Bohemia trades up in the West Village
Condos to dominate '08 sales, townhouse prices still soar

By Melissa Dehncke-McGill


West Village townhouses are increasingly breaking the $10 million mark and attracting the city's wealthiest buyers. But some brokers fear that the neighborhood's once bohemian edge is being overwhelmed and diluted by high-end condos and luxury retail. While the neighborhood has seen a falloff from the frenzied market of two years ago, when apartments would get snapped up within 48 hours through bidding wars, $2,000-plus per-square-foot sales are the norm today for new construction. Experts interviewed for The Real Deal's Q & A this month said there is virtually nothing on the market for less than $1,600 a square foot and note that one penthouse in the former Superior Ink factory, converted by the Related Companies, went for $4,000 a square foot. The neighborhood is seeing a major shortage of inventory, particularly for smaller apartments like studios and one-bedrooms. One broker noted that in some cases, studios are going for more per square foot than one-bedrooms. Several said that if the credit crunch has had any effect on the West Village, it can be seen in higher rents, because not everyone is willing to spring for a purchase with an economic downturn looming. While the charming, tree-lined blocks yield higher sales prices, brokers say there are deals to be had on Christopher Street, which is noisier and more crowded, in walk-ups and in re-sale co-ops. One broker predicted that a stunning 75 percent of deals in 2008 will be in new construction. That new construction includes Superior Ink, the condo-townhouse project, along with Cary Tamarkin's 22-unit condo project on West 12th Street, One Jackson Square, and artist Julian Schnabel's controversial project on West 11th Street. For more on the West Village, here is what our experts had to say: Alex Nicholas senior vice president, the Corcoran Group What surprises you most about the West Village market? The appreciation of West Village townhouses. A house on an average block in Chelsea that needs work would trade at roughly $4 million. That same house on a decent, but not the best block in the West Village is $8 million. Have buyers' and sellers' mentalities changed? I was recently talking to an owner of a unit in the West Village who has lived there since the early '70s. He bought for $12,000. He said an acquaintance in the neighborhood told him he was selling his house for $12 million, and this person's reply was, 'That's all?' I think everyone there realizes how valuable real estate is—it is no longer fringe by any means. What is the most exciting new condo project in the West Village right now (that you are not involved with)? It has to be the Superior Ink building. One of the penthouses is in contract for over $25 million. What sectors are faring best and worst? Townhouse, then condo, then co-op [are doing best]. Co-op re-sales in need of work [are doing worst]. People are hesitant to plunge into a home in need of major renovation. Too many horror stories. Sellers need to be realistic and meet the buyers at realistic prices. What geographical part of the West Village is doing best? Which is performing worst? The charming blocks like Bank Street, Perry Street and Commerce Street all do exceptionally well. Christopher Street struggles a bit. It has the PATH train and is still a hangout scene for people from neighboring areas. If Christopher Street could go the way of Bleecker Street in retail, well then you would see a huge increase in value. Where is the best bargain? Walk-ups. If you are willing to climb, you can still get [a good deal]. What's the overall level of sales activity like compared to six months, a year or two years ago? Still very strong, but it has dropped off in the amount of multiple bids and the craziness of two years ago. Prices remain strong; it is just returning to a more normal market, where units don't sell in 48 hours. What's open house attendance like in the West Village these days? Again, not as crowded as it was two years ago, where 40 to 70 people were the norm. Now, 15 to 20 is normal. What's happening with rents? The rents are equally as strong, if not stronger. Because many buyers are not willing to make the plunge into the escalating prices, they are now renting, which has shrunken the availability—vacancy was recently below 1 percent. Thus, prices have risen sharply in the last 18 months. A very nice two-bedroom in a prewar apartment can easily fetch $7,000. Some luxury rentals fetch more than $25,000 a month—and they are renting. David Wine vice chairman, the Related Companies What surprises you most about the West Village market? It is undoubtedly the strongest market in the country. What is the most negative aspect of the West Village market? That all of this demand has pushed up prices to where many people are priced out of the ability to buy new construction in this neighborhood. What group of buyers is the most active now in the West Village market? We have seen many neighborhood people upgrade; we've seen uptown neighborhood people drawn to the intimacy of the neighborhood; we've seen pied-à-terres, singles, couples and families. What is the most exciting new condo project in the West Village right now (that you are not involved with)? I am quite impressed with Cary Tamarkin's development on West 12th Street. What's one telling statistic about the West Village market? That the penthouse at Superior Ink has been sold for over $4,000 a square foot. Any notable deals you've seen recently