Something curious appeared this week on NFT marketplace OpenSea: a $26.5M building in one of New York City’s most fashionable neighborhoods.
The seven-story building in Manhattan’s Flatiron District includes ground-level retail space with apartments above. The seller, Okada & Company, has been in the commercial real estate business for almost 60 years, CEO Chris Okada told The Defiant in an interview Friday afternoon.
“It’s blowing up,” he said with a laugh. “I’ve done things that went a little viral but this went, like — I got calls from Norway, people reached out from Korea.”
If sold, 111 West 24th Street wouldn’t be the first property to be purchased on the blockchain, but it would almost certainly be the most expensive, the splashiest.
‘Future of Real Estate’
“This is unironically one of the best use cases of NFTs,” wrote Grant Gerber, the chief governance officer at Kaddex.
Naturally, there was no shortage of online haters.
“Yes. You get the property after buying the NFT,” Okada tweeted, in response to those who thought it was some kind of scam. “Yes you can live in the building. Yes you can rent it out. It’s not just an expensive jpeg.”
There were other questions as well. Why sell an IRL building as an NFT? What’s wrong with the traditional method of buying property?
Okada’s rejoinder: “If web3 is going to happen,” as he put it, then we need to learn how to integrate the blockchain with existing government infrastructure that records the transfer of property. The sale is, as much as anything else, a stunt of sorts: an attempt to draw attention to the yawning gap between the blockchain and New York’s Automated City Register Information System, or ACRIS.
Indeed, the OpenSea listing warns potential buyers: “Due to the nature of real estate sales, the sale of the NFT does not warrant the completion of the real estate transaction, or reflect the transfer of the deed or title.”
Okada described it instead as a “ticket” — or, perhaps more accurately, a promise — to transfer the deed to the property. After the NFT is purchased, the money will be held in escrow “which the buyer’s team still controls.” It will stay there until the standard process required for the transfer of real estate is complete and the purchase is logged in ACRIS.
Okada is a believer in crypto and has styled his family-run firm as friendly to the industry.
“We’ve got over 40 office buildings in all the popular crypto zip codes!” its website boasts.
But the sale is also a lesson in the vagaries of the crypto market.
“There’s so much fraud around the NFT space right now,” he lamented. “If you search OpenSea [for] Chris Okada, there’s already like three or four fake accounts …”
It has also shined a spotlight on the volatility of the crypto market. When originally listed on OpenSea, the asking price, 15,000 ETH, was worth about $29.5M. By Friday afternoon, that had dropped to about $26.3M, a drop Okada called “crazy”.
The building was purchased in November 2021 for $16.5M and underwent a gut renovation. If it were to sell for $26M, Okada would consider it a successful exit. “If it continues to drop, that’s when we’ll have an issue,” he added. “We’ll pull the listing very quickly.”
Nevertheless, Okada is excited about the response the listing has generated.
“The community is really, really, really excited about utility, and that was one of those most positive things that came out of this whole experience,” he said. “This is the kind of utility NFTs need, not just pretty pictures, (but) true, real-life applications that can make a difference.”