Multifamily Monday: Have Condo Prices Topped Out?
Alchemy Properties' 35XV condos on 15th Street are selling well beyond the original underwriting, but developers aren't counting on similar growth for new projects.
Alchemy principal Gerry Davis tells us the 54 units will deliver in Q1 with 10 units left to sell. They're going for $2,200/SF to $2,500/SF, well above the $1,500 the company banked on. It’s easy to see why developers would be tempted to underwrite future projects to such growth, especially if land prices mean the alternative is bypassing a project. But no one starting projects is banking on $4,000/SF three years from now. That would mean a 1,000 SF one-bedroom would be on the market for $4M, he says.
The building, which we snapped on 15th Street between Fifth and Sixth—in what Gerry calls the nexus of Chelsea, the Village, and Union Square—is enclosed, elevators are running, apartments are framed, and it’s time to put the finishes on.
Gerry and founders Ken Horn and Joel Breitkopf run the show at Alchemy, Ken concentrating on acquisitions, Joel on risk management and financial stuff, and Gerry on day-to-day operations and “constructability” (hence these construction schedules for Brooklyn’s Sackett Union condos and townhomes, 35XV, and the Woolworth Building’s partial conversion to resi condos). He tells us the company is working on an acquisition in the West 30s, as south of Penn Station is an area where land prices are still feasible. The only hint Gerry would give on the status of the Woolworth construction is that they’re still working it all out—as per the still-short schedule for the project on the right.
Gerry was born in Manhattan and raised in Bergen County while he attended private school in the Bronx. (Those early years also involved annual fishing trips to Central Maine’s North Pond, where he caught his first fish on Aug. 29, 1968.) He headed to Cornell to study architecture, his lifelong “when I grow up” dream job and spent five years working for the Port Authority, Marvin Meltzer, and John Burgee and Phillip Johnson. When he realized there are bigger issues in the built environment than design, off he went to get a master’s at NYU and an MBA at Columbia.
It was tough to get a job when he finished his MBA in ’92, but Gerry landed at a small bank. Through that, he met Ken and Joel. In ’99, he joined them at Alchemy, back in the good ol’ days when you could underwrite at $500/SF. First up was a project in Tribeca, then a renovation of the Gramercy Tavern lofts while the restaurant stayed open, and then bigger gigs like a renovation of the 100k SF 121 W 19th St. Fifteen years after Gerry joined, the trio is doing new construction, as well, as on 35XV (which we snapped from its Sixth Avenue side).
35XV was a complicated project. The first eight floors were zoned for community space, so Alchemy agreed to build that space as an expansion for Xavier High School in exchange for Xavier’s air rights. 35XV also cantilevers over the existing Xavier building, and there was the stress of having a crane up during Sandy. Meanwhile, Gerry’s back where he started: He and his wife are empty nesters living in Manhattan now that the kids (pictured the year Gerry joined Alchemy) are 20 and 18.