Wednesday, February 5, 2014

8-Family Week Continues in Park Slope: 703 Carroll Street

It's becoming a week full of 8-Family buildings here at BK to the Fullest, and today is no exception.  This time we're in prime Park Slope.  Platinum Members had the early lead on 703 Carroll Street just before it came out in December.  This beautiful bowfront building is 27.5' wide and a hefty 80' deep.  So you're still working with narrow apartments left and right (like 531 Bergen Street), but you get an even deeper floor plate.  Not only is this on a killer block in Park Slope, but it's in the most coveted of all school districts in Brooklyn: PS 321 (for all you school-conscious folks).  The Berkeley Carroll School is also on the same block.  School expert Joyce Szuflita says that PS 321 is "the mecca" for good schools in Brooklyn; however, you can have too much of a good thing.  And folks these days complain that the school is over-crowded.  But being in PS 321 has propelled 8-Family condo conversions before, like the successful bowfront cousin to this house at 397 1st Street.

How close is 703 Carroll Street to the path of 397 1st Street?  Well, there are 6 free market units, 1 rent stabilized, and 1 rent controlled.  Lots of leases and not a lot of vacancies.  Still sitting prettier than 531 Bergen Street in terms of quickest path to conversion, but if they were serious about selling near the lofty asking price of $4.9M, we don't think they should've renewed leases on those free-market units.  But it's hard to give up that rental income bird in the hand for that $4.9M bird in the bush.  It's not everyday that big pieces on blocks this pretty come up...

The inside?  Well, this is what some $3,000/month gets you...

The marketing package is projecting $1,200/sqft on the condo sell-out.  Maybe buyers will believe that number from Cpex, because certainly no one wants to hear even $900/sqft from us in Prospect Heights (while $1,000/sqft comes in on a regular basis now...).  With a projected profit almost as high as the asking price, we're sure someone will underwrite a rub in there somewhere.  Maybe you missed over the summer when 709 Carroll Street, #1R listed for $1.15M and closed for $1.3M (or almost $1,100/sqft)...

You'd better believe folks have their eyes on reproducing or exceeding that result at 703 Carroll Street!  But, as it sits today, the asking price is almost $1.4M more than even 12 times the projected rent roll.  And the projected rent roll is almost 40% higher than the actual rent roll.  So the buy & hold approach isn't paying off at this asking price for a long time to come.  Either someone with deep pockets who needs this block in particular or some one with some patience for the condo conversion will make this happen.

Pro's:  size, curb appeal, block, school, uncontested location with stellar condo conversion potential, 6 free-market units, asking just over $550/sqft in the land of $1,000/sqft+ condos

Con's:  lofty asking price by many calculations, narrow left and right apartments, full of tenants at under-market rents, 3.3% cap at asking price, very little to reposition on it for a long time

Ideally:  these don't come around everyday, so when they do, they expect a premium.  Would $500/sqft get it done?

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