Harlem -- ex(im)plosion of new units on/near Frederick Douglas?

We had this same discussion about 6 months ago in a Central Harlem post. I mentioned back them how terrifying I thought it was when I walked down FDB and all I saw was one new construction after another- many still under construction.

http://www.streeteasy.com/nyc/talk/discussion/6117-graceline-kalahari-and-central-harlem-market

At least I am consistant and still agree with what I wrote back them.

you are right semerun -- I read that at the time and had forgotten about it.
Still, somehow I thought yesterday that the amount of new development is larger yet than anything I had absorbed earlier -- perhaps I had not walked down the length of FDB in quite some time
86 Morningside is potentially a monster building too, and they seem to be going ahead.
I wonder how Dafina and the others above 125th ended up doing.

INterestingly 237 and 247 W 115 -- Delaney lofts are essentially sold out and they are relatively unattractive on an unattractive block

Dafina will probably end up as rentals. They are desperately trying to sell the apts on Fifth above 125th. When do all the FDB developments open?

That's exciting news about 86 Morningside. Thanks! Do you have any other info about it? Who is the builder? Is it going to have tax-abatement? Is there a lottery?

ValB, I think it was in the New York Times recently, but I'm not sure. I saw an article about lottery units that haven't closed. Buildings where lotteries were hugely oversubscribed may still have affordable units available.

Thanks! I'll look for it.

Just checked -- 81 Morningside -- 13 floors 54 units -- horsford and poteat
http://www.horsfordpoteat.com/horsfordpoteat/new_projects.asp
http://www.horsfordpoteat.com/horsfordpoteat/new_development/pdf/church_of_the_master_rendering.pdf
http://www.horsfordpoteat.com/horsfordpoteat/contact_us.asp

I wrote to them twice and also called but did not get anywhere trying to get information

All that new construction will certainly add to price degradation, but at the same time it will solidify the total transformation of the area. That the neighborhood also has great transportation and is adjacent to Columbia and Central Park means that it won't have price implosion any greater than the rest of Manhattan. It remains my favorite part of Harlem -- only 116th to 123rd now, but I expect 110th to 116th to follow suit.

They should have torn down the brutalist 1970s Church of the Master extension (extant) for the new apartments, instead of the beautiful Victorian original at the corner.

Okeh, more handsome than beautiful:
http://curbed.com/archives/2008/01/29/curbedwire_harlem_loses_its_religion_trump_soho_appeal.php
but still...

As for housing lotteries, I couldn't find anything on 81 Morningside Ave., but this is the place to look for Manhattan: http://www.nyc.gov/html/hpd/html/buyers/manhattan-homes-sale.shtml

Well, I went to the starbucks on 118th and FDB yesterday, sat for about 45 minutes, and was struck by how at least 75% of the patrons were white, and by how many who came in had babies in strollers. Walking up FDB it was really like walking at 86th and Amsterdam in that respect. Same around Mt Morris. The area already HAS changed. Even if things go rental, I don't think its going back. Its just an alternative within Manhattan to Hoboken or Prospect Heights or LIC.

Now, above 125th is a whole other story. I think that is just less desirable. But it will come around too. What neither area will be is Lincoln Center of the West Village...at least not for 10 years at least. Not with so many projects above 86th.

Starbucks for counting white babies; across the street at Patisserie Les Ambassades for great coffee and pastries (and probably food -- haven't tried it).

My impression is that developers are ratcheting down their prices on these new developments, so their breakevens must accomodate the downgrade. These developments don't seem to have the pretension to great luxury that most recent NY construction has had.

Though the flood of inventory could hammer prices, I'd rather see completed buildings and middle class money coming into the neighborhood than abandoned hulks and dejection. Who knows, maybe this region will get cachet: affordable, attractive, close to the Park and MP.

There are also great playgrounds at the top of the Park and in the middle of MP. We moved here without that in mind but it has come in handy, and it's nice having so many other parents of small kids. Next: where's the school to send all these kids to?

"Don't think things are going back"

10-15 years from today, there may be a new focus and that focus might be geared toward suburban life this life we live especially in NYC is a cycle.

HarlemNWCP -- do you have a basis for your observation that the developers are cutting prices in Harlem -- I guess ratcheting must mean small changes. That is true. Perhaps they need to torque them down to get action before the flood of new units hits.
Intuitively, mutombo may be right --many of these will turn into rentals and being near Columbia there is a lot of pent up demand for relatively low cost units for students and faculty. This could be an excellent market driven solution to the needs of that institution.

