental advocacy groups are sub-stantially funded by business and rely on the expertise of the business community to inform their research, plan-ning, advocacy and outreach activities on behalf of im-proving our transportation infrastructure.

Nostalgia about how great things were in the past is con-tradicted by the fact that New York City transit is, despite its problems, in considerably better shape today than in the last decades of the 20th cen-tury. We intend to continue working with MTA leadership, as well as the governor, mayor, state Legislature and City Council, to keep it that way.

More senior business executives live, work and are deeply engaged in the � ve bor-oughs now than at any time I can remember. � e fact that David does not know their names is probably more a function of their vast numbers than anything else.KATHRYN WYLDEPresident and CEOPartnership for New York City

CRAIN’S WELCOMES SUBMISSIONS to its opinion pages. Send letters to [email protected]. Send op-eds of 500 words or fewer to [email protected]. Please include the writer’s name, company, address and telephone number. Crain’s reserves the right to edit submissions for clarity.

WYLDE

LAW DESERVES AN FUdi Meirav’s op-ed, “How to earn an A for your building” (CrainsNewYork.com), sadly misses the mark.

Meirav’s assertion that recently enacted Local Law 33 is a key part of the city’s plan to reduce greenhouse-gas emissions by 80% by 2050 is simplistic. While posting letter grades will raise public consciousness on the issue of sustainability, it will also misrepresent a building’s true energy e� ciency and do noth-ing to reduce emissions.

� e law takes a grade-school approach, assigning an A to a building with an Ener-gy Star score of 90 or above, though the Environmental Protection Agency—the federal o� ce that administers Energy Star—recognizes a building scoring 75 as a top performer. Under the city’s law, that building would receive a B.

Meirav writes that HVAC load-reduction technology, a form of demand-control ventilation, realizes energy e� ciencies that will push buildings into the A range under Local Law 33. � at will not be true for most New

York City buildings. It will only incrementally improve a building’s Energy Star score because the technology a� ects only base-building energy consumption, which rep-resents a fraction of a build-ing’s energy use.

Tenants consume the vast majority of energy through lighting, computing and other power demands. Moreover, installing demand-control ventilation in buildings bigger than 50,000 square feet would reduce greenhouse-gas emissions by an average of just 1.2%.

Keep in mind that the city and the state have the lowest

emissions per capita in the country. City buildings’ emis-sions fell 19% between 1990 and 2015, despite a historic construction boom, and will continue to do so through technological advances and sensible retro� ts. Going forward, we need to adjust Local Law 33’s misguided scoring system and � nd ways to promote tenants’ awareness of energy e� ciency.CARL HUMGeneral counselReal Estate Board of New YorkDANIEL AVERYDirector of legislative affairsBuilding Owners & Managers Association of Greater New York

BUILDINGS have cut emissions by 19% but are targeted by a new law.

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THE LIST NY AREA’S LARGEST MERGERS & ACQUISITIONSDeals announced in 2017; ranked by value

MERGER PLATEAUFollowing a surge in value in 2016, the total value of M&A activity in 2017 returned to the level of 2015.

TARGET/ BUYERS/ DEAL VALUE PRIMARY INDUSTRY DATE DATELOCATION LOCATION IN MILLIONS OF TARGET BUSINESS ANNOUNCED CLOSED

Twenty-First Century Fox Inc. Walt Disney Co. $77,071.7 Movies and entertainment 12/13 - 1 Manhattan Burbank, Calif.

C.R. Bard Inc.. Becton, Dickinson and Co. $25,785.2 Health care equipment 4/23 12/29 2 Murray Hill, N.J. Franklin Lakes, N.J.

Calpine Corp.1 Access Industries6 $17,337.7 Independent power producers 8/17 - 3 Houston Toronto and energy traders

Bradford & Bingley2 Blackstone Group7 $14,777.0 �ri�s and mortgage �nance 3/31 3/31 4 United Kingdom Manhattan

Spreads business of Unilever KKR & Co. $8,032.3 Packaged foods and meats 12/15 - 5 United Kingdom Manhattan

Uber Technologies Inc.3 General Atlantic8 $8,000.0 Application so�ware 11/12 1/18 6 San Francisco Manhattan

Staples Inc. Sycamore Partners $7,903.7 Specialty stores 6/28 9/12 7 Framingham, Mass. Manhattan

TerraForm Power Inc.3 Orion US Holdings9 $6,229.4 Renewable electricity 3/6 10/16 8 Bethesda, Md. Manhattan

Toshiba Corp. King Street Capital Management10 $5,313.3 Industrial conglomerates 11/19 12/5 9 Tokyo, Japan Manhattan

West Corp. Apollo Global Management $5,128.3 O�ce services and supplies 5/9 10/10 10 Omaha, Neb. Manhattan

Equis Energy Pte. Ltd. Global Infrastructure Partners11 $5,000.0 Renewable electricity 10/24 1/19 11 Singapore Manhattan

Aon4 Blackstone Group $4,800.0 Internet so�ware and services 2/9 5/1 12 United Kingdom Manhattan

Foreclosed real estate assets5 Cerberus Capital Management $4,745.0 Real estate operating companies 11/29 - 13 Spain Manhattan

Kindred Healthcare Inc. Welsh, Carson, Anderson & Stowe12 $4,399.6 Health care facilities 12/19 - 14 Louisville, Ky. Manhattan

USI Insurance Services KKR & Co.13 $4,300.0 Insurance brokers 3/17 5/16 15 Valhalla, N.Y. Manhattan

Paysafe Group Ltd. Blackstone Group14 $4,285.8 Data processing and 7/21 12/20 16 Douglas, Isle of Man Manhattan outsourced services

Sponda Blackstone Group15 $4,049.0 Real estate operating companies 6/5 8/4 17 Helsinki, Finland Manhattan

China Internet Plus Group Coatue Management16 $4,000.0 Internet so�ware and services 10/13 10/19 18 Beijing Manhattan

WebMD Health Corp. Total Attorneys $3,751.3 Internet so�ware and services 7/24 9/14 19 Manhattan Chicago

Fidelis Care Centene Corp. $3,750.0 Life and health insurance 9/12 - 20 Rego Park, N.Y. St. Louis, Mo.

Portfolio of U.S. �rst lien residential DLJ Mortgage Capital Inc. $3,396.0 �ri�s and mortgage �nance 3/8 3/8 21 mortgage loans Manhattan United States

Bureau van Dijk Electronic Publishing Moody’s Analytics Inc. $3,292.8 Publishing 5/15 8/10 22 Amsterdam Manhattan

Q-Park KKR & Co.17 $3,287.3 Environmental and facilities services 5/17 - 23 Maastricht, Netherlands Manhattan

Fortress Investment Group SoftBank Group Corp. $3,265.5 Asset management and custody banks 2/14 12/27 24 Manhattan Tokyo

Time Inc. Meredith Corp. $3,137.4 Publishing 11/26 - 25 Manhattan Des Moines, Iowa

Tec CTL Inc. Milost Global Inc. $3,000.0 Integrated oil and gas 6/9 - 26 Manhattan Manhattan

WeWork Management3 SoftBank Group Corp.18 $3,000.0 Real estate operating companies 8/24 - 26 Manhattan Tokyo

CBS Radio Inc. Entercom Communications Corp. $2,836.9 Broadcasting 2/2 11/17 28 Manhattan Bala Cynwyd, Pa.

Kate Spade & Co. Tapestry Inc. $2,776.4 Apparel, accessories and luxury goods 5/7 7/10 29 Manhattan Manhattan

Oldcastle Distribution Inc. Beacon Roo�ng Supply Inc. $2,625.0 Trading companies and distributors 8/24 1/2 30 East Rutherford, N.J. Herndon, Va.

New York area includes New York City and Nassau, Suffolk and Westchester counties in New York, and Bergen, Essex, Hudson and Union counties in New Jersey. List includes announced transactions for which terms were disclosed and that were not canceled and in which a buyer or target was based in the New York area. Includes private-equity deals. Data on announced deals are as of Jan. 31, 2018. In case of a tie in value, deals are listed in alphabetical order by target. 1-95.08%. 2-104,000 buy-to-let mortgages. 3-Unknown minority stake. 4-Benefits administration and human resources business process outsourcing platform. 5-80%. Includes necessary assets and employees to manage the business. Additional parties for the corresponding footnotes listed above: 6-Canada Pension Plan Investment Board; Energy Capital Partners. 7-Prudential. 8-Sequoia Capital; SoftBank Group Corp.; TPG Capital; Tencent Holdings Ltd.; Dragoneer Investment Group. 9-Brookfield Renewable Partners. 10-Effissimo Capital Management Pte Ltd. 11-Public Sector Pension Investment Board; CIC Capital Corp. 12-TPG Capital; Humana Inc. 13-Caisse de dépôt et placement du Québec; individual investors. 14-CVC Capital Partners Ltd. 15-Andersson Real Estate Investment Management. 16-IDG Capital Partners; Priceline Group Inc.; GIC Pte. Ltd.; Canada Pension Plan Investment Board; Mubadala Investment Co.; Tiger Global Management; Sequoia Capital China; TrustBridge Partners; China Development Bank Capital Corp.; Tencent Holdings Ltd. 17-EDF Invest. 18-SoftBank Investment Advisers. Source: S&P Global, with additional research by Gerald Schifman.

