Comments are closed. Employers are being urged to target second-year undergraduates afterresearch shows that fewer final-year students hunt for jobs. The study by the Higher Education Careers Services Unit shows that only 7per cent of students look for a job at the start of their final year, andnearly half claim they will leave it until midway through. The survey of 1,200 students also finds that nearly a fifth plan to look fora job in the summer after graduation and 11 per cent will leave it until theyreturn from travelling. Mike Hill, chief executive of Careers Services Unit, urged employers todevelop work experience programmes for second-year students. He said, “Through targeting second-year students, companies will beatthe final-year rush and give themselves a larger pool of talent to choose from.”Also, by getting second-year undergraduates into work experience thestudents have the advantage of finding out about the organisation and itsculture. If the employer is happy with the student it is able to beat itsrivals by offering a job.” The Careers Services Unit research was launched at the Association ofGraduate Recruiters annual conference in Wales last week and Hill urgedemployers to form a closer relationship with university careers services. “If careers services staff are aware of an organisation, it will helpthe employer when students go to them for advice.” Carl Gilleard, chief executive of the AGR, said, “If the final-yearrecruitment percentage is correct then employers will have to review theirrecruitment processes. “I am a great believer in student work experience. Undergraduates getan insight into the world of work and it improves their future job prospects.Employers get to promote their organisation to students and build up arelationship with individuals. By Paul Nelson Pitch early for student talent, employers toldOn 24 Jul 2001 in Personnel Today Previous Article Next Article Related posts:No related photos.
Comments are closed. What a performance!On 20 Aug 2002 in Personnel Today Previous Article Next Article Performance related pay for senior executives rarely seems to achieve thereturns that it promises, reports Stephen OverellOne of the many useful functions of work is that it provides a way forsociety to allocate its resources. Because of their occupations, a baker is worth so much, a nursery nurse abit less, a management consultant much more and Sir Christopher Gent ofVodafone £5.1m in salary and bonuses and £9.3m in share options. Hopefully,even the great man himself, flushed as he must be with his shareholders’largesse, might agree that the values placed on certain jobs are really veryarbitrary. As time goes by it often seems that such awards are becoming even morearbitrary. With Sir Christopher at the helm, Vodafone lost £13.5bn in the yearto March 2002. From a share price peak of 399p, they now languish at around97p. Of course, the glumness of the telecoms sector is beyond his control. Butit still feels like an affront to common sense to learn that 80 per cent of thisvoluptuous remuneration package was performance-related. Yes, indeed. According to Vodafone’s 2002 accounts, the performance elementin senior management packages sits at 80 per cent of the total amount. Therules that determine executive pay are entirely geared towards growth, withsuch inscrutable measures as one year cash flow, one year Ebitda, one-year ARPUand so on. As any rational fellow would do, Sir Christopher seeks to maximise hisincome within the rules set by his remuneration committee. If it wants growth,it gives its managers incentives and viewed historically that is what they havedelivered. Value is another matter. It is a question of what companies chooseto reward that matters. Expressed like this, Vodafone’s pay policy seems entirely logical in aKafkaesque sort of way – the shareholders are happy. But to the rest of theworld it looks like fumbling in the greasy till by another name. Over recent years, researchers have been at a loss to find a clear linkbetween pay and performance – as most people would understand it – in executiveremuneration. The directors of FTSE 100 companies, for instance, received an average payrise of 28 per cent in 2000 – five times as much as the increase in the UK’saverage wage, according to pay consultants Inbucon1. Overall, 2000 was a goodyear for the economy – maybe not 28 per cent better than the previous one, butgood nevertheless. Most of the increase received by Britain’s highest paidexecutives came from performance-related schemes and share options, as onewould expect. Yet Inbucon found that even when the effect of bonus schemes and long-termincentive plans was removed, base salaries rose by 22 per cent. And who did thebest? Step forward 2000’s winner: Sir Christopher Gent with a 400 per cent payrise. If asked for an intuitive definition of what ‘performance’ should mean, manypeople might say profitability. Yet it is on this very point that thepay-performance link seems most opaque. When the research group Incomes DataServices looked at the salaries, bonus payments, incentive plans and benefitspackages of the UK’s 350 largest companies, alas, think-of-a-number culture wasmost in evidence. The researchers could find “no statistical relationshipbetween total cash movements and changes in corporate profitability”, itsreport said2. The problem has been taken to absurd levels in the US, where even those whobring about the collapse of their companies emerge from the rubble with a tidyfortune. A recent investigation into the remuneration practices of the 25biggest corporate failures since January 2001 by the Financial Times found thatthe executives who brought about bankruptcies walked away with $3.3bn (£2.1bn)in payouts and share sales. In the good times, contracts are drawn up promisingwild compensation and then the unstoppable gravy train cannot be halted. Organisations such as the Institute of Directors often point out that byglobal standards Britain’s bosses are not basking in richesse. To attract thebest in an alleged (though highly debatable) ‘global market’, pay must becompetitive. Yet the idea of ‘competitive’ remuneration depends on comparison. Those who want to see British salaries levelled up tend to draw comparisonswith the US. There, the average chief executive earns just under £100,000,against £550,000 for UK chief executives. Indeed, compared with the rest of theEuropean Union, Britain’s bosses are also doing well. In France, the averagechief executive earns £383,000, while the Germans pay the least at just under£300,0003. As has always been the case in pay negotiations, ‘fair pay’ is aquestion of who compares themselves with whom. From the point of view of