Would You Buy on the Waterfront?

By MICHELLE HIGGINS

IF tropical storm Irene last year was an eye-opener, Hurricane Sandy was a reality check.

Waterfront property in the New York area is some of the most coveted in the nation, but after back-to-back years of supposedly once-in-a-generation storms, public officials, developers, brokers and homeowners are being forced to re-evaluate.

Although real estate experts say property values are unlikely to suffer in the long term, it is possible that new zoning and planning regulations — and buyers’ expectations — could reshape how residential housing along the water is built, marketed and sold.

In a news briefing on Wednesday, Gov. Andrew M. Cuomo said elected officials had a responsibility to consider new ways to prevent similar damage to the region’s infrastructure in the face of future storms. “For us to sit here today and say this is a once-in-a-generation and it’s not going to happen again, I think, would be shortsighted,” he said. “I think we need to anticipate more of these extreme-weather-type situations in the future, and we have to take that into consideration in reforming, modifying, our infrastructure.”

On Wednesday, property management companies were just beginning to assess the damage across the region. At least 40 of the 500 buildings that Cooper Square Realty manages throughout the five boroughs had “major disasters,” where common areas or equipment sustained significant damage, some with extensive flooding, said David Kuperberg, the firm’s chief executive.

“Some of our buildings out in Brighton Beach, Coney Island and the Rockaways have part of the boardwalks in their lobbies,” Mr. Kuperberg said. “There is one building that had 24 feet of water in the lobby at one point.”

Despite the destruction, those in the industry agree that the urban waterfront will continue to retain its allure.

“If you love living on the water, and you’re willing to take the risk,” said Dottie Herman, the president and chief executive of Prudential Douglas Elliman, “waterfront properties always go for a higher premium. Those who buy on the water know the risks ahead of time.”

Hall F. Willkie, the president of Brown Harris Stevens, said he was confident that the storm would not have a negative impact on overall property values. “It may affect specific homes within buildings or locations which were severely damaged by the storm, but not on the long-term market as a whole.”

Depending on the pace of the cleanup in hard-hit neighborhoods, said Jonathan J. Miller, the president of the Miller Samuel appraisal firm, “there may be a lag or delay in that market, but I am extremely skeptical that once this crisis is past there is going to be some sort of structural impact to values.”

He added: “I’m always struck by how quickly we forget — the collective memory, whether it’s politics or real estate or anything else. When people are looking at property on the water with beautiful views, all that gets rationalized away.”

Even after the devastating effects of the 9/11 terrorist attacks, Mr. Miller noted, “Lower Manhattan is one of the best-performing markets a decade later.”

Still, for now at least, some brokers reported that their buyers were expressing jitters about the waterfront. Dolly Lenz, a high-end broker at Douglas Elliman in Manhattan, said that even though she was scrambling to get some clients appointments lined up in the wake of the storm, others in flooded areas like Battery Park City were “reassessing whether they want to be there on a long-term basis as they had originally thought.”

Her advice: “Take a pause, wait a few weeks and see what happens. Those kinds of decisions should not be made in a panic. They’re in a panic. They’re not accustomed to having their life upended that way.”

She said at least one deal, a $1 million year-round Hamptons rental, had fallen through. Before the storm, her client had “only wanted the primest of prime oceanfront.” Now the priorities have shifted to a home in the estate section farther inland. “They don’t want to put their family and pets in the way of any potential danger,” she said, “and do not wish to pursue the waterfront opportunity.”

Some brokers and developers are anticipating new questions and concerns from buyers regarding waterfront property. “I think people will start looking into the zones a building is in, learning if there is backup power or not in the building, is there a history of flooding etc.,” said David J. Maundrell III, the founder of aptsandlofts.com, a New York brokerage that specializes in new-development marketing. Although he doesn’t expect those concerns to hurt prices, he said, “people will be more cautious and ask more and different questions.”

Still, as Frederick W. Peters, the president of the Manhattan firm Warburg Realty Partnership, pointed out, “There’s this funny way in which events of this nature make people more passionately devoted to their communities, and we’ve seen that in New York before.”

Developers should be installing generators in each new building, said Andrew Gerringer, the managing director for new business development of the Marketing Directors, a New York development, leasing and marketing company. “And if you are in a zone that’s prone to flooding,” he added, “the new codes should require that serious drainage should be built in to mitigate the damage that we just witnessed.”

Some real estate veterans looked to more hurricane-prone regions for guidance. “The last two storms have shown we’re not immune to what we think only happens down South,” said Gary L. Malin, the president of Citi Habitats. In Florida, he noted, “People have lived and learned through so many storms and had the opportunity to make changes where necessary. We have to start following those guides.” Despite the risks, he added, “people will still want to build on the water, but hopefully they will build in different ways.”

Some developers have already begun to implement designs that they say could help mitigate damage in similar storms. At the Edge, a more-than-500-unit glass-and-steel residential building on the waterfront in Williamsburg, Brooklyn, generators are on the eighth floor instead of the basement; hefty precast concrete panels were used on the exteriors to minimize building motion in high winds; and the entrance was built to the highest level of grade possible. The Edge narrowly averted severe damage this time as water breached the bulkheads and came up over the waterfront esplanades, but never reached the building.

Jeffrey E. Levine, the chairman of Douglaston Development, said the Edge’s special features could set it apart in the event of a similar storm. Other than a broken window, he said, “there were absolutely no problems whatsoever.” He added, “I think we should probably put signs up in the building: We survived Sandy without a blemish.”

But with long-term plans to build another tower even closer to the water, Mr. Levine added, further measures are in the pipeline. “Future plans will include well-designed gas turbines which will produce uninterrupted emergency electric power for the building.”