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From Four Condo to One House

05/02/2013, By Josh Barbanel


From Four Condos to One House


Back when the real-estate market was hot in 2007, broker-developer Daren Herzberg, envisioned turning a small townhouse in Chelsea into a tall, modernist condominium with a copper-clad facade and four apartments.

Things didn't work out as originally planned. But after a brush with foreclosure during the downturn, Mr. Herzberg has come back strong using a new strategy for the property: It is now a seven-story single-family Georgian-style house faced in limestone and brick.

The house sold on Friday for $15.5 million, a record price for a townhouse in Chelsea.

"It was a scary and educational adventure," Mr. Herzberg said. Julie Pham, a Corcoran Group broker who advocated the unusual redesign, has another description. "We did a Hail Mary pass," she said.
Mr. Herzberg says he and his investors were saved by a new marketing plan that rode the surge in luxury real-estate prices, as well as an unusual design decision. He turned the house over to interior designer Eric Cohler, who moved in and decorated it with his own furnishings and art work. The designer lived there for two years while the property lingered on the market.

He began construction on a plan to nearly double the size of the house, making it seven stories including a penthouse. The design gave it a dark metallic sheen and wide, protruding picture windows. The four condos were priced for a total of about $12 million, including a $7 million penthouse with a private rooftop pool. The penthouse quickly went into contract.In 2006, when condo prices were soaring and every development was counted as a winner, Mr. Herzberg and some investors paid $3.71 million for the Federal style, 20-foot-wide townhouse at 150 W. 15th St. between Sixth and Seventh avenues, outside Greenwich Village and other hot Downtown neighborhoods.

But when the financial crisis struck, money ran out and the project stalled. A Chicago-based bank financing the deal, Broadway Bank, eventually failed and was taken over by the Federal Deposit Insurance Corp..

The debt passed to other hands, and Mr. Herzberg said he worked out a compromise with the new debt holders that allowed the project go forward—after his investors put up additional capital.

Mr. Herzberg, Ms. Pham and Brian Babst, another Corcoran broker who shared the listing, worked out a new plan for the property, keeping the same building shape. But the house was turned into an unusually large single-family, listed at 8,400 square feet with 18 rooms, six bedrooms and 10 baths spread over the seven stories.

The idea was to take advantage of rising prices in TriBeCa, the West Village and the Village, where prime apartments for the wealthiest buyers were going for between $3,000 and $4,000 a square foot. Ms. Pham said.

The house as a single-family design was priced as high as $22 million, but the asking price was gradually cut over the last two years. The sale price of $15.5 million works out to $1,892 a square foot.

The highest sale price in Chelsea had been $8.75 million last year of a smaller house on the grounds of the General Theological Seminary on West 20th Street near Ninth Avenue.

The 15th Street house includes two double-height spaces—one in a 35-foot-long living room opening out on a garden and a second in a drawing room next to master bedroom on the fifth floor. There is also a hot tub on the roof.

Mr. Cohler repainted many walls dark colors, the better to show off his art collection. He said he used the stairwell, painted dark blue and black, as a seven-story art gallery displaying 500 brightly framed photographs, drawings and paintings.

In the end the buyers were drawn to his designs as well as the vast newly finished space, priced below smaller places further downtown, said Alex Karas, a broker at Bond New York, who represented the buyers.

He said the buyers negotiated to purchase pieces of Mr. Cohler's furniture and artwork used to stage it, and asked Mr. Cohler to design the interiors for them. Mr. Karas declined to identify the buyers, except to say that the buyers were New Yorkers and one worked in finance. They had been renting downtown for some time.

Mr. Cohler said that his design work for the developer was essentially a "barter transaction." He said he has moved out of the house and is now living in a "450-square-foot room." His furniture and artwork are in storage.

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