Inside Third & Bond: Week 143

When Buyer B came along looking for at least three bedrooms and enough space to give the grown-ups and their three kids room to play, we thought they were perfect candidates for one of our garden duplexes. With private rear yards and plenty of space, our garden duplexes are house-like and the most family-friendly units at Third + Bond. But Buyer B envisioned something a little different. They were more excited about gardening on a roof terrace than in a rear yard, and they liked the views from our higher-floor units. Their idea: buy two two-bedroom apartments in one building and combine them into a four-bedroom duplex.

We love signing contracts, but customization is a tricky business. Over the course of our negotiations, we had to consider the costs of the additional construction and design work, as well as the impacts on the construction timeline and TCO sign-offs for the rest of the project. In the end it was fairly easy to decide that the benefit of selling two apartments with one stone more than outweighed the complications involved in combining them, and we now we have a signed contract for a second floor and a third floor two-bedroom as one combined duplex unit.

As detailed by a construction rider to the purchase contract, Hudson will customize the units by installing an internal staircase and demolishing one kitchen. The new unit will…

…open from the condo entrance on the second floor of the building into a living space with an open kitchen and dining room. On the far wall, a straight-run staircase will lead away from the windows and up to the third floor of the building, ending just where the third floor kitchen is now. That kitchen will be removed and the large, open room will likely function as an especially spacious living room with perhaps a study or entertainment nook where the kitchen once was.

This work costs money, of course, so we negotiated a construction price separate from the purchase price. Because of the custom nature of the work, most of the construction price is payable upfront. After we’d told Buyer B the cost of the work, they wanted to know if we would also convert one of the bathrooms into a vanilla box. We considered it, but the work involved – removing fixtures, capping the plumbing, putting up new drywall and sheetrock, taking out the tile floor and putting in hardwood – was beyond the construction price we’d already quoted. So we told them yes: for more money. They decided it wasn’t that important.

The next big decision was what to do with the kitchen and appliances we were taking out. Since we’d already purchased and installed all of the appliances for the entire project, we weren’t going to be able to get a credit from P.C. Richard. The appliances were included, from our perspective, in the price we’d negotiated with Buyer B, so we gave them the option of taking or leaving. They took. We plan to unhook the appliances and Buyer B will come pick them up (hopefully the same day to get them out of our demo frenzy). They have a vacation home that could use new appliances. Smartly, they’ll leave both sets of washers/dryers. Kids, that means you get to do your own laundry!

Once we’d established the scope of work and the price, the schedule was next on the list. Buyer B wants as much certainty as possible so they can give appropriate notice to their landlord. We’d like certainty, too, but it isn’t that simple. The work we are doing to combine the units will require an amendment to our DOB approved drawings. If we submit the amendment now and proceed with the work, then the TCO for the entire building will be postponed. There are three other units in that building, some under contract. While the combo unit represents a large sum that we’d like to close on, it doesn’t make a ton of sense to postpone TCO and thus closings for the other units. We would rather get the TCO and then file the amendment for the combination. That way we can close the other units while working on the combo.

Then there is the matter of the time to complete the work. There’s architecture and engineering work. There’s the manufacturing of the steel staircase. There’s demolition. There’s stair installation and drywall repair, painting and punch list. Altogether this work could take as many as 10 weeks. To condense the time as much as possible, we have already started the architecture and engineering work. The staircase will go to manufacture shortly—it’s expected to take a month. The plan is to be all teed up to start the work as soon as our TCO and permits allow.

The customized duplex will be fantastic. The floor plan, the sense of being in the air is all very different from the garden duplex. Buyer B also bought a large roof terrace so they got their private outdoor space, albeit on the fifth floor. Buyer B, we salute your vision!

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Our legal fine print: The complete offering terms are in an Offering Plan available from Sponsor. File No. CD080490. Sponsor: Hudson Third LLC, 826 Broadway, New York, NY 10003.