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Start-up mansion fix for Greenwich, Conn., ‘America’s worst housing market’
Billionaire real estate investor Barry Sternlicht had declared Greenwich, Connecticut, with its glut of mega-mansions for sale, “may be the worst housing market in the United States.”
“You can’t give away a house in Greenwich,” he said at CNBC/Institutional Investor’s Delivering Alpha conference last week.
One broker has an idea for how to fix that. “Get some start-up to buy them and put 12 people in them and work,” said Fred Glick, a real estate veteran who is currently CEO of brokerages Arrivva and U.S. Spaces.
In an interview Monday on CNBC’s “Closing Bell,” Glick pointed to the success of that model in Silicon Valley hot spots. “That’s actually happening out here in San Francisco,” he said. “They’re buying a big house and putting 12 to 15 people in it at $3,000 to $4,000 a month, and it’s working.”
Of course, Silicon Valley also has a long track record with companies being operated out of houses. As Barron’s noted over the weekend, the joke in Silicon Valley lately is that Meg Whitman’s recent split and accelerated downsizing of Hewlett Packard “will return the business to its 1939 roots under David Packard and William Hewlett: a tech shop run out of a garage.”
As for gilded Greenwich, it has traditionally been the trophy, as opposed to the launching pad, for business success. Such a departure from its highfalutin history toward divvied-up work-mansions seems unlikely barring some dramatic catalyst. But, “if Greenwich itself did something with giving start-ups some tax incentives, I bet you’ll get some people out of New York to move up to Greenwich and start getting it going,” Glick said.
There is now an abundance of “Silicon Alley” talent in New York City — where rents have surged — to draw upon.
And Sternlicht, chief executive of Starwood Capital Group, just moved from Connecticut to Florida, having tired of Connecticut’s onerous taxes. He is part of an exodus of successful businessmen from the area, including Paul Tudor Jones and former New Jerseyan David Tepper.
A surge in new listings and a drop in sales has left Greenwich with a 12-month supply of homes on the market as of June, up from 7.7 months a year earlier, according to Bloomberg. Taxes are one factor, along with lifestyle changes across all generations that favor renting or buying newer homes in emerging communities (such as “active senior living” centers).