By: Hadassa Kalatizadeh
A developer, who specializes in luxury rentals, has snatched up three side by side properties in Midtown Manhattan.
As reported by Crain’s NY, Kahen Properties paid out nearly $34 million for the three sites on Third Avenue, located between East 60th and East 61st streets. The sites, at 1020 Third Avenue, 1024 Third Avenue and 1026 Third Avenue, all currently have tenement-style housing across 3 or 4 stories. The properties are centrally located near the Bloomingdales Department Store. The purchases took place last week, in three separate transactions, from two separate sellers (both being limited liability companies), as per city records. The deal also includes two vacant storefronts. The location’s zoning, however, may allow for residential towers as tall as a dozen floors to be built. No plans have been yet confirmed for the adjacent sites. The Queens based firm’s managing principal, Majid Kahen, did not respond to Crain’s calls for comment. A spokesman for the brokerage JLL, which helped with the transactions, said Kahen plans to hold off on developing the properties for now.
Overall, activity in apartment construction has been slow, due to the absence of key tax breaks. In June, the major tax break, known as 421a tax abatement, which gave developers tax exemptions for setting aside part of their new construction as affordable housing, expired. Originally started in 1971, this was one of New York’s biggest programs, which added a big chunk of the new low-income housing in the market today. Also known as Affordable New York, the abatement was not renewed, with progressive lawmakers criticizing it saying it was outdated and was giving wealthy developers too much of a tax break.
As per Crain’s, it is not clear when Kahen went into contract on the sites, and if they knew at the time that 421a would not be renewed. “The appetite for these kinds of development sites is not what it used to be,” said Adelaide Polsinelli, a vice chairwoman at the brokerage Compass who markets similar development sites but wasn’t involved in these transactions. “No one is building housing for moderate-income buyers anymore, no way, no how.”
Kahen is a seasoned rental developer with many posh buildings in its portfolio. In 2014, Kahen built the Adele on the Lower East Side, at East Houston Street and Avenue D. It was one of the first luxury rentals in that part of town. That project, which required the developer to purchase six separate lots, was turned into a 12-story, 135-unit rental with some below-market-rate units, for which the 421a abatement was obtained. The building boasts exceptional amenities, including custom Italian kitchens, bamboo plank hardwood floors, and wireless blue-tooth speakers. In 2018, Kahen built the Mason, at 145 Madison Ave. near East 31st Street. The glassy, 23-story rental tower, boasts 70 rental apartments. The boutique building in NoMad, had a one-bedroom listed this week, asking $7,200 a month. Building amenities include a fitness center with outdoor patio, indoor storage room and rooftop lounge with BBQ grills and seating.
