Sunday, November 11, 2007

Back to Basics

The New York Times
November 11, 2007
By LISA KEYS
http://www.nytimes.com/2007/11/11/realestate/11cover.html

A FEW years ago, developers created amenities to make their buildings stand out from the pack. Buyers returned the favor, rushing to the newest building with the latest gimmick and snapping up apartments as fast as they became available.

Many of those people are now living in buildings with pet spas, basketball courts, screening rooms and the occasional climbing wall.

But now developers are waving white flags, trading in outré amenities for well-executed must-haves and quality construction. "Absolutely, it's back to basics," said Harry Dubin, director of sales and marketing at the Athena Group, a developer based in Manhattan whose recent projects include the A Condominiums in Jersey City.

Buyers, too, are becoming increasingly wary, developers and marketers say. Manhattan condominiums now cost, on average, $1,178 a square foot, according to a recent report by the Miller Samuel appraisal company for Prudential Douglas Elliman, and many buyers are hesitant to spend a lot of money on extras. And with one eye on the resale market, they don't want expenses that drive up monthly common charges.

So instead of trying to tempt buyers with a long list of luxurious amenities, developers are trying to provide only those that buyers see as essential. The new standard calls for a gym, a party room and outdoor space like a common roof deck, if possible.

Kelly Wines, 28, has a dog, a fitness regimen and a busy schedule. And yet, when she went shopping for a condo, she wasn't looking for a pet spa or a fancy gym with treatment rooms.

"I don't need a dog run," said Ms. Wines, whose toy poodle is named Chloe. "When I walk her, I walk her wherever I'm going. And I don't think it's that hard to get my dog to the groomer. There are so many services in New York that cater to pets, I didn't need one in the building."

Top priorities for Ms. Wines were outdoor space and a chef's kitchen, because she likes to cook. She found what she was looking for at 100 West 18th Street, a building with 43 apartments developed by the Brauser Group. The one-bedroom apartment she is buying has the private balcony and the high-end kitchen appliances she wanted.

The building, still under construction, will also have a common room, a refrigerated room for grocery deliveries and a gym, which Ms. Wines has decided is "nice to have," even though she is already a regular at a Pilates studio.

Ms. Wines says she is paying "under $1 million" for her apartment, and the common charge will be around $1,000 a month. Even so, she believes that she's getting a bargain.

"For condos, its tough to get a decent-priced common charge when you have so few units," she said. But because the building's features were just what she wanted, "I'm not paying for something I'm not going to use," she said.

Some amenities have a life span all their own. In the 1980s, buildings with swimming pools were all the rage, and they made a comeback in the most recent boom. But there is a downside. "When you put a pool in, everyone says it's great," said Allen Goldman, president of SJP Residential Properties. "Then, after it's in, they say, 'My God, why are the condo charges so big?' A pool is incredibly expensive to maintain. Then they say, 'No one is ever there.' And you know what? No one ever is."

SJP is putting the finishing touches on 45 Park Avenue, a 105-unit condo at 37th Street with a concierge, terrace, gym and lounge. It does not have a pool.

Even Louise Sunshine, once the grande dame of extravagant amenities, senses a scaling back. Ms. Sunshine, who began her career working for Donald Trump in the 1970s, founded her own marketing company in 1985. It merged with the Corcoran Group two years ago, and she is now director of development for the Alexico Group.

"We started out with a few amenities," she said, "then we kept adding as time went on."

Over the last 10 years, Ms. Sunshine said, the trend was "one-off amenities, things that made people feel better about living in their buildings, made their buildings more exciting." As examples, she cited pet-washing salons, elaborate family activity centers and bowling alleys.

Then the shift toward simplification began a few years ago, Ms. Sunshine said, when "name" architects started to design new condominiums. "Those stars began to create a world of their own, a value of their own, a lifestyle for these buildings of their own," she said. "You don't need a badminton court when you have great architecture, great design, great views, great quality and the basic requisites."

