The Real Deal New York

Hamptons, without houses: East End developers turn to condos

Projects like Harbor’s Edge in Sag Harbor and Bishop’s Pond in Southampton are getting snatched up fast

August 01, 2014
By Janna Herron

From left:

From left: Michael and Steven Dubb of the Beechwood Organization and a rendering of Harbor’s Edge in Sag Harbor

Residential real estate in the Hamptons brings to mind sprawling farmland estates, waterfront mansions, or even quaint bungalows. But a number of developers are now bringing a very Manhattan type of housing to Long Island’s East End: condos and townhouses.

The bet is that both longtime Hamptons residents looking to scale down and Manhattanites looking for turnkey homes will flock to these maintenance-free properties.

In the last few years, at least five townhouse and condo projects went up, including Harbor’s Edge in Sag Harbor, which just began marketing last month.

“There is a pent-up demand for condos in the Hamptons, and developers are tapping into that,” said Keith Green, a broker with Halstead Property who is marketing Harbor’s Edge. “The bell has rung.”

An elevated product

The latest crop of condos and townhouses are a major upgrade over the condos and townhouses built in the Hamptons in the ’70s, ’80s and ’90s, sources said.

“Those feel small and dark. The finishes are dated,” said Steven Dubb, principal of the Beechwood Organization, the developer of the 69-unit Bishop’s Pond in Southampton, which launched last year. “We’re coming to market with a larger and elevated product that sells at a much higher price point.”

Beechwood already sold 60 of its Bishop’s Pond units, priced between $999,000 and $1.3 million, said Dubb, whose firm is marketing the property in-house. “To sell 60 homes in a year at the prices we did, that has exceeded our expectations,” Dubb said. The project includes 34 villas and 35 townhouses.

Meanwhile, in Westhampton, 26 of the 39 townhouses built or under construction at the Dunes are already spoken for. Ten homes are in contract and 16 have closed, said Bill Strittmatter, licensed real estate salesperson for Timber Ridge Homes, the developer.

Further east in Sag Harbor at the Watchcase, a converted 1881 factory, 36 of the 43 lofts and townhouses released last spring were already snatched up, said David Kronman, partner at developer Cape Advisors. In June, Cape released an additional four townhouses and two penthouses. Corcoran Sunshine just began marketing those units.

The available units at the development, which is located a block off Sag Harbor’s main drag, are priced between $1.1 million and $10.2 million, according to the project’s website.

Nearby, Halstead just started marketing Harbor’s Edge, where prices range from $2.5 million to $6.5 million, last month. Halstead’s Green said interest so far has been “downright amazing.”

“I spent our first weekend booked from sunrise to sunset with serious showings,” he said of the project, which faces Sag Harbor Cove. “And this weekend, we won’t have a single showing slot available.”

Targeted buyers

Not surprisingly, these new Hamptons developments generally include resort-style amenities such as clubhouses, gyms, heated pools, lounges and concierge services.

And so far, they are drawing two main types of buyers: Older residents (both year-round and seasonal) looking to downsize, and Manhattanites.

Of the former group, Timber Ridge’s Strittmatter said: “These are people who have lived here a long time but don’t want to have to call the pool guy or shovel the snow anymore. They just want to go out and enjoy the beach, without having to cut the lawn first.”

Halstead’s Green said the latter group is “the work-hard, play-hard group from Manhattan.”

They tend to be professionals who work long hours and want to start their vacations as soon as they arrive in the Hamptons, he said, adding “these people take their leisure seriously.”

Paving the way

One of the earliest of these developments to come out the gate was Pond Crossing, which launched in Southampton in 2008. Developer Robert Morrow sold all but two of the 16 townhouses. Those two are rented out, but are available for sale for $1.195 million each, said the Corcoran Group’s Matthew Breitenbach, who has the listings.

“It was ground-breaking,” Breitenbach said of Pond Crossing. “It basically paved the way for what is happening today.”

But it has not been easy for all of these projects to get to this point. And some planned developments have been stymied altogether.

R Squared Development, headed by cousins Mitchell Rechler and Gregg Rechler — RXR Realty’s Scott Rechler’s brother — has been trying to build 40 townhomes called the Boat Houses in Hampton Bays since 2004.

The firm originally wanted to raze the decrepit Canoe Place Inn and build 75 condos, but local residents balked at the proposed demolition, so the developers proposed plans to renovate and restore the inn and build 45 condos. The firm since reduced the number of units to 40, but is still awaiting approval.

Harbor’s Edge also had a hard time. The original version of the project advanced by the then-developer, East End Development, was approved in 2007. But two years later, the permits expired mid-construction. Soon after, the developer lost the project in bankruptcy and the real estate investment fund Ultra bought it and formed Water Street Development at Sag Harbor LLC, which finished the project.

And even after a two-and-a-half-year approval process with 65 hearings, the Watchcase still ran into dissent during construction from a group called Save Sag Harbor, which originally backed the project. This year, the group took issue with the materials being used, saying they were not historically sensitive enough.

Sniffing around

The potential roadblocks have not deterred other developers from sniffing around for opportunities to build more Hamptons condos, Dubb said. Nonetheless, the pickings are slim, because most Hamptons towns strictly regulate new development.

The key, sources say, is to find sites that residents deem as having a less desirable existing use than a condo or townhouse development. For instance, Pond Crossing was a rundown hotel, and Bishop’s Pond was once a sand mine.

“The prior owner had mined the sand down to the ground water and it was considered an obnoxious use by surrounding residents who hated the truck traffic,” said Dubb. “I don’t think we could have gotten it done on farmland.”

The Watchcase project did the opposite and restored a cherished building. “The factory building is such an important part of the history of Sag Harbor,” said Kronman. “It was the village’s economic driver for so long that everyone wanted it saved.”

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