Real estate datapoint of the day, Bill Gross edition

By Felix Salmon
June 10, 2011

How much would you pay for an empty lot in a highly desirable location? If you fancy moving to southern California, Pimco’s Bill Gross might have the perfect place for you: an 18,150-square-foot bayfront lot in Harbor Island which he’s selling for $26.5 million. According to Redfin, the buildable square footage on the site is 9,734, which puts the price at $2,722 per buildable square foot or $1,460 per raw square foot.

It’s instructive to compare, here, the most famous sale of an empty lot in Manhattan: the area bounded by Central Park West, Broadway, 61st Street, and 62nd Street. The lot eventually became 15 Central Park West, where the apartments ended up selling for a total of $2 billion.

The price on that lot was $401 million: a record $690 per buildable square foot, or roughly a quarter of what Gross is asking. On a raw-square-foot basis, a bit of fiddling with Google Maps and the Photoshop Measure tool puts the lot size at about 63,000 square feet, which means that the lot was sold for about $6,365 per raw square foot — and remember that 15 Central Park West has 201 units and rises as much as 35 stories.

The difference is partially a function of construction costs: 15 Central Park West cost a good $1 billion to build, while a California mansion can be put up for a small fraction of the value of the lot. But still, in the context of property values continuing to slump across the country, it’s striking that the top end of the market seems to be immune to such pressures. While everybody else is hurting, the plutocrats — whether in Manhattan or Newport Beach — just go on accumulating their millions, blithely unaffected by any downturn.

(Via Carney)

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Comments
10 comments so far

The “random” datapoint you have selected is for one of the most successful financiers of his generation in the world.

You could do this exercise for any generation over the last 1000 years and arrive at the same thing.

What does it prove? That human economic ability and work ethic is not spread around equally?

I learned not to hate the guy and instead hitch my wagon to his train via a Pimco fund. He’s earning me money and I am earning him money. The injustice of it all!

Posted by DanHess | Report as abusive

TinyOne, what have you done to help people out of the downturn? When was the last time you offered a homeless person shelter for the night? Who are you to call these people “contemptible hypocrite with no moral integrity” when you do nothing of substance with your life to help disadvantaged people? You are a contemptible hypocrite with no moral integrity.

Posted by FelixIsAlright | Report as abusive

I didn’t write a blog post deriding people as being callous to poor people (although Felix has zero evidence of this) and implying that we have a moral imperative to help out, thus, it wouldn’t be hypocritical of me not to.

I am not criticizing Felix for not helping out… I am criticizing him for not helping out while advocating that others should.

Basic logic fail, FelixIsAlright

Posted by TinyOne | Report as abusive

What have I done to help? I sacrifice half my earnings potential to work with children from low-income families, helping them grow into mature and responsible young ladies. The “downturn” is the least of the problems that these kids face…

But then I’m not criticizing others for being “blithely unaffected”. I prefer to assume that they are quietly sharing their good fortune with others.

Posted by TFF | Report as abusive

It’s not like Felix accused the ultra-wealthy of feasting on the children of the homeless. He said they were “blithely unaffected by any downturn,” meaning that for them, it’s simply not cause for concern. And he’s right: we’re talking about people who, because of their previous good fortune and current economic stature, are for all intents and purposes economically untouchable. They could lose most of everything they have and still have so much more than most of us could ever conceive.

That’s not a condemnation of their attitudes towards the middle or lower classes — or a condemnation of anything mental or moral or metaphysical at all, for that matter. It’s just a condemnation of a society in which the most fortunate members are observably unaffected by the hardships afflicting pretty much everybody else.

Posted by WHS | Report as abusive

The last sentence is a completely gratuitous shot at the character of people Felix has never met, people who give a much greater percentage of their wealth and disposable income to causes that benefit the less fortunate.

And anyway, what is his point: Bill Gross shouldn’t sell real estate until the unemployment rate is under 5%? Or he should donate all the proceeds of the sale to charity? The proletariat should rise up and seize the wealth of plutocrats? It’s unfair that there are rich people?

Seriously, how is what he writes any different than :”Meanwhile, Felix Salmon spends $5 on artisan coffee in Brooklyn on the weekends, making dumb jokes while wearing ugly glasses that he mistakenly believes give him an air of sophistication, blithely unaffected while a child starves to death in Africa.”

Posted by TinyOne | Report as abusive

The criteria used when valuing ocean front property is usually cost per linear foot. An old figure I came across for Newport Beach was around $166k per linear foot, so at about $265k per linear foot this is premium or the price has increased.

Posted by MyLord | Report as abusive

He paid $23M 3 years ago and knocked down the house. A guess: you ask for more to get near what you want and if he asked for $23M for what is now a lot – claiming that demolishing the house is worth $3M – then he might get out close to whole. I don’t kno what demolition cost in time and money, but he’s not asking for a big markup. He overpaid and hopes to get it back.

Posted by jomiku | Report as abusive

He paid $23M 3 years ago and knocked down the house. A guess: you ask for more to get near what you want and if he asked for $23M for what is now a lot – claiming that demolishing the house is worth $3M – then he might get out close to whole. I don’t kno what demolition cost in time and money, but he’s not asking for a big markup. He overpaid and hopes to get it back.

Posted by jomiku | Report as abusive

@ DanHess – buying a piece of vacant land from Bill Gross does not allow you to “hitch your wagon” to Bill Gross’s investment ability.

Posted by johnhhaskell | Report as abusive
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