Kips Bay Goes White-Brick

The New York Times
March 9, 2008

By Josh Barbanel

You can dress it up in beaver rugs and silk taffeta, crown moldings and chandeliers, but can you sell it?

Manhattan House, the huge $1 billion condominium conversion project at East 66th Street and Second Avenue, faces a state deadline of June 30.

By then, the developers have to obtain signed contracts for 87 of the original 583 apartments (some have since been combined) or the plan will be considered abandoned. And to push the project forward, the developers have negotiated an unusual promotion for the complex, which has five 20-story towers in a postwar modernist style. In April, it will be the site of the 2008 Kips Bay Decorator Show House.

For most of its 36 years, the event has used a Manhattan town house (usually one that is about to go on the market) to provide a showcase for designers, who redesign rooms, usually luxuriously, and charge admission to benefit the Kips Bay Boys and Girls Club, an organization that provides services to children in the Bronx.

But this year, the show house will take over six apartments, including two penthouses, on two floors at Manhattan House and turn them over to 19 designers. A rooftop lounge will be used to house a furniture retrospective by Vladimir Kagan. Some of the show apartments have been renovated, others have been left exactly as they were when the last tenant moved out, and some have been stripped down to concrete floors and exposed pipes.

“We can bring all the fantasy that people associate with the show to apartment living,” said Jennifer Skoda, the director of special events for the Kips Bay Boys and Girls Club. The show is set to open to the public on April 24.

Ms. Skoda said the show would provide a challenge for designers, who must cope with a design problem common to white-brick buildings: though recognized as the first and perhaps greatest white-brick complex on the Upper East Side, with a curved drive and a private garden, it has relatively low apartment ceilings.

Developers bought Manhattan House from the New York Life Insurance Company in 2005 for $623 million, and the project has been caught up in a series of battles, some involving partners in the deal and others involving the sponsors and hundreds of market-rate and rent-stabilized tenants in the building.

Tenants sued to stop the conversion but have so far been rebuffed in State Supreme Court in Manhattan. After the ruling, the sponsors threatened to sue the tenants and a tenant Web site for defamation. In a letter in January, lawyers for the sponsor complained that the tenants “have printed T-shirts with wording about asbestos and leaky pipes for the intent of disrupting sales.”

But in the last few months, after a development team — headed by Jeremiah W. O’Connor Jr. — brought in designers to create model apartments (and after the insider discount was increased to 25 percent below the asking price), sales began to take off.

Dolly Lenz, a Prudential Douglas Elliman broker who is leading the sales team, said that so far 53 apartments were in contract, including nine sold to insiders, and 20 more deals were nearly complete.

Rafael Urquia II, a lawyer and president of a tenants group, said tenants were prepared to meet with the developers about their complaints and perhaps a further reduction in sales prices, especially in view of the June deadline.

Yet at Manhattan House last week, as work crews knocked down a cinder-block wall in a $6 million penthouse to give Larry Laslo, a Kips Bay designer, a blank canvas with a larger entryway to work with, a stream of brokers, with clients in tow, wandered through the sponsor’s model apartments.