condos

Architecture review: Tootsie Roll conversion brings welcome change to Soho

DDG’s 325 West Broadway will bring condos to former chocolate factory

March 21, 2013 03:30PM
By James Gardner

325 West Broadway project rendering

A particularly ugly part of West Broadway in Soho will soon become unimaginably better. The best thing that can be said for the existing structure at 325 West Broadway, at Grand Street, is that in the days when things were still manufactured in New York City it used to be a factory that produced Tootsie Rolls — those delicious, caramelized confections that we all remember from our younger days.

Now I yield to no one in my reverence for Tootsie Rolls, but that does not obscure the fact that the drab and unadorned building from which so much joy once issued is itself an eyesore, confected out of bare, albeit vaguely caramel-colored, brick.

All of that is about to change: the development firm of DDG has gotten the go-ahead from the Landmarks Preservation Commission to tear down the factory and put up a luxury condominium. DDG revealed new renderings for the project earlier this month. Standing nine stories plus a rooftop penthouse level, the building will have seven units ranging from 3,000 to 6,000 square feet.

The planned building, designed by DDG’s in-house architect Peter Guthrie, consists of a cubic structure clad in a pristine glass curtain wall, covered in a cast aluminum façade screen, with an elegant glass façade at street level, given over to retail and to the building’s lobby, the renderings show. (Beyhan Karahan Architects & Associates designed an earlier plan for the project.)

The results, to be completed in 2015, will look especially good when viewed beside the drab 19th century pile to its left, which could also profit from the strenuous ministrations of a developer.

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A look at buyers and sellers

A look at buyers and sellers

A snapshot of how buyers and sellers are reacting to the bleak economy — and to each other

 

 By Lauren Elkies

The bleak economy and credit crunch have claimed their share of victims in the New York City real estate world, but under the surface they have also shifted the foundations that buyers and sellers became accustomed to when the market was peaking.

This month, The Real Deal offers a series of stories about how buyers and sellers in the five boroughs and in the surrounding suburbs are dealing with one another and with the new financial terrain a little over a year into the crunch.

While prices have softened in some neighborhoods, first-time buyers are having more trouble than ever securing mortgages and getting a piece of the action (see Amid mortgage woes, first-time buyers seek solutions).

As their purchasing power has decreased, the pace of sales of the smaller units they tend to buy has slowed, creating a pileup of inventory. In Manhattan, there has been a sharp drop in sales of studios and one-bedrooms this year.

Meanwhile, some buyers fear more foreclosures could result in a growing number of vacant buildings, particularly in fringe areas of the city, which could contribute to an uptick in crime (see Watching for broken windows).

Experts weigh in on whether the so-called “broken windows theory,” which suggests that crime increases in areas of neglect, will play out in places like Crown Heights, Bedford-Stuyvesant, Bushwick and other neighborhoods with high foreclosures rates. Crime, of course, can put a damper on the appeal of a neighborhood and depress prices, driving away potential buyers.

In more prime areas, foreign buyers, who have been capitalizing on the weak dollar and propping up sales activity in the city, are now starting to pull back. As the dollar has started to rebound (at least a little), brokers say those with primary addresses in other countries are finally starting to hesitate and wait for deeper price cuts (see Fewer foreign clients buying).

On the seller side, market conditions and anxiety about the economy are causing some to drop asking prices to increase their chances of a sale, and prompting others to take their listings off the market altogether and wait until the market swings back (see Sellers feeling the pressure).

Even buildings are being put through the wringer. Co-ops have long put potential buyers through a rigorous board approval process. But now, lenders are turning the tables on them and more closely scrutinizing their books.

And, whether at a co-op or condo, gentrification continues to cause tension between existing board members and new residents, especially when the newbies push for expensive cosmetic upgrades for the building (see New buyers clashing with the condo board).

In the Financial District, the credit crunch has translated into fewer buyers at open houses (see Open house traffic hits wall in Financial District). And in the South Bronx, it has put activity on hold. The difficulty in securing cash has made it harder for small investors to buy into the area and stymied new residential development and rehabs there (see South Bronx buzz fizzles).

Beyond New York City, in suburbs like Westchester and Nassau and Fairfield counties, foreclosures on the rise are helping depress the overall market for sellers (see New York City’s suburbs slip).

And in parts of New Jersey and Long Island, there’s a real estate domino effect taking hold for so-called “trade ups” (see Trading up slows down).

Experts told The Real Deal that some sellers looking to unload their “starter homes” are out of luck, in large part because the buyers they need are unable to secure mortgages. And, until they pull their equity out of their homes, they don’t have the money to become buyers themselves.

Prices come down to help move new projects

Condos on the chopping block

 

 By Lauren Elkies

As sales have slowed and inventory has grown, developers are clamoring to move new development condo units, many by adjusting prices.

Price cuts are outpacing price increases, and prices appear to be falling on the whole in the two most active boroughs for development, Manhattan and Brooklyn, particularly in Harlem and much of Brooklyn.

The Real Deal compiled a project-by-project and neighborhood-by-neighborhood breakdown of price changes among listings where there were price fluctuations during the past 90 days. Data was provided by StreetEasy, the home listing and data Web site. Listings excluded resales.
The data showed that 54 percent of Manhattan listings that saw a change in price had dropped their prices in the three months, and 64 percent of Brooklyn properties that had fluctuating prices cut theirs.

