[Image via Streeteasy]
Back in April 2013, 534 E. 14th St. hit the market for $7.1 million. The 5-story walk-up between Avenue A and Avenue B is adjacent to Extell's incoming retail-residential complex.
At the time, not much was known about the size and scope of the development. Today, though, everyone has a good of what's to come. The two buildings at No. 532 and No. 500 will include 150 residential units and nearly 57,000 square feet for retail.
So a listing for 534 E. 14th St. returned yesterday with a new broker (Marcus & Millichap) and a new price tag — $8.995 million.
Here's the listing via Streeteasy, which doesn't sound too promising for current lease holders…:
The subject property is a 5-story, mixed-use, walk-up building containing 15 residential units, 2 ground floor retail units and a cell tower. Of the 15 apartments, there are 14 studios and one 1-bedroom. All of the apartments are rent stabilized and contain an average legal rent of approximately $2,400. With an actual average rent of approximately $1,769 per month, this provides an investor significant immediate rental upside.
The property contains two retail tenants: ABC East 14 Cleaners, which occupies 800 square feet with a month-to-month lease and New Tasty King, which occupies 800 square feet and is also on a month-to-month lease. The two tenants are paying an approximate average of $109 per square foot.
The property is located adjacent to Extell’s new development which will have over 30,000 square feet of retail asking $250 per square foot. Further retail upside can be recognized by building out the retail space using the property’s additional air rights. The property also features a cell tower on the roof, which pays $750 per month and has a lease expiring on June 30, 2019.
According to Streeteasy, the property has 3,078 square feet of unused air rights.
5 comments:
.>> All of the apartments are rent stabilized and contain an average legal rent of approximately $2,400. With an actual average rent of approximately $1,769 per month, this provides an investor significant immediate rental upside. <<
Am curious, what does this mean? Is the landlord currently not charging tenants their full rent? Why would they do this?
Not an attractive property. It looks like it's dying.
Moe - It's called a preferential lease. It basically means the market rate of the apartment (what people are willing to pay - average of $1,769 in this case) is less than what a regulated apartment is allowed to rent for (average of $2,400 in this case). This is common in smaller apartments that typically rent for less. Since they aren't as good of a deal as a huge four bedroom regulated apartment renting for $500/month, people aren't incentivized to live there for 30+ years. The increased voluntary turnover means the regulated rate is increased much faster due to vacancies that occur more often. In the case of this building, a potential buyer would likely renovate individual apartments as they become vacant so that they can demand a higher market rate (likely over $2000).
And I am sure that whoever shells out 9 mil to buy it will be happy to let Tasty King, my cheap Chinese of choice, stay there instead of replacing it with something upscale. Right?
8:12 thanks for the explanation one more clarification please. When you say "" regulated apartment is allowed to rent for"", doesn't that mean what the lease, as escalated by the annual increases plus any MCI increases, specifies? Or do you mean the lease has that rental amount stated, but both parties agree to a lower rental?
Sorry if I am being a bit dense here.
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