Home buyers pioneer new neighborhoods

Despite historically high prices and lack of supply, residential home buyers continue to rind new ways to find value in Manhattan.

Low interest rates and a rising desire to live in an urban environment has created a new type of buyer, one who is willing to pioneer new areas, thereby starting a transformation and blurring previous neighborhood boundaries.

Developers are seizing opportunities to build or launch conversions in areas formerly considered less desirable for families, like the Lower East Side, the East Village and even Madison Square, located between Chelsea and Murray Hill.

In fact, anchor buildings such as 240 E. 10th St. have paved the way for newly-built 235 E. Second St., which offers comforts and amenities previously found only in established neighborhoods. Such buildings are blazing trails for luxury living for buyers in new areas. These anchor buildings are creating more than luxury homes for forward-thinking buyers; they are becoming the nucleus around which neighborhoods are built.

With extensive online choices for delivery of everything from basic goods to entertainment, new buyers can forego the traditional grocery or movie rental store. And, it is only a matter of time before entrepreneurs heed the demand of residents and establish local businesses to serve residents in these emerging neighborhoods.

Development in the East Village has seen tremendous growth recently, and 240 E. 10th St. was one of the first buildings to set this trend. Voted one of the top 10 condos in the East Village, all 33 units sold for higher-than-expected prices when the property was built in 2001. Although sale prices equaling $600 per square foot were quite notable in 2001, the resale prices of up to $1,100 per square foot that owners are commanding today have really catapulted the area into a new league.

The success of 240 E. 10th St. prompted a developer to contact me about the Lower East Side, an area mostly known for bargain shopping and residential buildings in bad repair. Today, 235 E. Second St., a five-unit, newly-constructed boutique building, is expected to fetch sale prices in the high $700s per square foot. Newly constructed, loft-style one-bedroom homes offering private outdoor space and a washer and dryer in each unit are projected to sell between mid-$500,000 and mid-$700,000. These numbers, virtually impossible to achieve a few years ago, are now the norm in what has become a rapidly developing residential area. It is also a testament to the way in which the successful development of the East Village has affected areas around it, even as far east as Avenue D.

Luxury condominium 50 Madison, a magnificent five-stop/ Italianate palazzo originally designed by Renwick, Aspinwall & Owen in 1896, is currently undergoing expansion into an 11-story, nine-unit, 30,000-square-foot residential building.

The property offers the first full-floor residences constructed on Madison Square Park, one of New York's original residential enclaves. This project epitomizes the shift in buyers' and investors' strategy when purchasing a home.

Slated for completion in Spring 2005 and currently selling at more than $1,000 per square foot, buyers are attracted to the extraordinary park virtually on the building's doorstep, a valuable and scarce asset in Manhattan. This exceptional project is the foundation upon which an entire neighborhood will be developed. Currently, 600,000 square feet of residential space are slated for conversion in the area between 26th and 34thstreets and Park and Fifth avenues, known as Madison Square. Buyers who are frustrated by the lack of property available for sale in established areas of the city are rapidly investing in areas undergoing dramatic transformations that will change the face of Manhattan. The impact of new anchor buildings is extraordinary, affecting everything from retail outlets to schools.

As the trend continues, formerly commercial and industrial neighborhoods will continue their evolution into mixed-use residential neighborhoods and the previous geography of Manhattan, which included pockets of residential neighborhoods, will become a much more integrated residential center comprised of individual neighborhoods.

COPYRIGHT 2004 Hagedorn Publication
COPYRIGHT 2004 Gale Group