that show the state of the market? The number of buyers spending in excess of $10 million is quite notable. We have about a half dozen in excess of $10 million. What sector of the residential market is faring best in the West Village? They are all faring extremely well. The biggest change is the townhouse market. The townhouses have really captured the imagination of buyers because they are so unique, and they have escalated in value over the last couple of years and outpaced the growth of the market. As [the area becomes more coveted], it will lead Manhattan in price appreciation because supply is so limited. You just can't build there. Where is the best bargain? We think non-river view condos. Iris Racant senior vice president, Fenwick Keats Goodstein Have buyers' and sellers' mentalities changed recently? Buyers are more demanding and less flexible in compromises. Buyers are also very nervous and hesitant to do a no-mortgage contingency deal. Many sellers are still looking in the rearview mirror hoping to get the prices of the past and being rigid in negotiations. Apartments that are priced correctly sell. Overpriced apartments don't. What sectors are faring best and worst? The best in order are condos, rentals and townhouses. The weakest is the co-op and overpriced townhouses. James Lansill senior managing director, Corcoran Sunshine Marketing Group What is the most positive aspect of the West Village market right now? Pure eclecticism. Julian Schnabel's "Florence meets Madrid" tower. Tamarkin's muscular, industrial 495 West Street next to Stern's neoclassical Superior Ink. One Jackson Square's fantastic undulating façade. Asymptote's 166 Perry next to Richard Meier. What is the most negative aspect? In this neighborhood known for cutting-edge innovations, there have been a few developments that used lesser materials and less-inspired design, and they do not live up to the caliber of the West Village. What is the most exciting new condo project (that you are not involved with)? Superior Ink took the neighborhood by storm. I hand it to Related for taking the risk of re-calibrating the market valuation/pricing paradigm in acknowledgment of the legitimate scarcity of Hudson River front property. Watch where prices go from here. What's one telling statistic about the West Village? We are currently marketing and selling a property at 166 Perry that is over 30 percent sold, at approximately $2,100 per square foot, without a sales center. We meet buyers at the Perry Street restaurant and show beautiful renderings of the lovely Asymptote designs, and they buy. Any notable deals you've seen recently that show the state of the market? We sold a mid-floor apartment at One Jackson Square with a terrace so vast one could grow corn on it, and we had multiple bidders. John Kane executive vice president, director of sales, West Village office, Prudential Douglas Elliman What is the most negative aspect of the West Village market? Your buyer is different than the young people who made the Village what it was; the writers and painters of the old days could no longer afford to move there [now]. I don't want the influx of high-end retail of Bleecker Street to continue to other streets. Which buyers and sellers are most active? I think the celebrities, the TV and entertainment people, and maybe some hedge fund and Wall Street people who can afford it also. As for sellers, aside from sponsors for new buildings, it is mostly estates, divorce and people who have to move for job loss or job transfers. Have buyers' and sellers' mentalities changed recently? Yes, I think so. With all the news even as recently as the past few days, the ambitious sellers are now aware of the concerns that buyers have, and … they seem to all be on the same page. What is the most exciting new condo project in the West Village right now (that you are not involved with)? The ones that are causing the most buzz are the Julian Schnabel building on West 11th Street and Superior Ink. What's the level of condo inventory like overall? Very limited and really tight. Particularly for one-bedroom and smaller apartments. For example, at 31 West 11th Street, there is a turn-of-the-century being converted to condominiums. The smallest apartment is the two-bedroom. What's one telling statistic about the West Village market? On a dollar-per-square-foot basis, studios are selling for more than one-bedrooms because of the limited availability of small apartments. Which area is performing worst? The area around Fifth and Sixth avenues, the gold coast. But that is due to the lack of inventory and the stringent co-op board restrictions, which eliminate a lot of young buyers. Qualified buyers just don't want to deal with a co-op board. What is the most underrated part of the West Village, and where are the best bargains? The area around Christopher Street and south of that, there are pockets, and where Bleecker crosses Seventh Avenue is rather sleepy. It has some high-end stores, and yet Christopher Street is a little bit tawdry in that area. If you can pass a co-op board and are qualified, you will probably get a better deal in a co-op as far as dollars per square foot. Maggie Kent vice president and managing director, Nest Seekers What group of sellers is most active? Co-op sellers looking to move from a one- or two-bedroom and upgrade. In my view, co-ops are harder to sell because of the demand for condos, so they may stay on the market longer. How is the West Village faring in relation to other parts of Manhattan? It is faring very well; it's stable. I personally