Why Co-Ops May Be A Thing Of The Past
In New York, the co-op has long epitomized some of the most coveted addresses in the world. Park Avenue, Central Park West and Fifth Avenue are brimming with cooperatives that hark back to a bygone era in Manhattan, where prospective owners had to pass notoriously difficult boards, meet rigorous income standards, and abide by stringent “house rules” when it came to renovations and resale. Co-ops generally reject purchasing in anonymous LLCs and make it nearly impossible for foreign buyers to purchase.
The strict nature of co-ops, coupled with a surge in shiny, modern new development condominiums across the city, is leading to a dramatic drop in co-op sales. In fact, Stribling and Associates, a leading residential brokerage firm in NYC, found that co-op sales priced $5 million and up fell nearly 20% in 2016 from the year prior. In the super-luxury category – co-ops priced $20 million and up – sales declined 25% YOY despite the fact that co-ops comprise 70% of Manhattan’s owned housing units.
New development of co-ops buildings became quiet rear in recent years, however, we can still find some interesting projects being initiated. “A great benefit for buyers of co-ops is that coops have more tools at their disposal to raise needed funds or to deal with a delinquent or objectionable apartment owner,” said Steven R. Wagner, a partner at Wagner, Berkow, LLC, a firm specializing in coop and condominium law. “Coop boards, however, have a bad reputation when it comes to interviewing prospective purchasers and granting sales and subletting approvals. Consequently, condo unit owners have much greater freedom when it comes to selling or renting. 100 Barrow St., developed by Toll Brothers City Living, is a good example which combines the best of both insofar as it is a coop, but sales and sublets are treated like it is a condo.”