By Patrick Hedlund
Lower East reality
A six-story residential/retail loft building on the Lower East Side hit the market for $23.25 million last week, featuring 18 renovated units and four ground-floor storefronts.
The fully occupied property, at 126-130 Orchard St., is ripe for the plucking by foreign investors, who could utilize the buildings J-51 tax abatement while raising rents to the legal limit as fast as the market will bear, according to Stuart Gross, executive director of building marketers Eastern Consolidated.
The rent-stabilized building, between Delancey and Rivington Sts., secured a 15-year J-51 tax abatement after renovations in 2002, and the residential units feature 20-foot ceilings, plus two penthouse units with rooftop gardens.
The propertys retail compliments are also significantly under market, said Eastern Consolidated senior director Deborah Gutoff, adding that prices there currently average $68 per square foot. But since their leases all expire within the next two years, the new owner will be able to increase rates as much as 40 percent, to $115 to $125 per square foot at present market rates, she said in the statement.
But Nadeem Waheed, owner of Daniels Leather in the buildings ground floor since 1992, said the turnover of tenants on his block puts every new stores survival in question.
Its a bloodbath right now
We have never seen years like this, he noted of the spate of retail tenants who open new businesses, only to close a short time later and the spaces sit vacant. If they think a new guy can come and make it, thats wishful thinking.
If rents at Waheeds space were raised even slightly, he claimed hed simply pack up and leave. People get lured into thinking theres money here, he added, saying business at his store has been decreasing each year. All the time theres moving trucks.
Julian Schnabels pink palace is apparently not impervious to the slowing economy, as hes lopped $2.5 million off the asking price of a duplex in his West Village building.
The Wall Street Journal noted last week that Schnabel has slashed the cost of one condo is his five-unit Palazzo Chupi high-rise on W. 11th St. from $32 million to $29.5 million, citing brokerage listings of the unit that appeared online.
The luxe three-bedroom, four-bathroom duplex includes a trio of outdoor terraces set in the rose-hued, Italian-style palazzo, which also offers a swimming pool and steam room to condo owners.
Schnabel has courted such high-profile buyers as U2 rocker Bono, who bailed out, and actor Richard Gere, who bought, for the building, which has been both lauded for its design and criticized for appearing out of context with the neighborhood.
The Journal added that Gere is now attempting to flip his four-bedroom purchase secured for $12 million last year for $18 million through Sothebys International Realty.
Debra Ortega of Brown Harris Stevens, who is marketing the duplex, said interest in the building has remained high despite the price cut.
People are very interested in whats behind those walls, Ortega told Mixed Use, adding she expects the likely buyer to be foreign. Someone that lives in the world not in one place.
Its been a rough year for building in Manhattan, with a series of construction accidents and the recent resignation of the Buildings Department commissioner; so, Mayor Bloomberg announced this week more than $5 million to be put into the agencys budget for new hires to boost enforcement and safety.
The funding, part of the mayors fiscal year 2009 budget, will allow D.O.B. to take on 63 new positions by injecting $5.3 million for the Special Enforcement Plan implemented last summer.
Fifty-six additional inspectors and administrators will be taken on to launch the third phase of SEP, a multi-phase initiative to increase the Departments presence on construction job sites, increase audits and unannounced inspections, and tighten oversight over the professional certification program, read a joint statement by Bloomberg and new D.O.B. Commissioner Robert D. LiMandri.
This phase includes the new Construction Monitoring Program, which will add staffers to oversee milestone points in new projects by auditing at different construction intervals; Violation Re-inspection Teams, which will conduct follow-up and surprise inspections of sites where building violations have not been corrected, and to confirm proper remediation of such violations; and the Sidewalk Shed Electrical Safety Program, which will ensure that the required electrical lighting of pedestrian sidewalk sheds near construction sites is safe and up to code.
We are in the midst of a historic building boom, Bloomberg said, and the added development demands that we devote sufficient resources to aggressively enforce site safety.
The investment brings the total number of inspectors to 461, up from 277 in 2002.
Hot for retail
Asking rents along retail stretches in Soho and the Flatiron District rose dramatically over the past six months compared to the same period last year, according to a report last week by the Real Estate Board of New York.
Rents increased a whopping 50 percent in the Flatiron District, along Fifth Ave. between 14th and 23rd Sts., to $401 per square foot second only to the Upper East Side for the greatest gain in all the neighborhoods surveyed.
Soho, along Broadway from Houston to Broome Sts., posted a 32 percent jump year over last year to $424 per square foot.
According to REBNY, five new corridors have been added to the reports list of Selected Major Retail Corridors, including Bleecker St. in the West Village and 14th St. in the Meatpacking District.
The new data showed that asking rents on Bleecker St., between Seventh Ave. S. and Hudson St., were $397 per square foot, while rents along 14th St. between Ninth and 10th Aves. in the Meatpacking District were $462 per square foot.
Building owners remain optimistic that the favorable market for retail leasing will continue despite the softening economy, stated Steven Spinola, REBNY president.