is now completely suspect,” he explained.
But since there are no official neighborhood borders, there is limited legal action that a buyer who feels misled can take against a sponsor or broker. “There’s never been a case on the subject,” said real estate attorney Adam Leitman Bailey.
Only under certain circumstances could a buyer argue that a sponsor or broker committed fraud or misrepresentation — for example, if a person did not know the city well and relied entirely on a seller’s false information about a condo’s location.
“If the broker lied to them, and the purchaser relied on that, then [maybe] they’d have a case,” Bailey noted.
Attorney Terrence Oved, a partner with the law firm Oved Oved, said that while sponsors and brokers need to exercise “extreme care” in how they geographically describe certain neighborhoods, they still have room within the law to embellish their marketing materials.
“A sophisticated developer’s marketing team will know the difference between statements that flirt with an appropriate amount of accuracy as well as incorporating certain exaggerations that are sure to grab a buyer’s attention,” Oved said. “If they say, ‘gateway to Tribeca’ or ‘gateway to Soho,’ you can’t blame them for trying.”
And sometimes that difference hardly matters when it comes to a building’s core value. Miller Samuel’s CEO, Jonathan Miller, said that the advertised locations of properties don’t weigh heavily when he’s doing appraisals. Instead, he looks at comparable buildings or units nearby to determine a property’s worth.
“The ultimate test is [to ask], ‘If a person were looking at an apartment in this building, would they pay the same or less or more for a very similar apartment in adjacent neighborhood?’” he noted.
The geographic pitch
Still, some sponsors rely on an area’s name recognition to get buyers to tour their properties in the first place.
The development and construction firm Wonder Works Construction, for example, is marketing its condo the Vitre at 302 East 96th Street, as being on the Upper East Side rather than in the more specific neighborhood of Yorkville.
“We wanted to cast a net for everyone to know it’s the Upper East Side,” said Eric Brody, the firm’s CEO. “For our decision-making it was [about asking], ‘What is most recognizable to someone within New York and outside of New York?’”
And like many other areas in the city, there are varying opinions of where the Upper East Side begins and ends. Some people think the name should only be used for the area between East 59th and 96th streets and west of Lexington Avenue. Others believe the neighborhood stretches as far as the East River and includes the areas often referred to as Lenox Hill, Carnegie Hill and Yorkville. And the average prices in that part of Manhattan vary, too. In the second quarter of this year, the average sales price west of Lexington on the Upper East Side was $3.8 million, much steeper than the average price of $1.5 million east of Lexington.
“Sometimes I find it amusing that there will be developments on Third Avenue, or even east of Third, showing pictures of Gold Coast institutions like the Metropolitan Museum of Art and the Cooper Hewitt,” said Stribling’s Christine Miller Martin, an active broker in the area. “They are selling the lifestyle brand of the Upper East Side.”
Others pointed out that neighborhood names have become more fluid and change regularly — particularly in Brooklyn. “Biggie Smalls always said he lived in Bed-Stuy, but now where he lived would be considered Clinton Hill,” said Slate Property Group’s David Schwartz, who acknowledged that brokers and developers adapt quickly to branding neighborhoods to suit trends.
“In 2005 and 2006, people would call everything East Williamsburg,” he added. “Now that Bushwick has so much cachet, those same areas that were once called East Williamsburg are being called Bushwick again.”
The same has happened in Gowanus, the largely industrial Brooklyn neighborhood centered around the heavily polluted Gowanus Canal. Just a few years ago, developers would do all they could to avoid associating their properties with that area, one broker said.
But when the Lightstone Group began marketing its 430-unit rental at 365 Bond Street in Gowanus last year, while it played up the project’s proximity to the “charming Smith Street and Court Street in Carroll Gardens,” it never misstated the development’s true location.
“We made a conscious decision to embrace Gowanus rather than turn our backs on it,” said Mitchell Hochberg, Lightstone’s president. “The developer always wants to put their best foot forward, [but] you’re not going to pull wool over the eyes of today’s buyer or renter. Ultimately, when they get there, they are going to know where it is.”
It was a similar situation for Steiner of Steiner Equities, whose six-story condo building at 438 East 12th Street in the East Village is scheduled for completion this winter. The project’s average asking price is $2.7 million, according to StreetEasy, compared to the neighborhood’s $1.5 million average sales price. Still, Steiner never tried to disguise the project’s location, he said.
“If I like a neighborhood, I like a neighborhood and I don’t try to change where it is,” he noted. “I try to embrace it as it is and not dupe people.”
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