Sunday, November 10, 2013

The Block is Hot: 1239 Dean Street Condo Conversion

What do you do when you pick up a 5-story, 20' x 50' historic house that's almost 5,000 square feet of brownstone goodness for $900K?  Why not turn it into 5 condos for $600K a piece??  You might've seen how much townhome activity we've covered in Crown Heights on this stretch of Dean between Nostrand and New York Avenue.  Now one of our go-to mortgage guys and resident of the block Adam Dahill tells us that condo sales on the block at 1239 Dean Street are pretty bullish, and he's right.  We first heard about the building most recently when off-market rumors went around that the whole thing might be available somewhere above $2M, but it makes way more sense for the owner to find various buyers to pay a per-unit premium to bite off a nice-sized turnkey condo bite they can chew.  The sum of the condo parts is much greater than the townhouse whole.  Much like we saw just across Atlantic Avenue on the Bed-Stuy & Clinton Hill border at 88 Quincy Street, any floor thru condo in a brownstone under $700K will get gobbled up in this market.  Yes, gone are the days (just under 2 years ago) when a condo in neighborhoods as coveted as Boerum Hill at 89 Dean Street could ask as low as $700K and fetch not much more than asking price.  Today the still under-appreciated Crown Heights 1200-block of Dean Street had these condos hit the market just under $600K, and so far has hit sales as high as $609K.  Like Unit 1 that closed for that price last month after some 6 months in contract...

Could those wood cabinets be more generic?  Could that painful pink tile on the patio be any better if the cement stripe wasn't running down the middle of it?  Were folding chairs the best staging they could muster here for tens of thousands in commission??  Peanut gallery potshots don't change the fact that $630/sqft still ain't too shabby for buyer or seller, especially when $850/sqft is crossing over into Clinton Hill and the Prospect/Crown Heights border with ease.  For a floor-through parlor apartment with a back patio over the garden, not too bad.  We've seen worse sell for more.  But - as we like to point out - raw price per square foot isn't what propels valuation here.  "Whole dollar" pricepoint is much more important.  And this is the only way you can get on this block anymore under $1.25M, unless you're ready to spend twice this much all-cash for an SRO with tenants, or chase an SRO estate sale around the corner with shady six-figure dollar amounts under the table.  Even then, you'd better have another six-figures ready for the renovation.  With modestly renovated condo comps like these coming in past Nostrand, still has us wondering why developers are underwriting condos near Barclays at $550K/each... still shaking our heads.

Unit 2 in 1239 Dean sold for slightly less that same week last month.  $585K to a buyer from Fort Greene with a cool 20% down, or less than $120K.  That's a manageable slice of house for handfuls of buyers.  Again, price per square foot aside, what else can you buy on this block with a "mere" $120K down?  It's certainly not likely to be a turnkey townhouse anymore in this market.

If you want a condo that's not in a cookie cutter glass building, with a short (but not that quaint) walk to the A express train at Nostrand, it doesn't get too much better than this.  Unit 3 is still available, down to $549K...

Certainly, the block is hot.  If you think this block is too sketchy to spend as much as $600K on a nice condo, then multiple bidders (including cash offers) upwards of $2M for a single family townhouse across the street certainly don't agree with you.  It's kind of adorable when the quarter-of-a-millionaires think they're still too good for the same block as the 2-millionaires.  The top, attic-y floor at 1239 Dean Street, Unit 4 has supposedly sold, but the price hasn't been recorded yet.  It features exposed beams and the obligatory roof deck for its premium...

It wasn't long ago (2007) that 1239 Dean Street...

... still looked just like the SRO at 1245 Dean Street.  If condo comps like these indicate that 1245 Dean's five stories plus extension might sell out as high as $3M gross as condos, then it's no wonder why we were bullish on 1245 Dean Street for as much as $1.2M last month.  If 1239 Dean isn't the blueprint for 1245 Dean, what is?

Pro's:  turnkey floor-thru condos at a manageable pricepoint, brownstone on a great block, a few details were done well to go for premium, one's still available with a price drop

Con's:  the best ones are gone, prices will feel steep to some, common charges aren't absurdly high or necessarily that cheap either

Ideally:  the 2BR/2B in unit 3 for $549K is cheaper than some 1BR's a few blocks west.  And maybe the comps that have already come in will help potential buyers feel warm & fuzzy about the valuation.

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