Some investors hoping to run a familiar playbook with rent-stabilized apartment buildings — raise rents to boost income when units become empty — have recently come up short.
Rules the state passed in 2019 to protect tenants against rent surges also made it harder for landlords to deregulate units, and banks have responded by limiting loans for multifamily deals, essentially locking up the market, developers say.
But the recent sale of two walk-ups on the Upper West Side suggests demand for rentals is far from dead. In May, Checo Acquisitions, a two-year-old firm focused on local deals, snapped up a pair of buildings that contain some rent-regulated units, 472 and 474 Columbus Ave., for $14.5 million, with JPMorgan Chase providing $9.4 million in debt.
“Real estate markets move much more slowly than stock markets, and it took years for investors to understand the kinds of returns they could get,” said Aziz Syed, a Checo vice president. “But investors are starting to have an appetite again.”
The new market might also benefit from sellers adjusting their expectations. Pre-2019, properties like the Columbus Avenue rentals, which have a total of 36 units, might have fetched $1,000 per square foot, but they sold for slightly less than half that in the deal with Checo, which is an investing arm of the Chehebars, one of the prominent Syrian Jewish real estate families of Brooklyn.
The seller, Bruce Haley, appears to have paid $91,000 for the addresses in 1979 and had no mortgage on the properties, records show, so even at a reduced rate the upside for some landlords appears considerable. Haley, a Florida resident, could not be reached by press time.
Checo may not have been swayed by curb appeal. Brick, prewar and at five stories each, Nos. 472 and 474 are the kind of tenement-style buildings that pack neighborhoods from the Lower East Side to Harlem and hardly get a second glance. But they do offer a handful of retail spaces between them, all of which are occupied — one by Thyme & Tonic, a popular gluten-free restaurant. Though Covid did leave some hollowed-out storefronts on Columbus in its wake, Nos. 472 and 474 seem to have weathered the last few years well, undoubtedly a selling point, too.
But most critically, perhaps, the presence of rent-stabilized tenants who might stick around for decades (Checo would not say how many there are exactly) did not seem to faze a firm interested in long-term holds. “We love stabilized housing,” Syed said. “Affordable units are the backbone of the entire city.”
474 Columbus Ave.
This 5-story, 24-unit building, along with the adjacent and slightly skinnier 472 Columbus, a 5-story, 12-unit offering, traded in May for about $15 million. The buyer was Checo Acquisitions, a two-year-old offshoot of the firm Gideon Asset Management, which is owned by the Chehebar family, founder of the Brooklyn-based mid-market clothing chain Rainbow Shops. Brothers Gabriel and JoJo Chehebar are Checo’s co-founders and also run Gideon, which owns retail, residential and student housing properties across the county. Four businesses occupy the five storefronts lining the bases of Nos. 474 and 472. A year ago, a two-bedroom unit at No. 474 was asking $3,300 a month, according to StreetEasy. A one-bedroom in No. 472, meanwhile, sought $2,500 around the same time. But both buildings also have rent-stabilized units that likely don’t change hands very often. Considered a tough place to live in the 1940s and 1950s, the Columbus Avenue corridor later rebounded as part of the urban revival that targeted historic neighborhoods like the Upper West Side in the 1970s and 1980s. Today, small ethnic restaurants and mom-and-pop shops fill out the block, which since 1990 has enjoyed the protection of being in an historic district.
470 Columbus Ave.
For years the Schneider family owned this unusually large 50-by-100-foot site, which formerly contained a three-story building with a series of restaurants on its ground floor. In 2004 developer Frederick Rudd purchased the property for $7.2 million before unloading it about a decade later for $16 million to a team made up of development firm The Roe Corp., Isaac Jemal and Ralph Braha, public records show. Today the site has sprouted a stylish 9-story condo called Charlotte of the Upper West Side (named for the daughter of Roe principal John Roe) that promises cutting-edge passive house technology — essentially, thick insulation and powerful ventilation systems to limit energy waste. But the project, which initially expected $93 million in sales for its seven apartments and two retail spaces, seems to have struggled to sell units since its 2021 launch. No condos have yet closed, despite the fact that the building has had a full certificate of occupancy, which allows move-ins, since January. Some homes have also experienced major discounts. Unit No. 3, a four-bedroom, was asking $10.7 million three years ago but now seeks $7.5 million, according to StreetEasy. But a project spokeswoman said that several units are in contract.