TRENDS

RAW DEALSAfter a steep drop from 2015 to 2016, the total number of M&A deals including NYC companies dropped an additional 3% in 2017.

-2.8%DROP IN the total number of M&A deals in which an

NYC-based company was the buyer or target in 2017; nationwide, the drop was 9.1%

INDUSTRY LEADERSAs per usual, Crain’s top 30 was punctuated by merger activity in the energy, software, �nance and real estate sectors.

2013 2014 2015 2016 2017

$389

$327

$424$457

$422

2013 2014 2015 2016 2017

■ Total value (in billions)

■ Total

3,669

4,403 4,4624,068 3,955

Source: S&P Global

Energy■ Number of deals

4Software

4

Finance

3Real estate

3

Health care2

Insurance2

Publishing2

Broadcasting1

1

1

1

1

1

1

1

Clothing

Data processing & outsourced services

Entertainment

Environmental & facilities services

Food

Specialty stores

Trading companies and distribution

Industrial conglomerates

Of�ce services & supplies1

1

FINANCE | M&A FEVER

While mergers and acquisi-tions came down in New York in 2017, the drop in deals was steeper in the country than in the city. Overall, M&A activity remains robust in New York.

P014_CN_20180212.indd 14 2/8/18 6:17 PM

New York’s private-equity �rms are leading the M&A charge BY AARON ELSTEIN


A select group of Wall Street executives is buying up assets at a pace that has rarely been seen before. �e wallets of these big-game hunters—private-equity executives—collectively carry more than $1 trillion in cash, which they call dry powder, plus seemingly endless lines of

credit. Almost no corporate target is outside their crosshairs.Last year, helped by a relatively strong dollar and low interest

rates, New York’s PE executives spent like a bunch of giddy tourists. �ey were buyers in 15 of the 20 largest deals involving city-based companies last year, according to Crain’s research. In all, they had a hand in 4,191 deals worldwide, worth a total of $347 billion.

More big deals are on the way because the �rms are rolling in cash. And the recent market volatility might be more good news for them, as it could prompt weaker companies to sell at a discount. Last year Leon Black’s Apollo Global Management raised a record $24.6 billion private-equity fund in just six months, less than half the time it took Blackstone Group to raise a then-record $6.5 bil-lion in 2002. North American private-equity �rms raised a record $272 billion in new cash last year, according to research �rm Preqin.

�e king of the heap is undoubtedly Blackstone, long one of Wall Street’s most successful wheelers and dealers. �e �rm spent $50 billion on acquisitions last year, returned $55 billion from selling o� previously acquired companies and pulled in $108 billion in new investor cash.

“I can’t even say that number with a straight face,” Blackstone President Tony James said of the infusion of funds during a conference call this month.

“�e scale of our operations today is something I couldn’t have imagined when I started this business with my partner, Pete Peterson, 32 years ago,” added Blackstone co-founder Stephen Schwarzman who, based on those 2017 returns, could become the �rst CEO of a publicly traded company to earn $1 billion in single year.

Schwarzman and his fellow M&A titans didn’t invent private equity, but they were early adopters. �e classic playbook—buy struggling companies with bor-rowed money, get rid of all but their most essential assets, boost performance

and then sell—was called a bootstrap until it was rebranded as a leveraged buy-out in the 1980s.

To counter their pop-culture image as hatchet men who buy, strip and �ip com-panies, Schwarzman helped organize the industry’s �rst trade group just before

the �nancial crisis—what became the Private Equity Growth Capital Council, now the American Investment Council.

Whatever it’s called, the PE �eld has doubled in size during the past decade and today counts 5,000 �rms con-trolling more than $2.8 trillion in assets, according to Preqin. Private equity is now where Wall Street’s biggest fortunes are made. Forbes estimated that there

were 25 private-equity billionaires in 2016. Schwarzman’s net worth is pegged at $11.8 billion, KKR’s Henry Kravis’ at $5 billion. PE executives’ vast earnings are taxed at the advantageous capital-gains rate rather than as ordinary income, a lucrative loophole that survived the new tax changes.

Bulls on a shopping spree

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“THE SCALE OF OUR OPERATIONS IS SOMETHING I COULDN’T HAVE IMAGINED WHEN I STARTED THIS

BUSINESS 32 YEARS AGO”

ROCK STAR: With $55 billion in returns and $108 billion in new investor cash in 2017, Blackstone co-founder Schwarzman could become the �rst CEO of a publicly traded company to earn $1 billion in a single year.

P015_P016_CN_20180212.indd 15 2/8/18 4:41 PM

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Schwarzman is a prominent adviser and fund-raiser for President Donald Trump, and James is a leading Democratic contributor. Arguably the greatest gi� the � rm ever got from Washing-ton came when Obama administration regulators helped clear the competitive � eld by nudging com-mercial banks out of PE investing in the wake of the � nancial crisis.

Future gains� anks to fewer big competitors and years of

rock-bottom interest rates, private-equity � rms’ buying sprees have produced strong results for their investors. During the past decade private equity has generated annualized returns of 8.5% for public pension plans, twice the returns those plans earned from investing in stocks, according to Preqin. � at fact is a major selling point to pension funds, many of which have invested in private equity in hopes the returns will narrow the o� en-wide gap between what they have to pay current retirees and the size of their future commitments.

New York City’s pension sys-tem, for instance, has $11 billion in private-equity investments, which have returned 9.9% since 1997. � at return is below the 13% target set by the funds, which have paid he� y fees for that underperfor-mance because PE managers typ-ically collect 2% of the assets and 20% of the pro� ts. Still, many insti-tutional investors continue to pin their hopes on private equity. � e New York State Common Retire-ment Fund, for example, predicts that its PE port folio will return 7.75% annually over time, better than stocks, bonds, real estate or any other assets the fund currently invests in.

Although plenty of PE deals still rely on the “buy, strip, � ip” textbook, many � rms are looking to invest in promising Silicon Valley ventures. Last year KKR

joined a group that invested $1.5 bil-lion in Ly� , while General Atlantic and TPG joined a consortium that put $8 billion into Uber.

� e � rms are also big investors in New York’s own burgeoning tech scene. Kenneth Ziegler, chief execu-tive of cloud-computing-services pro-vider Logicworks of Manhattan, said his company elected to be acquired by a private-equity � rm for $135 million in late 2016 a� er � elding bids from 15 potential suitors. � e new owner has given Logicworks the resources to double its sta� to 150 and pursue new business in a fast-growing � eld.

“Nothing is weighing us down now,” Ziegler said. “We can really go for it.”

� e buyer was Pamplona Capital Management of London—a � tting moniker, in Ziegler’s estimation. “� ey had a bullish point of view,” he said. ■

ALL EARSNO 2017 DEAL WAS MORE SURPRISINGthan Rupert Murdoch’s decision to sell most of his media empire to Disney for $77 billion—No. 1 on Crain’s list (page 14). If the merger is completed, Disney will control a Hollywood colossus that includes stakes in streaming ser-vice Hulu as well as the Yes Network and sev-eral other regional sports channels. And it will account for 40% of total box-of� ce receipts.

But it’s still a big “if,” as the federal govern-ment might not approve the deal as con-structed—despite Murdoch being on President Donald Trump’s speed dial. After all, the pro-posed merger between AT&T and Time Warner has been held up by the Justice Department, which has argued that the combined company would have too much power to raise rates on cable and satellite consumers.

But there may be a way for Disney to avoid potential entanglements: Make more deals.

To persuade antitrust authorities to sign off on the Fox merger, Disney could sell Hulu to, say, Comcast. It also could shed Fox Search-light, a studio that focuses on the sort of � lms that don’t � t well with Disney’s blockbuster franchises.

If Disney would rather retain those assets, analyst Richard Green� eld at BTIG Research said, it has other options to placate the Feds. It could, for instance, dim its baseball broad-casting power by selling some regional sports networks, such as Yes—a potentially bitter pill to swallow given the Yankees’ expected resurgence.

Another intriguing prospect, according to BTIG, is for Knicks owner James Dolan to buy Yes and consolidate it with his MSG Networks. Dolan has been trying to sell those cable channels for more than a year, but 20 years ago his father, Charles, fought to buy a stake in the Yankees. Perhaps acquiring the team’s cable channel is the next-best thing.

Meanwhile, more media companies are likely to merge, especially as Facebook and Amazon morph into broadcasting networks. BTIG reckons Amazon soon will acquire rights to Thursday Night Football for $600 million. If that happens, and even if it doesn’t, look for CBS and Viacom to rekindle their merger talks and hammer out a reuni� cation.

— A.E.

FINANCE | M&A FEVER

RETAIL BUYSEVERYONE KNOWS THAT RETAILERS are being done in by the rise of e-commerce. Radio Shack, which had 116 stores here a decade ago, is down to its last three. Duane Reade closed 43 stores in the city last year. Whole Foods raced into Amazon’s arms.

