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June 13, 2013
A glimpse at Southold’s commercial real estate market
When Town & Country listed the Soundview Inn on Route 48 in Greenport late last year, it definitely caught the eye of Suffolk Times readers and North Fork real estate professionals.
It’s hard for the curious real estate browser not to notice phrases like “5.5-acre waterfront resort on Long Island Sound” and “first time on market.”
Then, of course, there were all the zeroes in the asking price of $13,900,000.
While the family that has owned the iconic Greenport landmark for the past 45 years called the listing “an exploratory move,” they certainly have everyone’s attention. Two questions asked frequently since The Suffolk Times first reported on the listing are, just how much is the property worth and exactly what is the state of the commercial market in Southold Town?
“[$13.9 million] might be a record,” said Thomas McCarthy of the Southold real estate company that bears his name. “It’s certainly an ambitious asking price, but I hope they get it.”
A sale at such a number could be a significant boon for a commercial market that already appeared to be on the upswing in 2012. After just seven commercial buildings sold in Southold Town in 2011, according to MLS records provided by Mr. McCarthy, a dozen such properties sold here last year.
Not only did the number of transfers grow, the average sales price increased by nearly $300,000 in 2012 from the previous year. That’s due largely to the number of million-dollar transactions that occurred last year. After the commercial market in Southold Town topped out with the $795,000 sale of the Orient Country Store (bottom left in photo above) in 2011, four properties sold for more than $1 million in 2012.
Mr. McCarthy said he sees two reasons for the 2012 increases in sales volume and prices: a willingness among banks to lend more and sellers’ dropping their asking prices to more realistic numbers, trends that together allowed for more high-price transfers.
“Banks are less afraid to lend,” he said. “And some of those transactions involved properties where the seller really needed to sell. They couldn’t wait for it to sell at their original asking price.”
Of the 12 commercial properties that changed hands in 2012, six spent more than seven months on the market, including two that were listed for more than two years. Captain Marty’s Fishing Station in New Suffolk was on the market for 756 days before finally selling at $790,000, 17 percent less than the original asking price of $950,000. By comparison, only one commercial property sold in 2011 was listed for longer than seven months. This was an office space along Main Road in Cutchogue, which went for $562,000 after two years on the market.
No commercial building has sold for more in the past two years than the former Lucas Ford building in Peconic (bottom right in photo above), which was purchased by Greenport Harbor Brewing Company last spring for $1.4 million. The Greenport Village microbrewery plans to expand this year to its second location, which will feature a 25,000-barrel brew house system as well as a tasting room with indoor and outdoor seating.
Lucas Ford, which now operates exclusively on Horton Lane in Southold, had closed its Peconic showroom and initially listed the property at $1.8 million 10 months before the transfer, according to MLS. The closing price reflected a 22 percent drop from the original asking price.
Two other properties that sold for over $1 million last year dropped their prices by more than $300,000 before closing: the former Chowder Pot Pub in Greenport, which sold for $1.275 million after four months on the market, and the brick-paved shopping plaza at 120-122 Front Street, which was listed for nearly eight months before being purchased for $1.3 million.
The Arcade Department Store in Greenport is the only other commercial sale in Southold Town to pierce the million-dollar mark in the past two years, according to MLS, fetching its initial asking price of $1.2 million after just 26 days on the market in 2012.
While four properties selling for more than $1 million in one year marks progress in the Southold Town commercial market, no transaction in the past two years compares in price to the Soundview listing.
Similar waterfront listings nearby, such as the Ram’s Head Inn on Shelter Island, which entered the market for $15 million in 2009, have not sold.
But Rachel Murphy, who operates the Soundview Inn (top right in photo above) with her sister, Ellen Wiederlight, said the listing is merely an attempt to measure the market for such a property.
“Everything is for sale, but the family is testing the waters,” Ms. Murphy said. “I’m operating the restaurant like I’m going to be here for another 20 years.”
Ms. Murphy’s father, Jack Levin, 104, built the Soundview business up from the small beachfront concession stand named Jack’s Shack he operated at Southold Town Beach. In 1953, Mr. Levin purchased the Sound Shore Motel adjacent to the SoundView Restaurant, built in 1949. He acquired the restaurant in 1968. The property now includes the 45-room motel and the restaurant and catering facility, as well as an adjacent 10-unit apartment building.
While Town & Country listed the property in The Suffolk Times in August, it later pulled all local advertising at the suggestion of the seller. However, the listing still appears on Town & Country’s website. Hal Zwick, the agent on the listing, declined comment for this story.
The full market value of the Soundview property, assessed at $100,900, is estimated by the town to be $8,773,900, a number that does not factor in the value of the actual businesses there.
Southold Town assessor Kevin Webster said the Soundview is unique among local business properties in that it features 1,345 feet along Long Island Sound. Mr. Webster said he can’t think of another commercial property anywhere in town with near that footage.
Both Mr. Webster and Mr. McCarthy said the only property on the market in recent years anywhere near comparable to the Soundview would be the former Santorini Beachcomber Resort in Cutchogue (top left in photo above). But while that property is 17.4 acres compared to the Soundview’s 5.5, only 534 feet are on the Sound.
The local chapter of the International Brotherhood of Electrical Workers purchased the Beachcomber for $12.65 million in January 2008, months before the market collapsed. The IBEW now runs that property as a private training facility.
The IBEW property has an annual tax bill of just under $148,000, compared with the $116,000 the Soundview pays.
With Gianna Volpe and Tim Kelly