How a Lone Tenant is Holding Up a $70 million Condo Deal in NYC

[iheartthed]

Originally Posted by Crawford

Right, and they will.

But the point is that the process is absurd and ridiculously inefficient, as it's driving up the cost of housing while reducing city revenues, for no public policy purpose.

Maybe. But this is a luxury development so I'm not really sympathetic to the developer in this particular case. Paying out a 7-figure settlement to him will barely be noticed in the budget.

[dchan]

Yes, 30-40+ units is a much more reasonable number than 11. I would wager that number would be an even higher, since there's a fairly limited market for expensive 2000-3000 SF apartments (that's 3-4+ bedrooms). I would figure there would be some 600-900 SF one bedrooms or studios, plus some 1000-1500 SF two bedrooms available as well.

[dchan]

Originally Posted by Crawford

That's not the choice. The choice is between an empty building with one holdout generating virtually no revenue and a full building of families generating tens of millions in revenue. The city can build SROs on cheaper land, but of course the same people advocating for these absurd tenant laws simultaneously oppose new housing.

I'm pretty sure new SROs aren't legal, unless you're talking about a homeless shelter or other temporary housing. What have you heard about the development of new SROs for permanent residents?

My opinion is that we should explore many different options for housing residents, from micro units to SROs, to combat the housing issues in the city. The issue is that the amount of space we need for even a studio apartment is fairly enormous compared to apartments in places like Hong Kong or Singapore, and they require even more space if we need to comply with ADA regulations (which would mostly determine how big the bathroom and kitchens need to be in the apartment for wheelchair usage).

[Gantz]

Originally Posted by dchan

I'm pretty sure new SROs aren't legal, unless you're talking about a homeless shelter or other temporary housing. What have you heard about the development of new SROs for permanent residents?

My opinion is that we should explore many different options for housing residents, from micro units to SROs, to combat the housing issues in the city. The issue is that the amount of space we need for even a studio apartment is fairly enormous compared to apartments in places like Hong Kong or Singapore, and they require even more space if we need to comply with ADA regulations (which would mostly determine how big the bathroom and kitchens need to be in the apartment for wheelchair usage).

We could be doing so much more... unfortunately NIMBYs.
Smaller units, basement units, and the biggest of all, mixed use higher FAR zoning, especially near subway stations.

[lio45]

Originally Posted by Crawford

And it won't be $40 million units. This a very prime location, but not a $40 million apartment location.

At 150k square feet, definitely at least 30-40 units, even if extreme high end.

It's pretty mindblowing to think that if you have 40 units on a $80M site, then each condo owner owns $2M's worth of land.

That's high for a SFH, let alone for condos. (Probably typical for Manhattan, I just never thought about it.)

[lio45]

Originally Posted by Gantz

Where did you get this information?

Originally Posted by Crawford

Right, I'm also not understanding the 11 units claim.

The developer that bought the 128-unit building where there's the holdout dude is currently building a 13-story, 11-unit luxury building in the same neighborhood (edit: just looked it up, it's actually on the other side of Central Park).

The most likely scenario for the holdout site is a tower with a "similarly small number of units", which would mean ~40 units if the new building has 2x the footprint and 2x the number of stories as the one currently under construction nearby.

The Naftali Group has yet to file plans for its new condo project. However, the site could support a roughly 210-foot tower, not including potential height bonuses that the developer might get for including affordable units or making subway improvements, according to George M. Janes, a New York urban planner who has studied the local zoning.

On the corner of East 86th Street and Madison Avenue, Naftali is building a 210-foot, 13-story tower with commercial space and 11 condo units, including a quadruplex penthouse, according to city filings. Prices range from about $8.5 million to $40 million, according to public records.

The most likely scenario at West 84th Street is a complete demolition of the 128-unit rental building to make way for a condo tower with a similarly small number of units, Janes said. A spokesperson for the developer said it was “still reviewing options for the site.”

[Crawford]

Yeah, 86th/Madison is an A+ location. The Broadway site is an A- location, so prices will probably be about half. And units will be big, but not gigantic.

Also, the 86th/Madison building has a very small footprint relative to the Broadway site. So 30-40 units is probably a conservative count. Madison Ave. attracts master of the universe types, Broadway attracts merely rich locals. The Broadway location will be big with Jewish professionals with younger children, given all the good nearby schools and tons of Jewish amenities nearby (Manhattan JCC, lots of schools, synagogues and kosher places).

The 86th/Madison building already had a $67 milllion sale, as two of the penthouse units were combined.
https://www.mansionglobal.com/articl...on-01635959945

I doubt the Broadway penthouses will go for more than $10-$15 million.

[Crawford]

Here's a list of available units in a newer construction building on Broadway about 10 blocks north.

https://2505broadway.com/availability/

It's a cheaper location, so the prices are lower. But it's a similar building footprint and same zoning rules. And both buildings would attract the same types of families. And these units aren't huge. So maybe it will be more like a 50-100 unit building.

[Gantz]

The 86th/Madison building is only 1/3 the size and has commercial space on the first floor. It also has 12 units, not 11.