Amid last year’s carnage, private-equity � rm Sycamore Partners stepped in and paid $6.9 billion for Staples (No. 7), which, according to the Center for an Urban Future, has closed 25% of its stores in the city since 2010. So why is Sycamore buying what would appear to be a wilting asset?

Launched in 2011 by Stefan Kaluzny, a native New Yorker who shuns the press and declined to be interviewed, Sycamore acquired the ailing Talbots chain in 2012 for $193 mil-lion, an investment that netted a six-fold return, according to Bloomberg News. Kaluzny, a co-founder of Chicago-based grocery chain Delray Farms, has since made big bets on shoe sellers Nine West and Stuart Weitzman. Last year Sycamore bought The Limited Stores’ brand and e-commerce business after the retailer � led for bankruptcy.

Staples, the � rm’s biggest bet, looks to be yet another retailer in a death spiral, with same-store sales declining every quarter since at least 2013. But about 60% of its of� ce-supply sales happen online, so perhaps it has a future without all that brick and mortar.

Although Kaluzny described Staples as an “iconic brand,” he didn’t shell out much for it, paying a price equal to 0.35% of Staples’ revenue, making it one of the cheapest big PE deals on record, according to Bloomberg. Plus, the $6.9 billion price wasn’t as formidable as it might seem, as Sycamore put up just $1.6 bil-lion in cash and borrowed the rest—standard fare in the world of leveraged buyouts. But the new debt wrecked Staples’ credit rating, which Standard & Poor’s cut four notches: from investment grade to a deep-junk B+.

With more than $3.5 billion under man-agement, Sycamore is small by private-equity standards, but the � rm certainly has no short-age of ailing retailers to sift through. Macy’s stock price has sunk by 65%, Ralph Lauren’s is down 42%, and J.C. Penney’s market value is now just $1.1 billion.

MERGER RXPRACTICALLY EVERY SECTOR of the health care industry caught the consolidation bug last year, including hospitals, health insur-ers, medical suppliers and pharmacies.

It’s no coincidence. “Consolidation breeds consolidation,” said Allen Miller, CEO of con-sulting � rm COPE Health Solutions of Manhat-tan. “People get threatened and concerned when they start to see other folks potentially gaining a leg up.”

In the hospital sector, there were 115 transactions nationwide, a 13% increase over the previous year, according to Kaufman, Hall & Associates of Skokie, Ill. Six of those deals were in New York state, including Mount Sinai Health System’s arrangement to become the active parent of South Nassau Communities Hospital.

But as hospitals gain market clout, sup-pliers feel threatened. Becton Dickinson of Franklin Lakes, N.J., announced in April that it planned to acquire fellow medical-supply manufacturer C.R. Bard for $25.8 billion to broaden its product portfolio. The deal (No. 2) closed in December. The company was moti-vated in part by hospital consolidation, Vincent Forlenza, Becton Dickinson’s CEO, told The Wall Street Journal.

Buyers also made deals last year to expand into new markets. St. Louis–based Cen-tene Corp., the largest operator of Medicaid managed-care plans nationwide, agreed in September to acquire nonpro� t insurer Fidelis Care of Queens for $3.75 billion in cash and stock (No. 20).

Some acquisitions have bridged sectors. CVS’ deal to buy Aetna for $69 billion links the retailer and pharmacy-bene� t manager with an insurer, offering the opportunity to lower Aetna members’ health costs by managing their chronic diseases at CVS clinics.

Perhaps the most industry buzz surrounds the joint venture between Amazon, Berkshire Hathaway and JPMorgan. Details have been scant, but the new company’s stated goal of lowering employer health care costs while improving employee satisfaction is telling.

“They’re frustrated with the pace of change,” said Anu Singh, managing director at Kaufman Hall.

HOME COOKING

4,191NUMBER OF M&A transactions worldwide that involved a New York–based private-equity � rm

$347BTOTAL COMBINED value of those deals

— JONATHAN LAMANTIA— A.E.

of the

P015_P016_CN_20180212.indd 16 2/8/18 4:41 PM

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TABLEHow a group of female entrepreneurs

took advantage of low rents and community support to launch a Harlem restaurant renaissance

BY CARA EISENPRESS

On Edgecombe Avenue and West 139th Street, �e Edge Har-lem café presents a mash-up menu of British, American and Jamaican fare, including jerk chicken Caesar salad. Twenty blocks down, on Frederick Douglass Boulevard and West 119th Street, Vinateria specializes in Italian and Spanish wine and cuisine. Nearby, there’s LoLo’s Seafood Shack for

Caribbean-inspired food, Lido for Italian and Corner Social for pub fare. �e Cecil just reopened as a steakhouse. And then there’s Sylvia’s, famous for its Southern comfort food.

A collection of so many thriving restaurants in a single neighborhood is hardly unusual here, especially in a community with 330,000 residents—more than Pittsburgh. But these spots—like a third of Harlem’s top eateries—are owned by women, mainly women of color from the neighborhood, who found a hospitable business environment and community of like-minded entrepre-neurs. Elsewhere in the city, women own just 1 in 10 top restaurants, and male chefs continue to dominate the culinary landscape.

“�ey took the risk,” said Kaaryn Simmons, director of the Columbia- Harlem Small Business Development Center. “�ese women have gone out of their way to seek assistance to grow. �ey’re deliberate, focused on creating great businesses and committed to the community.”

Restaurants have been booming in Harlem for the past decade or so, thanks to a wealthier population moving in, a rich cultural history that attracts hun-gry tourists, a community that supports local businesses and boosterism by Top Chef winner Marcus Samuelsson, owner of Red Rooster.

By leading the boom, Harlem’s female restaurateurs are a preview of what the industry looks like with women at the helm. And their stories provide a glimpse of the barriers they must overcome not only to open but also to grow a business. �at future is here: Nationally the number of women-owned restaurants outpaced overall restaurant growth from 2007 to 2012, jumping by 40% while the total number of restaurants increased by just 12%. In New York the amount of women-owned accommodation and food-services businesses soared by 45% between 2011 and 2016, according to the Center for an Urban Future, which sees the expansion of women-owned eateries as a way to bolster the city’s small-business ecosystem.

RESTAURANTS | UPTOWN EATS

OUT-OF-POCKET EXPENSE: Selling their Williamsburg apartment gave Young and her chef husband enough cash to bring a taste of the Caribbean to Harlem.


P017_P019_CN_20180212.indd 17 2/8/18 5:56 PM


But the economic conditions that once greeted the Harlem crowd have tightened, suggest-ing that opportunities for female entrepreneurs are closing.

Well-trod pathIn 1901 Lillian Harris Dean,

known as Pig Foot Mary, be-came Harlem’s �rst female cu-linary entrepreneur when she sold boiled pigs’ feet to fellow displaced black Southerners out of a baby carriage on 135th Street. Enough Mississippians were hungering for the snack that she was able to buy an apartment building in 1917.

Fi�y years later, Sylvia Woods, who had worked as a waitress in the neighborhood, opened Sylvia’s. Her ribs and greens �rst drew locals but soon attracted downtowners and tourists who wanted to soak up some of Harlem’s renowned artistic energy. “As a market, Harlem has been driven by food,” said Nikoa Evans-Hendrick, executive director of Harlem Park to Park, a business membership organization to which many of the restaurants belong.

By 2005, a�er decades of crime and poverty had besieged Harlem, the neighborhood was again hun-gering for some good eats. With $300,000 she had been saving in her mattress, lifelong Harlem resident Melba Wilson opened Melba’s on West 114th Street, which she said was a notorious block for drugs.

“�ey call me the godmama,” she said. “It takes someone to start.”

From the beginning, Wilson’s surprised accoun-tant would call each quarter and say, “You’re looking really good.” �e popularity transformed Melba’s into a pro�table business by year two, and this year she was able to expand in order to seat more than 100 diners. Rent was originally $2,500 a month but has gone up considerably, Wilson said.

Melba’s sells fried chicken and wa�es at a�ord-able prices. And Wilson taps in to the demand of a neighborhood underserved by eateries. “�ere are just not as many restaurants per square foot in Har-lem as in other parts of the city,” said Herb Karlitz, an event marketer who organizes the annual Harlem EatUp festival. For �rst-time restaurateurs, uptown was a place where “they think, Maybe I stand a �ght-ing chance.”

Sisters Juliet and Justine Masters, a chef and a real estate broker, respectively, had a similar thought in 2014. If they could build a place where they want-ed to eat themselves, others would come too. �ree years ago they decided to open �e Edge Harlem. It sits on a residential block far north of the strips on Lenox Avenue and Frederick Douglass Boulevard, where several restaurants had followed Melba’s path to success.

“�e building we’re located in has 90 apartments,” said Juliet Masters. “Even if we just feed the peo-ple in this building, we’ll do OK,” she recalled their thinking at the time. “It was this intuitive thing: If we put something here that is good quality, we’ll get the residents.”

