Co-op hotels fill niche in N.Y. real estate market Owners use apartments or buy units for hotel-like rentals as investments

October 12, 1997|By NEW YORK TIMES NEWS SERVICE

NEW YORK -- Every time Ashif Jiwa, a restaurateur from Vancouver, British Columbia, comes to New York on business, he stays in a stranger's apartment.

If Gene and Miriam Summ suddenly need to come into the city from their home on Long Island, and someone happens to be occupying their Manhattan co-op, the Summs stay in someone else's apartment in the same building.

If all that sounds confusing, consider a small, unusual niche in the residential real estate market -- the co-op hotel.

Jiwa is a regular guest at the Lombardy, a 165-unit co-op on 56th Street near Park Avenue, built as a hotel in 1926 by William Randolph Hearst. The Summs, both product-licensing agents, own a one-bedroom apartment at the Lombardy.

When the Summs are out of town, someone like Jiwa might rent their apartment for a night or two, or more.

The Lombardy is one of at least four residential buildings in the city (the Hotel Association of New York could not say how many others there are) in which some apartment owners either rent out their homes like hotel rooms when they are out of town or buy apartments for hotel-like use, purely as investments. The other hotels are the Pierre, the Sherry-Netherland and the Carlyle.

Nightly rates at the co-op hotels range from a quite reasonable -- by Manhattan standards -- $250 to an astronomical $3,400.

"It's like moving into someone's home for a few days, rather than some generic hotel room," Jiwa said. "What I really like is that the apartments are decorated by the owners, to their taste, with personal touches."

"In 501, for example," he said, "the lady had her whole CD collection and her books out, books she obviously read because she wrote notes in some of them. A locked closet in each apartment is set aside for personal belongings that the owner wants to keep private.

"It makes so much sense," said Summ, a former Lombardy guest who decided to buy an apartment, "particularly for people who live part of the time elsewhere.

"I usually know in advance that we are going to be in the city, so the apartment is there for us." Summ said. "But if I'm on Long Island and something's come up businesswise and I need to stay in the apartment but it's already rented, then the hotel will give us an alternate suite, which we pay for like a guest, so it's a wash."

The chairman of the Council of New York Cooperatives, Stuart Saft, when asked about co-op hotels, said, "Co-op hotels?" After the concept was described, Saft said: "Some ski resorts operate that way. When people are not using the apartment, it goes into a rental pool. For a corporation that regularly sends executives to New York, it makes a great deal of sense because they know there's a swanky apartment available."

"Elegant" and "traditional" best describe the decor of apartments at the Lombardy, where prices for buying a unit range from $180,000 for a studio to $650,000 for a three-bedroom suite.

A clause in the proprietary lease, said Werner Hoefer, managing director of the Lombardy, allows owners to sublet while not in residence, without the board's approval. Of the Lombardy's 165 apartments, 50 are owned by permanent residents and 115 are in the rental pool.

The rental units are occupied about 75 percent of the year, Hoefer said, with 50 percent to 55 percent occupancy the break-even point on maintenance.

The nightly rates at the Lombardy are $250 for a studio, $345 for a one-bedroom suite and $425 for a two-bedroom.

Rates at the Pierre, on Fifth Avenue at 61st Street, are, to understate it, steeper. One-bedroom suites range from $695 to $2,900, while two-bedroom units go for between $1,090 and $3,400.

Officials at the Pierre would not disclose how much it costs to buy an apartment. But Louis Ventresca, executive vice president of the Sherry-Netherland, at Fifth Avenue and 59th Street, said the purchase price of a studio there is about $250,000, with a two-bedroom suite selling for up to $2 million. Nightly rates at the Sherry-Netherland start at $280 for a studio, with suites ranging from $550 to $1,900.

Pub Date: 10/12/97

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