Tuesday, July 12, 2011
We took a look last month at a series of activity on the up & coming (read: "already came"?) stretch of Vanderbilt Avenue, lodged between the park and the new stadium. Lots of mixed-use places around the $1M range went into contract in a matter of months. We're still not sure why some of the remaining for sale by owner buildings over there haven't changed hands as the entire block becomes re-positioned. Today comes another mixed-use play, on a mostly residential block, right across the street from our beloved, stolen 96 St. Marks. Massey Knakal just cut the price of 75 St. Marks from $1.65M to $1.35M. How does this price strike you?
Standing at only 3 stories, this healthy 20' x 60' brownstone has a retail space on the 1st floor, and 2 huge apartments above it. Yet the dang thing is only grossing $142K/year, and wants a GRM that's in line with its neighbors. Which isn't too much to ask, except the thing isn't grossing $142K/year. As good of a job as Massey Knakal usually does, they tend to provide pro-forma rents as if they were the real rents and not call them out as pro-forma rents. Other commercial real estate pro's like Marcup & Millichap, for example, never do this kind of semi-misleading tomfoolery. The listing, however, does take the time to point out the drama:
"The second floor apartment is currently vacant and will be delivered as such. The owner has initiated an eviction procedure for the first and third floors since the tenants are not paying rent and do not have leases. Thus the entire building may potentially be delivered vacant at closing."
Not knowing the lay-out or condition of the space, we still think their pro-forma rents are probably wishful thinking, but isn't that what the majority of this industry seems to run on? We can only imagine what they'd be asking if anyone was paying any real rent over here. What's the ideal tenant for that commercial space? Is $5,000K+/month really the going rate for that space?
Pro's: location, curb appeal, potentially delivered vacant, there's only so many of these left
Con's: not a lot of income at the moment, lay-out & interior condition unknown, realistic potential income unknown, potential tenant issues, pricey, commercial loan needed, may need renovation
Ideally: even with the price cut, it's not getting our interest. We figure someone will over pay since this is some prime location.