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A blog for breaking sales and neighborhood real estate news.

Massey Knakal has been exclusively retained to arrange for the sale of 39 (out of 54) unsold cooperative units in 3260 Netherland Avenue in the Riverdale neighborhood of the Bronx. These 39 units are located within a 54-unit, six (6) story, South Riverdale elevator building constructed in 1950. The package consists of 24 one-bedroom units, 11 two-bedrooms units, and 4 studios, of which 25 are Free Market, and 14 are Rent-Stabilized. Six (6) of the Free Market units are currently vacant.

Click here for listing detail.

Neighborhoods: Riverdale/ Agents: Karl Brumback, Paul Smadbeck

This brand new elevatored luxury construction rental building in Williamsburg, Brooklyn has a total of 32 units of which 13 are 2 BRs, 13 are 1BRs, and 6 are 2 BRs plus a home office. There are also 16 parking spaces on the premises which are rented separately. The apartments are currently 100% leased. The property features such amenities as a gym, storage, and  laundry. The property also has received a 25 year 421a tax abatement.

Click here for listing details.

Neighborhoods: Williamsburg/ Agents: Mark Lively

A six-story elevator apartment building at 126 Franklin Avenue located in New Rochelle, NY sold in an all cash transaction valued at $4,750,000.

The 41,676 square foot building contains 44 units, of which 25 are one-bedroom units, 18 are two-bedroom units and there is one studio unit. There are 41 (combined) indoor/outdoor parking spaces as well as laundry facilities on the ground floor. The seller, 126 Franklin Avenue Partners, sold the property to Echo Bay Properties LLC, an experienced owner manager in Westchester County and Connecticut. The sale occurred at a capitalization rate of 6.3% and 8.5 times the gross rent.

Neighborhoods: Westchester County

An 18' wide, 4-story, approximately 3,240 square foot, 3 family townhouse situated on an irregular shaped lot on the south side of East 30th Street between Second and Third Avenues.

The subject property lies in a R7B zoning district and has approximately 1,638 square feet of air rights. The building could be delivered vacant.

Click here for listing details.

Neighborhoods: Murray Hill/ Agents: John Ciraulo

The subject property is a six story walk up building located on the north side of East 77th Street between Second and Third Avenue. It contains 24 residential units and 2 commercial units. 21 of the units are Rent Stabilized and 3 are free market. All of the units are junior one bedroom apartments. 

Click here for listing details.

Neighborhoods: Upper East Side/ Agents: Robert Knakal, Thomas Donovan, Thomas Gammino Jr.

For those of you who are golfers, you will appreciate the following tale.

I was playing my first round of the year this past weekend and thought I was having one of the best rounds of my life. I warmed up on the range for an hour before I teed off and spent another thirty minutes on the practice putting green. I approched the first tee and launched a drive 275 yards right down the middle of the fairway. My approach shot landed 5 feet from the pin. I walked up the fairway looking around at the trees and the blue sky and feeling like “Wow, this is great”. I stepped up to the ball and confidently sunk my 5 footer for a birdie on #1.

Click here for full article.

Agents: Robert Knakal

14 Highland Avenue is a very well maintained five (5) story brick walkup apartment building with twenty - two (22) units. There are (9) Studio units, (9) 1-bedroom units, (1) 3-bedroom unit and (3) 4-bedroom units. The building is located just off S Broadway, offering tenants easy access to public transportation and retail shopping. The building has been well maintained by longtime ownership and all units and common areas are in excellent condition.

Click here for listing details.

Neighborhoods: Westchester County

This Anglo-Italianate brownstone was built in 1853 by Reuben R. Wood. It has five stories including the garden level. The building is configured with five apartments (1 floor through), all of which are fair market. The ceilings reach as high as 12' with oversized windows which provide great light and air. The property also benefits from a south facing garden with potential for a roof top deck. The apartments are all currently occupied and can be vacated with 90 days notice. The brownstone still maintains many of its original detailing throughout.

Click here for listing details.

