Murray Hill Renters Become Buyers

Murray Hill and Kips Bay are among Manhattan’s last affordable neighborhoods, but their popularity with buyers looking for space in classic rowhouses or new high-rises means these tucked away enclaves won’t remain in the shadows for long.

The districts, which border each other in the East 20s and 30s, have traditionally been overlooked as residential options because they lack the amenities and panache of neighborhoods to the north and south, brokers say. Murray Hill, bounded by 34th and 40th streets and Park Avenue and the East River, is similar to Kips Bay, a neighborhood with the same east-west dimensions that stretches south to 23rd Street.

Renters ready to make their first purchase or couples looking for a starter home have piled on in the past year, and prices are starting to catch up to those in swankier locales. There’s still a window to pay less and buy into these picturesque communities, which brokers tout as home to some of Manhattan’s most elegant brownstones.

“If a first-time buyer cannot afford the Flatiron or Midtown or any other place in Manhattan, this is the area you bring them to,” said Larry Michaels, vice president of investment sales and new developments at Douglas Elliman.

Developers emphasized rental housing over the past several decades, but now newer arrivals’ fondness for the neighborhood is partly responsible for rising sales prices. Julie Perlin, a vice president at Stribling & Associates, said local renters are graduating to purchases, and even sparking bidding wars.

“The profile of the customer has gotten younger, as the twenty-somethings who have been renting along the trendy corridor of Third Avenue, between 30th and 40th streets, decide to become first-time purchasers in the studio and small one-bedroom market,” she said.

Both neighborhoods have drawbacks, from being perceived as somber and drab locales to a dearth of green spaces. Brokers concede the lack of easy access to desirable uptown private schools and periodically dreadful traffic snarls near the Midtown Tunnel between 35th and 38th streets at Second Avenue. The No. 6 subway line is a long haul for residents near the East River. But in a sizzling market, Murray Hill and Kips Bay will inevitably become viable options for buyers set on staying in the borough.

“It’s a question of which of the two is more affordable, which is going to make that neighborhood become more successful sooner,” Michaels said.

In Murray Hill, originally the 18th-century country estate of merchant Robert Murray, townhouses are being combined and reconfigured for more affluent buyers, or divided to meet growing demand.

“A lot of these buildings that were very large were for single families, but developers are making them into multi-units,” said Phyllis Lerner, director of sales at Leslie J. Garfield & Co. “They set back new upper floors without changing the façde, and condominiums are put in. That’s what the investor is looking for.”

Murray Hill, which is closer to Midtown, is a more commercial neighborhood than Kips Bay. Its town homes now see mixed uses doctors’ offices, diplomatic missions and publishing companies. The neighborhood is close to First Avenue’s hospital corridor and the United Nations. It also houses two historic districts, one from 34th to 39th streets, between Lexington and Park avenues, and tiny Sniffen Court, an alley lined by 1920s vintage carriage houses.

Kips Bay, named for farmowner Jacobus Henderson Kip, is more affordable, residential and middle-class, though with slightly less elegant architecture. The 1,118-unit Kips Bay Towers condominium, designed in 1961, is the neighborhood’s focal point. There is also the 1,470-unit Waterside Plaza and the 1,610-unit Henry Phipps Plaza, spanning four blocks in the high 20s along Second Avenue.

“It used to be that Kips Bay was a very dead area,” said Kathleen Hoffman, senior managing director for Century 21 William B. May. “You had a lot of brownstone owners and not too many chic apartment buildings.”

Recent Kips Bay townhouse sales have fetched between $1.25 and $2.6 million, Michaels said. Brownstones in other Manhattan neighborhoods usually pull in $4 million or more. Most Kips Bay properties need renovations.

While Hoffman said relatively few townhouses in Murray Hill are available at $3 million or less (and those that are often require serious renovation), recent closings range from $1.8 to $5.5 million, according to Michaels.

“Five years ago, you could buy these for $1.1 million, $1.3 million, even $999,000,” he said. “So there has been activity, because of the supply and demand, and the fact that interest rates are making real estate very affordable.”

Larger units are scarce in Murray Hill, making combined spaces a hit, Perlin said. She has closed some recent sales with prices per square foot ranging from $700 to $975. “Whereas in 2003, there were plenty of properties selling in the $600 per square foot range, that price point is unheard of today, just one year later,” she said.

Elliman is marketing condominiums at 45 East 30th St., between Park and Madison avenues, at more than $950 per square foot. “That’s really on the borderline of tipping the scales of affordability,” Michaels said.

The Real Deal