Young Brokers: Spend Big, Michael Shvo Advises

It's difficult to imagine a time in the New York real estate world when Michael Shvo was an outsider who made a living renting small studio apartments for Prudential Douglas Elliman. His first year as a real estate salesman, he rented 300 apartments in 365 days.

These days, Mr. Shvo is a hot commodity. The 35-year-old Israeli immigrant spoke at Esther Muller's Real Estate Academy yesterday to a room filled with power brokers paying to hear how he has redefined the marketing practices of Manhattan's top properties. Two years ago he founded Shvo Marketing, a firm that caters to young, affluent audiences who he claims are changing the face of high-end real estate sales.

Mr. Shvo said that when he would flip through real estate sections in newspapers, he would see an interior photo of a kitchen, a photo of a steel and glass exterior, and — inevitably — a smiling couple. He began to wonder how such a cheesy, cut-and-paste advertising philosophy sold anything, not to mention high-profile luxury properties.

"I don't need somebody telling me an apartment has granite countertops," Mr. Shvo said. "Every luxury apartment has granite countertops. I want to be told that my apartment is about Jade Jagger or Giorgio Armani and the kind of lifestyle that's associated with these designers."

"My head of marketing used to be the head of marketing for Brioni suits," he said. "That's why we produce things that don't look like real estate products."

One of his best-known projects is 20 Pine Street, once a drab office building in Lower Manhattan. Over the past few years, this white-brick building has morphed into an Armani-designed showplace. The crowd Mr. Shvo is interested in attracting consists of what he calls "greenbloods": young, hip people with money to burn but without stodgy social hang-ups that might be held by their "blueblood" counterparts.

Spending marketing funds wisely might more important than ever: Of the three million apartments in Manhattan, only a fraction are condos and co-ops, according to Mr. Shvo. "New York is a rental market. There's huge room to expand in the condo market," he said.

"My office on Fifth Avenue overlooks the Louis Vuitton store," he said to the class of brokers and salesmen. "It probably has $5 million in inventory, yet Louis Vuitton likely spent $30 million to create the flagship store. Now when you consider there's a half-billion in inventory at 20 Pine Street, why would the extent of your investment be a small model of the project on a conference table?"

Mr. Shvo said the demand for unique properties would never let up. That's why he said quality buildings and marketing campaigns are crucial for luxury real estate brokers.

"A few years ago, everybody was investing in real estate because it was the trendy thing to do. Now everybody wants to be a developer, which is a dangerous thing. A lot of projects — two I'm thinking of specifically — are going to go bust," he said.