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Real Estate Developer Andrew Farkas Wants to Redevelop the
 Montauk Yacht Club into a World Class Yachting Destination
By Daniel Wagner, Newsday, Melville, N.Y.McClatchy-Tribune Business News

Apr. 16, 2007 --For international maritime real estate developer Andrew Farkas, buying and developing the Montauk Yacht Club Resort & Marina is something of a homecoming.

Farkas built his career on residential real estate investment, founding what would become the nation's largest owner of apartments before taking the company public and selling it off.

Insignia Financial Group, the business he started, eventually merged with CB Richard Ellis to become the world's largest real estate services company.

Farkas is the grandson of the founder of Alexander's department store, a major Manhattan retailer that shuttered in 1992.

Putting yachts on the map

He spent his childhood summers in the Hamptons, and still has a house in Southampton.

And lately, his attention has turned to the yachting industry -- more specifically, developing what he called "a new concept in hospitality that hasn't been done before: Yachting-oriented resort destinations on a global basis."

Farkas said he has not finished his plan to bring the Montauk Yacht Club -- on Star Island in Lake Montauk -- into that sphere.

The site's 29 acres of waterfront real estate house 232 boat slips, 107 guest rooms and 12,100 square feet of meeting space. Farkas will move his family to his house in Southampton for the summer, he said, and the resort will operate as it has under the previous owner, with the same management, for the duration of the season.

So far, Farkas' company has made good on that high-flying rhetoric. Island Global Yachting Llc, which consumes more of Farkas' attention than does his real estate banking firm that spawned it, last month opened its flagship property: the Yacht Haven Grande in St. Thomas.

That resort includes three restaurants, 80,000 feet of retail space, condominiums, office space, and berthing for yachts up to 450 feet.

Island Global Yachting also owns or operates properties throughout the Caribbean, Mexico and Texas and is in contract to develop and operate all the marina facilities for Nakheel, the storied developer of Dubai's burgeoning mega-resorts.

Farkas has spent enough time in Montauk to understand that the Yacht Club, a property steeped in local history, is unlikely to develop on that kind of scale. But he is "a hundred percent" confident that there is a higher-end yachting community in the Northeast that will be attracted to an upscaled version of the resort, which dates to the 1920s.

"What we're undertaking to do is to restore each venue to their glory days" in a manner consistent with host communities, geography, local architecture and history, but also recognizing enthusiasm for larger boats and greater demand for services like provisioners and electronics repair staff, Farkas said.

"Montauk continues to be a destination location," he said, "and with the passage of time, I think it will become more so."

Montauk residents and area officials agree, pointing to the sales in the last year of the Panoramic View Hotel on the Old Montauk Highway waterfront, which is being redeveloped as a lower-density co-op community; and the Shepherd's Neck properties, a pair of hotel and restaurant accommodations, one on the water, that Montauk resident and East Hampton restaurateur Mark Smith described as having been "a local dive."

All three are "key properties in Montauk," said Suffolk Legis. Jay Schneiderman (R-Montauk), and their purchase by outside investors has led to a "definite sense of upscaling, a sense that there's new money coming in with deep pockets that are redeveloping these properties."

Schneiderman said the regulatory and permitting processes can be prohibitive for wide-eyed developers who hope to build in Montauk.

"I'm sure [the Yacht Club] could never be built today under the current regulations, so I can't imagine him being able to expand it," said Schneiderman, who also is former chairman of the East Hampton Zoning Board.

This summer, the only changes will be consistent with the club's current footprint: Tennis courts will be refinished, docks repaired.

But Farkas said Island Global Yachting will develop its longer-term plan "over the next six months or so, and then work with the community to undertake that" with locals' concerns in mind.

An environment of change

Once there's a development plan, he said, "we'll close down the facility and get to work. It'll be nice to do that over the next winter."

That timeline sounded unduly optimistic to East Hampton director of natural resources Larry Penny. He said any proposed changes should be put on hold while his department does a comprehensive environmental study of Lake Montauk.

"East Hampton Town is known as the land of 'no,' locally, and things just don't move that quick," he said. Just to move one of the support beams, or piles, that are driven into the lake bed, "he needs a permit," Penny said.

"It might come to fruition, but it's not going to happen in a year's time. That's for sure."

Penny ticked off the list of permits most waterfront changes require: "It has to get an Army Corps permit, if there's any disturbance on the bottom; it has to get a state wetlands permit, has to get a zoning board and natural resources permit, has to get a planning board site plan."

Referring to all of the new developers in town, Schneiderman said, "From a regulatory standpoint, it's certainly going to be difficult to make all the changes these people are going to want or be accustomed to in other areas where they've developed."

But Concerned Citizens of Montauk president Bill Akin, whose father was vice commodore of the Montauk Yacht Club in the 1950s, said any investment in the property could be a "net gain" for the community, as long as the changes conform with environmental regulations.

He said Lake Montauk is a particularly sensitive body of water and a once-productive shellfish bed, and it may be difficult to make changes that would accommodate a greater number of large boats like the 100-foot yachts that sometimes appear there during summer.

"Nobody more than me wants to see [Farkas] do a good job with it," Akin said, but "if you're going to bring in a bunch of bigger boats, you'd have to redo it."

Conserving the character

Paul Monte, an owner of the landmark Gurney's Inn and chairman of the Montauk Chamber of Commerce, agreed that changes at the Yacht Club, the Panoramic and elsewhere would help bring the quality of the area's hospitality offerings in line with the high prices they charge during Montauk's relatively short tourist season.

"I think it's a great thing," he said of his nascent competitors. "Anyone that comes into town to invest money to improve this critical aspect of Montauk is certainly welcome -- with the caveat that they don't try to change the character of the place.

"Montauk is an eclectic combination of old and new, rich and not-so-rich, young and old; and it has the ability to blend all of those things to make it work." Mega-yacht destinations may be what the market calls for, Monte said, but "Montauk will always have a history of equality."

Montauk at a glance

History: The oldest portions of the Montauk Yacht Club are part of the legacy of developer Carl Graham Fisher, who had turned a stretch of mangrove swamps and woods in Florida into Miami. He bought most of Montauk, but his plans for a "Miami of the North" never came to fruition. It was Fisher who cut the inlet, allowing boats to pass into the freshwater Lake Montauk.

Population: 3,851

Total housing units: 4815

Single-family, owner-occupied homes: 940

Median home value: $290,400

Montauk Yacht Club

Area: 29 acres

Boat slips: 232

Guest rooms: 107

Meeting space: 12,100 square feet.



Copyright 2007 Newsday Inc.


Copyright (c) 2007, Newsday, Melville, N.Y.

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