Real Estate Is a Major Cost in a High-End Audiophile System

Years ago, I had a very candid conversation with one of the most prominent audiophile retailers and raconteurs in Manhattan. It was during the Great Recession of 2008, and he was closing over 8,100 square feet of space despite having recently gotten a price reduction on his lease from his landlord. Inside this once uber-important retailer were large scale demonstrations of the biggest and best audiophile gear money could buy parked in a New York City neighborhood where there were more people likely to buy said equipment and or systems. And the business just didn’t work out. It was being crushed by overhead.

My old friend Harry ran a world-famous audiophile store not too far from where I grew up in the suburbs of Philadelphia. At its peak, SoundEx was the most over-crowded audiophile store you ever saw. They effectively sold brands that were direct competitors that might not be shown in any other dealer in the nation at the same time. They had damn-near anything you could dream of buying, from Krell to Mark Levinson to Transparent to MIT. MartinLogan, Wilson Audio, Dynaudio, Audio Research. The gear was all over the place, and on a Saturdays it would be packed with folks not only from Philadelphia, but from New Jersey, New York City, and anywhere else within reasonable (and sometimes unreasonable) driving distance. Prices were low relative to other audio salons. Pretention was also low, which was part of the store’s appeal. Shipping (or delivery plus installation) was often free and if there was rent or a mortgage on the house by the PA Turnpike that they operated from, it was stupidly low. 

That was until Harry tore down this dumpy house and threw up a shiny “build-it-and-they-will-come” showroom–a concept that is a proven failure. There were 26 reference audio rooms on two floors. And these were gorgeous sounding, well organized rooms. They had lighting control. There were sales offices and a product service department. There was ample parking and well-groomed landscaping. Everything was slick, and just like Christopher Hansen Ltd. in Beverly Hills back in 1994, slick didn’t sell. And SoundEx is now long gone, with no meaningful replacement unless you count Audiogon.com. 

At the recent AXPONA show in Chicago, I noticed several tons’ worth of truly large-scale audio demonstrations. Big Sonus fabers. Big, bigger, and the biggest of Wilson Audio speakers. Large Magico speakers. YG, too, and other stuff along those lines. And some of the rooms sounded very good. Often really very good. But when you think of the locations around the country where people are most likely to have the wealth to invest in extreme audio, the biggest cost of the system isn’t the gear or even construction to make the room sound great. It’s the room itself.  

Today, here in Los Angeles, finished homes in the best neighborhoods cost between $1,500 and $2,000 per square foot. In Manhattan’s Park Avenue, where my mentor, Mark Levinson, was so successful selling large-scale Cello systems in the late 1990s to well-heeled, music-loving clientele (not necessarily hardened audiophiles), prices can be as high as $3,000 to $4,000 per foot in the best of properties. San Francisco and Silicon Valley real estate falls somewhere in the middle of this insanity.  

Do the math: in order to properly house the world’s biggest and best speakers you might need a room that is say 20 by 30 feet or more. The per-foot price of that room on Park Avenue comes in at a whopping $2,400,000! At $1,500 per foot here in L.A., it’s down to a mere $900,000. But again, that’s just for the real estate. Not any special construction, studio doors, sound proofing, room acoustics, HVAC dampening, lighting or lighting control, electrical work.  

There are some in the tenth-of-a-tenth-of-one-percent who can easily afford the real estate as well as the systems, and that’s why the hobby continues on at the highest levels. There are also international markets where cost is simply not an object: Russian oligarchs or those involved in the agricultural trade (if you know what I mean) in South America. You really want to sell a rocking audio system? Sell it to the Middle Eastern prince building a new palace. 

There are yet other audio fans who live in locations that simply aren’t as expensive, but even in the most affordable locales, building a true audiophile room for an extreme system is going to be pretty costly. They often have to travel to hear the biggest and best audio, and that’s probably part of the reason why the growing list of audiophile shows have a good amount of relevance today. Simply put, it’s just too expensive to set up and to maintain an extreme audiophile system with $500,000 speakers, $250,000 amps, $50,000 in digital, and so much more. The overhead is crushing and likely not sustainable.  

Are there alternatives? Of course, systems with smaller speakers are an obvious answer. Most of today’s ultra-level speakers have smaller siblings that have all of the performance on the highs and midrange but lack the big bass and dynamics of the flagship speakers. Those dynamics can be nicely replicated in a well-treated room with a handful of subwoofers to bring back that heft and gravitas. This was the basic value proposition that made Wilson’s WATT Puppy series of products that are so appealing for so many audiophiles. They sounded great. They were somewhat easy to drive. They came finished in gorgeous paint colors. And most importantly, they didn’t use up your entire room. Thousands of pairs were sold despite a never-ending series of price increases over the years. Even as very expensive speakers, the fit on so many other levels. 

In the real world, the appeal of in-wall and in-ceiling speakers is that they don’t take up much space but present pretty compelling sound in a way that allows a room to be a room, not a recording studio. Do high-end in-walls sound like Wilsons or Focals? Not even close. But products like Nakymatone speakers (http://nakymatone.com) are high end solutions that actually are “invisible,” in that they’re installed and then covered with skim coat, wallpaper, or even a wood veneer. 

Back to the retail front: there is a dealer here in Los Angeles who has built an ultimate-level audiophile store in the suburbs east of Los Angeles that has all of the goodies that one used to expect to see at a gleaming audiophile salon like Christopher Hansen’s in Beverly Hills back in the 1980s and early 1990s. Sunny Components does the same sort of thing today in a warehouse building in way-less-swanky and much-more-affordable Covina, California. Jay Frank at Evolution Audio Video does the same thing to the north in Calabasas, as he has converted affordable, easily configurable space into a strong audiophile and home theater showroom that services the vast number of people north of L.A. that want the best in AV.  

In today’s market, though, the bottom line is this: whether you’re a retailer or an enthusiast, you need to be mindful of your real estate costs, or the next check you write might be cut to a bankruptcy attorney if you build too fancy of a high-end audio room.