Neighborhood Transformation

Chelsea Well along the Path from Gritty to Urbane

by Alex Padalka

A Manhattan neighborhood that had been on the urban frontier for most residential developers is now becoming a hot spot for conversions and new luxury housing projects.

Known in recent years as a trendy, somewhat gritty neighborhood flavored by a vibrant artist and gallery presence, Manhattan's Chelsea district is quickly becoming a luxury residential enclave.

The wave is transforming commercial spaces into residential properties while upping the value of Chelsea's existing stock of brownstone houses. The district runs north from 14th street to 31st street, and west from Sixth Avenue to the Hudson River, though most New Yorkers identify it as the neighborhood around 23rd Street west of Seventh Avenue.

"You have the young, the hip, you have the elderly, you're close to downtown, close to uptown," said Erez Itzhaki, founder of Itzhaki Properties, a Manhattan real estate firm specializing in commercial investment brokerage. "I think Chelsea represents the new New York. It's a shoe-in investment."

The development race is seeing no slowdown despite the skyrocketing price of air rights in the neighborhood, trading this winter at $150 to $160 per sq. ft., said Itzhaki, who is himself developing a 35,000-sq.-ft. residential building designed by Dan Goldner on 23rd Street between Eighth and Ninth avenues. Itzhaki said Chelsea is "still undervalued because you have a limited number of projects."

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Chelsea's growing popularity has much to do with a rezoning approved last year by the New York City Department of City Planning for the district's western end. Unlike a 1999 rezoning that limits heights on the more developed eastern side to a floor-to-area ratio of around 6, the plan for the more desolate areas west of 10th Avenue allows for ratios of 9 and even up to 12 in some cases, meaning that on lots of similar size, developers on the western side can construct buildings that are up to twice as large.

Another push comes from the city's determination to convert the High Line, an abandoned elevated freight railroad line weaving through the neighborhood, into a unique New York park that can help to spur new development all around it.

"We're generally bracing ourselves for what's going to be happening," said Lee Compton, chair of Manhattan's Community Board 4, the local municipal body that oversees Chelsea. "We know there's going to be a flurry of activity."

Some developers dug in before the rezoning went through. Buildings completed since 2002 include the Sierra, a 14-story condominium tower at 130 W. 15th St. and the Robert Stern-designed, 16-story Westminster at 180 W. 20th St., both developed by Related Cos., as well as the Rockwell Group's Tate Building at 535 W. 23rd St., which has a bamboo grove in the lobby. Monthly rent for a one-bedroom unit in the Westminster is near $4,200, while two-bedroom units in the Tate rent for more than $5,400.

Many established city developers are close behind. Scheduled for completion this summer is the Clarett Group's 100,000-sq.-ft. Chelsea House designed by New York-based GKV Architects on 19th St. between Sixth and Seventh avenues. Rising 14 stories with 64 condominiums - including duplex townhouses and penthouses - the building's facade features fritted glass, exposed concrete, and exposed window mullions.

Meanwhile, Corcoran Group, a New York real estate firm, is selling units in several large developments. One is New York-based Extell Management's Altair 18 at 32 W. 18th St., which is slated for completion by the end of the year and features flat-panel TVs in the bedrooms, rosewood cabinetry, and radiant-heated floors in units selling from $3 million to $4.5 million. Another is the 11-story Altair 20 at 15 W. 20th St., which has two units per floor, with the smallest at 3,000 sq. ft., and the lowest-priced topping $3 million.

"Extell has become known for putting in high-end finishes and high attention to detail," said Tricia Cole, senior executive vice president at Corcoran's marketing unit.

Other developers are trying to blend the architecture of their buildings with the neighborhood's edginess. The recently completed Vesta 24 at 231 10th Ave. features faux wood paneling on most of its 14-story façade. The material, popular in Europe and Asia but new in New York, was the brainchild of New York's Garrett Gourlay Architect. New York's HRH Construction managed construction.

Sleepy Hudson, another New York developer, is developing High Line 519, slated to open this summer. The 11-story building at 519 W. 23rd St. seems both three dimensional and flat by virtue of a smooth glass exterior and decorative balcony grates that are in front of it. It was designed by Lindy Roy, a New York architect, in tandem with the developer's in-house staff. NTD Construction of New York is general contractor, replacing a prior contractor who Hudson declined to name.

"You have such a diversity of product," said Daniel Cordeiro, managing director at Corcoran, comparing brownstone-dominated east Chelsea to commercial areas to the north and lofts to the west. "You have a diversity of neighborhoods attracting a diversity of developers."

The developers sometimes come from unexpected backgrounds. The General Theological Seminary is partnering with the New York-based Brodsky Organization and seeking approval from the city's Landmarks Preservation Commission to replace its 1961 Sherrill Hall with a 17-story Polshek Partnership-designed building, which would have 13 floors of residences. Deferring to neighborhood scale, the plan proposes using 185,000 sq. ft. of the 240,000 developable sq. ft. on the site on the Ninth Avenue side of the seminary campus between 20th and 21st streets.

Local groups, from the century-old 23rd Street Association to the community board, have been generally supportive of the city's plan to build big on the west while preserving the more established neighborhoods between Sixth and 10th avenues in the southern part of Chelsea. The board's Compton suggested that while developers building within zoning limits do not need community approval, the board's support can "push a project along more smoothly."

He said Manhattan's Georgetown Co. decided to share already-completed designs for its next project with the board for that reason. Georgetown is already co-developing a nine-story office tower designed by Pritzker Prize-winning architect Frank Gehry of Los Angeles. Its partner is IAC/InterActiveCorp., which will use the new building on 11th Avenue between 18th and 19th streets for its headquarters. Gehry is also designing Georgetown's next project, which is on the same block.

Such projects should keep the Chelsea market hot for the foreseeable future, Itzhaki said.

"The market needs more product, so it will keep on going," he added. "There's a waiting list for every project."