High interest rates aren’t the only reason some apartments aren’t selling.
Sometimes the dirt underneath them may be the problem, as seems to be the case with a three-level penthouse in trendy Tribeca that hit the market March 19 for $10 million.
The roomy, 7,200-square-foot pad at 142 Duane St. has been searching unsuccessfully for a buyer for 13 years apparently in part because its building sits on land that is not owned by the co-op but leased from a third party. And because the rent on the lot could potentially shoot up when the lease ends—even though that event won’t occur till 2094—some buyers still seem skittish.
“Some attorneys see it and don’t understand it and say, ‘No, no, no,’” said Sabrina Saltiel, the Douglas Elliman agent who has marketed the penthouse from the beginning. “And that’s why it’s taken some time.”
First listed in 2011 for $19.5 million, the penthouse has steadily cut its price in the years since. By 2019, it stood at $15 million, and by 2020, at $14 million, before dropping to its current $10 million mark. Although the apartment did function as a rental for some of that time—it was asking $40,000 a month at one point—the seller, local developer Stephen Corelli, has been open to offers to sell the place since he moved out of the unit in 2011, Saltiel said.
Though it may be true that ground rent adds an extra chunk of change to monthly fees, the situation at 142 Duane does not seem totally dire. Maintenance charges for the penthouse, which is part of an eight-unit, non-doorman, low-frills building, are $13,371 a month, about what one would expect to pay for any apartment of its size regardless of its land arrangement.
But buyers who have looked there seem to have concluded that the risk of a land-lease building, however remote, is not worth taking on, especially when one can find a similar property with fewer strings attached. For her part, Saltiel guessed that the penthouse, which has a living room with a fireplace and skylights as well as a private terrace, could fetch $20 million if it were in a traditional condo.
Condos must sit on owned land in New York; if the land is leased, the building must be incorporated as a co-op, though some co-ops do own their parcel collectively.
But land lease concerns are not just troubling the Duane Street building. Midtown’s Carnegie House co-op will see its lease reset in spring 2025, and the land’s owners are reportedly seeking to dramatically raise the ground rent at the West 57th Street site. The expected higher monthly fees have driven down unit prices in the process. A studio in the postwar building is now listed for $120,000.
Corelli, who is also an architect, developed 142 Duane inside a 19th-century former commercial building near Church Street in 1999, records show. It’s unclear what Corelli paid for the 29,000-square-foot building or to lease the land, which can be a tax-saving strategy; its property records are unclear on those points but suggest he might have had partners in the deal.
But the sell-out of the co-op could have generated nearly $6 million, that is, if the penthouse had sold, records show.
Corelli did not return an email for comment, and the landowner, which appears to be the Drelich family, could not immediately be reached.
C. J. Hughes , 2024-03-25 16:57:15
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