For decades Harlem’s Church of the Master had a problem. Its historic building on Morningside Avenue was crumbling, unsuitable for worship services. The church’s leaders wanted to renovate it but raising the large sum required eluded them.
So year after year the congregants prayed and worshipped in a make-shift sanctuary next door as New York City land values climbed, especially for the land beneath the Church of the Master’s pews with Morningside Park across the street and Columbia University nearby.
The church, still cash poor, became land rich. But it didn’t want to sell. So church leaders hatched an idea, instead of renovating the old church, they could partner with a developer to build an apartment building on the land. Rent proceeds would first pay the developer for the apartment building’s construction and then provide a revenue stream for the church.
“We said, ‘Guys, that’s nice but it will take at least 15 years to earn a fair profit in this market,’” remembers Edward Poteat, director of real estate finance for Horsford & Poteat Realty, part of a team, along with Beatrice Sibblies of BOS Development and Sara Herbstman of The Bluestone Organization, that worked with the church.
Instead, Poteat’s group suggested something more immediately profitable for both the development team and the church. It would build condominiums instead, selling the units but not the land beneath in an arrangement called a ground lease co-op. The developers would get paid as the units are sold, and the church receives rental income from the buyers for the land it continues to own, plus a place to worship inside the building.
The resulting 12-story tower named 88 Morningside became the fastest-selling condominium in Harlem. It opened for sales in June 2010, but really took off in October 2010 when the model units were done. By August the building had contracts on more than half of the 73 units, and closings had begun.
The less common land arrangement at 88 Morningside, where the building’s buyers own their units but pay rent on the land, hasn’t seemed to deter sales, say marketers. Owners are guaranteed a land lease for as long as 200 years with rent rate increases capped at 1 percent to 2 percent a year tied to the cost of living. What happens at the end of 200 years? The rates can be renegotiated to reflect the market at that time.
The units, with their spare but high-end modern fixtures and views of Morningside Park and the Manhattan skyline, are attracting a broad demographic swath of buyers from Manhattan’s Upper East and West Sides, as well as a contingent from France, marketers say. The buyers have been singles and couples, both with and without children.
Its distance from downtown also has failed to slow sales. “The west side of Harlem has always been the better part of northern Manhattan, says Poteat. “It’s by a lot of great trains and has great access to the university.”
Spurring sales are the park views from the building, twice as tall as Harlem’s typical six-story cap, and its price tags. The one- to three-bedroom units are selling for between $415,000 and $880,000 for 735- to 1,270 square feet.
Then there are the building’s amenities, including a roof deck with an outdoor kitchen where residents can soak up the views and socialize. There’s a media lounge and virtual concierge as well. Plus, for those residents seeking some Sunday morning spirituality, the Church of the Master abides conveniently downstairs.
Learn more about markets featured in this article: New York, NY.
