(Photo by Leon Bennett/Getty Images; Earth Explorer)
- Billionaire investor Barry Sternlicht's Nantucket beach house has been demolished due to erosion.
- Strict zoning rules and unstable land make it unlikely that Sternlicht will be allowed to rebuild.
- The ongoing erosion is causing property values to fall on parts of the exclusive island.
Billionaire investor Barry Sternlicht's Nantucket beach house is officially no more.
Excavators demolished the home on Hummock Pond Road this week after a series of storms severely eroded the property. The town had approved its demolition last month.
Sternlicht, who Forbes reports is worth $3.8 billion, originally purchased 289 Hummock Pond Road for $610,000 in 2010 in a foreclosure sale, according to property records. The home changed hands between two Sternlicht-linked trusts in 2016, the year he got divorced, for $1.6 million. Then, in 2019, he purchased 287 Hummock Pond Road for $1.3 million.
In 2020, hurricanes eroded the properties, and the town ordered one of the two homes on the land demolished, according to a Vanity Fair story published at the time. The other home was moved onto steel girders, where it sat until it was razed this week.
A representative for Sternlicht told Business Insider the house was to be demolished but did not provide further comment.
The Nantucket Current reported that there was nowhere else on the lot, which is surrounded by water, to move the home after so much of the land was swept away by rising sea levels. Shelly Lockwood, a real-estate agent on Nantucket, told Business Insider that the land was too unstable to hold the equipment needed to move the house elsewhere on the island and that, due to strict zoning rules, it's unlikely Sternlicht will be allowed to rebuild on the property.
The tony island of Nantucket is a favorite among billionaires like former Google CEO Eric Schmidt and Blackstone leader Steve Schwarzman. Sternlicht's neighbor is James Pallota, the investor and former Celtics minority owner. Pallota also owns a nearly 3-acre lot further inland with an assessed value of about $7 million.
But property values on what was once some of the most valuable spits of coastal properties are now falling because of the erosion caused by storms and rising sea levels.
"It's crazy," Lockwood said about the properties. "They are dropping into the ocean."
On nearby Sheep Pond Road, a home that was once listed for $2.3 million in September ended up selling for $600,000 in February.
"I'd like to think that it'll be there for a while, but I was definitely aware of the risk of any particular storm causing a problem in the future," the owner, Brendan Maddigan, told The Boston Globe.
Another home on that street had its price cut in half, from $3 million to $1.5 million, after three months on the market.
"Prices are going to have to start dropping. It's becoming more and more obvious that there is no value there. You are taking a big risk," Lockwood said. "If your portfolio can stand the loss, then have fun and enjoy the beachfront home — just don't expect it to be here next year."
Nantucket real-estate attorney Steven Cohen counts at least "five or six hot spots" for erosion around the island that threaten existing structures, including the local airport. He estimates one or two homes every year have to be moved or demolished because of the phenomenon, which threatens nearly every aspect of life on the island.
"Erosion takes out houses, roads, infrastructure, sewer beds, even airport runways," he told Business Insider. "The town is trying to figure out what to do."
Despite the island's propensity for natural destruction, the town has strict rules regarding what structures owners can take down.
Many homeowners on Nantucket who want to rebuild can't just knock down the homes on their properties. Instead, they must move them. Some offer up the structures for free to those willing to take them off their lots.
The "demolition delay" rule, as it's known, was initially implemented for environmental reasons, Cohen said. Island officials were concerned about an overflow of materials clogging local dumps.
Under the rule, owners who want to tear down an existing home must advertise it in the local paper for 30 days. They are not required to offer the house for free, but in practice, many owners offer it for free to incentivize its removal.
Though it began with green aspirations, the rule has become a cornerstone of affordable housing on the island. Families with access to land but without the means to afford astronomical building costs often snap up the homes. Many structures are also bought by the nonprofit Housing Nantucket, which converts them into income-restricted rentals for the island's year-round workforce.
But when owners who experience heavy erosion wait too long, the land around the homes can no longer support removal — as was the case for Sternlicht.
"The owners didn't do anything fast enough — they've known these houses are going in the drink," Lockwood said. "It was at a point of no return."
Do you live in Nantucket and have a story about the effects of climate change on the island? Reach out to the reporters via Mberg@businessinsider.com or Dlatu@businessinsider.com.