October 10, 2017
By Tim Latterner
When it comes to constructing some of the great buildings of New York City, the lines of who’s doing what can sometimes be a little unclear. Architects draw and design the structure, an interior decorator chooses furniture for staging, the plumbers put in the pipes, the electricians wire the building, the list goes on and on.
Behind all of the little-but-critical things that go into constructing a great building, behind every single decision that gets made, is one person, the developer. For the Naftali Group, one of New York’s most prominent developers, that man is Miki Naftali.
We sat down with Naftali for a candid discussion about the real role of a developer in a project—from the first brick to when the doors swing open—that will serve as the ultimate how-to guide for anyone looking to be a great developer, learning from the master.
“I try to understand the demand and getting to a point that to be able to go after an opportunity. Making a decision how much money you can pay for it based on your underwriting and understanding, hopefully understanding, of the market, what can be done with over there, how much you can sell over there, how long it’s going to take you to sell or to rent, if it’s a rental property, how much it’s going to cost you, can you get financing, how long it will take to build the project. All those elements need to work with you.
Then, try to win the bid or win the opportunity, or convince someone to sell you a piece of real estate or an old building, and to say, ‘Look, here is how much money we’re willing to pay you,’ and hopefully to be in a position that you win it.
When you so-called ‘shake hands’ on a deal, then it moves into another process of negotiating the purchase and sale agreement, making sure that you know what you’re buying, making sure that the seller is behind his promises. Before the closing and after the closing.
Then, at the same time, you need to negotiate with the lender. No one is buying full cash. You don’t buy anything cash, so you need to negotiate with lenders. You need to make sure that the lenders are there for you. You need to make sure that you have a very good reputation, especially in a tight market, when the lenders are very selective and they’re very careful who they lend to. You need to negotiate the loan agreement with the lenders.
When you do all of that, from my point of view, the minute that I shake … that I have a deal, before I sign, before I close, the minute that I have a deal and I start to negotiate on the purchase and sale agreement, but if I feel comfortable that I have the deal and now it’s legal, from that moment I put together the design team.”
And if you’re thinking that’s the end of the developer’s work, think again. Naftali oversees some of the most impressive real estate projects in the city from The Shepard downtown to the twin developments at 221 and 210 West 77th Street. What makes his projects most enticing though is not his ability to manage money and finances, but rather his ability to keep the artistic and quality of luxury and design in place.
“It takes about 12 months to go through a really good design process. So now you’re in a process to make a decision, who is the right architect? Okay. You need to pick and choose the right architect. You need to make sure that they’re available for you at the right price. Interior designers, mechanical engineer, electrical engineer, sprinklers, sound engineer, you name it. You have consultants that you put together as a team. You build your team to start to design the project.”
“Then, beside that, now you need to start to think about marketing and sales. So besides the brokers and the team, you start to think about positioning, creative. They’re another team of people that you hire to advise you on how to create the story. Okay. It’s not,’”Okay, I built something, and now I open a sales office and hopefully someone will come to…’. There’s a lot involved. Basically branding. The same as on the fashion side, you know, many high-end brands spend a lot of money and time thinking about everything. How to brand a product and how to work in our minds that we will want to buy it, right? Between social media and other things that are, or opening a store on fifth avenue that is not necessarily a profitable store, but that’s what they need, to promote the brand.”
Throughout the entire process, Naftali’s craftsmanship oversees everything with his team. They have become a united force to make sure every detail is perfect, and are always adaptive and quick to respond at a moments notice. When asked, Naftali likened his work to that of a great chef, commanding over the kitchen with pinpoint accuracy, and with a team that works loyally to support the same goal.
“It’s a lot of work and effort, a lot of work and effort, to make sure. As a developer, I’m pushing everyone. I don’t want to cut corners. If it takes four weeks to get something from overseas and we can’t get it sooner, communication. Making sure they understand. About a year into the life of the new building-we also manage the building, or asset manage the building at least a year after we complete the building, because a year after the board of condominium can make a decision—we say, ‘Okay, we want to go to another…’.”
And the process continues on and on, until some of the best parts of this city get built…