wish that I had more condos to sell, but that would change the nature of the West Village. Because of the lack of condo inventory, people are shifting to other neighborhoods. What is the most exciting new condo project (that you are not involved with)? The Superior Ink and One Jackson Square are beautiful. I heard that Abingdon Square nursing home is being converted. What's one telling statistic about the West Village market? There are no condos in the price range under $700,000. There are no alcove studios; the buyer doesn't know that when they are starting out. Matthew Blesso president, Blesso Properties What surprises you most about the West Village market? The continued rise in prices for townhouses. We are currently developing three very high-end townhouses: two on Jane Street and one on Washington Place. We just listed one of them at 42 Jane Street for $10.75 million, which we originally projected to list for $7 to $8 million. The majority of townhouses currently on the market are priced over $10 million. The retail story is also pretty interesting. While the spaces are small and have little foot traffic, the rents they are able to command would have been unheard of a few years ago, particularly in the prime area of Bleecker Street. What is the most negative aspect? People like me selling $10 million townhouses. In all seriousness, I do have a concern that the Village is becoming homogenized. While we cater to a very wealthy market, I also believe we cater to a sophisticated and design-conscious clientele. While I don't believe that high-priced housing has a negative impact on a neighborhood, I do believe that poorly designed high-priced housing can have a negative impact. There has also been a loss of a few small local retailers to corporate tenants. The Village has always had a funky mix of mom-and-pop stores. Landlords in the Village, like us, have to appreciate that unusual retailers have always made the Village valuable. If the neighborhood offers nothing special, then there will be no reason to come here. Which buyers and sellers are most active? There are far more buyers than sellers. Currently, West Village listings represent only 2 percent of all the active Manhattan apartments for sale. I get the feeling that people who are selling right now are only doing so because they have to. Either they're relocating, or perhaps they're selling because an estate has to be put on the market. What's one telling statistic about the West Village market? As of today, there is not one condo listing in the West Village for less than half a million dollars. Any notable deals you've seen recently that show the state of the market? There was a townhouse on West 10th Street listed with Sotheby's for $19.5 million; then the price went up by over $2 million. Now it's either in contract or off the market. Also, 92 Jane sold for over $3,000 per square foot. There's a $40 million listing for a condo on Perry Street right now. I think the eight-digit townhouse prices are here to stay. Steen Rasmussen senior vice president, Warburg Realty What surprises you most about the West Village market? That finding a home for less than $1,600 per square foot has become nearly impossible. And if you want new construction, forget about paying less than $2,200 per square foot on average. What is the most negative aspect? There is a shortage of affordable studios and one-bedrooms. By 'affordable,' I'm referring to one-bedrooms for under $800,000 and studios under $500,000. Which buyers and sellers are most active? We are currently seeing a shift towards buyers of larger apartments in a market where studio and one-bedroom buyers have dominated for the past few years. Based on the inventory currently available, the two- to three-bedroom market will be the most active segment in 2008. Have buyers' and sellers' mentalities changed recently, and if so, how? There are still many people looking at real estate as reflected in the high attendance (20 to 30) at Sunday open houses in January. I call them 'people looking' rather than 'potential buyers' because many people do seem to have taken a wait-and-see attitude. Still, I think it is significant that they are at least out there looking and not staying home. It signals that they do want to own a home and will buy when there is more transparency in the economy. What's the level of condo inventory like overall compared to other parts of Manhattan? One-third of available inventory right now is new condo construction. In 2008, as much as 75 percent of all deals consummated could be new construction based on current inventory and the pipeline of new condos expected to come on the market this year. Which sectors are doing best and worst? Sales and rentals in all categories are doing extremely well, and will continue to as long as the local economy stays strong. There is a lot of talk about how overseas money is being pumped into New York City residential real estate. The West Village is not a destination of choice for these buyers in the way that Midtown and the Financial District are, so if the neighborhood has a weak spot, then that would be it right now. What's the overall level of sales activity like compared to six months, a year or two years ago? Sales activity slowed down during the last two quarters of 2007 for the same reason it did in the rest of the city. What's happened with rents in the West Village recently? Rents in the West Village seem to be rising. People may be nervous about buying, but they do want to live in the neighborhood, so they are opting to rent. "The Real Deal"