Sinvin turns dilemma into a deal.
Jeremy Markoe, director of Sinvin Realty Corp., negotiated the sale of the five-story 8,500 s/f building on behalf of the unnamed seller, and the buyer, Bexin Realty Corp.
"There was a lot of uncertainty around this property because it didn't fully meet code for residential use and it has tenants who pay very low rents and are now rent stabilized," Markoe said.
It took two years for 143 Chambers to resolve the legal and regulatory problems it faced, during which time Bexin was considering buying it. The sellers finally resolved the issues this summer. Other bidders stepped forward but Bexin beat them to the deposit.
Had 143 Chambers Street been free of its abnormal liabilities, it would have sold for $4.25 million, and much more quickly, according to Markoe. In such a scenario, were it to be converted and renovated to condominium units, it could garner $850 to $1,000 psf, or a $8.5 million in total.
143 Chambers Street's problems stemmed from its earlier conversion to residential use. When it was first marketed, it had still not been improved to comply with the state and city housing laws that govern residential properties. At issue were required certificate of occupancy filings, repairs and inspections. Most of the buildings tenants had never had leases and many were suing the landlord. Today, all have signed rent-stabilized leases.
Commercially zoned buildings that have been imperfectly converted to residential use like 143 Chambers Street are officially known as Interim Multiple Dwelling ("IMD") properties. In 1996, the City began demanding that IMD buildings citywide comply with state and city housing laws. Today, 200 (nearly half) of the city's nearly 450 IMD buildings are located in TriBeCa.
"Property with big problems are almost the only opportunity for developers to use their savvy to wring a profit out of an investment in high-priced Tribeca," says Markoe. "There is so little product that sellers typically hold all the cards and leave buyers with razor thin margins. This is a rare exception."
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|Publication:||Real Estate Weekly|
|Date:||Apr 5, 2006|
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