Many more than 90 households now go to �e Edge. Lines at brunch can wind around the block. Diners come from all over the city and beyond.

Community supportTo build the 1,300-square-foot reclaimed wood–

lined restaurant, the Masters sisters �rst raised $100,000 before realizing they’d need at least double that, still less than the $500,000 most experts say it takes to start a café downtown. A $25,000 loan from Chase bought half the equipment; money from their

savings, their parents and two private investors com-pleted the �nancing. It took a year from lease sign-ing to opening day, but the landlord allowed them to defer the �rst year’s rent payments.

At �rst �e Edge sold only co�ee and pastries; brunch and dinner came later—once the gas was in-stalled. Even with the slow rollout, they made mon-ey from the get-go. “�e landscape is ripe for new businesses to come in and do well,” said Justine Mas-ters. “It’s di�erent from trying to do this downtown, where the overhead is so high. �is neighborhood needs amenities.”

Bringing those amenities was an intentional process. By the end of the 2000s, business and com-munity leaders had come together to ensure that residents would bene�t from redevelopment. �e Columbia Community Business Program, Harlem Park to Park and the Frederick Douglass Boulevard Alliance had formed to provide education and ex-pertise to new businesses, some in an academic set-ting. With their assistance, entrepreneurs without previous hospitality experience were able to think through their plans thoroughly. Still, loans and in-vestment weren’t available to most—a problem com-mon to new business owners. Women have a par-ticularly hard time accessing cash. In New York in 2014, female entrepreneurs received just 12% of the total dollars lent.

Wilson and others relied on their savings or eq-uity from their homes to open their restaurants. It wasn’t until about a decade a�er Wilson opened Melba’s that she received a loan to expand the restaurant. �e task was surprisingly di�cult. “�e bank I was dealing with at the time wanted me to put in my lease as collateral,” she said. “I was bringing in $1 million on a yearly basis. �at was insane.” She borrowed money from the Upper Manhattan Em-powerment Zone and Carver Federal Savings Bank, a community bank, instead.

Leticia Skai Young, who grew up in Harlem, moved back to the neighborhood a�er selling her home in Williamsburg. She had worked her way up in hospitality management to opening restau-rants for a big organization. And she had married an executive chef with experience at Union Square’s �e Co�ee Shop. So when she followed her gut and decided to undertake a passion project, which be-came LoLo’s Seafood Shack, she and her husband, Raymond Mohan, were ready.

�ey took inspiration for the food and the de-cor from both New England and the Caribbean and named the spot in tribute to the locally owned, locally operated seaside shacks in St. Martin. �ey opened in winter 2014. “I really �nd that it’s a way to express ourselves creatively,” Young said of running her 1,000-square-foot eatery, which includes a back-yard beach shack. Sales grew 50% the second year and about 35% in the third.

Just as the inspiration came from within, so did the funding. Young and her husband were able to buy a brownstone and sign a lease for the restaurant on the proceeds of their Brooklyn home sale. But a network in the community was crucial for pro-viding the mentorship and aca-demic support that have turned LoLo’s into a mainstay.

Young is in her second year at the Columbia Community Busi-ness Program, which has helped her focus on building a lean but stable enterprise and maximiz-ing growth, she said.

Other forms of mentorship are less formal. “I don’t feel the sort of one-upmanship compe-

tition that you feel in other neighborhoods,” said Yvette Leeper-Bueno, owner of Vinateria and vice president of the Frederick Douglass Boulevard Al-liance. “I know the names and have the numbers of so many businesses in the neighborhood. I can call people on the phone and ask them ‘So who do you use for linen?’ and so on.”

Adding to that sense of community is that many of the women are from the neighborhood. “Since I lived here, I felt like I was opening in a neighbor-hood that wanted us to succeed,” said Leeper-Bueno. She signed “one of the longer leases” for Vinateria’s 1,300-square-foot corner space, she said—which has given her the ability to pace her growth.

Wilson said she has always had two goals at Mel-ba’s: to cook great food and to serve the people living around her.

“Part of it was to show people—kids from my neighborhood—that you can come from Harlem, from the inner city, and own your own business and employ kids from your community,” she said. “We have always kept prices a�ordable for the neighbor-hood.” Dozens of locals work at the restaurants.

But the economic accessibility for new businesses may not last. “�e rents are crazy,” said Colum-bia-Harlem’s Simmons. “We don’t have as many clients saying, ‘I want to open a restaurant in Har-lem.’ �ey were priced out two to three years ago.” It’s one thing to take a risk on a new business; it’s an-other thing to jump in for $10,000 in monthly rent when you simply can’t sell that many wa�es.

�e average asking rent in the busy 125th Street corridor rose to $140 per square foot in 2015 before sinking to $123 last fall, according to the Real Estate Board of New York. �at would amount to 20% of sales for a 1,600-square-foot restaurant doing $1 mil-lion a year. On less-tra�cked streets, rents are lower; a 1,000-square-foot corner spot on Adam Clayton Powell Jr. Boulevard and West 118th Street is listed for $57 per square foot by John McGuinness, an agent at Compass.

“Rents have doubled,” he said, “but they’re still half of anything below 96th Street.”

Today’s rents might deter newcomers, but the �rst wave of Harlem’s female restaurateurs sometimes found enough early success to consider branching out. Anahi Angelone opened the bar Corner Social in 2012 a�er managing Irish bars downtown for a de-cade. Two years later Corner Social was so successful that she opened a restaurant, Angel of Harlem. Both are pro�table. In the summer she and her partners, including former Time Warner CEO Richard Par-sons, took over �e Cecil Steakhouse as well as Min-ton’s Playhouse, the adjoining restaurant and venue that had closed in 2016. Angelone ascribes her drive to the neighborhood itself.

“�e reason I do what I do is Harlem,” she said. “I love this community.” ■

THE TIPPING POINT: The Masters sisters knew if they built a restaurant they wanted to eat in, others would follow.

SUBJECT | CATEGORYRESTAURANTS | UPTOWN EATS

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Nominate by February 23: crainsnewyork.com/leading-women-in-finance

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IN JULY NICHOLAS LARSEN and Petrushka Bazin Larsen opened Sugar Hill Creamery in a 500-square-foot shop on Lenox Avenue. Lines for their ice cream ran down the block until they sold out, every day for two weeks. The husband-and-wife team knew that their gamble—they used $300,000 from their own funds and a loan from the Upper Manhattan Empowerment Zone—would pay off. But while other ice-cream companies have opened additional stores or added trucks quickly, the Larsens plan to expand by selling pints at wholesale for $5.15 (about $9 at retail) in four of their popular � avors.

“People think it’s cute, like a mom-and-pop,” said Bazin Larsen of their store. “But, no, this is the beginning. Our vision is more expansive.”

Their wholesale venture comes at what looks to be the end of an era for new Harlem eateries, especially those opened by � rst-time business owners. From the late-2000s until Whole Foods opened on West 125th Street in July, the area had both low rents and an enormous population underserved by retailers.

Now the same entrepreneurs who might once have opted to sell in retail spaces are wholesaling products. Their startup costs are lower, since they often launch out of their home and then move to shared commercial kitchens or local accelerators like HBK Incubates, instead of investing $500,000 to out� t a storefront. In 2009 business coalition Harlem Park to Park had nine members, all of which operated out of storefronts.

Today 16% of its 120 members are sell-ing products wholesale, according to Nikoa Evans-Hendricks, executive director. Just a few years ago, Evans-Hendricks said she had to — C.E.

THE NEXT HARLEM FOOD BINGE WILL BE WHOLESALEbeg for participants to join the Harlem Harvest Festival, but now she has to turn folks away.

To ensure that the local entrepreneurs pitching products would be sophisticated enough to sell to national chains, Evans-Hendricks launched the Harlem Local Vendor Partner Program in 2015, in collaboration with the Whole Foods loca-tion, which was then being built . The vendor program lasts six months and pushes entrepreneurs to polish their packaging, production and marketing strategies in order to sign on with vendors quickly. Columbia University came on as a partner in 2016 and has been providing a � ve-week business boot camp to the vendors. In December the most recent cohort was joined by other Harlem businesses at a fair where buyers from Whole Foods, Bed Bath & Beyond and Macy’s met the founders of the up-and-coming businesses. The program also markets its participants’ products on a website and a social channel called Shop Harlem Made.

Under the program’s guidance, limeade company Lima-tion lowered its sugar content, rebranding as a health drink

rather than a Caribbean-inspired elixir. Essie Spice, a four-year-old spice-mix and sauce company founded in Harlem but now based in New Jersey, sells at several

Whole Foods and at ShopRite locations; sales reached $40,000 last year. This year founder Essie Bartels says she’ll expand by introducing grains from Africa and attending the Fancy Food Show, the big annual fair that

connect food makers with buyers. So far 20 of the 60 vendors who went

through the program are on the shelves at Whole Foods; some have gotten orders from other stores in the city or other regions. And their products are on the menu at 50 met-ro-area restaurants.

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HIGH GLASS: Cuffe’s one-woman enterprise imports wines from small vintners around the world.

