In yesterday’s New York Times, the lead story in the Real Estate section notes that “a number of interesting and distinctive prewar buildings are being converted to condos.” The trend has emerged over the last decade as developers began to prefer that route for shifting a rental building to ownership.
Writer Hilary Stout cites as examples, 36 Gramery Park East, the Devonshire House (28 E. 10th St.), 845 West End Ave., 610 W. 110th St., 220 W. 93rd St. and 314 W. 100th St.
The author is careful to provide some of the downsides to purchasing a condo in a building under conversion–for instance, tensions between tenants and purchasers; financing issues in which a majority of the units are unconverted, unsold or both; the quality of the infrastructure; and the amount of the reserve fund.
Unfortunately, left out of the article is the matter of living in a building in which construction continues while one tenant after the other finally departs. (I call these “rolling conversions.”)
Even more important, the piece overlooks an especially critical question:
Does the developer have deep enough pockets to see the project through in the event of sales that fail to meet expectations. And how can you know for sure? Foreclosure is not a pretty sight.
It is the collection of uncertainties that causes me to advise my buyers routinely to avoid conversion buildings until they are mostly sold out. To me, the risks, are way too high.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022