Sole Gramercy Park rental building to go condo

By Candace Taylor | January 05, 2009 11:58AM

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.”