Selena Cu� e imports wines from South Af-rica and other distant corners of the globe. Rachel Charlupski provides baby-sitting services at hotels, sporting events and other venues. Ryley Lyon sells 3-D printing pens

and specialty coolers. Colin Kamesh Raja and his wife, Angie, market boxing gear and other sporting goods on Amazon.

� ese New York City entrepreneurs run varied businesses, but all have one thing in common: � ey grew revenues beyond $1 million without any employees other than themselves.

Although some nonemployer businesses—the U.S. government’s term for such companies—are part-nerships, most are solo operations. And the number of them is on the rise. Some 35,584 earned between $1 million and $2.49 million in reve-nue in 2015—a 33% increase from 2011, according to Census Bureau data.

But despite that growth rate, such robust earnings are still the exception to the rule. � e average revenue for Manhattan-based nonemployer � rms was $80,830 in 2015, which is 71% more than the national average but a far cry from seven � gures.

What separates Cu� e and others who break the $1 million mark from the many microentrepreneurs

who don’t is the ways they’ve found to extend what one person or team of partners can achieve without adding payroll. In some nonemployer professional services � rms, the secret is commanding high rates from deep-pocketed clients, said Steve King, founder of Emergent Research in Lafayette, Calif., which stud-ies the freelance economy. “People are willing to pay a lot,” he said.

But in many businesses, the secret is stretching ultralean budgets by outsourcing, automating and

hiring contractors and freelancers. � at’s a powerful competitive advantage in the New York City market, where the cost of hiring talent—and � nding a place for them to work—is beyond the budget of most micro-businesses. “It’s expensive,” said Gene Zaino, presi-dent and chief executive o� cer at MBO Partners, a Virginia-based provider of back-o� ce services that studies the self-employed economy. “Brooklyn is as expensive as Manhattan and sometimes even more.”

Cu� e, a Brooklyn resident and graduate of Stan-ford University and Harvard Business School, has grown her business by relying on contractors. She started her � rm, Heritage Link Brands, in 2005, a� er a visit to the Soweto Wine Festival inspired her to help black-owned wineries take root in post- Apartheid South Africa.

Tapping personal savings and zero-interest credit cards, Cu� e, 42, who had been working in marketing at a nonpro� t, made arrangements to import wines

from the Seven Sisters winery, one of the few black-owned wineries in South Africa at the time.

“Over the next two years, I began to plan and plot to bring these wines into the U.S. market,” Cu� e said.

By 2010 her one-woman enter-prise broke the $1 million revenue mark and has continued to grow. Heritage now sells wines from all

over the world.One big factor was relying on a small army of

freelance “brand ambassadors”—typically wine a� -cionados or freelance sommeliers—to sell her wines at events such as holiday tastings at retail stores. Giv-en that her business is heavily seasonal—with 40% to 50% of sales in November and December—Cu� e doesn’t need a year-round sales sta� , and the brand ambassadors welcome the holiday cash.

SMALL BUSINESS | SOLO ACTS

SINGULAR ACHIEVEMENT BY ELAINE POFELDT

A growing number of $1 million businesses have just one employee:the owner

THE SECRET IS STRETCHING ULTRATHIN BUDGETS BY OUTSOURCING,

AUTOMATING AND HIRING CONTRACTORS AND FREELANCERS

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Cu�e also hires her sister, an independent tax consultant, to advise her on regulatory issues and a freelance design-er from Minneapolis to create the labels for her bottles.

Her approach is working. Stores such as Gnarly Vines in Brook-lyn and Whole Foods on the Upper West Side now carry her brands—which include Casa Valduga and Don Gue-rino. But retail is still Cu�e’s smallest distri-bution channel. She has found a niche catering to institutions such as the Brooks Atkinson, Gershwin, Nederland-er and Lunt-Fontanne theaters, as well as landmarks such as the Harvard Club and the World Bank. When her

newest label, Kindred, launches this year, it will be the house wine of the National Museum of African American History and Culture in Washington, D.C.

“Where we have been successful is in not trying to go head-to-head with Mondavi and Gallo,” Cu�e said.

Charlupski has taken a similar approach to growing �e Babysitting Co., also a pro�table nonemployer �rm that breaks $1 million in revenue. She employs 2,500 carefully screened baby sitters as contractors at her one-woman business, founded in 2009.

In addition to working for private clients, Char-lupski’s sitters mind children at area hotels such as �e Peninsula, �e St. Regis New York and more than one Ritz-Carlton. �e 33-year-old has also tapped into the sports scene, taking charge of play-ers’ and coaches’ kids during a game.

“We have mastered con�dentiality and getting a really high caliber of sitters,” Charlupski said. “�at translates to a high-caliber clientele.”

Tapping technologySome of the city’s high-revenue nonemployer �rms

use low-cost technology to expand what a one-person business can accomplish while keeping overhead to a minimum. Take Lyon. �e 28-year old runs Ditec Solutions, a Brooklyn-based Amazon store that he said grossed $3.5 million last year—enough to per-suade him to drop out of the University of Califor-nia, Santa Cruz. Advertising within Amazon and on Facebook has allowed Lyon to reach a vast audience on his lean budget. He stretches what he can get done by using programs such as TaxJar, which automatical-ly reports and �les sales taxes, and Unify for Quick-Books, which manages bookkeeping tasks related to e-commerce with minimal human oversight.

Lyon started the business in 2015, relocating it from California to the Bond Collective co-work-ing space in Brooklyn last May. His business sells 3-D printing pens and other merchandise, such as high-performance coolers for outdoorsmen, and gets help from two outside contractors for such tasks as content creation and customer service. He has found hiremymom.com to be an excellent source of quali�ed workers.

Lyon doesn’t have to contend with the challenges of �lling orders solo or the o�en-prohibitive cost of warehouse space in the city thanks to a contract with a third-party logistics warehouse in Edison, N.J., and the Ful�llment by Amazon network. Amazon takes

between 12% and 15% of the retail price as a referral fee, as well as a separate ful�llment fee, but the latter charge is not much higher than it would cost him in postage.

“�ere’s the added bene�t of not having to man-age a warehouse, which is a huge headache,” he said.

“You can outsource almost everything today,” said attorney Glenn Stein, who advises startups in New York and New Jersey at Chiesa Shahinian & Giantomasi.

Lyon’s business is growing so fast that he borrowed $105,000 from a lending program at Amazon at 6.9% interest to keep pace with orders during the pre-holiday season. Strong sales justi�ed the decision. “I paid it all o� at the end of December,” he said.

Some of the city’s million-dollar nonemployer businesses eventually pick up so much momentum, they become traditional job creators.

�at’s what happened to Colin Kamesh Raja, who emigrated from India in 2012, and his wife, Angie, who hails from Trinidad. �e couple, who share a passion for recreational boxing, two years ago start-ed RIMSports, an Amazon store that sells sporting goods and �tness accessories out of Kew Gardens, Queens. When his wife complained that much of the available gear was in black and other drab col-

ors, they decided to o�er it in seven bright hues they thought would appeal to women, plus a men’s line. Like Lyon, they used paid advertising within Am-azon and on Google and Facebook. “�ose things helped us reach multiple customers,” Raja said.

�e Rajas were on to something. �e couple, who are both in their early 30s, were able to grow what was once a side business by outsourcing orders to Ful�llment by Amazon. �eir company’s revenue grew to $1 million in 2016, when it was just the two of them.

�e Rajas also took advantage of New York City’s entrepreneurial ecosystem.

“�ere is a lot of support for freelancers in New York City—co-working spaces, meet-ups, a commu-nity of people doing similar things,” said MBO Part-ners’ Zaino. “One of the issues of being freelance is you are on your own. When you can socialize with people who are doing similar things as you and you can physically meet with them and collaborate, that’s a good feeling. Being in a big city is wonderful for that.”

A�er attending meet-ups when he su�ered “brain freeze” about how to grow the business, Raja said, “I’ll refresh myself.”

He and his wife recently hired a customer-service person in India to provide 24/7 support. �ey are now in the process of hiring more employees to grow RIMSports. With business humming—it brought in about $2 million last year—Angie Raja le� her job on Wall Street about a year ago, and her husband, previously an assistant vice president at a big bank, quit his job in July. “I feel like I’m in a dream,” he said. “Don’t wake me up.” ■

SITTING PRETTY: Lyon quit college as his one-man business took off. Last year it grossed $3.5 million.

FAB FIVEAVERAGE REVENUE for nonemployer �rms in each borough

$29,598BRONX

$43,953BROOKLYN

$80,830MANHATTAN

$38,134QUEENS

$45,447STATEN ISLAND

MAKING IT HERE

$49,977AVERAGE REVENUE OF NEW YORK–BASED NONEMPLOYER

BUSINESSES, ABOUT 6% MORE THAN THE NATIONWIDE AVERAGE, $47,211. OWNERS HERE SAY THEY BENEFIT FROM THE LOCAL ECOSYSTEM, INCLUDING AN AMPLE SUPPLY OF QUALITY FREELANCERS.