Neighborhoods: Greenwich Village

Two (2) contiguous two-story office buildings located on the south side of Northern Blvd. between Hereford and Merrivale Roads in Great Neck, NY. 300 Northern Blvd. sits on a 18,150 SF lot and has approx. 10,920 square feet. 310 Northern Blvd. sits on a 12,100 SF lot with approx. 6,200 square feet. 300 Northern Blvd. has (approx.) 31 parking spaces. 310 Northern Blvd. has (approx.) 23 parking spaces. The two lots have a total frontage of (approx.) 250 SF on Northern Blvd. 

These buildings may be sold seperately or as a package.  This is an excellent opportunity to purchase two exceptional office buildings on Northern Blvd. in Great Neck.

Click here for listing details.

Neighborhoods: Nassau County

On February 2 of this year, the New York State Assembly passed a package of bills to modify and strengthen rent regulation to an even greater degree in the tenant’s favor. The new legislation would repeal vacancy decontrol laws, increase penalties for tenant harassment and revoke a statute that restricts New York City from strengthening its rent regulation laws.


Legislators contend that these bills will help maintain the affordability of rent stabilized housing, but they will have the opposite effect on housing and will produce collateral damage. If these bills are passed in June by the Senate, two things are virtually guaranteed: First, the housing stock in New York City will deteriorate at a faster rate than that seen in the 1970s. Second, the tax base will be negatively impacted to a significant degree.


We must understand, first, that rent stabilized and rent controlled housing is misallocated, as financial need is not part of the equation. The rent laws provide maximum benefits to those who have been in place for a long time regardless of their financial status and need. This results in a system that makes people resistant to moving even when, in the normal course of family life, they would seek to downsize or upgrade the size of their apartments. This constrains the supply of available units, which puts upward pressure on the average rent that a New Yorker pays. This premise has been verified in studies completed at MIT and at the Wharton School.


Unfortunately, even if every economist in the world proved to the City Council and the New York State Assembly that the elimination of rent regulation would lower average rents in New York, it would be political suicide for any legislator to take a position against rent regulation. There are simply more tenant-voters than non-tenant-voters.  It’s for that reason that the Assembly passed that ridiculous package of bills in February.


Let’s take a look at the probable consequences of this legislation.



Housing Stock Deterioration


In the 1970’s, we saw a significant deterioration in the quality of our housing stock. Because of rising costs of ownership, which could not be mitigated because of rent regulation, many buildings were abandoned and burned, and entire neighborhoods suffered. The legislature, in response, created a system of rent regulation in which an owner was rewarded for making major capital improvements (MCI) in a property and for upgrading the quality of a unit via an individual apartment improvement (IAI). For an MCI, the owner could increase the legal monthly rent by 1/84th of that cost. For improvements to an individual apartment, 1/40th of the costs could be passed along.


That legislation motivated the private sector to invest in the city’s housing stock. The Community Housing Improvement Program (CHIP) has estimated that on an annual basis these two incentives create approximately $500 million of private investment. The Executive Director of CHIP, Patrick Siconolfi, said, “These two programs have been an enormous success, and the dollar value of investment in housing which they represent far exceeds state and city investment in affordable housing.”


The current package of proposed bills, however, creates a disincentive for the private sector. Under the Assembly’s Bill A01928, rent surcharges for costs of MCIs would be further regulated—and the bill would prohibit rent surcharges authorized for major capital improvements after the cost of the improvement has been recovered.


MCIs and IAIs are the primary incentives to upgrade building systems in the older rent regulated housing stock. Remember: 60% of New York’s stabilized housing stock is at least 80 years old—and old buildings require more maintenance, not less. If the MCIs are recoverable over a longer period of time and made a temporary surcharge only, an owner will not be fully compensated for the cost of making an improvement.


As it is, the Department of Housing and Community Renewal (DHCR) does not allow recovery of the full actual cost attributable to an MCI. DCHR does not allow an owner to recover the cost of borrowing. Most MCIs are made with loans, since buildings, especially small and medium sized properties, seldom generate sufficient cash flow to pay for these improvements from reserves.


The proposed laws provide incentives for owners to do little more than patch and minimally repair building systems that are antiquated and obsolete rather than replacing them.



Negative Ripple Effect


All of the businesses that depend on these improvements from the contractors to the suppliers to the manufacturers will be financially hurt by this legislation and thousands of jobs will be lost. Suppose that an owner, who has used a contracting firm for years to do major upgrades to her buildings, decides that without the incentives provided by the present system of rent regulation she can’t make further improvements. She informs her contractor that there will be no work for them in fiscal 2009-10.