chiefexecutives, it is a good thing those lower down the scale don’t choose toemploy the same logic as their bosses have to feather their nests. The wages ofmanufacturing workers in the US are a third higher than those in the UK. Despite the shortcomings of performance-related schemes, the ideal of payingfor performance remains a beguiling one – far superior to paying people forgetting older, which is what used to happen. Yet it is unclear at the momenthow far organisations recognise and are seeking to tackle the embarrassments itthrows up. IRS, the research body, says that while performance-related pay (PRP)continues to be the most common type of reward in UK companies, it has beenfalling for three years (54 per cent of them use it). Part of the reason isthat there is “mounting evidence that it doesn’t do what its advocatesclaim”. In its place, organisations are adopting some complicated systemsthat honour both outputs (targets, defined objectives) and inputs(competencies, skills, contribution and behaviour)4. However, Mark Edelstein, a consultant with Mercer Human Resource Consulting,argues it is “an absolute myth” that PRP is declining. Ninety-nineper cent of organisations want incentive pay schemes, he says, and go to greatlengths to ensure their rigour. “The results can look peculiar and there is sometimes a big reality gapbetween what looks fair now and how it will appear several years in the future.But I would dispute the claim that performance is unrelated to pay,” hesaid. It all depends what you mean by ‘performance’. The suspicion is that whatsenior executives mean is as remote from popular understanding as the corporatearistocracy is from the rest of the workforce. 1 Inbucon executive remuneration survey, August 2001; www.inbucon.co.uk 2 Incomes Data Services, salary survey, October, 1999 3 Study by Management Today, July 2001 4 Paying for Performance, IRS Management Review, Issue 20, 2001; www.xperthr.co.ukResearch Viewpoint plusRead related articles on this topic from XpertHR’s extensivedatabase free. Go to www.xperthr.co.uk/researchviewpointJoin the Xperts take a free trialBy calling 01483 257775 or e-mail: [email protected] is a new web-based information service bringing together leadinginformation providers: IRS, Butterworths Tolley and Personnel Today. Itfeatures a new Butterworths Tolley employment law reference manual, a researchdatabase and guidance from 13 specialist IRS journals, including IRS EmploymentReview. Related posts:No related photos.
Comments are closed. Philip Titchmarsh outlines what the new directive will mean and what actionemployers will have to take to ensure employees’ rights to information andconsultationAt present, employees in the UK have far fewer rights to information andconsultation than their counterparts elsewhere in the European Union. Most ofthe time, in fact, employers in the UK have no legal obligation to keep theiremployees informed or to consult with them. Although employers do have toinform and consult employees in certain specified circumstances – relating tolarge-scale redundancies, business transfers and health and safety – atpresent, there is no general legal framework in the UK providing for theinformation and consultation of employees. Every EU member state except the UK and Ireland, has laws or legally bindingnational agreements which oblige employers to inform and consult with employeerepresentatives generally. However, the gap between the UK and most of theother members of the EU will narrow in the not too distant future. On 23 March 2002, the European directive providing for the information andconsultation of employees at national-level came in to force. The Directive in detail The final text of the directive differs considerably from the original textissued by the Commission in 1998. In general terms, it places more emphasis onnational-level custom and practice. It does not provide for a one-size-fits-allnational works council model and allows for employers to create information andconsultation arrangements which best suit their own organisational structure. Thresholds Member states may choose whether to apply the directive to either: – Undertakings with at least 50 employees in any one member state; or – Establishments with at least 20 employees in any one member state. Whereas the original text spoke exclusively of “undertakings”, thefinal text distinguishes between undertakings and establishments. This means that countries such as Germany – where employee representationmay be set up in establishments with at least five employees and works councilsmay be set up in establishments with at least 20 employees – will choose theestablishment option. Countries such as the UK, where there is no statutoryprovision for information and consultation of this kind, will in all likelihoodchoose the undertaking option, where the threshold is 50 employees. The term ‘undertaking’ is not defined in the directive. However, it is clearthat the meaning of the term is not restricted to companies. In European Courtof Justice decisions (predominantly concerning the Acquired Rights Directive(77/187)), the term has been held to cover public and private entities carryingout an economic activity, whether or not operating for gain. This will includecompanies and unincorporated entities such as partnerships. Potentially, otherorganisations such as charities or public sector bodies are also covered wherethey are carrying out an economic activity. Graduated implementation One of main concessions in the final text of the directive is that certainmember states may avail themselves of a graduated implementation phase. The directive must be implemented in the member states by March 2005.However, the implementation timetable can be extended in member states where thereis at the date of adoption of the directive: “no general, permanent andstatutory system of information and consultation of employees nor a general,permanent and statutory system of employee representation of theworkforce”. The UK is, of course, such a member state and will take advantage of thegraduated implementation phase. Ireland is the only other member state in aposition to do so. The UK and Ireland are entitled to restrict the applicationof the directive between March 2005 and March 2007 to undertakings with 150 ormore employees. Then it must apply to undertakings with 100 or more employeesand, after a further year – that is by March 2008 – to those with 50 or moreemployees. All other member states must apply the provisions of the directiveto undertakings with at least 50 employees (or establishments with at least 20employees) from March 2005. Content of information and consultation The directive draws the