The Milan Condo on 23rd Street in Chelsea is going to need a new name.
Joining the ranks of New York City’s many “nondos,” the 42-unit conversion will remain a rental building rather than going condominium as planned.
The Milan, which hit the market in June of 2008, failed to sell enough units in time for its condo offering plan to be declared effective, according to Douglas Wagner, president of Benjamin James Real Estate, the exclusive marketing and sales agent at the building. Instead, the now-vacant units will be leased out, said Wagner, whose company has already started marketing rentals there.
The credit crisis and stringent lending requirements have stalled sales for new condo projects all over the city. Still, the Milan’s situation is rare because it’s one of only a few residential conversions, which have a time limit for declaring the offering plan effective, unlike new-construction condos, according to real estate lawyer Meg Goble, a partner at Hanley & Goble, who is not involved with the building.
Located at 120 West 23rd Street between Sixth and Seventh avenues, the Milan was constructed as a rental building in 1987. The owner, Manhattan-based Milan Associates, has since renovated the building with condo-quality finishes, like hardwood floors, sandstone tiles and mahogany cabinetry. The asking price of a 575-square-foot junior one-bedroom there was $515,000, according to Streeteasy.com, while a two-bedroom, two-bath unit was priced at $1.285 million.
Today, one-bedrooms in the now-vacant doorman building, where each apartment has a balcony, rent for $2,700, Wagner said, while two-bedroom units start at $4,100.
“We wanted to rent quickly,” he said.
In order for the offering plan to be declared effective, Wagner said, 15 percent of the units needed to be sold by the end of June. Instead, rising interest rates and customers’ inability to get mortgages slowed sales as the deadline neared.
“The [deals] were stunted by the increase in interest rates,” he said.
Phone calls to Milan Associates were not returned.
When rental buildings are converted to condos, Goble explained, the offering plan must be declared effective within 15 months from when the attorney general’s office accepts the plan.
“If you don’t make that date, your plan is out the door,” she said.
If the developer fails to sell enough units in time, the project reverts back to a rental building and buyers get their deposits back, she said. Wagner didn’t say how many contracts had been signed, but said some buyers received their money back.
The 15 months can’t be extended and the developer can’t file a new offering plan for at least a year, Goble said.
That’s one reason most of the city’s new condos are ground-up construction: Converting an occupied building means a longer approval process and is often fraught with complications, such as the headaches experienced at much-publicized projects the Apthorp and Sheffield 57.
“You don’t see too many occupied buildings going condo,” she said.