A team of three German and South African entrepreneurs who have muscled their way into the top ranks of New York developers have snapped up yet another upper East Side site for an apartment building.
Aby Rosen, Michael Fuchs and Trevor Davis plan to build a 22-story rental tower with about 220 apartments on the east side of First Ave. between 75th and 76th Streets.
Their company, RFR Holdings, is rushing ahead with the $70 million project, named the Impala, to cash in on the white-hot rental market in Manhattan that has driven prices–and rents–to record levels.
These days mere studio apartments in upper East Side doorman buildings bag rents in the $1,700 to $1,800 range. One-bedroom apartments typically go for $2,400 to $2,500 a month. Such rents were unheard of only a few years ago, when the real estate market flattened.
RFR is staking a lot of money on its hopes that the market stays hot. Besides the Impala, the company is completing a rental building at First Ave. and 33d St. and is about to start work on two others, at First Avenue and 82d Street and Third Avenue and 78th Street.
So far, RFR’s bets have paid off handsomely. The company’s first development, a 100-unit building at 300 E. 64th St., filled up quickly at record rent levels.
RFR also had the Midas touch in its purchase of such prominent office buildings as 830 Third Ave. and 400 Park Ave. Thanks to the city’s improving economy, they have sharply risen in value.
The danger, of course, is that the residential market could slam into reverse, the way it did in the late 1980s following the October 1987 stock market crash. If that happens, RFR could be left holding a lot of pricey apartments with a shortage of high-income renters.
But Rosen says RFR is playing it safe by focusing on the upper East Side.
“It’s the best rental market in the city,” he said. “Prices will continue to climb there even if they stop elsewhere.”
So far, rents have shown little sign of slowing down. In the first half of 1997 alone, rents have gone up an average of 10 percent in Manhattan, according to a recent survey by Feathered Nest, a large brokerage firm. In 1995 and 1996, rents went up about 10 percent each year.
In other words, a one-bedroom apartment that rented for $1,700 two years ago, now rents for more than $2,000.
“It’s incredible,” said Nancy Packes, president of Feathered Nest. “Even with a lot of affluent people deciding to buy instead of rent, rents are still going up.”
RFR made headlines earlier this year when the company locked horns with neighbors of the planned 88-unit development at Third Avenue and 78th Street. Neighbors tried to block the project to save the Cottages, an eight-unit building with a popular internal garden.
But RFR defeated the neighbors’ court challenge and is moving ahead with the development.