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February 5, 2006

Going Condo in Harlem

By JOSH BARBANEL

RICHARD SHIU'S brownstone on West 123rd Street was once an abandoned wreck, but now he looks on proudly as would-be buyers trek up the stairs to stare at the gas-burning fireplaces and mantels, the high ceilings and granite counters and the roof deck with clear views of the Midtown Manhattan skyline.

There was Cathy McGlynn, a graphic designer, and her husband, David, a photographer and artist, who were looking for an affordable alternative to their Upper West Side neighborhood, where they were putting their condominium on the market to take some profit and lower their costs.

Right behind them was Lubbie Harper, a lawyer and vice president of Mizuho Capital Markets, who rents a brownstone apartment in Harlem and wants to find a home close to Lenox Avenue, where his grandfather lived for many decades after moving up from the South.

And then there was Ray Franks, a stay-at-home dad, who lives a block or so away in a house he bought six years ago under a city program, and was both thrilled and alarmed at the pace of change in the brownstone neighborhoods of central Harlem. He was just looking for the fun of it.

Just a year or two ago, Mr. Shiu, a former Wall Street trader and novice developer, would have almost certainly rented out his building, or sold it to a family that would live there and rent out several apartments to help pay the mortgage.

But in an abrupt shift in the winds of the housing market, Mr. Shiu and many other developers like him are converting brownstones, shells of destroyed buildings and narrow vacant lots into condominium apartments as fast as they can build them and get their plans approved by the state attorney general's office.

For home buyers, this new wave of condo conversion in Harlem provides an opportunity to live in a neighborhood with small-scale buildings without having to buy the entire structure.

These apartments, typically floor-throughs and duplexes and ranging from $500,000 to $1.6 million, provide the grandeur of town house amenities, like terraces, gardens and fireplaces, and uncommonly good light for Manhattan, at prices far below those in other parts of Manhattan and even the condos with doormen and other amenities now going up on Harlem's avenues.

Prices are lower, on the other hand, because the brownstone condominiums sometimes have pinched layouts, dictated by the location of public staircases, and are in neighborhoods in the midst of rapid redevelopment, where drug dealers and still-abandoned lots and buildings coexist with construction Dumpsters.

Mr. Shiu's brownstone is just under 18 feet wide, but by adding a story on top and a terrace above that he was able to provide two floor-through apartments and two three-bedroom duplexes. Prices range from $535,000 for a one-bedroom to $935,000 for a three-bedroom with a terrace and a rooftop garden. This works out to about $550 a square foot, half the average price per square foot of a condo in all of Manhattan, according to a recent market report by Prudential Douglas Elliman.

On that same January day when Mr. Shiu and his broker first showed off his new building, Lawrence Comroe and Tony Oakley, brokers with the Corcoran Group, were showing half a dozen other brownstone-style condominium buildings in Harlem.

One developer, the RoseTree Development Company, is marketing condominiums in three town houses on West 131st Street just off Fifth Avenue. Most of them come with wood-burning fireplaces, hardwood floors, terraces and air-conditioning, as well as wood cabinets and stainless steel appliances.

"People are looking for that walk-in-the-door brownstone feel," Mr. Comroe said. "These buildings brought back all of the original features you would find in a brownstone home."

Smaller developers now investing in Harlem are boosters of the neighborhood and believe it has reached a critical turning point in its journey from blight to a stable middle-class area.

"Central Harlem has already made it past the hump; it is already the next SoHo," said Charlie Marcus, an actor, singer and dancer who has temporarily retired from the stage to complete work on two brownstones that he is turning into condominiums on West 117th Street. "I don't think it will revert into a dangerous slum. A lot of people have sunk a lot of money into it."

Another developer, Gerald S. Migdol, who has been renovating and selling Harlem town houses for years, has now switched to condominiums.

He is currently converting 10 brownstones, including three adjoining buildings at St. Nicholas Avenue and West 149th Street, that will go on the market by this spring at less than $600 a square foot, at prices of $500,000 to $900,000.

The St. Nicholas Avenue buildings have been named the Rockwell Condominium, for Norman Rockwell, who lived next door for several years at the turn of the last century, Mr. Migdol said. He said he would offer a 10 percent discount to civil servants, which means a couple would need a combined annual income of about $100,000 to buy one of the less expensive ones.

