Espais Promocions Immobiliàries, an established developer based in Barcelona, Spain, has entered the U.S. market with Twenty9th Park Madison, a 34-story, 142-unit luxury condominium development at 39 East 29th Street in New York. The stylish complex, designed by H. Thomas O’Hara Architects, features floor-to-ceiling windows and teak hardwood floors in every unit, with other upscale touches throughout. It is more than 70 percent sold and ready for occupancy. Andres Hogg, general manager of Espais’s new U.S. division, is incorporating the company’s international sensibility and attention to detail into this project as well as other deals in the works.
Hogg, a trained architect, owned an architectural firm in Buenos Aires, Argentina, for 10 years. After discovering he enjoyed the art of the deal, he came to the U.S. for Columbia University’s intensive one-year master's degree in real estate development; went on to serve as development analyst and project manager for Anbau Enterprises, then as development director for Greystone and Company, a residential and commercial firm. At Espais, Hogg opened its U.S. headquarters in New York, hired three full-time employees, took over Twenty9th Park Madison and delved into other deals.

You were an architect before getting into development. Was it a smooth transition?
I think it was, because in a way, I was already creating deals and putting together more developments other than giving a service as an architect. So it was a transition of three or four years where I started getting more into the business side of the design and then the school allowed me to get really into the development side and it was a big step to come from a different country to America.

What projects did you work on at Greystone and Company?
I worked on some projects in the city, including a luxury boutique, nine-unit condominium on the Upper East Side, at 130 East 93rd Street. We did a lot of projects outside New York, because Greystone is a national company. We did projects in the Outer Banks of North Carolina. We created a residential condominium on the beach. We also created a subdivision of a retirement community in Freeport, ME. We did some other things in Florida and Madison, WI.

And then you moved to Espais Promocions at the beginning of 2008.
The people from Espais started this project on 29th Street in late 2006. The project was very successful, but they were now interested in establishing themselves in the city, opening an office. They were pretty much managing this from Spain and they thought they needed a representative in New York, and that’s when they hired me. I opened the office for them, what we call the United States office. I jumped in to manage and complete this project and the idea is to move forward with some other projects that we have in the pipeline right now.

Did you have a hand in Twenty9th Park Madison?
By the time I got in, I had the chance to make some changes on an addition that we did on the project—the top four floors where all the penthouses are. I was responsible for finishing construction and keeping on with the sales and marketing and all the other things I have to take care of when we do a project of this size.

Espais has developed properties around the globe. Please tell us more about Espais.
It’s a family-owned company that has been in business for 75 years. In the last two or three years, they saw that in Spain, most of the projects were slowing down, the market was slowing down, and they made a big effort to expand their projects and their locations. They decided to go international. They created a [joint project] with a local developer in France. We have an office building in Paris and some other residential projects in Marseilles. We are with a local developer in Poland, where we’re doing some condominium buildings. We own a beautiful boutique hotel in Berlin, Germany, a 46-room hotel that was decorated and redesigned by Karl Lagerfeld. We bought it because we’re creating a hotel brand called Alma—that’s “soul” in Spanish. And we have some projects coming in Spain: a hotel project under construction in Barcelona. We are very diversified: we are in residential and office and hotel. I think this is a business model that we are trying to bring to New York City.

Espais’ first foray into New York City is Twenty9th Park Madison: why New York and what sets this property apart?
It’s a pretty big company and it can support the idea to start in New York. If you have to start somewhere, it’s a good place in the world to start. Construction is going to be done by the end of the year. We already have between 25 and 35 people moved in, with 40 closings. And we have a lot of closings to go in the next month and a half, of the 75 percent of completed sales. We are cautious, but we’re also optimistic with this market. We’re moving slowly. We’re going to finish this deal and we have two or three other projects we are working on, that we are analyzing and thinking about acquiring. You know the patience that everybody has to have in this kind of market. But we’re definitely looking forward to acquiring these properties and these are some [deals] that we are analyzing on a weekly or monthly basis.

