Jul. 3, 2009 - 2005 pricing at The Printing House, 421 Hudson Street

one-third of the way from February 2005 to June 2006 = about July 2005
The Manhattan loft #709 at 421 Hudson Street cleared at $1.64mm on May 29, 2009. They wanted more, of course, having started at $1.995mm in October 2008. But they ended up at a price from about the middle of 2005.

If the value of #709 could be plotted on a graph as a straight line, the May 2009 price of $1.64mm would be about July 2005, based on these data points (clearing prices):

February 2005 $1.6mm
June 2006 $1.715mm

This "1,500 sq ft" duplex loft features a "tastefully renovated" chef's kitchen (Carrara + stainless), a double height living room, and "breathtaking" views. The sellers thought it was worth more than they had paid for it in June 2006, so they brought it to market in October 2008 at $1.995mm. Two quick (small) price drops (to $1.895mm) were followed by 3 months of public stubbornness (no change in asking price), but secret flexibility: when they struck a deal in February they negotiated to $1.64mm, a decent 13% off the asking price. Props to them (and their agent, Richard Orenstein of Halstead) for recognizing that they should take what The Market was offering.

quiet competition, envy
The #709 sellers may or may not have known that their neighbors in #706 were also interested in selling. There is no listing associated with the April 1 sale of #706, but it sold to the owners of #505 for $1.73mm. These buyers seem to have held on to #505 as well, which is kind of interesting. They obviously can't combine #505 and #706, so one wonders how that private deal was struck. City records show #706 as "1,279 sq ft", so that is a significant per-foot premium over #709 ($1,352/ft vs. $1,093/ft). Without a listing to refer to, I have no way of knowing the condition of #706, or whether it was finished to that much higher a level than #709.

Interesting also that #709 was sold to someone in the building. The people who bought #709 on May 29 sold the smaller #604 ("912 sq ft") on May 28 for $1.025mm. If I am reading the respective histories on StreetEasy correctly, the #604 sellers signed a contract to buy #709 before they signed to sell #604. That's brassy.

The #614 trading price of $1,123/ft suggests that the private sale of #706 is the outlier price of 2009 in this building, rather than the #709 price. The #706 buyers (who were and remain #505 owners) must have really wanted that loft.

another battle of 2005 vs. 2009, with 2005 winning BIG (if a fair fight)
All this detail got me looking at other clearing prices at the Printing House, so I found one more loft that has changed hands twice since 2005. Assuming that both sides were arm's length transactions (I will explain in a moment), #603 traded in September 2005 at $1.625mm and again on July 17, 2008 at $1.45mm. There are no listings in StreetEasy associated with either of these sales, and the sale last year was to an LLC, so it may not have been arm's length; if it was, that unit dropped in value by about 11% in 3 years, pre-Lehman. (No idea of size or condition.)
 

Jul. 2, 2009 - when charm is not enough, cut and cut again

There's a lovely (truly charming) Manhattan loft for sale that has had rather a lot of trouble finding it's correct positioning in The Market. I'd say not for lack of trying, as it has been on the market (on, and off, and on, and ...) for the better part of three years, except that it seems to have been so far from market price time and time again. One suspects that the sellers are more in love with the lovely (truly charming) loft than any buyers. That can be a problem.

Jul. 1, 2009 - (too rich, too thin) too stylish to sell (well)?

Jun. 30, 2009 - The Memo was delayed? / flipper now under year-old price

Jun. 29, 2009 - what a difference a year (and a view) makes, as 161 Grand Street closes

then v. now, spectacular v. move-in, view v. not-so-much
The Manhattan loft #4B at 161 Grand Street closed last week for $1.71mm after a relatively brief (successful) campaign. This "1,831 sq ft" "beautiful and spacious" loft was marketed as being in "move-in" condition -- a relatively modest description for a unit with marble baths and "top of the line" kitchen, but that is what they said.

They started to market January 15, asking $1.9mm, dropped to $1.795mm on St. Patrick's Day and found the contract 2 months later that closed last week. The $1.71mm clearing price represents exactly 10% off their January starting point, and $934/ft, all of which are pretty reasonable seller outcomes these days.

This relatively modest description and relatively modest price contrasts significantly with the July 2008 sale of #9A. That "1,800 sq ft" loft was billed as "spectacular", with a "magnificent" entertaining space, chefs kitchen and "extraordinary" skyline views (including of the Police Building, just down the street). The Market loved that loft, as it cleared in July 2008 at $2.75mm, having come to market in April at $2.9mm and finding a a contract in 2 months. That computes to $1,500/ft.

is it The View, Mars?
I can only speculate about the difference between these two sales of similar sized Manhattan lofts in the same building 11 months and seven figures apart. #4B claimed "great city views east and west", but 60 or more feet higher #9A had those "extraordinary" views. The #4B layout is too stubby to be a Long-and-Narrow, but presents only 7 windows, while the corner layout of #9A has not only twice the windows (15) but each room has at least one long wall of windows (the corner LR / dining space has two). I have to guess that #9A's finishes were to some degree at a higher level, but it is hard to imagine that difference was terribly significant in light of the proper proper names invoked at #4B. The obvious calendar differences between contracts reached in June 2008 and May 2009 are significant, but June 2008 was already post-peak (though pre-Lehman).

