Park Avenue, Delancey Street, Houston Street- June Eye Candy
Cranes are everywhere. Whether it’s the proliferation of glass towers in Long Island City, or the highest of the high end along 57th Street, where the Nordstrom Tower aims to set a record of $4BB in sales in one building. Downtown, along Houston Street and Delancey, the Lower East Side is exploding with new projects as well.
196 Orchard, 1 block from the F train, corner of Houston Street
I thought I’d take time to look at some of the new projects and report back. My big takeaways:
For most of these projects, location is going to win out. It’s not specifically about the renovation, particular finishes, amenity program, as long as they reach a certain benchmark. It’s about location.
Without the 421-a program (which may come back under a different moniker), the taxes on these properties is quite high. New Development, without the tax abatements, must really carefully consider the pricing strategy to win over buyers
There is a lot of product, but overpricing by re-sellers has continued to make new product look quite good. And it’s pushing buyers to buy new rather than resale units.
Sponsors (i.e. New Development Sellers) are going to market only when they can help buyers see light at the end of the tunnel. That is, when they can reasonably explain when the construction will be complete and closings will begin.
The retail component, if it can enhance the “lifestyle” quality of the building, has certainly been put front and center of the building marketing. If a gym like Equinox is taking the retail, or if the Whole Foods (now aka Amazon) will be in the building or a block away, this will be a major focus of marketing.
With that in mind, I visited 196 Orchard, a lovely 94-unit condominium project at the corner of Orchard Street and Houston Street, no more than a block from the Second Avenue F train stop. Super convenient, with amazing Northern views of Midtown, on the wide Houston Street, across from a playground. Oh, and next door to Katz’s Deli. Work out at Equinox in the building, then send a salami to your boy in the army.
Either way, the project competes favorably with all of its LES neighbors because it has such a central location. The finishes are attractive but not over the top. Magnum, who has done lots and lots of projects, is very good at scaling the finishes and value engineering appropriately to the price point. With a lot of One- and Two-bedroom units, this project should be quite attractive to buyers, especially if two-bedroom units start in the low $2mm’s. Private outdoor spaces are in many of the units as well, giving many apartments a unique selling feature to distinguish it from its neighbors. A winner. Though $3000/month for the carrying charges (tax and common charges) means that costs are approaching $3 per square foot with everything (except your mortgage) included. Before tax savings, your monthly costs would be about $11,000/month (assuming a 25% downpayment), and that would drop to about $9000 once you factor in tax savings.
I’ve been accused of being too analytical, and not focused enough on the attractiveness of the building. Here, it really is a pretty design, with a bronzed brick at the base of the building, changing into a darker brick. The theme which I touched on about a year ago is that so much new residential building design is meant to echo the older warehouses that became downtown lofts. With big windows, high ceilings, and an industrial feel, this remains the case.
There are a lot more projects along Delancey and it’s just about getting into them over time. I sometimes fret that the Lower East Side has lost too much of its edge.
11 units, all floor-through or larger at 1010 Park
1010 Park Avenue
I also got to be one of the first to pop into the 1010 Park Avenue sales office, if you can call it that. It’s set inside the townhouse at 19 East 61st Street, another of Extell’s projects which are wrapping up. The idea was to get in agents to look at their three Upper East Side projects currently in different stages of the sales cycle: Carlton House (21 East 61st) which is all but sold out (3 remaining); The Kent- a building that’s about 20% sold on 95th and 3rd avenue- with gorgeous large apartments – ground up construction with very low taxes; and 1010 Park Avenue, and 11-unit building consisting of all large apartments. This is meant to echo buildings building 100 years ago along Park Avenue. Space first, privacy second, and a great address.
Other than very lovely floorplans- and nearly all of these are 3800 square feet or double that if they are duplexes- there is actually very little to see. They do not intend to create a model apartment, but rather sell off floorplans (it will be ready in a year or so, September 2018) and then show finished units if they are still available in 6-9 months’ time. We got to see the “look book,” which was composed of the finishes in small vignettes- something that is not atypical, but in this market, where there is well over 14 months of inventory at the high end, it seems like they could do more.
I suspect that since the prices start at $15mm, and go up to $21mm or so (plus the penthouse), these will not be flying off the shelf. With monthly charges in the $12000/month range also, this becomes either a “must-have” product or a very niche product. 7000 square foot apartments are quite rare, certainly those in mint condition and that aren’t the most expensive unit in the building. For me, it’s too soon to tell how these will turn out- I suspect that the developer simply had the opportunity to build something special and is taking advantage of it, with air rights from the neighboring church. It fills in a gap on the Avenue and should be lovely – Beyer Blinder Belle is designing it. We’ll see.