which is worth more commercial or residential?

This is the opposite of TMI.
Swim - every part of this equation depends on a complex combination of data points, conventional wisdom, building code, zoning, and market analysis. I would discuss the above in detail with an architect and a code expert, as well as a real estate broker or developer. (The real estate broker is probably the only one who will advise for free.)
Tina Fallon
Realty Collective, LLC

8 weeks ago
swim
A friend of mine bought a property in lower manhattan. Apparently, the small building is really old and needs a great deal of renovations. He is thinking about knocking it down and rebuilding it. The first floor is commercial and the above 2 tenants agreed to leave since it is not rent control nor rent stabilized)

Does anyone know how he should proceed?

Swim, judging by your previous post it seems as if your friend bought the property with no clear idea how/what to do with the property. Hate to say it, but investing in this seems like a bad idea.

Let me guess, you saw it on TV and it looks easy?

swim, I won't be able to answer the financial part of your question. However, with more information of the property I will be able to help with the code and zoning question, (if you have not done that part yet). I am an architect and I provide free consultation for basic zoning and code analysis.

ph41, you can have your friend contact me as well, if you think I am able to help. generative.arch@gmail.com

karhu - think you misunderstood. The post was originally BY swim - I just re-posted it, as it made it obvious that swim's friend had already purchased the property and was now looking for friends to invest with him/her. It just sort of sounds like the blind leading the blind (over a cliff)

Zoning may disallow commercial on the 2nd floor.

I'd say go for 1 bds or studios; stay away from duplexes & large apts. But, that also depends on the location. However, if you don't really understand the RE market, I'd say don't invest cuz you could lose yr shirt.

Zoning may disallow commercial on the 2nd floor.

check your zoning brother. It would be a shame to do it and find out you can't use it.
Viagra won't fix that!

Thanks for the imput. We realize that building codes and zoning play a very big role. However, let's assume if there were no restrictions and that the second floor can be either residential or commercial...then which one is:

1) worth more
2) easier to rent
3) does anyone out there know how hard would it be to convert residential to commercial ...or...convert commercial to residential?

I would think that in the future, conversion from commercial to residential would be harder since aren't building codes or requirementf for residential more stringent. I mean, aren't fire codes, and laws for building codes, windows and space more onerous for residential space?

Ph41: Yep, you are very sharp, yes, my friend "bought the property with no clear idea how/what to do with the property. Hate to say it, but investing in this seems like a bad idea."

So we are asking the forum for ideas of what is the best scenario. Of course, we plan to pay an architect to help with codes zoning and etc but we hope that this forum would help with what would be most profitable.

MAV: Nope, did not see it on TV. Also, nothing is easy. However, putting money in a bank for less than 1% will be worthless with inflation. Putting money in stock market is probably more risky with all that is going on right now. Bonds are undergoing major problems. Real estate is no guarantee but I am kindly asking this panel to help out with some ideas.

karhu: Maybe after getting some ideas with this panel, we can proceed with getting a few bids from architects so that we can pool our money to get this project done.

I wouldn't jump to the conclusion that converting commercial to residential is easier. Is this a single, two or multi-family building?

It's highly location-dependent. This is what I would do: check residential and commercial rentals on your block, adjust for condition. In general, the range for commercial rents is much wider and elastic than residential rents. In Manhattan, commercial rents are typically highest for ground floor (retail etc), lowest for non-elevator buildings. The ppsf could go from $21/sf to $400/sf on the same street.
For residential rents, on the same hypothetical street, the range would be $35 to $100/sf depending on condition and amenities.
To answer your question properly, you need to talk to architects, brokers, neighbors, as generalities do not matter. If you can build up and it's worth putting an elevator in the building, there might be a demand for smaller offices in your neighborhood? Or maybe not, residential is all that's allowed.

I want to thank people for helping me.

Currently, this building is:
1) Commercial on the ground floor and basement
2) Residential on 2nd and 3rd floor (no rent control...and tenants are willing to leave)
3) Has alot of air rights so can be built up
4) Unfortunately the building lot is very small so putting in an elevator would be a bad idea (since there would be lose of floor space)
5) Entrance to commercial property is separate from the upstairs residential unit entrance (both entrances are currently on the front of the building)

Questions:
1) Is it true that we can build up to 5 floors without an elevator?
2) Conversion of the 2nd floor to commercial is possible but should we?
3) Which is worth more?? a commercial 2nd floor or a residential 2nd floor?
4) Will making the 2nd floor commerical be better in terms of a) building resale value b) rental income for the 2nd floor c) is it easier to rent out commercial space than residential?
5) By the way, is it easier to evict commercial tenants vs residential tenants for non-payment of rent??or is eviction just as difficult for both with "no difference"

Maly: I agree with you that location probably dictates what is more desirable but I just wanted to see what everyone else thinks.

1) not true, max. floors you can have without an elevator is 4, however you can have mezzanine instead of 5th floor.
2) if the 2nd floor commercial space needs a separate entrance, than probably not.

Karhu: You certainly seem to know your stuff. The building lot size is small so having an elevator would lose valuable square footage. Do you know how much space or footage is required for an elevator vs staircase? Also, I see that you are an architech so do you have a website or an e-mail. We are currently in the process of meeting a few architech to see which would be best for our building/project. The goal is to maximize on profit since it is an investment property.

Do anyone in this forum have recommendations for good, competent, qualified architects and structural engineers??? I would really, really appreciate any and all recommendations.

The elevator will take roughly 7'x8' (including thickness of shaft wall). You will need stairs with or without elevator. If you are doing partial renovation, installing an elevator could be tricky.
I don't have a website yet, but I do have some samples of what I did for a small lot I can show you.
Feel free to contact me at generative.arch@gmail.com
I am more than happy to meet with you and visit the site. Thanks.

Karhu: Great! One of us will be e-mailing you shortly.

If anyone else knows of good architects and structural engineers to recommend...please give me their e-mail or contact info.

Thanks