Apthorp: What Happened?

Posted by Toes

Mon Nov 15th, 2010 01:07 PM

Christine Toes posting here.

I had several customers contact me in absolute shock after they saw last week's NY Post Article on the recent closings at the Apthorp. From the Post article:

"...one-bedroom penthouse went for a mere $228,900 -- down more than 88 percent from the asking price of $2,025,765, a source revealed. The 763-square-foot home had been on the market for 13 months..." "A 405-square-foot penthouse sold for just $123,717 in July -- down 86 percent from an asking price of $895,000. And a 964-square-foot penthouse also closed in July for $417,177 -- down 84 percent from an asking price of $2,559,420."
In case you didn't notice, the apartments that sold for really low prices were all "Penthouses". What the article didn't mention was that these Penthouses were originally built as staff apartments. They have low ceilings and none of the beautiful architectural detail that the building is famous for. Most of them are not accessible by the elevator, you have to take the elevator to the top floor and then walk up a flight of stairs to get to them. They were also not renovated and in need of a complete makeover.

Even still, most of us would love to buy a condo, even one that needs a gut renovation, for $123K-$229K. So what happened that these buyers got such great deals? The building had been in litigation for months and had a limited period of time to sell 15% of the units required by the Attorney General's office to declare the condo offering plan effective. So they cherry picked the least desirable, smallest units in the building to get rid of in order to meet the 15% requirement. If they had not done so, they would have had to wait another year to sell the units. Hence the number of "penthouses" selling for low prices and no larger units selling for similar prices. Everything else seems to have gone for $1350/sq ft.+

I had buyers offer $1,250/sq ft for a 2 bed, 2 bath at Apthorp in the late spring/early summer of 2009 and we barely even got a counter-offer. So if you feel like you "lost out" - don't! I suspect that the sweetheart deals probably went to "friends and family," or possibly investors who had a relationship with the developer. The summer of 2009 was one of the worst times in the market - almost no one was buying anything - and the Apthorp had had such problems that my buyers were not interested in paying more than $1,250/sq ft when there was no guarantee they would be able to get financing or close on the apartment. They needed a home and didn't want to wait an indefinite period of time while their deposit was tied up. So we moved on to another building with less risk.

There was a lot of risk at Apthorp for these early purchasers, and risk often equals reward. Of course, it could have also equaled disaster (i.e. developer going bankrupt, someone potentially running off with your deposit, lawsuits, having to live in a construction site for months and possibly years...). Think about the saga at One Madison Park!

Now that the Apthorp plan is effective, there is no reason for them to unload units for low prices. Apartments are apparently back to selling for $2,000/sq ft. One to four bedroom residences are available for immediate occupancy - for $2,000,000 to $7,000,000!