The contractor then has to lay off several employees as other owners follow suit. The contractor then contacts his suppliers, who provide windows, boilers, burners, plumbing, roofing material, intercoms, and electrical service—and informs them that purchases will be significantly reduced in the upcoming year.  The suppliers then lay off several of their workers. The suppliers then contact the manufacturers from whom they buy these materials from and informs them that purchases will be reduced—forcing the manufacturer to layoff even more employees.


The result: fewer dollars pumped into the economy, thousands of jobs lost—and a deteriorating housing stock and worse living conditions for the average New Yorker.



Negative Impact on Our Tax Base 


New York State and New York City depend on real estate taxes for a significant percentage of their operating budgets. We know that corporate tax collections will be significantly reduced this year as corporate earnings across all sectors drop. Should the slated bills passed by the Assembly pass in the Senate, real estate tax collections, too, will start to decrease.


Several of the bills will effectively put a cap on collectible rents and limit the upside potential in properties. For example, it’s important that an owner be able to increase rents as tenants vacate an apartment or their needs for subsidized housing change. The city’s Rent Guidelines Board determines the yearly allowable increases for regulated apartments—and has historically short-changed owners, both in relation to the guidelines and the vacancy factor. State laws have attempted to make up this deficit by making the vacancy factor statutory. But one of the pending bills suggests reducing the vacancy factor from 20% to 10%.


Yet another bill calls for the elimination of preferential rents being for specified periods only. Any rent that is charged to a tenant, even if it is well below the legal registered rent, will be the new low basis of all rents moving forward for that tenant. In a declining rental market, some owners may leave units vacant rather than establishing a new lower rent threshold for the unit. This will lower income and taxes—and reduce the supply of available units.


While these rent bills are statewide, they negatively impact the tax base in New York City to a much greater degree than the rest of the state. This will result in Upstate residents subsidizing all of the regulated tenants in the City to an even greater degree than they already do.


We are in a recession, the effects of which are likely to be with us for years. Is now the time to put even more people out of work and reduce the taxes that are collected by the City?



Protection for the Wealthy


Another pending bill calls for the elimination of luxury decontrol. Another calls for the reregulating of any units deregulated prior to January 1, 2007. The luxury decontrol provisions, enacted in 1993 and amended in 1997, provided for apartments to leave regulated status—upon vacancy—when the rent exceeded $2,000 a month. For occupied units, if the rent was over $2,000 per month, and the tenant’s income exceeded $175,000 in each of the last two years, an apartment would become free market upon the filing of the appropriate paperwork by the owner.


Another pending bill calls for increasing the income threshold to $240,000 and increasing the rent level eligible for deregulation $2,700 per month! Is the assembly stating that those earning over $175,000 are in need of welfare—which is what rent regulation is?



Broken Contracts


Another pending bill calls for all Mitchell-Lama properties built after 1974 to remain rent regulated forever. If this bill passes, I can’t imagine any developer would ever again want to build based on any program the Government provides, for fear that the rules will change midway through the process.


Developers have long been reluctant to build in New York because they couldn’t rely on the original contracts the Government provided in relation to removal from regulation once the benefits expired. Developers were frequently offered incentives to build affordable housing, only to find the laws changed when it comes time to have the properties removed from regulatory status. This bill is yet another example of that pattern. It will send a clear message to developers: “Do not build affordable housing in New York.”


I believe that the city needs affordable housing and should have much more of it. New York should not be a place for only the wealthy, for it is the diversity of our city that gives it its character. It’s unfortunate that our elected officials consider it the duty of the private sector to provide this affordable housing.


The public sector could provide affordable housing on its own initiative—or could create reliable incentives (which could not be easily changed by subsequent legislation) for the private sector to build. The key word here is “reliable.” The elimination of the 421A program, which had resulted in the creation of tens of thousands of affordable units, will lead to an abyss in the bar chart showing the dramatic reduction of affordable units created over the next few years. Can’t legislators look at the big picture?


With this set of bills, the Assembly is in effect taking private property for public use: reallocating private resources to supposedly benefit many at the expense of few. When the “few” and the “many” are translated into “voters,” the Assembly’s agenda becomes transparent. But they had better realize that the “few” is a lot larger than they think—because thousands of the “many” will be put out of work by this legislation.     


