While it may seem counterintuitive in a city that has become a sea
of glass luxury condos, several small walk-up buildings are quietly
being built from the ground up, while others are being renovated.
The idea of building a walk-up in today’s ultra-luxe (albeit
economically tanking) market may seem quaint — down-at-heel New York
City tenements come to mind. But the walk-ups being built and renovated
today are a different breed than their older counterparts, and some
developers say the interest in them is a sign that buyers are tired of
big, cookie-cutter condos.
“There may be increased attraction to small buildings as people
get disillusioned by larger developments, which are big and impersonal
at times, and can seem all the same,” said Lindsay Barrett, a vice
president at Corcoran.
Brokers say it’s unusual for a new structure, even a small one, to
be built today without an elevator. However, it is still happening in
some cases. The majority of the walk-up buildings on the market today
are actually conversions, likely to have both original detail and new
additions, such as custom kitchens and finished roof decks meant to
attract buyers who don’t mind a few flights of stairs.
“You might lose some people who don’t want to walk up the stairs,
but others will be committed to buying a unit because it’s unique,”
said Matthew Blesso, the president of Blesso Properties.
Brokers and developers noted that walk-ups can also be a
relatively affordable alternative for condo buyers — a selling point in
a down market like this one.
Trevor Stahelski, a partner with Cardinal Investments, recently
developed 212 East 70th Street, a four-story walk-up. He said the
building sits in a neighborhood of doorman co-ops and single-family
brownstones that are not options for first-time apartment buyers.
“We saw it as an opportunity to make starter apartments with
charm. There’s no product like it in the neighborhood,” Stahelski said,
adding that 90 percent of the building’s 16 units were sold in the
first two weeks, at $1,000 per square foot for 600-square-foot
one-bedrooms.
Unlocking walk-up funding
Getting financing in this credit-crunched market is tough for any
project, and can be even more challenging for smaller developers who
don’t have the same kind of access to capital as some of the big
players in the city. However, the perception that small buildings carry
less risk is, in some cases, helping to spur interest from investors.
“If you have the means, you’ll go for the bigger project, but you
can still make good money on smaller projects by finding your niche,”
said Stahelski.
Stahelski developed another walk-up conversion, the five-story 245 West 115th Street, which also had a quick buyout period.
“We took 15 units and turned them into eight one-bedrooms. We sold
those for $650,000 to $750,000, and sold 20 studios for under $400,000
apiece,” he said. “People said no one would buy up there, but it sold
out within weeks.”
The cost of building or converting a walk-up tends to be more
straightforward than that of financing a larger building, where common
charges tend to be significantly higher because residents pay for
amenities such as gyms or doormen.
Common charges in larger buildings can run around $500 to $1,000 a
month, while small buildings charge around $200, said Cecilia Mackie of
Mackie Developments. She added that although adding an elevator in a
small building increases the common charges, the sales prices for
apartments in small buildings are about the same regardless of
elevators.
Developers say that the average cost of installing an elevator is
about $120,000 to $140,000, but the decision to put one in a small
building is largely about space, not cost.
Mackie, who is building two four-story, eight-unit walk-up
buildings from the ground up in Williamsburg, decided against elevators
to conserve space. “Trying to put two one-bedroom apartments per floor
in a 25-by-55-foot area with an elevator would make the apartments very
small,” said Mackie. By skipping elevator installation, the apartments
will be 620 square feet.
Keeping the climb
Some developers specialize in restoring existing walk-ups.
Architect and developer Alex Barrett of Barrett Design and Development
works primarily in Carroll Gardens, Brooklyn, and his projects are all
conversions of existing brownstone buildings, including one four-story
walk-up on Union Street and another on President Street.
Corcoran’s Lindsay Barrett — Alex’s wife and the buildings’ broker
— said including elevators in these buildings is often impractical, and
that instead they focus on “maintaining the integrity” of the
structures.
The Barretts said that clients who move to this part of Brooklyn
are not counting on living in an elevator building. “There’s no
resistance to walk-ups here,” said Alex Barrett.
His wife argued that walk-ups don’t attract or shut out a specific
type of buyer. “You can’t generalize; we had a couple with kids who
bought the top duplex at our building on 240 Carroll Street, and
they’re very happy,” said Lindsay Barrett. “And another couple with
children bought the fourth-floor apartment at 321 Union Street.”
For his part, Stahelski said that the buyers for 212 East 70th
Street included “young urban professionals, people looking for a
pied-à-terre and foreigners who wanted an investment property.”
And while some say that the top floors of walk-ups sell for less
because of the higher climb, Mackie has had success with her
development.
“The top floors still go without difficulty,” she said. “Selling
them is no problem because of the views and lack of noise. And, the
rule of thumb is to add about $10 per square foot for each floor you go
up.”
However, other market players say that walk-ups shut out some
buyers. “Walk-ups are very difficult in that they limit your base to
people who are single and have no kids,” says Richard Shiu, developer
at New York Real Estate Partners.
Not saving headaches
David Kramer, a principal with the Hudson Companies, whose company
is building nine four-story walk-up townhouses at Third and Bond
streets in Carroll Gardens, said that the margin for error is no
different than that for larger buildings.
“We’re still faced with excavation, underpinning, construction and
marketing challenges consistent with all of our projects. We’re not
saving ourselves any headaches by pursuing this housing type,” said
Kramer.
Some developers say the small size of a walk-up building can help
with making a project that’s already been started in this market
financially feasible. That’s because there are fewer units to worry
about selling as buyers become more hesitant.
“Developers with 100-unit buildings are sitting with 70 units
still vacant, and they’re freaking out,” said Stahelski, the Manhattan
developer. “I have a building with seven units, and I can turn it into
a rental project if need be. It’s much easier to rent seven units than
70.”
Lindsay Barrett said that previous projects had sold relatively
quickly, in some cases off the floorplans. However, she noted that a
recent renovation, the four-story, five-unit 277 President Street in
Carroll Gardens, still has two unsold units. “We are feeling the impact
of the economic downturn,” she said, though she noted that showings
have been very active for both units.
Some developers have their doubts about betting on walk-ups in
such a fragile real estate market. “This type of building isn’t
necessarily better right now. In this economy, you’d want to open it up
to as many people as you could, instead of limiting yourself,” said
Shiu.
But Susan Singer, senior vice president at Corcoran, had a more
optimistic view. “I think that probably in a small building, there is
much less to contend with, fewer people to satisfy, and a shorter
selling time,” she said. “You can close and move on.”