Multi-Family Townhouses Are Being Returned To Their Single Family Glory At A Record Clip
If you can afford it, why not live in your own private paradise?
Poverty and wealth have always been precarious bedfellows in New York. Low income apartments often lie next to magnificent brownstones. It’s hardly new. In fact, many would argue that diversity in such close proximity is what makes New York what it is.
Gentrification has increased the disparity between the haves and have-nots and it is no more pronounced than with the number of multi-unit townhouses being returned back to their single family glory. The basic premise being, if you can afford not to live with tenants and do without additional rental income, then why should you? New data shows that there are many who don’t need the cash.
The New York Times revealed recently that over the last eight years there have been at least 260 multi-dwelling buildings in Manhattan and Brooklyn that have been turned into houses for individual families. More than a quarter of the conversions have been in the ZIP codes encompassing Park Slope and Boerum Hill, according to the city’s Buildings Department. Since 2008, there have been more than 70 conversions in the West Village and Chelsea, neighborhoods one would have thought were long past the point of gentrification.
Famed novelist and screenwriter, Richard Price is perfect example. He lives in Harlem in a brownstone the was once an SRO and crack house. It was restored by an architect to a single family home and then sold to Price who moved there from Gramercy Park.
“You’ve got those giant towers and oligarch pied-à-terres for over $50 million. I don’t care how many hip Japanese couples move in or people like me, artists. Harlem will always be Harlem,” Price said in Interview Magazine. “You’ve got this building across the street. Does that look gentrified to you? Think of the Lower East Side—Rivington, Stanton, Orchard, Ludlow. Yes, there are boutiques there but that’s just the epicenter. There are also a million housing projects there. It’s huge. It’s so complicated.”
Adding to the complication is the fact that converted townhouses can become highly profitable flips for developers looking to target high net worth clients. Many of these high end clients are hoping to score all the amenities they will ever need from home gyms to wine cellars. Jonathan Miller, a New York appraiser, told the Wall Street Journal that the average price-per-square-foot in Manhattan for a single-family home in 2015 was $2,137, compared with $1,584 a square foot for a two-family home, and $1,371 for a three- to five-family home. According to WSJ, townhouse conversions are a boon for developers, too. They cited Greystone Development which paid $10.45 million for an apartment building on a landmark street in New York’s West Village in 2012, according to public records. It then spent two years turning ten apartments into a 7,000-square-foot, six-bedroom single-family home. Jeff Simpson, head of Greystone Development, says the property sold the same day it was staged for $21 million.
Doug Bowen, a broker with Douglas Elliman specializes in brownstone Brooklyn. He offered the industry take on the trend:
“The net effect of the 2013-14 high-end condominium market boom in Manhattan, has created a surge into the niche townhouse market where the purchase plus a multi-million-dollar renovation is the name of the game,” says Bowen. “The level of design and cost to renovate have increased quite dramatically as buyers try and maximize the usable square footage possible for any given property including fully developing cellar spaces—think pool, wine room, children’s areas, gymnasiums and screening rooms. The perceived value on a relative price/square foot basis is also attracting major investment in Brooklyn, where the REIT Dixon has purchased upwards of 600 townhouses in the last 6 years, most of them in emerging neighborhoods like Bedford Stuyvesant and Bushwick. All of the houses are being thoroughly renovated into single family rental homes, which shows Dixon’s confidence in the long term prospect of townhouse values in Brooklyn.” Bowen feels that brownstone conversions will are rampant across all price points.
“In the core brownstone neighborhoods it is both a lifestyle play and an investment play that is driving an always in-demand townhouse market place. In Brooklyn Heights, the $4-6 million buy market for multifamily houses with multi-million dollar renovations are producing some incredible finished products. Almost all single families that are priced between $10-18 million—although the absorption rate is yet untested. The $2-4-million-dollar market in many of the core Brooklyn markets has also been very robust, partly due to the cost of entry and more manageable construction costs. This buyer is more typically an owner/user and this helps satisfying the growing demand to design and build your own home. The renovation costs of these projects are typically in the $800,000 to $1.5 million. Many are deciding to go single family.”
If all this talk of single family opulence makes you feel a little queasy and worthless, you are not alone. Only a small sliver of the New York population can afford to live in a single family townhouse. According to recent census data, New York is still a city of renters, across all age groups and a typical New York household spends two-thirds of its income on rent. Now, don’t you feel better?
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