There’s still time to prevent passage of these bills in the State Senate. I urge you to contact your Senator to express your concerns.


Agents: Robert Knakal

A five-story walk-up apartment building at 59 Morton Street located in the historic district of Greenwich Village sold in an all cash transaction valued at $3,700,000.

Located on the North side of Morton Street between Hudson Street and Seventh Avenue, this 25’ wide apartment building contains approximately 6,680 square feet. It is comprised of two rent stabilized tenants; one rent controlled tenant and a vacant parlor and third floor. Built in 1828 for Cornelius Oakley, this house was selected in the 1930s by the Federal Arts project of the Index of American Design as the most outstanding example of late Federal style in New York City.

Neighborhoods: Greenwich Village/ Agents: John Ciraulo

Massey Knakal, In The News

4/17/2009 2:42:06 PM/ Massey Knakal/ News

Massey Knakal was featured in 36 articles in the last 2 weeks.

Of note –

  • Tom Gammino and Paul Massey’s sale at 526-46 East 82nd Street was picked up by, GlobeSt, and BisNow
  • Nick Petkoff’s sale at 108-21 72nd Avenue in Forest Hills was featured in BisNow, RE Business Online and
  • James Nelson and John Ciraulo’s sale at 59 Morton Street was picked up by BisNow and GlobeSt
  • Michael Amirkhanian’s listing of the famous Salve Theater in Bed-Stuy was featured in The Daily News
  • Stephen Palmese, Matt Giordano and Bob Knakal’s listing at 130 Montague Street was picked up by and Brooklyn Daily Eagle
All articles can be found at Massey Knakal News.

Neighborhoods: Greenwich Village, Upper East Side, Forest Hills, Bedford Stuyvesant, Brooklyn Heights/ Agents/Corporates: John Ciraulo, Michael Amirkhanian, Paul Massey Jr., Robert Knakal, Stephen Palmese, Thomas Gammino Jr., Thomas Donovan

Four six-story walk-up apartment buildings at 526-46 East 82nd Street, located on the south side of East 82nd Street between York and East End Avenues, sold in an all cash transaction valued at $15,500,000.

The subject properties, which traded for the first time in 70 years, contain 106 residential units and one commercial unit. The 59,000 square foot (approx.) property contains 74 free market units, 22 rent stabilized units, and 10 rent controlled units with average rents of approximately $33/sq.ft. There are 88 two-bedroom units, 17 one-bedroom units and one studio. The sales price of this post Lehman transaction corresponds to $263 per square foot, a 6.8% cap and 9.5 GRM.

Neighborhoods: Upper East Side/ Corporates/Agents: Paul Massey Jr., Thomas Gammino Jr.

This Anglo-Italianate brownstone was built in 1853 by Reuben R. Wood. It has five stories including the garden level. The building is configured with five apartments (1 floor through), all of which are fair market. The ceilings reach ashigh as 12' with oversized windows which provide great light and air. The property also benefits from a south facing garden with potential for a roof top deck. The apartments are all currently occupied and can be vacated with 90 days notice. The brownstone still maintains many of its original detailing throughout.

Click here for listing details.

Neighborhoods: Greenwich Village

The subject property is ideally situated in the heart of “The Hub,” one of the most up-and-coming neighborhoods in the tri-state area. “The Hub” is the premier shopping district of the South Bronx and includes a unique mix of national, regional and local retailers.

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Neighborhoods: The Hub

This is a six story mixed-use loft building with a store on the ground floor and 6 apartments above. 4 of the apartments are floor-thru while the other 2 are half-floors.

There are 3 IMD (Interim Multiple Dwelling) tenants remaining in the building and 3 vacant apartments. The ground floor space is also vacant and has a great 14' ceiling height. Additionally the basement use is solely for the ground floor tenant.

This is a perfect opportunity for an investor to acquire a loft building for less than $300/SF. Owner financing is available with 40% down and for a 3 year term.

Click here for listing details.

Neighborhoods: Lower East Side/ Agents: Michael DeCheser

Known as the Black Lady Theater, this property has a rich local history. The building has over 53’ of frontage on a main retail corridor in the busy Crown Heights neighborhood of Brooklyn. The first floor and basement is the theater while the second and third floors are used as meeting areas and offices.