Can you give us an idea of where these opportunities are?
They’re going to be in prime locations in Manhattan and it can be office, hotel, or restaurant. We’re actually looking at three alternatives and probably would move into the one that is more feasible and fits to the new way of doing business in this economy.

Tell us how you’ve had to adapt in this economy.
In our project, we are in the process of almost finishing, so that was not hard to adapt. I think that we have to start adapting in the future. It’s not only us; pretty much everybody is going to have to do the same. We’re moving back to the old rules where highly-leveraged projects are not going to be that usual. More cash is going to have to come into place. And a lot of partnerships are going to have to happen. There’s going to be some movement or some more negotiations on the price of land—that pretty much is the only one that [can be] cut to make the numbers work.

What types of partnerships are you specifically talking about?
Partnership with some other equity partners; with builders or landowners.

Is that coming into play in projects two and three that you’re looking at doing next year and after?
Definitely because it’s going to be the only way to make the numbers work, because there’s no financing. Financing is not going to be that easy to leverage a project. So the returns are going to be similar or a little lower and so everybody is going to have to find good partners and be a little bit more creative in the way that business is done, or deals are going to be done. And we see it. You know, I think that the company, coming to the U.S. from Europe and myself from Argentina, we have the experience of dealing with these kinds of markets where things change and you have to be more creative.

What sort of European sensibility is Espais bringing to its projects? We really believe in the kind of product that we build and that we supply. Our way of thinking is, the product that we want to create has to be the best product in that area. We always want to be better than our competition. That’s our first point. The second point is that we do believe there’s lots of types of finishes that, in New York City, we can provide and improve from the mechanical, air conditioning, and electrical systems, such as outlets and switches in the bathrooms and corridors. I think a lot has been done in New York in the last six or seven years, but we believe there’s still a long way to go to have product that will be very attractive to not only international people, but to local people, too.

What types of green or sustainable features are in this building?
This building was designed in 2005, so it was never designed as a green building. It still has a lot of features that will qualify, but we never went through the process, because back when we designed it, it was not something that people considered the way it is today. Based on that, we definitely think for our next two projects, we’re going to create green buildings.

Do you think you can maintain the value? How important is it that the building is green?
I think really for the moment it’s important. I don’t know if the tenants are ready to pay more for it. Developers will have to pay maybe three to five percent more of the cost to create a green building. But I would think that in the future—not in the near future, but soon—probably you’re not going to be able to sell a building if it is not a green building. And interesting: I heard once that it’s not the buyers who are looking for a green building, but it’s the kids who are coming to their dads and saying, “Dad, I want to live in a green building.” They are the ones who are being educated; they’re the ones bringing it back home, and that’s where the push comes. But I think these people like to live in a green building. I think developers now are very cautious and conscious that you have to green-build and that’s pretty much the future.

In terms of green, do you see New York differently from the other markets you’ve worked in?
In a way, it’s more feasible to go for a green building when you’re in New York because half of the [certification] points you already have because you’re close to mass transportation and you have all the utilities at the front of your door. So I think New York will always be the leader in green buildings because, also, speaking about America specifically, it’s where most of the biggest projects are being built.

What are your goals for Espais?
We see ourselves totally established in the U.S. market. Our second and third projects will probably be in New York, too. But after that, we are willing to go to the major cities on the East Coast and West Coast. The next step will be start looking to some projects in maybe Central America or South America. As you can imagine, Espais made a big effort to establish a job in the U.S. It’s not easy to come from abroad and establish. And we’re doing it through baby steps and very solid steps. We are here to stay and we always think for the long term. This is not a company that will come to the U.S. and do a deal and go back. The idea is to establish ourselves and create a brand in the U.S. market.

What would you like Espais to be known for in the U.S.?
The same philosophy that Espais has worldwide and in Spain: a company that creates a very good, high standard product, and that does business very respectfully and in a way that’s profitable but with long-term views.