And you thought co-op conversions disappeared along with big hair and shoulder pads after the 1980s? You obviously haven't been to Battery Park City lately.
In that oasis jutting into the Hudson River in Lower Manhattan, a 290-unit rental tower called the Solaire is undergoing a conversion to a co-op — a process that began just before state lawmakers passed the sweeping Housing Stability and Tenant Protection Act in 2019, a law designed to protect rental tenants that also raised the bar for converting a property from a rental to a co-op or condo. No longer can developers reinvent buildings merely by selling 15% of the units in advance, as they did during the co-op conversion wave in the '80s. Now, under the most common plans, they must sell a much heftier 51% share beforehand — and not just to anybody. The buyers must be existing tenants.
The Albanese Organization, the Solaire's developer, appears destined to clear this higher bar with ease, according to Crain's. About 100 of the 160 vacant apartments the building, located at 20 River Terrace in Battery Park City, have gone into contract since sales began in the fall of 2021. Where the Solaire once would have had to sell 44 apartments to move forward, it must sell 148 under the new system. Albanese attributes the strong sales to rental-heavy Battery Park City having few places to buy. The new law, which prohibits conversions unless a majority of existing tenants agree to buy an apartment, makes it unlikely that anything else will be converted in the neighborhood — or anywhere else in the city.
"It's just a really high bar," says Aaron Goed, the agent with Corcoran Sunshine Marketing Group who's handling sales at the Solaire. "It will be very tough to replicate what we're doing in the future."
In 2018, the year before the Tenant Protection Act was passed, Albanese filed plans to make the Solaire a condo building. The state attorney general's office took three years, an unusually long time for such a matter, to green-light the new Solaire. During the back-and-forth, the offering plan changed from one that created condos to one that offered co-ops.
The Tenant Protection Act appears to have had a chilling effect on co-op and condo conversions. There were 22 conversions in the works in the year before the law was enacted; that number plummeted to just five in the year afterward, according to a report from the Steven L. Newman Real Estate Institute at Baruch College. So maybe conversions are destined to go the route of big hair and shoulder pads.
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