Due to the internal layout, this property is wonderful opportunity for a church or it can be converted into retail. The top floors can be used as classes, meeting rooms or converted into three bedroom apartments. The utility room, which his located in the basement, is about 500’. While in good structural condition, the building needs some renovations.

Public transportation is in abundance and the 3 train is a few short blocks away on Eastern Parkway.

The property can be purchased together with its sister property located on 1215-17 Fulton Street better know as the Slave 1 Theater.

Click here for listing details.

Neighborhoods: Crown Heights

A three story, 75' wide building with garage space on the ground floor, unfinished space on the second floor and beautifully renovated office space on the third floor. The property has heavy floor-loads and a brand new passenger elevator. Views from the roof of Midtown and New Jersey are breathtaking. Air Rights of approximately 15,725 sq. ft. exist and allow for significant expansion possibilities.

The area is home to Kenneth Cole, Prada and Ogilvy & Mather. The property represents an interesting candidate for conversion to a similar such office, retail, showroom, and/or production facility.

Click here for listing details.

Neighborhoods: Midtown West/ Agents: Christoffer Brodhead

Yes, I know that I am a commerical investment property sales broker, so why do I track the national housing market so closely? The answer is that this market has the most profound impact on our financial system, which effects our capital availability, which in turn effects our commercial real estate markets. Let’s look into this dynamic.

The most recent housing bubble that we experienced has upended our financial system. History helps us to understand where we are today. Since 1070, there have been two other major housing bubbles, with peaks in 1979 and 1989.

Click here for full article.

Agents: Robert Knakal

We recently sat down for our quarterly conversation with Massey Knakal Chairman, Robert Knakal to discuss his views on the economy and the implications for our local NYC building sales market. We hope you find this interview informative and timely:

Q: What has happened to the building sales volume in the first quarter of the year?

A: Sales volume was extraordinarily low. In 2008, volume in the under $100 million market was down 40% from 2007 levels. The over $100 million market was affected much more adversely. We do not have the final figures for the first quarter yet but are anticipating that if extrapolated in annual terms, the volume of sales was probably running at about 1.2%. If you recall, our projection for turnover this year was “1.6% or lower,” representing the percentage of the 125,000 multi-family apartment buildings, mixed-use, commercial and retail properties that exist in the five boroughs in our niche. Since 1988, the average turnover has been 2.5% and we have only dropped to 1.6% in two other years, 1992 and 2003, both at the end of recessions. The very low turnover in the first quarter is the result of the uncertainty in the marketplace in the fourth quarter of 2008 after Lehman Brothers failed. People were shell shocked and there were not a lot of contract signings in the fourth quarter. Those that were signed resulted in closings in the first quarter. We anticipate the level of activity to pick up in the second quarter as first quarter contract signings showed a reasonable increase.  


Q: How were prices affected in the first quarter?

A: Well, that depends on the segment of the market that you are referring to. Clearly, the over $100 million market saw very significant reductions in value but there have been so few transactions it is very difficult to quantify what that reduction was. 1540 Broadway is the transaction everyone points to which occurred at about 70% less than it had at the height of the market. I don’t think you can draw a conclusion about the entire market based upon one transaction. With regard to the under $100 million market, we have seen pricing differ based upon product type. The multi-family sector has been holding up the best, where capitalization rates have increased only 50-75 basis points from their peak. Retail properties and office buildings have been much more greatly impacted by the economy as the increase in unemployment has affected demand for office space and rents have been tumbling. Capitalization rates on office buildings are up in the neighborhood of 150-200 basis points from their peak. With regard to the retail property market, consumer spending, although up slightly in March, is still at extraordinarily low levels which is putting tremendous stress on retailers. For these reasons cap rates in this sector are also up by about 150 -200 basis points.


Q: You indicated the multi-family sector was doing best, have you seen any tangible effects of the bills passed by the assembly in January?

A: Everyone in the marketplace is concerned about the status of these bills. If the bills are passed by the Senate in June there are two things that are more.

Download the entire 2nd Quarter 2009 - Conversation with the Chairman.

Agents: Robert Knakal

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