Pencil Factory Half Way There

Last time we checked in on the Pencil Factory a few months ago they were selling units at “pre-completion” prices, and the deals were proving compelling: 24 of the 93 units sold within less than a month. A broker tells us construction is going smoothly and they expect to begin closing early this fall. He also says almost 50 units have been spoken for, with about half closed and half in contract. Pretty solid. StreetEasy shows that most units got a price chop before they sold, with a one-bedroom priced at $418,000 going into contract after dropping to $376,000 and a $730,000 two-bedroom pad reduced to $657,000 before being taken.
Pencil Factory 25 Percent Sold [Brownstoner]
Pencil Factory Back in Business [Brownstoner] GMAP

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  • It’s a bit confusing. If the building is not ready for occupancy, how could some units have closed already? Did the developer mean 25% in contract, 25% contract out?

  • These new comps are setting the bar at around $500 psf.

    Much lower than people paid 2 years ago for similar product.

  • Maly, this is from the broker at the Pencil Factory:

    “Approximately 50 units sold and of those a little over half are fully executed and the remaining have contracts out and are in their due diligence period.”

  • Not sold then; we need a brokerese to English translation. 27% in contract, and another 25% with contracts out. Sold is not interchangeable with in contract, as many developers have found in the recent past.

  • I’ve looked at this building several times and I can tell you, not a single one has “sold.” The building doesn’t even have a CofO. The poster above is exactly correct.

    After yanking this building from the market a year ago, it was relisted a few months ago with drastically reduced prices of around $500 a sq ft (which should be the going rate in GP). Because of the reasonable prices, many of them went into contract quickly. But guess what? They are slowly falling out of contract one by one and coming back on the market, for, wait for it… drastically HIGHER prices! In some cases they are way above the original prices from early 2009.

    I think the builder got a little cocky here, but he’s missing one important fact: The attractive pricing was the reason for all the activity. Good luck with this one folks.