But, because Mr. Krugman is Mr. Krugman, he also takes a more macro view of the decision. His argument? This is just one more example of how the United States is recklessly allowing its most important infrastructure to deteriorate: "By refusing to pay for essential investment, politicians are both perpetuating unemployment and sacrificing long-run growth."

Read the whole screed here. 

This morning's comes care of India's NDTV. In a nutshell, vacancy rates are still rising, skyscrapers still remain incomplete, and purchasers of units in those incomplete towers are still unable to get their money back.

Here's a snippet:

Apartment buyers who made down payments for property construction cannot find what is happening with their money, these people said. Bank loans held on undelivered property often cannot be forfeited, and borrowers have had to pay higher interest rates even as banks have not let them walk away from the mortgages.

"The rules of the game are definitely opaque here," said an investor who has bought several properties in Dubai and who insisted on anonymity because of delicate talks with developers and regulators. "In the United States, I would know my legal position much more clearly and could take actions if necessary."

Read the whole thing here.

Well, Vans, the popular West Coast purveyor of checkered canvas slip-ons is trying to change all that. The Wall Street Journal reports that the firm is on Oct. 16 opening a private skateboard park called the "House of Vans" in Greenpoint:

[It's]part of a broader strategy to beef up Vans's presence in New York and the East Coast.

"Brooklyn is one of the best Vans strongholds outside of California," says Doug Palladini, Vans vice president of marketing. "As big as Vans has become, we're still really only known in a few key spots outside of California."

The 24,000-square-foot warehouse will be closed to the public, and will be used primarily by skateboarders endorsed by Vans. In addition, the space will be used by Vans to host events for retail shops, magazines and artists.

But while "you can't just show up," Mr. Palladini said there will be occasional chances-a special event through a local skate shop, for instance-for outsiders to get inside the park and roll around. He declined to say how much the company is spending on the facility.

More here.

In yet another example of life's little injustices, two former Deutsche Bank executives who made fortunes lubricating the real estate juggernaut have just landed plum gigs at LNR Property.

The Journal's Lingling Wei reports:

Justin Kennedy, ex-head trader of real-estate securities at Deutsche Bank, and Toby Cobb, former co-head of the bank's U.S. commercial-property lending business, are joining LNR after the firm recapitalized its balance sheet this summer by issuing $417 million in new equity to a group including Vornado Realty Trust, iStar Financial Inc., Cerberus Capital Management LP and Oaktree Capital Management LP.

...The moves by Messrs. Kennedy and Cobb are the latest example of big-name investment bankers and traders who helped finance the commercial real-estate boom moving into new jobs in which they are hoping to make money off the industry's distress. Jon Vaccaro, who built Deutsche Bank's commercial-real-estate lending business over the past decade recently has joined Lewis Ranieri, the pioneer of the home-mortgage-bond market, to form a new venture aimed at advising lenders and property owners on working out maturing commercial property debt.

Read the whole rather depressing article here.

Trade mag Hedge Fund Alert reports that Ms. Macklowe (profiled by Irina Aleksander in the Observer last year) is ditching the hedge fund business for fashion: "Specifically, she plans to start a fashion-related company and make seed investments in other fashion businesses."

Ms. Macklowe, wife of Billy Macklowe (profiled in the Observer last week) and daughter-in-law to Harry Macklowe, is known for her love of fashion. As she told Irina:

"You see all these amazing things on the runway, and very few people have the guts to wear them," Ms. Macklowe said. "Anyone can wear something that's safe, but you have to have a certain amount of courage to ... like one year I wore a Zac Posen dress to the CFDAs. It was all one piece of yarn in little pieces and I actually hit the worst-dressed list somewhere!"

The project would do the following: 

Named "Access to the Region's Core," or A.R.C., the project would build a new tunnel under the Hudson River connecting New York City and northern New Jersey, allowing 80,000 new riders to gush into Manhattan every day to work in its offices. Lots of new train service to north Jersey suburbs would offer a one-seat ride to Manhattan-bound commuters in places like Passaic, Paterson, North Hackensack and Teterboro, increasing property values in these towns by a total of $18 billion, according to a study by the Regional Plan Association. New planned office towers in Manhattan, like the massive new office building Steve Roth's Vornado Realty Trust wants to build right next to Penn Station, and buildings planned for a platform above the West Side Railyards, would be injected with adrenaline in a sagging economy. Commuters would get a less crowded ride, and ever-growing Amtrak could fit more trains (for a few years) into at-capacity Penn Station. All at a cost of about $8.7 billion.

