Manhattan's Lower East Side Enjoys a Renaissance

The first stop for many immigrants who arrived at Ellis Island was a room and/or a job on the Lower East Side of Manhattan, and hundreds of prominent business and civic leaders grew up in this community. Now, it is undergoing an unexpected renaissance.

"Until fairly recently the Bowery always possessed the greatest number of groggeries, flophouses, clip joints, brothels, fire sales, rigged auctions, pawnbrokers, dime museums, shooting galleries, dime-a-dance establishments, fortune-telling and lottery agencies, thieves markets and tattoo parlors, as well as second and third rate theaters," the director of Eastern Consolidated Properties, Alan Miller, said.

The flophouses of the Bowery and Lower East Side are being replaced by properties such as the Hotel on Rivington, at 107 Rivington St. between Ludlow and Essex streets, directly across the street from Economy Candy. The stylish 20-story, 109-room hotel took close to three years to complete. It opened in October 2004. The hotel refinanced its mortgage earlier this year and has outperformed its earliest expectations.

A number of hotels are planned all over the Lower East Side. At 54 Canal St. (One Orchard St.), a 150-room hotel is planned for a 60,000-square-foot, 12-story former garment manufacturing building on the border between Chinatown and the Lower East Side. Another hotel is planned on the site of a restaurant at 231 Grand St.

Thompson Hotels, the owners of 60 Thompson, has begun construction of its 200 Allen St. development between Houston and Stanton streets. The 102-room hotel, which will have eight condominium apartments, is scheduled to open late next year.

Also, Lounge Sleep Hotels is in the early stages of construction of a 22-story, 145-room Cooper Square Hotel on the Bowery between 5th and 6th streets.

"The Lower East Side affords New York at having another shot as the most creative and reinterpreted lifestyle neighborhood for this generation," a principal at Thompson Hotels, Michael Pomeranc, said.

A "limited supply of quality loft housing is available to meet the demands of Europeans and young people with money who are interested in living and owning property in New York," a developer, Marshall Shone, said.

Early next year, his company will begin construction of a nine-story, mixed-use building at 60 Orchard St. The building will have ground floor retail and eight loft apartments. The units are expected to be sold for $1.32 million, or $1,100 a square foot.

Opened in 1922, the Sunshine Hotel at 241 Bowery is one of only six old-line skid row flophouses still open. Owned by the Bari family, which is in the business of supplying pizza kitchens, the hotel is no longer admitting new residents. Soon, the residents will soon have a different type of neighbor across the way, at 250 Bowery St.

Earlier this year, PMA Associates, headed by architect Peter Moore, purchased the commercially zoned site, between Houston and Prince streets, for $13 million. The developer is constructing an eight-story hotel condo development at the site. The project, which will have a total of 63 rooms, is expected to open in 2008.

Across the street, at 223–225 Bowery, is a 10-story commercial building owned by the Salvation Army. The nonprofit organization has quietly marketed the property for the past few years, and industry leaders expect that the site will be slated for a hotel or residential condominium conversion.

Two of New York's premier hotel operators, Richard Born and Ira Druckier, are bullish on the Bowery. Early next year, the principals of BD Hotels, which owns the chic Maritime and Chambers Hotel, will open the Bowery Hotel. This ground-up, 16-story boutique hotel at 335 Bowery, aka 6 E. 3rd St., will have a total of 140 rooms, as well as restaurants and bars.

One block north of the site of the Hotel on the Bowery, a prominent developer of affordable and market-rate housing has an application with city planning to construct a 15-story residential apartment house. The site is presently occupied by a parking lot. Adjacent to the site, the developer plans to restore the landmark Tredwell Skidmore House, at 37 E. 4th St.

"Even the famous developer/hotelier Ian Schrager has seen fit to enter the area with a development at 40 Bond St., where he will build five ground-level townhouses and 22 apartments above them," the sales director at Massey Knakal Realty Services, James Kinsey, said. "Schrager purchased the 14,200-square-foot lot in January 2005 for $16 million, or $224 per buildable square foot. The units are currently listed at prices ranging from $3.65 million, or $2,876 per square foot, for a one-bedroom to $10.2 million, or $2,886 per square foot, for a three-bedroom/fourbath apartment units."

Early next year, the 16-story "Blue" condominium is expected to welcome its first tenants. The building is located on the site of the former parking lot belonging to the famous Ratner's restaurant.

In 2000, the 12-story, 65-unit market rental apartment building Nolita Place opened at 199 Bowery. Today, the property has been converted to a condominium ownership and prices are averaging in excess of $1,000 a square foot.

