Haven No Longer: Say Goodbye Fast to the Far East Side

Ever since Peter Falk lit the opening cigarette in the 1971 Broadway version of The Prisoner of Second Avenue, the eastern reaches of the Upper East Side have been known as a haven—or hell—for modest renters. The real-estate boom has changed all of that, prompting condo conversions as far east as First Avenue and turning a weathered redoubt for curmudgeons into a glossy destination for young, well-heeled families.

The reasons for this transformation, which is just now confronting the fizzling market, are familiar to anyone following New York real estate, and yet they have infected this area with particular fervor. Since January 2004, developers have filed plans for 1,461 condominium units with the State Attorney General’s office for the area east of Second Avenue, between 59th and 96th streets. The much larger western section of the Upper East Side registered just 881 applications.

“It’s a good sign for the economy. It brings more people, and that will be good for businesses in the area, but it comes at a price,” said David Liston, the chairman of Community Board 8. “In almost every case, what typically is being knocked down is the five-story walk-up, which has a particular rent [range] and is being replaced by high-rise buildings that are out of reach for a lot of people.”

In large part, the reason for this happening is because it can: The zoning for the main avenues in the area, dating back to 1961, envisions 15- to 20-story buildings where, until recently, brick row houses have predominated. And while, in some cases, developers argue that they create as many affordable apartments as they destroy, it is not always clear that is their intention.

Some far East Side residents and elected officials want to make sure that it is, exhibiting the same sort of concerned muscle often flexed by East Siders along Fifth and Park.

Last month, the Landmarks Preservation Commission stepped in to landmark two six-story apartment buildings along York Avenue that were part of the City and Suburban Homes complex, an early 20th-century experiment in low-income housing. The move blocked a plan by the owner, Stahl Real Estate, to replace them with two 28-story towers.

While Stahl had suggested it might provide affordable units, the local City Council member, Jessica Lappin, nonetheless pushed for the landmarking, stressing the complex’s historical importance. “These buildings are affordable now,” she told The Observer. “There are rent-stabilized tenants in these buildings right now who would be displaced.”

In other cases, it may be hard to sympathize if affluent tenants are being replaced by affluent buyers. Developer Aby Rosen built two residential buildings, the Wellington at 82nd Street and First Avenue, and the Century Tower Condo at 90th and First, in 2000 and 2002, respectively, with condominium-quality finishes. He and his partners decided to open them as rentals, however, and have just started converting them.

Although he acknowledges that the market “is a little bit softer” now than it was a year ago, Mr. Rosen said that waiting served the developers well: It gave them tax advantages that they wouldn’t have had if they’d opened the building’s condo projects, and now the neighborhood is better established as a destination for buyers.

In addition, they are non-eviction conversions—which means that tenants, if they choose not to buy their apartments at an insider price, get to live out their leases. That slows the rate at which units come onto the market. But Mr. Rosen said that he has no plans to wait out a sluggish market by renewing any rental leases.

“There is never a good or a bad condo market,” Mr. Rosen told The Observer. “Those are units that will always sell. We are not talking about $3,000 a square foot; those are $1,200 to $1,400 a square foot. There is always growth in the area. Obviously there is no subway there, so it makes it more a destination area, but people are still very willing to live there.”

Jacky Teplitzky, a broker who estimates that she does 80 percent of her business east of Second Avenue, said that many of the new condo buyers are, in fact, long-time renters in the neighborhood who have become accustomed to the walk to the Lexington Avenue subway line.

“What I do when I hear of something coming to market is send tons of mailings to people renting in the area,” said Ms. Teplitzky, an executive vice president at Prudential Douglas Elliman who lives on the far East Side herself. “People renting in the area are more likely to stay in the area.”

The developer Jules Demchick is unapologetic about having taken down “a dilapidated group of townhouses” to put up the Cielo, a luxury tower at 83rd Street and York Avenue that opened last winter. (He has sold all but nine of its 128 apartments.) For one thing, the townhouses were vacant. For another, he paid a developer to build affordable rentals elsewhere in the neighborhood in order to qualify for a zoning bonus that allowed Demchick to build more square footage.

“What was on this site were 22 vacant apartments, so no one was displaced,” he said. “We more than replaced those rentals.”

Even if long-time residents are not getting overtly pushed out of the far East Side, the new development has raised anxieties over crowding in schools and on public transit in a neighborhood that is two to five blocks from a subway line. Indeed, urban planners often say that the only reason the city permits such high density in the area is that planners 45 years ago expected the Second Avenue Subway to be built in a matter of years.

“You do not necessarily have a massive displacement of large numbers of people, but you do have increased population density, and I think that is very clearly a planning challenge,” said State Senator Liz Krueger, who represents the East Side and midtown. “The first phase of the new Second Avenue Subway is going to stretch between 96th Street and 63rd Street, and the first day it opens, it is expected to get 400,000 riders.”

That will be about 2013, according to the Metropolitan Transportation Authority. In the meantime, the M.T.A. will start a pilot project for “bus rapid transit” along First and Second avenues, which will entail any number of possible steps to accelerate bus service.

Convincing New Yorkers to buy in an area once known for cheaper rents prompted some creative marketing at first. The developer Sheldon Solow even went so far as to rechristen 61st Street between York and First so he could call his new condo “One Sutton Place North.”

Larry Kaiser, the president of Key-Ventures Inc., a Madison Avenue brokerage, says that the newer large condo towers have avoided addresses on the avenues in favor of ones on the side streets.

Still, Mr. Kaiser said that new buildings with swimming pools and other amenities have made the far East Side a favorite place for young families. But it’s also one of the first places to feel real-estate contractions.

“The things that tend to be moving more quickly are the ones in the most desirable areas and those that are priced correctly,” said Paul Purcell, a real-estate consultant at Braddock + Purcell.

The speculators may be hurting the most: Mr. Purcell gives as an example a friend who had bought a place at the Arcadia, a new condo tower at 408 East 79th Street, expecting its price to appreciate enough to justify reselling it. “I don’t think he needed to flip it, but if the price was right, he would have,” Mr. Purcell said.

The price wasn’t right, but the friend liked the area. He ended up moving to the far East Side himself. Haven No Longer: Say Goodbye  Fast to the Far East Side