Going into contract in Gramercy

Go to chart: Sealing the deal in Gramercy

With its well-maintained prewar buildings and tree-lined streets, Gramercy, the micro-neighborhood surrounding exclusive Gramercy Park, has long been a desirable residential enclave.

But as with most Manhattan neighborhoods in recent months, sales have been few and far between.

This month, The Real Deal zeroed in on the area to find out how many deals in Gramercy are closing and to determine exactly what kinds of apartments are selling most strongly.

According to the real estate data Web site StreetEasy, the number of closings has dropped more than 81 percent in the last year. The site found that only 10 units closed in the area this April, the most recent closing data on record, compared to 54 in April 2008.

The site defines Gramercy as running between 14th and 23rd streets, and between Park Avenue South to the west and First Avenue to the east.

Sofia Kim, vice president of research at StreetEasy, cautioned that the number might not represent all the Gramercy closings in April of this year, since typically most closings are recorded with the city’s Department of Finance two to eight weeks after the closing occurs. But even taking that into account, it was evident as of the middle of last month that far fewer Gramercy properties are trading now than during the same month-long period last year.

While most of the units that closed in April went into contract in the middle of the winter, they offer a representation of what’s actually making it to the closing table and not falling apart because the mortgage fell through or the buyer got cold feet about the recession.

Of the 10 properties that did sell, six were co-ops, three were condos and one was a cond-op. Prices ranged from $295,000 to $2.7 million.

Seven of the 10 deals that closed were for one-bedrooms, and only two properties had two bedrooms or more — two facts that brokers say are helping to guide them as they decide which deals to chase.

Interestingly, only one of the sales recorded in April was for a building fronting the private park from which the neighborhood’s name derives — a location that gives residents “key” privileges to Gramercy Park.

Elaine Mayers, a vice president and associate broker with Citi Habitats, said that while property on the blocks surrounding the park is “very desirable,” it consists only of prewar buildings, so if a buyer is looking for an apartment in a building with newer amenities, they typically search elsewhere in the neighborhood.

With that said, only one of the sales in April was in a condo building developed in the past few years—the Gramercy Starck condo at 340 East 23rd Street, where interiors were designed by Philippe Starck.

The brokers who were fortunate enough to claim a sale reported several key trends that helped them clinch their deals. They said there were more first-time buyers and price drops of about 20 percent from the peak of the market, balanced by an increase in the number of buyers putting up more cash because less financing was available. Or, to put it differently, the sales climate in Gramercy has been something of a microcosm of Manhattan as a whole.

Mayers said first-time buyers have accounted for nearly “100 percent” of recent purchases in Gramercy. Mayers, who brokered one of the 10 deals that closed in April, an 820-square-foot, one-bedroom unit at Gramercy Park Tower at 205 Third Avenue, said it sold “fairly quickly” after hitting the market in October.

“We kept lowering the price as needed,” she said. “We didn’t want to chase the market.”

The asking price for the co-op was originally $829,000, according to StreetEasy, and the last ask was $699,000. It ultimately sold for $670,000.

Mayers said the unit got multiple offers but that they were rejected before it ultimately went into contract. She also said the seller did some minor repair work to the unit at the buyer’s request before the unit sold to help seal the deal.

Danelle Snider of Fenwick Keats Goodstein said a studio she sold at Gramercy East, at 301 East 22nd Street, went on sale in October, with an asking price of $350,000. The price of the co-op was reduced a couple of times, and it ultimately sold for $295,000. Asked what factors went into moving the deal to the signed contract phase, she said, “It helped that we had a motivated seller.”

Snider also observed that while many would-be buyers might prefer to ink a deal in Gramercy, she’s seeing “more people broadening their search to look in Kips Bay or Murray Hill, since many are looking for value over neighborhood.”

Another Manhattan-wide trend seen in Gramercy in recent months is an increase in buyers putting more cash on the table since financing has become more difficult to obtain.

Sachiko Goodman, a managing director at Prudential Douglas Elliman, sold a 525-square-foot alcove studio in the Gramercy Arms at 145 East 15th Street that closed for $425,000 in late April.

Goodman said the buyers financed much less than the maximum amount allowed by the building’s co-op board. Along with other brokers, she said more buyers are being cautious nowadays and taking out smaller mortgages.

Plus, “many buyers need to put up more cash, because it’s not easy to get a mortgage,” said Goodman, who noted that the buyer of the Gramercy Arms unit was pre-approved for a loan.

Goodman said the sale of the studio, which was initially listed for $525,000 in mid-September and ultimately sold for $425,000 after a few price reductions, was a relatively easy one because of the “reasonable” price and the demand for smaller units in Gramercy.

In addition, she said, the neighborhood is still attracting parents buying apartments for their children.

In general, brokers said they believe Gramercy’s tight supply and small size will help it retain its value — a selling point they are invoking with potential buyers.

“If you want to live on the Upper East Side or the Upper West Side, you have a lot more [inventory] to choose from,” said Emily Tannen, a director at A.J. Clarke who recently brokered a sale in the Gramercy Plaza building at 130 East 18th Street. “Gramercy is a very small and desirable area, and there’s more competition for apartments.”

Rachel Lustbader, an associate broker and managing director at Warburg Realty who brokered the sale of one of the seven co-ops that sold in the neighborhood in April, said, “Gramercy prices are about 20 percent off peak.”

“The neighborhood is in step with most of Manhattan” in terms of price decreases, said Lustbader.

Still, she said customers remain who are “very sure” they want to live there. That and the lack of supply are helping brokers in Gramercy seal the few deals that are being completed. “There are just a limited number of premier prewar buildings there,” she said.