There may be buried treasure in your basement. There certainly was over at Gramercy Park, where a co-op defied the odds to earn more income when many of its neighbors – who depended on techniques such as flip taxes – are taking in considerably less.
How did they do it?
According to Frederica Gamble, a board director at the East 19th Street co-op that discovered the “treasure,” Al Lemer, the board’s forward-thinking treasurer, came up with a way for the building to add an amenity and earn extra cash: new storage bins.
Back in 2005, the board, at Lemer’s instigation, began exploring options about storage – it “seemed to be something people wanted and seemed to be something that could bring additional income into the building,” she notes. About 35 people responded to a survey of the building’s 83 shareholders. The board decided that was a strong enough response to begin looking around at space in the building, at construction costs, and at how to structure the leasing of the bins.
The co-op board was lucky. The building was renting part of its basement to a local hardware store, which didn’t seem to be doing well. When the hardware store’s lease came up for renewal in 2006, managing agent Jeffrey Friedman, president of Vintage Real Estate, approached the store’s owners with a proposal: allow the co-op to reclaim two-thirds of the basement space and in return, receive a rent reduction from $1,100 to $300 a month. The store’s owners jumped at the proposal.
By combining the space that was formerly rented by the hardware store to a large handyman’s shop with another small space that had been used by contractors to store materials, the board ultimately was able to create a large room that could house the storage bins.
After the board spent several sessions trying to determine whether it was best to hire someone to build the bins or simply to lease them from a company and pass on the cost to the shareholders, the choice was made to have the bins permanently installed, and charge the shareholders a monthly rental fee. “Al, God bless him, worked with a tape measure – he’s a retired accountant, he has engineering in his background - [and] put in 33 units initially,” recalls Gamble. The total cost of the basement renovation – including painting and the installation of the storage bins and improved lighting – was $32,000. The storage bins finally went on line in September 2007. Last year, says Gamble, they earned $48,000.
To install the bins, “we found a company in New Jersey [called Custom Storage Systems],” Friedman recalls. “They were very nice people, very cooperative, very aboveboard.” The company helped the East 19th Street co-op board lay out the space and offered different sizes of bins.
The board settled on a standard rental fee of 90 cents per cubic feet, so, for example, a four-by-four-by-eight storage bin rented for $115 a month. Because of space constrictions, several different bin sizes were built.
To make the process as fair as possible, a lottery was held. Names were pulled out of a hat by the super, and the bins were assigned according to the order in which the names were drawn. There are four categories: $85 a month, $115 a month, $145 a month, and $175 a month. Some larger bins go for over $200 a month. The bins collect roughly $50,000 a year.
To make certain that the building would continue to see a steady income from the storage bins over time, the co-op’s attorney drew up an agreement that said that, as the building’s maintenance increased, the storage bin rent would increase, at the same percentage.
Both Friedman and Gamble say the bins have been a great success (the treasurer, Al Lemer, was on vacation and could not be reached). Within six months of the bins’ construction, all were rented. And more are going to be installed. “They look great,” says Gamble with enthusiasm. “The shareholders love it. We are going to be adding another 10 storage units later this year.”