Can you imagine Manhattan without its stately co-ops? The experts can. The co-op is on its way out—and for good reason, according to a group of New York brokers who recently convened for a Gotham Magazine-sponsored lunch. While that may be bad news for current co-op owners, would-be buyers may be in luck.
Co-op shareholders already face a few hurdles: First off, and perhaps most importantly, the resale value of their apartments is about 30 percent less than their condo counterparts. Plus, there's an aesthetic problem: Buyers' tastes have shifted more toward glass-walled towers and away from pre-wars. And finally, buyers are fed up with the scrutiny and snootiness for which co-op boards are known. But for buyers who read between the lines, you'll see that there are (relative) deals to be found in co-ops.
So what's a co-op building to do? Why, become a condo, of course. The group of brokers said they're working on a proposal to bring to co-op boards that would help them make the switch to condo. But it's likely to be a lengthy process, involving significant changes to the buildings' tax structures.
Still, some think it's just a matter of time before co-ops become all but extinct. "The 'Masters of the Universe' who bought the $20 million to $30 million co-ops on Park Avenue are all financially minded; they come from hedge funds and banking," high-end broker Adam Modlin of the Modlin Group tells Gotham."They’re going to realize that their co-ops have not appreciated the same 20 to 30 percent that condos have. When the 60- and 70-year-olds move out of these apartments and they’re bought by 20-, 30-, and 40-year-olds, [these younger buyers] are going to initiate change because their friend has a condo that has gone up 30 percent in three years and the co-op has gone up 4 percent in three years."