Issue 105 – Combining Apartments for Greater Resale Value — When 1+1=3

Who hasn’t dreamed of having an extra room in their home? For some, that dream can become a reality by strategically buying two units and combining them into a larger living space.

This approach particularly appeals to the many people who love their current building and apartment. Buying a connecting unit — to either side, above, or below — can be incredibly beneficial because the owners can remain in their beloved residence while expanding their square footage. It allows them to capitalize on the place they’ve called home in creating a more expansive footprint.

Just imagine: Buying an adjoining unit means not having to change your commute or leave your memories behind. Your very identity might well be engrained in the dwelling. It also means avoiding the hassle of searching for another place to buy, dealing with the timing of selling an apartment to buy a bigger one elsewhere, and (importantly) enduring another stressful board interview! Adding onto your apartment is the most seamless way to increase precious living space with minimal disruption and change.

Of course, the above assumes a connecting unit is or will become available. Another, likely easier, option is to buy two units together in a new development in the preconstruction stage. This way, you can view the floorplans before the build-out has begun and discuss how best to combine the units with the developer. Namely, you can make the finishes consistent throughout, and the developer can ensure the plumbing and gas lines are efficiently integrated.

Whichever way you go about combining two units, there are a few significant drawbacks to keep in mind. A primary concern should be whether the size of the combined space will have enough value to justify this endeavor. You want to be sure the value is both immediate and increases over time so you can get a solid ROI when it is time to sell, even if that won’t happen for a decade.

For example, combining units might deprive the space of two highly desirable qualities: abundant natural light and impressive views. Or it might result in an awkward layout (more on this below). This value assessment can be complex when you hope to remain in your preferred building, but a place on, say, the third floor that doesn’t hold value would not be prudent.

Large entertaining and living spaces with sizable bedrooms that feel comfortable garner the most value. Specific examples include a great room with 13 to 28 feet of frontage, a luxurious primary bedroom with dual bathrooms, and a chef’s kitchen that becomes the heart of the home. The ultimate win? Integrating two corner units with panoramic views.

Other factors to consider before embarking on this endeavor include financing, building and city regulations, demolition and construction costs, and tax liabilities. You should also assess whether a precedent exists in your building, especially if it is a co-op. If not, doing a combination can be challenging and frustrating, causing much stress and expense. Because of “wet-over-dry” rules, you might be unable to add a bathroom or move the kitchen where you want. In addition, buildings may say that they will allow something only to reverse course after you’ve purchased the second unit.

An essential preliminary step is consulting with an architect and developing a firm plan. Do you want to add a smaller unit to an existing large one? According to a recent article in Brick Underground, duplexing up or down might prove more difficult because it involves building a new staircase requiring structural changes. Many boards will not approve this large-scale work.

You should avoid ending up with a Frankenstein apartment, meaning one that is put together haphazardly with no natural flow. A big no-no is a random hallway or weird entry that doesn’t fit into the fuller space. Ditto an apartment that feels like a maze, where you can’t tell which way to go.

Another potential pitfall is that unless you file with the city as a single-family residence, meaning just one permit for the entire space, the carrying cost can be slightly higher than you’d prefer because you are incorporating an additional unit into your original space.

Finally, although it is wonderful to avoid the general upheaval of moving, the labor and construction fees can be exorbitant, notably if you have updated your present apartment and the add-on unit may have done some renovations along the way. Labor fees can really become a factor if the condition of the apartment is not on the same level. It can be even more expensive if the combination requires plumbing upgrades and matching the flooring and finishers, some of which may have been discontinued. It gets even more complicated when you must file plans with the DOB and deal with your building’s architectural requirements, such as knocking down support walls or creating a duplex.

The ultimate advice is to do your due diligence. Always and proactively read the alteration agreement with a fine-tooth comb, looking for rules that would preclude completing your combination. Find out ahead of time if the building is supportive of this type of change. Ask any neighbors who have undergone this kind of renovation.

One additional note: Depending on the scope of work, you may have to move into a short-term rental and put items into storage, or at least have limited use of your everyday space, for a period.

The overarching goal is cohesion throughout, making every area as functional and aesthetically pleasing as possible. The rooms should be right-sized and have a clear purpose—is it a bedroom or a study? They also need to be carefully organized, or your home will feel discombobulated.

The bottom line is that combining two — or even three! — units can be a massive boon for anyone interested in increasing living space and resale value if they know what to look out for and what to avoid. This single step can create an architectural masterpiece and a genuinely unique home.

Issue 125 – The $5 Million Question: What’s Actually Worth Owning in New York Right Now?

