Back in 2006, when Glenwood Management began assembling parcels on the eastern edge of the then newly rezoned Hudson Yards district to make way for Emerald Green, it knew the project would have plenty of company when it opened. Thousands of high-end apartments in several massive rental projects were slated to hit the market in the emerging neighborhood at the same time or soon after.
What they didn’t anticipate was the mess of a market they’d be entering.
The 24-story, two-tower building, located at 320 West 38th Street, has just begun renting its 569 apartments, not long after the release of a quarterly market survey declaring the past year a disaster for rentals.
Prudential Douglas Elliman’s second-quarter 2009 survey, prepared by Miller Samuel, reported that the number of rentals in Manhattan dropped by about 58 percent (partly because of unemployment) compared with the same time the previous year. Inventory increased by 28.8 percent and the average rent per square foot slipped 17.5 percent.
Still, Gary Jacob, executive vice president of Glenwood Management, said “We’re hoping to rent out in 12 months.”
The rental sector is after all doing a lot better than the sales market, he pointed out.
“If we were building a condominium, we’d want to put our heads in the oven. But you can always rent. We never get too concerned about that,” said Jacob, during a phone interview from the hospital were he was recovering from hip replacement surgery.
Jacob said the only adjustment Glenwood — which in addition to Emerald Green has 23 other luxury rental buildings in Manhattan — has made in response to the market decline is to reduce initial rental prices.
And it appears that rentals have come out of the gate strong. In its opening weekend last month 52 leases were signed — just under 10 percent of the total number of market-rate apartments. Emerald Green is offering one month free, in addition to paying the broker’s fee.
“One good thing about doing rental buildings,” said Jacob, “is that if the market is weak when we start, we’ll rent the building out, and when the market gets stronger, we’ll raise the rents.”
Figuring in the one month’s free rent on a year’s lease, rents at Emerald Green are $2,200 for studios with home offices, $2,350 for one-bedrooms and $3,750 for two-bedrooms — around the average for each category in Manhattan and on par or lower than the few comparable new buildings in the broader area. The building also includes below-market-rate units that will be allocated through a lottery.
The Hudson Yards area is bounded roughly by West 30th Street to the south, West 42nd Street to the north, and by Eighth Avenue and the Hudson River to the east and west, respectively.
At Emerald Green, Glenwood wavered a little from its usual formula on the mix of apartment layouts, a move meant to accommodate the breed of younger renters it expects will be attracted to the developing area. “Glenwood generally does not build studios,” Jacob said. “We prefer one-beds, small or large.
“But for this emerging neighborhood, we want to attract more young people.”
The building has 104 studios, 336 one-bedrooms, 127 two-bedrooms and two three-bedroom apartments.
The smaller-layout formula has proven successful for 455 West 37th Street, one of the two other new-construction luxury rental buildings to open recently in the Hudson Yards area. That rental building has 260 apartments, including 96 studios, with rents starting at just under $2,000 a month. The first phase of a three-tower rental development by TF Cornerstone (a spin-off of Rockrose Development run by the family’s two younger brothers), 455 West 37th Street, opened in January 2009, is already 87 percent leased, according to a project representative.
Then there’s the behemoth: Larry Silverstein’s Silver Towers at 11th Avenue and 42nd Street, which has 1,275 rental apartments in two 60-story towers. While the block-long complex is technically within the Hudson Yards zoning area, it is not a true comparable for Emerald Green, both because it is much farther west and because of its sheer size. Together with the 921 apartments at Silverstein’s nearby 41-story One River Place, and the retail and amenities contained in both projects, the Silverstein towers form a small neighborhood on their own.
But the success Silver Towers has had so far could bode well for Emerald Green.
Even at relatively higher price points, with studios starting at $2,300, the units Silver Towers released in its first phase in May are renting faster than its marketing company, Citi Habitats, had expected. More than 250 apartments had been rented as of last month.
“The leasing velocity at Silver Towers has been nothing short of fantastic,” said Citi Habitats’ president, Gary Malin.
Malin predicted that Emerald Green will also do well, due to Glenwood’s reputation for producing and maintaining high-quality buildings. He added a caveat, though: “We were fortunate to hit the market at the precise time when the volume is at its highest, May through August. September is not as good as it used to be, and things slow down in the fall and winter months.”
Still, Emerald Green’s location could give it a potentially greater advantage. “The Rockrose and Silverstein projects are farther west,” Jacob noted. “We’re right off Eighth Avenue, closer to transportation.”
The Glenwood building is also going for LEED certification. Its environmentally efficient features include recycled construction materials, green roofs that recapture water for irrigation, and four charging stations for electric cars in the 400-car parking garage.
Emerald Green consists of two separate towers, fronting West 37th and 38th streets, each with its own entrance. The buildings are connected by a glass-enclosed corridor that overlooks an interior garden court. Architect Stephen B. Jacobs designed the towers, and designer John Saladino furnished and decorated the public spaces.
Amenities at the complex, which are mostly located in the southern tower, will include a fitness center with 50-foot swimming pool, circular stone whirlpool, locker rooms and saunas; yoga room overlooking a garden court; children’s playroom; landscaped outdoor terrace; and screening room, library and conference room.
The area around Emerald Green’s site is rather desolate, lacking in shops and services, especially closer to the heart of the Hudson Yards district to the west. But that is expected to improve as people fill the vast number of apartments slated to open in the next couple of years. Glenwood is looking to fill the building’s 10,000 square feet of retail space with a restaurant or gourmet grocery, said Jacob.