The logic of condominium development from the developer's point of view is fairly simple. The slices of the pie are worth more than the entire pie, said Christa Giesecke, a German-born architect who lives on West 149th Street and is renovating her second condominium project. In the current market, the value of a condo apartment is far higher than the value of a rental unit, and a condominium brownstone can be worth more than single-family residences.

At current asking prices, the apartments in an unexceptional condo building can sell close to the highest price paid in Harlem for a restored historic town house, about $2.6 million, according to brokers.

And, Ms. Giesecke said, condominium developers, unlike landlords, can earn a return without the hassle of property management. "With a condominium you don't have to be a landlord," she said.

Ms. Giesecke's first condominium building opened last year, a project that carefully balanced a sense of old with a clean modern look and some newer amenities that many buyers want. She added an extra partial story on the roof, neatly set back from the street, and an extension that provided room for large terraces on each floor.

She stripped the walls to bare brick, but kept the old fireplace mantels. The lobby is dominated by an old built-in mirror in a carved oak frame. Now she is putting in steelwork for an extension and terraces on a brownstone two doors away.

"I'm an architect, not a professional developer, so I didn't have to make so much money and build every square foot possible," Ms. Giesecke said.

Brokers say they are seeing interest in the brownstone condominiums from families displaced by high prices on the West Side, downtown musicians and artists who can't afford to live downtown, affluent foreigners with a romantic attachment to Harlem, and bicoastal Californians who want a pied-�-terre in New York.

John Angier, a composer who writes mainly for television and film, lived on the Lower East Side for many years, but decided to leave the neighborhood because of the increasingly noisy bars nearby and the high real estate prices.

Last April, Mr. Angier, who wrote music for two Pok�mon movies, and music for the "Yu-Gi-Oh" television series, signed a contract for $474,000 to buy an 831-square-foot one-bedroom apartment on West 149th Street that included an additional 100-square-foot terrace.

Now he is remodeling the apartment to create a recording studio in the bedroom, along with a fold-down Murphy bed to sleep in at night. He said he is only two blocks from the 145th Street A train stop and a ride of only 14 minutes to Times Square. For the first time he has gotten to know his neighbors.

"The people are real friendly here," he said. "I met more people here in six months than I have in 15 years" living downtown. Yet as low as the prices are compared with the rest of Manhattan, they can be extremely profitable to building owners, and have been driving building prices higher and higher.

Bill Rohlfing bought a 20-foot brownstone shell in Harlem in 2001, renovated the interior, creating a loftlike open space for his family, and has been buying and renovating similar properties as single-family houses ever since. He said he wants to keep renovating houses for families but has been frustrated by the higher prices for shells and run-down buildings paid by condominium developers.

Because of the rising prices, Mr. Rohlfing has had to return to his investors and get permission to pay more - from $475,000 in 2004 to $775,000 last year and now even more. "I realized that condo developers were making $150 a square foot more than I was," he said.

In Mr. Shiu's building, the asking prices for his four apartments total nearly $2.9 million, far above the market price for all but the largest, most exceptional buildings in Harlem's historic districts. And, according to city records, he paid only $600,000 to buy the property less than two years ago (from another developer who paid $150,000 in 2000).

Jonathan J. Miller, the president of Miller Samuel, an appraisal company in Manhattan, said that a similar rush to condo-ize town houses occurred on the West Side, in the Village and the far East Side in the 1980's when condo prices soared. In the current market, he noted, most town houses below 110th Street are worth more as individually owned houses.

But Ray Franks, the stay-at-home dad, and some of his Harlem neighbors are worried that the market may already be outpacing the brownstone conversion movement, which could damage the ambience of brownstone neighborhoods.

Only a small fraction of the brownstone stock in Harlem is protected within the boundaries of historic districts, and brokers are beginning to negotiate about the sale of air rights over churches to allow even larger structures than permitted under the zoning code. Mr. Franks was particularly perturbed by plans by a neighborhood housing group to put up a large market-rate condominium project on the site of a parking lot, just down the street from his home on West 123rd Street.

After that first open house in January, the McGlynns decided that Harlem wasn't for them. They found that prices were higher than they expected and that the neighborhood was too edgy for comfort. Mr. Harper is still looking, but found that he really wants to own an entire town house, not an apartment, if he can afford one.

Within days of the open house, Mr. Shiu said, two buyers agreed to purchase units at the asking price and have been sent contracts for signing. Now three condos are in contract.

"Condos seem to be what is working now," Mr. Shiu said. "I'm on the prowl for another building."