November 5, 2020
Crain's New York Business
Chelsea strip could hold clues for health of Manhattan development
It’s tucked away, low-key, and a bit rough. But West 28th Street between Seventh and Eighth avenues in Chelsea may hold clues about the mid-pandemic state of development.
The industrial stretch is the site of a handful of major projects, residential and commercial, that appears to be going full steam ahead even as others tap the brakes.
“These seem like tougher times than the last recession,” said Jana Angelakis, who is trying to sell her two-bedroom, two-and-a-half-bath condo at 261 W. 28th St. Since listing the unit last winter, Angelakis has cut its price four times, to $1.7 million from $1.8 million, while also offering it as a rental at $6,250 per month. “But it’s exciting to see what’s happening on this block.”
Of all the new developments, the one with the most immediate risk, perhaps, is the Maverick, an 87-unit, 20-story condo at 215 W. 28th St. Sales begin at year’s end, which will test the area’s luxury appetite.
Though officials have yet to approve prices for the project, which is from developer HAP Investments, they should average $2,400 per square foot, or starting at $1.2 million for one-bedrooms.
In comparison, new one-bedrooms in Chelsea now list for an average of $2.1 million, according to StreetEasy.com, with one-bedrooms averaging $1.3 million.
“Time has worked against me” with the project, which missed the peak condo market of 2016, said Eran Polack, HAP’s chief executive officer.
The Maverick also features a 112-unit rental portion, with an entrance at No. 225, that was conceived as a hedge against a softening condo market even before coronavirus hit; it will begin leasing this winter. Both the condo and rental will share a pool, saunas and a roof deck.
Other projects are right behind it, like 28&7, a boutique 11-story office building from GDSNY at 322 Seventh Ave., which will open in 2021. Whether the work-from-home trend impacts its leasing remains to be seen, brokers say.
And this month, ground-breaking occurs at 241 W. 28th St., a 479-unit rental planned from MAG Partners.
This fall, MAG turned not to a conventional bank for financing but a private equity firm, Madison Realty Capital, which lent $173 million.
“As major tech companies continue to sign big leases within walking distance,” MaryAnne Gilmartin, MAG’s founder, said, “We expect to see very strong long-term demand.”