Monday, November 19, 2012

Price Drop on Prime Mixed-Use: 784 Washington Avenue

Not on your StreetEasy or your NYTimes, this mixed-use property on the unquestionably up & coming Washington Avenue was on Platinum Member radar just before it came out on the market for $1.325M last month.  Now it's asking $1.2M and we think this is another great look at getting a foot in on an area that's poised for another leg up.  784 Washington Avenue is next door to Tom's Restaurant, the lovable local greasy-spoon diner where people still inexplicably stand in long lines on the weekend:

It was almost 6 months ago that we told you to "speak now or forever hold your lease" on this rapidly repositioning stretch down the hill from the Brooklyn Museum, the 2/3 trains, lodged between the hotter-than-hot stretches of Franklin Avenue and Vanderbilt Avenue.  Since then, even more places have opened up including a tattoo parlor and another fawncy cocktail bar. The critical mass has been reached when young-professional & hipster foot traffic on the streets between these avenues has become a regular occurrence.  By the time Milk Bar's 2nd variation opens up across the street at 780 Washington Avenue, trust us, everyone will have gotten the memo that it's okay to be boudgie on Washington Ave now and the value in 784 Washington will be a no-brainer.

Sure, the building is a funky trapezoid that starts out 15' wide in the front and gets wider in the back.  The commercial space wasn't able to rent for $4,500 for a long time, or even the seemingly-high $3,500 they wanted as recently as last year.  But it has high ceilings, an enormous back yard, and is a sweet raw canvas to build out.

The apartments are at least 2BR's renting for a very reasonable average of $2,100/month each.  Readers across the street pay $1,800/month for a decent 1BR, and locals have rented their renovated 2BR's short-term for as much as $1,500/BR.  That's right, people - this "isn't your father's Crown Heights".  Or even last year's Crown Heights, for that matter.  And talk about anchor tenants, that Brooklyn Museum (hasn't and) isn't going anywhere...

So tying your boat to that dock for under $1.3M makes sense for anyone with the funds to do it and even just a pinch of vision.  With a projected 6.3% cap, and some cool space to play with, we don't see this lasting much longer.  6-caps sell in much less desirable locations than this on the regular.  An owner/user is probably the most likely candidate to understand this space and make it work, because half the rent is still just projected at this point.  That's the biggest hold-up on an even more prime Cpex listing too.  Hey, at least they spell out clearly for ya what's pro forma and what isn't.

Pro's:  value price for rapidly improving area, interesting commercial canvas, apartments with upside to explore, not on everyone's radar, buildable square feet

Con's:  commercial tenant may take time to land, narrow at the front, not sure how to make the best use of the buildable square feet, come-lately's fretting about the owner's cost basis

Ideally:  sitting at a really sensible price now, but there's an even better play that's flying under the radar as we speak too.

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