The Full Nelson

607 Hudson Street - NYC Condo Conversions Are Back

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After a two-year -hiatus, condo conversions in New York City are back. My firm just closed on the sale of the former Village Nursing Home, located at 607-09 Hudson Street, for $33,369,362 to a condo converter. The property is an elevatored, seven-story, assisted living facility, in the heart of Manhattan's Greenwich Village. The price equated to $587/SF.

Built in 1905 in the Neo-Federal style, the property is situated on Abingdon Square in a historic preservation district and has frontage on both Hudson and Greenwich Streets, as well as the entire block front on West 12th Street.

Serving as a hotel earlier in its life, the property was converted to nursing home use in 1958, and was renovated in 1981 with the addition of a penthouse, among other improvements. The ceiling heights range from 9' to 15'6” with tremendous light, air, and views. The property contains a total of approximately 56,800 square feet including the finished basement with 11'-high ceilings on an irregular footprint that measures approximately 59' 4” x 147' 5”.

When we were out to market, we had interest from hoteliers and user groups alike; however, the condo converters bid most aggressively. FLAnk, an architecture, development, and brokerage firm, was the ultimate buyer. The firm's plans are for 10 condos ranging from 3,300 to 9,000 square feet. They hope to parlay their recent successes in the area, including The Novare at 133-35 West 4th Street and 385 West 12th Street. They will likely ask well into the $2,000s per square foot for the new condos.

This sale demonstrates the strong demand for conversion opportunities in prime locations. Driving this demand is the very low supply of new condominium product. According to StreetEasy, there are only 17 new condos currently on the market in Greenwich Village. They ask a median price of $4,650,000 or $1,912/SF. Due to this lack of competition, I believe the project will be a great success.

The condo sales comps are also compelling. In November 2010 at the Superior Ink Building, a raw 6,300-square-foot penthouse, with 360-degree views and a 1,273-square-foot terrace, sold for a record $31,500,000 or $4,983/SF.

The increased availability of construction financing will also allow more projects to be developed. One developer had told me that that he had received three quotes from construction lenders for a 150,000-square-foot ground-floor-up residential project in Chelsea.

One such project that will benefit from this trend was the sale of 18 Grammery Park South. It sold for $60,000,000 or $715/SF. This former Salvation Army women's shelter will likely be converted to condos by Eastgate Realty. With direct park views and keys to the prestigious park, the developer should fare well.

The challenge now will be for more inventory to come to market. Vacant buildings for conversion are few and far between, as so many were already converted in the 2006-2007 boom. Fortunately, we are starting to see more inventory come on line, as discretionary sellers are starting to come back into the market.

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