distinction between issues subject to informationonly and those on which information and consultation should be conducted. Therationale for this distinction is that the matters which are subject toinformation only are matters which are thought to be generally outside thecontrol of the employer. Employees through their representatives will have a right to be informedabout the recent and probable development of the undertakings or theestablishment’s activities and economic situation. Employee representatives will have a right to be informed and consulted on: – The situation, structure and probable development of employment within theundertaking or establishment; – Measures envisaged which could pose a threat to employment; – Decisions likely to lead to substantial changes in work organisation or incontractual relations including those covered by the Transfer of Undertakingsand Collective Redundancies legislation. The key point here is that the proposed subject matter of information andconsultation contains the two key elements of information, namely the ongoinghealth of the undertaking and any plans for changes, especially those inrelation to employees. Carrying out information and consultation The directive defines what is meant by ‘information’ and ‘consultation’ andlays down some rules as to how employers should carry out those processes. Information concerns the employer’s transmission of data to employeerepresentatives so they can acquaint themselves with the subject matter in handand examine it. Information must be given in such a way (timing, method,content) as to enable employee representatives to conduct “an adequatestudy” and, where necessary, prepare for consultation. Consultation is a more meaningful process than the provision of information.Under the terms of the directive, it means an exchange of views andestablishment of dialogue between the employer and the employeerepresentatives. This is the same definition as that found in the European WorksCouncils Directive. The provisions governing consultation state that: The timing, method and content should be appropriate – It should take place at the relevant level of management and employeerepresentation – It should take place on the basis of relevant information supplied by theemployer and on the basis of an opinion formulated by the employeerepresentatives – It should enable employee representatives to meet with the employer andobtain a response, including reasons for the response, to any opinion therepresentatives might formulate, and – Insofar as decisions are likely to lead to substantial changes in workorganisation or in contractual relations, consultation should take place”with a view to reaching an agreement” on decisions within the scopeof the employer’s powers The employer is, therefore, obliged to enter into consultation “with aview to reaching an agreement” on significant changes in the workplace.What that phrase means is not explained in the directive. It is used, however,both in the context of the Acquired Rights Directive and the CollectiveRedundancies Directive. The phrase does not mean the employer is required to agree with any counterproposals made by employee representatives. However, consultation must beentered into with an open mind and with a willingness to be persuaded. Arguably, what is envisaged is a process akin to negotiation. An employerwho enters into consultation with a closed mind will be found not to haveproperly consulted at all, and will be exposed to liability for breach of theobligations contained in the directive. In considering whether an employer has discharged his duty to consult, evenwhere there is no obligation to consult “with a view to reaching anagreement”, the question of the employer’s state of mind at the outset ofthe consultation process will be relevant. Consultation clearly means more than the simple provision of information.Case law in the context of the collective redundancies legislation may beinstructive. In that context, in R v British Coal Corporation ex-partePrice,1994, IRLR 72, Glidewell LJ took the view that: “É fair consultationmeans:(a) consultation when the proposals are still at a formative stage; (b)adequate information on which to respond; (c) adequate time in which torespond; and (d) conscientious consideration É of the response toconsultation.” Glidewell LJ’s summary of fair consultation is consistent with thatenvisaged in the directive. Consultation must be entered into by the employerbefore decisions are taken. The employer must have an open mind and awillingness to be persuaded by employee representatives and the consultationshould take place only after appropriate information on the subject matter ofthe consultation has been provided to the employee representatives. Voluntary arrangements As with the original draft, the final text of the directive provides thatmember states may allow management and labour “at the appropriate level,including at undertaking or establishment level” to define, throughnegotiation, practical arrangements for informing and consulting employees. These arrangements may contain provisions which are different to thosedescribed above, as long as they respect the principles set out in Article 1 ofthe directive, including a provision that information and consultation takesplace “in a spirit of co-operation”. Any negotiated form ofinformation and consultation may also be subject to limitations set out bymember states in their implementing legislation. The UK Government is keen for employers to set up voluntary arrangementstailored to suit their organisation and it is unlikely that there will be many,if any, such limitations in the UK. This opportunity to enter into voluntary information and consultationarrangements is familiar from the European Works Councils Directive. However,in that context, there was only an ability to enter into a voluntary agreementin the period prior to the directive’s transposition in to the relevant memberstate’s national law. If that window of opportunity was taken, the directive,as implemented in national law, did not apply to the trans-national undertakingor group concerned. The National-level Information and Consultation Directive is different.Voluntary arrangements may be entered in to at any time, either prior to orafter the directive is incorporated in to national law. All the directive saysis that the voluntary arrangements for information and consultation may bedifferent to those envisaged by the directive so long as they provide for theeffective information and consultation of employees. The directive, therefore,sets out the minimum requirements. Confidentiality Employee representatives will not be allowed to reveal any