Why was #9A 50% more valuable than #4B? Using a (generous) ballpark of 20% as the local market decline for a non-prime loft micro-nabe (sorry, Police fans) and 5% for the finishes, it has got to be the layout, the windows and the views that account for the largest part of the #4B vs. #9A differential. At this order of magnitude, somebody paid $500k for a better layout with more windows and great views. Interesting....

Jun. 26, 2009 - 73 Worth Street closes by biting a very large bullet in one bite

did I say "large"?
I wish I had a transcript for the negotiating that resulted in the June 12 closing of the Manhattan loft #4B at 73 Worth Street. The 'simple' facts are that it had been asking $3.2mm and the deal was done well south, at $2.69mm. $510,000, or 16% -- that's a pretty big gulp.

how big was that gulp? into the way-back machine
Here's another way to measure how big that hit was for these sellers: the June 2009 clearing price was 7% below their purchase price way back in August 2005. ($2,905,250 -- with that funny number, there must have been an interesting negotiation that time, as well.)

no sales since 2005??
According to the building page on StreetEasy (here) there have been no sales in this building since 2005 -- not for lack of trying. In fact, this very same loft was offered for sale for the summer of 2007 for $3.5mm before taking a year off the market and coming back in September 2008 at that same $3.5mm. That return to market was immediately before Lehman fizzled, so it was no surprise that the price that did not work in September 2007 was again not working in September 2008. It took these sellers four months to adjust that price (to $3.2mm) and then another 3 months to sign a contract.

As I said up top, negotiating 16% off the (reduced) price -- to a point well below the 2005 value -- must not have been easy (and it probably took a few weeks). Props to the sellers for proving that yes, they really did want to sell.

impact?
Check the building page on StreetEasy (here) to see whether (how) any currently available listings are adjusting to this news.




© Sandy Mattingly 2009


 

Jun. 25, 2009 - why would you do that? flipping (trying) at 25% over February 2009

head-scratching ensues
There's a Manhattan loft new to market in a building that has had a fair amount of activity in the past couple of years. One bit of that activity was this very same loft, selling in February for $1.73mm. When that happened, the loft was a poster child for the changing market -- coming to market at $2.275mm at the peak, then hanging on (dripping down; 3 price drops) through the dog days of Lehman, into 2009.

So it is back on the market at ... Old Price #2. The exact price it did not sell at from May to September 2008. $200k higher than the price it did not sell at from September into November. $300k more than the price that generated a sale at $1.73mm. I am scratching so much my head hurts.

Why would you do that???


 

Jun. 23, 2009 - "gotta sell" at 315 West 36 Street, so dropped 40% -- and sold

seven figures of motivation
The Manhattan loft #12C at 315 West 36 Street was marketed with some urgency, some big price drops, and all caps (I have taken that annoying formatting off): "major price drop, must sell immediately!!!". Darned if they didn't do it (not "immediately", but they did it).

long downward trail
They started trying to sell this newly renovated loft ("designed from the ground up in 2008"; "from the ground up" on the 12th floor??) in May 2008 asking $2.65mm for "1,658 sq ft" that "architecturally speaking ... is a masterpiece". You can't say they weren't paying attention, as they dropped $300k right after Labor Day (after the Fall of the House of Lehman), then another $110k 5 weeks later. They changed firms around Thanksgiving, with a new price of $1.98mm.

That didn't work, either, so they pulled out the ALL CAPS and exclamation points when they crossed the $1,000/ft threshold with the March 6 price of $1.595mm and the "must sell immediately!!!" come-on. That ploy worked, though it took until May 13 to find thecontract that closed last week (June 15) at $1.439mm -- 10% off the last asking price and a round 40% off from where they started a year earlier. That is 40% as the crow calculates, but also $1,211,000 off that original ask.

long time getting started
This building was converted to white-box residential lofts in 2003 but this one seems to have been left in its original primitive state until this "ground up" renovation in 2008. (It was originally marketed this time around as "[c]ompleted in 2008 from a raw loft space". When purchased new in that not-quite-raw condition in May 2004, the June 2009 seller paid $895k. On a gross basis, they certainly made some money selling in June at $1.439mm after buying in 2004 at $895k and renovating "from the ground up" (that odd phrase really gets to me). Of course, they paid two rounds of transfer taxes and apparently did not even live there after buying it, so the net-net 'profit' is more limited.