Despite the project's obvious benefits, despite the fact that ground has already been broken on the tunnel, and despite a lot of funding already allocated, Mr. Christie is likely to shelve the project and use the funds to address the state's crippling debt.

As Eliot Brown, late of The Observer, explains:

[C]hristie had no great incentive to push for something that was not going to be his legacy project: He was not at that North Bergen groundbreaking, and, with a ribbon cutting targeted somewhere around 2018, he would not be there for the completion.

And the consituents in New York that would benefit from the project are not among Christie's voters; their own New York politicians are in no place to criticize, given that they have not put up money of their own.

If Christie pulls the plug, the best advocates for the project could hope for is a delay. But its rare for the existing funding on a project to remain intact through years of such delay. And that would probably be the end of A.R.C. With $600 million already spent on the project and the federal government having earmarked $3 billion to help with the costs, it's hard to imagine when the region will be able to round up that kind of money again, then redraft the plan, go through years of construction, and put a spade in the ground, for real this time.

Read it here. 

Which is to say, commercial real estate has got a long, hard slog ahead of it:

The turmoil hitting commercial real estate is the worst since the early 1990s, when the sector helped drag the economy into recession largely due to overbuilding. This time around, the problem is demand. Millions of job losses have eliminated the need for hundreds of millions of square feet of office space.

In addition to the 135 million square feet of space that businesses have already given up, many offices around the country are filled with the vacant desks of laid-off workers. That means that even when companies start hiring again, they won't need more office space right away.

When you factor in the impact of technology on demand for office space, the picture looks even cloudier:

Another factor in what's likely to be a slow recovery: changes in workplace design that require far fewer square feet of office space per employee.

In San Francisco, for example, accounting giant Deloitte recently inked a deal that reduces the square footage of its San Francisco headquarters by about 40%, even though the company plans to expand its head count in the city by 10% over the next year.

Read the whole analysis here.

The nose where he pressed his fingers was aquiline, like the beak of a barn owl. Below, his thin line of a mouth seemed hard-pressed to exhibit anything but irritation. For a man as fastidious as Mr. Macklowe, the ordeal of the past few years--an ordeal that laid low his and his father's business, an ordeal that made his family the poster child of the New York real estate bubble, an ordeal that still elicits invasive questions from intrusive reporters--must seem like medieval torture. Every negative blog post a turn of the rack.

You're just really seeking to move past all of that?

But all of that is over.

That's true. But it still informs our activities. ...

And that will show itself as I move forward.

William (Billy) Macklowe, 42, was born to a father whose immersion in New York real estate would come to dominate his life.

"My dad was less the throw-the-football-around kind of guy and more the let's-walk-building-sites-together," he told Men's Vogue in 2008.

An N.Y.U. grad with a degree in humanities, Mr. Macklowe joined the family firm in 1992. By then, his father, Harry, was an outsize figure in New York City, known as a mercurial, bare-knuckled genius. He started his career as a broker in the '60s, ultimately turning to development and amassing a fortune. He gained notoriety in 1985 when, under cover of night, his development team illegally tore down two Times Square SROs to make way for a new hotel. He was later fined $2 million. Then, like so many others, Harry Macklowe was felled by the real estate recession of the late '80s-early '90s.  

With Billy at his side, Harry quickly rebuilt his fortune. By 2003, he had won the industry's most prized trophy--the General Motors Building at the southeast corner of Central Park.

He solidified his reputation as a real estate virtuoso, the man who built Riverbank West and remade 340 Madison Avenue; the man who would go on to reopen the GM Building plaza to the street and help Apple build the now famous glass cube at the tower's base.

"It's not like Billy can easily replace his development savvy," said Michael Fascitelli, the president and CEO of Vornado, a real estate investment trust, and a longtime business associate of both men. "Harry was really one of a kind."

