so spent a bunch of time there recently ... here's the deal: the prices are reasonable - hard to say "cheap" since who knows what new stuff is really worth these days; key drawback is the 'hood....true, its "UES", but the location "feels" very very different from just a few blocks to the west, east or south....and its 1 block from some public housing projects to boot......

they are 15% sold according to the person i met with today - so they have a loooooooonnnng way to go - so risk they may not fill it...

any one else looked at this place? hard to ignore given the prices and nice apartments - but the 'hood......am i wrong?

Don't go near this development. I know it all too well . . .

Azure was one of the first places my wife and I looked at seriously in spring 2008. We live in that neighborhood (92nd and York), and like it very much.

Some important facts about Azure: (1) It's a 75 year land lease, so when they say that their prices are 20% lower than those of other luxury developments in the 'hood it's simultaneously true and grossly misleading, as a 75 year lease SHOULD sell for at least 20% less than a freehold. (2) They claimed to be 15% sold back in April 2008 - this means they haven't sold a thing since then.

I spent $4500 on legal fees reviewing the offering document. The lawyer I chose works for major developers, and he said he'd never seen such a complicated and worrisome offering document. This place simply will not sell in this market - only rentals can keep it afloat.

The reason the units are less expensive is because they are co op. And I believe the city has modified the 75 year land lease to allow the building to PURCHASE the land outright, which provides significant upside. All of Battery Park City is a land lease; not sure why suddenly this is a big deal. The arrangement allowed the developer access to an unusally large parcel of land in exchange for construction of a "gifted" middle school just next door (however entrance is on 92nd rather than 91st.

Yes, there is a project on the next block but it is a "project" -- a hotel with valet parking is directly opposite the project, as well as several luxury condos.

Tanker, very curious where you ended up / what you thought was better value in comparison to the Azure.

smv - Azure is not a co-op, it is a condop. That is very different. The units are only less expensive because at the end of 75 years the land (and the building on it) reverts to the city unless another lease is negotiated - at a price, naturally, which will be borne the unit-holders. If the building ultimately buys the land, the cost will also be borne by the unit buyers. Furthermore, as I learned from the offering document, the sponsors took out a $20 million 10-year interest-only mortgage on the building - in ten years time, unit-holders will have to shell out enormous sums (about $150k for the unit I was considering) to pay off the mortgage. As for the school, yes that was the deal the developer cut with the city - instead of the city paying to build the school on-budget, they get the school built by the developer off-budget by sacrificing revenues through a tax abatement. No free lunch for anybody - not the city, not the kids, not the buyers.

As for me, I am in the process of buying a co-op on East End Avenue - much more space, much better view, much lower price.

this one sucks so badly it isn't even quantifiable. "what you thought was better value in comparison to the Azure." almost anything.

let's see, 12D, at $1.8ish for 1487 sf. for the 'hood i wouldn't say that's 20% lower. about $11,500 a month to buy with 20% down.

go rent one of the two bedrooms at the cielo instead, $6500 i believe.

tanker, any east end avenue tips???

"this one sucks so badly it isn't even quantifiable" 'One-liner of the week' award for this one

Azure is not a co-op, it is a condop

a condop is a co-op

you are buying shares in a corporation, get a stock certificate and a proprietary lease to reside in the unit you purchase. Legally, a condop is a coop. Its the rules and bylaws that make the coop behave more like a condo - i.e., flexible subletting policies, pied-a-terre policies, parents buying for children, more flexible financing, etc..

condop is simplay a marketing term made up to fit this unique combination into its own term.

Aint this the place with the fatal crane accident last year

urbandigs - my point is that the units are not 20% cheaper (as Azure advertises) because it is a condop. It is because it is a leasehold. Long leases routinely sell at 20% discounts, which obviously turn into much larger discounts as expiration approaches . . .

EZrenter - yes, Azure is the site of the crane accident.

falcogold - I've shopped a lot on EEA, as we love the quiet, the park, and the river views. Everyone's taste is different, obviously, but here are some potentially useful observations: (1) The larger buildings have considerably lower maintenance charges - focus on them; (2) If you like river views, take a partial view rather than an unobstructed one, as premiums for the latter are huge; and (3) avoid the newly renovated places, as sellers are unreasonably wedded to the idea that buyers should pay up for them - you're better off renovating yourself (I have a friend who is an architect/contractor, which obviously helps). Good luck . . .

they have convincing answers on all the land lease questions. i have to hire a lawyer to sure, of course....in the past few months they've restructured the land lease - now at 75 years, there's an option to renew for 50 years...so they're really pitching it as a "125 year" lease at this point.

Just called my lawyer - he will review offering document and i will post summary of his opinion as soon as i have it......thx tanker for the great heads up - will be interesting to compare notes.

