From blintzes to bling

<i>A look at one Lower East Side block as a window into the boom, the bust and a host of other real estate trends</i>

From left: The CSV Cultural Center parking lot at 114 Norfolk; Norfolk Apartments at 108 Norfolk
The stretch of Norfolk Street between Rivington and Delancey streets is one of those New York City blocks where real estate worlds collide. The block is a hodgepodge of Lower East Side immigrant history, hipster bars and high-end living. This month, The Real Deal took a closer look at the block as a real estate microcosm and found a number of textbook examples of the boom and bust, as well as a host of other real estate trends. Perhaps the most transformative event on the block in recent years was the demise of Ratner’s Delicatessen, which the owners, the Harmatz family, closed in 2002 after nearly a century of operation. After the storied kosher institution shuttered, the family cashed out on their properties, six of which are on this block. Sleepy’s Mattress now leases the deli’s former storefront around the corner on Delancey. Its old blintz factory, meanwhile, is being eyed by hoteliers in a deal that can be seen as a sign of the post-boom times. And two stylishly designed condos, Blue and the Switch Building, which both have boutique financial firms operating on the ground floors, rose from the eatery’s parking lots. The deli’s infamous back dining room, once a Prohibition-era speakeasy, is now leased to a pseudo speakeasy with celebrity backers. Jeff Harmatz, 39, the great-grandson of Ratner’s founder, is a partner on two of those projects. “I found myself moonlighting as my dad’s landlord-tenant attorney … and I said, ‘You know, you’re sitting on prime real estate.’ I don’t think he ever believed it because he grew up in the ’50s and ’60s and ’70s, when it was worthless.” Other property owners on the block include two old New York real estate families, the Gottliebs and the Economakises. And another well-designed building is now under construction (see full spread below).

Schiller’s Liquor Bar and vacant retail: 131-133 Rivington

Schiller’s Liquor Bar, the first high-end restaurant on the block, was opened in 2003 by prolific restaurateur Keith McNally, responsible for numerous stylish restaurants throughout the city, including Balthazar and Pastis. Schiller’s is one of his more casual incarnations, with a wine list broken into three sections — “cheap,” “decent” and “good.” The vacant space next door is on the market for around $80 per square foot, said its broker, Jason Pennington of Ripco. “It needs some work,” he said. The Gottlieb family owns the 1920s building.

The Blue Condominium: 105 Norfolk

When this 16-story condo, designed by Bernard Tschumi, was finished in 2007, it was the first doorman building on the Lower East Side. Formerly Ratner’s main parking lot, the land was purchased in 2005 for nearly $6 million, including air and roof deck rights. Cosentini and his partner, John Carson, developed it with Harmatz. Towering above the neighboring low-rise buildings, it was both a rallying call for and a beneficiary of the neighborhood’s 2008 rezoning (its views are now mostly protected). The 32-unit building sold out (save for the penthouse, which is leased) at a median price per square foot of $1,132. After cycling through four brokers, the ground-floor retail space was leased to a building resident, Michael Edwards, who will operate a three-person boutique financial advisory group there. Harmatz said the 2,500-square-foot space went for just under $8,000 per month.

Under-construction retail: 128-130 Delancey

Jeff Harmatz and Blue Condominium developer Angelo Cosentini are redeveloping this three-story retail building, formerly rented by a Bank of America and a Gem Value Store for around $60 per square foot, Harmatz said. The two bought the property from Harmatz’s family for $10.5 million in 2008. Harmatz said the Comprehensive Center, a speech therapy and rehab provider, signed a lease for the top two floors of the building. As for the ground floor of the site, “a lot of national retailers have been snooping around,” he said. Harmatz said the offers being received show the gentrification that the neighborhood has undergone. “It shows you how far [the area] has come that we’re getting offers north of $100-per-square-foot rents.”

CSV Cultural Center parking lot: 114 Norfolk

This is the back parking lot for the Clemente Soto Vélez Cultural Center, a neighborhood institution that houses artists’ studios and performing arts groups. The group’s executive director, Jan Hanvik, said there are no future plans for a building on the lot, which, like the Suffolk Street-facing cultural center, is city-owned property. Instead, the center is considering using it for either a farmers’ market, a community garden or even to construct a replica of a small Dominican town with crafters, a cassava baker and a stage. A decision is expected this summer.

Vacant retail: 107 Norfolk

Tonic, a legendary avant-garde music venue, closed in 2007 after nine years of operation. It was reportedly unable to pay the $10,000 monthly rent imposed by the landlord, the Gottlieb family. Now the Gottliebs are asking for $15,000, or around $72 per square foot. That’s down from the roughly $120 per square foot landlords on the block were asking during the market’s peak, said Pennington, the building’s broker. He said restaurants, boutiques, galleries and an art bookstore have all looked at the space.

