Building in New York City hasn\’t gotten cheaper and with buyers expecting an increasing amount of amenities and high-quality finishes, cutting condo sales prices is nearly impossible.
Developers generally do not want to raise the curtain on their budgets, but HJ Development provided The Real Deal with a detailed projected budget for its condo conversion of a rental building at 211 East 51st Street, nearly finished as of the middle of last month.
The cost to renovate the 76,500-square-foot building (purchased on May 4, 2007) is roughly $76 million: $46 million for acquisition, $16 million for hard costs including material and labor, and $14 million for soft costs including financing, brokerage and professional fees.
Total cost for an average 856-square-foot one-bedroom apartment (photos are of an 868-square-foot unit): $1,041,096. Average home asking price: $1.1 million. Profit: $58,904 or 5.7 percent.
That is a low rate of return, but developer Henry Justin said he still expects to earn his usual 10 to 15 percent profit, still relatively low, on the whole project by factoring in the commercial units. Asking prices for the commercial units are $2.7 million for one (under contract) and $2.8 million for each of the other two.
The 14-story building has 73 residential units, three commercial condos and 34 storage spaces. The apartments run from 505 square feet to 2,405 square feet with one to three bedrooms, eight units with terraces. The storage units, to be sold on a first-come, first-serve basis, cost around $19,950 each. As of mid-May, 11 units were under contract and closings are slated to begin next month.
One thing was apparent from the line-by-line budget: developers have to allot funds for even the smallest things such as robe hooks ($200 each). And the developer said he prefers to use high-end materials and fixtures.
\”This will show you why prices can\’t drop 10 or 20 percent,\” Justin said.
He is able to cut costs, however, when it comes to construction since he is the developer and the general contractor.
But, a budget is not set in stone.
\”I\’ve never met a project where you don\’t exceed a budget,\” Justin said, and by press time 211 East 51st Street had increased to $76,227,000 from $74,226,500
The price of (nearly) everything
The following is a breakdown of the costs for finishes and fixtures in a sample apartment, 4D, a 505-square-foot, one-bedroom condo, with an asking price of $650,000, in HJ Development\’s 211 East 51st Street. The costs, provided to The Real Deal by the developer, include the price of the items, but not the labor involved or shared building costs. Many items can be found in all units, regardless of size. (The pictures displayed are actually of a standard 868-square-foot apartment.)
Bathroom
Vanity: Polished chrome with white polished three-quarter inch Bianco Dolomiti marble counter and custom-made medicine cabinet, $4,000
Shower curb: Bianco Dolomiti marble slab, $450
Accent wall tile: Five-by-three inch Fireclay ceramic tile, $2,000
Wall tile: White crackle ceramic tile, $1,600
Sink faucet and lever handles: Kohler Stillness in polished chrome, $280
Bath shower handle: Kohler Stillness, $145
Lavatory sink: Kohler Kathryn undercounter, $350
Showerhead: Kohler rain in polished chrome, $400
Toilet: Toto, $330
Stone mosaic tile floor: Polished Bianco Dolomiti marble, $1,300
Toilet paper holder: Vola in polished chrome, $175
Robe hook: Vola in polished chrome, $200
Shower enclosure with towel bar: Frameless glass door with polished chrome towel bar, $3,000
Subtotal: $14,230
Kitchen
Microwave and ventilator: Bosch over-the-range room stainless steel combination microwave and venting, $550
Backsplash: Stainless steel metal tile, $1,000
Floor tile: Honed cypress limestone, $1,200
Sink: Franke undermount stainless steel, $950
Faucet: KWC chrome Orcino with long lever and pull-out spray, $450
Refrigerator: Northland stainless steel top mount freezer in stainless steel, $4,200
Cook top: Bosch stainless steel four-burner gas cooktop, $900
Dishwasher: Bosch Integra 800 series, $1,100
Oven: Bosch stainless steel electric wall oven, $1,900
Countertop: Honed Calacatta gold marble, $1,500
Cabinets: Custom-made including $45 individual cabinet pulls, $13,000
Subtotal: $26,750
General
Windows: Wausau oversized double-glazed casement windows, $10,000
Hardware: Baldwin and Ives in antique brass/antique nickel/polished chrome, $1,300
Doors: Solid hardwood doors, $2,200
Light fixtures: In the kitchen, custom polished chrome lighting; in the bath, custom polished chrome, medicine cabinet with integrated lighting; $3,500
HVAC: Two individual climate-controlled heat and air conditioning units, $450 and $700
Flooring: Four-inch-wide solid white oak plank floors, $3,250
Subtotal: $21,400
Grand total: $62,380
The whole building\’s budget, from top to bottom
Below is the projected budget for HJ Development\’s 211 East 51st Street, a 76,500-square-foot conversion with 73 residential condo units, three commercial condo
units and 34 storage spaces:
Hard costs
General conditions: payroll, etc., $1.2 million
Masonry: exterior, exterior cleaning and terrace pavers, $600,000
Structural steel: building extensions, $125,000
Exterior railings and stairs: $300,000
Concrete: building extension, $40,000
Roofing: installed new Johns Manville roof, $200,000
Lighting: unit interior, corridors, lobby, terraces, $210,000
Insulation: $150,000
Rough carpentry: Sheetrock, studs, etc., $600,000
Finish carpentry: custom wood moldings, etc., $485,000
Kitchen cabinets: handcrafted rift-cut white oak with lacquer finish, $950,000
Doors and hardware: solid hardwood doors with Baldwin hardware, $750,000
Windows and terrace doors: oversized Wausau double-glazed casement windows, $800,000
Stone: Bizzaza mosaic, Bianco Dolomiti, etc., $1.3 million
Wood flooring: solid white oak four-inch plank floor in ebony or light finish, $750,000
Carpeting and wall covering: Bentley print for street corridor and Innovations wall covering in corridors, $125,000
Painting and taping: $800,000
Bath vanities and fixtures: $150,000
Toilet and bath accessories: $275,000
Medicine cabinets: handcrafted polished chrome with integrated lights, $125,000
Kitchen appliances: Northland refrigerators, Bosch stovetop, oven, dishwasher and microwave, $700,000
Kitchen fixtures: custom polished chrome lighting and hardware, $175,000
Two elevators: modernization of system, new cabs with stainless steel and wire mesh interiors, new call buttons with dark bronze finish, $510,000
Plumbing: $800,000
HVAC: individual climate controlled air conditioning and heat units, $600,000
Building electrical and intercom phone entry system: $1.25 million
Resident\’s lounge and fitness area: $200,000
Lobby allowance: reception, furniture, lighting, stone and security, $400,000
Subtotal: $14,570,000
Contingency (10 percent of hard costs): $1,457,000
Total hard costs: $16,027,000
Soft costs
Professional fees: attorney, architect, engineering, interior designer, etc., $1.2 million
Sales, marketing, brokerage: commission, advertising, brochures, models with furnishings, etc.: $4.5 million
Miscellaneous: real estate taxes, insurance, operating expenses, permits, filing fees, etc., $1.5 million
Financing costs: acquisition and construction loan interest, $7 million (HJ Development is financing $39 million)
Total soft costs: $14.2 million
Total hard and soft costs: $30,227,000
Acquisition: $46 million
Grand total: $76,227,000