"As far as we are concerned, it is not happening in Manhattan to any degree," said Eastern Consolidated’s Hauspurg.
The extension was designed to provide financing to investors to purchase securities backed by commercial real estate loans, but the program’s restrictions have proven overbearing.
In addition to the Goldman loan, another deal that was rumored to be in the works in July was from Vornado Realty Trust, but no details have emerged since then.
Hauspurg said the program’s apparent failure in Manhattan could be helpful for the industry.
"It is better to get through the pain and the hangover," he said. "Let the prices adjust and go forward."
Toby Cobb, managing director at Deutsche Bank and former cohead of its real estate group in the United States, said the risks associated with pooling commercial real estate loans and packaging them under the TALF conditions were still too high for many potential originators.
One problem is that there is a limited class of borrower who has leverage low enough to make using TALF possible, but that same borrower can generally turn directly to the unsecured credit markets for cheaper funding, he explained.
And the program will do nothing for the highly leveraged borrowers with 70 or 80 percent loan-to-value ratios, he said, because it requires loan-to-value ratios closer to 50 percent.
In fact, with so little activity from the program, it may be aggravating the lending situation further. "They are creating more problems than they are solving by having a TALF that doesn’t work," Cobb said.
Helps: Diversify operations
Suddenly, real estate companies have become jacks-of-all-trades. With the real estate market slogging along, residential and commercial brokerages have diversified their portfolios to include rentals, commercial property and distressed sales.
Eastern Consolidated, aptsandlofts.com, Jones Lang LaSalle, Colliers ABR, Cushman & Wakefield, Halstead Property, Prudential Douglas Elliman and CB Richard Ellis, in addition to others, all now have teams handling distressed assets.
Eastern Consolidated’s Hauspurg said his firm began forming its distressed asset team in 2005, when it could smell the bust coming.
"[Nondistressed] property sales have been off nationwide 70 to 80 percent, which has been extremely painful for people in this business," he said, adding that Eastern Consolidated’s small distressed asset team now accounts for half of the firm’s sales activity.
Meanwhile, as residential firms and offices shuttered in the last year, brokerages began doing everything in their power to diversify and capture a portion of the remaining market. The shift is helping many firms financially weather the down market.
"You really have to do more than one thing in real estate because times change," Marc Lewis, president of Century 21 NY Metro, told The Real Deal this summer, after his firm founded a new commercial division. That move follows in the footsteps of two other residential firms that have reached into commercial, Bond New York and Mark David Real Estate.
While some experts predict that the ill-fated commercial market has only begun to crack, Lewis is betting he can get a piece of the commercial and retail pie.
Chris Salizzoni, executive vice president of the division, said that the team has closed 13 deals representing the owner and 15 deals representing the tenant since launching.
Other brokerages are going back into rentals, which most agree is a savvy move since two-thirds of New Yorkers rent, and more failed condo projects are expected to turn rental as the fallout continues.
Elliman recently launched a rental listings site, which now has 2,731 listings in Manhattan, and opened its first rentals-only office since the early 1990s.
Lewis recently said his firm also expanded its rental division by adding 75 agents.
"We realized there was a downturn in sales and we needed to generate income rather than wait for the market to come back," he said.
Additional reporting by Adam Pincus.