[Gantz]

Originally Posted by lio45

It's pretty mindblowing to think that if you have 40 units on a $80M site, then each condo owner owns $2M's worth of land.

That's high for a SFH, let alone for condos. (Probably typical for Manhattan, I just never thought about it.)

Its mostly air rights above the land. That is why if you want developers to build affordable housing (or cheaper housing in general), less restrictive zoning/higher FAR is important.

[dchan]

Originally Posted by Gantz

We could be doing so much more... unfortunately NIMBYs.
Smaller units, basement units, and the biggest of all, mixed use higher FAR zoning, especially near subway stations.

The so-called "basement units" are actually cellar units by definition (more than 50% of the floor's height is below grade level), and they are risky because they tend to lack adequate egress points. Usually, their only freely-accessible exit is the entrance door. Sometimes there is an exit going into the first floor, but this "exit" not only doesn't lead directly outdoors, but is often locked or blocked off by the 1st floor tenant.

In addition, we've seen how unsafe these cellar units are when there's a nor'easter (like the one coming tonight), especially if the building is located in a known flood zone.

FAR and zoning is an arcane set of rules that requires experience to understand and interpret to create the largest building possible for a given block & lot. But generally speaking, zoning restrictions exist in areas with dense amount of high rises in order to preserve accessible sunlight that would otherwise be blocked off if the city was composed of nothing but giant rectangular monoliths. The zoning text defines all sorts of ways to define how bulky a building can be, how far the setback must be from the street, and the shape that the building takes as it rises into the sky.

Perhaps zoning restrictions can be eased closer to transit hubs to encourage more building and higher density. But generally speaking, zoning exists to preserve quality of life in a neighborhood.

With that said, I support the building of smaller apartments. Generally speaking, people enjoy privacy and would prefer the tradeoff of the privacy of their own small unit vs. having more space but dealing with roommates.

[Gantz]

Originally Posted by dchan

The so-called "basement units" are actually cellar units by definition (more than 50% of the floor's height is below grade level), and they are risky because they tend to lack adequate egress points. Usually, their only freely-accessible exit is the entrance door. Sometimes there is an exit going into the first floor, but this "exit" not only doesn't lead directly outdoors, but is often locked or blocked off by the 1st floor tenant.

In addition, we've seen how unsafe these cellar units are when there's a nor'easter (like the one coming tonight), especially if the building is located in a known flood zone.

No, that is because a lot of these apartments are illegal now, so they lack adequate egress, flood and fire safety. If you legalize them and mandate proper safety exits, you'll have a different story. There are plenty that can be upgraded to follow all proper codes and regulations if permitted by the city, but aren't.

Originally Posted by dchan

But generally speaking, zoning restrictions exist in areas with dense amount of high rises in order to preserve accessible sunlight that would otherwise be blocked off if the city was composed of nothing but giant rectangular monoliths.

No, zoning restrictions in NYC exist in very low rise SFH neighborhoods, or low rise 2-3 storey neighborhoods. Nothing to do with sunlight either.

Originally Posted by dchan

Perhaps zoning restrictions can be eased closer to transit hubs to encourage more building and higher density. But generally speaking, zoning exists to preserve quality of life in a neighborhood.

This is demonstrably false though. Areas with much looser zoning/higher FAR/bigger build envelopes are considered the most expensive in the city. There are plenty of completely run down underdeveloped areas, even close to subway, that would really benefit from boosting density. Show me a cheap neighborhood with 10+ FAR zoning?

[dchan]

Originally Posted by Gantz

No, that is because a lot of these apartments are illegal now, so they lack adequate egress, flood and fire safety. If you legalize them and mandate proper safety exits, you'll have a different story. There are plenty that can be upgraded to follow all proper codes and regulations if permitted by the city, but aren't.

Yes and no. There would basically be no egress through the windows unless building owners dig an well around the grounds outside the window (which would allow full-sized windows to be installed). However, while these window wells can be easily built & accommodate in larger lots, NYC is full of houses in smaller lots that barely have any side yards whatsoever. And oftentimes, these cellar apartments can only be accessed from the back, which often can only be accessed through these side yards (this is especially true for semi-detached homes).

IMO, even if cellar apartments are legalized, the steps needed to legalize them properly from an egress as well as health & safety standpoint would be both cost and space prohibitive from many properties throughout NYC.

No, zoning restrictions in NYC exist in very low rise SFH neighborhoods, or low rise 2-3 storey neighborhoods. Nothing to do with sunlight either.

Yes, I am very aware that zoning restrictions exist everywhere in the city. I used to work at a small architectural firm, and zoning was always the first thing we tackled to see what could be built (although I was always rubbish at zoning analysis, but architecture isn't my field anyway).

But I am mainly speaking about dense high-rise neighborhoods. This is where zoning & FAR would affect how much sunlight can reach a street

This is demonstrably false though. Areas with much looser zoning/higher FAR/bigger build envelopes are considered the most expensive in the city. There are plenty of completely run down underdeveloped areas, even close to subway, that would really benefit from boosting density. Show me a cheap neighborhood with 10+ FAR zoning?

In terms of "quality of life", I am speaking only about the lack of sunlight that would occur if we built rectangular monoliths with no setbacks at street level or regular setbacks at certain heights. I do not mean the other aspects of "quality of life".