confidentialinformation given to them in the course of the information and consultationprocedures if it is expressly provided to them in confidence and if this is inthe legitimate interest of the undertaking concerned. However, member statesmay authorise employee representatives and those assisting them to pass onconfidential information to employees and to third parties bound by anobligation of confidentiality. Whether this means the employees must havesigned some form of confidentiality undertaking or whether their general dutyof confidentiality will suffice is not clear. Under the directive, an employer will not be obliged to disclose informationor undertake consultation when, according to objective criteria, theinformation or consultation might seriously harm the functioning of theundertaking or the establishment or would be prejudicial to it. This exceptionis likely to be construed narrowly. Member states will be obliged to set-up procedures for dealing with disputesover confidentiality of information. If the Government adopts a similar approachto that used in the context of the European Works Councils legislation, it willmake provision for disputes in this area to be referred to the CentralArbitration Committee. Protection of Employee Representatives Employee representatives must have specific protections to enable them tocarry out their functions. In the UK, we can expect this to be the now familiarpackage of the right not to be subject to any detriment for exercising theirfunctions or standing for election, and provisions rendering any dismissal ofan employee representative or candidate for election in connection with suchmatters automatically unfair without reference to the usual statutory tests. Sanctions – no nullification of dismissals One of the major differences between the text originally proposed by theCommission and the final text of the directive concerns the provisions relatingto sanctions. The 1998 text stated that, in case of serious breach of thedirective’s provisions by the employer, and where this would have direct andimmediate consequences in terms of substantial change or termination ofemployment contracts or employment relations, the decision (dismissal, forexample) would have no legal effect on the employment contracts or employmentrelationships of the employees affected. The original text also defined seriousbreaches as the total absence of information and consultation, and thewithholding of important information or provision of false information. These provisions have been omitted from the final text of the directive,which states merely (as also contained in the original draft) that memberstates shall provide for appropriate measures in the event of non-compliancewith the directive, that adequate administrative or judicial procedures shallbe available to ensure compliance and that member states should provide for”adequate sanctions” in the case of infringement, which must be”effective, proportionate and dissuasive”. Reactions The European Trade Union Confederation has stated that the directive”sends a strong signal to workers and to those who had serious concernsabout the high-handed and frankly intolerable way company management have beenbehaving in closures and industrial restructuring”. The ETUC maintains itis the result of concerted trade union action and lobbying. The Union of Industrial and Employer Confederations of Europe (UNICE) wasnot originally in favour of the directive, based on subsidiarity arguments andbelieving that a high level of protection of workers is already ensured by theCollective Redundancies, Transfer of Undertakings and European Works CouncilsDirectives. UNICE has, however, welcomed elements in the directive including,in particular, the exclusion of smaller employers from the scope of thedirective and the broad principles on sanctions. What happens next? While the directive as a whole must be implemented into UK law within threeyears, the UK will have up to six years to implement the provisions in full. ByMarch 2005, the directive must be applied to employers in the UK with more than150 employees; by March 2007 to those with 100 or more employees and, only byMarch 2008, will it have to be applied to those with 50 or more employees. Bycontrast, in those Member States where there is already in existence aframework for employee information and consultation [all existing EU MemberStates except the UK and Ireland], the directive must be applied, in full, toall employers with more than 50 employees from the standard implementation dateof March 2005. The DTI has already issued a discussion paper in connection with employeeinvolvement and has stated its intention to consult on the implementation ofthe directive in the UK during 2003. The consultation document will include draftimplementation regulations. Although UK law will probably not change until March 2005, employers shouldnot be complacent. They would be well advised to audit their employeeinvolvement arrangements now, or if no formal arrangements exist, consider introducingsome. This is particularly because voluntary information and consultationarrangements will be capable of satisfying an employer’s obligations under thedirective and the employee relations advantages of being pro-active are likelyto be quite considerable. Philip Titchmarsh is a solicitor at Pinsent Curtis Biddle Previous Article Next Article Lawyers view: The national-level information and consultation directiveOn 1 Sep 2002 in Personnel Today Related posts:No related photos.
Sonia Heaton is the new HR director at automotive firm Lex Auto Logistics.She joins from BAE Systems where she was HR manager. Heaton has vast experienceof the sector, having worked as a regional training manager for House ofFraser. Her new role covers learning and development, performance managementand HR strategy. Keith Spooner has been appointed change programme manager at BNFLEnvironmental Sciences, the specialist de-commissioning and remediation business.The programme he will be heading up is based on a set of strategic prioritiesaimed at improving skills and experience in the organisation. Spooner waspreviously site manager at Trawsfyndd power station. Sarah Decent has joined Technicolor Entertainment Services as HR director,based at West Drayton. She has been in HR for 14 years and her last job was HRmanager at TDG. Previously, she spent four years at PWC in the same role, andheld a number of HR roles in the telecoms/hi-tech industry prior to that.Decent holds an MA in Industrial Relations and HR Management from WarwickUniversity. Comments are closed. Previous Article Next Article On the moveOn 22 Apr 2003 in Personnel Today Related posts:No related photos.