Yet if Harry was the creative genius, Billy seemed to pride himself on serving as his more practical foil.

"I've spent a considerable amount of time institutionalizing our business," he told Men's Vogue.

"I always thought he brought some stability to Harry's wildness," said a real estate executive who asked to remain anonymous so as not to endanger his relationship with the father and son.

Billy Macklowe also focused his energies on leasing and became a respected negotiator and dealmaker. Thomas Fuerth, an attorney who represented a Christian Scientist church in negotiations with Mr. Macklowe over the redevelopment of 340 Madison Avenue, remembers him as "very knowledgeable."

"He's a good negotiator," Mr. Fuerth said. "Sophisticated, understood the issues. I found it very enjoyable dealing with Billy."

Mitchell Konsker, a broker at Cushman & Wakefield who has helped Mr. Macklowe lease 140 East 45th Street and 340 Madison Avenue, among others, has been similarly impressed. "He is a dealmaker," Mr. Konsker said. "He makes the tenant feel at home. He gives the level of service you would expect from a first-class property. He treats the brokerage community fairly, but he is a very tough negotiator."

Nevertheless, there is an impressive amount of grousing about Mr. Macklowe in the clubby world of Big Real Estate, all of it off the record, lest brokers damage their standing with a family still regarded as powerful. If they're to be believed, Mr. Macklowe has the unfortunate habit of talking down to those he considers beneath him.

"Billy Macklowe is a guy who woke up on third base and thinks he hit a triple," said one broker. 

"He started on third base and he thinks he hit a home run," said another broker separately.

Said a third, "He was always a very arrogant young guy."

"He was really mean to people when they were on the top of the world, and unfortunately that's what people are remembering right now," said yet another leasing broker. "But at the end of the day, he's a really talented guy with a high aesthetic. He's got great taste."

When asked about his reputation for meanness, Mr. Macklowe said, "I've never heard that."

So tell me about cooking.

Why?

I don't know. I'm just trying to get you to open up a little bit. You're so tightly coiled.

No, I'm not tightly coiled at all. So much has been written about the past and all that, it's just not an area that I really wish to comment on.

The past that he was referring to began in 2007, when Mr. Macklowe and his father embarked on one of the most ill-fated real estate ventures of the modern era.

In 2007, Stephen Schwarzman's Blackstone Group bested Vornado Realty Trust and bought Sam Zell's Equity Office Properties Trust for $39 billion. The portfolio included some of Manhattan's finest cloudbusters, from the 39-story Plaza district tower at 540 Madison Avenue, catering to high-end boutique firms, to Worldwide Plaza at 825 Eighth Avenue, which housed high-powered tenants like Cravath, Swaine & Moore.

Blackstone, attuned to the roaring market, proceeded to sell off some of its new acquisitions. In a rapid-fire transaction that took place over 10 business days, Blackstone flipped seven midtown skyscrapers to the Macklowes for $7 billion. The family's footprint doubled to more than 10 million square feet. This being the era of overleverage, the family put only $50 million down, using the GM Building and personal assets as collateral, and financing the transaction with short-term loans from Deutsche Bank and Fortress Investment Group.

That wouldn't have been a problem if the real estate market had continued to soar, untethered by any relation to reality. But it didn't. The subprime mortgage crisis and subsequent collapse of Lehman Brothers spread fear in the New York real estate market. Transactions soon ground to a halt, property values fell off a cliff, credit markets withered. The Macklowes were unable to refinance that short-term debt, and they were forced to sell off the seven trophy towers and the GM Building at distressed prices. Billy Macklowe publicly spearheaded the dismantling of the empire. It was one of the most spectacular collapses the New York market had ever seen.

At the time, some people in the real estate community faulted Deutsche Bank for playing hardball with the Macklowes, rather than, like countless other banks, renegotiating and extending the loans until the economy improved.

"Yes, Deutsche Bank should have rolled with it," Billy Macklowe said. "They should have held out for the market to return."

But they didn't, and the fire sale--and recriminations--began. On May 27, 2008, an article in The Wall Street Journal, clearly written with the cooperation of the younger Macklowe, detailed the personal impact of the family's real estate woes, and seemed to place blame for the debacle squarely on his father's shoulders.