Prices for rental apartments on the Lower East Side and the Bowery are reaching all-time highs. Market-rate apartments in AvalonBay new rental buildings are in excess of $60 a square foot. In 2001, the Hudson Companies developed the Crossroads at 10 Rutgers St. at East Broadway. The mixed-use rental building is situated at the East Broadway stop of the F line, caddy-corner from Seward Park and down the street from the Forward Building and the Educational Alliance. "When we opened the building the rents were in the low $40s, and today are rents are $52 to $55 per square foot," a principal at the Hudson Companies, David Kramer, said. "Our tenants love the location, the convenience to downtown and the local retail environment. With the ongoing success of condominium projects on Essex Street, Henry Street, the Grand Street Cooperatives, and now the Forward Building, this residential area continues to become more dynamic each day."

As I reported last month, a 23-story, 242-unit rental tower that will provide an affordable-housing component is under construction at the parking garage site across from Katz's Delicatessen at 205 E. Houston St. A few blocks away, the second rental tower is nearly 50% leased at Avalon Bowery Place, located at Houston and East 1st streets.

"The Lower East Side is the last remaining part of Manhattan that has not been retail gentrified," the executive vice president of Newmark Knight Frank Retail, Jeffrey Roseman, said.

"The area is becoming a popular destination for young singles, and couples are moving into the neighborhood, requiring the retail amenities. A good example is the Clinton Street Bakery, where on the weekends customers stand in line for up to two hours. Retailers including American Apparel, Whole Foods, and trendy restaurants and bars are replacing the textile stores. The last time this neighborhood was as vibrant was when my great-grandparents first moved to America," he said.

Last month, the city presented its plan to guide future development of the Lower East Side in anticipation of the area's first rezoning since 1961. The vast majority of the area, encompassing more than 100 city blocks, would be rezoned with a height cap of 80 feet. The rezoning area would be bounded by the north side of East 13th Street, the west side of Avenue D, the north side of Houston Street, the west side of Pitt Street, the north side of Delancey Street, the east side of Essex Street, the north side of Grand Street, 100 feet in from the east side of the Bowery, and 100 feet in from the west side of Third Avenue.

The zoning would end a height exemption available for most community facilities, and would require new developments to build flush to the street line, preventing buildings that soar high above the low-rise neighborhoods. However, areas along East Houston, Delancey, and Christie streets and stretches of Second Avenue and Avenue D will be rezoned to allow developers to build up to 12 stories high, as long as 20% of their projects include what is called affordable housing.

"The East Village and Lower East Side, which has not been rezoned in over 45 years, is poised for a down-zone showdown pitting the pro development real estate community against the locals who want to maintain the integrity and charm of the neighborhood," the senior executive broker at Besen Associates, Laurence Ross, said. "The latest trend of glass heightened buildings may be short lived, only increasing the value of existing high rises and trendier hotels that have popped over the past few years."

Not everyone is happy about the changes taking place regarding the new developments on the Lower East Side. "The Lower East Side, once the home of Bernstein on Essex Street, Ratner's, and hundreds of apparel and retail stores, is losing its unique character," the head of real estate lending for Amalgamated Bank, Thomas Graf, a senior vice president, said. "The special characteristics of the neighborhood, once the traditional home of immigrants, are diminishing and at some point will adversely affect values and desirability."

I have to concur with the president of Gladstein Development, Jane Gladstein, when she says: "The Bowery and the neighborhoods it spans — NoLIta, NoHo, Chinatown, Little Italy — have all enjoyed a renaissance in the past few years and deservedly so."

This is one of the most sophisticated and laid-back areas of downtown Manhattan. Rarely do we see such a beautiful and harmonious blending of history, culture, entertainment, and community facilities in such an extraordinarily popular venue.

Mr. Stoler, a contributing editor of The New York Sun, is a television broadcaster and senior principal at a real estate investment fund. He can be reached at mstoler@newyorkrealestatetv.com.

Correction from December 19, 2006: Luc Sante, in his book "Low Life," wrote: "Until fairly recently the Bowery always possessed the greatest number of groggeries, flophouses, clip joints, brothels, fire sales, rigged auctions, pawnbrokers, dime museums, shooting galleries, dime-a-dance establishments, fortune telling and lottery agencies, thieves markets and tattoo parlors, as well as second and third rate theaters." The quotation was misattributed in a column on page 21 of the December 14 New York Sun.