Upgrading owners covet combining neighboring units for good reason.
The bigger a Manhattan property, the higher its price-per-square-foot. It is one of the few global residential markets where this is the case.
Let’s look at a tangible example. Picture a market where one-bedroom condos sell for an average of $1,300/ft. while two-beds may sell for an average of $1,750/ft.
This presents an opportunity for a one-bed owner to combine their unit with the one-bed next door, creating a two-bed (or larger) for cheaper than buying a similarly-sized apartment on the open market.
If an owner creates a two-bed, worth $1,750/ft., for less than the $1,300/ft. cost for both standalone one-beds plus her total renovation cost ($200-300/ft. is a good rule of thumb), she’s just created instant value. Owners see this return when the finished product feels right with good spatial flow and mid-to-high end upgrades.
Making a combo deal involves particulars that differ from traditional purchases.
Borrowing to combine requires more equity. Purchasers must place escrow funds for a % of the total reno cost, with funds released only after sign-off confirming a legal combination with one kitchen and old lines capped off. Loans require stamped architectural plans and multiple appraisals.
Combos also may be harder to find. Neighbors know they have what you want, and may over-ask. As a combo may be an off-market deal started with a knock on a door, there is greater chance for missing a hurdle.
These are some of the most important considerations, and reasons why combining in NYC requires patience and direction.