"William Macklowe blames his father for making numerous mistakes that led the company to the brink," read the article. "That deal proved to be fateful largely because the elder Mr. Macklowe, 70 years old, personally guaranteed a $1.2 billion loan from Fortress Investment Group.

"The elder Mr. Macklowe also resisted his son's efforts to quickly reduce their risk. 'The issue was my father seeing the victory of the deal as closing of the transaction. I saw victory as exiting the transaction,' William Macklowe says."

Two weeks later, Billy Macklowe was named chairman and CEO of his father's firm. Harry was bumped to chairman emeritus.

Understandably, Billy doesn't like to talk about that time. He doesn't like to discuss his role in the purchase of the seven-building portfolio. Nor does he like to discuss the Journal piece.

You've certainly sought to draw a distinction between yourself and your father, be it in the infamous Wall Street Journal article ...

You know what, just, I don't know what you're talking about.

No?

I think the infamous Wall Street Journal article of which you are speaking is something that happened several years ago, in the past. And I kind of sit here today very optimistic and expectant about what the future holds. And I think that how we will invest going forward will show what lessons we learned in the past. Everything that happens, lessons are learned from positive experiences, lessons are learned from negative experiences. And it's the ability to absorb that, and ultimately put that into your investment. ... That's how we seek to move forward.

Certainly, Mr. Macklowe, who was barely 40 when he began untangling his family empire, has endured something of a trial by fire. And he's widely credited with doing so with aplomb. "He handled it with poise and grace," Mr. Fascitelli of Vornado said. "He tried like hell to play that hand out the best he could."

"He's not a kid, Billy, he's an adult, but he certainly added a number of years of experience [during that period]," Mr. Fascitelli added. "He grew up quick."

On July 26, Billy Macklowe announced he was starting his own firm. It would be called William Macklowe Company.

To enter his new offices, on the 28th floor of Tower 56--the boutique skyscraper that his family sold in distress in the summer of 2008 for $158 million--is to emerge into a blindingly white space that bespeaks elegance and power.

Mr. Macklowe reigns over his new venture from a corner office in the rear, complete with panoramic views of the Upper East Side of Manhattan. On the bookshelf to the right of the door sits a dodo bird figurine. On the base of the figurine is the inscription, "Sam Zell 2009, Survival of the fittest."

Earlier this year, Mr. Zell's Equity Residential agreed to buy three Manhattan apartment towers from Macklowe Properties--the firm founded by Harry--for $475 million. Billy Macklowe, as chairman and CEO of that firm, negotiated the deal.

"I thought he was straight. I thought he was very pleasant. I thought he was very direct. I would like to think those are characteristic that would describe me," Mr. Zell told The Observer. "It was a terrific experience and I would do it again."

That morning, Mr. Macklowe, trim and compact, wore a gray suit, a lavender tie and a large, flat-faced IWC watch.

When asked about the relationship between his father's firm--still in existence--and his own, Mr. Macklowe said, "We have our respective economic interests and shared assets, but the old company has their business and we have ours."

Those shared properties include 400 Madison Avenue, 610 Broadway and other, smaller assets, which are "irrelevant." Mr. Macklowe said the development of the Drake Hotel site, on Park Avenue, between 56th and 57th streets, falls firmly in his father's court.

Now, Mr. Macklowe's firm is focused on four areas: what he calls "pure-play real estate," referring to the buying and selling and operating of properties; strategic lending opportunities; the trade in real estate securities; and real-estate-correlated investments. In contrast to his father, development does not seem a primary interest of Billy Macklowe's. Presumably like his father, resuscitating the family name is. (Harry Macklowe, through a spokesman, declined to comment for this article.)

Mr. Zell says he would happily work with Mr. Macklowe again. Fortress, one of the Macklowes' aforementioned short-term lenders, has expressed the same sentiment. Real estate insiders--even one of those grousing brokers--believe Billy Macklowe has the smarts, name recognition and real estate savvy to go far in the business. On his own.

"This situation wasn't easy to go through, both from a real estate standpoint and from a family standpoint," Mr. Fascitelli said. "The separation, breaking up and doing his own thing was probably invigorating for him."

