Onyx Chelsea

I sold an A-line (2BR) there two years ago. The Onyx has a lot of amenities for a 50-unit building to support -- the roof deck, the gym, and most costly, the FT doorman.

So your maintenance may seem high at, what's it now? a $1.10 a sf? but that's not out of line.

Of course when you look at carrying costs, you have to figure in real estate taxes too; at this point the building is halfway through its ten-year abatement, so prospective buyers have to figure that there are a couple more jumps coming.

ali r.
DG Neary Realty

When buying new construction, no one ever seems to ask how the amenities will be paid for. A fulltime doorman, for instance, costs the same amount regardless of the number of units in a building. So in a 150 unit building the cost is spread out over 3x as many units as a 50 unit building. That obviously means that comparatively speaking, a doorman costs 3 times more in the smaller building. Do that for every amenity, and it really adds up. When the sponsor stops needing to market the units since all or most are sold, the owners are left to decide which amenities that initially attracted them to the building can still be afforded and which need to be cut. This unfortunately occurs around the time the tax abatement's expiration nears and impacts sales prices. Concurrently, the shiny new finishes that were commanding such a premium in the new construction when the building opened are now getting dented and chipped and in need up renovation. That's a bad set of ingredients to be stuck with when trying to cook up a resale plan.

The Onyx was in a marginal area when built--actually quite a bizarre location if you ask me. The area hasn't changed a stitch. The Highline has zero impact on this building which is nestled in a no man's land between the more interesting areas in Chelsea and the blech of Penn Station and the Post Office.

In my opinion, there is no way these units in the Onyx will hold value as the abatement nears expiration, the finishes begin to age, the area stays the same, and the cost of the amenities comes to more fully rest on the owners versus the developer.

Kyle - extremely helpful and succint - this is the kind of post I wish was the rule and not the exception - thanks!

the total number when the building is fully assessed is not high in this building. also, while highline may not be particularly close, the buildings on 6th ave such as beatrice and ace hotel are also helping the neighborhood. i think this building has a lot of value for location, as its much better now than it was when it came on pre construction.

I'm much more identified with co-ops than condos, but I do want to defend this building for a minute. I do agree that the area -- what shall we call it, "FIT-adjacent"? "Behind Penn South"? -- isn't A+, but I think that the Onyx trades at a discount to prime Chelsea for just that very reason.

The fact that the Onyx is still commanding nearly $1,100 a sq ft shows that there are buyers who do want its amenities -- the combo of designer appliances (including SubZeros and W/Ds in the units), radiant heat bathroom floors, and common outdoor space really appeals to a certain shopper.

Is the Onyx a gentrification play? Probably. Anybody who has witnessed the explosion at Far West 19th-23rd (let me just cite Cookshop, the sellout of the Chelsea Enclave, and Sam Zell's soon-to-come luxury rental as three data points) might logically think that "Highline Effect" could spread further north.

But has that Highline Effect already been a bust on 28th? I don't know if I'd go that far -- Phase Two only opened two months ago, so let's give the retail a little time to follow the people before we throw dirt on the coffin.

ali r.
DG Neary Realty

I had been to a party there. My friends who bought there and their neighbors at the party seem to really like it as well. They're happy. I had a good time too and the one train was just at the other end of the block. Good for them.

Cookshop was already in full effect long before the Highline was open, and Far West Chelsea (the Prime A+ part of chelsea from 14th to 23rd between 9th and 11th) would have been gentrified with or without the highline - it was past the tipping point with the hudson river park, explosion of new developments, art galleries, 10th ave restaurant row, and revived interest in the townhouses between 9th and 10th etc.

The highline has certainly been a terrific selling point, though, and I think it could spread the gentrification north to varying degrees. Certain real estate is taken up by projects that are not going anywhere, but the blocks between 10th and 11th may become less grimy.

The Onyx, however, is a total bust. I agree with Kylewest that it is a bizarre location. It's simply not part of any neighborhood. To the north you have Penn Station, to the west you have Penn South, to the east you have FIT, and to the south you have grimy fringe tenements and odd buildings that will take a long, long time to metamorphosis into anything remotely better.

