Investing in a Soho apartment, key tips
Posted by Wei Min Tan on May 4, 2020
Soho is one of the most desirable and expensive addresses in Manhattan, New York. Soho was once an artist hub in the 1960s and 1970s. As with real estate trends, fancy coffee shops and chic restaurants started moving in, prices increased, artists moved out, high income financiers and entrepreneurs who can afford $2,500 to $5,000 per square foot prices or $100+ per square foot rents moved in. Now, Soho is home to expensive art galleries, loft apartments and luxury designer stores.
Is getting a Soho condo apartment a good investment? It depends. The below are some tips when looking to invest in a Soho property.
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Tip 1: A Soho loft is extremely desirable
The distinguishing factor of a Soho apartment is the loft style. A loft refers to a former warehouse or factory that has been converted to residential apartments. Lofts are unique because of the 12 to 14 feet high ceilings and large floor-to-ceiling windows. A loft usually occupies the entire floor so the area is huge, 2,000 sqft and up. This makes the apartment very voluminous. Investing in a Soho loft apartment represents one of the best assets to own in Manhattan because the supply is finite.
Deal example: Investor client’s Soho loft at 40 Mercer Street. I remember we shopped for this during a cold and dark winter day. Looks so much better in Spring. Notice the apartment looks out to historic Soho architecture.
Tip 2: Artist In Residence rule
Since Soho started as an artist hub, most Soho buildings are zoned A.I.R. (Artist In Residence). Technically, this means that, in an AIR building, the resident needs to be a certified artist, and there is a detailed and cumbersome process to get such certification (if one is indeed an artist).
Reality is that most current owners of Soho apartments are not artists. The AIR law is not one enforced by New York City but this doesn’t mean it will not be enforced. The AIR law may cause challenges when obtaining a mortgage from a bank. There are some Soho buildings that are not zoned AIR and these are the newer built ones.
Tip 3: Facilities
Being a classic Soho loft building means it’s a 100 year old building with creaky floors, no fitness center or residents’ lounge and usually no doorman. When paying $2,500 per sqft for an apartment, these are amenities often expected in a newly built, all-glass condo building. Not in Soho. There is a handful of newer all-glass buildings with the fancy amenities. But majority of Soho apartments will be as mentioned above, little to no facilities.
A Soho living room is expansive, especially with the high ceilings. Most Soho apartments are floor through, going from front to back.
Tip 4: Living in a building with 5 to 15 apartments
Most Soho apartments are 5-story buildings, one apartment per floor. There is a very small number of apartments in the entire building, maybe between 5 to 15 apartments. This in contrast to a 200 unit luxury condo. So what does this mean? It means that everyone or half of all residents are in the board. And everyone gets involved in the decision making of the building (not always a good thing).
As with all committees and politics, there is always arguments and disagreements on what to do, eg whether to add plants on the roof, paint the hallways, how much common charge to increase, replace vs fix the boiler, etc. You will know your neighbors because your neighbor is constantly lobbying you to vote a certain way.
Tip 5: The Soho vibe is irreplaceable
Why do people pay so much for a Soho apartment? The main reasons are preference for the high ceiling loft style, need for privacy and need to be in the middle of the Soho vibe. Walking the cobblestone streets of Soho simply feels glamorous. You may stand taller or feel better. At least I do. There are chic hotels, expensive restaurants, and sidewalk ice cream stalls. That’s only in Soho. The cast iron architecture is one-of-a-kind. They don’t make these anymore.
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We focus on global investors buying Manhattan condos for portfolio diversification and long term return-on-investment.
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5) Market the property at the eventual sale
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