I took a walk through 28 2nd Place the other day, the wide and centrally located Carroll Gardens brownstone that we hope to convert to roomy three- (and one four-) bedrooms. The architect who worked on the floor plan for us was with me, as well as a general contractor who is very experienced with these types of gut rehab projects — and, trust me, this is a gut rehab and nothing less. The three of us have a combined 50-plus years of experience with the evaluation, design, construction and marketing of these small multi-family rehabilitation projects.
Location, building width (34 feet!) and possible floor plan configurations of two three-bedroom and one four-plus bedroom lower duplex all enhance the value of the property. Unfortunately, the cost to capitalize on these factors and create attractive and functional market-ready homes combined with the seller’s asking price of $2,500,000, or $477 per square foot of habitable space, exceeds what most folks are willing to pay for homes of this size and in this location; currently, the preferred price among readers would require us to acquire the building for less than a tenth of the asking price.
I’m not sure how or why the asking price of $2,500,000 was determined, or for that matter the original asking price from November 2008 of $3,100,000, or $600 per square foot of habitable space. Six hundred dollars per square foot for effectively raw and currently non-habitable space that will require a significant amount of work — stabilization of floor plates near main staircase and interior bearing wall, bowed exterior rear wall, resetting of dislodged lintels, all new mechanical, electrical and plumbing systems, new windows, etc. — would push the end-user purchase price for finished units to $1,200 per square foot (about three times what most readers said they’d like to pay). As I said, good location and very functional floor plate dimensions… but, come on, this ain’t no doorman elevator building on Park Ave.
This situation appears to be seller business from the pre-bust days: set asking price above the highs achieved during the peak of 2007 and pile on the risk for the fool willing to take this on. As we can all clearly see, the most likely outcome will be another half-finished, vacant and abandoned property in the middle of an otherwise vibrant residential block. Hopefully the lack of market rate financing for this type of project and the almost non-existent pool of capable developer candidates will prevent this from happening.
According to recent sales activity, average quality brownstone multi-unit housing has been trading in a range of $500 to $750 per square foot in this neck of the woods. We think our product would successfully compete with the high end of this range if not above it. We are very much interested in this property as we have a long list of families clamoring to live here and be part of our new model of development. Hopefully the seller will come to grips with the reality of what they actually possess and let us successfully restore this property so once again it can be a home for families who like it for what it is: a nice building located in a solid neighborhood.