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Take a drive into the city. Lights and skyscrapers surround you as you head to an evening of high-end cocktails in a moody downtown bar, and an exciting gala event to follow. The thought of the late-night drive home leaves you with the urge to cut the evening short. This is where a pied-a-terre comes into play. Wait. A what? Sounds fancy, it is French after all. Pied-a-terre roughly translates to “a foot on the ground,” meaning a small, non-primary urban residence to call home. Layouts are typically similar to a studio or efficiency apartment and pieds-a-terre can be found in all major cities in the U.S. and around the world.
We are here to dive into everything you need to know about pieds-a-terre. We sifted through data, examined perks and challenges, and spoke with HomeLight agent Martin Eiden, who delivers over two decades of real estate experience in New York, which just so happens to be a hot spot for pieds-a-terre.
What’s the appeal of pieds-a-terre?
Business or leisure
According to Eiden, those who are buying pieds-a-terre are often high profile, wealthy individuals who come to the city for business or leisure. “[Buyers will have] their big home out in Westchester or Long Island … and then they will have their pied-a-terre apartment in New York City so they can be downtown for all of the right social events,” he says.
He also mentions a specific building in the West Village of New York known as the “Hollywood Condos.” Many actors, filmmakers, and individuals of notoriety own pieds-a-terre here. In fact, Eiden says many of his clients from Los Angeles looking for a small space in New York specifically request this building because of the status surrounding it. The building has a reputation as “the spot” to be when an L.A. native heads to New York City.
But pieds-a-terre aren’t only for the rich and famous. Think parents of a college student whose campus is far from home, frequent business travelers, or empty nesters looking for a small spot to call home when they travel to Paris for shopping, London for some sightseeing, or head to Chicago for that perfect slice of pizza.
The key to a pied-a-terre is that it’s usually not a large space. In fact, it’s typically a two-bedroom apartment or smaller. Also known as: just the right amount of space to get the local experience in whatever city you happen to be in.
Often, buyers will discover that they spent a large sum of money on hotel bills over the course of a year when they come to their favorite city, and subsequently decide that they should simply purchase property instead. Pieds-a-terre can be a more cost-effective alternative to renting or staying in hotels when people visit particular cities frequently.
The COVID effect
The current pandemic has caused an influx of individuals moving away from big cities, and in turn, making these buyers want to downsize to a pied-a-terre so they can still have a foot in the city they love. This trending move offers more freedom to owners by having their primary residence sit outside of the densely populated city, and subsequently having more space and fewer restrictions regarding the novel Coronavirus.
Eiden says that clients for homes often fall into two categories. There are those seeking convenience and luxury, and then there are the buyers that are looking for anonymity. More on this in the budget section!
It’s also common for pied-a-terre owners to be frequent business travelers. Many are consistently working in a particular city, and rather than rack up hotel fees, they purchase a pied-a-terre instead.
Another common buyer for pied-a-terre properties are long-distance commuters. Instead of enduring stressful hours on a commute each day, buyers will decide purchasing a small apartment in the city is worth the cost to save them valuable time that would otherwise be spent sitting in traffic.
Of course, individuals seeking fun weekend getaways, visiting family, sports season ticket holders, and those itching for a temporary fast-paced urban lifestyle are also common buyers of pieds-a-terre.
Let’s talk about budgets
Buyers of pieds-a-terre spaces often have a healthy budget. Eiden notes that in the luxurious West Village “Hollywood Condos” a studio apartment goes for $1 million, a one-bedroom unit is roughly $2 million and a three-bedroom space will cost about $4 million.
He says it is also common for buyers to spend between $700,000 and $1 million for a less luxurious one-bedroom pied-a-terre in more charming, smaller buildings that may lack certain amenities. “[These are the buyers] that often want to feel anonymous … maybe they are a bigwig somewhere else, and they come to New York to become part of the crowd.”
But there are, of course, more affordable options in cities around the globe. For example, in Chicago you can find a pied-a-terre space for $300,000 or less! You also may be able to rent properties in various cities for much lower price points than the cool millions you may face in NYC.