Related posts:No related photos. Top up fees hold no fears for new chief of the AGROn 13 Jan 2004 in Personnel Today Thenew head of the Association of Graduate Recruiters has reassured employers thatcontroversial top-up fees for university students are unlikely to have muchimpact on the number of graduates joining the workforce.Inan exclusive interview Alison Hodgson told Personnel Today that the proposedfees, coupled with the Government drive for more vocational training, would nothave a serious effect on graduate recruitment.”Australiahas been operating this model of top-up fees for a long time and graduates havenot turned away from the market at all,” she explained.Hodgsonalso wants graduate recruitment to become more of a profession in itself, withits practitioners having the same level of expertise and kudos as otherspecialisms within the HR field. Comments are closed. Previous Article Next Article
Somerfield opens its doors to allOn 10 Aug 2004 in Personnel Today Previous Article Next Article Related posts:No related photos. Comments are closed. Supermarket group Somerfield is opening uphundreds of jobs for people with disabilities by joining forces with Remploy, the leading supplier of employment opportunitiesfor the disabled. Under the scheme – which covers more than 1,250 Somerfieldand Kwik Save supermarkets nationwide – stores willprovide Remploy’s recruitment division, Interwork Services, with details of their vacancies. Thecompany is guaranteeing to interview all candidates presented by Interwork Services, provided they meet the jobspecification requirements. Interwork Services will advise on the interviewprocess and provide continuing advice and support for both new recruits andmanagement. It will also be available for advice on issues around disabilityand access. Karan Paige, head of retail HR at Somerfield, said: “We have already been working with Remploy to recruit disabled people and we are impressedwith the significant contribution these employees have made. “This partnership will provide a unique recruitment resource for Somerfield, enabling the company to access the widestpossible pool of talent. It will also help us meet our obligations on diversityand equal opportunities issues.” Stuart Knowles, executive director for InterworkServices, said there were more than a million disabled people in the UKwho wanted to work and were looking for an opportunity to use their skills. “Experience shows they are particularly committed and conscientiousemployees,” he said. “Yet too often their potential is ignored wherethere are acute employment shortages.” Somerfield said it hoped the scheme would enableits workforce to better reflect its customer base and the local community. By Mike Berry
Share on FacebookShare on TwitterShare on LinkedinShare via Email Share via Shortlink (Illustration by Kotynski)Over the course of the last several years, billionaire Ken Griffin went on what can only be described as a real estate buying binge. There was a $60 million penthouse in Miami, a $59 million penthouse on Chicago’s Gold Coast and a $122 million mansion overlooking St. James’s Park in London. Then, for the hedge funder’s pièce de résistance, he closed on the record-breaking $238 million condo at 220 Central Park South.Griffin obviously isn’t the first billionaire to purchase a second, third or fourth home in New York. And he has said he is in New York almost every week and plans to make this apartment his home in the city. But purchases like his — or at least those in the seven- and eight-figure price range — have become commonplace in Manhattan and have contributed to a much-maligned phenomenon here in which shiny new condo towers get sold out and then sit half empty for months at a time.But Griffin’s 220 Central Park South deal put a new spotlight on this kind of investor activity, setting off last month’s scramble by state lawmakers to find a way to tax luxury residential purchases. That push was bolstered by ongoing concerns over money laundering and the sources of cash flowing into New York real estate through anonymous corporate entities.Related: Tax targetsAlong the 57th Street corridor, clusters of so-called ghost towers — those with darkened apartments — can be spotted on any given night.“These buildings were targeting the Billionaires’ Club of the world,” said attorney Pierre Debbas, the managing partner at the boutique real estate law firm Romer Debbas, who has a view of One Beacon Court from his Midtown office. “Most nights, there are five lights on. It’s crazy.”According to the latest U.S. Census Bureau data, 60 percent of residences in a 14-block tract of Midtown East between 49th and 56th streets were “seasonally vacant” between 2013 and 2017.Meanwhile, a recent study by the New York City Department of Housing Preservation and Development found that the number of pieds-à-terre in the city jumped to 75,000 from 55,000 between 2014 and 2017. City Comptroller Scott Stringer’s office estimated that 5,400 of them are worth $5 million or more.During those boom years between 2014 and 2017, foreign investors — particularly from Russia and China — snapped up trophy apartments that doubled as safety deposit boxes.“Some of these buildings are half empty. Is that a big deal?” said George Doerre, a vice president at M&T Bank, which has financed condo projects in the city. “That’s the question we’ve been asking for four or five years.”This month, with that question top of mind, The Real Deal attempted to quantify these investor purchases, surveying Department of Finance tax rolls for over 92,000 Manhattan condo units in 773 buildings — all the Manhattan condo buildings with 30 or more units.We found that roughly 16 percent — or about 15,000 of those units — were purchased through anonymous LLCs or other corporate entities. That figure offers some clues, because investors often use LLCs to buy apartments. The catch? So do many wealthy buyers who purchase their primary home through an LLC in order to protect their assets or maintain anonymity.But there’s another key indicator of an apartment’s ownership status: An annual condo/co-op tax abatement available only on primary residences.With help from the city’s Independent Budget Office — a nonpartisan organization that provides information about the city’s budget and tax revenue — we identified 30,000 units that didn’t claim this benefit, another sign of significant investor activity.Related: Investors: A double-edged swordThat means around a third of the condos TRD surveyed are likely owned as pieds-à-terre or investor properties. And if you strip out other units from this equation that are ineligible for the abatement — for example, those getting another type of tax break— the percentage of pieds-à-terre or investor properties shoots up to 43 percent. George Sweeting, deputy director for research at IBO, said the abundance of owners not receiving the tax break is notable.