[lio45]

Originally Posted by Gantz

Its mostly air rights above the land.

That's pretty much always included in what we mean by land value, no? Land in Manhattan is worth a lot because you can build something 3D (i.e. into the "air rights") on it, and then sell or rent those spaces.

Land value is a direct factor of the possibilities it offers (location, size, zoning, etc.)

If I sell you a vacant lot in a given city, it includes not just the land but also the right to use the space directly above it.

Now, yes, I'm sure there are exceptions in "special" cities like NYC but normally, if you have land, that possession always includes the right to do something with the land that extends into the air space above it.

[Shawn]

Originally Posted by dchan

Yes and no.

True, Mr. Ozsu would normally not be entitled to such tenant protections as a renter of a non-stabilized apartment. And he is taking advantage of the rent relief program's protection to its maximum.

And it's true that the world has plenty of unemployed (or not - https://www.complex.com/pop-culture/...rent-28-months) who take advantage of NY's liberal tenant protection laws and courts to their maximum.

But it doesn't appear to be the case here, at least not to an extreme extent:
1. Mr. Ozsu was let go from his job due to the pandemic, and is now working. He is a long-time rent-paying resident of the building since 2006, and would have continued to pay the rent were it not for the pandemic shutdown in 2020.
2. Crawford mentions the fact that the city is losing property tax revenue from the potential condo development, all over one tenant holding out. But is that really an uneven tradeoff?

Think about it.

On the one hand, there is less revenue generated from the jobs created to design & construct this building, along with the tax revenue to be collected yearly from each condo.

On the other hand, there would only be 11 condo units in this building, many of which would likely be investment properties or pied-a-terres for the wealthy. And what is it replacing? A rental building with 128 units, occupied by working class people who now need to search for new apartments in a city with short housing supply.

So really, is the health of the city improved by the design/construction jobs, doorman/maintenance/building super jobs, and property tax revenue created by the new 11 story condo? Or would it be better with 128 apartment units being maintained within a city that has a housing shortage? You decide.

I don't know enough about NYC taxes to have a qualified opinion on most of this. My original beef is really with the lawyer, who I feel effectively specializes in incentivizing holdouts and collects $3 million+ a pop.

[mrnyc]

Originally Posted by Shawn

I don't know enough about NYC taxes to have a qualified opinion on most of this. My original beef is really with the lawyer, who I feel effectively specializes in incentivizing holdouts and collects $3 million+ a pop.

meh. developer lawyers who dig up any dirt or rules they can to get over on the city or get tenants out are no different.

[mrnyc]

Originally Posted by dchan

I'm pretty sure new SROs aren't legal, unless you're talking about a homeless shelter or other temporary housing. What have you heard about the development of new SROs for permanent residents?

My opinion is that we should explore many different options for housing residents, from micro units to SROs, to combat the housing issues in the city. The issue is that the amount of space we need for even a studio apartment is fairly enormous compared to apartments in places like Hong Kong or Singapore, and they require even more space if we need to comply with ADA regulations (which would mostly determine how big the bathroom and kitchens need to be in the apartment for wheelchair usage).

i certainly agree, but would reiterate that sro's were different options. actually they were a level above homeless shelters and the like, distasteful as they were to monitor and to have around. a big part of the homeless issues we have is because we have lost this important level of service. we need to bring these options back. and no the current use of unused hotel space is not the same as purpose built for these purposes. also, spread this stuff out instead of clumping it up in poor areas.

[lio45]

Originally Posted by Shawn

I don't know enough about NYC taxes to have a qualified opinion on most of this. My original beef is really with the lawyer, who I feel effectively specializes in incentivizing holdouts and collects $3 million+ a pop.

Oh, it's not just your "feeling". That lawyer is pretty shameless in confirming he specializes in incentivizing holdouts in order to collect outrageous multimillion fees a pop. He's pretty straightforward about it.

That's the way the system works. Can't really blame him, honestly.

With the numbers involved (into the eight figures to get rid of him?), I'm surprised (not that I'm condoning that) that the guy doesn't simply just die in mysterious circumstances.

[Gantz]

Originally Posted by dchan

IMO, even if cellar apartments are legalized, the steps needed to legalize them properly from an egress as well as health & safety standpoint would be both cost and space prohibitive from many properties throughout NYC.

This shouldn't be up to the city to decide. Let the property owners decide themselves if these conversions are worth their time and money. I think you'd be surprised.

[Gantz]

Originally Posted by dchan

In terms of "quality of life", I am speaking only about the lack of sunlight that would occur if we built rectangular monoliths with no setbacks at street level or regular setbacks at certain heights. I do not mean the other aspects of "quality of life".

Buildings can be constructed in such a way that lets sunlight through, as you mentioned, setbacks. Regardless, sunlight should not be a reason why zoning regulations exist. It is a fairly trivial reason that not at all one of the determining factors for most people's QOL. And frankly, such people to whom the sun is THAT important, probably shouldn't be living in NYC to begin with, but maybe consider Arizona instead. Cloudy skies certainly contribute a lot more than any zoning regulations.