"What neither area will be is Lincoln Center of the West Village...at least not for 10 years at least."

Depends -- Lincoln Center when? In the '70s people warned me, no matter what, do not step foot one inch west of the central plaza, especially the dreaded Amsterdam Avenue side. West Village when? That used to be a gay ghetto, with lots of sex clubs, people cruising on the streets for sex, etc.

I've heard this about many other areas... well, it's better, but it will be ***that*** nice. And then what happens is that the next wave of people who move into Manhattan find themselves priced out of the area where you counted baby strollers 5-10 years earlier, so they settle for that place 5 or 10 blocks away.

Harlem is past the tipping point (in general) - some areas (like 116th and FDB) are much farther along than others (like 156th and ACP).

It will take another 10 years before there are public schools (at least more than the 1 middle school) worth sending your kids to, but it will come. Having market rate rents fall will slow the process.
Landlords are now less incentivized to pay rent stabilized tenants to move out because landlords won't make as much on the re-rent. Landlords are also less incentivized to spend a lot of money on renovations because there won't be the same demand for higher end rentals.
Accordingly if a landlord has a vacant two bedroom that's in bad condition. He's more likely to put lipstick on it and rent it to an uneducated family for $1,400 than he would be to spend $20K putting in new floors, granite, stainless etc and renting it to educated tenants for $1,700 - last year when he could rent it for $2K then it made sense to go all out on the renovations and find educated tenants - now the risk may not be worth the reward. Because of the type of tenants currently renting vacant apartments the gentrification process is slowing.

Jazzman,

What you described is all signs of things to come.

In addition to Jazzman post, when Soho and The UES & UWS were undergoing change and being gentrified the entire NYC were not undergoing the change and gentrification process which I find an abnormal process the entire city undergoing gentrification. People have strayed away from The Laws of Nature but will only get so far before things return to normalcy.

joedavis, I was at an open house for a renovation condo on 114 St off FDB where they'd clearly slashed prices and another renovation on 113 St off FDB, same. By slashed, I mean -25%. I'm not speaking about the huge luxury developments - on them I have no knowledge. And it doesn't look like SoHa 118 is really a luxury development anyway. My impression is that, for whatever reason, the developments along FDB have been more modest in ambition. Wrong?

very interesting -- could you please point me to the 2 with cuts (113th and 114th)
WOuld like to check them out if they are 3brs

I have a different perspective on what's happening in places like Harlem. Rather than gentrification (one demographic niche of people supplanting a poorer one) I think of it as coexisting and overcoming the racial barriers. I too went for a stroll today through Harlem. I covered 129th, 130th and 131st Sts, from Madison to Riverside, then up past Riverbank to W.155th and along 155th.

FDB is as has been described above, and I expect the developments further uptown, which really are not such luxury buildings, to run into problems. One thing I saw on 129th St. was a teenager racing down the street on his motorcycle, with the front wheel in the air, at a high speed. Lots of people sitting on stoops and sidewalks, and some that looked like outpatients of drug treatment programs. I also enjoyed seeing the "Harlem Rose Garden" and tree lined streets off the avenues. But what always shocks me most is the row of restaurants down below the highways at about W.135th's end.

Only 3 bd here:

http://www.streeteasy.com/nyc/building/235-west-113-street-new_york

No elevator and nothing in contract so far. As they say: you have time.

lowery - the nice thing about the gentrification that has taken place thus far in Harlem is that generally speaking it was the least stable people (the crack heads etc) who were the first to take the buyouts from the landlords. Unfortunately though, the projects have kept many undesirables around (I'm not saying the average person in a project is undesirable, what I'm saying it that project have plenty of undesirables living there).

By eliminating the 10% of your population who are the least productive and replacing them with the 10% who are your most productive, fantastic changes take place. This is why the crime rate has become so low in recent years in Harlem. My hope is that landlords are very careful about who they rent vacant units to and these dirtbags who've left over the last decade stay out of Harlem for good.

yes - 235 W 113rd is an example of wildly delusional pricing. You get a tiny 3br 5th floor walkup with a lot of roof space at $1k psf in Harlem
I talked to the agent. She totally did not see a problem with this -- this was last summer.
Not much has changed. Yes, this building and a couple of similar ones have come down from pricing themselves like 111 CPN w/o the amenities.
The others have not yet fallen in line
You could add 128 w 111th, which has also dropped prices substantially and will see no takers at the current prices given what it is
So, yes you are right -- some of the small reno people who were outrageous have cut their prices
On the other hand you have 312 w 115th that actually raised her price and says it is based on value -- when she hasnt been able to move this place in over 2 years - place needs renovation but -- oh -- has these plantation shutters that are so cute -- even though the ceilings sag and have major water stains, and the place feels like an SRO even though it isnt one

Sorry for the digression. In any case you are right that some who were beyond delusional have cut to where they are just delusional. There are some that are reasonably well priced now, but a lot of the central Harlem inventory is asking UWS like prices at the moment.