“You would assume that these are relatively sophisticated owners, particularly at the high end,” Sweeting said. “I would assume that most co-op/condo owners in a building who are eligible for the abatement do apply for it. The benefit is fairly substantial.”Though some would argue the benefit isn’t substantial enough to dissuade buyers from using LLCs, anecdotal evidence suggests investor units have piled up in certain corridors of the city. “You can just ride through my district at night, the East Side of Manhattan, and you’ll pass complete buildings where there are no lights on,” said U.S. Rep. Carolyn Maloney. “They’re bank accounts.”A place to put your pillowIt’s no coincidence that pied-à-terre purchases are concentrated at the uppermost reaches of the market.“It’s that level of success where you have the luxury of having your own pillow and artwork, so that when you’re in town you’re not in a hotel,” said Compass’ Vickey Barron, who has sold some of the priciest condos in the city.Although geopolitical strife has slowed investment, brokers said pied-à-terre buyers have been largely immune to market fluctuations.That’s because unlike investors who rent out their condos, returns are not the only motivation for this group.“They’re not worried about tax breaks and jumbo mortgages or interest rates going up,” said Julie Perlin of Stribling & Associates, who specializes in pied-à-terre purchases in Midtown East.According to sources, buildings like the Baccarat Hotel & Residences, 737 Park Avenue and 432 Park are heavy on units without primary residents.TRD’s research seems to back that up.For example, at 432 Park, where 114 of the 146 units had sold as of last month, just a handful of owners received the co-op/condo tax abatement in 2018 — although nearly 62 percent of owners are LLCs or other corporate entities that are not eligible for it.At the nearby Plaza, the Corcoran Group’s Charlie Attias has sold 40 apartments over the past eight years. According to TRD’s analysis, all 164 sponsor units at the Plaza have sold, and the building has 97 LLCs/corporate owners and 39 units receiving the tax abatement.“The majority are pieds-à-terre, and the majority are also foreign buyers,” Attias said, noting that they were drawn to the Plaza’s cachet and location. Elliman’s Gail Sankarsingh said her buyers have been drawn to the Baccarat, where she sold the penthouse as a pied-à-terre for $42.5 million, for similar reasons. Meanwhile, Asher Alcobi, a co-founder of Peter Ashe Realty, said he’s sold four condos at 432 Park — one to an investor who rented it out and three as pieds-à-terre. “No one lives there full-time,” he said.A spokesperson for Macklowe Properties and CIM Group, the developers of that property, declined to comment. (It should, however, be noted that they have sold the über-luxe building at a fast clip and unloaded a slew of headline-grabbing blockbuster properties).Although Midtown has been a favorite location for investors and pied-à-terre owners, those buyers are increasingly looking Downtown.At 56 Leonard, Brown Harris Stevens’ Sophie Ravet sold four pieds-à-terre. Elliman’s Madeline Hult Elghanayan said 160 Leroy, developed by hotelier Ian Schrager, has also attracted an international buyer pool.“There were buyers from Australia, Hong Kong and Turkey,” she said. “There’s one person from the Upper East Side who wanted a Downtown apartment. I saw her in the elevator the other day — they live on the Upper East, and this is their weekend getaway.”Pied-à-terre and investment properties are, of course, not exclusive to New York. A recent analysis by the international organization Global Witness found that 87,000 properties in England and Wales are owned by anonymous companies registered in tax havens.But in New York, sources say, most developers anticipate that 10 to 15 percent of buyers are looking for an investment or pied-à-terre, and they plan amenities accordingly. “You’re putting in things that investors would use if they use it as a part-time place — like business centers and lounges,” said Andy Gerringer, head of new business development at the Marketing Directors.Zeckendorf Development’s 520 Park, for example, has a wine and cocktail lounge. Buyers in that building include vacuum mogul James Dyson, one of England’s largest private landholders, as well as Ultimate Fighting Championship co-founder Frank Fertitta, whose primary home is in Las Vegas.Despite a flurry of closings at 520 Park in recent months, inventory in the broader luxury Manhattan market is piling up, discounts are widespread, and sales velocity has slowed. And some say investors (those making financial transactions rather than buying second homes for themselves) are reacting.“Investors are ducking and covering right now. They’re hoping to ride the market until it comes back,” said Dylan Pichulik, CEO of XL Real Property Management, which manages luxury residential properties for absentee owners in New York.Pichulik said that over the past six months, 10 of his sellers have pulled listings off the market. “Everyone came back and said, ‘Okay, let’s put a tenant back in place and we’ll try again in a couple of years,’” he said.Even buyers looking for trophy apartments think prices in the city are still too high, said attorney Debbas, who represented the buyer of a $17 million unit at 520 Park.In addition, he said, the dollar has gotten stronger, and foreign investors increasingly view the U.S. as less politically stable than they once did.Fueling rentals While many ultrawealthy buyers are happy to have their condos sit empty for long stretches, the vast majority of investors are not.This year, Compass’ Marie-Claire Martineau sold four condos at the Sutton on First Avenue to Chinese investors — each of whom ponied up $2.5 million to $4 million in cash. Upon closing, the units immediately went up for rent, she said.These units are all adding to the inventory in the rental market. At Extell Development’s One57, the owner of Unit 56B paid about $10 million in 2011 and has been renting it out for $25,000 per month for the last few years. “He didn’t have a mortgage and the common charges are $5,000 with taxes, so he nets $250,000,” said Corcoran’s Attias, who recently listed the apartment for $7.9 million.But most investors want units priced under $3 million that will rent out quickly — a fact that condo boards have responded to by offering flexible rental rules.Executive Plaza on West 51st Street, for example, has a one-month minimum stay, compared to a typical 12-month lease. The Link, 1600 Broadway and the Orion all have six-month minimums.