Moinian finds 'weak spot'

Real Estate Weekly, Dec 15, 2004 by Elaine Misonzhnik

Joseph Moinian would advise you to go ahead and overpay if you want to take advantage of the current sales market--otherwise you will lose your building. Speaking at a UJA Federation event on December 8, the CEO of the Moinian Group noted that with interest from prospective buyers being so high right now, sellers tend to give in to the highest bidder.

"The trend in the past few years has been for the sellers to decide not to have an asking price and let the buyer play Russian roulette and come up with [one]," said Moinian, who recently bought one of the biggest office buildings in the world, the Sears Tower in Chicago, as well as smaller properties at 180 Maiden Lane and 95 Wall St. in New York City.

"What happens is we come up with the price and the seller gives the contract to the top three [bidders] and we all start negotiating against ourselves. And if you just offer what you think the other guy will offer, you will lose. You should think of what the seller is looking for, you have to find their weak spot and massage it. Unless you go overboard, you will lose the building"

Moinian also advised potential buyers not to be fussy about the contracts. According to him, the Moinian Group was able to buy the Sears Tower only because a bidder who had already shook hands on the contract failed to close the deal quickly.

"Some of the financial institutions, when they sell, they don't want to get half of a deal," he said. "To them a no-nonsense approach and hard deposit is the language they understand. You can be the winner, but if [there are problems with the contract] they have the next guy ready. You get four to six hours to come up with a signed contract and the money."

Despite the high stakes involved in such kind of deals, Moinian insists he does not think he paid too much for any of his new properties--"Every building that I've lost, I am sorry I didn't buy it," he said. He feels that both the residential and commercial markets are in great shape right now and offer a great deal of opportunity to an intelligent investor.

"I see the most opportunity in the office sector right now," he said. "We are coming out of double digit vacancies. All the financial institutions, all the service companies are growing and hiring. All of that [means] that a year from today, the vacancy in midtown will be a mid single digit."

Moinian, who owns close to 5 million s/f of commercial and residential space downtown, also hopes that fewer availabilities and higher rates in midtown will be beneficial for lower Manhattan. He believes that the redevelopment effort downtown is progressing rapidly and will create a 24/ 7 community that will be more functional than the area was pre-9/11.

"The federal money will bring downtown to the next level," he said. "Also, the commitment of financial institutions is a huge factor. They are all hiring again. I see downtown as an almost immediate opportunity. If you wait more than five years, you will be late."

Moinian is also optimistic about the redevelopment of the Far West Side, though he hasn't yet made up his mind about the controversial Jets stadium.

"I feel very bullish about the expansion of the Javitz center--we need it--and the extension of the #7 subway line," he noted. "I will buy anything there I can get my hands on. The whole idea is to get there a little bit earlier [than the development takes off.]"

In general, he advised potential investors to be aggressive, study the properties they want to buy and be ready to complete fast transactions.

"In the buildings that I bought, there is not an inch that I don't know," he said.

"Otherwise, it reduces the speed of your creating more value. The current market is challenging, it's hard, but it's [rewarding.]"