One of Bed-Stuy's most prime corner 8-Family buildings closed last week at 1 MacDonough Street in an off-market transaction for $3.5M. This hefty 27' x 95' building weighs in at over 10,000 square feet no matter how you slice it, and with over a dozen windows per floor, it is stacked with 3 and 4 bedroom apartments. The group "1 MacDonough Street Partners LLC" purchased the property and plans to develop it into 8 condo units.
We were bullish on the place since the day we heard about it last year, when Platinum Members had an accepted offer at $2.9M and the owners were pushing for more. It later appeared on HomeCanvasr.com for higher just about a year ago. But you won't find this deal on StreetEasy, no matter what their corporate counsel might say.
No stranger to making off-market moves in Bed-Stuy, our main man Paul Gooden is the agent who put the deal together at 1 MacDonough. And the buyer group, who also picked up 479 Clinton Avenue last week for $5M...
... they demonstrated a unique understanding of a landmarked block's potential in Bed-Stuy.
The interior of 1 MacDonough obviously will undergo rehab, but we were curious to get a first peek at the bones...
Early last year we were closing 8-Family's (though about half the size) for over $3M in Prospect Heights, but obviously the market's changed since then, particularly in areas like Bed-Stuy. Getting what will likely be $8M-$10M worth of condos for $3.5M ain't bad. Especially as $300 per buildable square foot pushes its way east, $350/sqft for good bones is even better. Can't go wrong when you "get it for the low". The price is also impressive considering the Aussies just resold nearby 75 MacDonough Street for $4.175M. Although that's a more grand property, its value isn't as poised to be unleashed as 1 MacDonough's. Or compare to another corner big-boy 8-Family right next to it at 231 Hancock Street, reportedly in contract off-market for $3.5M cash as well with the same broker, and seen only on HomeCanvasr.com for over a year. Hancock, however, comes with plenty of rent regulation in place, so MacDonough vacant for the same price looks even more attractive.
While tons of ground up construction goes up all over Brooklyn - the quality, style, and aesthetic of which many groan about - these early 1900's gems were built better, withstood over 100 years of mixed-bag maintaining, and are here to stay. They will command a different clientele than the boxy glass condo. Also, you can't build box glass condos on these landmarket blocks if you wanted to. Plus quality condo product on the prime brownstone blocks will command that much more of a premium since not everyone can afford prices over $1.5M for a fixer-upper townhouse, or $2M+ for a finished one (or worse). So don't be surprised when the people who can afford the ~$1M condo show up on the brownstone blocks too, even in Bed-Stuy. Not everyone grasps the nuances of the "you build it, they will come" potential of Brooklyn like the buyers of 1 MacDonough, and we're looking forward to seeing these condos when they "bring 'em out, bring 'em out".
Pro's: corner, size, windows & BR's for days, delivered vacant, not outrageously bid up on market, buy & hold or condo potential right out the gates
Con's: price bubbled up, top line number may sound high if you dunno what you're looking at, not on everyone's radar, very difficult deal to navigate, will take lots of money to maximize
Ideally: one of the most desirable canvases to renovate and restore in line with today's market