100 W. 84th St.
Considered among the city’s most genteel enclaves today, the Upper West Side was actually once considered rough, and perhaps no block was more checkered than West 84th between Columbus and Amsterdam avenues, as hard as it may be to believe today. The New York Times described the street in 1961 as teeming with “drunkeness,” “narcotics addiction” and “despair,” among other problems, on the occasion of a 400-person brawl. (But the “troubled” area actually stretched from West 79th to West 86th streets and from Central Park West to Riverside Drive, the article said.) The block’s fate was sealed by the early ’60s, however, when Mayor Robert Wagner condemned six buildings on West 84th and 15 structures on West 85th to create a massive L-shaped site for Public School 9, which opened in 1965 in a new blue-brick-lined home. Today called the Sarah Anderson School, the pre-kindergarten to fifth grade-teaching institution, which has an enrollment of about 470, is considered one of Manhattan’s best. Niche, a school ranking service, gives it an A grade.
475 Columbus Ave.
A five-story prewar red-brick tenement-style building like so many on Columbus, this 23-unit offering appears to have been owned for years in part by Arthur Leeds, an Upper West Side developer whose holdings also once included the iconic Astor Court complex at West 89th and Broadway that went co-op in 1985. Today known as Leeds Associates, the firm is helmed by Stacey Shurgin, a developer who has interests beyond the city’s borders. In 2022 Shurgin proposed a 147-acre resort complex called Iron Star on farmland she owns in upstate Ancram, New York, though she later scaled back the plan to about a quarter of the size as neighbors revolted. At No. 475 a studio with a non-working fireplace that was last listed for about $2,700 found a taker this month. The ground floor of the corner building is home to an Italian eatery, Tarallucci e Vino Upper West Side, that has occupied the berth for years.
471 Columbus Ave.
Zingone Bros., the small grocery here, may be a dependable place for fresh tomatoes, broccoli and lemons. But the 25-foot-wide storefront, a plain Jane among natty cafes on the street, also serves as a window into the past. In 1927, Domenico and Vincenzo Zingone opened a fruit and vegetable stand in the neighborhood after emigrating from Italy’s Amalfi Coast and later relocated their business in 1935 to No. 471. For many years, No. 471 focused on vegetables while the Zingones sold fruit out of nearby 483 Columbus. But the family seems to have combined both operations under one roof after Ralph and Nicholas Zingone bought No. 471 in 1975 for about $15,000 (the equivalent of $90,000 today), according to the city register. Upstairs in the 5-story walk-up building are 12 apartments, records show. The most recent to turn over was in 2021, when a two-bedroom that was last listed at about $1,900 a month found a renter.
493 Columbus Ave.
The life span of this mixed-use brick building resembles so many others in the neighborhood. Built as a rental, it later operated as a single-room occupancy hotel before being converted into a co-op, a strategy often deployed in the 1980s in response to restrictive rent-stabilization laws. Indeed, by selling off at least some apartments, landlords could create new income streams for their old multifamily buildings. Leading the charge for hundreds of these types of conversions in the era was “king of co-ops” developer Francis Greenburger. In 1978 he bought No. 493 for about $43,000 and incorporated the 29-unit walk-up as a co-op in 1985, according to the city register. (The building’s residential portion uses the address 66 W. 84th St.) But like with many conversions, returns can be realized at a slow pace, as units are often only sold after longtime tenants leave, which can take decades. Records indicate that Greenburger, now chairman of the firm Time Equities, owned an apartment there, a two-bedroom on the second floor, until 2015, when he sold it for $747,000. Time Equities also continues to control the building’s handful of retail spaces, one of which has contained an outpost of the French wine bar chain Vin Sur Vingt since 2016. The 1,400-square-foot corner berth that once offered a hair salon has been vacant for five years but is supposed to welcome a tanning salon this fall.
71 W. 83rd St.
Single-room occupancy hotels, where tenants have their own small bedrooms but share baths with hallmates, used to be a vital source of low-cost housing for an area once considered seedy. The arch-windowed 1884 Romanesque building at this site was one of them, packing 96 units across its five stories before becoming a 12-unit co-op in 1982, according to brokers’ accounts. Based on deeds and news clips, the landlords who steered the transition were New Jersey-based Ralph Miller and his son Richard Miller, who bought No. 71 in 1980 for $77,000. The Millers were known for repurposing other SROs at a time when they were falling out of favor over perceptions of unsanitary conditions and crime. In the same era, the family snapped up the former Stratton Hotel at 342 W. 85th St., turning an 85-unit dwelling into a 22-unit condo. Units there today fetch $1 million or more. Meanwhile, a one-bedroom at No. 71 that was last listed for $1.1 million is now in contract, according to StreetEasy.
C. J. Hughes , 2024-06-04 12:03:04
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