The next upswing in real estate--and surely there will be one at some point in the next decade--should prove that theory out. 

As Mr. Zell put it, "All of us who are dealmakers live and die by the sword."

drubinstein@observer.com

First, the magazine estimates the developer's worth at about $700 million, "still wealthy indeed but not nearly enough to make this year's rich list."

Further, Mr. Sapir puts full responsibility for all of his recent real estate moves of recent years--many of them ill-fated--on his son:

In a 2009 videotaped deposition involving a pending suit in Las Vegas, Sapir is asked about a $21 million development deal he is accused of reneging on. "My son is doing the business," Sapir answers. "'Papa, give me money,' and that's it." Sapir says he has no knowledge of the property's price or its appraisal, explaining: "My son--I speak little English. My son is in the business. I am the money man, and that's it. Why am I expected to know so much?"

There's more. Read the whole treatment here.

"I think it’s performed better than anybody had expected, particularly on the residential and rental side. Now it’s doing extremely well and we’re very optimistic about the future."

Does he plan on making any more New York acquisitions?

"I think Equity Residential has a very significant position in the New York market," Mr. Zell said. "It’s done very well for EQR and I imagine that EQR will continue to pursue opportunities as they arise."

The family is in contract to buy the 340,000-square-foot 50 West 23^rd Street, an office loft building right next to Home Depot, for $129.5 million from Joe Monian's Moinian Group.

“We gave them a hard deposit last Friday,” said Asher Abehsera, of Two Trees Management. “It was an off-market deal.”

Mr. Abehsera said this is the firm's first office building acquisition in Manhattan, though its footprint there will soon grow much larger. The Walentases have begun construction on a striking, Enrique Norten-designed, 900-unit rental apartment building at 54th Street and 11th Avenue. 

“We toured it maybe a month, month-and-a-half ago,” Mr. Abehsera said of 50 West 23rd Street. “As it turns out, a friend of mine I grew up with in L.A. works for Joe [Moinian], and that’s how we put the deal together.”

The acquisition is scheduled to close within the month. Mr. Moinian’s spokesperson declined to comment. 

drubinstein@observer.com

The main thrust: The often ugly controversy surrounding the plans by Imam Faisal Abdul Rauf and developer Sharif El-Gamal (whom I profiled in this week's Observer) to build an Islamic community center two blocks from Ground Zero is likely harming America's reputation among Muslims abroad. 

Some key excerpts:

"In order to defeat the Taliban, you need to marginalize them,” said Ahmed, echoing U.S. military policy. “To marginalize them, you need to earn their [locals’] respect and treat them with dignity. It’s as simple as that.” But the mosque debacle hinders the growth of that trust, providing the doubt and suspicion that fuels discontent and war.

“I think the genie is out of the bottle,” said Ahmed when asked if he thought the damage done to the Muslim world’s perceptions of America could be walked back. “Because it is not just about one mosque, and it is not just now.”

Yet, Mr. Ahmed does not let the center's developers off the hook, either. In fact, he calls their efforts ham-handed and suggests that, rather than build a mosque, they donate whatever money they've raised and will raise to help flood victims in Pakistan:

"I think that the Muslim leadership is responsible—indirectly perhaps, innocently perhaps, naively perhaps, directly or indirectly, partly responsible, for precipitating this crisis in America,” he said. 

"In one instant, he will turn it around. In one instant Jews and Christians will praise what he has done. And Muslims will approve because they are the ones who are suffering,” said Ahmed.

Read the whole fascinating interview here.

drubinstein@observer.com

Park51 developer Sharif El-Gamal, accidental protagonist of the most politicized real estate story in recent memory, sat behind the blond-wood desk in his office six floors above the lower Broadway mall, and, meaty hands clasped before him, held forth on what it takes to make it in real estate. After all, it is real estate—not fanning national anti-Muslim hysteria—that is Mr. El-Gamal's actual business.

"You know, the real estate business is a very tough business, and you have to be patient and persistent, and aggressive, and thank God I have all those qualities," said Mr. El-Gamal, who looks something like Liev Schreiber, if Mr. Schreiber were to grow a gut and don the uniform of a young real estate upstart: pinstriped suit, manicured nails, ostentatiously large watch, unblinking blue-eyed gaze.

