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Mentioned in this Article:
Stephen G. Kliegerman

Stephen G. Kliegerman
President of Development Marketing

Louise Phillips Forbes

Louise Phillips Forbes
Park Avenue Office

The Real Deal

Luxury's Bell Tolls At Lower Prices In East Village

Following the mixed results of Related Companies' Astor Place, new projects are smaller, less expensive

By Vanessa Londono

The A Building in the East Village When the Related Companies' 21-story curvy luxury tower went up over Astor Place, it served as a beacon of change for the East Village, but other developers are finding the light isn't burning quite as brightly in a more subdued market.

Ask Toll Brothers, the developer that broke ground on One Ten Third, a 21-story tower, earlier this year. The project looked to the undulating glass structure designed by Gwathmey Siegel as a comp for high-end construction in an area where early-20th century tenements are the norm. The Astor Place project set neighborhood price records for new construction, with apartments in the 39-unit building hitting the market between $3 and $12 million.

Results at Astor Place were mixed. About 75 percent of the units sold fairly quickly, but in October the developers put seven unsold units on the rental market. Five units were rented at monthly rates ranging from $12,000 to about $50,000. While the developer says the decision to rent some apartments was rooted in tax issues and possible deductions, the end result shows the sales market for luxury residences in the East Village isn't limitless. As hopes for an ultraluxury sellout over the rotating cube sculpture recede, Toll Brothers believes there's enough room to succeed with a luxury product a little lower down the food chain.

At One Ten Third, prices range from $850,000 to just under $2 million, significantly lower than units at Astor Place. Since the project hit the market in mid-October, 15 of the 76 condos have sold. Units have an average per-square-foot price of $1,300 and range from 800-square-foot one-bedrooms to 1,450-square-foot three-bedrooms. The project is expected to be completed in spring 2007.

"It has an intimate feel," said David Von Spreckelsen, vice president at Toll Brothers. "Because the site is small, many units are on corners, and floors have four or less apartments."

Like Astor Place, the project has floor-to-ceiling windows and a modern design. One Ten Third also has a common rooftop terrace, a fitness center and a courtyard.
Some of the major differences include a less prominent location and the absence of a marquee architect such as Charles Gwathmey, as well as smaller unit sizes.
"Astor Place has bigger apartments," said Von Spreckelsen.

Since opening sales on Oct. 13, One Ten Third has already had a 3 percent price increase on floors 16 though 21. But Von Spreckelsen says he doesn't expect prices to reach the level of Astor Place, which he said also raised prices several times.

David Wine, vice chairman of the Related Companies, said Astor Place set local records because of the project's timing.

"Astor Place couldn't be replicated today -- land prices and construction prices have gone up so much," he said.

Other luxury projects sprouting in the East Village are smaller and more consistent with the low-rise character of the neighborhood.

The A Building located at 425 East 13th Street between First Avenue and Avenue A is a low-rise luxury development. The eight-story glass and terra-cotta building has 84 units made up of studios, one-, two- and three-bedrooms. Cantor Pecorella is marketing the project, which will be completed by the summer of 2007. Sale prices begin at $480,000 and go as high as $2.9 million. Units range in size from 426 to 1,859 square feet with prices ranging from $1,000 to $1,700 a square foot.

"Many of the homes will feature home offices and boast balconies with glass railings facing 13th Street," said Ariana Meyerson, project manager for Cantor Pecorella.

Marketing is focusing on the rooftop lounge, which features a lap pool, a lawn with a cabana and a wet bar. Other amenities include a fitness center and storage facilities.

Another new luxury glass building is One Avenue B, a 24-unit new construction condo building on the corner of Avenue B and Houston Street. The eight-story project will have studios, one- and two-bedroom units with prices ranging from $535,000 to $1.2 million.

"When this building was conceptualized, we wanted to keep the apartments efficient so we could deliver at low price points," said Clifford Finn, managing director of Citi Habitats Marketing Group, which handles sales for the building. The typical studio at One Avenue B is about 465 square feet. Larger units are about 1,100 square feet. According to Finn, the average price per square foot at One Avenue B is about $1,200. He said the building's size and likely buying base encouraged the builders to create larger numbers of small units, though it's still being marketed as a luxury building. It will have a full-time doorman, a fitness center and a separate yoga and Pilates studio.

There is also an entertainment lounge, a terrace, a bike room and individual storage closets for every unit.

"People need secondary space, and additional space at your disposal can make or break someone at a specific price point," Finn said. "With the amenities, it's really like getting square footage."

He said 13 of the 24 units are in contract since sales started in October.

Other developments are hitting the market at still lower price points -- with fewer amenities and no glass façade.

New condo 296 East 2nd Street is almost 70 percent sold since sales began in May. The five-story building with eight units -- six one-bedrooms, a two-bedroom and a three-bedroom penthouse -- is keeping its price per square foot below $1,000.

Units range in price from $600,000 to $1.7 million and in size from 660 square feet to 2,100 square feet, with prices per square foot ranging from $710 to $950.

Sales broker Louise Phillips Forbes of Halstead Property said she used 240 East 10th Street as a comparable to set prices.

"It doesn't have a lot of amenities, but the focus is on light and air," she said. "But from my experience, people who want one-bedrooms are looking more at the price point and 800 square feet for $710,000 is completely a value buy."

Despite the slowing market, there is enough demand for high-end units in almost every neighborhood, according to Wine of Related.

"There is a citywide market for luxury housing," Wine said.

Copyright © 2003-2005 The Real Deal

Friday, December 15, 2006

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