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Sole Gramercy Park rental building to go condo

36 Gramercy Park East

The only rental building situated on one of Manhattan's most sought-after plots of land is going condo.

On December 26, proposed condominium offering plans were issued to residents of 36 Gramercy Park East, a landmarked rental building abutting the exclusive Gramercy Park, one of only two remaining private parks in New York City. The building, which includes 18 rent-stabilized apartments and one rent-controlled unit, is owned by Mann Realty Associates, co-owner of another iconic New York building currently undergoing a condo conversion: the Apthorp at Broadway and West 79th Street.

Mann provided residents with a proposed offering plan, known as a "red herring," signaling that the initial offering plan for the building's conversion has been submitted to the attorney general's office. By law, no condo units may be sold until the attorney general's office accepts and files the final offering plan.

The "red herring" for 36 Gramercy Park East indicates that the 53 units at 36 Gramercy Park East are being offered for sale at an average price of $2,448 per square foot, though large units facing the park are going for much more.  The most expensive apartment, a 2,078-square-foot, three-bedroom on the ninth floor facing the park that is currently rent-controlled, has been priced at $6,545,700, or roughly $3,150 per square foot. The least expensive, a 323-square-foot studio at the back of the building, has been priced at $484,500, or roughly $1,500 a square foot.

Gramercy Park real estate is among the most prized in New York City, thanks to the carefully tended two-acre park, developed in 1831, that sits behind wrought-iron gates between East 20th Street and East 21st Street, between Third and Park avenues.

The scenic private park is only accessible to residents of adjacent buildings. The owners of the 39 buildings on lots surrounding the park each receive keys to the park, which residents (and guests at the Gramercy Park Hotel and members of the National Arts Club) may borrow from their doormen. In addition, residents of those buildings -- but no one else -- may purchase their own keys for $350 per year.

Nearly all of the buildings with access to the park are co-ops, according to Arlene Harrison, president of the Gramercy Park Block Association and a trustee of Gramercy Park. Seven Gramercy Park West is a condo building, and there are 25 condo residences connected to the Gramercy Park Hotel. Zeckendorf Realty reportedly plans to redevelop a shuttered 17-story Salvation Army boarding house on the south side of the park. But 36 Gramercy Park East is the only rental building that owns a lot on the park, Harrison said. 

Units at 36 Gramercy Park East, constructed in 1906, will undeniably fetch high prices, thanks to the building's park access and striking Gothic facade of white terra cotta porcelain tiles. While the original 24 apartments have been divided into smaller units, Mann has combined some units to create larger homes likely to fetch higher sums, residents say.

A recent example of the high prices fetched by apartments in Gramercy Park is Ian Schrager's 50 Gramercy Park North, where units have sold for an average of $2,825 per square foot, and a 4,235-square foot penthouse sold in March for $16 million, according to Streeteasy.com.

But tenants at 36 Gramercy Park East aren't sure if units in their building will command such high prices, especially since the economy has soured and 11 of the front apartments overlooking the park are rent-stabilized. According to the "red herring," the conversion is a non-eviction plan, meaning tenants in rent-stabilized and rent-controlled apartments must be allowed to continue residency indefinitely, paying rent to the sponsor.

"It's overpriced," said Karen Fisher, a tenant at 36 Gramercy Park East, who said she plans to continue renting her rent-stabilized apartment. "There's no reason for anybody [in rent-stabilized or rent-controlled apartments] to buy."

Another rent-stabilized tenant, who asked to remain anonymous, echoed Fisher's remarks.

"I don't know how many of the stabilized people would buy," the tenant said. "At these prices, it doesn't make sense." Rents of stabilized units in the building range from $1,000 to $2,000 a month, the resident said. 

Asking rents for market-rate apartments in the building run as high as $20,000 per month, according to MyNewApts.com, the exclusive broker for rentals in the building.

Maurice Mann, owner of Mann Realty Associates, said several of the market-rate renters have expressed interest in purchasing units in the building, adding that when the attorney general's office approves the plan in at least a year, the economy may have improved.  

"We'll see what the market is in a year," he said, adding that he has not offered buyouts to any rent-stabilized tenants.

Some tenants have likened the situation at 36 Gramercy Park East to that of Mann's highly publicized conversion of the Apthorp, another historic building with rent-stabilized tenants where rents of market-rate apartments and asking prices of the units are very high. According to Streeteasy.com, asking prices for condos at the Apthorp average $2,167 per square foot.

"Some of us are drawing a very close parallel to the Apthorp," said the resident who asked to remain anonymous.

Sales have been slow at the Apthorp, which is in danger of defaulting after selling only one unit in the last six months, the Wall Street Journal reported.

The Apthorp project is also embroiled in litigation between Mann and his co-owner, Israeli diamond merchant and developer Lev Leviev. Leviev recently filed an emergency injunction to take control of the project from Mann, who is the managing party and 50 percent owner, charging that Mann had spent operation money on his personal legal fees and allowed employees to live in the Apthorp's vacant apartments. Meanwhile, Leviev had floated a plan in November to put the conversion up for sale for more than $550 million, The Real Deal reported.

But Harrison, president of the Gramercy Park Block Association, said she is pleased that 36 Gramercy Park East is going condo. "We feel it can only be a positive for our community," she said.

"We find that in general, rental buildings have a more transient population and in many of the [buildings] on the park, the apartments are handed down through the generations."