The Real Deal New York

In rare instance, Soho building has Artist-in Residence requirement waived

Move thought to boost value of the Mercer Street condos
By Katherine Clarke | November 14, 2012 09:00AM

A new Soho condominium, at 111 Mercer Street, has received an unusual special permit circumventing its Artist-in-Residence Certification, a move could increase the property’s value up to 15 percent.

For years, Soho’s famous loft-style residences have been reserved by the city exclusively for working artists thanks to city zoning laws. The requirement that all of these buildings’ units, spanning five dozen blocks north of Canal Street, serve as homes only to artists has been a thorn in the side of property owners and brokers across the city, who complain that the rules limit the audience for potential new developments. Non-artists have moved into these units over time, signing a waiver with the sellers consenting that if the city comes knocking, the liability falls with the buyer.

“This is huge for us,” Fredrik Eklund, who is marketing the property alongside fellow Prudential Douglas Elliman broker John Gomes, told The Real Deal. “The entire process took 18 months and involved numerous city agencies with approvals at every level.”

The Landmarks Preservation Commission and Department of City Planning required developer Veracity Development to complete a Class A renovation of the building in support of the application, incorporating historically accurate materials, a spokesperson for Veracity said. Closings at the four-unit property will begin in the spring of 2013. Two of the units are already in contract.

The artist rule has been in play for three decades. It was instituted to permit artists to use formerly industrial spaces as private residences. The rule has been more strictly enforced in recent years.

Kirk Rundhaug, another Elliman broker with a listing in the adjacent building, said 111 Mercer’s values are significantly higher than those at the building in which his listing is located, at 115 Mercer Street.

Rundhaug’s listing, a 2,000-square-foot two-bedroom, is asking $3.49 million. Meanwhile, a 2,000-square-foot two-bedroom unit next door is asking $4.5 million. Rundhaug said the AIR waiver, in addition to the new construction and high-end finishes, could be contributing to the difference in price.

The penthouse at 111 Mercer is asking $12.5 million, according to Streeteasy.com.