I disagree. the best values are 26th thru 30th street, from 7th av to 9th. Undiscovered, no premium. a loft there trades half price from Tribeca. that's how you make money. by being early.

"the combo of designer appliances (including SubZeros and W/Ds in the units), radiant heat bathroom floors, and common outdoor space really appeals to a certain shopper"

Not for much longer....

Appliances: Subzero 30" = $6,500; Miele d/w = $2000; Viking 30" range = $6,500; Viking convection microwave = $1,500. You can do better, but for argument's sake take these prices for a total of $16,500. It boggles my mind that people are willing to pay a premium for used top end appliances when purchasing an apartment when simply replacing cheap appliances is about the easiest upgrade that exists. The Onyx has nice appliances? What does that have to do with living on one of the ugliest corners in Manhattan in a wasteland? It is "Location, location, location." Not "but there's a roofdeck and washer/dryers."

thanks all for the defense.

One more "on-topic" point -- I agree with KW's argument that it's easy to replace a cheap pre-existing kitchen, but one reason new condo buyers like modern construction is that it has features that CAN'T be duplicated by renovating an older property.

For example, many very pretty prewars won't allow in-unit washer/dryers, because the plumbing can't cope. A broader example is the floor-to-ceiling windows in many new condos -- you can renovate a prewar kitchen to be as nice (or nicer) than the ones in the Onyx, but it's unlikely that you can make it that sunny and bright, because an older building has smaller window apertures, due to the window technology at the time.

ali r.
DG Neary Realty

What's the update on this building? I heard there was some sort of lawsuit....any recent buyers care to share their experiences.

Also, why are they having such a hard time with the retail space....I think it looks pretty nice.

There've been lots of lawsuits. Here's the Summons and Complaint for what seems to be the main one: https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=X_PLUS_7VmJBg9XpMI5uRpwXXdQ==&system=prod

As of Friday, there've been 145 other documents filed. To see those, go to eCourts at http://iapps.courts.state.ny.us/webcivil/FCASSearch?param=I and search for index 114230/2010.

Re: the retail space, one of the suits was over the sponsor trying to combine the Onyx's retail space with the building next door. The condo board objected to a huge hole being cut in the wall between. I can't tell where that suit's going; way too much to read. The condo's financials will include convenient summaries and status of all the suits.

Thanks NWT! This is very helpful. Looks like a case study involving "Terrible Towers". I cannot believe that folks with big reputations like Bronfman and KBF would be involved in this much bad behavior. Goes to show you what happens when the economy heads south.

Any idea if these problems will be ongoing or if they are resolved?

The case continues. As of last week there're about 300 documents to peruse, if you've got the time.

Wow...talk about a nightmare...

One of the cases looks to have been finalized and the judge ruled in favor of the condo. One lawsuit left. Prices should start to shoot up if the lawsuites get wrapped up.

Shooting up may be overstating it a bit... Virtually every resale to date has been at a loss.

The only "shooting up" I know of is done by the the crack and heroin addicts in the never rented commercial space.

Ahhh, MMC285, but there is a tenant in the commercial space - it's a pop-up Halloween costume shop. It's purple, orange, and tackorific, and if I were an owner, I'd be aghast and livid.

This is such a delayed reaction and I am not really adding anything substantive here, but I just wanted to say that the post by Ali R. here (below) may have been one of the best discussion entries I have read on SE. Wow!!! If I am selling/buying in the future, I'd definitely come to somebody like her--rational, courteous, and well informed.

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I agree with KW's argument that it's easy to replace a cheap pre-existing kitchen, but one reason new condo buyers like modern construction is that it has features that CAN'T be duplicated by renovating an older property.

For example, many very pretty prewars won't allow in-unit washer/dryers, because the plumbing can't cope. A broader example is the floor-to-ceiling windows in many new condos -- you can renovate a prewar kitchen to be as nice (or nicer) than the ones in the Onyx, but it's unlikely that you can make it that sunny and bright, because an older building has smaller window apertures, due to the window technology at the time.

ali r.
DG Neary Realty