NYC Lawmakers Zero In On Real Estate Deals, Cushman Broker In Oversight Hearing

The people in charge of signing office leases on behalf of the New York City government have come under scrutiny after it was reported last week that a lucrative government real estate contract was steered toward a building owned by a donor to Mayor Eric Adams.

The New York City Council’s Committee on Governmental Operations, State and Federal Legislation held a two-hour oversight hearing Tuesday morning, examining how the Department of Citywide Administrative Services makes decisions about leasing office space in the city.

The hearing was called after Politico reported last week that Jesse Hamilton, deputy commissioner for real estate services at DCAS, had intervened in efforts to relocate the NYC Department for the Aging. 

Against the advice of the agency’s general counsel, Hamilton steered the contract away from AmTrust Re’s 250 Broadway — the property that had initially won the bid — and instructed staff not to talk to the New York City-based property owner. Instead, Hamilton directed the contract to 14 Wall St., owned by billionaire real estate investor Alexander Rovt, Politico reported.

During Tuesday’s hearing, City Council Member Lincoln Restler, who heads up the committee in charge of the hearings, questioned the qualifications of the executives at the top of DCAS to make crucial decisions regarding the city’s real estate leases.

Restler also probed the relationships between DCAS and real estate players who had donated to Adams, including Rovt, who has donated tens of thousands to Adams’ campaigns and a nonprofit he previously ran, per Politico. He also questioned the selection of Cushman & Wakefield broker Diana Boutross to negotiate leases for the city. Boutross donated $2K to Adams’ 2019 mayoral campaign, The Real Deal previously reported.

“Sadly, it appears as if DCAS is once again facing a corruption scandal,” Restler said, adding that he respects and admires the hundreds of public servants who work at DCAS.

“Their hard work is being tarnished by questions of ethical impropriety of leadership responsible for managing the real estate division,” he said. “These issues center on the appointment of Jesse Hamilton.”

DCAS oversees $1.5B in real estate contracts spanning 122M SF, said Restler, who represents parts of Downtown Brooklyn. The agency leadership’s broad discretion over that portfolio, in addition to its size, has “historically made DCAS a target for corruption, both for those within government and those outside of government hoping to profit from misuse of the city’s public dollars,” he said. 

Restler, along with City Council Members Chris Marte, Lynn Schulman and Gale Brewer, grilled DCAS Commissioner Louis Molina alongside Shameka Overton, the executive deputy commissioner for asset and property management. Hamilton didn't appear at the hearing.

Molina was previously in charge of the Department of Corrections and has been at DCAS for 90 days. Overton, who started as an intern and has been at DCAS for 30 years, has only been in her current role for just shy of two months. 

Restler established that neither Molina nor Overton have any direct experience in commercial real estate and asked about the qualifications of Hamilton, who has been in the role for two years and also lacks direct experience in the industry.

“I just think it’s worth noting that the senior executive team at DCAS — commissioner, executive deputy commissioner, deputy commissioner — is responsible for overseeing a $1.5B leasing portfolio, and that chain of command has no experience in commercial real estate,” Restler said.

There have been no changes to Hamilton’s authority or responsibilities at DCAS since he first came under scrutiny earlier this fall when he had his cell phone seized as part of a corruption investigation by Manhattan District Attorney Alvin Bragg, Molina said.

First Deputy Mayor Maria Torres-Springer is conducting a comprehensive review of Hamilton’s leasing decisions, Restler said. But DCAS hasn't conducted any internal review of contracts that were at Hamilton’s discretion over the past two years, with the exception of 14 Wall St., Molina said.

DCAS made a nonbinding offer for 250 Broadway but then began negotiations with other parties, Molina said. The agency said it made the switch to 14 Wall St. against the advice of its general counsel because the turnkey lease at the Rovt-owned building was cheaper than the raw space at 250 Broadway, as well as the Department for the Aging’s stated preference for the Wall Street property.

“This was a fluid negotiation process that we have to ensure that we have the best price possible for city taxpayers,” Molina said. “At the end of the day, 14 Wall St. was over $31M cheaper than locating the Department of the Aging at 250 Broadway.”

Hamilton, along with Boutross, Adams' Chief Advisor Ingrid Lewis-Martin and legislator-turned-lobbyist Adam Clayton Powell IV, had their cell phones seized in late September at John F. Kennedy International Airport as they returned from a trip to Japan together. 

Arthur Aidala, an attorney for Lewis-Martin, described the group to Bisnow as “eight friends who decided to go to one of the biggest tourist countries in the world to just explore on a long-planned friendship trip.”

At Tuesday’s hearing, Molina said he was unaware of the group’s trip until their return to John F. Kennedy International Airport and said he didn't know about Boutross’ donations to Adams’ mayoral campaign in 2019. 

Restler questioned whether Boutross, who oversees the brokerage’s contract with the DCAS and earns a commission on executed leases, was placed in the role because of her political connections. 

“Miss Boutross was installed in an extremely lucrative position as Cushman & Wakefield’s broker for the city account, managing a multimillion-dollar account with the city of New York, despite her own lack of qualifications,” Restler said.

Prior to taking over the DCAS contract, Boutross had spent the majority of her two-decade career as a retail broker. It’s unusual for brokers to switch from one asset class to another, Restler said, citing reporting by The New York Times.

“It’s unusual for someone with zero relevant experience to be selected by Cushman & Wakefield to run such a significant account if DCAS didn’t request it, which is what we’ve been advised,” Restler said.

Molina said he wasn't aware if potential conflicts of interest were examined when it came to Boutross’ appointment.

Neither Cushman & Wakefield nor Boutross responded to Bisnow’s requests for comment.

Boutross stands to make $6M over the course of a five-year office contract for the NYC Administration of Children’s Services at 110 William St., Restler said.

The NYC Administration for Children’s Services signed one of the largest leases of 2023 at the building when it took 630K SF of vacant space. The previous year, lobbyists began targeting Hamilton after the building’s investors defaulted on their mortgage, The City previously reported.

DCAS is also in negotiations to potentially acquire the Bronx Logistics Center, a 1.3M SF multistory industrial complex in Hunts Point owned by Turnbridge Equities. Hamilton has advocated for the acquisition, which could net Boutross a commission of as much as $13.4M, Restler said.

Boutross and Hamilton were in Molina’s office on Oct. 8, less than two weeks after their phones were seized in the corruption investigation, to discuss the sale along with nine other Cushman & Wakefield brokers and additional DCAS employees, Restler said during the hearing. Molina described the asset as “a possible acquisition that’s in the early stages of consideration.”

Restler also questioned why DCAS made a promotional video for the Bronx Logistics Center, arguing that the video could increase the price the city would have to pay for the asset. In the video, which was partially played at the hearing, Hamilton and two other DCAS officials touted the building's quality and LEED Platinum rating.

Bronx Logistics Center delivered last year, and JLL marketing materials show all 1.3M SF is still available for lease. 

Molina said he was unaware of the video’s existence. Turnbridge Equities did not immediately respond to Bisnow's request for comment.

A spokesperson for Adams, when asked for comment, directed Bisnow to a Tuesday morning press conference happening at the same time as the hearing.

Adams didn't respond to questions about whether he trusted Hamilton, why Hamilton didn’t attend the hearing, or whether Hamilton or Lewis-Martin had anything to do with Boutross’ appointment to the Cushman & Wakefield account.

“DCAS Commissioner Molina is there and he's going to lay out how we've saved taxpayers millions of dollars,” Adams said. “Let's see what the facts say.”