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The news this month that the former home of Papaya King, a tiny takeout joint on East 86th Street and a mainstay of the shopping strip since the Great Depression, will meet a wrecking ball to make way for housing came as a shock to some observers: How could a longtime business loved as much for its cheap hot dogs as for its quirky neon signs vanish just like that?
But in a way, it shouldn’t have been surprising at all. With tick-tock-like steadiness, East 86th has been losing its mom-and-pop businesses for decades, as tea shops, music venues, budget hotels, movie theaters, pet stores and banks, several of which once catered to the area’s longtime German population, have said auf wiedersehen.
In the end, a single-story structure with ample unused air rights serving mango drinks seems to have barely stood a chance in a “highest and best use” analysis, the often ruthless calculation deployed by real estate players to wring the most value out of even specks of land.
It’s clear that the owner of the site, whose address is 171 E. 86th St, has greater aspirations for the low-slung building, which also once included an eyewear store and children’s clothing shop. That owner, developer ZD Jasper Realty, a Long Island-based firm increasingly active across the city, has proposed a 17-story condo with 25 units.
Some recent residential trends involving new homes rather than resales may have inspired its plans.
While activity has been mostly flat — 193 new condos sold in Manhattan during the first quarter of this year versus 201 during the first quarter of 2023, according to data from Douglas Elliman — prices of those units were relatively strong. The median sale price for new developments was $2.1 million this winter versus $1.6 million the previous year, a hefty 31% gain.
Conversely, any investor looking at similar figures for the retail sector might conclude that storefronts aren’t what they used to be.
In the first quarter of this year, asking rents for retail berths in Manhattan averaged $255 per square foot on nearby Third Avenue (the closest major retail thoroughfare), according to data from CBRE. This represented an increase from the first quarter of 2023 but only by about 3%. Along the same lines, more than half of Manhattan’s 19 top shopping areas saw rent declines over the same period, CBRE said.
The pandemic doesn’t seem to have helped Papaya King’s case. In 2020, its landlord Imperial Sterling dragged the no-frills frankfurter stand to court over alleged non-payment of rent, a case that appeared to be ongoing in 2021, when Imperial Sterling sold No. 171 to residential builder Extell Development Co. for $21 million. Although Extell took steps to raze the site, the developer eventually changed its mind, choosing to unload the corner property at a profit to ZD Jasper instead.
To be fair, ZD Jasper, which did not return a call for comment, does plan to include 2,700 square feet of retail space in its new high-rise, according to permits. Likewise, most of the other towers that have marched onto East 86th in recent years offer retail berths on their ground floors as well.
But whether because of changing culinary tastes or the cold realities of real estate economics, it may be hard to imagine any of them having tenants whose business is serving up buns filled with low-cost meat.
171 E. 86th St.
The small retail building at this site, which for decades housed a Papaya King stand — its 1930s-era opening seemed to mark the first time the classic New York combo of hot dogs and sweet drinks were offered — was gobbled up by luxury builder Extell Development before being offloaded to developer ZD Jasper Realty last year. The company, whose chief is Tom Wu, filed plans in April for a 17-story, 25-unit condo project. Papaya King was on the outs with its landlord at the site after allegedly missing more than $120,000 in rent payments during the pandemic. After closing in 2022, the stand tried to make a go of it across the street in a former sports store at 1535 Third Ave., but it never really got off the ground. ZD Jasper, meanwhile, has two projects afoot near Hudson Yards, a 52-unit development at 439 W. 36th St., and a 174-unit, two-towered version at 501 and 489 Ninth Ave. In April, the firm also picked up a sizable Long Island City development site for $47 million.