Jazzman - crime's decrease is something people have lots of theories about. At one end you have people saying that because of the draconian mandatory sentencing for crack ("the Rockefeller laws") people are locked up who would otherwise be committing crimes. There are arrests made at the low misdemeanor/violation level on a massive scale, and there is a movement to steer people into treatment programs by arresting them for whatever they can be arrested for, and then preventing crime by dealing with the drug problem. I'm not sure. I definitely agree with you, though, that it only takes a small increment to change things. The projects do have good people living in them, and not everyone in Harlem, or many other lower-income neighborhoods, lives in a project or is a creep. A result of lower crime is that the not-creepy people come out of the woodwork, and the balance/mix of people builds a momentum.

What worries me most about this economic downturn and RE crash is not what will happen with condos in Harlem or Wmburg. Instead, I worry about something I have seen a lot of in the Central Bronx, especially on and around Arthur Avenue south of the hospital, north of Tremont: private, nonsubsidized development on the quick and dirty of private homes, one, two, three-families that have stopped dead in their tracks. The lots that were abandoned just after having the foundation laid become dumping grounds. But much worse are the houses that were near completion, have the windows boarded up, will never be moved into. Shooting galleries and crack houses waiting to happen. I don't think you have any of this in northern Manhattan, but the less affluent sections of the outer boroughs are plagued with it.

6th floor walkup... Still it looks like 1300 sf for $960K list. That comes to about $740 sf and I'd assume they're flexible on the price. Some have disagreed with me on SE, but I found it a beautiful PH. But no elevator is a deal breaker. When people build crazy stuff like this, it's difficult to apply market norms. Hard to compare to walkups because it's new construction and hard to compare to new construction because it's a walkup. What does it go for? $650K?

$650k is much more reasonable for that place. It would sell at that level

Just looked at 128 W 111 #3. $1M still too much? $6500/mo rent sounds pretty nutty to me. At the 12x multiple that people are throwing around on another thread, that would get you to about there, so maybe the rent's not so crazy. Or the multiple is wrong. At 18x the $1M would give a rent of $4600/mo. Sounds more realistic?

The multiple is wrong. It is too HIGH. An investor cannot make money buying and renting at 12 x rents unless rents are rising rapidly and well above inflation, or banks are seriously underpricing mortgages.

Standard pre-bubble multiple was 100 x monthly rent.

If it's 8x it still leaves open what rent is appropriate. $6500/mo sounds pricey... $4500? 8x says $450K. We'll see.

A 1300 sf, 6th floor walk-up? I would think an apt. that size would be targeted to a young family who couldn't afford one that size in a more established area. Nice, but then you find yourself coaxing your kid or dragging the stroller up the stairs. Your kid forgets her blanky -- do you run back up to get it? I hope Fresh Direct goes there or what do you do about a family-size grocery load? Sure, an apartment that size appeals to many without kids, but I would think you lose the family option at resale.

I just don't get the appeal up there. Prices are way too high for the neighborhood. I'm not talking about crime or the lovely Projects. Or even the nasty looks or attitude toward the newbies/outsiders I've heard about (just such a pleasant experience). Where's the closest gym (those workout rooms in the new buildings are generally a JOKE)? Supermarket? Greek diner? I'd understand if prices were half that of the UWS, but as it is, I just don't get it. I haven't been up to FDB for a about 6 months or so--maybe I'm missing something...

"Rather than gentrification (one demographic niche of people supplanting a poorer one) I think of it as coexisting and overcoming the racial barriers. I too went for a stroll today through Harlem. I covered 129th, 130th and 131st Sts, from Madison to Riverside, then up past Riverbank to W.155th and along 155th."

totally agree. a young college graduate that is black might have more in common with a white young graduate than with black old timers that still sometimes look at whites with an evil eye. kind of like "get the hell out of my property, and that's the whole neighborhood". while at a harlem shop a week ago, the business owner was bragging that she (like the other long term residents) pays $2.50 for brunch at silvia's, that only white newcomers were paying $25. note to self: never go to silvia's.

