Battery Park as an investment property

There are huge family populations down there.

The risk is in the abnormally high monthly carrying costs.

So that means the transaction costs of doing rentals are higher for the owner than would be ideal.

High carrying costs ... at your own risk.

The biggest risk in BPC is not the credit crisis but the land lease it is on which is up for renewal in 2011/2012. The lease terms states that it will go up to fair market value. Since the present land lease rent was based on pre-real estate boom prices, it will go up ALOT. In most buildings, the already high pilot (cc/taxes) will double. Most real estate attorneys overlook this or simply miss it when they perform due diligence for their clients but the good ones catch it.

Since the lease is with the city, there is a huge movement by the owners there to try and have the city ease up on the increase because it will be an undue hardship to many of the owners. But barring some sympathy from the city, there will be a substantial increase as the land lease terms are very specific.

Brokers won't tell you this and sloppy real estate attorneys will miss it but now you know.

Why are monthlies so high in BPC?! It's pretty isolated from the rest of Manhattan, no subways & none of the boutique charm of Tribeca.

This is a family neighborhood, a suburb within the city. The walk to ANY subway is just as short as any neighborhood, unless you have a subway outside your apt. The schools are very good. We have more park per sf than any other area in the city with the exception of Central Park or Stuy Town and Cooper Village. Living is wonderful here, quiet and clean. The Esplanade and the Marina and for me a view of the River and New Jersey which is quite wonderful. Walk to Tribeca in 10 easy minutes, take the train or a cheap cab to Meat packing. I take the N/R or 4/5 to the village and Union Square. As far as the land lease, let's not forget that many of the owners are working to keep them low. This is without a doubt the friendliest neighborhood I have ever lived in, and I have lived in many neighborhoods in NYC. It is nice to come home to quiet, especially after partying all night. Many internationals are drawn to this area too because of this. I will be purchasing again soon.

OK I see the appeal for certain people, but what about the high monthlies? Nobody likes that.

1. It's a good place to rent because the rent is pretty "gentle" and the area is just lovely.

2. It's a good place to own if you can afford the monthlies.

3. It's impossible to make significant money renting an investment unit out because of the relatively low rent and outrageous monthlies.

BigApple, nicely stated.

ali r.
{downtown broker}

> Why are monthlies so high in BPC?! It's pretty isolated from the rest of Manhattan, no subways &
> none of the boutique charm of Tribeca.

New construction.... ALWAYS much higher assessments than old co-ops, which have retarded tax rules to help them.

> This is a family neighborhood, a suburb within the city.

Or a suburb off the edge of the city. I think its pretty significant that its at one end of Manhattan, and then slightly separated.

> The walk to ANY subway is just as short as any neighborhood, unless you have a subway outside your
> apt.

Or don't have to cross a highway to get there. The WSH is no small affair, especially since you have to go up and over. And, unless you live right next to it, you could be talking a bunch of blocks to get to where the bridge is, cross is, and then walk to the subway. I'd put it in the lower 25% of subway access neighborhoods south of 96.

> The schools are very good.

Agreed.

> We have more park per sf than any other area in the city with the exception of Central Park or Stuy
> Town and Cooper Village.

I have to admit, I've never heard park per sf ever used before.. .its a bit of a stretch to me. If you live near a good, nice park, cool. That it goes 3 neighborhoods over doesn't make much of a difference to me. The promenade is nice, but I actually think there isn't much in terms of recreational areas. Riverside uptown or even central park (and definitely prospect) have a lot more things. BPC is a a glorified promenade.

> Living is wonderful here, quiet and clean.

One man's quite is another man's kansas. I think thats part of the problem... no real life there. Hey, some folks like it, but then folks like New Jersey, too.

> It is nice to come home to quiet, especially after partying all night. Many internationals are drawn
> to this area too because of this. I will be purchasing again soon.

If this is about finding a neighborhood that you have to leave to socialize, and then coming home to quiet, I'd take cobble hill or the upper east side way before this. At least you get some character.

To me, Battery Park City is like being in some new development area in Boston or Chicago. I don't consider it really Manhattan, and if you're going for "compromise", I think there are much better compromise neighborhoods.

What are the details of the land lease agreements?

I've seen mention that the "city" is on a master land lease which expires in 2069. Individual buildings are reevaluated every 15 years and the PILOT is increased accordingly for those buildings. Since some buildings were constructed in the 80s, shouldn't they have been renegotiated already? What about the new constructions?

Agreed, it is difficult to judge the future of your investment with such renewals looming...

The master lease expires 2069 BUT the terms of the lease allows for the land lease rent for the entire BPC area to be re-evaluated in 2011 to fair market value. It will go up substantially for all buildings except maybe for the more recently converted or built ones as the market value of those buildings would have been closer to what it is today. That is why their PILOT already tends to be higher. The older the building, the higher the fair market increase because of the huge run up in real estate prices over the years. Am I explaining it clearly? It's a bit confusing.

The aggressive movement by the existing owners to fight this increase based on undue hardship is an indication of how bad the rent increase will be. But with the city in a fiscal deficit given the current economy, I don't know how generous they will be. The city has the law on their side. It was plainly stated in the master lease. I'm not sure what, if any, legal argument the existing owners can give. People who purchased there should have known beforehand that any real estate gains, in essence, would have been shared with the city via the land lease. The building itself does not go up in value, in fact, it depreciates. It is the land that is increasing in value. So the city benefits to a large degree - not the owner of the condo unit. Hence, speaking purely from an investment prespective, it is NOT a good investment as you do not have 100% participation in any gains. In theory, once the cc/taxes (PILOT) doubles (as is expected in all the buildings), the re-sale value will go down for the condo owners accordingly. But values should have never ran up that much in the area as the anticipated increase should have been built into the price. Unfortunately, it did though as some buyers were unaware and did not have brokers or lawyers to tell them this. I was one such buyer until I ran across the lease terms in the annual financial statements given to the owners. It was a red flag and so I investigated it further. I was shocked at what I found and so several years ago, I put my condo on the market. I sold it and thought to myself that I had dodged a bullet.

BigApple,
You are incorrect....only three buildings in BPC are being re-evaluated in 2009, not the entire BPC area.

Pilot tax is very unstable. But they do the best job I have ever seen in up keeping.

Prada,

I did an enormous amount of research, spoke to 2 attorneys and BPC brokers about the terms of the lease before I sold my apt. That is the information I came up with. This was several years ago though so not sure if there are any subsequent amendments. Hence, I would double check that only 3 buildings in BPC will be re-evaluated.

Bigapple thank you for all your extensive input here - I think you have just saved me from making a very big investment mistake here - I had thought unit rates were lower due to economic crisis hitting harder in this specific area. We had looked at 4 different units here and no broker even hinted at sort of information you have just so kindly provided. Thank you very much - time to shift search area here I"d say

Are there any updated information about investor property in Battery park city? Lots of buildings are investor friendly without too much move in / out fee. Even though land leasing is a big concern.

Last time I looked, this piece was citing 50 West Street, with the 20-foot-high curved-glass living rooms, as one of two towers "driv[ing] closings" into "double digit percentage increases in all pricing metrics" for the Financial District:

https://rew-online.com/2017/07/high-end-new-york-homes-market-showing-signs-of-life-as-average-price-tops-9-2m/

But many of its units had, then, sat unsold for three years.