All of 37 years old, Mr. El-Gamal says he owns upward of 400,000 square feet of real estate in New York City, with a direct staff of 20 and an indirect staff of about 100, if you count the various entities he controls.

Before the news media and Republican establishment turned his plan for a mosque two blocks from ground zero into a rallying cry for Islamophobes everywhere—a hallowed two-block radius that includes countless fast-food restaurants, an Off-Track Betting outlet, nail salons and the headquarters of Goldman Sachs—Mr. El-Gamal had other projects to deal with, including the 12-story office building at 31 West 27th Street, which his SoHo Properties bought for more than $45 million in 2009, and a six-unit luxury condo at 50 Lispenard Street that's about to come to market.

Mr. El-Gamal calls the brouhaha surrounding Park51, essentially an Islamic JCC, "a big distraction." Which is not to say that he plans to back down. In truth, his commitment to building an Islamic community center in Lower Manhattan seems to grow in direct proportion to the level of controversy fomented by his opponents. They might want to take note.

"I don't give up," Mr. El-Gamal said. "I don't quit. It's just not in my DNA."

BROOKLYN-BORN, SHARIF El-Gamal is the child of a Chemical Bank executive and the eldest of four siblings. He grew up all over the world, with sojourns in Liberia and Alexandria, Egypt. His early adult life mirrored his peripatetic upbringing. 

"I couldn't figure out what I wanted to do," Mr. El-Gamal said. "I wanted to be an architect, I wanted to be an engineer, but I've always been very restless."

After high school, he shuttled between different New York universities, including Pace, SUNY Farmingdale and NYIT, before concluding that formal education was not his bag. "You know, I couldn't focus in a classroom, so I finally gave up. That was the only thing I've ever given up on, because I'm not one to give up."

In the late 1990s, he entered real estate, first, as a residential sales broker. Within his first year, he transitioned to the more lucrative side of the business: commercial real estate sales. Soon, he'd sold nine buildings. In his estimation, he was very lucky. Over the next decade, he made his living in commercial real estate.

By 2006, Mr. El-Gamal felt he'd learned the business through and through and decided to become "a principal"—a landlord and developer in his own right. Using money from family and friends, as well as bank financing, Mr. El-Gamal began building his portfolio.

"I've been discreetly buying under the radar without any publicity since 2006," Mr. El-Gamal said. "I've never publicized any of my commercial transactions and I was very successful in it."

"I was just happy getting a check and going on to the next deal," he continued. "That's always been my philosophy."

Not that the man is without vanity. On the wall behind his desk hang two newspaper clips—one from The Commercial Observer, another from The New York Times—along with a framed Islamic prayer and photos of his wife, a homemaker, and their two toddler daughters. A pile of prayer mats rests nearby.

LIKE MANY A successful businessman, Mr. El-Gamal tends to look for inefficiencies in the market, even when going about his religious awakening.

"I wasn't really brought up in a really religious home, and I guess after 9/11, I was curious to understand, who am I? What is my identity that I've been raised to be?" Mr. El-Gamal said. "My journey started in Lower Manhattan."

He began visiting mosques downtown near where he lived and worked, and came away with the realization that there were more mosque-goers than there were mosques to accommodate them. Some mosques had to hold four services a night, and still there were people praying on the streets.

He began toying with the idea of developing a mosque himself. When asked if making a profit was his initial motivation, Mr. El-Gamal, smiling slyly, would only say, "I am a businessman. I am a businessman."

Soon, he met Imam Feisal Abdul Rauf, and his plans grew more complex.

"I'd never met an American imam who spoke the way I speak, who, it was almost like I was listening to a professor," Mr. El-Gamal said. "I went up to him and I said, 'It's not fair that only 70 people get to hear this.' And I started a relationship with him."

"Then as I got married and as I became a father and a husband and a member of the Jewish Community Center on 76th and Amsterdam, I was like, 'Wow, let's build a community center.'"