Although the actual average price changes in Manhattan were about three-and-a-half times more than the changes in Brooklyn, where there are more fringe neighborhoods and sales prices are lower, the average net price change was comparable at -$15,362 in Manhattan and -$14,516 in Brooklyn.
While the data show some price drops, Andrew Gerringer, managing director of Prudential Douglas Elliman’s development marketing group, said that the developers he is working with are negotiating, but not by not slashing prices.

“Developers are offering brokers more commission and paying closing costs,” he told The Real Deal.

Although not all brokers readily acknowledge developers are adjusting prices, and the StreetEasy research is limited, (because it only covers a three-month period and the number of price cuts need to be considered relative to the initial prices), the data provide a glimpse into how market conditions are affecting pricing. The data was also impacted by big price cuts at a single development, which could affect totals for an entire neighborhood.

MANHATTAN

Manhattan held up fairly well over the three months ending May 15 with slightly more condo price decreases than increases. There were 178 increases with an average change of $146,483 and 208 decreases with an average change of $153,864.

Of all submarkets in Manhattan — Downtown, Midtown, Upper West Side, Upper East Side and Upper Manhattan — only the Upper East Side, the most expensive market in terms of the average price per listing ($4.1 million), was in the black in terms of a net price increase ($106,436), meaning that on the whole, developers raised their prices more than they lowered them, StreetEasy determined. Percentage-wise, the Silk Stocking District also had the most price increases (27) relative to decreases (11).

“The Upper East Side, on a valuation basis, has not spiked as much as other popular and trendy neighborhoods, so it has a little more headroom for pricing,” said Jorden Tepper, executive director of sales at Century 21 NY Metro Fine Homes & Estates.

Downtown Manhattan, which has a new development inventory that almost matches the size of all the other submarkets combined, saw the most price increases of all submarkets with 88, despite concerns about an inventory oversupply, particularly in the Financial District. A couple of projects contributed to the steep total, including River Ridge condos with 13 increases (and three decreases) and Tribeca Summit, also with 13 increases (and three decreases). As a result of a few large markdowns, the average net change, however, was -$18,128.

Upper Manhattan fared the worst in terms of the number of price reductions with 75, compared to only 14 increases. Harlem had 52 price decreases and six price increases.

“People who wanted to be on the Upper West Side were getting priced out and went farther north,” said Sofia Kim, vice president of research at StreetEasy. So developers started building aggressively to meet demand. At the same time, current market conditions are putting pressure on prices in fringe outlying neighborhoods including Harlem.

“All fringe neighborhoods are suffering,” said Darren Sukenik, an executive vice president at Prudential Douglas Elliman. “These fringe neighborhoods were successful in an inappropriately manic-driven market two years ago.”

Of 29 Manhattan neighborhoods, more than half saw negative net changes.

After Harlem, Chelsea had the most price drops with 18.

“With Tribeca and Soho’s stunning condo lofts coming to market month after month, Chelsea no longer has the allure it once did,” said Jeffrey Tanenbaum, a vice president at Barak Realty. “Not to say Chelsea is passé, but it no longer is the most exciting flavor of the month.” Tribeca saw 19 price increases and five price decreases. Soho was split with four increases and four decreases.

But in a testament to the allure of a good project, there were 22 price increases in Chelsea.

The greatest price cuts Downtown were in the West Village, where three changes brought the average net price change to -$2.2 million. The price decreases included the $2.5 million price slashing of Julian Schnabel’s Palazzo Chupi’s duplex from $32 million to $29.5 million and the $4 million cut in price at Hudson Blue at 423 West Street.

BROOKLYN

The majority of Brooklyn’s 23 neighborhoods saw overall price drops. Prices were slashed at 183 units with an average price decrease of $42,195. There were 103 listing increases averaging $34,660.

In the popular and increasingly saturated new condo market in Williamsburg, where the market varies by area, there are bound to be price changes.

“Williamsburg is definitely a hotbed of activity so you’re going to have more competing developments,” said Kim of StreetEasy.

Williamsburg was home to the greatest number of units with price changes (104). Developers raised prices 64 times and lowered them 40 times. The majority of the price increases were at Northside Piers. Without that project, the area would have done poorly with 40 price decreases and only 11 increases.

Northside Piers, a Toll Brothers project marketed by Halstead Property, had 53 price increases — four units at the project had as many as four price changes — in the three months, with an average price change of $40,302, StreetEasy data indicate. Although increases might seem strange considering Toll Brothers reported its eighth-consecutive quarterly decline in revenue last month and might want to sell units quickly at lower prices, prices were too low from the start, said a broker who has worked on the project.

“Northside was the first tower ever in Williamsburg,” said William Ross, a director in new development marketing at Halstead, and former director of sales for the Brooklyn office. As such, Ross said the team did not how to accurately price the units. “We did the best we could,” he said.

The majority of the 180 units in the building have had price adjustments, Ross said. Last April, Halstead reduced the prices of 35 units in the building, all large units with unimpressive views, by an average of 12 to 15 percent, or $65,000 each. “We found out the larger units that don’t have views didn’t sell until we did the decrease,” Ross said.

The numbers for Clinton Hill (24 price reductions and three increases) and Park Slope (18 decreases and zero increases) were pretty weak, but some brokers attribute the price drops to developers trying to push the neighborhood boundaries.

As the boundaries of Clinton Hill and Park Slope expand farther away from main transportation lines, so do price reductions. Homes in the heart of Park Slope and along brownstone row in Clinton Hill are selling well, said Tom Le, vice president and associate broker at the Corcoran Group in the Williamsburg office. But projects on the outskirts are on shakier ground. Too many developers do not create the right product in the right location, Le said.