The Cosmopolitan Effect
If you have been reading my blog for any length of time, you have heard me discuss the pricing of The Cosmopolitan. Most of what I have said in the past blog post is that I have just felt the the pricing is way too high. Today what I want to talk about is the effects of this pricing.
Just short of a year ago, one of the iconic Pearl District brownstone style town homes along 11th sold for $1,390,000 or $515 a square foot. Now keep in mind these town homes don’t come on the market that often so the buyer of that unit did pay a premium to get it. Now fast forward almost a year later. The next door neighbor of this unit just put their home on the market. The square footage of the unit was an identical 2698 feet. These neighbors put their home on the market for $1,899,000 or $703 a square foot. Not only did they put their home on the market, they got 2 offers within the first 2 days it was on the market! A year ago it would have been thought that $703 a foot was insane for these units. What has changed things that makes these units jump 36% in under a year? I would call it “The Cosmopolitan Effect!” What do I mean by this? When the Cosmopolitan came to market, it brought unheard of prices for this area. Now with $700 a square foot being almost a starter unit at the Cosmo, and with prices reaching all the way up to $1,200 a square foot, $703 a sq. ft. for one of the Pearl Districts most recognized set of homes almost makes it seem under-priced! Why not pay $703 a sq. ft.? It’s only 58% of what they are trying to get at the Cosmopolitan!
Remember that buyer that “overpaid” or paid a premium of $1,390,000 for their town home? Well thanks to the developers at Hoyt Street Properties, they are laughing all the way to the bank with their 36% return!
Part of the high prices we are seeing is no doubt coming partially from our very low inventory. The other part, no question, is coming from the effects of the Cosmopolitan pricing, or as I like to call it, “The Cosmopolitan Effect!”