West 23rd Street’s condo canyon weathers the bust

Chelsea neighborhood waits for expansion of the High Line, more retail

Oct.October 29, 2009 08:02 PM


Derek and Phatavanh Olsen of Prudential Douglas Elliman in front of High Line 519, where they recently sold a unit for 25 percent below the original asking price.
For those looking for a veritable timeline illustrating the evolution of Manhattan’s boom and bust, 23rd Street west of Ninth Avenue offers a perfect case study.

The street has a slew of modest new condo buildings, the first-built ones that effectively tested the residential waters — in this case, 555 West 23rd Street as well as the Tate at 535 West 23rd Street. Then there are the tall and glassy followers, built during the go-go real estate days — HL23, Neil Denari’s under-construction cantilevering glass-and-steel tower, and High Line 519, the Sleepy Hudson-developed silver structure.

And finally, there is evidence of the downturn — a gaping hole in the ground on the corner of 10th Avenue, where work on 10 Chelsea, a rental tower planned by developer Shaya Boymelgreen, has stopped, and the recently shuttered Mediterranean restaurant Il Bordello.

“It’s a mixed bag over there. There are super-high-end, architecturally significant condos, then there are [modest] buildings, [and then there’s] the gritty stuff,” said Charles Summers, a vice president of Bellmarc Realty, who lives at 555 West 23rd Street.

While the retail in the area is spotty, what makes this residential condo canyon special is the imminent opening of the second phase of the High Line, slated for next spring. The elevated park will not only run right through the area, it will have an entrance within it.

Right now, however, the stretch is in flux.

Like every other Manhattan neighborhood, it has seen significant price reductions in the year since the bottom dropped out of the real estate market.

Take the resale of a unit in the architecturally avant-garde High Line 519. Agents Phatavanh and Derek Olsen, of Prudential Douglas Elliman, were familiar with the building when they got the listing in May.

The husband-and-wife team brought a buyer to the sales office to see plans for a two-bedroom apartment back in 2006, before the project was built. Their customer bought that unit for $2.2 million, or nearly $1,300 a square foot, in 2007. Their new listing was the exact same apartment on another floor. It had been listed first by another brokerage in January for $2.295 million, or $1,353 a foot. When the Olsens came on, they put it on the market for $1.949 million, and then decreased it by 8 percent, to $1.799 million, almost immediately.

“We found a couple [apartments] that were actually moving and marked [the price] to that,” said Derek Olsen.

After a number of lowball offers (and despite the fact that the seller was offering to pay the mansion tax), the Olsens decreased the price yet again last summer, to $1.699 million. It went into contract in September for a price that was “under ask,” Olsen said. That means it sold for $1,000 a foot or less — a more than 25 percent discount on the original price.

Add to that round of aggressive price chopping the fact that two units nearby, at 555 West 23rd Street, were recently auctioned by their owners rather than sold, and the picture looks dire.

But that’s not the whole story, said Halstead Property’s Richard Hamilton.

In August, Hamilton helped close a 750-square-foot one-bedroom at 555 West 23rd for $687,000, or nearly $200,000 more than the auction’s opening bid of $499,000.

“They put this ridiculously low price on it,” he said, referring to the units that were auctioned. “They totally undersold it.”

In fact, the number of units that closed on 23rd Street west of Ninth Avenue in the third quarter of this year actually surpassed the number of units that closed during the same time last year by one unit, according to data provided by StreetEasy. This year there were 13 closings, versus 12 last year.

Furthermore, despite all of the economic turmoil, the average price of the units closed in the third quarter of this year was $843,041, compared with $786,042 last year.

Brokers say the strength of activity and prices can likely be attributed to changes afoot in the neighborhood. Along with the coming elevated park, there is another park being built on the street’s far west end.

“Until now, West 23rd Street dead-ended into the Chelsea Waterside Park … Now, Chelsea Cove is being developed on 9.5 acres,” said Leonard Steinberg, a top broker at Prudential Douglas Elliman.

Basketball City, the sports complex, “was torn down … and replaced by a park. That’s a miracle. That never happens, but it happened on 23rd Street.

“So what does that do?” Steinberg said. “It shifts 23rd Street west.”

What’s missing, however, are the conveniences.

The stretch is largely residential west of Ninth Avenue. “It’s the major thoroughfare and there isn’t a lot of commercial or retail traffic there,” said Shaun Osher, president of Core. “If you want to get your shoes repaired, go to a dry cleaner, you’re not that close.”

Faith Hope Consolo, chairman of the retail leasing and sales division of Prudential Douglas Elliman, thinks the only way the retail climate in the area could change is if a big brand took a big risk. “If you could convince a Whole Foods to go west, a Gracious Home, a Trader Joe’s — something that would create some momentum,” she said.

For now, all anyone can do is be patient.

“We have a lot of people who have come in and spent a lot of money on residences, and they have needs,” said Osher. “There’s a lot of waiting and seeing right now.”


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