How one developer is selling Brooklyn townhouses for eight figures
Eckstrom’s husband and wife duo are snapping up vacant multifamily properties and converting them into massive townhouses
Oct 8, 2024
Five single-family homes in Brooklyn have gone into contract this year with last asking prices pushing $12 million.
Four of them are par for the course for the borough’s top-dollar getters: historic homes, gut-renovated by their owners and turned around on the market at a healthy markup from their last purchase price.
The fifth, at 170 Clinton Street, did not exist as a single-family home as recently as a year ago, and is months away from being move-in ready. Nonetheless, the five-story home went into contract the other week with a last asking price of $14 million, the second priciest Brooklyn signing this year.
The listing boasts that the buyer can “enjoy the fruits of a custom renovation, without the labor.”
The labor instead is being done by Eckstrom NYC, a seven-year old development firm run by husband-wife duo Carlos Saavedra and Nicole Eckstrom.
“In Brooklyn Heights, there are almost no renovated townhouses at all, and people still pay these crazy prices knowing that they’re going to go in there, gut the whole thing and spend [$2-$4 million] more on top,” Saavedra said. “That has always been the norm, as an accepted, very unfortunate, reality.”
Saavedra and Eckstrom claim to have a better way, where they bring the general contractor (a partner in the firm) and the experience with handling suppliers, the prickly Landmarks Preservation Committee and renovation headaches. The buyer just has to bring a sack of money, and ideally some design sensibilities.
The value proposition — a renovated townhouse prior to closing — comes with the caveat that buyers need to see an eight-figure vision when they sign a deal on an unfinished home.
At 170 Clinton, Eckstrom completed the structural renovations of seven bedrooms, a lower level with a gym and sauna, a double height kitchen and dining space, and an extra-wide backyard with an outdoor kitchen. Saavedra and Eckstrom will collaborate with the buyer on the interior finishes.
“I’m still surprised how fast we sold 170 Clinton, and the price that we got for it,” Saavedra said. “The very first time we did it, I was like, ‘Oh, maybe we’re lucky,’ but not anymore.”
Higher margins
170 Clinton is the second contract that Eckstrom has signed for a single-family home — the first was an off-market deal in Cobble Hill which signed in January for over $11 million — and Saavedra said that after seeing the last asking prices the properties garnered, the company’s portfolio has shifted to be evenly divided between single-family homes and condos.
The firm has made 18 purchases for $90 million the past two years, according to PincusCo, and Saavedra said his team has worked on 30 homes since inception.
The eight-figure townhouses in tony Brooklyn neighborhoods are a far cry from the Bed Stuy condos the duo started developing in 2016. They bought their first project at 541 Madison Street for $1.3 million in 2016, which they turned into four condos that sold for roughly $850,000 each, according to property records.
Saavedra declined to share the margins on any specific project, but he said that with condo projects, profits can erode quickly. With construction and lending costs making it even harder to get in the black on condos, which require multiple kitchen renovations, the pivot to single-family homes has given Eckstrom a chance to maintain quality at a higher price per square foot.
“I don’t think we would be able to continue doing condominiums if we didn’t have the profits from one-families,” Saavedra said.
Saavedra said he initially submitted a five-unit offering plan at 170 Clinton with a projected sellout of $11.4 million last year, and Eckstrom only began marketing the unit as a single-family when that plan was delayed. If the last asking price of $14 million holds, the switch will have netted an extra $2.6 million compared to the offering plan projections.
A growing sector
It’s a good time to be focusing on townhomes.
In the last 12 months, there have been 1,716 townhouse signed contracts in Brooklyn, up 40 percent from the 1,218 signed contracts from the previous 12 months. In the same period, condos and co-ops have collectively seen an 8 percent increase in contract signings in the borough.
Compass’ Noah Plener, who worked on both of Eckstrom’s single-family deals this year, argued that Brooklyn townhouses have been the most in-demand product in the city since 2020.
“Townhouse [pricing] didn’t stagnate at all,” he said, despite interest rate hikes dampening demand around the city.
The downside of the single-family offering is risk concentration; with condos, as each unit closes, developers can start paying down their debt and open up refinancing opportunities.
But by bringing in townhouse buyers mid-process, Eckstrom hopes to attract a wider audience by providing potential buyers with, if not a blank canvas, a paint-by-numbers one, allowing them to choose finishing touches.
Saavedra called it a compromise, where the buyers’ doesn’t have to deal with anybody else’s choices, and the company gets to a signing before finishing the project.
Now, Eckstrom looks to be trying to one up its contract at 170 Clinton.
The company, which bought the property at 307 Hicks Street for $5.1 million last year, briefly listed the 6,200-square-foot home on the market in late July with an asking price of $14.25 million.