BY CARL GAINES

Jonathan Mechanic, a partner at Fried Frank and chairman of the firm’s real estate department, represents clients in every type of commercial real estate transaction. His deals have included Conde Nast’s 1-million-square-foot lease at One World Trade Center and, more recently, the 170,000-square-foot bite that the New York Genome Center took out of 101 Avenue of the Americas.

The Commercial Observer: What are some of the most recent leasing deals that you’ve helped to put together? Mr. Mechanic: The New York Genome Center, which is this center for genome science that signed this past week for 160,000 feet at 101 Avenue of the Americas, owned by Edward Minskoff.

How did they find such a huge block of space, in Midtown South of all places? Well, they were looking for a long time for the right space, which had the right attributes in terms of both lab space, research space and office space and something that would be a striking office for inducing scientists around the world to come and spend time at the Genome Center. And they looked at several alternatives, and then Minskoff actually sought them, saying “I thought this was the perfect building for you.” They spent time looking at it and analyzing it and ultimately we came to terms. There were some negotiations over several months of the lease because there were various complexities—they’ve got their own separate entrance, how the lobbies interacted, the auditorium where they can hold seminars and courses. And it just turned out to be the right place at the right time—right for the Minskoff organization and right for the Genome Center.

It sounds like Minskoff wooed them to a certain extent. I think Minkoff wooed them to come there, and then, spending a lot of time looking at it, it turned out to be a very good solution for them, so it was kind of a win-win.

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BY JOTHAM SEDERSTROM

As chair of law firm Greenberg Traurig’s global real estate practice and its New York office, veteran attorney Robert Ivanhoe has, for more than 30 years, represented most of the city’s heaviest real estate hitters. In order to protect his biggest clients, Mr. Ivanhoe follows precedent-setting cases from across the country. Among the cases he’s now watching are two in Michigan—Cherryland and Chesterfield—that challenge the very essence of non-recourse loans. Last week, Mr. Ivanhoe discussed the implication of both cases with The Commercial Observer.

The Commercial Observer: If you had to name one legal decision that has major implications for New York City real estate owners in the near future, what would it be? Mr. Ivanhoe: I actually have two cases. One case is called Cherryland and the other is called Chesterfield. They’re both Michigan cases. One is a state court case, the other is a federal case. They’re Michigan cases, but they have—they might have—enormous implications on the ability to finance real estate.

Take me from the beginning. So in a typical loan, especially in a CMBS [commercial mortgage-backed security] loan that gets securitized, there were always sort of guidelines as to the way a loan would be structured. And one of the fundamentals of how it was structured is [that] you would have a single purpose entity borrower—so your borrower only owned the real estate that was being mortgaged and didn’t have any other assets. And they would have to operate in a certain way that a single purpose entity would operate. And if they did those things, then the loan would be non-recourse to the principals of the borrower unless the principals of the borrower did certain things that people called “bad boy” acts, like committing fraud.

So how are these cases in Michigan different? So, in these two Michigan cases, contrary to what every real estate lawyer anywhere in the country would say the documents say, the courts allowed the foreclosing lenders, which were both special servicers, to go after the borrower for a deficiency judgment where the lender foreclosed only, simply, for monetary default. Contrary to what every lawyer would say the documents say and what the intent was, the courts found that the lenders could personally sue the borrowers because the mere default breached these covenants that were in the documents.

Does that set a legal precedent here in New York?

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BY CARL GAINES

Jay Neveloff is a partner at Kramer Levin Naftalis & Frankel whose practice is focused on real estate and other commercial transactions. His past and present client list includes Starwood Hotels, the owners of Starrett City, New York Life Insurance Co. and the Trump Organization. Mr. Neveloff spoke to The Commercial Observer last week about how land-use issues have evolved in the city over the past 10 years. The Commercial Observer: Has land-use law evolved over the past decade or so here in New York and, if so, how? Mr. Neveloff: Land use almost precedes the economy. It’s a very good indicator of development or future development in the city. We think it’s a great sign of future development when clients are asking questions about what can be built, how uses can be changed. So I think it’s a critical indicator. In terms of evolution, the city and the land-use buyers are always looking at adapting to the economy. You could see, for example, attention being spent to the potential change in zoning for Park Avenue. You could see what’s happening with areas like the train yards—so it has evolved as the city has evolved.

Another facet that fascinates me is how land use is affected by technology. For example, Google coming in to 111 Eighth Avenue—hence a massive change in the way that owners and developers and investors have looked at the area. There’s a lot going on and I, for one, think it’s driven by the economy and it’s driven by technology. How much of Kramer Levin’s business is dedicated toward the issue of land use? We have approximately 20 full-time professionals involved in land use. And Sandy Lindenbaum, Paul Selver and Michael Sillerman are the people who lead it.

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BY DANIEL EDWARD ROSEN

For any developer, perhaps the only thing harder to secure than a zoning permit is community approval. No matter how beneficial to a neighborhood a developer’s project purports to be, it’s always going to have its naysayers. And should those naysayers unite to sue the developers in an attempt to prevent the bulldozers from moving in, that’s when Kenneth Fisher, a partner at Cozen O’Connor, intervenes. The former city councilman (he served in Brooklyn from 1991 to 2001) talks about how developers can steel themselves for the inevitable community opposition.

If you’re, say, Jamestown Properties, how would you prepare yourself for ongoing community opposition over projects like the proposed Chelsea Market expansion? I once published a letter in the New York Times; I said I had a dream that the mayor announced an agreement with the Almighty to build a stairway to Heaven. And when they announced the location, half the people said that it would lead to gentrification, the other half said it would bring in the riffraff, and everybody agreed that it would be bad for traffic.

The point of the story is that no matter how benign a project is, it’s going to upset somebody.

What kind of project do you think upsets people the most? What gets attention are the “baby carriages in front of the bulldozers” projects. NYU is a situation like that, where the people who were opposed to NYU weren’t particularly interested [in] negotiating. They simply wanted to preserve Greenwich Village the way it was [yesterday].

It wasn’t a question [of] putting in a day-care center or making it bigger or smaller for a lot of them. There are others who wanted to engage, and the result was that the council got NYU to make some changes just before they gave the final go-ahead. That’s the give-and-take and the back-and-forth of the process. But it’s not Newtonian, because governments are bodies in motion that don’t always stay in motion, and reactions are never equal and opposite.

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