The Atelier (635 West 42nd Street)
1. BUILDING OVERVIEW (ANALYST FRAMING)
The Atelier (635 West 42nd Street) is a mature resale condo completed in 2007, consisting of 478 units across 46 floors. Based on post-sponsor behavior, the building is classified as Yield-Oriented, as it maintains high transaction velocity (922 recorded sales) but chronically underperforms its sub-neighborhood (Hell's Kitchen) by 14.1%. Capital preservation is inconsistent; while liquidity is high in terms of volume, the building experiences high line-level dispersion and significant "income leakage" due to rental vacancy (DOM).
2. UNIT MIX & COMPOSITION
The inventory is heavily weighted toward smaller footprints, which shapes its behavior as a high-churn, rental-heavy asset.
1BR: ~470 sales (approx. 51% of activity), Median PPSF $1,212.
2BR: ~248 sales (approx. 27% of activity), Median PPSF $1,328.
Studios: 8 recorded resale sales, Median PPSF $1,249.
3BR+: Limited organic resale liquidity; often result of combinations.
Analysis: The 1BR concentration creates high liquidity but subjects the building to market regime timing volatility, as these units are the first to be impacted by inventory spikes in Midtown.
3. LINE (STACK) PERFORMANCE — RESALE ONLY
Liquidity (Fastest Lines): The 2BR/2BA stacks (e.g., Line J, Line F) exhibit the highest resale liquidity with a median DOM of 91 days.
Price Strength: Line J and Line B (2BR configurations) command a premium baseline of $1,328 PPSF, roughly 9% higher than the 1BR building median.
Appreciation: Line-level compounding is weak. For example, Line M (1BR) showed a PPSF of $1,149 in 2007 and traded at $1,244 in 2025, representing a CAGR of ~0.4%, significantly trailing the NYXRCSA index which moved from a conceptual 100 to over 331 in the same era.
4. BUILDING-WIDE PPSF TREND (NORMALIZED)
2007–2012: Sponsor-heavy period; pricing clustered around $1,100–$1,300 PPSF.
2013–2019: Flat/Cyclical; resale pricing struggled to break the $1,500 PPSF barrier consistently.
2020–2025: Drawdown/Recovery; recent sales (e.g., Unit 12D in 2025 at $1,157 PPSF) indicate the building is mean-reverting toward its 2007 sponsor pricing, failing to capture broader NYC condo appreciation.
Conclusion: Flat/Cyclical.
5. RENT CAPTURE ANALYSIS
Mandatory Metric: Effective Annual Rent
Unit 10C (2025): Achieved $4,000. DOM: 139 days. Effective Rent: $2,476.
Unit 11J (2025): Achieved $3,700. DOM: 90 days. Effective Rent: $2,787.
Analysis: The building suffers from massive income leakage due to high rental DOM (averaging 70-139 days for recent 1BRs), which negates nominal rent growth.
6. B³ SCORING SYSTEM (0–100)
Liquidity Score: 55 (High volume, but high median DOM of 103 days indicates friction).
Rent Capture Score: 45 (Significant leakage; effective rents are often 20-30% below nominal due to vacancy).
Appreciation Score: 30 (CAGR is near zero for many lines; underperforms benchmark by 14%+).
7. COMPOSITE SCORE & CLASSIFICATION
Composite Score: 44.0
Category: Yield-Oriented (At Risk)
Justification: While the building functions as a high-velocity rental engine, it fails to meet the "Core/Defensive" threshold of 80+ liquidity or the "Appreciation-Driven" threshold of 75+ appreciation.
8. TRANSACTION EXAMPLES
Resale Appreciation (Nominal)
Unit 12G: $855,330 (2007) → $1,100,000 (2019). CAGR: 2.1%. (Driver: Market regime timing).
Unit 31G: $770,000 (2010) → $1,100,000 (2019). CAGR: 4.0%. (Driver: Market regime timing).
Resale Depreciation/Stagnation
Unit 12M: $868,000 (2016) → $809,000 (2025). Change: -6.8%. (Driver: Liquidity shift).
Unit 38D: $1,407,018 (2007) → $900,000 (2021). Change: -36%. (Driver: Unit mix imbalance/Market regime).
9. RISKS & RED FLAGS
Chronic Vacancy Leakage: Rental DOM frequently exceeds 100 days, destroying net yields.
Price Anchor Failure: Resale PPSF in 2025 (e.g., Unit PHG at $824 PPSF) is currently trading below original 2007 sponsor levels ($1,376 PPSF for same unit).
Red Flag: Avoid the D and G lines in mid-floor tiers; they show the highest volatility and weakest price persistence.
10. EXECUTIVE SUMMARY
The Atelier is a high-velocity, Yield-Oriented building that serves as a Midtown rental factory but fails as a capital appreciation vehicle. Post-sponsor behavior is characterized by flat compounding and extreme rent leakage due to high vacancy periods (DOM). Investors capture high nominal rents, but the Effective Annual Rent is severely diminished by absorption friction. The building’s 14.1% underperformance relative to Hell's Kitchen confirms it is a mean-reverting asset where value is lost to time and oversupply.
B³ SCORECARD
Liquidity Score: 55
Rent Capture Score: 45
Appreciation Score: 30
Composite Score: 44.0
Category: Yield-Oriented
Unit Mix: 1BR Dominant (51%)
Disclosures: 142 transactions from 2007-2012 were reclassified as Sponsor-Driven due to the <30 day DOM rule. This normalization lowered the perceived "resale" PPSF for those years, revealing that true resale appreciation has been near-zero for 15 years.