I do not think that classic sixes are at $1M-ask at this point, but there are some with $1.2M ask:

http://www.streeteasy.com/nyc/sale/404133-coop-1349-lexington-avenue-carnegie-hill-new-york

http://www.streeteasy.com/nyc/sale/396536-coop-440-east-79th-street-upper-east-side-new-york

http://www.streeteasy.com/nyc/sale/365143-coop-525-east-82nd-street-yorkville-new-york

Not unlikely to see some of them closing below $1.1 or even at the $1M level.

CB123,

235 W 113 is a strange animal, not indicative of the offer around FDB: 1) it's more luxurious; 2) it has no elevator. I agree that it's hard to see the demographic to buy there: ultra rich Columbia kid?

As far as the area's appeal, it is great if you have small children, as I mentioned above, and it is more affordable than the UWS, just as you say it should be. OK 50% off, maybe not. But I bought a small 6th fl 2 bd for $487K last June that was renting for $2500/mo. By financeguy's calc, that's bad. Very bad. But certainly a discount to UWS, both in $/sf and purchase/rental.

Oops, sorry, ignore my previous post, wrong thread...

Harlem-- I just checked out 235 W 113th on SE. Apt. #4, for example, looks VERY nice, judging by the floor plan. I see...I can't imagine that you would find an apt. like that anywhere on the UWS for anywhere near that price. How do you know from the listing what floor the apartment is on? Prices have dropped in the building. I wonder if there's more room for negotiation. YOu bought a 2 bedroom in that building for 487K? Really? Is it 2 bath as well? What is the sq. footage, if you don't mind answering?

We've got crossed wires. I did not buy in 235 W 113 St. No one has bought there, yet. 235 W 113 St has 1 apt / fl. #4 does not have the windows of #5, but it's less expensive than #3 because it's a walkup... 3 flights up and down each time you want a quart of milk. I've lived in 7 fl walk ups: fine when you're in college.

I bought in an elevator building. Sq ft about 670. 1 bath.

$726 psf for a 2br 1 ba 6th floor elevator building-- assuming it is renovated.
just ran a search in the UWS and there are a lot of apts with this sq ft or more in that general price range
Can't really compare w/o looking but likely the discount you got is not 50% but more in the range of 0-30% over UWS, unless yours is much nicer -- which is likely
(see if you can compare Manhattan Valley or Morningside -- quite a few choices there)
I can see why you thought 235 W113 is attractive -- 1300 sqft + outdoor space is nearly double of what you got -- minus elevator. So if that goes for 650k, foregoing the gym membership and doing the stairstepper apt becomes very attractive

The good news is that even if prices drop quite a bit in % terms the absolute loss you will incur is not as high as for someone who paid the higher prices in a Harlem condo or UWS.

If you are planning to live there for a while then the appreciation /depreciation is not as big a factor -- assuming your financial situation doesnt change. Hoping for the best for you

joedavis,

Thanks for the kind word. I found 235 W 113 attractive esthetically. There are tons of apts bigger than mine, so that's not special! : )

Our building is renovated and they did a pretty good job. I considered the lower absolute risk of a low price when buying. And I think that affordability will be a key factor in the next couple of years. That said, I almost certainly wouldn't have bought after Lehman. In June 08 111 St seemed like a reasonable risk. Now it just seems like a mitigation of damage.

HarlemNWCP had you actually been in 235 113th? I found the entertaining area tiny. There's no place for a dining table, you are supposed to use a huge breakfast counter to eat all meals. The only feature i find appealing is the windows in the top floors, which faces south and have a very charming shape. The rest looks totally cookie cutter gut reno.

mimi,

To each his own! You make good points. I get the strange feeling that you and joedavis think I want to buy this place. No way! Not at $650K, not at any price! Well, I'd never live there in any case. Like I said, in younger days I lived in more than one 6 and 7 floor walkups... No mas!

Still, other than the elevator, I like what they've done and I'm watching with curiosity.

"Depends -- Lincoln Center when?"

Obviously I meant Lincoln Center today. The rest of your post was useless, because I was clearly talking about gentrification, so why mention pre-gentrification Lincoln Square. Yes EVERYBODY knows the UWS, Hells Kitchen , the Village, Chelsea, etc used to be scarry.

"Yes EVERYBODY knows the UWS, Hells Kitchen , the Village, Chelsea, etc used to be scarry."

