Lot sales in Manhattan Beach are always a favorite research topic of mine. These sales can be an indication of an area’s next price driver or sometimes it is just an aggressive homeowner trying to build their dream home. With accelerated Manhattan Beach real estate growth over the past five years, it has been difficult to make a bad buy on lot purchase. On today’s blog, I plan to explore these lot sales in an attempt to guess what comes next and how the dollars and cents work out.
Sand Section Sale
In March of this year 316 32nd Street sold to an LLC for $2,926,500. The property is a standard full lot at 2,700 sq. ft. zoned to support town homes but will likely be a 4,000+ sq. ft. walk street home.
The recent comparable sales this year include pre-completed 325 6th Street and 400 16th Street at $6.55 and $5.2 million respectively. Those were both south of the pier locations while a more comparable north Manhattan location sold back in 2015 at 312 27th Street for $4,837,500. A 2015 sale can feel like a lifetime ago in this market so the buyer’s assumption is probably a value of much higher once completed.
One could assume $1.5 million to get a new house out of the ground, so being all-in for around $4.5 million would necessitate an ask price (and sale) of around $5.999 million to be deemed a successful spec project. Can they get that price in two years?
Tree Section
A “unique property in the Tree Section” is an apt description for 3309 Pine Avenue. Very rarely do you get an opportunity to own a duplex in the Manhattan Beach Trees which are zoned completely for R1 single-family housing. This property contains a 2-bed/1-bath front house and a back unit studio. It sold for $1.525 million to an all-cash individual.
One could likely expect a $3 million sale today in this location depending on construction quality and style, but the Tree Section has been picking up since the holidays so that price could grow over the next couple years. The most probable situation is a homeowner looking to build now (around $1.3 million cost), however, the owner could easily utilize the duplex as what is known as a “covered land play” and realize cash flow while waiting to build on the lot when the time is more optimal.
Hill Section
The Hill Section has had a great 2017 and all indicators point that it will not stop with the sale of 828 1st Street at $3.315 million. Although unconfirmed, it looks as though local developer Matt Morris purchased the lot as he represented the buyer and the property is now owned in an obvious spec entity by the name of 828 First Street LLC.
This purchase looks to be steal now that the Silicon Bay Development at 629 6th Street closed at $9.4 million. With Morris known for spending big bucks on the highest end finishings, you can expect him to build a home of equal or greater quality to 6th Street in this very similar location and lot. At $400 a sq. ft. to build and constructing a 5,600 sq. ft. home, Morris could be all-in for $5,555,000. Expect him to ask a premium price with his brand name, likely over $10 million (if completed in two years) with the juicy 6th Street comp just closing down the road.
As long as the market stays flat or better, this should be easy money for the local developer.
East Manhattan Beach
Like the idea of building your dream home? There are plenty of opportunities in East Manhattan Beach. The newest lot listing happens to be a 15,311 sq. ft. double lot at 1156 6th Street asking $3,795,000.
With new construction homes on 7,500 sq. ft. lots selling for around $3.5 million in East MB, building two homes here simply does not pencil at that price. That said, if you loved the home and lot size at the $7.48 million 233 S. Meadows Avenue but Beach Modern is not your thing, then perhaps this is your opportunity to build a dream home to your exact taste.
Which option would you choose?