Out and About: Don’t be fooled with a conversion

There is nothing like a gut renovation. (Flickr photo by Asturnut)

There is a 16-story building on West End Avenue in the low 70s that has undergone conversion from rentals to condos, a situation fraught with issues that I have explored from time to time.

Among the issues: How long will it take for the conversion to be completed? How deep are the developer’s pockets?  How will lingering tenants and ongoing construction affect the ambiance of the 1924 building? How certain is the quality of future work?

When I asked the listing broker three different ways how many of the units were occupied by owners, she told me that approximately 60 percent had that status, a healthy proportion indeed.  Yet there was something about the way she answered that piqued my interest.

To have believed her would have required me to take an imaginative leap as long and improbable as a grand jeté from the Bowery to Buffalo.  Just sayin’.

Although I warrant that there could be a credible explanation for her reply, one does not immediately come to mind.

First, I checked the OLR database, which many brokers use routinely, including me.  When I looked last month, I found that no more than eight out of 54 units (of which some have been or will be combined) have hit the market.  One is off the market, one is under contract, four are sold and two are listed as actively available.  Perhaps there were insider transactions that would not show up in OLR?

However, they would be disclosed in the city’s database, which admittedly is always out of date.  Documents in that database (ACRIS) show that 12 apartments have changed hands for a total of $14,088,935 since the building was converted.  The city’s records also show that the new owner purchased the building back in 2006 for $25.78 million and had it declared a condominium in February.

Let’s see: 12 sold units out of 54 (of which I think some have been combined) equals 22 percent.  Not 60 percent.

I have to assume that many of the unsold apartments are scheduled for or undergoing demolition.  In addition, other occupants probably have chosen to live there as tenants.  I suppose some of them may yet decide to buy their residences, some still may be bought out, others will have their own reasons to move eventually and a few will leave feet first.

It was when I took a look at a combined apartment in the building that I questioned the listing broker.  It went on the market last June at a price that has remained steady of $2.2 million.  (Apparently there is room for negotiation: For example, a 15th-floor unit listed for $1.9 million traded for $1.75 million.)  The common charge is $1,953 and real estate tax is $716 monthly.

The situation in the building is but one reason that I question the offering price of the 1,506-sf unit that I saw. If purchased as is, it is available for $1.5 million, meaning the sponsor puts the cost of renovation at $700,000, or an extremely generous $465 per square foot.

Now gutted and littered with shards of construction debris, the apartment could easily accommodate three bedrooms, two and half baths and a half-open galley kitchen.  There are to be Bosch appliances, a stainless-steel Liebherr refrigerator, Waterworks floor tiles and finishes by Restoration Hardware along with a fireplace that may or may not be working and a washer/dryer.

Views from the three exposures are disappointing, even though the apartment is on a high floor–hardly any skyline, no river, nothing much at all.

Another issue is the building itself.  Even the hall outside the sales office has yet to shed its decrepitude, so there is nothing to commend any of the public spaces that the newest owners will be condemned to tread for an unforeseen amount of time.  (I didn’t ask, but I obviously have my concerns about the speed with which the work will be done.)  And renovation on a new owner’s floor still doesn’t prevent the elevator from stopping on other floors with depressingly unfinished halls.

In a completed conversion, roughly $1,000 a square foot for a gutted unit could represent real value, though the cost in dollars, energy and construction frustration would be steep.  In this project, I don’t know how the asking price can be justified.

Given its languishing on the housing market for the past six months, I guess I’m not alone.

Other recently seen properties that have been listed by various brokers:

  • On a corner of Broadway in the low 100s, a renovated two-bedroom, two-bath co-op with improved open kitchen and bright southern exposures.  This compact 875-sf apartment is in a full-service pre-war building with concierge, doorman and live-in super.  Pets are permitted with board approval.  At $795,000 with maintenance per month of $1,282, this unit is well priced.    
  • Surrounded by a sow’s ear, a one-bedroom co-op that will never benefit from being turned into a silk purse.  This otherwise pleasant ground-floor apartment has a modestly improved kitchen with a half-size dishwasher, custom closets, good flow, lovely floors, 10’4″ ceilings and a location barely more than block from Central Park in the low 80s.  Its oversize windows are hardly a plus.  In a pet-friendly pre-war building with live-in super, the unit needs to have a price lower than the offered $475,000 with monthly maintenance of $1,003.
  • A homey, 1,100-sf duplex that exudes charm.  The two-bedroom apartment has been expensively and tastefully renovated, but it has only a single, albeit handsome, European-style bath.  In a Central Park block of the high 60s, this unusually charming co-op features inviting window seats in the living room and master bedroom, exceptionally attractive built-ins, decorative fireplace, recessed lighting, high-end kitchen in which a red Viking stove commands attention, a true staircase and ample closets.  But the asking price of $1.495 million with maintenance of $2,001 a month says more about the cost of the renovations than of the value that today’s market will put on the place.
  • At the southern edge of Washington Heights on Riverside Drive, a true bargain in a classic-six-room co-op.  With gorgeously paneled formal dining room and original wood details throughout, this 1,500-sf unit in a 1910 building evokes another era–even the modern kitchen, which boasts a Sub-Zero refrigerator and granite countertops.  Its liabilities are hallway flooring in poor condition, a living room of small proportions and exposures that are at least acceptable in two of the bedrooms.  Listed for $1.095 million with monthly maintenance of $1,481 in May 2008, the unit now is offered for $679,000 after seven–count ’em, seven–price drops.
  • On Riverside Drive in the mid 90s, a shamelessly overpriced 1,150-sf condo that demands a gut renovation.  This two-bedroom, two-bath apartment in a 1931 building–marketing materials refer to “the charm of the 1920s”–has nice river views from the fifth floor and three exposures, one of which permits an earful from the school yard below.  The asking price is $979,000 with combined monthly charges of $1,457.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201

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