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POSITIONS AVAILABLE

REQUEST FOR PROPOSAL


VP – Emerging Markets. NY, NY. Torino

Capital LLC. Provide financial guidance on

emerging market securities in Argentina,

Brazil, & Venezuela, Spanish speaking

portfolio cos. Need BS in Engineering, Fi-

nance or other analytical field. (or Foreign)

Need 2 yrs. research in emerging market

in LAT region. Need institutional relations in

emerging market LAT countries. Series 7 &

Series 63 req. Fluent in Spanish & English,

verbal & written. 40% domestic travel &

60% international travel: Argentina, Ecua-

dor, Venezuela, among other countries.

Apply at: [email protected].

The Wildlife Conservation Society, an EEO

employer, is currently soliciting bids for the

abatement of ACM at the New York Aquarium

on Coney Island. Only bids responsive to the

entire scope of work will be considered. This

work will be scheduled during spring of 2018.

Certified M/WBE and Small Business (13

CFR Part 121) companies are encouraged

to submit. In order to receive the bid package

interested parties should email purchasing@

wcs.org or telephone WCS Purchasing at 718

220 5144 to receive scope, bid and other

relevant documents. All bidders will be subject

to government regulations, including 44 CFR

and Federal Executive Order 11246. Note that

while this is a New York City prevailing wage

project, union affiliation is not required. Bid

s will be publicly opened at the Purchasing

Department, Bronx Zoo, 2300 Southern Bou-

levard, Bronx New York at 2:00 PM Tuesday,

March 6, 2018.”

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FEBRUARY 12 2018 | CRAIN’S NEW YORK BUSINESS | 23


Notice of Qualification of VBG 990 AOAMEMBER LLC Appl. for Auth. filed withSecy. of State of NY (SSNY) on01/09/18. Office location: NY County.LLC formed in Delaware (DE) on12/01/17. SSNY designated as agentof LLC upon whom process against itmay be served. SSNY shall mail proc-ess to c/o Corporation Service Co., 80State St., Albany, NY 12207-2543. DEaddr. of LLC: 251 Little Falls Dr., Wil-mington, DE 19808. Cert. of Form. filedwith DE Secy. of State, Div. of Corps.,John G. Townsend Bldg., 401 FederalSt. - Ste. 4, Dover, DE 19901. Pur-pose: Any lawful activity.

Notice of Qualification of VILLAGE APTS4DS LLC Appl. for Auth. filed with Secy.of State of NY (SSNY) on 09/27/17. Of-fice location: NY County. LLC formed inDelaware (DE) on 09/20/17. SSNYdesignated as agent of LLC upon whomprocess against it may be served.SSNY shall mail process to c/o Gibson,Dunn & Crutcher LLP, Attn: StevenKlein, 200 Park Ave., NY, NY 10166.DE addr. of LLC: Corporation ServiceCo., 251 Little Falls Dr., Wilmington,DE 19808. Cert. of Form. filed withSecy. of State of DE, Div. of Corps.,John G. Townsend Bldg., 401 FederalSt., Dover, DE 19901. Purpose: Anylawful activity.

NOTICE OF FORMATION of Fresh Har-vest Valley, LLC. Articles of Organiza-tion filed with Secretary of State of NewYork (SSNY) on 12/26/2017. Office lo-cation: New York County. SSNY desig-nated agent upon whom process maybe served and shall mail copy of proc-ess against LLC to its designated regis-tered agent: United States CorporationAgents, Inc., 7014 13th Ave., #202,Brooklyn, NY 11228. Principal Busi-ness address: 447 Broadway, 2ndFloor, New York, NY 10013. Purpose:any lawful act.

Notice of formation of Bethel Road LLCArts. of Org. filed with the NY Sect’y ofState (SSNY) on 11/1/2017. Office lo-cated in NY County. SSNY hasbeen designated as agent of the LLCupon whom process against it may beserved. SSNY shall mail process to:CMT Portfolio Advisors, 150 W 56thSt., Apt. 4508, NY NY 10019. Purpose:any lawful act.

BASIL REALTY LLC. Arts. of Org. filedwith the SSNY on 12/22/17, with anexistence date of 01/01/2018. Office:New York County. SSNY designated asagent of the LLC upon whom processagainst it may be served. SSNY shallmail copy of process to the LLC, 51West 14th Street, New York, NY10011. Purpose: Any lawful purpose.

Notice of Formation of UNTIL ONE HUN-DRED TWENTY, LLC Arts. of Org. filedwith Secy. of State of NY (SSNY) on01/11/18. Office location: NY County.SSNY designated as agent of LLC uponwhom process against it may beserved. SSNY shall mail process to c/oMatthew H. Kamens, 1650 Market St.,Ste. 2800, Philadelphia, PA 19103.Purpose: Any lawful activity.

Notice of Qualification of THE OMARAPROJECT LLC Appl. for Auth. filed withSecy. of State of NY (SSNY) on01/10/18. Office location: NY County.LLC formed in Delaware (DE) on10/19/17. SSNY designated as agent ofLLC upon whom process against it maybe served. SSNY shall mail process toc/o Corporation Service Co. (CSC), 80State St., Albany, NY 12207-2543. DEaddr. of LLC: c/o CSC, 251 Little FallsDr., Wilmington, DE 19808. Cert. ofForm. filed with DE Secy. of State Corps.Div., 401 Federal St., Dover, DE 19901.Purpose: Any lawful activity.

Notice of formation of Trufflery LLC. Artsof Org filed with Secy of State of NY(SSNY) on 12/11/17. Office location: NYCounty. SSNY designated agent uponwhom process may be served and shallmail copy of process against LLC to: USCorp Agents Inc 7014 13th Ave #202 BKNY 11228. Principal business address:796 9th Ave 2 NYC 10019. Purpose: anylawful act.

NOTICE OF FORMATION OF NERVE LosTres Preservation, LLC Application forAuthority filed with the SSNY on 01-11-18. Office: New York County. SSNYdesignated as an agent of LLC uponwhom process against it may beserved. SSNY shall mail a copy of proc-ess to 251 Little Falls Drive, Wilming-ton, DE 19808. Purpose: any lawfulactivity.

NOTICE OF FORMATION OF James SeoCommercial, LLC. Articles of Organiza-tion filed with the Secretary of State ofNY (SSNY) on 12/07/17. Office loca-tion: NEW YORK County. SSNY hasbeen designated as agent upon whomprocess against it may be served. ThePost Office address to which the SSNYshall mail a copy of any processagainst the LLC served upon him/heris: Registered Agent Solutions, Inc., 99Washington Ave., Suite 1008, Albany,NY 12260. The principal business ad-dress of the LLC is: 30 W 60th Street,Floor 2, New York, NY 10023. Purpose:any lawful act or activity.

Broome Street Penthouse, LLC. Arts. ofOrg. filed with the SSNY on 01/11/18.Office: New York County. SSNY designat-ed as agent of the LLC upon whom proc-ess against it may be served. SSNY shallmail copy of process to the LLC, c/o Jer-ry Feeney, 33 East 33rd Street, 4thFloor, New York, NY 10016, which alsoserves as the registered agent address.Purpose: Any lawful purpose.

Notice of formation of Andreas GomollLLC. Arts of Org filed with Secy. ofState of NY (SSNY) on 12/7/17. Officelocation NY County. SSNY designatedagent upon whom process may beserved and shall mail copy of processagainst LLC to principal business ad-dress: 350 E 79th Street, New York,NY 10075. Purpose: any lawful act.

Notice of Qualification of FLIGHT CLUBNEW YORK LLC Appl. for Auth. filedwith Secy. of State of NY (SSNY) on01/22/18. Office location: NY County.LLC formed in Delaware (DE) on10/05/17. NYS fictitious name:FLIGHT CLUB NEW YORK (DE) LLC.SSNY designated as agent of LLCupon whom process against it may beserved. SSNY shall mail process toc/o Corporation Service Co. (CSC), 80State St., Albany, NY 12207-2543. DEaddr. of LLC: c/o CSC, 251 Little FallsDr., Wilmington, DE 19808. Cert. ofForm. filed with Secy. of State, JohnG. Townsend Bldg., 401 Federal St.,Ste. 4, Dover, DE 19901. Purpose:Any lawful activity.

Notice of Qualification of G&S INVEST-ORS CONSTRUCTION MANAGEMENTLLC Appl. for Auth. filed with Secy. ofState of NY (SSNY) on 01/24/18. Of-fice location: NY County. LLC formed inDelaware (DE) on 01/19/18. SSNYdesignated as agent of LLC upon whomprocess against it may be served.SSNY shall mail process to the LLC,211 E. 43rd St., 25th Fl., NY, NY10017. DE addr. of LLC: 251 LittleFalls Dr., Wilmington, DE 19808. Cert.of Form. filed with Secy. of State, 401Federal St., Dover, DE 19901. Pur-pose: Any lawful activity.