“Investors come in with cash, they rent it out and maybe five, six or seven years later we sell it for a profit,” said Martineau.At the Orion, which was also developed by Extell and is entirely sold out, a stunning 98.7 percent of units are either owned by corporate structures or by residents not getting the condo and co-op abatement. That was the highest percentage TRD found.Of the 551 units at the building — located at 350 West 42nd Street — 92 are owned by LLCs or other corporate structures, and only seven owners received the abatement in 2018. That’s only 1.5 percent of noncorporate-owned units. Neither Extell nor representatives for the Orion’s management company responded to requests for comment. In addition, the building received a 421a tax abatement — which made it ineligible for the condo and co-op abatement — until that expired in 2018. But at that point a number of owners began looking to sell. Last month, the Orion had 24 listings, a fact brokers said is more evidence of investors. “Now that the tax abatements are gone and the market is not great, owners are getting out,” said Martineau.The Manhattan market has, indeed, seen five consecutive quarters of sales declines. What’s more, the weak rental market has further dampened investor purchases, according to appraiser Jonathan Miller, who added that investors and second-home purchasers are the first to stop buying when the market turns. “They’re going to wait for better conditions,” he said.The Modlin Group’s Adam Modlin said that back in 2014 and 2015, investors who went into contract for new condos at $2,500 a foot believed their units would be worth $4,000 by the time they closed. “If you buy today, are you going to be in the money? No,” he said. “The greater likelihood is that when the project is complete, the price will go down.” Despite that, Modlin said, the investor market is not dead. An investor who bought a $5 million condo but has to sell at a 20 percent discount may be able to purchase a $10 million property for a similar discount. In that scenario, the investor stands to net $2 million, he said.BHS’ Ravet agreed, saying that she continues to see activity among investors. She said one of her clients, a Canadian investor looking to spend up to $4 million on a condo to rent out, has been unequivocal about striking while the iron is hot. “I spoke to him last week and he said, ‘I don’t care where it is in the city, just find me the best deal. I just want to park that money,’” she said.— Additional reporting by Kevin SunCorrection: An earlier version of this story misstated the timeline on Ken Griffin’s string of residential real estate purchases, including for his Chicago apartment. The story has been updated to reflect the accurate closing dates. It’s also been updated to include a public statement Griffin made about the amount of time he will spend in his 220 Central Park South apartment. Share via Shortlink
Email Address* Share via Shortlink (Getty, iStock)It’s one of New York City’s biggest real estate events of the year: Thousands of attendees fill the Jacob Javits Center for the International Council of Shopping Centers retail show.The December event was canceled, as virtually everything was last year. But today, Javits is one of the vaccination sites the real estate industry is counting on to bring New York back to pre-Covid life.In the parlance of real estate, widespread vaccination is seen as a leading indicator. Real estate’s recovery is expected to follow, though some segments are expected to take longer than others.“I think you’re going to have pockets of real explosive growth,” said Marcus & Millichap’s Eric Anton, who noted decimated sectors like retail and hospitality have the most potential to rebound. “I think it will spur confidence in multifamily in New York and New Jersey, which seem to be tumbling beyond recognition.”ADVERTISEMENTSome sectors are primed for a fast comeback. Hotels, for example, are among the assets most sensitive to changes in the economy, as their room rates are essentially reset every night. Many experts believe that once business travel and tourism return, the hotel industry will bounce back relatively quickly.Dr. Anthony Fauci last week told a group of performing arts professionals that theaters could be able to open later this year.“If everything goes right, this will occur some time in the fall of 2021,” said Fauci, according to the New York Times. “So that by the time we get to the early to mid-fall, you can have people feeling safe performing on stage as well as people in the audience.”For other types of real estate, such as offices, recovery may have more to do with how work patterns change than with vaccinations. Others, such as multifamily apartments, will have to factor in things like eviction moratoriums and federal financial support, on top of changes from the 2019 rent law.New York City administered its first coronavirus vaccine Dec. 15, and this week Gov. Andrew Cuomo expanded the list of those eligible for one to include individuals 75 and older. But the rollout has had its share of challenges, such as reports of pharmacies throwing out expired vaccines or distribution sites booking more appointments than they had vaccines to accommodate.It’s unclear when enough people will get vaccinated to allow for the economy to significantly reopen.For the real estate industry, there is plenty of room for recovery following a year when business all but shut down.Investment sales in Manhattan, for example, were off 51 percent in 2020 compared to the year prior, according to Avison Young. The borough recorded just $8.5 billion worth of deals.Manhattan retail, meanwhile, recorded its sixth-straight quarter of declining leasing volume at the end of 2020, according to CBRE. Retail leasing over the previous 12 months dropped below 2.1 million square feet, according to the brokerage.And office leasing hit a record low in 2020, as Manhattan recorded just 19.4 million square feet of leases, Avison Young noted. That was down 51 percent from the year before and more than 20 percent below the previous record low of 25 million square feet in 2008 at the onset of the financial crisis.Prior to Covid, the office leasing market had some of its best years ever. Although it’s not clear when, if ever, the sector will return to pre-pandemic levels, when landlords and tenants return to the negotiating table, they’ll find a different dynamic.