Vacation home versus pied-a-terre
A pied-a-terre may be confused with a vacation home, but there is a distinction. A vacation home is often much larger in size than a pied-a-terre. Vacation homes are also usually outside of a condensed urban area, whereas a pied-a-terre is smaller scale and urban. But perhaps the most notable distinguishing factor is that a pied-a-terre is a temporary residence that isn’t intended for long-term living, while a vacation home is intended for extended stays.
There are a lot of different features people look for when buying a pied-a-terre. Obviously, location is important. If you’re buying property in another city you want to make sure it’s in a location that serves your purpose, whether that means being close to restaurants, theaters, museums, or shopping, or the stadium where you hold season tickets for your favorite team.
Many buyers look for a building with a doorman, a concierge, or a full staff. It’s “not so much about security as it is about convenience,” Eiden says.
Common spaces like rooftop decks are also popular, as are access to public transportation and parking availability.
While some buyers are in the market for budget-friendly spaces, others wish to have luxury amenities in their pied-a-terre. Common popular features include exclusive gym and spa services, a swimming pool, and pet-friendly buildings.
Amenities can vary greatly so make sure you find out what’s included in the building.
Are pieds-a-terre used as investments?
Often, pied-a-terre buyers are not using the purchase as an investment strategy per se, but because it is a real estate investment, simply by holding onto the property for years, they often increase in value. Eiden stresses that the draw of a pied-a-terre is often about convenience over investment.
He notes a common pattern in which individuals will go from getting a hotel room every time they are in town, to renting a property, to then owning a pied-a-terre.
What cities are pied-a-terre hot spots?
Pieds-a-terre are extremely popular in New York, but you can find them in cities across the country, including Los Angeles, Miami, and Chicago.
According to Forbes, Hong Kong is an international hot spot for pieds-a-terre because they have a strong luxury apartment market as well. Pieds-a-terre are also highly popular in cities like Milan, London, Singapore, Paris, and Geneva, just to name a few.
But where you focus your search depends on your individual needs. A buyer’s agent can help you find just what you’re looking for no matter the city.
Influx in foreign buyers
Depending on the location, pieds-a-terre can bring an influx of foreign individuals to the area. These buyers often are often willing to purchase larger, more expensive units as a means to bring cash in the U.S. This can drive up housing prices.
Since pieds-a-terre aren’t a primary residence with standard property taxes, these purchases generally don’t contribute to the local tax base. This has been a sticking point in cities around the world. As a result, there might be other tax considerations you need to take into account. New York, for example, is considering an annual pied-a-terre tax to target properties that are secondary residences and worth $5 million or more. This boasts a clear distinction from the already existing mansion tax in New York, which is a one-time fee at closing.
In addition, in many European cities, non-European Union members face taxes associated with pied-a-terre properties. Sydney, Hong Kong, and Singapore are among a handful of other cities that have implemented taxes on secondary homes and non-permanent residents.
It’s important to understand what tax rules may apply to these properties and be aware of brewing controversies so you can plan accordingly.
Tips for buying a pied-a-terre
So, you think the pied-a-terre lifestyle is perfect for you? Make sure to do your homework on building restrictions and rental guidelines. For example, properties in New York City may be a condo or a co-op. “Co-ops are typically more restrictive than condos, so I usually recommend a condo for buyers looking for a pied-a-terre,” Eiden says. “Co-ops typically only want buyers who are using the space as their primary residence.”
In general, buyers purchasing a co-op space are buying shares in a corporation. The corporation owns the building and the size of your co-op unit determines how many shares of the corporation you own. Many co-ops don’t allow pieds-a-terre and, if they do, you might not be able to rent it out. A condo, on the other hand, is a more traditional form of owning real estate, meaning the buyer owns the unit inside the building.
Having a top buyer’s agent is key in purchasing a pied-a-terre. They know the areas well and can help you find a place that meets your needs, and is located in a well-run building. That means if issues pop up while you’re not staying at your pied-a-terre, you can rely on your building staff to help.
If you can, Eiden recommends looking for a location in a “real neighborhood” as opposed to being near attractions. He says this is where the magic happens. “You get to live in a city and experience it like a native.”
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