In other scaffolding-related news that will warm the hearts of Tribecans everywhere, the sidewalk shed that has covered Greca’s outdoor dining setup on Washington Street between Desbrosses and Watts since October 2020 has been taken down. Rejoice!
While Greca certainly did their best to make their sidewalk shed cozy for outdoor dining over the past two and a half years, they just couldn’t replicate the breezy vibe of their pre-covid, sun-drenched setup, which was undoubtedly one of the best outdoor cafes in Tribeca at the time. They didn’t have any tables or chairs out yet, but that’ll likely change when the weather gets better. This is a positive development for that stretch of Washington Street, which has been dotted with construction for years: the development of Hotel Barrière Fouquet’s, facade work at the Fleming Smith Warehouse, construction of the townhouse at 142 Watts, the construction of 456 Washington before that, and whatever else I’m forgetting.
Another positive development for that block is the reported addition of Big Gay Ice Cream in the space previously occupied by Fika Coffee on the corner of Washington & Desbrosses. That’s been vacant since late 2019. The new location isn’t shown yet on Big Gay Ice Cream’s website, but it was reported by the all-knowing Tribeca Citizen, Google Maps has it, and you can see equipment being stored inside:
The removal of scaffolding marks significant progress on the redevelopment of 450 Washington Street into luxury condops from its previous life as a 421-a rent stabilized rental building, Truffles Tribeca. With that said, I go down a real estate rabbit hole…
450 Washington is being redeveloped by Related Group, who also built 456 Washington to the immediate north and 70 Vestry to the immediate south. They recently replaced the windows, refinished the facade, and are presumably wrapping up the interiors. It has the amenities you’d expect of a luxury building with Hudson River views in Tribeca: roof terrace, fitness center, golf simulator, children’s playroom, and a private dining room. Marketing materials, availabilities, floorplans, and more information are available on the 450 Washington website. There are 176 units with prices ranging from $1 million for a studio to $8.5 million for a penthouse or roughly $2,000-$3,500/sf. It’s uncertain exactly how many units are in contract because sales only recently launched. StreetEasy shows 24 currently in contract.
If you read our previous article about 67 Vestry, you’ll notice that asking prices at 450 Washington are substantially cheaper than those at 67 Vestry even though it has comparable location and views. Compared to the $2,000-$3,500/sf being asked at 450 Washington, 67 Vestry is 100% in contract asking $2,750-$7,250/sf, an average upwards of $4,200/sf and a significant premium. The primary reason for this differential is likely 450 Washington’s complicated “condop” structure.
A condop is essentially a coop within a condo. A review of the offering plans provides more information. 450 Washington is being divided up into four condominium units: 2 commercial (retail) condos, 1 parking condo, and 1 “other” condo. That other condo will contain a residential coop. That residential coop will govern the 176 apartments being offered. Purchasers of apartments will be buying shares of that coop, which is inside of a condo, hence “condop.”
New York City real estate developers most commonly use this condop structure in order to separate non-residential uses with independent ownership like retail and parking from the residential apartments for properties where the developer does not own the land outright. That situation applies here.
According to public ACRIS filings, in April 2002, Ponte Equities, a prominent landlord in Tribeca and Hudson Square, leased the land at 450 Washington to Truffles LLC, an entity owned by the Jack Parker Corporation, to construct the original rental building. In March 2006, that ground lease was converted to an “estate for years” agreement for $29 million. Pursuant to that agreement, the Jack Parker Corporation would own the land and building until April 30, 2105 (yes, the year 2105). After April 2105, ownership of the land and building reverts back to Ponte Equities. In February 2019, the Jack Parker Corporation sold that estate for years interest to Related for $260 million and Related began the current redevelopment. That reversion to Ponte Equities mechanism remains in place.
Because ownership of the land and building will ultimately revert back to Ponte Equities, 450 Washington shareholders will have to deal with at least two key downsides compared to owners of standard condominiums.
- Ownership of everything—land, residential apartments, retail condos, and parking—will revert back to Ponte Equities upon expiration of the estate for years agreement on April 30, 2105
- Shareholders do not own fee title to their units, which can make obtaining a mortgage more challenging
These elements add cost, complexity, and risk, substantially reducing the asking price of these units relative to neighborhood comps before taking into account typical apartment specifics—finishes, views, quality, etc.
On the bright side, because this is an estate for years agreement whereby the sponsor owns the land for a period of time rather than a ground lease whereby the sponsor rents the land for a period of time, there does not appear to be any ground rent payable by shareholders on top of their monthly maintenance charges, so monthlies shouldn’t run above market.
In addition, the offering plan states that Related is retaining the right to rent more than 49 percent of the apartments being offered and that there is a mechanism to sell apartments at even deeper discounts to existing tenants of the Truffles rental building. These factors could push values down further by providing a less desirable living experience for new owners and by creating challenges with building governance given the various potential different types of owners (previous tenants turned owners, sponsor rental units, bonafide new owners, etc.).
Our grade school real estate enthusiasts should mark their calendars to keep an eye on this project at the turn of the 22nd century if Tribeca isn’t underwater by then.
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