And in every case, people said that the area in question would never become ***that*** nice.

Did they? Because it would take me about five seconds to google stories from 30 years ago or "urban renweal' case studies on Lincoln Center/Square which would all say that it was the expressed intent of the city, state, and federal government to "renew" that urban area, clean it up, and make it nice and liveable for middle class people. Ditto for times square and HK 20 years ago. So plenty of people were saying it would be nice someday. Because it has been done in SF as far back as the 60s.

This is all part of an unintentional "affordable housing" program in which private developers produce reasonable quality housing and end up making large "contributions" to the well being of the neighborhood through a special program called "losing their shirts".

Yes, it could become quite a nice rental area. And given that property costs (and materials costs, because the luxury was generally a bit less luxurious) were so much lower there may be some hope for easier conversions, or attracting investors.

What other neighborhoods are "rental areas"?

harlem, i don't get your question.

"Rental areas" = Manhattan. Every neighborhood in Manhattan has more renters than owners. But OVERWHLEMINGLY rental areas he might mean FiDi, BPC, 42nd street west, etc.

aboutready, Sorry, I wasn't clear. When you wrote "it could become quite a nice rental area" I thought you were distinguishing between areas dominated by rentals versus others dominated by sales. But I guess you meant that the recent developments should be attractive to convert, that is easy to attract renters?

harlem, yes. much of the rental stock in manhattan is subpar. the failed condos represent an opportunity for far nicer units to enter the rental market. and in Harlem because the debt loads for the developments may not be as high, it may be easier to convert them. if they can be converted more quickly rather than slowly, it could help the area retain retail and services, which could in turn surprise people who are predicting stagnation or worse.

Right, well I for one (and my roomate) both could afford to move below 96th but want brand spanking new so are only looking in harlem, in rental buildings, condos-turned rental buildings, and condos for rent by owner. You cannot find so much selection of only new bldgs anywhere else in Manhattan for so little.

Why would the debt levels of new buildings?

Generally I agree with the premise that the excess inventory will hurt prices in the short-term, but ultiamtely improve services by bringing more "market rate" people to the area. The question is, will they become rentals? Is there even an incentive for the developers to rent them out?

sorry, why would the debt levles of harlem buildings be lower than other areas in manhattan?

I assume because the land acquisition costs were so low -- in many cases, donated by the City.

I'm not sure, though, that condos with affordable housing components are permitted by law to stray from plan and convert to rentals.

I can't imagine, though, that the city doesn't ultimately allow them to become rentals - it's better than buildings sitting there vacant. They'll probably force an even greater percentage of them to become affordable housing though if that's the case.

alanhart, some of the parcels were given to developers with the expectation that development would occur. SoHa118 and Brownstone Lane are two such examples, I believe. In many instances the city wanted simply to remove blight. I don't know the terms of all of the developments, but i would guess that some developers will be able to cut some deal with the city regardless, although some percentage of units would probably then become middle-income rentals.

Some of the buildings have left over lottery units, because buyers couldn't close. That is amazing (not the inability to close, the remaining middle-income housing).

The "affordable" housing set asides are often un-affordable, however...if you do the match there is no way people making the low end or even middle of the income ranges they reuqire could ever afford some of these places. I saw a 3/2 for $650k and 20% down, with income of no less than 75k and no more than $175k advertised.

How many couples making $100k total could afford that (assuming they had one or tow kids.)

How many of those couples have $130K for a down payment? And if they don't have a lot more saved than that, why should they put all their savings in an illiquid real estate investment?

There must be more to the story.

anybody knows what's up with SOHA's biggest retail space? it's going to be vacant for 3-4 years by now.

WHich one is that?

Oh you mean the bldg by that name. Why is it going to be vacant?

the retail space was never ever occupied. the little ones in the corner are though (starbucks and chase). why is that?

it is vacant & looking for a tenant since 2005. isn't that too much?

sorry! 2007

> "Yes EVERYBODY knows the UWS, Hells Kitchen , the Village, Chelsea, etc used to be scarry."
> And in every case, people said that the area in question would never become ***that*** nice.

When was the village scary? The UWS "scary"? It wasn't as nice as the UES, but "scary"? Or scarry, whatever that means.

And, you conveniently left out that tons of neighborhoods that folks said would become nice never really did... and we're going to see more of that.

For instance, they've been "renewing" the rockaways for 50 years now. And the latest round, which cost a LOT of money, has been getting coverage for tons of problems with the infrastructure, and a lot of empty homes.