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Historic Sag Harbor sees transformation as tiny Hamptons hot spot

The pool behind the home at 38 Ezekills

The pool behind the home at 38 Ezekills Hollow Dr. in North Haven on May 5, 2014. The home is for sale for $14,990,000. Credit: Gordon M. Grant

Time was, Sag Harbor was “the unHampton,” an artists’ haven and former whaling village where a crumbling red brick factory loomed over the downtown as a reminder — picturesque to some, unsightly and perilous to others — of the town’s industrial legacy.

Now, the transformation of the old Bulova watchcase factory into luxury condominiums priced as high as $10.2 million is almost complete. And so, some say, is the Hamptonification of Sag Harbor, suddenly the most talked-about village on the East End.

“Thirty years ago nobody knew Sag Harbor,” said Cee Scott Brown, a longtime resident and associate broker with Corcoran who is handling sales at the 64-unit complex known as Watchcase, Sag Harbor. “You couldn’t sell a house for $50,000. Over the years it’s just become the tony place to be.”

With sales prices and transactions rising, the total value of closed home sales in Sag Harbor and nearby North Haven topped $143 million in the first three months of this year, up 135 percent compared with the same period in 2013, according to an East End home sales report by Corcoran.

In North Haven, a waterfront estate recently sold for nearly $32 million, and actor Richard Gere is asking $56 million for his six-acre compound.

The recovery on Wall Street, Sag Harbor’s lively downtown, its deepwater port for yachters, its calm bay beaches and the relatively low price of waterfront land in North Haven are among the reasons for the boom, locals say.

“We still have our historic whaling village, but we also have the modern amenities,” said Robert Evjen, chairman of the local chamber of commerce.

Some longtime residents, however, are being priced out.

“It’s very hard for young people, in particular, to stay here to live,” said James Henry, an environmental attorney and an economist who helped found Save Sag Harbor, a preservationist group. “You end up with this crowd of people who are here on weekends and spending $72 on candles.”

Sag Harbor is changing, to be sure. But it has a history of transformations.

Founded in the early 1700s, the village thrived in the first part of the 19th century as a port for shippers and whalers. In Herman Melville’s “Moby-Dick,” harpooner Queequeg reflected on what a “wicked world” it was after witnessing sailors’ antics in Sag Harbor and Nantucket.

After the whaling industry collapsed in the mid-1800s, the village regained its footing as an industrial center, churning out goods such as brass, watches, hats and sugar, and as a tourism destination. But with the decline of manufacturing in the second half of the 20th century, Sag Harbor gradually sank into disrepair.

Esther Ricker recalls her first words to her husband, Joe, when the couple arrived in the village in 1963: “Boy, does this place need a coat of paint.”

The Rickers spent $15,000 on a three-bedroom home built in 1883, where they raised their two children. Ricker said children used to peer into the storefront studio of the Russian artist Ilya Bolotowsky as he painted; years later the Rickers saw those works in the Guggenheim Museum in Manhattan.

These days, she said, Sag Harbor “is a storybook village.”

At the north end of Main Street stands a 1700s-style wooden windmill built in the 1960s, and a wharf where families stroll. Downtown, celebrities such as Billy Joel are regularly spotted at the American Hotel. The local variety store, founded in 1922 and still known as the “5-and-10,” stocks buttons and trims along with seasonal decorations.

History, claims to fame

The official historic district includes almost 900 buildings in Georgian, Federal and Greek Revival styles, from modest bungalows to lavish captain’s houses. Some structures date to the 1700s. Locals point out homes once occupied by luminaries such as Nobel Prize-winning author John Steinbeck, who wrote “Travels with Charley” and other works there.

Sag Harbor’s most recent boom began about 10 years ago, as home buyers seeking waterfront properties found themselves priced out of East Hampton and Southampton.

Margaret Wagner, whose grandfather worked at Bulova and who co-founded the Sag Harbor Baking Co. in 2011, said the village “was definitely more sleepy when we were kids.” Despite Sag Harbor’s rising prosperity, she said, “the feeling of the village hasn’t changed that much. It’s a small town.”

Korine Konzet, a real estate agent with Brown Harris Stevens in Bridgehampton, agreed: “That’s what people like about it.”

What has changed, though, is the cost of living.

In the five years ended in 2012, a typical Sag Harbor homeowner with a mortgage paid $2,877 in monthly housing costs, including mortgage, property taxes, insurance and utilities, up 41 percent in inflation-adjusted dollars from 2000, census estimates show.

The cost of everything from housing to groceries has become hard to bear, Ricker said.

That’s what prompted Lauren Fortmiller to run for mayor in 2011.

“I thought, this is not right, that real people couldn’t afford to live in the village where they were born,” said Fortmiller, a retired teacher. In the end, Fortmiller could not run for a second two-year term because she could no longer afford housing in the village. She now lives in Colorado.

Sag Harbor’s historically African-American waterfront enclaves also are experiencing shifts. With prices rising, new, more affluent residents are buying once-modest summer cottages and fixing them up. Longtime residents of the “incredibly beautiful and quiet” areas welcome the higher home values, but they also hope newcomers will embrace the community’s neighborly ways, said Dianne McMillan Brannen, a local real estate agent with Douglas Elliman.

Sign of new fortunes

The most visible sign of Sag Harbor’s changing fortunes is the hulking, 2.3-acre Watchcase complex, so named in a nod to the Bulova plant that operated there from 1936 to 1981.

The building, which dates to 1881, will include 47 lofts and penthouses with banks of huge, arched windows, brick walls and wood ceiling beams, as well as terraces and rooftop gardens. The factory’s old tower is being rebuilt, and one unit’s rooftop gazebo will mimic its now-demolished water tower. The complex also will include 17 town houses and bungalows, now under construction, a heated pool, garden, gym, yoga studio and wine bar, as well as concierge and other services.

The design architect is Beyer Blinder Belle, known for its renovation of Grand Central Terminal in 1998.

So far, 35 units have gone into contract, at prices from $710,000 to $5.5 million, according to Manhattan-based Cape Advisors, the developer. More homes will hit the market in June, including a three-bedroom penthouse priced at $10.2 million. The first residents are expected to move in this fall.

Those who have signed contracts include retirees, families and others attracted to Sag Harbor, most of them longtime fans of the village, Brown said. Most plan to visit throughout the summer and on weekends year-round, but a handful will live there full time, and a few will rent out the units to others, he said.

Cost of luxury

In a deal with local officials, Cape Advisors has agreed to contribute about $2.5 million to an affordable housing fund.

The developer has spent about $100 million, buying the complex for $16 million in 2006, rebuilding sections of the long-abandoned building and cleaning up the site, said David Kronman, a partner with the firm. The land was polluted by solvents and metals from its industrial days, according to the state Department of Environmental Conservation. A cleanup began in 1993, with tainted soil removed and fresh soil brought in. The state will continue to monitor the air and soil.

A few blocks away, workers have resumed a separate $60 million redevelopment of 15 condominiums on West Water Street, called Harbor’s Edge. The builder stopped construction in 2009, after the housing market crashed, according to Amalgamated Bank, trustee for the fund bankrolling the project. Sales are set to begin this summer, priced at $2.5 million to $6.5 million.

The rising interest in Sag Harbor could “bring in a whole new generation of writers, artists, intellectuals,” said Henry, the environmental attorney. “But those tend to be the people that need subsidies, not the kind of folks that are buying $10 million apartments.”

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