What's Brewing in the Real Estate Market

THE WALL STREET JOURNAL
August 9, 2006

By Christine Haughney, Michael Corkery and Alex Frangos

Flushing Focus

A Canadian investment firm is betting it can find profits in New York City's slowing condominium market by targeting the growing Chinese immigrant community in the Queens neighborhood of Flushing.

Onex Real Estate, a division of Toronto-based Onex Corp., is developing a $1 billion retail and residential project in Flushing Town Center in partnership with Queens-based firm Muss Development LLC. The venture will include an 800,000-square-foot shopping center and 1,100 condos priced from an estimated $300,000 to $1.7 million.

Onex executives, who previously had been in the area only en route to the nearby U.S. Open tennis tournament in Flushing Meadows, chose the property after noticing Flushing's home-ownership levels and employment-growth rates are higher than the borough average. Flushing has benefited from soaring prices in Manhattan's Chinatown that have pushed Chinese immigrants out to Flushing. According to U.S. Census Bureau data from 2000, Asians account for 44.4% of Flushing's population.

Onex executives hope to avoid competing with the glut of condos expected to come to market throughout the rest of the city by focusing on Flushing. "Outside of Manhattan, this is the most vibrant 24-hour community," says Michael Dana, Onex's chief executive.

Muss Development, which has owned the 14-acre site for 20 years and recently chose Onex as its equity partner, is keeping in mind the preferences of the area's immigrants. The firm hired a consultant to use principles of feng shui -- an ancient Chinese method of evaluating the shape and position of manmade structures in relation to their environment. The first residential floor is on the eighth floor because eight is considered a favorable number in China.

Paring Pay

Executives at Dominion Homes Inc. are feeling the chill of the cooling housing market. The Dublin, Ohio, home builder said last week some top executives have agreed to salary cuts.

The base salary of Chief Executive Douglas G. Borror is being reduced to $450,000 from $650,000. His brother, David S. Borror, corporate executive vice president, and their father, Donald A. Borror, chairman emeritus, are having their base salaries cut to $125,000 from $250,000.

Dominion said in a filing with the Securities and Exchange Commission that the changes were made "in response to current business conditions and as part of the company's ongoing efforts to reduce overhead expenses." Dominion focuses much of its business in Columbus, Ohio, which hasn't experienced the same runup in house prices as some other U.S. markets. For its second quarter, the company posted a net loss of $5.9 million, or 73 cents a share, as revenue fell from a year earlier.

Rick Murray, an analyst at Raymond James & Associates, says it's possible that executives at other home-building companies could take pay cuts in the near future, "given that the majority of their compensation is tied to profitability."

Venturi's Venture

Architecture legend Robert Venturi has been hired by his high-school alma mater, Episcopal Academy in Merion, Pa., to design the centerpiece chapel of a new $213 million campus.

It's not the first time Mr. Venturi, 81 years old, has sketched plans for a chapel at Episcopal. His master's thesis in architecture at Princeton envisioned a new chapel at the academy. That was in 1950. But it was an academic exercise, and the chapel was never built. He graduated from Episcopal in 1944.

The new design is "extremely different" from his youthful musings, he says. The chapel will be wrapped in a series of walls as "layers," he says, with sunlight peeking through openings and windows. The outside walls will have a pattern that's still being decided upon. Atop will be a triangular steeple. "It will make it dramatic in a nice sense, not a corny sense," he says.

Mr. Venturi and Denise Scott Brown, his wife and partner, together run Venturi Scott Brown & Associates, Philadelphia. The couple came to fame for their iconic use of colorful symbols, patterns and words affixed to buildings, including several projects for Walt Disney Co. He won the Pritzker Prize, architecture's top honor, in 1991.