In one property, a sign of the times

Real Estate Weekly, Oct 23, 2002 by Francis Greenburger

Over the years I have purchased a number of properties on the Upper West Side. One of those, bought in 1987, is the six-story building at 214 West 96th St., which is finally in 2002 realizing its full potential as an income producing property. Its slow transformation mirrors that of the entire neighborhood.

Just over a decade ago the Upper West Side was still terribly bifurcated. There were the relatively prosperous avenues such as Central Park West, and there were the crime-ridden side streets and avenues, such as Columbus and Amsterdam in the 70s and above.

New York's Upper West Side today is home to some of the city's most affluent residents, chic boutique shops and private schools. Residential and property values are at or close to their highest ever, and retail spaces are commanding rents into the market of $150 to $175 per SF.

The former stomping ground of the cast of "Seinfeld" and the birthplace of J.D. Salinger, Lauren Bacall, Norman Rockwell and the Reuben sandwich has not always been this prosperous.

Between the 1950s and 1980s, it was considered bad enough to spark huge redevelopment efforts. Their legacy consists of large, mixed-income housing complexes, as well as the Lincoln Center and the New York Coliseum- where AOL-Time Warner Center is now rising.

Into the 1980s, however, many neighborhoods were still a no-man's land. Columbus and Amsterdam Avenues seemed worlds away from Central Park West, ridden as they were with crime, drugs and prostitution. During this period, Time Equities purchased about a dozen buildings on Amsterdam Avenue for as little as $10,000 and never more than $100,000. It sounds ridiculous today, but those amounts were not just the down-payments, but the full purchase prices of the properties. By comparison, an investor recently paid $25 million for two, six-story apartment buildings that take up the whole block along Columbus Avenue, from 85th to 86th Streets.

Change in the area was sparked by a tax abatement program that favored development between 86th Street and 96"' Street, and Central Park West and Columbus Avenue. This first dramatic improvement led a few adventurous people to branch out into the side streets between Columbus and Amsterdam Avenues, making them more attractive to potential residents and businesses.

The most significant change in the neighborhood resulted from the cooperative conversion movement of the 1980s. Time Equities was among the most active of converters in New York, and the movement attracted ,other ambitious investors who spent millions renovating dilapidated properties, attracting new residents and business, and contributing to a generalized rising tide of prosperity.

As the Upper West Side continued to change, affluent couples and single urbanites moved in, and fashionable restaurants and stores opened on Amsterdam and Columbus Avenue. Real estate prices rose and developers began building luxury apartment towers, especially below 96th Street.

The area around 96th Street and above was slower to change. However, our experience at 214 West 96th St. indicates it has reached maturity. In late 2001, Washington Mutual Bank, FA signed a ten-year lease with two five-year options to extend, for a 5,276 SF of the ground and basement level retail space in the building.

Although I can't reveal the monthly rent we agreed upon, we had been asking $200 per SF. Washington Mutual is paying a market rate that is four times what we earned from the prior tenant. We expect similar numbers at the 3,200 SF of space still available for lease at the property.

The presence of Washington Mutual will help solidify the intersection of 96th Street and Broadway, making it more attractive to shoppers. More importantly, it signifies a change in a neighborhood that is finally realizing its potential. The evolution of 214 West 96th St. is a symbol of the Upper West Side's evolution from a mixed bag into the bustling area that it is today. The property, like Broadway and the entire Upper West Side, has made steady progress in recent years. Finally, today, it has realized its potential as an income property in a prosperous stable neighborhood.