Mr. El-Gamal, who now lives on the Upper West Side, continued to focus his energies on the Muslim community in Lower Manhattan, a neighborhood that had long expressed a desire for a new community center. The District Needs Statement put out by Community Board 1 reads, "With the tremendous increase in the population of the Financial District and Seaport and Civic Centers, a community center is urgently needed to support a strong and stable community there."

Yet all of this remained more of an idea than an actual plan until about three and a half years ago, when Mr. El-Gamal and his wife were walking along 57th Street and entered a Sharper Image store.

"And I saw this young man by the name of Francisco Patino, who was on this reality show called American Inventor," he said. "I don't watch TV, but for some reason, I saw this show a couple of times. He was a young 18-year-old kid, but I loved his passion and he stuck in my head."

Mr. El-Gamal said he approached Mr. Patino, and two weeks later, Mr. Patino was his employee. He gave him a map and told him to find a development site in Tribeca south.

"And it had nothing to do with the World Trade Center site," Mr. El-Gamal said. He repeated himself, this time more slowly: "It had nothing to do with the World Trade Center site. It had to do with me being an American, a New Yorker who has particular religious beliefs and wants to help his community."

Anyway, "Literally within two weeks, or within a month of him being here, he made a call and we found the Burlington site. And, when we found that site, he called a guy, who said, 'Oh, good timing, my son is showing the building tomorrow afternoon, and we want to sell.'"

"And then I saw that building," Mr. El-Gamal said, referring to 51 Park Place, the site of a former Burlington Coat Factory that was damaged during 9/11. "I never wanted anything so badly, and it took me four years to buy it." After years of on-again, off-again negotiations, Mr. El-Gamal closed on the purchase in July 2009 for $4.85 million.

"I never realized that a project that I'm working on would become a topic of national and global debate," he said.

ON AN EASEL in a conference room next to Mr. El-Gamal's office sits a large notepad with red writing on it, vestiges of a brainstorming session on outreach, with mentions of a Park51 blog, Facebook, a fund-raising plan.

Mr. El-Gamal declined to elaborate on the scribblings, but he said that the next step for Park51 was to incorporate it as a nonprofit. "And, then I'll develop it for them." Whether Mr. El-Gamal will be paid a developer's fee remains uncertain. "I don't know yet," he said. "That's not even on my agenda right now."

Crucial to the 13-story project, which is to include a mosque, a swimming pool, a 9/11 memorial and a basketball court, is, of course, financing, somewhere in the ballpark of $100 million, which is a sizable sum, particularly in one of the worst financing markets in decades. 

Mr. El-Gamal brushed aside any such concerns.

"Over the last couple of years, I've started understanding how these community centers work. And, this is all public information, but the Jewish Community Center makes over $25 million in annual revenue. The 92nd Street Y makes over $50 million in annual revenue, from membership and programming."

(The JCC clarified that its operating budget, not its revenue, is more than $20 million.)

"So, if you start looking at what these centers generate once they're built, then you can understand that this is not a very far-fetched idea."

Nor, he said, does the fact that he doesn't fully own the entire site present a problem (he has a long-term lease from Con Edison for part of the site on which the development would rise). He called reports to the contrary "just more noise."

"I bought a 99-year term lease from Con Edison, when I bought the real estate in 2009, and there is a purchase option, which I executed in February," he said. "This is all as of right."

Even so, would he ever consider relocating the center? The chorus of voices suggesting he and the imam do just that has expanded to include both Governor Paterson and Senate Majority Leader Harry Reid. What if he were offered a tidy sum for the site?

"It's not about money," Mr. El-Gamal said. "But everything does have a price. But it's not about money."

drubinstein@observer.com

"[Commercial real estate] industry fundamentals remain weak," reads the report. In part, that's because the real estate industry generally lags behind the larger economy during recoveries. But that's not the entire story. Unlike the recovery following the 2001 recession, this recovery—when it finally arrives—will be severely hampered by the lack of both market demand and financing:

The various players in the CRE industry are in a stalemate of sorts. Not enough buyers for CRE assets currently exist, especially if one excludes so-called vulture investors. The lending community is delaying foreclosure procedures and sales of real estate-owned properties as a result of depressed values. These factors foster an environment of stagnation in the CRE industry, and companies may be tempted to limp along and simply survive. However, the CRE industry is about to face a post-recession paradigm it has never seen before. The recovery following the 2001 recession is not a good benchmark because access to capital may be much more severely constrained. Approximately $1.4 trillion in CRE loans will mature during the next four years. The lending market will probably be flooded with demand, while higher loan-to-value ratios, tighter credit standards and an uncertain securitization market may limit refi nancing opportunities.

