For decades, Brooke Astor’s duplex at 778 Park was the pinnacle of New York City living. This had much to do with the society queen and her courtiers, who hosted lavish parties there, but also with the 16-room home, boasting six terraces and a renowned red-lacquered library. That was before the wallpaper began to peel and the red lacquer to chip; before people talked of appliances that dated to years before Astor moved there in 1959. Before it allegedly became a prison for Astor at the hands of her son, Anthony Marshall. Before Mr. Marshall’s trial in 2009, and the Lehman collapse the year before that.
It took two years and two staggering price cuts, from $46 million to $24.5 million, before Swiss currency speculator Daniel Forcart came around in December and signed a contract for the duplex. The price was $19.9 million.
Pretty much everywhere else in the world, this deal would have closed by now. But not in the world of New York City co-operatives. The board balked for reasons that remain unclear, whether because Mr. Forcart did not have the proper social credentials or the right price. It is impossible to know, because, like all other co-op boards, the one at 778 Park need not disclose its reasons for rejection. This, along with a handful of other nasty turns at buildings around the city, has brokers grumbling that co-ops are more intrusive and cockier than ever.
“It’s an antiquated system not suited to modern life in a cosmopolitan city,” Douglas Elliman’s Raphael De Niro complained over coffee on Hudson Street recently.
During the real estate boom, condos colonized the city. Glassy spires shot up everywhere from Harlem to Brighton Beach, and dour old hotels were spruced up in bare-knuckled conversions (think the Plaza and the Stanhope). Even with tens of thousands of new apartments in the city, the buyable housing stock shifted only about 10 percent, from four co-op units for every condo to a ratio of three to one. With white flight running in reverse, yuppies and BroBos, along with their fashionably enlarging broods, swept across the boroughs in search of permanent housing. Thanks to all the new condos, it became easier than ever to avoid the onerous boards and their anvil application packages. And, best of all, those probing, embarrassing interviews.
As a result, some co-op boards, growing jealous of their chintzy brethren across the park or downtown, loosened their collars. New neighbors, ones who not so long ago would have been seen as “those people,” who would have been lucky to be shown the apartment, let alone get an interview, found themselves with entree to some of the city’s nicer buildings. This may not have been the case at the tippy-top, but brokers certainly say there was a relaxation of standards, not least because there was just so much money floating around. If letting some riffraff in meant your home was worth 10 times what you bought it for a decade ago, why not!
Then the music stopped, the panic set in, and this rarefied world teetered on the brink of collapse. Many of the city’s co-op boards became stricter than ever before, requiring bigger down payments, more escrow and higher renovation fees. Picky, picky, picky. “Many of these buildings require a certain lifestyle, and you just couldn’t have people sneaking their art and antiques out the service door just to afford the maintenance,” said Mary Ellen Cashman of Stribling.
Yet there was also a countervailing force. As the fortunes, monetary and otherwise, of those in the coveted prewars continued to dwindle, some had no choice but to try and liquidate the homes they had worked so hard to get into. Many boards would never have allowed such things, damaging as a fire sale would be to their home values. With the power to set prices in their buildings, and the ability to reject at will, few boards thought twice about turning down buyers deemed to be paying too little, even as the sellers squirmed.
As this anxiety grew, there were also cases where boards relaxed their standards. After all, for a time in 2008 and 2009, it looked like the sky might never stop falling. Sure, boards were still fussy as ever regarding financial credentials–you’ve got only 10 times the price in liquid assets?–but the “panache” of the buyer, as one broker put it, was less relevant for once.
“Certain buildings are nervous, certain people were desperate,” said A. Laurance Kaiser IV of Key Ventures. “And once those people get on the board, they’re the worst of all! ‘It’s my candy store, and you can’t have any of it.’ The hypocrisy of it all.”
And there is the rub. Now that the economy has begun to recover, and buyers are rushing the market once again, boards feel less desperate. They feel empowered–downright vicious, even. They can play a little catch and release, if the fish is not the perfect whopper. This, combined with the fact that co-ops have yet to loosen their still-spooked, post-Lehman financial rigor, means it is becoming more difficult than many brokers can remember to get their buyers past boards.
And it is not just the aerie likes of the Astor duplex. Consider the two brothers from an impeccable family, both recent London School of Economics grads. They had taken to a quirky penthouse duplex a block from the High Line in West Chelsea and gone to contract in December for $3 million, just over the asking price. Even though it was an all-cash offer, the buyers were never interviewed, and it took until April for the board to get around to telling them they would not be getting one.
It was the first time the buyers’ broker had a client turned down in seven years–until it happened again later that week. “These are two very clean-cut, together young men, and if the board had seen that, I’m sure it would have changed their mind,” the broker said. “Instead, all they saw was the application. All they saw was two 20-something guys who wanted to buy a penthouse in Chelsea and party all the time.”