310 E. 86th St.
Like many stretches of the street, the southern side of this block for years included row houses with faded grandeur. A previous retail tenant in one of them, at No. 310, was a holdover from Yorkville’s German heyday, M. Rohrs’ House of Fine Teas and Coffees. Founded in 1896 and located at different addresses around the Upper East Side in the years since, the narrow 1,800-square-foot berth at No. 310 sold 90 types of its namesake beverages as well as German beers. But M. Rohrs reportedly had a hard time keeping customers as the Q line extension project in the late 2000s turned Second Avenue into a clamorous construction zone, and the store closed in 2011. A Petland Discount followed. In 2019, developer Izaki Group Investments razed No. 310 and four buildings around it, a span from No. 306 to No. 314, to make way for the Harper, a 20-story, 62-unit condo project named for the author Harper Lee, who lived on nearby East 82nd Street. A decades-old Israeli firm whose U.S. division is headed by Eldad Blaustein, Izaki is offering two- to four-bedroom units and amenities such as a gym, music practice room and two roof decks with TVs and kitchens. Eleven of the 62 for-sale units at the building, or 18%, had sold and closed between the start of sales last summer and April 22, according to a spokeswoman for the project. The least expensive unit for sale in late April was a two-bedroom asking $2.1 million, according to the listings site StreetEasy. Izaki snapped up the assemblage in 2017 for $42 million but didn’t file its $260 million offering plan with the state until the Covid summer of 2020. Officials green-lighted the plan the following year, records show.
1289 Lexington Ave.
The challenges that come with mistiming the market seem evident at this site, which is home to an 18-story, 61-unit cond-op originally called the Hayworth. Its original developers, Ceruzzi Properties and Kuafu Properties, assembled the corner site for $119 million in 2014 but didn’t kick off sales until the tower was complete in 2019. By that time, the robust condo market of the mid-2010s had begun to peter out. Company founder Louis Ceruzzi also died in 2017. And then of course came Covid, which in early 2020 ground virtually all projects to a halt. When the team defaulted on its construction loan, lender Children’s Investment Fund, the U.K. hedge fund, moved to foreclose on the project. But developers were simultaneously shopping around the Hayworth, and the team of Zeckendorf Development and the Stahl Organization wound up taking the site, which sits on land leased from the Goldman family, for about $232 million in 2022, records show. Now known just by its address, No. 1289 had by late April sold and closed 34 of its 61 apartments, or about 60%, according to a Crain’s analysis of public records. A 1,700-square-foot two-bedroom unit with two-and-a-half baths was asking $4 million as of April. The white-walled high-rise replaced a retail site whose tenants in recent years have included Petco, Verizon and New York Sports Club. A Dr. Stroer’s School of Languages occupied the site in the early 20th century, vintage photos show.
124 E. 86th St.
Developers may be shying away from large new multifamily projects, but East 86th has some notable exceptions. Rybak Development, a Coney Island-based firm that has been particularly active in the Covid era, grabbed this narrow mid-block site in 2020 for $26 million, and after tacking on some air rights from No. 128 in a $3.6 million deal, is putting up a 20-story, 28-unit condo called Arloparc. Amenities include a gym, a music room and a roof deck with a fireplace. Sales at the limestone condo, which began in spring 2023, are expected to take in about $139 million, according to its offering plan. A spokesman for the project declined to say how many contracts have been signed at the condo, which is to begin closings this summer. A two-bedroom on April 22 was asking $2.7 million, according to StreetEasy. The Beaux-Arts-style bank that once stood on the site contained a branch of the Corn Exchange, a once-ubiquitous retail bank founded in 1853 that Chemical Bank absorbed in the 1950s. Chase Bank later acquired Chemical, and JPMorgan Chase sold the site to Rybak. Debt for the condo project has come from Valley National Bank, which has so far provided $35 million in financing, according to the city register. Most of Rybak’s portfolio is concentrated in Brooklyn, but the firm does seem bullish on Manhattan’s East Side. In 2022, Rybak completed Manor 82, a 7-story, 22-unit condo at 333 E. 82nd St.; it also filed permits in the late fall for a 23-unit offering at 656 Lexington Ave., a single-story retail building at East 55th Street.
