The Real Deal New York

Open house traffic hits wall in Financial District

Pricey Financial District condos not flying off shelves

September 01, 2008

By Marc Ferris

While the Financial District’s hip new moniker, FiDi, is catching
on, and the neighborhood is being re-branded as an around-the-clock
destination, the transformation is far from complete.

With Wall Street nose-diving and luxury rental buildings there offering more concessions to attract tenants, The Real Deal
took a sweep through open houses at some of the most high-profile new
buildings there to see how much pain the sales market in Lower
Manhattan’s fastest-growing neighborhood is feeling.

Due to tax policy and a dearth of dirt Downtown, most condos
consist of retrofitted office buildings that have been converted into
blue-chip residences.

But, despite the buzz, open houses at some of the neighborhood’s
hottest properties attracted only a moderate traffic flow on a Sunday
last month.

Certainly, the condos are not flying off the shelves. For instance,
20 Pine Street, which went on sale in 2006, has yet to sellout. Two
other high-profile buildings, the William Beaver House and the W New
York Downtown Hotel & Residences, aren’t sold out either — despite
being on the market since 2006 and 2007, respectively.

Wait and see

At 20 Pine, the former Chase Manhattan Bank headquarters, many
brokers held open houses on the same day last month — for both those
looking to resell units they bought when the building first started
sales as well as for the sponsor looking to unload inventory.

Brokers met with clients in the narrow unfinished lobby as a new resident moved in, adding to the commotion.

Ran Gibor, sales associate, juggled his day from Penthouse 22, a
1,871-square-foot furnished unit on the market for $3.2 million. “It
can get crazy around here, especially since the building isn’t
finished,” he said.

With 409 apartments, 20 Pine is one of the largest condos in FiDi.
Typical buyers include foreigners, financial executives who live uptown
and couples looking for a pied-à-terre, Gibor said. But the building
has suffered from construction delays and a slow start out of the sales
gate.

And last month developer Shaya Boymelgreen and marketer Michael
Shvo were named in a lawsuit filed by a buyer who alleges that the
building exaggerated sales figures and the completion date, and then
refused to rescind its contract.

Deborah DeMaria, a broker with Warburg Realty, lives in a combined
apartment in the building with her husband and two children, and rents
another unit. She bought in June 2006 and was promised a June 2007
move-in date, but had to move three times while waiting another year to
move in.

“A lot of residents are angry with the delays,” she said.

During her Sunday open house, she showed several apartments at 20
Pine and 15 Broad Street to her client, Thomas Addison, a composer who
owns a condo in the Parc Vendome at Columbus Circle.

Addison, 57, a real estate buff who scours Web sites for prices and
trends, dismissed one apartment for its investment potential because it
lacked a bathtub.

“I’m generally in a wait-and-see mode,” he said. “Early investors
in places like 20 Pine and 75 Wall Street are selling for what they
paid, so what does that say?”

He has also looked in the Columbus Circle area, where sales go for
around $1,500 a square foot, he said, adding that he appreciates that
resales in FiDi are going for around $1,200 to $1,300 a square foot.
While he’s attracted to the relative bargains, he said the area “lacks
critical mass.”

“Buildings Downtown need amenities because there’s such a sense of
isolation and it lacks a city vibe; I don’t want to walk out the door
at 9 p.m. onto deserted streets.”

Ryan Smagala, a broker with Homestead New York, also held an open
house at 20 Pine, where he has eight listings for investors who bought
during the heyday of 2006 sight-unseen and are now looking to sell.

Apartment 1512, which measures 784 square feet and is listed at
$885,000, was one of those units. Long and narrow, the apartment had a
large bathroom in addition to an alcove-like space that could be used
for another bed or as an office area.

“My open house was hugely successful, though I didn’t get my first
client until a half hour before it was supposed to end,” said Smagala.
“I stayed an extra hour for seven groups of clients who showed up.”

Light traffic

At the W New York Downtown Hotel & Residences at 123 Washington
Street — which was developed by the Moinian Group and is also being
marketed by Shvo — traffic in the showroom was light until it started
to rain and people came in for refuge. Michael Monterosa, a broker with
Shvo, said he had seven walk-ins and two appointments.

Scheduled for completion in fall 2009, the building will have 217
hotel rooms and 223 condos —159 unfurnished units that have been
available for two years and 64 furnished units that have not yet been
offered for sale, he said.

Out of the 159 residential units available in the project, 30 active sales are listed on StreetEasy.com.

The sales office, located a block from the site, is on a busy corner at 90 West Street.

After visitors enter a faux ’80s club (with a bar) Monterosa leads
them to the selling floor, which has the feel of an art gallery. There,
he manipulates a cursor on an elaborate 3-D projection to highlight the
building’s features and floorplans. He then brings visitors to the
model apartment, whose fridge is stocked with Moet and Perrier.

He said typical buyers at the W are “hip and trendy professionals in their late 30s.”

The one- and two-bedrooms in the building range from $1.1 million
for a 609-square-foot apartment to $2.8 million for a 1,200-square-foot
unit, said Monterosa. Despite overall increases in the rest of the
neighborhood, average price per square foot has dropped 2 percent at
the W New York to $2,016, since November, when sales began.

With about an hour to go at an open house at the William Beaver
House, which lasted from noon to 4 p.m., no attendees had stopped by,
according to a security guard.

Available units range from a 698-square-foot alcove studio listed
at $935,000, to a 1,657-square-foot penthouse in the neighborhood of $4
million. According to a broker on site, 70 percent of the 47-story,
320-unit structure is sold.

Last year the building made headlines when
it sold a unit for about $3,500 a square foot and likely set a record
for FiDi.

Sofia Kim, vice president of research at StreetEasy.com, attributed
this to a new marketing push that de-emphasizes the “soft-core porn,”
designed to appeal to young men with discretionary income, to a more
sophisticated campaign that stresses the building’s design and the
history of Downtown Manhattan.

The building also switched from the Sunshine Marketing Group to
Core Group Marketing. According to StreetEasy.com, the increase at the
William Beaver House mirrors a neighborhood trend (prices rose from
$1,151 to $1,271 per square foot in the last year).

For now, the typical city-based buyer checking out the Financial
District is coming from the Upper East Side or Upper West Side, said
Smagala, the Homestead New York broker.

Jennifer Mikitan, sales director at 55 Wall Street, told The Real Deal
that around a half dozen buyers visited her Sunday open house. The
average price per square foot, $1,543, has remained steady in the last
year at the building, which started sales in 2006.

According to StreetEasy.com, the building is 80 percent sold.

While the neighborhood is undergoing a growth spurt, brokers say the souring economy has spawned bargain hunters.

“I see a lot of bravado from buyers, but many of them are clueless
about what it takes to buy an apartment in this credit atmosphere,”
said Richard Rothbloom of Brown Harris Stevens, who specializes in the
Downtown area. “I tell them they really should be pre-qualified, and
they say, ‘Oh, I think I’ll be fine.’ So then I have to get out my book
and play professor.”

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