It says a lot about the real estate investment climate out there when 5% cap rates are happening not only in the most prime locations, or for the most prime product, but in "emerging" locations for uninspiring product. We first heard about this 2-story corner mixed-use piece on our corner in Crown Heights last fall when it was being marketed for $3.5M off-market. The price struck us as high for barely 5,500 sqft, but the broker insisted offers over $3M were already coming in. Now Cpex has 654-656 Nostrand Avenue at the corner of Bergen & Nostrand asking $3.7M and insist it will trade at a 5-cap (over $3.5M). The commercial tenants include our main-stay corner store Nas Deli, a serviceable 99-cent store that isn't exactly the posterchild of gentrification, and the newly-signed UPS Store. 3 medium sized apartments get a very at-market $2,000/month. We don't see the appeal, but the with 5% cap rates sweeping the best of the borough, apparently they're coming over to Crown Heights too.
When we heard that offers were already over $3M before Halloween...
...it made us think one of the taller buildings across the street shopped to us in the mid-$2M's had to be worth closer to $3M too...
And indeed 619 Nostrand Avenue traded for $3.3M in December 2014. Obviously pricing in the next leg up for residential and retail rents over here. And while up & coming commercial additions are always welcome in these "emerging" commercial stretches, even the most successful and beloved ones couldn't make it through their second winter, including Chop Chop Grub Shop...
We were posted on this block so much this summer that Bing caught us on their street view on our way back from Nas Deli...
What this winter did bring us across the street is the completion of the Miami themed bar King Tai...
And down in Miami, signs of Brooklyn are everywhere too. From South Beach...
To CVS....
And a Brooklyn style coffee shop in Miami isn't too unlike a Miami style bar in Brooklyn...
Back on Nostrand Avenue in Brooklyn, Two Saints got in on the action too this month...
When all the newest places on Nostrand look like this, no wonder there's a demand for exposure to that upside. We're just surprised to see it as low as 5-cap on a piece so plain as 654-656 Nostrand Avenue. Says a lot about the valuation for more attractive properties in this patch.
Pro's: corner piece two blocks from Crown Heights ground zero, performing rents with a serious new tenant, exposure to a budding block
Con's: maxed-out 5-cap, not much upside in as-is rents, uninspiring building, long way away from significant further development
Ideally: molasses return for the right buyer. To us it makes 5-caps in Boerum Hill start to look attractive, or corner 7-caps further down Nostrand into Lefferts and Flatbush.
No comments:
Post a Comment