The New York Times real estate section yesterday had a provocative article about coops that take advantage of prime ground floor retail space to dramatically reduce shareholders’ maintenance costs. Their prime example is a coop at Bank Street and Hudson where a studio apartment that used to pay over $800 monthly now pays around $20.
Sounds like a New York homeowner’s fantasy, doesn’t it?
Some spots in Manhattan (like the West Village) can draw ridiculous retail rents, but the article also mentions a coop at East 7th Street and Ave. B where retail income has had a big effect on maintenance fees — a 1-bedroom there carries a monthly charge of only $252.
This sort of thing used to be unheard of, because U.S. tax law insisted that, in order to reap the tax breaks associated with cooperative housing, a coop’s income from non-owners (like retail) could be no more than 20%. At my old coop on West 10th Street in the 1990s, we kept our retail rental rates artificially low in order to keep income under 20%. But that law changed a few years ago, giving coop’s much more flexibility.
Could a scenario like this be possible at East River? Probably not. For one thing, the far east end of Grand Street is obviously not a prime retail location. For another, the proportion of retail to residential space is much lower here than, say, at a 6-story building with a full ground floor of retail.
Nevertheless, one look at our low-end retail tenants, not to mention our inefficiently allocated ground floor spaces, says that there’s room to grow our retail income if the board were to push management to be more creative and aggressive.
Here’s the link again to that NYT article: http://nyti.ms/1E4oH4a