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October 5, 2009

Optimism on State Street

New York Magazine has a feature in its real estate section this week called "Hey, This Might Work," in which the mag asks six optimistic developers for their strategies for coping in this market. One of the six properties featured: The planned six-townhouse development at 345 State Street. Says developer Hesky Brahimy, "We're not worried. It's six, not 600." As far as we're aware, no one's given him a deposit yet for any of the new homes, which are priced at over $3.5 million a pop.
Hey, This Might Work [New York Mag] GMAP
Six More New Brownstones for State Street? [Brownstoner]

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if Levine isn't cutting prices on The Edge in Williamsburg where there is a Pacific ocean's worth of competing unsold places, why should this guy cut where there is no equivalent product?

Posted by: dittoburg at October 5, 2009 10:22 AM

$3.5 MM on the "wrong" side of Atlantic??? ROTFLMMFAO

Posted by: daveinbedstuy at October 5, 2009 10:56 AM

that price is insane but those few blocks of state are actually really special. i enjoy that street a lot. people there take very good care of their front gardens.

Posted by: duckumu at October 5, 2009 11:19 AM

The prices are impossible.
This is Brooklyn, not Dubai.

Posted by: Minard Lafever at October 5, 2009 11:29 AM

July...

"the developers are only going to do it if they find some buyers upfront"

Today...

"As far as we're aware, no one's given him a deposit yet for any of the new homes, which are priced at over $3.5 million a pop."

This thing aint gettin' built. If they need 3.5, they've overpaid for the land and will dump it before the market "comes back".

***Bid half off peak comps***

Posted by: Brownstones Half Off at October 5, 2009 11:35 AM

dave in bedstuy - I really dont think its the wrong side of Atlantic. State has some great spots. You should venture dow nthose parts before you make a comment. And its closer to subway.

Posted by: THAL at October 5, 2009 11:46 AM

I'm actually in that neighborhood a lot and do know State St and yes, there are nice blocks. For $3.5 MM it has to be location, location, location and those blocks, thought they may get 1 or 2 do not get a 3 for location, location, location. State St also has more traffic than the residential blocks south of Atlantic. But it is close to the subway ( a big plus) and that new market that just opened.

Posted by: daveinbedstuy at October 5, 2009 11:56 AM

I think it is a great block. there is a row of houses across the street that are all individual landmarks.
But the prices for the new houses are just out of reach.

Posted by: Minard Lafever at October 5, 2009 12:11 PM

It's a beautiful block, and I don't think it gets any more auto traffic than Pacific or Dean. (Not saying that the traffic is light on those blocks, just that it's probably comparable.) There is a lot more auto traffic on Hoyt leading into Atlantic than the other side, but I think the traffic on Bond is pretty bad on both sides of Atlantic.

OTOH, $3.5M is big big stretch for this location. More than "just out of reach", I'd say. While I'd not disagre with the quote in the article that there is a $2M and over market for townhouses in Boerum Hill, there is a huge difference (both mathematically and psychologically) between $2.1 million and "$3.5 million to 4 million apiece."

Posted by: Boerumresident at October 5, 2009 12:42 PM

not only is 3.5M is a huge hurdle but to pay that much for a modern TH in brownstone BK seems whacky

Posted by: more4less at October 5, 2009 1:08 PM

Not optimism, but foolishness. However, for a brand new townhouse, with supposedly zero problems, how much is a fair price?

Posted by: infinitejester at October 5, 2009 1:12 PM

"for a brand new townhouse, with supposedly zero problems, how much is a fair price?"

Land plus construction plus 10% mark-up. Way south of 3.5.

Won't be built.

***Bid half off peak comps***

Posted by: Brownstones Half Off at October 5, 2009 1:20 PM

Not optimism, but foolishness. However, for a brand new townhouse, with supposedly zero problems, how much is a fair price?

Posted by: infinitejester at October 5, 2009 1:12 PM

One of my favorite rants (among many) on here is that you can never be sure of the quality of new construction. Not sure about this guy's reputatation. If he has a longstanding reputation of constructing quality devlopments then so be it.

Posted by: daveinbedstuy at October 5, 2009 1:20 PM

One thing I missed: yet another reason New York magazine sucks, if they think "Hey, This Might Work."

Posted by: infinitejester at October 5, 2009 1:36 PM

I think the Boerum Hill blocks of State Street are beautiful, but the suggested price is ludicrous. I'm sorry, but for $3.5 million, I'd rather buy an old house with original detail several blocks west in Brooklyn Heights.

Posted by: CarrollGardened at October 5, 2009 1:47 PM

The 14 townhouses a block down caught the tail end of the cycle and all went for less than $3m. More than $3m when you can get a place in the Heights for that now is nuts, not to mention that noone in their right mind is signing pre-build contracts no matter how good the developer's reputation.

Posted by: tricks73 at October 5, 2009 2:07 PM

"Not sure about this guy's reputatation"

I heard he has no tatas.

Posted by: dittoburg at October 5, 2009 2:16 PM

right, most people on Brownstoner would prefer old house with orig detail...but the 14 townhouses and perhaps these are for the market that want Townhouse Modern. and I think the ones on State were excellent example of that. (even tho their backyards face a parking lot and stadium lighting.

Posted by: Petebklyn at October 5, 2009 2:17 PM

Pete, those 14 TH sold in the 2's. 3.5M now would be a big premium over stuff on mkt and to expect to fill someone to pay that premium in an area that's predominantly brownstone type buyers, that is a little "needle in haystack" situation. Now if they price these also in the 2's like the initial 14, then odds much much better

Posted by: more4less at October 5, 2009 2:32 PM

14 TH's sold for an avg $2,580,000, or $626 psf. A 5,500 sq ft townhouse at $3,500,000 equals $636 psf. So on a psf basis not much of a difference. That said, there is definitley a disconnect btwn suggested price, location, current market conditions and use (ie a single-family townhouse). A three family - owner duplex with two floor-thru rentals might be a better fit for this location.

Tricks73 or anyone else - what type of discount would you be looking for in exchange for signing a pre-construction contract? If you were given the opportunity to customize the finishes in conjunction with doing a deal at a price you felt was appropriate and reflected current market conditions would you be willing to make a deposit and sign a contract, pre-construction?

Posted by: ITM at October 5, 2009 2:56 PM

I think you need to price at $3.5m now if you want $2.8 because everyone expects to bargain down 20% off ask...so then price high , negotiate big, and everyone's ego is intact.

Posted by: Petebklyn at October 5, 2009 3:41 PM

I would need a crazy discount and contingencies up the wazoo to even consider it. My guess is that this developer is posturing as part of his neighbor relations/Brooklyn Friends negotiating.

Posted by: tricks73 at October 5, 2009 5:20 PM

Here's the logic, which is likely to be successful. Some buyers will be attracted to a modern asthetic and a fresh take on historic townhouse architecture (pre-brooklyn europe). Rehab of a historic townhouse is $1.5-$2mm on top of building cost and, frankly, few homes are available that don't have historical detail that one might be apprehensive about gutting. In each case, buildings will sell in comparable ranges.

Also, modern systems like HVAC, electric, etc that works + lighting + windows + super dope back yard/terrace.

2-3 years to construct gets you into 2012 to sell on completed units.

Previously stated, mid-$600 sq ft.

May be a bit rich at $4mm, but will get a serious look from the right buyers.

Posted by: boerumite at October 7, 2009 10:12 PM

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October 5, 2009

Optimism on State Street

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