The New York real estate market is entering a period where the old rules of valuation are becoming less reliable. Price per square foot and comparable sales still matter, but buyers are weighing those factors differently — rewarding some attributes while quietly discounting others. The question is no longer simply, “What did the apartment downstairs sell for?” It’s “What are buyers willing to pay a premium for now — and what have they stopped paying for?”

I could identify at least seven factors being repriced in Manhattan right now: outdoor space, views/greenery, turnkey condition, monthly carrying costs, new development versus resale, second-home ownership, and the increasingly important distinction between a great apartment and a great building.

Confusing matters for buyers is that the NYC market is sending contradictory signals. Manhattan inventory is changing by price band, mortgage rates remain challenging nationally, and NYC’s new pied-à-terre tax is creating another potential dividing line in how buyers assess ownership costs.  

In the luxury zone, one way to test those shifting valuations is what I call “The $5-Million-Question.”

I can take $5 million and show clients what that buys today in six completely different versions of New York: Think:

  • $5M on Central Park West
  • $5M downtown
  • $5M in Brooklyn
  • $5M in a new development
  • $5M in a great prewar co-op
  • $5M for something compromised but spectacular

Same amount of money. Same city. Radically different value.

The questions to ponder are:

  • Which one would I buy?
  • Which one would I avoid?
  • Which one has the greatest upside?
  • And which one will be easiest to sell five years from now?

That comparison is more revealing than a market-wide statistic because it shows what the same $5 million actually buys — and what it might be worth to the next buyer.

On the surface, the questions are simple. In practice, answering them requires a sophisticated analysis — price per square foot, carrying costs, taxes, liquidity, buyer pool, neighborhood trajectory, architectural quality, and exit strategy. Buyers should seek out an expert broker not only for information but also for interpretation.

For a long time, value was assessed through familiar metrics: price per square foot, comparable sales, neighborhood, floor, light, views, condition, and building pedigree. Those factors still matter. But buyers are now weighing them differently. We are in a repricing phase — not necessarily of New York City as a whole, but of the individual components that define its value.

At Central Park West, $5 million typically trades square footage for permanence: park frontage, architectural significance, scarcity, and long-term stability.

Downtown, the same budget may secure a more contemporary product — larger windows, amenities, and outdoor space — but often at a higher price per square foot and with higher ongoing costs.

In a new development, $5 million buys condition, services, and immediacy. The question is how much of that price reflects a “new development premium,” and whether the resale market will recognize it when the time comes to exit.

In Brooklyn, the same capital can deliver scale, outdoor space, and architectural character that would be significantly more expensive in Manhattan.

None of these is inherently superior. The real questions are: What are you actually buying, and who will want it next? That second part is often underweighted: Which market is offering more rewards?

Based on buyer behavior, several attributes are becoming more defensible:

Light and views are not replicable. While layouts can be changed, exposure and outlook cannot be transformed.

Functional outdoor space is valuable. Usable terraces connected to living areas are materially more valuable than secondary or awkwardly accessed outdoor areas.

Strong floor plans are key. The pandemic reinforced that usability matters as much as size. Proportion, flow, and flexibility are now critical.

Condition has always mattered — now more than ever. High construction costs and uncertainty have increased demand for finished product. However, there is a ceiling — buyers will not indefinitely overpay for someone else’s design choices.

Low carrying friction is persuasive. Taxes, common charges, assessments, and long-term building health are now central to valuation. High monthly costs can materially impact resale liquidity.

Scarcity can be the tipping point. A strong apartment does not need to be perfect. It needs to be difficult to replicate.

So, where would I be most cautious today?

I would be disciplined about paying a premium purely for newness. New does not hold value on its own — architecture, location, and scarcity do. I would closely evaluate buildings where carrying costs are disconnected from underlying asset value. I would avoid trophy pricing unless there is a true trophy attribute. And I would be careful about pricing that is anchored primarily to renovation cost.

A $2 million renovation does not translate into a $2 million increase in value.

The market does not reimburse cost. It prices outcome.

If I were allocating funds at this level, the guiding principles should be: light over finishes, proportion over decoration, irreplaceable views over amenity packages, and ultimately, best-in-class units in proven buildings over average units in trending ones.

The strongest purchases do two things at once: they function as exceptional homes today and remain desirable assets tomorrow. That means thinking about the exit before the entry — and recognizing that New York isn’t one market, but a collection of micro-markets defined by neighborhood, block, building, floor, and orientation.

While real estate is inherently emotional, value is what remains when emotion fades.

Whether the budget is $1 million, $5 million, or $25 million, the question is ultimately the same: What is actually worth owning?

That is the question the next phase of the market will answer — and it will reward analysis over generalization.

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