Regarding the offering document - if you demand it in advance, they will make the $200 fee for the offering plan refundable if you don't go to contract.

thx so much - that sounds reasonable....i guess

UES - you have a plan for getting financing? I don't know who would lend in a development 15% sold.

tanker - HSBC has agreed to work with anyone buying in the building - 20% loan to value. i haven't talked to HSBC yet though, so i don't know what rates are (Azure reps say they are good rates, but who knows).

UES - I assume your lawyer will tell you this as well, but if you decide to go to contract make sure you have a robust mortgage contingency clause. Fannie and Freddie are requiring 70% of units sold before they will buy the mortgage, so Azure is not an attractive development to lend into.

Condops are structured with residential and professional (commercial) "Units". The residential unit is the Coop and has all the structure of a usual Coop. All the residential apts reside in the Coop. Expenses related to the apts will be paid from the Coop, such as the real estate taxes, thus the residential unit is charging the apt owners the maintenance. The residential unit will own some percentage of the Condo entity, with the professional unit (most likely retained by the sponsor). The Condo receives allocations from the residential and professional units based on their ownership interest in the Condo. The Coop while covering the RE taxes in the Coop form will have to charge enough maintenance to fund it's piece of expenses that the Condo is responsible for (i.e. the lease land rent).

What you have to be careful of is the above method of allocation between the interests that own the Residential and the Professional. Remember who wrote the offering plan--The developer and most likely the owner of the Commercial unit.

FYI - i'm a real estate pro w/ 16 years experience - i've looked at azure carefully - its really interesting situation:

updated offering memo that has terms of REVISED land lease still not available......even before this is done i'm told the building is RAISING asking prices on certain units.....they haven't gone into contract on a unit in a year - they are betting on market recovery and developers seem to be in utter denial that there's a project 100 feet from the building....apts are very very nice, but there are significant barriers to purchase here upon close examination.....my guess after doing some research is that this bldg WILL SELL since the apts are so nice (finishes, views, layouts are 1st rate) --- BUT THEY WILL NEED TO COME DOWN AT LEAST 20% from current asking prices if they want to move the units within a year....they likely don't want to do that now since the developers don't know if the market will recover or not.....if they don't move units in next 3-6 months, look for price drops at least during negotiations......they likely want to wait for the wall street people to get their bonuses in Jan/feb before making pricingdecisions.......developers i'm told just don't know what units in this bldg are worth yet so probably don't want to drop prices before "testing" the waters for 3-6 months after release of the revised land lease/offering memo..........i'm told HSBC made the loan on the underlying property and therefore HSBC is offering VERY below market rates to propsective buyers with excellent credit -- also i'm told that developers may offer to buy points for buyers to lower rate even more......so clearly there is an air of desperation.......but there is the potential for good deals here if the market stays rationale: which, in my opinion, means buyers wait till prices drop another 10%, and then bids come in 10% under that ---- which, in the end, means 20% below current asking prices.....

bottom line here is that the developers probably want to comp themselves against new developments on the UES down in 80s and 70s...but those new buildings (e.g. brompton) aren't really comps.....comps are other nice new buildings in areas NEAR LOW INCOME HOUSING-- LIKE IN THE 50S ON THE WEST SIDE or even some nice newer places on the LES...

this is one of the more interesting situations i've seen in my many years of real estate....

will be fun to watch it play out

thoughts?

a

Researcher - Very nice post. Thank you so much for your input.

I have hired a lawyer and her advice has been remarkably similar to yours. Until they release the updated land lease terms, its just impossible to understand the risks/benefits of that situation.

I also agree that the apartments themselves are very nice.

I also agree with your commentary around the "projects." They are literally 100 feet away as you point out. They are not hidden in any way. You can see them from all the units with North exposure.

So the 'hood may improve over time, but the 'hood's development will likely stop right at 92nd street, where the projects are. Thats a significant problem longer term.

Two additional problems: (1) 1st avenue from 86th to 91st isn't very nice. Its not dangerous, its just that its not "cute" the way lower blocks are; and (2) the building is attached to a PUBLIC school - althought the entrance to the school is on 92nd (vs 91st for the Azure), middle school kids will be "hanging out" on the block and the school will take up space that could have been used to "upgrade" the neighborhood.

You are also correct that they are comparing themselves to new developments in much nicer parts of the UES. In fairness, the units are priced (on average) at a discount to these other developments. However, the "discounts" are to ASKING prices -- and I know from broker friends that these other developments are going into contract at about 10-20% below asking. Therefore, your logic on the Azure's pricing is sound, I think.

Think about it: Azure is asking about 20% below other UES develop right now. So if other developments sell units at an average discount of about 15%, Azure will definitely need to match this.

