Why has it become increasingly difficult to sell an apartment in a Land Lease building in Manhattan? You get larger space units and a lower price.

Because when the land lease ends your apartment could technically be seized for forever. Which makes your investment worthless.

Also the maintenance will tend to be higher.

Indeed, you most certainly do get the larger space & lower price...together with the disproportionately high, off the charts monthly maintenance charges.

Many land leases are also now aging. There really aren't new land leases. And as they age they accumulate ugly features: the maintenance skyrockets, there are periodic crises with lenders as the time approaches for the proprietary leases to be renegotiated (30 years from expiration of the lease), and nightmarish negotiations between the coop and landlord upon which the coop's survival depend. Who would want these kind of headaches?

A landlease is really just a fancy way to rent since there will comes a time--sometimes in the relatively near future--that the shareholder's ownership interest could be worthless or so economically toxic that the initial investment is lost.

Land leases are horrible arrangements for the most part.

Re: There really aren't new land leases.

plenty of new construction on this list:

100 West 57th - Carnegie House
101 West 23rd
110 Central Park South (leasehold condop)
116 West 22nd - SOMA
142 Duane
150 East 61st
167 East 61st - Trump Plaza
175 East 62nd
177 9th Ave - Chelsea Enclave
190 East 72nd
2 Tudor City Place
205 East 63rd
215 East 96th - One Carnegie Hill
24 5th Ave
242 East 25th
27 East 65th
303 East 57th - Excelsior
305 West 16th (leasehold condop)
333 East 91st - Azure
34 Leonard
343 East 74th
4 West 21st - 4W21 (marketed as "condop" but really landlease coop)
40 East 80th (need verification)
419 West 55th - Loft 55
420 East 51st
445 Lafayette - Astor Place (leasehold condop?)
465 Park Ave - Ritz Tower (need verification)
48 Bond Street
50 East 8th
50 Gramercy Park North
54 East 8th
520 West 23rd - Marais
575 Park Avenue - The Beekman
88 Morningside (Central Harlem)
995 Fifth Ave - The Stanhope
*Battery Park City (*condos on gov't land w/ PILOT)

I'm confused. Of the above list, I only see a handful of buildings (88 Morningside, 34 Leonard, Azure, Chelsea Enclave, and a couple more) that are "new."

Carnegie House, 2 Tudor City, 24 Fifth, 50 East 8th, Excelsior are all "old" conversions, IMHO.

Even the Marais, which we specialize in and market as a newer building, is celebrating its tenth birthday this year.

ali r.
DG Neary Realty

"New" land lease buildings or conversions:

116 West 22nd - SOMA
142 Duane
177 9th Ave - Chelsea Enclave
215 East 96th - One Carnegie Hill
305 West 16th
333 East 91st - Azure
34 Leonard
4 West 21st - 4W21
419 West 55th - Loft 55
445 Lafayette - Astor Place
48 Bond Street
50 Gramercy Park North
520 West 23rd - Marais
88 Morningside
995 Fifth Ave - The Stanhope

That's 15 out of 35 on the list. 42% isnt plenty?

@Bobby

It really depends on the following:

1. Life of the lease

2. What happens at the expiration of the lease

3. Higher Maintenance

4. Fear of having nothing left at the end of the lease

So what people fear is the unknown and work. Due diligence cures all.

Theoretically, a land lease apt should be worth less and less the closer it gets to maturity.

I asked a question about land-leases to a broker when I was looking at BPC apartments. He scoffed and condescendingly said that we all won't live for 99 years (term of the land lease, which, at that point was actually 87 years). It was at this point that I stopped trusting in brokers of any kind.

I work in finance and a land-lease apt is the same as an interest-only bond. You get rooming benefits/payments up until the point of maturity. The closer you get to maturity, the less your apt/bond is worth.

Agreed - dealing with one now on East 72nd where the lease was recently 'renewed', and the amount of the lease payment went up significantly. Maintenance is over 5k on an average sized 2 bedroom.