222 E. 86th St.
Some nonprofit groups may also view this block as underbuilt, like at this site, a five-story prewar structure that for decades contained a single-room occupancy property known as the York Hotel. In 1994, Postgraduate Center for Mental Health, a nonprofit formed in 1945 to help returning World War II veterans, purchased the York and converted it into a 35-unit affordable housing site. But two years ago, the center filed plans to demolish the gabled building. At the same time, the group, whose CEO is Jacob Barak, has taken steps to increase the size of what might come next. In January Barak purchased air rights from two nearby buildings, Nos. 222 and 230, for $7.5 million, records show, which could allow for a tower at No. 222 with up to 55 units, according to zoning documents. Barak has come under criticism in recent years for allowing poor conditions at some Postgraduate sites, though they appear to be ones operated rather than owned by his nonprofit, and he has blamed a lack of public funding for their challenges. Postgraduate Center reportedly has $130 million in reserves that can be tapped for its real estate. A phone message left for Barak was not returned.
225 E. 86th St.
The street’s shift from retail to residential really began generations ago. Originally home to a German beer hall on a strip teeming with nightlife, this site housed a trendy live music space called Barney Google’s by the late 1960s. Behind a facade lined with candy-colored signs were performances by acts like Tina Turner. Movie director Woody Allen, known for playing the clarinet in regular gigs with jazz bands at the nearby Café Carlyle, apparently launched his local live music career in 1970 with Wednesday night shows at the address. A few years later Barney Google’s became a disco where women were allowed in free before 10 p.m., according to an ad. Real estate interests came knocking by the early 1980s, when developer Joseph Neumann attempted a condo conversion of the mixed-use site, though Neumann did not complete his effort for unknown reasons. A subsequent developer, Roberto Spinelli, tried to pick up the pieces, but he died in 1986, apparently also coming up short. (Spinelli’s partner, the late architect Rafael Vinoly, was executor of Spinelli’s estate.) The firm APM Group finally brought the project across the finish line in the late 1980s, completing a 60-unit project that raked in $18 million, according to its offering plan. Offering mostly one- and two-bedrooms, though with triplex-style layouts, No. 225, which is called Buckingham East, had a one-bedroom non-sponsor unit for sale in mid-April for $780,000. Before Covid hit, a branch of Santander Bank occupied the former bar space. The vacant berth hit the market for $16.5 million in 2021 and sold for $8.7 million the next year to a buyer who appears tied to the rapidly expanding Korean grocery chain H Mart, property records show.
210 E. 86th St.
A union hall for musicians, many of them German, occupied this spot until the mid-1960s, when the Ornstein family developed a 9-story office building on this lot.“Musical Mutual Protective Union” remains inscribed on the back wall facing East 85th Street, but “Yorkville Medical Arts” is the name of the site today. A theater has been tucked inside the walls since 1904, according to the Cinema Treasures website, though its appearance has changed greatly over the years thanks to much slicing and dicing by its owners. A single-screen offering with 700 seats that showed German language films in the mid-20th century morphed into a 2-screen version by the 1980s and then a 4-screen cinema in the 1990s before going dark in 2019, though its marquee survives. Its owner appears to be the Perlbinder family, a four-generation real estate clan, according to the city register. Joseph Perlbinder built housing in Brooklyn in the early 1900s, while son Julius later developed Manhattan apartment complexes such as 35 E. 35th St. in Murray Hill. Julius’s son Barton, who goes by Mark, meanwhile, completed the condo Morgan Court at 211 Madison Ave. in the 1980s. Mark also seems to control No. 210, records show, though he and his brother Stephen have battled in court over the family portfolio. In April, Mark listed the family’s 10-bedroom compound in the Hamptons enclave of Sagaponack for a price that The New York Post reported as $90 million, though Mark had apparently privately shopped around the waterfront estate a year earlier for a hefty $150 million.
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C. J. Hughes , 2024-04-25 12:03:05
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