New York's once booming real estate industry has already been struggling with the recession, but the revelation of Bernie Madoff's $50 billion Ponzi scheme has hit commercial brokers and developers particularly hard. Deals across the city have been put in jeopardy, buyers have withdrawn pledges to purchase, and Madoff investments used as collateral are now worthless. "The level of devastation, both financial and on a human level, is astounding," said one real estate lawyer whose 10 clients have each lost from $5 million to $50 million.
Developers are particularly worried that banks will call in loans made against Madoff investments at a time when securing loans from alternative lenders remains difficult. One of the biggest real estate names imperiled is the Wilpon family, the primary owners of the Mets, who manage 600,000 square feet of office space and invested millions with Madoff. "They thought Bernie Madoff was a genius," said one broker, "and anybody who didn’t give them their money was a fool." (Read more Bernard Madoff stories.)