Page 6 - The NY Cooperator September 2019

6 THE COOPERATOR — SEPTEMBER 2019 COOPERATOR.COM Despite some fits and starts, the process of converting 1,000 rooms at the Waldorf Astoria hotel into 375 condo units is nearly complete – and Chinese developer Anbang announced on June 11th that it will be launching sales at the property this coming fall, according to Curbed. Douglas Elliman Real Estate will handle sales domestically, while Knight Frank Residential will work to drum up interest overseas. Anbang is currently under the control of the Chinese government after falling heavily in debt, and as recently as August of 2018 had postponed its Waldorf opening until 2021. But de- spite a market currently loaded with more sellers than buyers, things appear to be ramping back up, with the developer launching a somewhat cryptic new website along with a formal name for the project: The Towers. As The Real Deal notes, in addition to a landscape overrun with luxury condos languishing on the market, Anbang will have to contend with increasingly hostile U.S.-China trade rela- tions. Nevertheless, brokers anticipate prices of at least $3,500 per square-foot at The Towers, which is comparably high for Manhattan, indicating that the iconic Waldorf name is still con- sidered a value-add. In addition to the condos, the Waldorf will retain 350 newly-renovated hotel rooms, as well as restored interiors courtesy of project architect Skidmore, Owings & Merrill. Renderings were released by the firm back in 2017. Acting Locally In other Waldorf news, as reported by amNY, Manhattan’s Community Board 5 is attempt- ing to hold Anbang’s proverbial feet to the fire on a measure requiring that developers convert- ing commercial properties to residential provide residents open access to 50% of a building’s roof. Anbang has asserted that since it is not converting the entirety of the Waldorf to condos, the 50% requirement does not apply – and the firm has thus far only reserved a little over 20% of the roof space for recreational use in its plans. When the community board asked Anbang to instead make a donation to the Central Park Conservancy as a gesture of compromise, the developer refused. The Department of City Planning has yet to weigh in regarding Anbang’s development ap- plication, which is currently under review. But there is never a dull moment with this project and its underwriters, and further updates are sure to follow. n Mike Odenthal is a staff writer at The Cooperator Cooperator.com From The viability of the 421-a tax abatement was up in the air last month as the New York State Senate passed sweeping reforms via a rent regulation bill which has caused quite a stir in the real estate community. After pushback from developers – including the Durst Organization, which dan- gled the possibility of scrapping its highly-anticipated Halletts Point waterfront de- velopment in Astoria, according to Commercial Observer – the Senate hastily agreed upon a version of the bill that would retain the benefits allowed developers by 421-a. Under the abatement – also known as the Affordable New York Tax exemption – developers agree to both include a substantial percentage of affordable housing units in any new residential project and offer extremely competitive wages for union work- ers involved in the construction thereof. For their trouble, the developers would later be allowed to remove vacant units from rent stabilization once the going rent exceeds $2,744. As originally written, the new bill would have applied permanent rent regulation status to buildings that had received the 421-a break. But after the revisions, units that meet the deregulation threshold are still eligible for a rent hike. Breaking Away While this may assuage developers’ concerns for the time being, it seems to be a very temporary fix, as the 421-a abatement is set to expire this year or next. As The Co- operator reported in March, there had already been a wave of New York homeowners fleeing the city for Florida in the wake of increased taxation brought on by the Trump administration’s revised tax legislation, and this may push still more residents to seek breaks elsewhere. According to real estate website StreetEasy via a sampling of five buildings sched- uled to lose their abatement in the near future, more units are being listed for sale in those properties than at addresses not affected by the 421-a expiration. Grant Long, se- nior economist with StreetEasy, said via Crain’s New York Business : “People aren’t will- ing to pay the same amount for something that’s going to cost them more on a monthly basis. Figuring out what the right price is, given the expiring abatements, is going to be a challenge over time.” And in Bloomberg , Alon Chadad of luxury brokerage firm Blu Real Estate notes that “the difference between a building with a tax abatement and a building without is probably an additional $400,000 on the purchase price.” Given that the city is already facing a soft market for luxury apartment sales, any disincentive to purchase a condo can only exacerbate a purchasing slump. It remains to be seen what can turn things around for developers and owners of high-end residen- tial. n Mike Odenthal is a staff writer at The Cooperator. 421-a Tax Abatement Spared Via Revised Rent Regulation Bill Developers to Retain Tax Break for Affordable Housing in New Construction – For Now BY MIKE ODENTHAL The Bronx may not be known as New York City’s most glamorous borough, but a drive through the city’s northernmost section reveals signs of renewal and de- velopment that would’ve been almost unthinkable just a few years ago. From new apartment construction along the Grand Concourse across from Poe Park, to the residential conversion of existing loft buildings in Mott Haven, the number of cranes and sidewalk construction-site sheds point to big changes afoot. Curbed ran an ar- ticle online in July 2018 detailing 14 major construction projects either planned or underway south of the Cross Bronx Expressway, long considered to be the northern boundary of what was once derisively known as the ‘South Bronx.’ Rent, or Own? There has been some condominium development in the borough, explains Jason Gold, who leads the Bronx sales team for Ariel Property Advisors, a real estate in- vestment advisory and brokerage firm based in Manhattan. “There is 221 East 138th Street, which was built as condos, and is selling at $700-$750 per square-foot. An- other nearby condo project by Rosenberg Properties is slated to begin shortly.” The rest of the condominium market is in Riverdale, which, while technically still the Bronx, is not quite Bronx-Bronx, says Gold. Aside from those two projects, “Most of the new construction going on is for rentals,” he continues. “These new buildings will be for the most part at market rate. The developers are major players.” Gold says their entry into the market indicates a rising confidence in the Bronx as a market overall. That said, “The potential for condos in the Bronx is not there yet,” says Michael Wengroff, a former lender with several major banking institutions and a developer of affordable housing in the borough. “Gentrification has not arrived in the same way as it has in other boroughs. It always seems close, but it doesn’t quite get there.” The area around 138th Street, where the two condominium developments mentioned above are located, has been the most prone to gentrification, explains Wengroff. Another well-known condominium property in Mott Haven is Bronx Bricks, where sales began in 2007 – but again, the bulk of this new wave of residential development seems to be rental, rather than condo or co-op. What’s Happening in the Bronx Is the Condo Boom About to Cross the Harlem River? BY AJ SIDRANSKY Waldorf Condos to Hit Market This Fall Beijing-Based Developer Moves Ahead With Conversion BY MIKE ODENTHAL COOPERATOR.COM continued on page 7