Value of shells?

Curious how you think about shells in today's environment. Seems that these are long term projects undertaken by developers or very patient buyers. That works if prices are steadily rising and lots of cash or financing is available. Today, with construction halted, financing limited, prices uncertain, and cash precious, seems the value of shells would fall harder than other properties.

How do you think of the value of a property like this?

https://streeteasy.com/sale/1464602

Decent location, great space, small garden.

Is there is a real estate tax reappraisal to current value in going from 3 family to single family?

I was just looking at that piece a couple of days ago. I always wonder when someone buys anything and totally abandons their plans right in the middle of the project what the back story is.

Did you notice they couldn't get $4 million for the house next door as finished space last year?

I imagine people discovering that the place is a money pit and moving on. This is owned outright by an LLC who paid $5m, and it has been on the market already with another broker.

This space here is far better than next door (383 WEA). Next door is livable but needs a full reno too, including moving the staircase. There is no interior original detail at 383, and the windows are small. The floorplate is a lot better here, and the garden is bigger. Feels like this could/should be a real trophy property, but how would such a property be valued today? $3 million? $3.5?

Can you really call the cramped space between this townhouse and other building a garden? I think of this is as a townhouse with great light but not much of garden. Might as well get a resale condo.

The garden is sized quite differently on the two floorplans. One says it's 9 x 15, which looks right from streetview. So it's something but not much. Also I'm not sure that the light is great bc there are tall buildings on both east and south. But the space is about as good as it gets, esp at this price point south of 110th.

Don't assume that just because there's no recorded mortgage and it's owned by an LLC that there's no debt involved and there's plenty of money and no emotion involved.

This will never be a trophy property. You can't polish a turd.

George, That 9x15 is the alleyway between listing and neighboring building with entrance on 78th where garbage cans were probably kept and bikes were parked for 3 family set up. What do you think is the square footage for parlor floor?

Sure, the LLC could have debt that isn't a mortgage, and members who disagree with each other and want their $$ out.

Curious why it's a turd in your view. A good corner townhouse is hard to find. Maybe "trophy" is strong, but it seems like a very good property once polished.

George, what do you think about covering from 3 family to 1 family and related tax issues?

I don't think it makes a difference. It's assessed at the same rate as 383 WEA but with a higher market value which it should have since it's bigger. I don't think that 1-4 family makes a difference. The real change comes at 5 families.

Someone who knows better can tell me otherwise.

This is what a decent corner house needing everything in that exact neighborhood looks like:
https://streeteasy.com/sale/1417157
(And as a result is probably worth about 3 times as much since there isn't a single thing about it which isn't far superior).

George, I think 381 is very nice even though back garden is not much of a garden. You do get a flower garden in the front and triple exposure. It serves the needs of families who do not want a big townhouse space wise and cost wise. Think 2-3 kids and guest room plus very nice office/s (Many people need two - one for each spouse). Also there are people who may want to have parents live with them full time or for extended periods of time. Garden level is perfect for that - essentially garden level can be a separate apartment with its own entrance. Personally I prefer a single or at most two floor living rather than vertical but there are many who would take a townhouse any time over a condo for independence and privacy. Make a bid and let us know the feedback.

The difference in tax assessed value b/t the two properties is 2.8x, which is close to your 3x comment (even if glib). In that case, 381 WEA is worth around $2.7m.

I do note that 86 RSD has not closed despite being in contract for 8 months.

There is another shell in the neighborhood at $4.2m. It's a former nunnery sold by the mackerel snappers to raise money back in '16. Owners paid $4.3m, presumably after a bidding war since the list was $3.75m. It is only 14' wide, so I can't see it going for more than 381 WEA.

https://streeteasy.com/building/143-west-87-street-new_york

300, thanks much. I'm not likely to buy a shell but do find it intriguing that such properties linger for so long. I would think it would be better for the owner to cut losses quickly and get out from under the carrying costs. At least you can live in just about any other property, or rent it out if you think the market is set to improve (except coops).

If the purchase is cash, the owner is paying call it 50k in carry. It is a rounding error in price. For commercial buyer paying 6 percent, the calculus is very different.

87th St is another one where it was bought as a conversion to single family project and just abandoned. But that one is carrying at least $3 million in debt while it's just sitting there.

Note that historically townhouse buyers have shunned the ones on West End Ave for as long as I can remember.

Is the shunning due to location or the unique characteristics of some of the houses?

It is a lack of back to back / side by side / gardens - a big attraction of townhouses.

I could only guess as to all the reasons chocolate and vanilla out sell pistachio, but for sure I can tell you they do.

Potential answers:
- people tend to favor buildings which feel contextually appropriate (unless they are some "groundbreaking" architecture). Townhouse buyers tend to want townhouse blocks. Especially one's with long uninterrupted rows of similar houses. When this came on the market 3 years ago for over $11 million https://streeteasy.com/building/323-east-17-street-new_york/1
That's the first thought I had (even though it seems to have shrunk close to a thousand feet since that time).

