Chinatown’s crooked streets, packed with shops selling lucky ceramic cats, live fish and embroidered slippers jammed up against restaurants catering to tourists and locals, have largely resisted gentrification. But that’s changing.
While developers face multiple obstacles to building in the area, from height restrictions to owners reluctant to sell, a number of new condominium buildings have gone up in the past few years on the area’s most bustling streets, all serving slightly different needs.
Hester Gardens, at the corner of Hester and Mott streets, has attracted a mainly Chinese-American tenant base and has one-bedrooms for $495,000 to $600,000 and two-bedrooms from $700,000 to $900,000. Units at luxury building 123 Baxter Street, which include one-, two- and three-bedrooms, go for $1,100 a square foot. Buyers, who are not necessarily Asian, are generally “young and come from a lot of money,” says Lisa Maysonet, senior vice president and founder of Group Maysonet at Prudential Douglas Elliman, who until recently was handling sales in the building.
An 11-story condominium next to the Manhattan Bridge, 148 Madison Street, has “100 percent Asian” apartment buyers, says Shing Yeung, vice president of Well-Come Holdings, which developed both 148 Madison and Hester Gardens. “They’re mostly entrepreneurial out-of-state owners who purchase an apartment, rent it out, and then move back to Chinatown when they retire,” Yeung says.
But despite new construction, the bulk of Chinatown — the bustling area south of Canal Street as well as the crowded stretch of East Broadway — is still somewhat limited for development at the moment.
“Part of the difficulty is the footprint that we have in tenement buildings,” says Charles Lai, executive director of the Museum of Chinese in the Americas. “They’re very small, so more buildings have to be purchased so that a larger project can go up.”
Adjoining buildings frequently have different owners, which complicates potential sales for developers who would like to buy a group of properties in order to put up a larger building. “When you have multiple owners it’s harder to assemble a larger space, and that’s a critical obstacle that developers face,” says Lai.
There are also building-height restrictions that require zoning variances to change. “Most of Chinatown consists of residential buildings with a commercial ground floor and a six-story height limit,” Lai adds. “Right in the thick of Chinatown there are very few single-story buildings that you could build on top of and few vacant lots,” says Glenn Schiller, a senior vice president at Corcoran. The sites for Hester Gardens, 123 Baxter Street and 148 Madison Street were all vacant lots, which are becoming scarce.
And many longtime Chinatown building owners simply do not want to sell.
“They’ve owned a place for 40 or 50 years and would be reselling at a pretty high price, so the capital gains on the property would mean very high taxes,” says Lai.
Philip Lam, president of Green City Realty, who has been a broker in Chinatown for 17 years, notes that a building purchased 20 or 30 years ago for $400,000 could now be worth between $2 and $3 million dollars. Many landowners also want to keep their properties within their families if possible.
But Lam points out that some children of current property owners may not necessarily be interested in taking over their parents’ buildings. “The children are third and fourth generation; some are professionals and don’t want to deal with tenants’ problems,” he says. In many cases, it is the newer immigrant population in Chinatown, largely Fujianese, who take over older buildings when they periodically come up for sale.
“Most of the old, rent-stabilized buildings are owned by the Cantonese, who came here 100 years ago. When they retire, they sell, and 70 percent of the time Fujianese people take over the investment,” Lam says.
Fujianese investors often contact Lam to see if he has any investment properties available. But the process of evicting existing tenants in older buildings — or trying to buy them out — can be a complicated and lengthy one, particularly when tenants are on subleases. This often is the case in buildings where there is a large immigrant population, and determining who is actually on the lease can deter some developers.
“Looking at it from the development process, many buildings still have rent-controlled tenants, so developers may turn away because of that,” says Yeung.
While rent stabilization may protect the residents of certain buildings from development, in general developers interested in building in Chinatown tend to overlook the needs of the neighborhood’s largely working-class population, according to Robert Weber, director of policy for Asian Americans for Equality. The nonprofit also heads the Rebuild Chinatown Initiative, created in response to the economic fallout from the terror attacks of Sept. 11, 2001.
“Developers balk at the idea of including housing for low- or middle-income people,” Weber says. “We did a presentation on possible land-use and zoning changes, and several interested developers said they wanted to come but didn’t show up. We’d be willing to work with developers, but they have to engage the community.”
Still, there are certain underutilized areas of Chinatown, Weber says, that could be a boon to both developers and to the community. Rezoning commercial buildings along Canal Street and along the Bowery, Weber says, could potentially benefit the neighborhood by bringing more jobs and businesses to the area.
“Our office has done a soft-site analysis of Canal Street and the Bowery, and we’ve found that there are properties along those streets that are underdeveloped. The current properties are producing a handsome income, but there are some prime areas along Canal, near subways, where the buildings are one and two stories; they could be six stories, or even substantially higher, if a few lots were assembled and there was a transfer of air rights,” he said.
Where developers have been able to make inroads is on the edges of Chinatown, where they are renovating existing buildings. “A lot of development is happening on the western flank of Chinatown, around Lafayette and Centre streets,” says Weber. “There are lots of attractive, solid, prewar buildings, and there’s a push to convert them to luxury condos.”
Buildings such as 129 Lafayette Street (technically in Soho), a former garment factory where lofts now go for up to $1,400 a square foot, and the under-construction 209 Hester Street (technically in Little Italy, and originally a police stable), which will house 14 condominium units, are becoming more and more prevalent.
Michael Chapman, vice president of Stribling Marketing Associates, which represents both buildings, says that 129 Lafayette has a mix of residents “from the neighborhood who live and work there, and others who came from uptown.” Apparently, the building encountered some initial resistance from people who “perceived it as being in Chinatown,” but it’s now been sold out for 18 months.
Chapman adds that the proximity to Chinatown is also part of the attraction, partly because of its perceived stability. “The great thing about living on the edge of Chinatown is that you know it’s not going to change; it’s not going to get totally gentrified,” Chapman says.