The Condo-to-Rental Gambit

The Wall Street Journal has an article following up on the news we reported yesterday about how the developer of Carroll Gardens’ 100 Luquer Street is abandoning plans to sell the project as a condo and is instead looking for an investor to buy the building and turn it into a rental. The story is interesting insofar as it looks into how much financial sense a move like this makes nowadays. The article cites 360 Smith Street, where units are renting for $50 a foot, as an example of what condos-to-rentals can bring in for owners. And the 4th Avenue building Arias Park Slope, which sold to an investor for $60 million and is now operating as a rental after being built as a condo, is given as an example of how much new developments can rake in. The 20-unit 100 Luquer is being marketed for $15.5 million. While there are a bunch of quotes from the developers and marketers of 100 Luquer claiming they’re confident the building could have eventually sold as a condo and Brooklyn real estate is all sunshine, lollipops and rainbows, the most thought-provoking commentary comes from Massey Knakal’s Ken Freeman. Freeman notes that no one would take a building rental if “you thought you were going to be able to sell the condos at a good price individually” and “the recent Arias sale has given some condo developers overly optimistic expectations about what they can fetch selling their building to investors as potential rentals.”
Developer Drops Condo Plan [WSJ]
100 Luquer Street Building on the Market, Going Rental [Brownstoner]