NOTICE OF FORMATION of Fortitude Sol-utions, LLC. Articles of Organization ofFortitude Solutions, LLC were filed withSecy of State of New York (SSNY) on1/2/18. Office location: NY County.SSNY is designated as agent of theLLC upon whom process against it maybe served and shall mail a copy of theprocess to 245 Park Avenue, 18thFloor, NY NY 10167. Purpose is: alllawful acts or activities.

Rothman Orthopaedics of New York,PLLC. Articles of Org. filed Sec. ofState (SSNY) on 12/4/17. Office: 29E. 19th St., 7th Fl., NY, NY 10003, NYCounty. SSNY desig. agent of LLCupon whom process may be served.SSNY shall mail copy of process to Nix-on Peabody LLP, 677 Broadway, Alba-ny, NY 12207. Purpose: medicine.

Notice of Qualification of INTEGRATEDASSETS III LLC Appl. for Auth. filed withSecy. of State of NY (SSNY) on01/31/18. Office location: NY County.LLC formed in Delaware (DE) on01/29/18. SSNY designated as agentof LLC upon whom process against itmay be served. SSNY shall mail proc-ess to c/o Corporation Service Co.(CSC), 80 State St., Albany, NY 12207-2543. DE addr. of LLC: c/o CSC, 251Little Falls Dr., Wilmington, DE 19808.Cert. of Form. filed with DE Secy. ofState, John G. Townsend Bldg., 401Federal St. - Ste. 4, Dover, DE 19901.Purpose: Any lawful activity.

Notice of Formation of AVALANCHEFALLS LLC Arts. of Org. filed with Secy.of State of NY (SSNY) on 01/30/18. Of-fice location: NY County. Princ. officeof LLC: 299 Park Ave., 42nd Fl., NY, NY10171. SSNY designated as agent ofLLC upon whom process against it maybe served. SSNY shall mail process tothe LLC, Attn: General Counsel at theprinc. office of the LLC. Purpose: Anylawful activity.

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GOTHAM GIGSBU

CK E

NN

IS

BY LANCE PIERCE

AGE 42

BORN Wyckoff, N.J.

RESIDES Upper West Side

EDUCATION Bachelor’s in sociology and anthropology, Colgate University

WHAT’S IN A NAME? Stoopher and Boots were childhood nick-names for Goldstein and her sister, given to them by their dad.

BRUSH WITH FAME Goldstein is still thrilled at the memory of deliv-ering a Stoopher & Boots gift box to actor Matt Damon for his daughters.

WORK-LIFE BALANCE Goldstein lives around the corner from the store and works there seven days a week, often for 10 hours at a time. “The store is my baby and an extension of me. I feel like I retired and this is my passion that I �nally get to live every day.”

RETAIL SWEET SPOT Preteens

STEPHANIE GOLDSTEIN

IN LIVING COLOR: Goldstein, with her dog, Scout, has a knack for knowing what kids want to wear.

Since she was a child, Stephanie Goldstein dreamed of having her own clothing store. “One of my favorite childhood memories is decorating a zip sweatshirt with satin moons and stars when I was

6,” she said. “I’ve always loved kids’ clothing.” A�er college, though, Goldstein chose a steady pay-

check over pursuing her passion and took a job as a consultant at Accenture, advising blue-chip companies on corporate strategy and product development. But a�er 13 years, she hung up her power suit and made her childhood fantasy a reality.

In 2010 Goldstein opened Stoopher & Boots, now a �xture on the Upper West Side. �e store is known for its fashionable and well-made children’s apparel and accessories—and for Goldstein’s open-arms approach.

She used money she saved from her corporate pay-checks to start the business. At �rst she carried handmade items—adults’ and children’s clothing, plus toys and acces-sories—because she thought they represented the greatest unmet need in the market. In a nod to her early ambitions, she also sold children’s T-shirts that she had designed.

Goldstein quickly observed that children’s clothing was the most popular category and decided to focus on it. Her in-house T-shirt brand, Sparkle by Stoopher, was a top

seller. Two years later she launched a wholesale line, which now represents 30% of annual revenue.

Even as other local children’s retailers have succumbed to soaring rents and online competition, the Stoopher & Boots store doubled in size to 1,300 square feet last month. Sales reached $1.25 million last year—up 20% from 2016.

With one full- and two part-time employees, Goldstein averages 30 transactions per day. She knows the names and sizes of her regular cus-tomers’ kids, and though she has no children of her own, she is a maternal �gure to many. For years a group of students from a nearby public middle school ate lunch in the back of her shop.

“My store is a safe space,” she said. Now in high school, members of that group still stop by to visit Goldstein’s ever-present dog, Scout, a King Charles spaniel.

Like other children’s-store owners, Goldstein analyzes manufacturer trends and attends trade shows. But it is her rapport with customers that gives her a 100% sell-through rate. Goldstein might ask kids to circle what they like in a catalog or chat with them about new styles.

“�ere’s a little girl who stops by on her walk home from school every a�ernoon,” Goldstein said. “When her baby sitter once asked her why she did it, the girl said, ‘Wouldn’t you hug your best friend?’ ”

Dressing her inner childUpper West Sider left her corporate consulting job to make and sell kids’ clothes

My store is a safe space

“

”

— DIANE HESS


P024_CN_20180212.indd 24 2/9/18 6:28 PM

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Songs for schoolsExploring the Arts’ star-studded 11th annual bene�t Jan. 30 included performances by the organization’s co-founder, Tony Bennett, winner of 19 Grammy Awards, and Tony-winning actor and singer Brian Stokes Mitchell. �e nonpro�t’s mission is to strengthen the role of the arts in public high school education. Its �rst endeavor was teaming with the city’s Department of Education to create the Frank Sinatra School of the Arts in Astoria, where Bennett grew up. Now it supports 38 public high schools in the city and Long Island and in Los Angeles County.

Wé McDonald, a season 11 �nalist on �e Voice, performed at the gala. She joined Tony Bennett and his wife, Exploring the Arts’ co-founder Susan Benedetto, at the event at Ziegfeld Ballroom.

Event chair Greg Lippmann, chief

information o�cer at Libremax Capital, with his

daughter, Dahlia. �e party brought in

$190,000 for family and educational programming.

History for kids

SEE MORE OF THIS WEEK’S SNAPS AT CRAINSNEWYORK.COM/SNAPS. GET YOUR GALA IN SNAPS. EMAIL [email protected].

Bob Pittman, chief executive of iHeartMedia, with gala honoree Richard Bressler, president, chief operating o�cer and chief �nancial o�cer of iHeartMedia. �e party raised $1 million.

Bowling for dollars

Stuart Spodek, managing director at

BlackRock, and his wife, Kimberly, an attorney at her own law �rm, during the

party, which raised a record $170,000.

�e DiMenna Children’s History Museum at the New-York Historical Society hosted its sixth annual Family Bene�t Party Jan. 20. Louise Mirrer, the society’s president and chief executive, and Diana DiMenna, the muse-um’s co-founder and an event chair, were among the crowd of 500.

�e Stuttering Association for the Young counts actor Paul Rudd among its board members. He hosted the sixth annual All-Star Bowling bene�t for the or-ganization Jan. 22 at Lucky Strike Manhattan. �e Ant-Man star is �anked by Richard Hsieh, director of RBC Capital Markets, and Vincent Lin, director and executive producer at Valiant Pictures.

P025_CN_20180212.indd 25 2/9/18 12:58 PM

NEW IN TOWN

■ Boris & Horton195 Avenue A�e city’s �rst puppy café opened in the East Village. To comply with health laws, co�ee and booze are served in a space partitioned by glass from areas where ani-mals can roam. �e eatery also hosts dog-adoption events.

■ Brooklyn Heights Social Club60 Furman St.A new bar with an expan-sive view of the East River opened on the 10th �oor of the 1 Hotel.

■ I+care Pharmacy200B Livingston St., Brooklyn�is boutique pharmacy, which o�ers eye exams and other optical services, opened in Downtown Brooklyn.

■ Notoriouss514 Atlantic Ave., BrooklynT’yanna Wallace opened a Boerum Hill shop to celebrate and remember her father, Brooklyn native Biggie Smalls, and sell her own hip-hop-inspired clothing.

■ Pelicana11 W. 32nd St.One of South Korea’s oldest fried chicken chains opened its �rst U.S. location, in Koreatown. On the menu are eight varieties of chicken and a selection of Korean beer and soju.

■ The Little One150 E. BroadwayTwo pastry chefs who worked at Dominique Ansel’s bakery have opened their own �ve-table Japanese dessert spot on the Lower East Side. �e menu has just nine items, which pair well with its green matcha and hojicha teas.

MOVES AND EXPANSIONS

■ Ikinari Steak 368 W. 46th St.�e Japanese spot, known for its fast service and absence of chairs, opened its third location, in Hell’s Kitchen.

■ Pod Hotel400 W. 42nd St.�e micro-hotel chain, which o�ers compact spaces and bunk beds, opened its �agship hotel, in Times

Square. It’s the fourth and biggest of the budget hotel’s locations. It also o�ers 45 apartments—600 to 800 square feet each—for short-term and long-term leasing.

