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How Much Is A View Worth?

Ask the folks at 77 East 12th Street, that red brick 1960’s building in the heart of the Village.  Many of you have followed the saga of Sam Chang and his hotel that has gone up in fits and starts since the project was announced nearly four years ago. I have watched it rise in real time each day on my way to the Union Square subway station. 

I couldn’t believe what I was seeing till I got a quick lesson in lot line windows, that aren’t really legal windows at all,and allow construction of a new building cheek by jowl against the old. The Silk Building (14 East 4th Street), that Italian Renaissance palazzo turned condo, on lower Broadway, also has a number of south-facing units with lot line windows.

So now that the hotel is nearly three quarters of the way up, sucking out light and air as it grows, I wanted to find out how apartment prices in the East Village building had been affected.  It seems apartments are like stock.  Uncertainty is worse than certain bad news.

”Things are much better now that it’s done,” explained Catherine Holmes, a Senior Vice President at Halstead.   “Most people still consider it a desirable building in a desirable neighborhood.  Only those units with a northeast view are affected.”  Ms. Holmes recently sold one of them, 9J, a one-bedroom, for $689,000.

The apartment originally went on the market with another firm in September 2008 for $885,000, a price Ms. Holmes said was never realistic. She acquired the listing in March 2009 at $749,000.

According to Ms. Holmes, the price reduction was not so much a reflection of the hotel, as the fact that the apartment needed substantial work, bore the imprint of its chain-smoking occupant, and was caught in the downdraught of a contentious divorce between the owners, to say nothing of the post-Lehman market collapse.

In fact it was ultimately bought by the next-door neighbor, who wanted it from the start, followed the price down, and wound up with the perfect adjoining fit. Only the bedroom of the newly acquired unit is implicated and because it is on the 9th floor, it’s not  squished against the hotel, but will overlook a public garden at the 8th floor level, ironically winding up with t better view than before.

Margaret Heffernan, a resident broker in the building, believes the sample size is too small to make any reliable judgment about the effect of the hotel on apartment prices.

“There’s very little turnover in the building and only two lines are affected,” she said.  “The lower floors had no windows to begin with so only those apartments on the fifth floor and above are affected.”  Hers is one of them.

According to Ms. Heffernan none of the relevant units have come to market of late so it remains to be seen how they’ll be priced post-hotel. She suspects the impact won’t be that great because the blacked out windows are in bathrooms and kitchens. There have been a few rented out, but the issue of view doesn’t usually come into play the way it does in sales.

“The truth is risk of loss of view is more problematic than actual loss,” she echoed Ms. Holmes” sentiment, explaining that’s why sales at 111 Fourth Avenue (a loft-like condo on the corner of  12th Street) were brought to a virtual standstill a few years back, when NYU announced it was building a 26-floor dorm at 110 East 12th Street and no one was sure whose views would be wiped out. Now that the dorm is up, gargantuan that it is, things have gone back to relative normal.

The lesson of all this: If you don’t want to be in for a rude surprise, look before you buy, not just at the apartment, but what’s nearby. Lot line windows may be the least of you problems, because at least you should be on notice going in that they, and you,  could be sealed off from daylight. Potentially more dangerous is a next door parking garage which you think will preserve your view, only to turn round and find a residential tower replacing it.  Even harder to ferret out are saleable air rights of nearby buildings that may be bought and used to build to the sky. That’s how the monster of an NYU dorm got built.

Bottom line — be careful out there or your view could be here today and gone tomorros.

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