Issue 9, June 2007: It’s Hot and It’s Good Value

For many years it was a grungy wasteland between Greenwich Village and midtown with the attractive English name of Chelsea filled with small factories, tenements and warehouses. No longer my friends. This area has had a remarkable resurgence starting about a decade ago when art galleries ventured into the western part of the neighborhood followed by the rejuvenation of the so-called “Ladies Mile’ for shoppers along Sixth Avenue.

In the past several years, high-rise rentals and condominiums have sprouted and today what started out as a small stream is a flood. It seems that every block has at least one new development or major conversion. The popularity of Chelsea is one reason that in the past several years we have seen 70% more product coming onto the Manhattan market with much of it absorbed quickly. The building explosion in Chelsea has helped satisfy the insatiable desire for apartments in Manhattan and helped keep prices from increasing even faster than they have. Benefiting are high-priced rental tenants who can afford to convert to ownership in Chelsea.

The list of buildings under construction or recently completed is long. Included are: the Altair 18, 32 West 18th Street; Chelsea House, 130 West 19th Street; the Lion’s Head Condo, 121 West 19th Street; the Emory, 27 West 19th Street; the Chelsea Stratus, 101 West 24th Street, and the Caledonia, 450 West 17th Street, which describes itself as the first luxury condo on the Highline.

Chelsea Stratus, at 40 floors, the tallest new building, sold 50% of its apartments in just six weeks, with many rental tenants converting to ownership, an indication of the quality of the property and the attraction of the area.

Buyers in Chelsea are mainly the young, hip and “happening” who like the area’s upbeat energy and convenience. It is a vibrant scene without the tourist influx that is taking place in certain downtown areas. With Ireland experiencing an economic boom, and the dollar weak against the Euro, the Irish are aggressively purchasing in the downtown market, notably in Chelsea. They are attracted not only by the prices, but by the energy of the neighborhood. Initially, the high rise buildings in Chelsea were rentals, but increasingly the new properties are condominiums.

The new developments are trend-setting with amenities. Hotel-style concierges, who make dinner reservations, order theater tickets and provide unparalleled services that are now de rigueur are popular. For example, the Chelsea House has a screening room for residents along with its landscaped rooftop and backyard gardens. Gardens are extremely popular; the Campiello Collection is a two building complex with shared gardens totaling more than 19,693 square feet at 151 West 17th Street and 224 West 18th Street. The latter building also has a lobby mural of a painting by the Renaissance master Andre Mantegna. The Chelsea Slate at 165 West 18th Street has a pet spa and the Chelsea Stratus offers an indoor basketball court, billiards room and ding area with a catering kitchen. Almost all have gyms.

All this is not cheap, but in line with overall Manhattan prices and good value with all the amenities. In the fourth quarter of 2006, the most recent period where statistics are available for Chelsea, the appraisal firm of Miller Samuel says the median price for an apartment was $735,000, or $1,106 per square foot. For all of Manhattan, the median price was $799,000 and the square foot price for Chelsea was close to prices on the East and West Sides. The median price for a loft was $1,842,000, or $1,178 per square foot.

Meanwhile, as we approach the summer, when activity normally slows down, I am finding that the Manhattan market continues to buck the national downward trend. Open houses are full and I see no letup right now. With the approaching mass migration of college and professional school graduates coming to the city to start their careers I see demand continuing both in renting and in purchasing.

I wish all of you a good summer and hope you now have the time to read the books we’ve put away for our holidays.