Where a Single-Family House and 100+ Luxury Apartments Cost the Same

[Pedestrian]

By Adam Bonislawski
Dec. 12, 2018 10:48 a.m. ET

A suburban-style house might not seem like much of a trophy property, but what if it were situated in New York City?

According to an analysis by real-estate firm NeighborhoodX, a 2,000-square-foot home on a 0.21-acre lot in Manhattan’s Chelsea neighborhood would cost around $61 million.

At $60 million for the land, the cost of the house itself ($708,000 based on construction costs of around $354 per square foot according to figures from real-estate consultancy Turner & Townsend) is basically a “rounding error,” says Constantine Valhouli, director of research for NeighborhoodX . . . .

In San Francisco, four adjacent parcels spanning 1.1 acres in the city’s SoMa neighborhood can be had for $25 million. Add in construction costs of around $330 per square foot, and you could have a 2,000-square-foot house on just over an acre for about $26 million . . . .

In London, a 0.68-acre waterfront site along the Thames is available for about $25 million. According to the listing, the parcel could accommodate “130+ luxury riverside apartments.” If someone were to build a 2,000-square-foot home there instead, the total cost would come in around $26 million based on the value of the land and construction costs that are just under $300 per square foot.

In Hong Kong, meanwhile, a 6,200-square-foot home on 0.17 acres is currently on the market in the city’s exclusive Peak neighborhood for $448 million. A potential buyer could tear down the massive house and replace it with a 2,000-square-foot version, with construction costs at $344 per square foot. But the real value is the land, which is worth about $446 million, according to NeighborhoodX.

https://www.wsj.com/articles/where-a...p_wsj&ru=yahoo

It's all about zoning it seems. You can actually buy single family suburban style homes, mostly for a couple of mil, in San Francisco and nearly all of them would be in neighborhoods the average buyer wanting that type of property would find cleaner, safer and more friendly. But you wouldn't have the option there of building a skyscraper because the zoning wouldn't allow it as it would in large parts of SOMA or the other locations mentioned in other cities.

[10023]

It’s about location, not zoning. Any six year old knows that real estate is about location, so I don’t really understand the point of this article.

[the urban politician]

The point of this article is that too many people in America have desk jobs (reporters, internet bloggers, etc) where they really have nothing to do other than write stupid articles like this, or talk with their friends all day on CNN providing overanalyses that nobody asked for.

[Sun Belt]

Originally Posted by the urban politician

The point of this article is that too many people in America have desk jobs (reporters, internet bloggers, etc) where they really have nothing to do other than write stupid articles like this, or talk with their friends all day on CNN providing overanalyses that nobody asked for.

You just described the FAKE NEWS!!! industrial complex.

[BrownTown]

Originally Posted by 10023

It’s about location, not zoning. Any six year old knows that real estate is about location, so I don’t really understand the point of this article.

The point is that there shouldn't be single family homes in areas that can support vastly higher densities.

[Leveled]

Originally Posted by the urban politician

The point of this article is that too many people in America have desk jobs (reporters, internet bloggers, etc) where they really have nothing to do other than write stupid articles like this, or talk with their friends all day on CNN providing overanalyses that nobody asked for.

Did the media kill your puppy?

[Pedestrian]

Originally Posted by 10023

It’s about location, not zoning. Any six year old knows that real estate is about location, so I don’t really understand the point of this article.

No, it IS zoning. Location means nothing if the zoning limits what you can do with the property to low rise, single family construction.

Usually, zoning and location go together but not necessarily. A piece of property on which you could build a large building housing 150 $2 million units or one $30 million house is worth more, no matter where it is, than a piece on which the multifamily building is not an option.

[Pedestrian]

Originally Posted by Leveled

Did the media kill your puppy?

Must have. A sense of fun is very much lacking around here . . . always.

[mhays]

That's about $6,600 per square foot for the land. In my city, something with similar zoning and a similar location would be more like $1,200 or $1,500 per square foot.

It's about location, buildable capacity (and the inherent costs of the site), and supply/demand for that type of site. Only NYC and maybe SF would have typical urban core land that expensive in the US.

[BrownTown]

Originally Posted by mhays

That's about $6,600 per square foot for the land. In my city, something with similar zoning and a similar location would be more like $1,200 or $1,500 per square foot.

It's about location, buildable capacity (and the inherent costs of the site), and supply/demand for that type of site. Only NYC and maybe SF would have typical urban core land that expensive in the US.

But it's the restrictive zoning that is causing the prices to be so high in the first place. If not for the single family zoning there would be way higher densities which would drive down prices.

[Leveled]

Yes, Manhattan with its restrictive zoning. That’s why it’s so pricy. All that low density housing.

[iheartthed]

Originally Posted by 10023

It’s about location, not zoning. Any six year old knows that real estate is about location, so I don’t really understand the point of this article.

Then why did so many cities create zoning laws that discouraged density?

[10023]

Originally Posted by iheartthed

Then why did so many cities create zoning laws that discouraged density?

In order to maintain quality of life.

[iheartthed]

Originally Posted by 10023

In order to maintain quality of life.

It's pretty obvious that zoning can affect land values and you don't even need to leave Manhattan to find examples to make the point. Hudson Yards is the most expensive real estate development in history to date, but just a decade ago, before the re-zoning, the real estate around the site was mostly devoted to low value uses like auto repair yards, storage facilities, and warehouses.

[McBane]

Can't pricing be impacted by location AND zoning? Why are we arguing like it's either or? Land in downtown Billings, Montana upzoned for the next supertall is still going to be less valuable than even the most restrictive/lowest density zoning in Manhattan. But, there's no denying that upzoning increases land values. How many times have officials in any city been swayed to upzone property by a scrupulous developer making big promises, only to immediately sell - at a handsome profit - once that zoning change has been granted?

Just because overall land values are tied to location doesn't mean that zoning has no impact on a specific property's value.

[skyscraperpage17]

Originally Posted by Leveled

Did the media kill your puppy?