Mansion Global

Multimillion Dollar Homes Face the Wrecking Ball

Buyers seeking location, location, location spend upwards of $10 million for a house—only to raze it to the ground.

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A passion for huge, modern homes with high-tech features means that existing homes on desirable lots often fall to the wrecking ball. Photo: Clayton Hauck for The Wall Street Journal WSJ Video

The 14-bedroom, 19th-century mansion at the tip of a narrow peninsula in Darien, Conn., sold for $11.5 million three years ago. Today, the nearly 5-acre property is back on the market, asking $14 million. What has changed? Now, there is no mansion—it was torn down. “It had unique, priceless fixtures. Each room downstairs had a different pattern of beautiful, parquet floors,” said Sheila Daley, 72, a bookstore owner in Darien who grew up in the house and was part of the estate that sold it in 2012. “It would have cost a fortune to renovate it,” said the current listing agent Doug Werner of William Pitt Sotheby’s International Realty. Instead, the owners, who declined to be named, razed it and began drawing up plans for a new home; however, they moved out of the area before beginning construction, Mr. Werner said. The acreage now can be subdivided into multiple lots, adding to its value, he added. It’s almost becoming routine: eight-figure listings treated as teardowns—and marketed as such. Buyers see value in the land, especially in exclusive neighborhoods or on the waterfront. There, they can build brand new homes with modern design and cutting-edge technology. “Any architect will tell you it’s easier to start from scratch,” said Nancy Dauk, a broker at Halstead Connecticut who originally listed the Darien mansion. In Trousdale Estates, a section of Beverly Hills with views of downtown Los Angeles and the Pacific Ocean, teardowns and rebuilds are so prevalent that the entire neighborhood rumbles with construction noise. A developer inspired a wave of imitators in 2012, when he bought a $12.65 million home on 2 acres and tore it down. In its place is a 23,000-square-foot modern house with walls of glass, a subterranean garage and infinity pool. The property sold late last year for $70 million—a Beverly Hills record—to Markus Persson, the creator of the Minecraft videogame. The sleek, modern look is so popular in Trousdale that some agents whisper that even a house listed for $135 million will be either a teardown or a complete renovation. Its design—an Arabian fantasy with arches and Baccarat crystal chandeliers—has narrow appeal, several agents said. At a recent open house for a $35.5 million listing in Trousdale, the first thing to greet visitors at the door was a large poster with color renderings of a modern house that could be built in lieu of the current, circa 1965 house. Co-listing agent Rayni Williams, co-founder of Williams & Williams, a division of luxury brokerage Hilton & Hyland, said her team has sold 28 listings in Trousdale, 16 of which have been teardowns. She has used the renderings strategy many times, she said. Agents rarely use the word “teardown” in listings, opting instead for euphemisms such as “development opportunity” or “a chance to build your dream home.” Some agents don’t bother flagging the listing as a teardown, because they assume potential buyers will figure it out on their own. In Chicago, agent Amy Duong Kim of Jameson Sotheby’s International Realty is marketing a 980-square-foot, ramshackle Victorian, built in 1890, for $9.8 million. Ms. Duong Kim didn’t bother posting images of the house in the Multiple Listing Service database; instead, she included pictures of the home’s neighbor, Wrigley Field, “approximately 536 feet from home plate.” When developers call, she sends zoning information and discusses the potential for a hotel or other ballpark-related business, she said.

They Paid $11.5 Million...Then Tore the House Down

This mansion in Darien, Conn., sold for $11.5 million in 2012. The owner demolished the home with plans to build a new one. He has since moved away and is listing it for $14 million. 2012

HALSTEAD PROPERTY

2015

JESSE NEIDER FOR THE WALL STREET JOURNAL

Owner Francesca Vetrano, a 72-year-old actress, said she bought the house for $10,000 in the mid-1960s. She lived there with her mother and raised two children there. “Back then, there were gangs. They would graffiti the house and one day they burned down the candy store on the corner,” Ms. Vetrano said. In recent years, however, Ms. Vetrano and her family kept a close eye on huge sums paid for properties near Wrigley Field and priced her home accordingly, she said. She plans to buy another home in the same area once she sells, she said. Mary Ann Cinelli, an agent at Brown Harris Stevens in Bridgehampton, N.Y., is listing a $12.5 million property in nearby Water Mill that she describes as a “perfect oceanfront beach cottage with sunrise-sunset views.” The 2,000-square-foot home has a modern kitchen, stainless-steel appliances and updated bathrooms on an acre of beach. Previous owners include the comedian Mel Brooks and his wife, actress Anne Bancroft, who owned the property from 2000 to 2010. Despite its polished look and celebrity provenance, there is almost no chance that the house will remain standing, said Ms. Cinelli. “People don’t want little beach cottages for $12.5 million,” she said. “To the left and right, all of these cottages have been torn down and mega-houses have been built.”

Destroying historic mansions and one-of-a-kind estates can sometimes make economic sense, said Jonathan Miller, president of Miller Samuel Real Estate Appraisers in New York. “The vast majority of real-estate value is in the land, not in the house,” Mr. Miller said. Today, amid a global boom in luxury real estate, developers are competing with home buyers for prime land, which is driving up its cost. Razing an older home and building a huge, new house with all the bells and whistles will help ensure they make money on their investment, Mr. Miller said. Nelson Gonzalez, senior vice president of EWM Realty international in Miami, a Christie’s affiliate, said that when he started selling in Miami Beach in the late 1980s, “the old Mediterranean houses were the big draw.” In the past few years, however, they are increasingly being demolished. “Now, most buyers want new, modern, lots of glass, lots of light,” Mr. Gonzalez said. In mid-November, he listed a roughly 14,000-square-foot Spanish colonial estate, built in 1920, for $47.5 million. Though it is in great condition, it is likely a “development site,” Mr. Gonzales said, noting that nearly 40 homes could be built on its 6.9 acres. Simon Decker, an architect from Switzerland, bought the property in 2008 for $11.5 million. The main house was a wreck, so Mr. Decker moved his wife and three children into the 3,000-square-foot guesthouse. He spent five years and roughly $3 million restoring the main house, getting permits, and building a dock for a 70-foot yacht. Now he’s ready to sell and says he’s comfortable knowing the estate may be razed. “I’m not afraid of change. I like progress,” said Mr. Decker, 49. But some teardowns pack an emotional wallop. In Wayzata, Minn., in December 2012, Donald C. MacMillan, an heir to the Cargill fortune, paid $9.1 million for a lakeside home designed by Italian architect Romaldo Giurgola. The deal was complex: Mr. MacMillan sold his home in Minneapolis to the seller of the Giurgola house for $2.75 million, plus $500,000 worth of personal property, according to public records. Less than a year later, Mr. MacMillan applied for a permit to build a new 19,000-square-foot house with a 1,500-square-foot garage on the Wayzata lot. City records indicate that the home will be built for $6 million. Mr. MacMillan, the seller, and the new architect did not respond to requests for comment. The design community considers the 1970 Giurgola house “absolutely a point of pride in the city,” said Tom Fisher, a professor of architecture at the University of Minnesota in Minneapolis. Reports in local papers that it will soon be torn down depressed local architecture buffs, Mr. Fisher said. “People have been tearing down important houses and putting up schlock. Would someone buy a Picasso and then hire someone to paint over it?” This article originally appeared in The Wall Street Journal.