What Price Vacant Land?
When you spend all day obsessing about houses and apartments, it’s easy to forget about the land that they sit on. Conventional real estate wisdom, however, holds that housing itself is a depreciating asset while it’s the value of the land underneath that fluctuates. There aren’t a lot of single lots left for development in…
When you spend all day obsessing about houses and apartments, it’s easy to forget about the land that they sit on. Conventional real estate wisdom, however, holds that housing itself is a depreciating asset while it’s the value of the land underneath that fluctuates. There aren’t a lot of single lots left for development in Clinton Hill and Fort Greene, so we were interested to see this the For Sale sign on this slightly oversized (27-by-106 feet) lot at 140 Clinton Avenue. Located north of Myrtle Avenue (and outside the Historic District), the lot is zoned R5B and thus has a relatively low FAR of 1.35. Translation: Someone can build a 3,950-square-foot structure as of right. Typically, the key metric a developer looks at in this case is the price per buildable square foot. In this case, it’s $175, which seems about right given that it’ll probably cost the buyer another $300 to $325 per foot to build the house itself. So at the end of the day, you’ve got your custom house for about $500 a foot or, in this case, about $2 million. Sound about right?
140 Clinton Avenue [Massey Knakal] GMAP
$200 psf for new construction is not enough. If it was, there’d be no vacant lots left.
Only construction estimators really know how to accurately cost out new construction. Even architects and engineers do not know.
Square foot costs are really smoke and mirrors because the meaning of a “square foot”, which one would assume is pretty cut and dry, is actually subject to bizarre adjustments whose precise formula is only known to the high priests of the industry. Square foot means nothing in New York it is comparable to the term “middle class”, it can mean almost anything and nothing. Square foot cost is an industry shorthand that is most useful for comparison purposes.
As a coop looking for a new insurance policy for our building (four story, one family per story), we were met with the issue of value per square foot when trying to price the rebuilding of our home in case of a catastrophic event. We were told $200 per square foot was the going rate, but in your post your math concludes something more like $300-325. Anyone out there know understand the discrepency. Could one be the real replacement cost for an owner and the other be more the cost for a developer?
Since it is outside the historic district, I would not be optimistic. Our fabulous Boro of escalating home prices boasts some of the ugliest new residential construction in the entire region.
Mike, the broker, is adorable too. I bought my small warehouse on Park Avenue in Clinton Hill from him. Good luck Mikie!!!
Given b’stoner’s proposal, I wonder how difficult it is for an ordinary person (say a homeowner with a decent amount of equity) to get a construction loan. Seems like this is pretty close to a slam dunk for the lot owner: take out a $1m loan/credit line/whatever, hire an architect not named Scarano, build a 3 unit condo (or a spec 1 family), then sell for $2 million (or $1.8, or 2.5)…
I’ve owned an empty lot since 2003, so have tried to track values over the 3-4 years. I think $175 psf is about right for a lot in a good neighborhood. I’d say that’s down from peak prices of about $200 psf. Not sure about the cost to build though.
every time i see that modern interpretation of a row house on brooklyn tech, half a block from the park, I think about empty lots. Screw brownstones, the people living there must feel great every time they put they key in the door.
I’m also reminded of a comment i read once: it is funny how homes are considered appreciating assets – unless they have wheels on them.
Too bad the BQE is right up the block.