Chelsea’s side streets are catching up to the neighborhood’s main thoroughfares as developers eye lots in the middle of tree-lined blocks full of small apartment buildings and 19th-century townhouses.
After a wave of development hit the neighborhood’s main arteries in the mid-1990s, when about 2,000 units were built along Sixth Avenue north of 23rd Street, developers are seeking fresh turf to meet demand.
“It’s what’s available in terms of development,” said Veronica Hackett, managing partner of The Clarett Group, which is building Chelsea House, a 13-story, 64-unit condominium tower at 130 West 19th Street between Sixth and Seventh avenues, on the site of a former parking garage. “Chelsea is one of the most sought-after neighborhoods but the hardest to find development sites in.”
Chelsea side streets offer parking lots or low-rise parking garages, which are always choice development locations, even if zoning may be more restrictive, limiting the size of structures to about a dozen stories.
Developers also have been nudged toward side streets because retail values on the avenues in Chelsea have skyrocketed, Hackett said.
“Retail has become extremely valuable along Sixth Avenue and Seventh Avenue, and those tend to be longer, locked-in leases,” she said. “So it’s harder to turn them into development sites.”
The conversion of many of Chelsea’s small side-street apartment buildings started as a ground-floor phenomenon, and is now more frequently encompassing whole buildings.
“There are a number of buildings that, at one point, the first floor was a low-end hardware store or sewing machine parts shop, and the upper levels were a few rental apartments,” said Richard Ingenito, manager of Bellmarc Realty’s new property management sales group. “Those kinds of buildings are being converted to full-floor condominiums, though once you go from Eighth Avenue west, that’s not happening because it’s a historic district.”
Ingenito, who has lived in Chelsea for about 17 years and grew up just south of the neighborhood in Greenwich Village, pointed to West 17th Street between Sixth and Seventh avenues and West 18th Street between Seventh and Eighth avenues as current hotbeds of development activity.
“Some of the buildings are very old, and they’re keeping the facades,” he said. “Some of them are not that old, and they’re knocking them down and putting up buildings that really aren’t in character with the neighborhood.”
An even newer trend in Chelsea is that larger scale development is now taking place mid-block. Instead of the more traditional eight- to 20-unit developments, Chelsea’s side streets are now seeing projects with more than 60 units, often done by renowned architects in a modern vernacular. The projects, typically marketed by larger real estate brokerages, come complete with full-blown marketing campaigns.
“There has always been a lot of development in Chelsea on the side streets,” said Christopher Wilson, senior vice president and director of project marketing at Stribling & Associates, which is marketing 420 West 25th Street between Ninth and 10th avenues, a conversion of a 100,000-square-foot printing plant. “But now the market’s become a little more competitive in the sense that you really need to distinguish yourself with regard to that kind of product.”
Some of the side-street projects that have captured headlines have been the Chelsea Club at 444 West 19th Street, the Paradigm Building at 146-148 West 22nd Street, and Soma at 116 West 22nd Street.
“All of a sudden, you’re looking at a much bigger acceptable map of Chelsea in terms of the locations that people consider, so now you have to shout a little louder,” Wilson said. “Nobody’s going to come to you just because you’re on a prime block of 19th Street.”
Chelsea’s sales prices are advancing on the heels of rental prices that were the strongest in Manhattan in 2004 and a rental vacancy rate among the lowest in the borough. The area is still low on rental inventory despite the creation of more than five rental towers on Sixth Avenue north of 23rd Street since 1995.
That growing sales market has made it feasible for developers to make a profit with smaller projects on Chelsea side streets, said Gil Neary, who founded DG Neary Realty in 1997 and has lived and worked in Chelsea for 25 years.
“It’s more cost-effective to build on a larger lot [on the avenues],” he said. “But the prices are such that you can now afford to build on a small lot and still make a profit.”
Newer developments in Chelsea may be pushing the envelope for prices such as the Chelsea Club, which has commanded well over $1,000 a square foot but that has more to do with finishes and amenities than location, Neary said.
“Chelsea doesn’t have luxurious avenue addresses in general,” he said. “If you want to raise someone’s eyebrows in Chelsea, say you live on 20th Street between Ninth and 10th or that you live on a seminary block, on either side of the [General Theological Seminary at 175 Ninth Avenue].”
Thus, much of the rental housing built in Chelsea has gone up on the avenues, he said. And developers don’t necessarily feel the need to one-up the competition with amenities to attract sales clients to the side-street developments.
“The neighborhood sells it,” said David Perry, director of sales and marketing for The Clarett Group. “But you still have to provide basics a gym, 24-hour doorman, storage lockers, concierge services, maybe a children’s playroom or a media room.”
Chelsea, once a downtrodden immigrant neighborhood with a largely industrial and commercial zone to the west, saw its first wave of tonier residents when art galleries migrated northwest from Soho in the late 1990s as prices there rose. Some well-heeled gay residents began venturing north from Greenwich Village as early as the mid-1970s.
“There are also a lot of empty-nesters and baby boomers who are selling their large apartment or home in Westchester to move to the center of town,” Perry said. “They want to be where all the great restaurants and nightclubs are.”
“An apartment with a view will command the best price,” Perry added.