Digging for diamonds

A look at the last undervalued Manhattan neighborhoods

These days, few areas of Manhattan can be considered undervalued, despite fallout from the recent recession. “At this point, Manhattan is pretty mature,” said developer Matthew Blesso, president of Blesso Properties. “We’re going through this incredible recession, and it’s not like some of the neighborhoods are going to the pits, the way they did in previous recessions.”

Still, there are pockets of the city that haven’t yet reached their full potential, where small investors (or homebuyers) looking for the greatest financial upside can snap up deals.

It’s well known, for instance, that areas like Hudson Yards and Yorkville are a good bet for investment because of the massive construction projects underway nearby (the Hudson Yards complex and the Second Avenue subway, respectively). But The Real Deal asked experts to identify some lesser-known areas of Manhattan where value can still be found.

Upper West Side, 90s

Mega mixed-use complex Columbus Square recently started opening in a once-dingy area between 97th and 100th streets, from Amsterdam to Columbus avenues. The new complex brought with it a Whole Foods and a Crumbs Bakery, among other new retailers. The project faced opposition from neighbors, but now that it’s nearing completion of all its buildings, property values are sure to benefit, said Metropolitan Residential Partners agent and Upper West Side resident Joan Kagan. She suggested condos in nearby complex Park West Village, which she said have low common charges and spacious layouts.

Northwest Chelsea

In recent years, the construction of the High Line made West Chelsea one of the city’s most expensive neighborhoods.

“West Chelsea is now appreciating to the point where it’s no longer a value,” said Shaun Osher, the CEO of Core. Instead, he recommended that potential investors look north, from 24th to 34th streets near 10th Avenue, where the second and third phases of the High Line will be built.

Eventually, that corridor will “connect the Meatpacking District to Midtown,” he said. There’s not much housing stock there now, but Osher said the zoning is right for “a surge of condo activity” in the next few years.

NoMad/Garment District

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Since its 2001 renovation, once-seedy Madison Square Park has been transformed into a bucolic backdrop for the popular burger joint Shake Shack. But the neighborhood just north of the park — known as NoMad — hasn’t yet fared so well. The area between 27th Street and Herald Square, from Sixth to Lexington avenues, is still “a little gritty,” Brown Harris Stevens’ Julia Hoagland noted. But with its proximity to transportation and other hip neighborhoods, that won’t last long, she said. Already, the trendy Gansevoort Park Avenue and Ace Hotel have moved in. Right now, NoMad buyers “are getting really good value there,” Hoagland said, but “in a few years, it’s going to be just like the Flatiron.” Stribling’s Peter Browne noted that lofts can be found in NoMad and in the nearby Garment District for far cheaper than in Soho or Tribeca, noting that many of the co-ops can be had for the relative bargain price of $800 per square foot, while condos go for around $1,100.

Audubon Terrace Historic District, Washington Heights

“I tell my clients that Northern Manhattan is one of the best and last places to get a really great investment property,” said Citi Habitats Vice President Sandy Edry.

He recommends Riverside Drive near the landmarked Audubon Terrace, a complex of some eight early 20th-century Beaux Arts buildings at Broadway and West 155th Street designed by esteemed architects Cass Gilbert, Stanford White and Charles Pratt Huntington.

Prewar apartments in the area are currently selling for an average of $475 per square foot, Edry said. That’s two to three times less expensive than similar properties below 96th Street, so investors who rent their properties can “be cash-flow positive” right away, Edry said. Plus, they can “get a sizable return” when the units are sold a few years down the line. That’s particularly true because of Columbia University’s planned 17-acre extension nearby. When it comes to long-term appreciation, “the Columbia factor is huge,” Edry said.

For the same reason, the Upper West Side between 96th and 114th streets is a good bet, said Eastern Consolidated’s Peter Hauspurg, especially for investors looking to rent to students.

Co-op Village, Lower East Side

The Lower East Side is no doubt one of the hottest neighborhoods in the city. But its revitalization is new enough that properties can still be had on the cheap, brokers said.

The Lower East Side “is not like Soho, where everything is really expensive,” said Osher of Core. “There are small pockets within the neighborhood where you can get value.”

One place to look is Co-op Village, a little-known enclave of some 4,500 apartments on the far eastern end of Grand Street. The 12 buildings were built to house garment workers between 1930 and 1959, and until 2000, were limited equity buildings, meaning owners couldn’t sell them for full market value. Now, the units are free-market and divided into four co-ops — Amalgamated, East River, Hillman and Seward Park. The location is a bit far from nightlife and transportation, but units can be had for under $500 per square foot and maintenance fees are less than $300 per month, said Jacob Goldman, owner of LoHo Realty, who specializes in Co-op Village apartment sales. He added that nearby East River Park is currently “getting a nice face-lift from the city,” which will boost future property values.