As savvy and sophisticated as they’ve become in planning apartment layouts in condominiums to ensure a smooth sellout, developers and marketing consultants often find themselves coming online with the wrong product mix. At the moment, it’s the terrible twos that are the problem.
“The market at one point needed two-bedrooms,” says Anthony Tutino, project manager of Basile Builders’ Verde Chelsea, a 33-unit condominium designed by Thomas O’Hara under construction at 125 West 22nd Street. “Then by the time you put the project up and you start selling the two-bedrooms, 10 or 20 other projects are selling two-bedrooms also.”
The Verde Chelsea opened last May, offering primarily one- and two-bedroom units. The development sold 50 percent of its units in three weeks and another 20 percent by October — mostly all one-bedroom units and the large penthouses. The two-beds? Not so much.
It was time, recalls Tutino, “to rethink what was needed out there and reconfigure the project. What we see in this market [now] is a need for one-bedrooms and for family apartments — three-bedrooms.”
The Verde had a few advantages, the biggest of which being that it wasn’t built yet. Tutino credits Beth Fisher, director of Corcoran Sunshine Marketing Group, with coming up with a quick reconfiguration concept. “She came in, looked at the plans, said, ‘do this and this and this.’ Then we went back to the architect to make the changes.”
According to Fisher, “We saw we could readily take a two-bedroom and turn it into a one-bedroom and turn the adjacent two-bedroom into a three-bedroom. It was just a matter of changing a few floor plans and changing our listings.”
Another factor smoothing the reconfiguration was the fact that “our builder is the developer. Basile was open to a redesign because they control the construction company, so we didn’t have the worries we might have on another project,” says Fisher.
Forecasting change
The main worry for a developer tweaking plans is the dreaded “change order.”
“You lock a subcontractor or general contractor into a contract,” says Tutino, “and once you deviate from the architectural plans it’s an opportunity for them to stay away from the contract and charge extra money for that change. You’re basically at their mercy when it comes to change orders. They’re brutal in this business.”
Building flexibility into the original floor plans is the key to staying ahead of a shift in the demands of the market. “You have to be resilient,” says Tutino. “The smart developers always build it in. We look at interchangeable bedrooms, where the owner can move interior walls” without touching the major mechanical systems, he says.
According to Sheldon Werdiger, vice president of Macklowe Properties, developer of the 31-story condominium at 310 East 53rd Street, “You design units so that the piping in the core areas, like the kitchens and bathrooms, is such that if someone wants to combine, it’s easy. Walls that are common to two apartments can be [demolished] because there are no risers.”
Often it’s the marketing consultant who urges the developer to build in flexibility. “Some of the work we do in planning these buildings is done a year or two in advance,” according to Tricia Cole, CEO of Corcoran Group Marketing. “Markets do shift and we help developers work with the architect to plan for the eventuality that there might be a need to combine units, so they’re laid out up front for easy combination, without having to move kitchens or bathrooms.”
Verde Chelsea’s reconfiguration left the building with the same number of units, 33, but with mostly ones and threes, which will be listed at $1.1 million and $1.7 million, respectively. They are expected to sell more easily once they’re re-listed. “A one-bedroom at one million bucks, believe it or not, is a very reasonable product,” says Tutino, “and will probably not last very long in this market.”
As for the larger units, says Fisher, “we’ve had a lot of demand for the three-bedrooms because Chelsea is booming with people who either have families or are looking for larger, more luxurious spaces.”
Big is the new big
It’s not just Chelsea. A sudden unquenchable thirst for ultra-large residential product is causing a combination frenzy all over the city.
Extell’s Avery condominium on Riverside Boulevard opened recently to a stronger demand for the larger units at the top of the building than the developer anticipated. (Corcoran is marketing that building as well.) “We quickly took seven floors of two units,” says Cole, “one 1,200-square-feet and the other 1,100-square-feet, and combined those to come up with a 2,300-square-foot three-bedroom-plus-den. We sold all of those very quickly.”
They proved so popular Extell is contemplating combining units on the lower floors at the neighboring Rushmore to create three- and four-bedroom apartments up to 3,600 square feet.
Likewise, the Peter Marino-designed 170 East End Avenue (see Hospital sites offer Rx for development) opened its pre-construction sales office in January 2006 with 110 units, which have since been whittled down to 93. Some buyers wanted giant spaces but not the price points of the largest units, which were located at the top of the building. So builder Orin Wilf, president of Skyline Developers, began combining units on floors seven and below.
“We took two-bedroom apartments and combined them into one big apartment,” says Wilf. “We did five of them and sold them within two weeks. It delayed construction by about two months, but it was well worth it.”
Meanwhile, says Wilf, “lately we’ve been selling the four-, five- and six-bedroom apartments at the top of the building like they’re going out of style. We sold three apartments in the $8 million range this week. Space is a big thing in Manhattan.”
In Tribeca, at 101 Warren Street, says developer Edward Minskoff, “We reconfigured two floors of simplex units at the top of the building into three duplexes with twelve-foot ceilings and 2,200-square-foot terraces. We’re still under construction, so it was really easy to reconfigure those floors.” The building’s larger units are asking from $12 million to $16 million.
Developer Kent Swig’s floor plans for the condominium conversion of the 58-story Sheffield 57, a former 600-unit rental building, are all about flexibility. And the unit count is shrinking daily. “Some people are taking our combinations, which are already two or three apartments combined,” says Swig, who is partners in the project with Yair Levy and other investors, “and combining them with other combinations we’ve done, to create super-combinations.”
Swig says he had resisted pressure to load the building with one-bedroom apartments. (“Maybe that’s what’s selling because it’s the only thing left on the market,” he conjectures.) But he wasn’t prepared for the size of the combinations people are requesting. “I hadn’t anticipated that people would be spending a gross dollar amount of $4 to $6 million at Sheffield 57.”
Not even the Lower East Side is immune from the three-bedroom mania. “We’ve had three or four people looking to put apartments together at One Avenue B,” says Cliff Finn, director of new development marketing for Citi Habitats.
They’ve completed one combination so far, turning a one-bedroom plus a two-bedroom into a three-bedroom with over 1,600 square feet, selling for a little over $2 million. “I didn’t expect anyone would be looking for an apartment that big in that neighborhood,” says Finn.