“There’s going to be a period, and who knows how long it’s going to last for, where tenants are firmly in the driver’s seat,” said Bill Montana at Savills.Manhattan’s vacancy rate stood at 14.2 percent at the end of 2020, according to Avison Young. Industry experts generally agree that when the rate exceeds 10 percent, the market favors tenants over landlords.Many large office occupiers put leasing plans on hold when Covid hit and the state temporarily halted in-person showings. Some kicked the can down the road with short-term renewals. But there’s a constant churn of expiring terms across the city, meaning company CEOs face some kind of decision on their spaces, pandemic or not.Montana said those companies and their real estate advisers are watching the headlines like everyone else. By the time the city gets to herd immunity and workers are back to their office buildings, the occupiers will already have been working on their plans to lease new spaces, reconfigure their current ones for social distancing or figure out some kind of mix between working from home and the office.“The smart ones are already thinking about that now,” he said. “They’re not necessarily pulling the trigger, but they are aiming the gun.”Returning to the office is a big part of Gov. Andrew Cuomo’s road to recovery for the city. The governor on Tuesday revealed a plan to make rapid testing available to get people back in offices and restaurants.“Office buildings are the engines of our economy,” he said. “Bringing workers back safely will boost ridership on our mass transit, bring customers back to restaurants and stores and return life to our streets.”Thomas Flood of Richland Management, based in Great Neck, urged the governor in a letter to include superintendents, porters and other essential building staff in the early vaccination rounds.“It did not surprise me when I learned that a doorman in the Bronx was one of New York’s first fatalities,” he wrote. “It is consistent with the type of service that these workers provide and the care that they extend to our residents. Most days I worry over the continued risk that my staff take and the implications this has for the health of our residents and operation of our buildings.”For some areas of real estate, though, recovery is already underway.Manhattan apartment rentals surged to their highest levels since the financial crisis from October through December as falling rents enticed tenants to ink new deals, according to Miller Samuel.Joe Ben-Zvi, co-founder of leasing automation company Vero Leasing, said many of the enticements landlords are offering to fill apartments will remain for some time.“The amount of absorption it’s going to take to subdue those incentives is going to take several leasing cycles,” he said. “Just because the virus no longer around doesn’t mean those incentives will go away.”Contact Rich Bockmann Full Name* Share on FacebookShare on TwitterShare on LinkedinShare via Email Share via Shortlink Message* TagsCommercial Real EstateCoronavirus
Drew Isaacson, who worked on the $447M sale of The Olivia, will move from SL Green to Eastdil Secured (Google Maps, LinkedIn via Drew Isaacson) Eastdil Secured has tapped an SL Green Realty acquisitions pro to join its sales team.Drew Isaacson, a senior vice president at SL Green, will head to the real estate investment banking firm next week as a senior vice president in the New York City office, sources told The Real Deal.Isaacson has spent the past seven years at the REIT, where he’s worked on deals like last year’s $447 million sale of the Olivia apartment building on West 33rd Street to a fund backed by Brookfield Asset Management.Isaacson is also heavily involved in the company’s debt and preferred-equity book. Prior to SL Green, he spent about five years at Waterman Interests, according to his LinkedIn profile.ADVERTISEMENTA representative for Eastdil Secured declined to comment, and Isaacson did not immediately respond to a request for comment.Isaacson will work on the sales team led by Gary Phillips and Will Silverman.The hire comes as Eastdil, once New York City’s top investment sales brokerage, looks to regain some of the ground lost to competitors in recent years. Its top sales team, led by Doug Harmon and Adam Spies, left for rival Cushman & Wakefield in 2016.Eastdil ranked as the fourth most-active brokerage in New York City in 2019 with $1.8 billion worth of deals, according to the most recent ranking by The Real Deal. That put it behind competitors Cushman, CBRE and JLL — firms the company had previously dominated.Eastdil has also suffered something of a brain drain in recent years as a number of its home-grown brokers left. Most recently, senior vice president Bruer Kershner departed in October after more than eight years at the firm. He took a job at CBRE in Philadelphia, according to his LinkedIn.Headed by CEO Roy March, Eastdil has long prided itself on its company culture — “the Eastdil way” — built on a model where brokers work collaboratively on deals in a salary-and-bonus compensation structure, as opposed to the “eat what you kill” commission basis of most commercial real estate brokers. Eastdil was also known for training and bringing up professionals through its ranks, but in recent years the company has relied more heavily on outside hires.But it’s been in the midst of some major changes. March oversaw a management-led buyout of the company in late 2019, financed by the asset management firm Guggenheim Investments and the Singapore sovereign-wealth fund Temasek Holdings.And Eastdil recently lost its founder and longtime chairman Ben Lambert, who died in early February at the age of 82.Contact Rich Bockmann Tags Message* Share on FacebookShare on TwitterShare on LinkedinShare via Email Share via Shortlink Full Name* Email Address* Share via Shortlink Commercial Real Estateeastdil securedSL Green Realty
Housing MarketManhattanrentals Share on FacebookShare on TwitterShare on LinkedinShare via Email Share via Shortlink Share via Shortlink Tags The price cuts appear to have triggered more deals. Pending sales, or sales under contract, increased 31 percent in Manhattan from January 2020. In Brooklyn, pending sales increased 17 percent during the same period.More sellers will likely be offering price cuts in light of a massive glut of apartments and homes sitting on the market, according to StreetEasy economist Nancy Wu.This is especially true in the luxury sector. While January saw a 57 percent increase in high-end contracts from the previous year, Wu said inventory for luxury homes is still near all-time highs.[Bloomberg News] — Keith Larsen (iStock/Illustration by Kevin Rebong for The Real Deal)New York’s real estate market had a rough year in 2020 and price cuts portend a tumultuous 2021.January rents were down 15.5 percent in Manhattan and off 8.6 percent in Brooklyn from the same month last year, according to StreetEasy, Bloomberg News reported. Home prices also were lower by 6.2 percent in Manhattan and 5.4 percent in Brooklyn.Read more What will make of break New York City’s real estate market in 2021“A garbage year”: The state of Manhattan’s luxury resi market in 2020 The mirage of low interest rates