There is SIGNIFICANT re-sale risk at the Azure. They are only 15% sold and they are in a clearly non-prime location. Buyers will likely need to be fairly compensated for this risk. The 20% traditional "land lease" discount is NOT enough. Buyers will need an add'l discount to get comfortable.

I have several friends with a lot of money looking at this building, and they all seem to generally view it the same way.

I also agree that this will be interesting to watch!

throw lucida, geogica and isis into the picture and gets even more ugly. much trouble brewing for UES RE.

Checked it out a few weeks back - very nice apartments. Broker is great (Luis I think was his name). My sense is there are deals to be had here. If you're looking for space and have a young family, this deserves a look.

I strongly suggest bidding 30% under the asking price at this development. Settle for no more than 15%-20% under asking. I hear Azure is raising prices soon - this is absolutely insane in this environment. I fear this move will will create ill will towards the developers.

There are still MANY units left in Brompton, Lucida, Georgica, and many other new UES developments. These developments are negotiating in good faith at 20% below asking for premium units. That brings them very close to Azure.

My Wall Street clients tell me that most of their bonus will be in STOCK this year. That won't buy condos, unfortunately.

Azure says they've re-negotiated the land lease on more favorable terms recently. Anyone know about this?

I think the asking prices (listed here on SE) are insane for that location. $1.2m and above for 1100 square foot 2 bedroom is terrible given that its not in a "prime location". Take 30% off of the ask gives you $840k, which is $763 psf and thats a LITTLE better, but still nothing to get excited about. Those prices are available lower downtown (444 East 86th comes to mind) in what most would consider a much more desirable location. With so much vacancy, this place really needs to be priced at $500 psf for people to notice it in my opinion.

Bandit - you are right. I just visited the building. They've gone to contract on than 15% of the units. They pitch the land lease as the best land lease every, but its going to take 15 lawyers to explain it. Thats bad for re-sale. Even if the land lease is great, thats bad for re-sale. People don't have patience. Also there are personal injury/liability cases against the developer pending. Who knows where that goes.

Low income housing nearby this development is a killer. Upper east side has almost no projects. Except the one RIGHT BY this buidling. Its not like Chelsea or UWS, where they're kind of all over the place. Who would live here unless pricing is at a big discount. 20% for land lease and 20% for low income housing is needed to move these units. No question in my mind. Price increases are a mistake for this developer. Finishes don't sell homes when its said and done. Location and price do sell homes. Location stinks, so price better be perfect - not good, but perfect.

helper - I've lived right next door to the development, in a pricey Glenwood building, for 10 years. I've never felt the least bit threatened by anyone at the development. I think Azure is a no-hoper in this market, owing mainly to the land-lease and the $20m mortgage on the property, but I don't think the development is a significant issue.

How do the maintenance charges compare to other new construction ? Presumably once the 421 abatement goes away monthly charges for owners will increase

They are asking $1.90 per sq foot for common charges! And will likely go up over time - especially when the re-appraisal of the underlying land can happen, which is in 30 years, I believe. So this will affect re-sale.

wow - just reading this thread for the first time - this situation is really sad

I have researched this development. It is not a condop as the ads say. Its a Co-op plain and simple. Read the find print in the offering documents. So it should be priced as such. Co-ops in locations like this (near low income housing, nowhere near Park Avenue) typically sell for about $800 per sqaure foot. This development is massively overpriced. Beware.

I am so glad I just found this thread. I am not a broker or even in the real estate market. But my brother looked at this place. He sat down to talk price and the developers he said are in total denial (perfect way to describe it!!) about the property. So I'm not sure its worth even looking. He says the units are really nice (not fantastic, but nice), but that the devloper is very difficult and doesn't understand the market. And they are very slick and try to confuse you with numbers and spreadsheets he said. Sounds really scary to me.

Love the passion :)

I have taken a few clients to this buidling. The broker representative is excellent. However, I would agree with the postings above that building is over-priced. Its sad because the prices aren't even close to being market rates for what they have to offer.

Also, they have eliminated the mortgage on the underlying property I am 99% sure, so that is good.

However, the land gets to be re-appraised in 30 years. That's not so far away when you are considering re-sale. If you're going to live there for 10 years, that will almost certainly affect re-sale. And remember that maintenance is HIGHER here than at true condos, and it will probably go up if re-appraised at higher values.

My advice would be to bid 30-40% below here. I am negotiating deals at 2 other new UES developments that are in better locations and they are all accepting bids 20% or so under asking. Georgica, for example. So be very careful when you look at what Azure people tell you are 'comparables.'

So in summary I agree that this one is a "no-hoper" unless they make it very compelling on price.

Interesting thread - thanks everyone!

"I have researched this development. It is not a condop as the ads say. Its a Co-op plain and simple."

Well, that certainly depends on what definition of "Cond-op" you use: the legal one or the popular one.