Of course, for Ms. Sunshine, basic is relative. At the Laurel, a condominium being developed by Alexico on the Upper East Side, prices average $1,800 a square foot, with amenities that include a triathlon training center (with two pools), a screening room and a game room.

"As a developer, I think it's much more preferable to do a few things and to do them well," Ms. Sunshine said. "There's a point at which amenities don't have much of a return — they don't make all that much sense."

As developers take a second look at the bottom line, they are considering not just amenities but also escalating construction costs and the lack of buildable land in Manhattan.

Veronica Hackett, the managing partner in the Clarett Group, says that the math on pricing is evolving.

Consider a 1,400-square-foot apartment priced at $1.68 million. "If I'm going to take 50 square feet out of that apartment and put it into a gym, a pet spa or whatever, that leaves me with 1,350 square feet," she said. "I still need the same $1.68 million for that unit, or I'll never achieve my 25 percent profit margin.

"As a developer, I'm going to ask myself: What are the things that are most attractive to my buyer at that price range, in that location?"

The Clarett Group is currently developing the Sky House, a luxury building with 139 apartments at 11 East 29th Street. It features a concierge, a gym and a children's playroom. Marketing for the building focuses on its skyline views.

"When it comes down to it, people are going to look at a total package," Ms. Hackett said. "Do they want a pet spa, or do they want a great kitchen and the right windows? Things come and go, but quality and classic never go out of fashion."

David Wine, the vice chairman of the Related Group, said that the "less is more" trend could be attributed, at least in part, to construction costs. "Costs are through the roof," he said. "If a developer is going to plan something, they're really going to think twice in terms of cost. A developer today has to make every square foot as productive, economically, as possible."

Then, there is the dwindling availability of large lots throughout Manhattan, leading some developers to focus on smaller projects that can be built and sold in far less time than a behemoth.

"I don't want to be the guy with 250 condo units to sell in this market," said Scott Aaron, director of development at the Brauser Group. "You don't want to be out there selling for two, three years. You like to be able to sell out within the time frame that you're constructing the building."

There are, of course, exceptions. At the highest reaches of the market, hotel-style living is still the rule, and residents expect swimming pools, spa services, high-end room service and hefty monthly charges to match.

At buildings in up-and-coming areas — Harlem, say, or Long Island City, Queens — amenities can still serve as a lure, and buyers may rely on in-building services if they are in short supply in the surrounding neighborhood.

But these are the exceptions, developers say, and the paring down of costs is even extending to the suburbs.

Last fall, Marianna Greenberg and her husband, Marlon, looked at new condominiums in Jersey City. "I wasn't interested in the humongous buildings with the swimming pool, tennis courts, all those things," said Ms. Greenberg, 38, who operates Besu Salon and Day Spa in the Gramercy Park area. "Who would really, in real life, come home and play tennis every day? Even if you live in the building, you end up paying for it. It's in your maintenance."

Though they looked at developments like the Shore Club Condominiums and Trump Plaza Jersey City, the couple settled on the A Condominiums, the Athena Group's development, which has 250 apartments, each with outdoor space, as well as a gym, a party room, a common terrace and a parking garage.

The Greenbergs' two-bedroom cost $705,000, and the relatively low monthly common charge of $780 sealed the deal.

"The building is beautiful, clean and convenient, and it has all the amenities I'd like to use," Ms. Greenberg said. "That's more than enough for me."


Alex di Suvero for The New York Times

NOT JUST FOR SHOW At the A Condominiums in Jersey City, the Athena Group pared the amenities to a usable handful: a gym, party room, common terrace and garage, plus outdoor space for each of the 250 apartments.


James Estrin/The New York Times

SORTING OUT WHAT’S IMPORTANT Kelly Wines did not need a pet spa for her dog, Chloe, but she did want outdoor space and a chef’s kitchen.


Alex di Suvero for The New York Times

Marlon and Marianna Greenberg, who are buying a two-bedroom at the A Condominiums in Jersey City, did not want to pay high monthly charges for amenities they would not use.

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