In late 2005, I was hired by a young developer to consult, market, and sell a new project. My client was looking to make his mark on the New York residential market. He was smart, open to my ideas, and most importantly, he had enough money to get a project off the ground. The building was originally an 18 story office building on East 32nd Street in Murray Hill and he was looking to convert it into a residential condo. It was pioneering and our client wanted to do something innovative and special.
So we rolled up our sleeves and went to work.
Having never done a project in the city, our client weighed heavily on our insight and advice. He trusted us implicitly and gave us full reign on the vision of the project – the dream client. Everything seemed effortless. We had a blast. My team and I looked forward to every meeting.
We collaborated with the architects for 12 months on floorplans, the interior design, and the amenities of the building. We came up with a project that contained 80 loft apartments, a doorman, a children’s playroom, an indoor swimming pool, a fitness center, and a beautiful lobby that felt more like a boutique hotel than an apartment building. The concept was to bring authentic downtown lofts to Murray Hill with a level of services traditionally only found in a high-end hotel. The building had a broad range of apartments and a wide selection of layout options. The kitchens had poured concrete and wood block countertops, and high exposed ceilings, and the bathrooms felt like a personal spa. We closely honed in on our buyers’ needs and created dream lofts for a price point that didn’t exist in the market. It was a little risky, but our developer was all in. He had the balls to back up our vision and deliver something non-generic.
In 2006 we got to work on our marketing campaign. We created a new style of renderings that included realistic digital images that showcased people living in the lofts and enjoying our amenities. The building had a nondescript address, so we named her “Jasper”.
In the beginning of 2007, we set up Jasper’s sales office directly inside the building. A potential buyer would walk through a tunnel that hid the ongoing construction and then be led into a gallery-style experience that showcased the amenities and neighborhood. Once they were educated on all things Jasper, we would then tour them through one of two fully staged lofts.
In early 2007, we received the green light from the attorney general to start selling the apartments and we opened our doors. Showtime.
The record price at the time for a condo in the neighborhood was $1,225 per SF. The blended average price we were aiming for was just below $1,400. We ran our ad campaign and opened our doors.
The market responded. In a new development, there’s a requirement to have 15% of your building in contract before you can declare the offering plan effective. This sends a message to the market that sales are proceeding well and the project is legitimate. It also allows a developer to take a second deposit and schedule closings if the building has its temporary certificate of occupancy. Five months after launching sales, we had more than 50% of our building in contract – at record prices. People were excited about Jasper. They had never before been offered these types of homes in a building with these amenities in this location. We were outselling every other project in the market.
But then – something on the project went awry, and it had nothing to do with the market conditions created by the Great Recession of 2007. The construction crew ran into issues and there were unforeseen cost overruns. The developer couldn’t solve these problems and was forced to rethink his business plan.
In 2008 the market froze and nothing was selling. Everyone was scrambling because the world was turned upside down.
Except at Jasper.
If you gave any buyer in 2008 a free option to back out of a unit that they went into contract for in 2007, there wouldn’t have been a person who wouldn’t have exercised that option.
Except at Jasper.
We had more than 50% of the building in contract, with hard money deposits, and because of cost overruns and construction issues, our client had to abandon ship. Jasper was officially canceled and every buyer was notified that their contracts were null and void and they were going to be receiving their deposits back.
But, our buyers didn’t want their money back.
They didn’t want to renegotiate their contracts.
They wanted to live in Jasper.
After three years of work and half of the building sold, we were due to receive over $5M in earned commissions.
Our buyers’ dreams of living in this beautiful building disappeared, and for the next year, they all made it known to me how upset they were that this project was not moving forward. There was nothing else I could sell them quite like Jasper.
Everything was wiped out. Eventually, our client was forced to sell the building to a hotelier who took over the project.
Jasper is now The Marmara Park Avenue. A five-star hotel. Most of our buyers stayed where they were, moved into rentals or bought something else. None comparable to Jasper.
The ghost of Jasper still haunts me occasionally and when it does, I remind myself that sometimes the lessons learned are worth more than the earned unpaid commissions.
Side Bar:
Integrity. By now, you probably know Bill Browder’s story. If you don’t, I highly recommend you read his first book “Red Notice”, and his latest book “Freezing Order”. You can also follow him on Twitter or watch him on YouTube. Integrity seems to be in short supply these days. Few people are willing to put in the work needed to overcome certain obstacles or put their lives on the line for their principles. Bill Browder is an exception.
Let’s do this.
-Shaun