After Q4 Party, NYC Sales Face Cold Light of Day
NEW YORK CITY—More than 40% of the total
2012 investment sales volume for Manhattan
was generated in the fourth quarter, said
Cushman & Wakefield’s Steven Kohn at the
firm’s Q4 media briefing. “It’s amazing what
a fear of tax increases can do,” quipped
Kohn, president of C&W’s Equity, Debt &
Structured Finance operations. However,
investors should expect minimal activity in
the city’s CRE market during the first and
second quarter of 2013, Barbara Byrne
Denham, chief economist at Eastern
Consolidated, tells Real Estate Forum.
“The high level of activity in 2012 will take
away activity in the first two quarters of this
year,” she says. “It’s a very volatile pattern.”
Overall, she predicts volume of approximately $6 billion in this first quarter and the
same amount in the second quarter.
In particular, office rental and the retail
sectors will lag, says Denham. “The office
leasing market is still not very strong
because it’s very Wall Street driven. Retail
was off the chart in the fourth quarter, but
that won’t continue because it’s the most
However, she had good news to share
too. “Retail is a growing asset class,” she
says. “And multifamily will continue to be
strong because people still feel that hous-
ing in the New York market is strong.”
Other sectors, Denham says, “will be pro-
portionate to their usual role.”
The market watcher is coming off the
release of a report on Q4, in which she
announced that the volume of commercial
property deals soared to about $12 billion at
year-end, more than double the $5.8 billion
that was transacted the previous quarter.
When Does the Law Tolerate Destruction?
When is it acceptable in the eyes of the law to order the destruction
of a $2-million home? According to one recent trial court, it is the
right outcome when the structure is on the wrong property with no
evidence that the affected landowner was delinquent in asserting
his or her rights. The house represented an investment of over $1
million and years of effort, and the slice of land
on which it sat was worth a fraction of that. But
unless an appellate court reverses the decision,
the house will come
down before anyone ever
The case strikes a delicate balance between
principles of economic waste and the sanctity
of private property, and draws a fine line
between relative shades of innocence. Courts
around the country are divided on where the presumptive burden
in such circumstances should fall. Many courts start from the
assumption that the law should favor an economic adjustment in
which the affected land is sold—tantamount to a private regimen
of eminent domain. Other courts strike the balance in the opposite
direction. As long as the encroachment is not truly minimal, and
there is no evidence of acquiescence or delay, the party seeking
relief is entitled to a mandatory injunction of removal—the real
estate equivalent of the death penalty.
The recent case of Nulman v. Four Twenty Corp. involved a
home built in 2010 on a waterfront parcel in Rhode Island.
Because of wetlands, the developer situated the house close to the
boundary line where his parcel abutted a seven-acre public park
owned by a charitable foundation. In multiple regulatory applications, the developer relied on site plans that incorporated a fatal
By Mark Freel
flaw—the boundary line on one side was wrong. When a buyer
agreed to buy the house for nearly $2 million and performed a
survey, it revealed that error and confirmed that the entire footprint of the house was on the wrong land. Litigation ensued, and
the case went to trial solely on the question of the appropriate remedy. The question for the court was whether the trustees of the
foundation were entitled to a court order that the house should be
The court’s decision ordering destruction is instructive on the
law of mandatory injunctions for continuing trespass. Although it
is said that hard cases make bad law, this case confirmed that in the
right situation, a court will strike the balance in favor of an affected
landowner, even when the trespasser is innocent and has millions
of dollars at stake. And these issues are not confined to residential
development. The same considerations can and do apply in commercial development.
Prudence is always the best course when planning a development of residential or commercial property. But when accidents
happen—and this recent case is proof that they do—the parties
must keep in mind that courts can order removal or destruction.
The likelihood of such a draconian outcome will depend not only
on the state in which the dispute arises, but also on equitable considerations, including the extent of the encroachment and the relative innocence of the parties.
Mark Freel is a partner in Edwards Wildman’s litigation department.
Katherine Guarino, associate in Edwards Wildman’s litigation department, contributed to this article. They may be contacted at, respectively,
email@example.com and firstname.lastname@example.org. The
views expressed here are the authors’ own.
Vital Signs...Fairfield County added office-using jobs in Q4 for the first time since the recession began.—Jones Lang LaSalle