- the light tends to be bad. They tend to be surrounded by tall apartment buildings which cast big shadows.

- traffic. Especially since the entirety of every townhouse is on a low floor. You get noise, people walking by, if one of your kids runs out into the street..... I remember when the inhabitants of West 9th St banded together, protested, wrote legislators... To ban double decker sightseeing buses from the block.

- they are to some extent White Elephants

- here's a weird one which probably doesn't still exist but used to:
Alternate side of the street parking. For decades on the brownstone blocks on the Upper West Side police/traffic enforcement ignored double parking across the street during those days/hours. People on those blocks felt like they owned those spaces out in front of their houses. But not on West End Avenue.

Just to be clear, the above is in addition to, not instead of what 300 wrote.

On an unrelated but interesting side note, there are at least a couple of groups of townhouses in Greenwich Village where the houses have smaller private patios immediately behind them surrounding a large communal garden.
https://gvshp.org/blog/2017/08/02/macdougal-sullivan-gardens-celebrates-50-years-as-a-landmark/

That all makes sense. I remember when I first moved to NYC living in a brownstone being awoken at 8.15am by someone repeatedly blowing her horn because her car was trapped by the alternate side double-parkers. I never did, and never have, understood why someone would want a car in this city, except for the massive subsidies provided by the city in the form of free or very cheap on-street parking, even on highly congested roads. Maybe with sidewalk social distancing, we can take back on-street parking and turn it into walking space. Then nobody will "own" the space in front of thier property.

I suppose that the conclusion is that the value of a shell is whatever someone is willing to pay for it, and there's not exactly a robust and liquid market for such things right now. So make an offer and see how much the sellers are hurting.

As for that property on 17th St, I've seen those blocks between 1st and 2nd as something of an armpit. Too close to the hospital, too far from nice parks, dependent on the overcrowded L or a long walk to Union Sq subways, mostly low-end retail. And calling it Gramercy is a bloody crime. It's best called "Greater Stuy Town."

I found a comparable:

https://streeteasy.com/sale/1421343

Originally listed at 4.7mn, closed last month for $3.65mn with 100% financing - construction loans from First Republic. 18' wide, park block, 4200 gross sq ft above grade, reasonable taxes at $2900. $869/ft.

143 w 87th is farther from the park and narrower. 2808 ft above grade at $869/ft = less than $2.5m.

381 WEA is 4556 ft x 869/ft = $4m.

Different animals due location and tax class. But I think $4mm ish is the right price range for 381.

First floor West End Ave corner with private entrance, 4 bedrooms, 3 baths.... What's not to like?
https://streeteasy.com/building/235-west-end-avenue-new_york/1hjk

Please tell me that you're being sarcastic. That place looks like a prison.

I lived for nearly 25 years in a ground floor 'garden apartment' in Bklyn. Bars and gates on front and back windows. The rent was cheap enough that I stuck with it for far too long (and built up a nice piggy bank), but when I left I swore never again.

Take a look at how little of the facade of 381 WEA is glass. My point is that I think you are overlooking how prison-like the finished product is going to be. Take a look at the floorplan: bedrooms with one small window, living room with 3 tiny windows into an alley, other living room looks into a lightwell obscured by hedges so pedestrians can't look down, etc.

The lack of glass on 381 and 383 WEA is a problem - more so on 383 since it's not a corner. The tiny windows in pre-war buildings are a problem even in some rather prestigious buildings. However, glass facades allow in noise. Stand in a low floor of a modern glass residential building, and you can hear just about everything on the street. It's all a trade-off, but at least in a townhouse you have upper floors where people aren't looking in. And I've also learned that finding a quiet street is critical so that it doesn't matter if the glass's soundproofing isn't so good.

I lived in my last apartment for over 20 years, which was the first floor above the street in an Italianate brownstone, which I gut renovated (and actually gut renovated as opposed to what people try to call that these days: i.e. I replaced everything from multiple joists above and below, all electrical, plumbing, windows, walls, floors, finishes, etc). Even though the bedroom was facing a bus route it was pin drop quiet due to proper sound abatement. So I think I have a better idea than most about this situation.

If you live across from a bus, you can buy windows targeting such lower frequencies. However, a solid wall with sound abatement will always outperform the el-cheapo windows that go into luxury glass condos where the buyers/tenants either don't know about the windows or are more concerned about the brand of dishwasher.

87th Street just took an almost 6% haircut.

You think that was a good move?

From the demo pictures, the windows in 381 do not look small. But a lack of back yard and hence the nice big windows at the back. Side windows partially compensate for that.

The demo pictures only show the 3 good rooms in the entire house.

And what they certainly don't show is that none of those windows in that computer generated shot of the parlor floor Living Room is that none of those windows actually exist (yet, anyway).