then what? 34 Leonard new Manhattan loft development to be auctioned

wanna buy a building?
Back when I was marketing a Tribeca loft that never sold (sellers were firm about what they wanted; The Market was firm that it was not available), I used to watch the construction of 34 Leonard Street out the window, hoping that it would not take away any view slices that might hurt. It didn’t.

That brand new "loft" building topped out at 9 stories and  fits nicely into the neighborhood but it did not sell in the post-Lehman Manhattan real estate market. (Note the Anticipated Occupancy date, below.)  The lender has now foreclosed, and the property is to be auctioned off on May 5.

The project is a lovely new 9 story building with 16 units. The broker babble began at the height of The Market, in February 2008 (oops):

Designed by renowned architect Beyer Blinder Belle, 34 Leonard truly captures the charm of Tribeca and fits in well on this quiet cobble stone street. Anticipated Occupancy of Fall 2008. The building offers a large array of amenities including a 24-concierge, artist Jennifer SteinKamp light installation in the lobby, wine cellar with private 300 bottle temperature controlled wine closets complimentary for each resident, Landscaped Rooftop Sundeck with Outdoor Shower and Bar/Grill prep area, State-of-the-Art Fitness Center, Private Storage complimentary for each resident, Pet Spa and an Art Curator to help you build your own Personal Art Collection. Each Artful Loft features a minimum of 10′ ceilings, Dramatic 8′ Windows, Kitchens by Poggenpohl, Rich American Walnut Flooring throughout, Recessed Lighting, Central Air, and Gallery inspired layouts conducive for displaying your Art Collection.

stuff happens
Four of the 16 units were in contract, according to our data-base. Curbed reported last June that the developer had defaulted on a loan. Crain’s reported on Friday that the land and building are to be auctioned off on May 5 to repay two loans totaling $37.5mm. The asking prices of the four units in contract was about $16.mm. Asking prices on the remaining units ranged from a few around $1,000/ft to a penthouse over $2,000/ft.

one way to fix a land lease problem
The development is a coop because the land and the building are separately owned. (Other than the peculiar world of Battery Park City, I don’t think you can have a condo that does not own the land.) According to the Crain’s article, both the building and the land are being foreclosed on, with two loans involved. If one entity were to buy both pieces, the land lease issue (potentially, a big drag on the market) should be avoided.

one way to fix a bad economics problem
With the developer being wiped out in the foreclosure, all the past sunk costs (acquisition and constriction, mainly) are removed from the financial calculations for a profitable development. The residential footprint looks to be "5,303 sq ft" (8 floors), with commercial space of "4,100 sq ft". That’s 46,000 sq ft, or about $815 for each foot if the loans are fully valued.

It will be interesting to see if a new entity can buy the loans and make money on the spread between that full $815/ft (plus new marketing and carrying costs) and wherever The Market is for what seems to be a lovely new Manhattan loft development. Wiping out the legacy costs and starting life fresh as a condo that owns the land (or staying a coop if that’s easier, without the land lease drag) will surely make life simpler, and potentially profitable.

Maybe they drop some of the Ridiculous Amenities (pet spa? on-site art curator?) in the new market….

Any vultures circling overhead? Maybe this is a way for the Buster’s Garage guys to return to their roots.

h/t to some StreetEasy reader for flagging the Crain’s article.

© Sandy Mattingly 2010