More generally, real estate is no longer seen as an unfailingly good investment, according to Grant Thorton's Paul Melville, the white paper's principal author.

"People will be a little bit more cautious about heading into property and real estate, compared to how they were originally," Mr. Melville told The Observer. "The memories and the scars will last a while."

For a sobering read, click here.

drubinstein@observer.com

This comes as no surprise. The other two bidders—Penn National Gaming, and a consortium of SL Green, Hard Rock and Clairvest—were disqualified in early July after they failed to meet the bidding process requirements.

"Genting's proposal was impressive on many levels," reads the letter from New York Lottery director Gordon Medenica to Governor David Patterson. The governor has promised to abide by the lottery's recommendation. "They are a vastly experienced and professional gaming company and their proposal reflects a deep and insightful understanding of the opportunity and challenges of Aqueduct. Genting took nothing for granted—they respected the very rigorous selection process that we developed after the missteps of the past. They understood the business risks that a winning bidder is required to accept, and they have a clear and rational plan for navigating the complex construction and operating environment of New York City. In addition, they are highly sensitive to the community issues, labor requirements and social concerns that a project of such scope encompasses."

The full letter is copied below.

This recommendation in no way ensures that the transformation of the run-down racetrack into some sort of entertainment mecca will actually take place. The search for a suitable gaming operator has been ongoing since the Pataki administration, and has been plagued by incompetence and accusations of corruption.

Here's the letter.

August 3, 2010

The Honorable Governor David A. Paterson

State Capitol

Albany, NY 12224

Dear Governor Paterson: 

Attached is the report from the Lottery's Evaluation Committee on the selection of a developer and operator for the Video Lottery Facility at Aqueduct Racetrack. It is with genuine enthusiasm that the Committee unanimously recommends Genting New York as the winning vendor. Our strong recommendation, based on the merits of the proposal, was vastly reinforced by Genting's financial offer of $380 million as an upfront licensing fee.

Genting's proposal was impressive on many levels. They are a vastly experienced and professional gaming company and their proposal reflects a deep and insightful understanding of the opportunity and challenges of Aqueduct. Genting took nothing for granted - they respected the very rigorous selection process that we developed after the missteps of the past. They understood the business risks that a winning bidder is required to accept, and they have a clear and rational plan for navigating the complex construction and operating environment of New York City. In addition, they are highly sensitive to the community issues, labor requirements and social concerns that a project of such scope encompasses.

Genting's proposal was far superior, in concept, scope, detail and execution, to any we have seen in previous rounds of evaluation. It is well known that other bidders, and potential bidders, found the State's requirements too demanding to accept. They made the fatal assumption that the process was still open to maneuvering and negotiation. We acknowledge that the process was tough and the expectations were rigorous, but our requirements were crystal clear. For Genting to emerge from such a grueling process as a strong winner is a testament to the effort, skill and intelligence of their team. Every aspect of their proposal demonstrated the highest standards of professionalism and respect.

The attached report details our process, findings, analysis and scoring of the proposal. Even after we disqualified non-conforming bidders, we still followed the process, as originally outlined, for the remaining bidder. This included an exhaustive vetting of the company, its investors, and key personnel for licensing qualifications, and we found the company and its personnel fully qualified for video gaming licenses. We also retained KPMG to advise the Committee on the financial capability of Genting, and we concluded that Genting was uniquely qualified and highly capable of delivering the substantial financial results we expect from this project.

While you, Governor, have already committed to supporting this recommendation, we urge our legislative leaders to quickly add their support in order for the State to receive, finally, the massive influx of monies that this project will generate. Genting New York was not the only bidder for this project; it was the best bidder for this project. And Genting New York is not the only winner of this process; the people of New York, through jobs, economic activity and aid to education, are the bigger winners.

Sincerely,

/s/ Gordon Medenica

drubinstein@observer.com