Norfolk Apartments: 108 Norfolk

Norfolk Apartments was affordable housing developer Asian Americans for Equality’s first new construction project in Lower Manhattan as an affordable housing developer. Its 20 apartments were finished in 1999, and are reserved for low-income tenants. Originally, one-third were reserved for local residents, many who were of Asian and Latin American descent and increasingly being displaced from the neighborhood.

Norfolk Apartments II: 111-113 Norfolk

Sign Up for the undefined Newsletter

AAFE built this apartment building, along with two others, known together as “Norfolk Apartments II,” in 2003, the first affordable housing development in Lower Manhattan after the Sept. 11 attacks. The group’s spokesperson said it received 11,000 applications for the project’s 52 apartments, reserved for elderly and low-income tenants. Two-bedrooms range from $770 to $900 a month.

The Back Room and Global Grub: 102 Norfolk

The Harmatz family still owns this apartment building, which has two storefronts. One, disguised by a sign that reads “Lower East Side Toy Company,” is a pseudo speakeasy called the Back Room. The Harmatz family had used the space, a dining room for Ratner’s, as a real speakeasy during Prohibition and later as the nightclub Lanksy Lounge, in an effort to appeal to the area’s newly hip crowd. The Back Room, with celebrity backers Tim Robbins and Mark Messier, opened in 2005, and serves $300 bottles of Dom Pérignon. Meanwhile, Global Grub, a new takeout joint serving food from four countries, had previously been Tides Seafood since 2004. Next door are two bars: Sunita Bar and Nurse Bettie, which opened six and three years ago, respectively.

The Switch Building: 109 Norfolk

Originally a parking lot for busy Sundays at Ratner’s, this property was purchased by novice developer Gilad Grinberg in 2003 for $925,000. The seven-story condo, called the Switch Building, was finished in 2007. Four of its five floor-through condos sold for an average of $1.5 million. The remaining duplex penthouse was leased for $12,000 a month during the 2008 production of the TV show “She’s Got the Look.” When it was put back on the market in January 2009, the developer only asked $8,500. Ultimately, a source close to the deal said the penthouse (originally listed for sale at $3.6 million) was rented to a retired investment banker, who is running his own boutique firm out of the building’s retail space. The ground-floor space was originally envisioned as an art gallery, but nobody bit on the $15,000 monthly asking rent. Its last asking price was $8,000.

Development site for sale: 100 Norfolk

During the boom, the Harmatz family assembled air rights from adjacent buildings to allow a 15-story building in place of its former blintz factory here. Michael DeCheser of Massey Knakal said the property was in contract with a hotelier for $9 million in 2006, but he was unable to find a development partner. Then the area’s 2008 rezoning limited the building’s height to 120 feet. The contract fell apart. In a sign of the post-bust times, another hotelier may ground-lease the land for $350,000 until enough profits are generated by the hotel to buy it outright, because it’s hard to get mortgage and construction financing today.

Norfolk Atrium: 115 Norfolk

This 24-unit project was originally planned in 2005 as a high-end rental by developer Zeyad Aly. Architect Grzywinski Pons designed the glassy building with an upside-down, triangular atrium open to the elements, a rooftop pool and private backyards for ground-floor apartments. As the market cooled, Aly realized his rate of return wouldn’t be favorable to build it himself, said DeCheser. So, Massey Knakal sold the site with the approved plans in February 2008 for $10 million. “For the seller, we couldn’t have timed the market better,” said DeCheser. “In fact, that was the highest price paid for any development in the Lower East Side at the time.” The new developers, Nathan Vinbaytel and Alex Lokshin, are now planning a condo with no rooftop pool. Sales are expected to start in six to eight months, said a Corcoran spokesperson.

Solid Gold: 132 Delancey

Solid Gold, a discount jewelry store hawking cubic zirconium knuckles, is the last retail holdover on this block from the pre-gentrification Lower East Side. Business has declined around 30 percent in the past three years, said the store’s owner, Robin, who declined to give his last name. “They killed our business for a year and a half when they did construction [on Blue],” he said. More recently, the store was dealt another blow with the closing of the massive Gem Value Store across the street, which had made the intersection a destination point for potential gold chain buyers.

Tiny’s Giant Sandwich Shop and Maryam Nassir Zadeh: 123-129 Rivington

AAFE also owns this older tenement-style building on the corner of Rivington. Its 15 apartments are set aside for middle-income tenants and homeless referrals, but the retail is market rate. Tiny’s Giant Sandwich Shop owner Kevin Gregor said in 2004 he was in a bidding war with some 50 entrepreneurs for the prime corner space. He said his rent is “reasonable,” and despite the slump, overall business improved around 20 percent in the past three years. Next door is the block’s first clothing boutique, Maryam Nassir Zadeh, which opened two years ago.

52-53 Norfolk PDF(2)