BANKRUPTCIES

■ Brooklyn Women’s Pavilion facilities106-12 Liberty Ave., Queens�e obstetrics and gyne-cology practice in Ozone Park �led for Chapter 11 bankruptcy protection Jan. 24. �e �ling cites estimated assets of $100,001 to $500,000 and liabilities of $50,001 to $100,000.

■ Bridgehampton Stone2276 Steinway St., Astoria�e family-run fabrication, installation and restoration company �led for Chapter 11 bankruptcy protection Jan. 24. �e �ling cites esti-mated assets and liabilities of $0 to $50,000.

■ Golden City 888d/b/a Golden Palace141-19 Cherry Ave., Flushing�e Chinese restaurant �led for Chapter 11 bankruptcy protection Jan. 22. �e �ling cites estimated assets and liabilities of $0 to $50,000.

STOCK TRANSACTIONS

■ Foot Locker Inc. (FL-N)CEO Richard Johnson sold 25,000 shares of common stock for $50.05 per share Jan. 19 in a transaction worth $1,251,250. He now holds 258,185 shares.

■ Tiffany & Co. (TIF-N)Jean-Marc Bellaiche, senior vice president of strategy and business development, sold 9,170 shares of com-mon stock for $109.47 per share Jan. 24 in a transac-tion worth $1,003,853. He now holds 5,013 shares.

■ Yext (YEXT-N)CEO Howard Lerman sold 30,000 shares of common stock for $12.46 per share Jan. 24 in a transaction worth $101,629. He now holds 4,845,461 shares.

REAL ESTATE

RETAIL■ Hubb NYC bought two 5-story buildings totaling 14,900 square feet at 186-188 First Ave. in the East

Village. �e mixed-use buildings—which currently have three retail spaces leased by a computer store, a candy shop and a Japanese restaurant—sold for $14.25 million. Brax Realty represented the buyer and the seller, Allen Park.

■ SKF Development bought a 99-year ground lease for a 12,126-square-foot vacant lot at 2306 Webster Ave. in the Belmont section of the Bronx for nearly $45 million. �e Chelsea-based developer plans to use the space to develop a mixed-use building with 71 residential units and 9,000 square feet of retail space. Asset Commercial Realty Group handled the deal for the buyer and the owner, the Negron family.

COMMERCIAL■ �e New York Liquidation Bureau signed a 15-year lease for 43,138 square feet at 180 Maiden Lane. �e state agency, which takes over impaired or insolvent insurance companies, plans to move part of its o�ces from 110 William St. �e asking rent was in the high $50s per square foot. Savills Studley represented the tenant. �e landlords, MHP Real Estate Services and Clarion Partners, were represented by Cushman & Wake�eld and by an in-house team from MHP.

■ Industrial Color Brands inked a deal to renew its 38,000-square-foot space at 32 Sixth Ave. in TriBeCa and add 18,000 square feet. �e production-services company plans to be in the 27-story building for at least 10 more years. �e asking rent was $79 per square foot. �e landlord, Rudin Management Co., was repre-sented in-house. Newmark Knight Frank brokered the deal for the tenant.

■ Humanscale agreed to take 33,000 square feet at 11 E. 26th St. in NoMad. �e designer and maker of ergonomic o�ce products plans to move from 1114 Sixth Ave. �e asking rent for the 10-year deal was not disclosed, but on the building’s lower �oors, the asking rent was reportedly in the high $80s per square foot. �e owners, Brook�eld Property Partners and �e Swig Co., were represented by an in-house team from

Brook�eld and a team from CBRE. JLL represented the tenant.

■ Knotel signed a 10-year lease for 23,464 square feet at 584-588 Broadway in SoHo. �e provider of �exible o�ce space plans to occupy the entire fourth �oor of the 12-story build-ing between Houston and Prince streets. �e asking rent was not disclosed. Skylight Leasing handled the deal for the tenant.

�e landlord, Olmstead Properties, was represented in-house.

■ �e Crime Victims Treatment Center agreed to take 8,630 square feet at 40 Exchange Place. �e nonpro�t, which provides services to victims of sexual violence, plans to relocate from its 126 W. 60th St. o�ce. �e asking rent for the 15-year deal was in the $50s per square foot. �e landlord, GFP Real Estate,

was represented in-house. Avison Young brokered the deal for the tenant.

■ Fleischner Potash signed a three-year lease for 7,000 square feet at 14 Wall St. �e insurance law �rm, based in White Plains, plans to use the o�ce space for its lawyers with clients in the city. CBRE represented the landlord, Alex Rovt. Vicus Partners brokered for the tenant. �e asking rent was $49 per square foot. ■


DEALS ROUNDUP

Selected deals announced for the week ending Feb. 1 involving companies in metro New York. SB M&A: Strategic buyer M&A represents a minority or majority acquisition of existing shares of a company without the participation of a financial buyer. FB M&A: Financial buyer M&A represents a minority or majority acquisition of existing shares of a company with the participation of a financial buyer. GCI: Growth capital investment represents new money invested in a company for a minority stake.

TRANSACTION SIZE BUYERS/TARGET/SELLERS [IN MILLIONS] INVESTORS TRANSACTION TYPE

F&R business of Thomson $17,000 Canada Pension Plan SB M&A Reuters Corp. (55%)/ Investment Board; GIC Pte. Thomson Reuters Corp. Ltd.; The Blackstone Group LP (Manhattan)

Ablynx NV/Bank of America $5,376.6 Sano� SB M&A Corp., asset-management arm; Consonance Capman GP LLC (Manhattan); Life Sciences Partners BV; Perceptive Advisors LLC (Manhattan); Van Herk Investments BV

Ply Gem Holdings Inc./CI Capital $2,367.1 Clayton, Dubilier & Rice Inc. FB M&A Partners LLC (Manhattan); Fidelity (Manhattan) Management and Research Co.; Putnam Investment Management LLC

Sirtex Medical Ltd./Allan Gray $1,279.6 Varian Medical Systems Inc. SB M&A Australia Pty. Ltd.; Allan Gray Ltd.; Challenger Ltd.; Consonance Capital (Manhattan); Goldman Sachs Asset Management Australia Pty. Ltd.; Hunter Hall Investment Management Ltd.; MLC Investment Management Ltd.

ECS Federal Inc./ $775 On Assignment Inc. SB M&A Lindsay Goldberg (Manhattan)

Carlisle FoodService Products Inc./ $750 The Jordan Co. LP FB M&A Carlisle Etcetera LLC (Manhattan) (Manhattan)

3.25-acre Manhattan site/ $700 Canada Pension Plan SB M&A Atlas Capital Group LLC (Manhattan); Investment Board; Westbrook Partners (Manhattan) Oxford Properties Group Inc.

Public relations solutions and $335 West Corp. SB M&A digital media services businesses of Nasdaq Inc./Nasdaq Inc. (Manhattan)

CoreOS Inc./Accel Partners; Fuel $250 Red Hat Inc. SB M&A Capital; GV; Intel Capital; Kleiner Perkins Cau�eld & Byers; Work-Bench Ventures (Manhattan); Y Combinator Management LLC

Joby Aviation LLC $100 Allen & Co. Inc., GCI investment arm (Manhattan); AME Cloud Ventures; Capricorn Investment Group LLC; EDB Investments Pte. Ltd.; Eight Partners; individual investors; Intel Capital; JetBlue Technology Ventures; Toyota AI Ventures

Onyx on First Apartment Community/ $95.5 Atalaya Capital Management SB M&A J.P. Morgan Investment Management LP (Manhattan); Urban Inc. (Manhattan) Investment Partners LLC

ABOUT THIS SECTION

GET YOUR NEWS ON THE RECORDTo submit company openings, moves or real estate deals, or to receive further information, email [email protected].

For the Record is a listing to help businesspeople in New York �nd opportunities, potential new clients and updates on customers. Bankruptcy �lings from the eastern and southern districts of New York are listed alphabetically. Stock transactions are insider transactions at New York companies obtained from Thomson Reuters and listed by size. Real estate listings are in order of square footage.

*

FOR THE RECORD*

SOURCE: CAPITALIQ

P026_CN_20180212.indd 26 2/9/18 12:56 PM

PHOTO FINISH

Lion’s share

The Lunar New Year is Friday, Feb. 16, and the high school–age members of Karlin Chan’s lion-dance troupe have been busy rehearsing at the New York Chinese Freemasons Athlet-

ic Club on Canal Street. “About eight days a�er the New Year, one of our

lion-dancer groups weaves its way through China-town, wishing businesses well in the New Year,” Chan said. “�e store owners bow three times and give a red envelope with some money as a donation. You don’t know how much, but typically it’s $2 to $5. It used to be more pro�table, so now we split up in teams and send dancers to private performances.”

�e Freemasons perform at restaurants, private parties, parades and more. �ey don’t always charge for their services—as a nonpro�t, their goal is to spread traditional Chinese culture—but private shows typically cost $500 to $750.

“We aren’t a business,” Chan said, “but we have to pay the rent somehow.” — GERALD SCHIFMAN


BUCK

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Jonathan Fales 212.841.5989

Michael Tranfalia 212.841.5981

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