Tuesday, April 5, 2016

East 3rd Street buildings sell for $58 million, $34.5 million over the 2012 price

In the spring of 2012, GRJ, a fund co-founded and co-managed by brothers Graham and Gregory Jones, bought the 78-unit, three-building package of 50-58 E. Third St.

There was plenty of drama in subsequent months here between First Avenue and Second Avenue, as a number of longtime tenants lost their leases. The residents formed a tenants group; local politicians came out to offer support during a rally in May 2012. However, as one former resident put it, the Big Real Estate Machine was too great to overcome.

After extensive gut renovations, the buildings were later rebranded the "East Village3" (aka "EV3"), where the newly renovated apartments were fetching from $4,900 to $11,000 per month.

Per Gregory Jones in the news release announcing the sale: "We see a real opportunity to reposition the buildings. We'll invest significant capital and we look forward to creating the most desirable walk-ups in the East Village."

All the capital improvements paid off for GRJ. As The Real Deal first reported on Friday, GRJ has sold the buildings to developer Anbau Enterprises for $58 million.

The deal marks the first purchase of an income-producing asset for Anbau, which is best known for its ground-up projects. A spokesperson for Anbau told The Real Deal that the company’s move into income-producing assets was not a sign of limpness in the condominium market but simply a bet on a neighborhood they believe is good value.

“We want to augment our growing in-house condominium business by investing in New York City markets that have long-term growth potential – the East Village certainly fits the bill,” said Anbau managing director Barbara van Beuren.

A broker on the deal said that about 25 percent of the apartments remain as rent-stabilized units.

Previously on EV Grieve:
Reader report: Three apartment buildings sold on East Third Street

Advocate for East Third Street buildings moving to Washington Heights

More about the lease renewals at 50, 54 and 58 E. Third St.

Tenants at 50, 54 and 58 E. Third St. banding to together in face of building sale

More drama at 50-58 E. Third St.; 'heavy construction' awaits tenants who stay

And now the renovations really begin at 50-58 E. Third St.

The 'East Village3' is ready for you; for that 'Industrial Chic feel'


Anonymous said...

This just reaffirms what the real-estate industry has been betting on, there is a sucker willing to buy a renovated walkup building for much more money than it's worth.

" the most desirable walk-ups in the East Village." since when schlepping up 6 flights of stairs with your, bike, groceries and laundry is a desirable thing?

I guess developers see the close proximity to NYU as the reason the EV is worth investing in since that expensive school brings in the children of the wealthy. Soon NYU expansion will slow down with all available land nearby being beyond even's its cash stash.

Anonymous said...

Funny that people think that NYU has a "cash stash." It is not a well-endowed university given the large size of its student body (although it has managed to drum up funding in recent years with its grad schools and middle east campuses). NYU made a couple of great real estate investment moves right when NYC was picking itself up out of its economic mess in the 70s and 80s, and managed to ride that wave into the 2000s attempting to position itself as a global school for a global city. NYU is in fact highly leveraged, and does not have the purchasing power that many assume. It could buy up East Village real estate a decade or two ago, but is itself being priced out.

The real problem here is not NYU - it's the incredible income inequality in this country, the fact that all projections show that inequality will get worse for the next few decades, and the demographic shifts resulting from young well-educated high earners delaying having kids or choosing not to have them at all, and wanting to live in small "real" city apartments and live lives full of "experiences." Community boards are the last hope for neighborhoods, because every other possible factor favors real estate deals like this.

Anonymous said...

@9:18 AM: NYU I've read has an endowment of well over $3 Billion. Not the richest of the rich, but in the top 25 or so.

Anonymous said...

Baudrillard laughed.

Anonymous said...

Anon 9:18
You many good points however:

"young well-educated high earners delaying having kids or choosing not to have them at all, and wanting to live in small "real" city apartments and live lives full of "experiences."

These rental mostly in 100 year old walkups are for students and first job after grads, not that group when they enter their 30's. If they are making a good income it make money sense to buy a condo than pour money into rental which builds zero equity. The high priced rental market we now have is for wealthy college kids only which means that the EV will remain a transient neighborhood for decades to come.

This group will also be less likely to get wasted on weekends as they did when they were in their 20's. When you have a career job you need to be on your game. They may tire (as many of we older residents) of the noise and trash of this "nightlife" and move to Brooklyn or another Manhattan area.

cmarrtyy said...

Community Boards have traditionally betrayed the community they serve. They work for the real estate industry and the city. The city wants tax money. The reals estate industry wants to squeeze profits anyway they can from their investments. The Community Board facilitates both needs at the expense of the community. We the people are alone.

Anonymous said...

@9:18, if community boards are our last hope, we're already sunk. Virtually every community board is full of squabbling NIMBYs, hucksters, and self appointed petty kings and queens of the neighborhood that accomplish nothing but delay and squabbling. We'd be well rid of these fools if given half the chance.

Anonymous said...

@ Anon 11:51 - I agree that the current real estate market is targeted at college kids and recent grads. But I think the fact that these buildings sold for a shockingly high price just 3 years after their initial sale which was already shockingly high shows that developers are looking to re-position these as more "up market" rentals. A 30-something with student loans and making 200k+ still can't afford much more than a $3k studio, when they're paying half their income in taxes and don't get deductions for loan or mortgage payments. Of course I may be incorrect, and valuations are just completely out of whack.

Anonymous said...

I am starting to think that maybe those rioters on Morton Downey all those years ago had a point.

sam_the_man said...

How much more can they charge? If the average rent is $4900, are they going to try to get, what, $7000? For a walk-up 2-bedroom?

Whatever the market rate shakes out to be, what's clear is that every building that this process happens to will have 100% turnover every year or so. Not the way to maintain a living neighborhood.

Anonymous said...

"we look forward to creating the most desirable walk-ups in the East Village."

This is one of the most crazy statements I've read lately. Good luck making a walk-up "desirable"! NO doorman, NO amenities and NO chance of a stable group of fellow residents - there will be enormous turnover on these units. It's just post-college frat-ification.

I guess the owners will be putting in the requisite roof deck to ensure that all the neighbors are made miserable.

Anonymous said...

Every time a sale like this one happens a little more air gets stuffed in that big inflated real-estate bubble. Everything has a limit except for greed.

Scuba Diva said...

I kind of threw up in my mouth a little when I read "the most desirable walk-ups in the East Village."