Twin Beachy Spec Homes Exceed $5M

By Dave Fratello | August 20th, 2013

The Manhattan Beach real estate market is beginning to get its share of spec construction projects here and there. Two ocean-view beach homes that are emblematic of this new wave have now sold above $5 million.

This new run of construction is nothing like the wave of bank-funded speculative projects built in the early late-90s or early 2000s. Generally you see just one at a time, or a couple/few at a time, by each investor (or group), boasting quality names for the architecture and building. Investors are working on a small scale but building for top-dollar return.

And, like the twin projects we'll discuss here, the style of the new builds speaks to what today's high-end buyers want.

Here's a hint: It ain't Caliterranean.

224 6th (5br/5ba, 4100 sq. ft.) was the first of these twin spec homes to come out and sell early this year.

This ocean-view house hit all the style notes perfectly and got even crotchety old MBC to call it an "achievement of a home."

The style here was called "Beach Plantation," increasingly the label given to these bright, white new homes with simple lines and a West Indies influence.

The source of this style trend is not hard to identify. As we noted in our review of 224 6th in March, it's the landmark triple-lot home on The Strand (212 The Strand), completed in Summer 2009. (See "Big, Beautiful, Too Much?")

We really liked the views front and back on the top level, but weren't completely sure about the layout overall, which put the 5th "bedroom" on the top level just beyond the kitchen. Better to consider that a spare living room and call it a 4br house, we thought.

The sale there came at $5.250M in April. It had been listed at $5.500M.

The more recent sale is at 221 7th (5br/6ba, 4225 sq. ft.), at $5.400M in a deal that just closed.

This one was called "Cape Cod," on account of the shingles in lieu of straight white siding, and the absence of black trim and shutters.

Inside, we saw the same house in almost every respect.

No surprise there. The designer and builder were the same. They had hit upon a layout and design that they felt would work, and delivered twins – with different "clothing" to make them a bit different.

Views were good here, too – to gauge by the photos. We recall touring the property on a particularly foggy day, and just imagining the views.

Not only were these new homes nearly identical, so were their lot-acquisition and final-sale prices:

224 6th

Land price: $2.800M (market sale, Nov. 2011)

Sold price: $5.250M (April 2013)

221 7th

Land price: $2.800M (off-market, March 2012)

Sold price: $5.400M (Aug. 2013)

Regarding 221 7th, for a while in 2009, the dollhouse of an old beach cottage on that spot was offered for $3.375M. The home had just hit 100 years old (it was a 1908 build). The sale was not to be in '09, but by 2012 the house was not to be, making way for this new project. (Perhaps for the next 100 years?)

So pencil out the building projects here, for kicks.

Both plots were purchased for $2.8M and sold at $5.250M or higher (+$2.450M to +$2.600M).

Assume perhaps $300/PSF to build each home ($1.2M-$1.3M), plus some other tangible costs for carrying, upgrades and costs of sale (taxes, commissions, etc.). We can readily sketch out profits of $700K or better on each one.

Even if we're high on the end return there, we're in the ballpark, and those were a couple of good investments.

If we're low, and they netted closer to $1M on one or both, while improving the neighborhood, good for everyone, no?

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