That 2004-buyer-turned-seller was an LLC so I wonder what happened. Perhaps partners ran out of money or could not agree on renovation?? Whatever the reason, they carried this thing empty for five years. That will eat into profits, as well as generate losses. (Tax write-offs??) Probably not their original plan, however.

nice (long) reno, no?
I think they did a nice job (when they finally got around to ... yes ... indulge me ... renovating from the ground up) with a layout with windows only along one wall. The floor plan is pretty conventional (split bedrooms, open living / dining / whatever area in the middle), but the cool thing (for me, YMMV) is the glass (bedroom) walls that go opaque at the touch of a button. I doubt that the opacity-on-command helps sound insulation much, but it must surely look terrific.

 

Jun. 22, 2009 - biting a big bullet in little pieces / 9 Murray closes off 40%

price of "canvass" has plummeted
The Manhattan loft 5SE at 9 Murray Street was presented to the market in August 2008 (just before Lehman) with grand ambitions and evident motivation: starting at $1.9mm on August 16, 2008; dropped to $1.8mm in five weeks (and to $1,799,999 -- just for fun, I assume -- soon thereafter); then to $1.6mm within another 4 weeks; then to $1.5mm in 2 weeks; then (exhausted, no doubt) to $1.4mm after another 3 months, which generated a contract within 6 weeks. That contract closed on May 29 at $1.15mm.

That's 9 months on market, with 4 price drops of more than one dollar, to clear at 60% of the original asking price.

The "2,084 sq ft" loft was marketed as a bring-your-architect special with "divine" light. Nearly square, having windows on only one side is a severe limitation to any layout having real "bedrooms" (i.e., with windows), no matter how divine the light.

reasonable, just wrong
Hindsight is terribly clear that this loft never had a chance, even starting at $950/ft. (It overlapped from January into May with a high-floor neighbor asking about $1,200/ft [and then about $1,100/ft] for a "delightful" renovation with city, sky and river views -- that one came off the market without finding a buyer.) But when it started, it did not appear to be unreasonable, as another "canvass" cleared in January 2007 at just under $1,000/ft. Unit 8NE was another gut job ("Calling all creatives. Blank canvas to change."), though perhaps with slightly better light and city views. At "2,254 sq ft", it found a full price deal within 2 months in late 2006, closing in January 2007 at $2mm.

While the #5SE sellers relied on that 2007 sale in setting their asking price, they hardly sat on that price when it didn't work -- with four $100k price drops after 5 weeks, then 4 weeks, then 2 weeks, then 3 months. Having cut-cut-cut, they were still flexible enough to negotiate another 23% off their last asking price.

funny little "Tribeca" corner
I get it that this block is "Tribeca", but it is a very different Tribeca than the rest. The street level retail is vastly different from most of Tribeca-proper and the "T" intersection into Broadway at City Hall Park orients this block more to that park than to the river. Subway access is nearby and myriad, but a lot of charm has been lost in the translation. So it is priced accordingly.

funky condo development
This building looks to have been converted only in 2000. Judging from the 1 bathroom layout of #5SE (and of other units), it must have been sold as white boxes, and several people left them in that form (at least as far as plumbing). The lower 4 floors are commercial and the upper residential floors have varying layouts -- with 3, 4 or 2 units per floor and no two floors exactly alike. Makes me wonder if it evolved from residential rentals....

Prior pricing here reflects non-prime Tribeca values, with a typically powerful roof terrace premium: a no-detail-overlooked renovation sold around $1,150/ft in June 2008 (#8W) and (an even better renovation?) closed that same June around $1,300/ft (#8E; no listing info), while a "2,000 sq ft" penthouse with terrace sold for $4.85mm in September 2008 (#12SW) -- just a few weeks after #5SE came to market at $950/ft.

 

Jun. 20, 2009 - developer haircuts at 15 East 26 Street, 333 West 14 Street, 50 West 15 Street + 246 West 17 Street

taking the money and running
In looking at recent loft sales, I came across these five cases (in four buildings) in which a Manhattan loft developer took a pretty good discount from the last asking price to close a deal. In one case*, it is the first closing in the building; in the others, these are close to the last. Just for fun, I have also included the original asking prices for these lofts.

 

That is a lot of clipping.

Jun. 19, 2009 - power of a coop board to reject a deal as "too low"??

protecting shareholders from market value???
The Real Deal on-line June 16 flagged an interesting little item in a relatively obscure periodical that is mostly read (if at all) by Manhattan coop and condo boards, Habitat Magazine. With a tip of the hat toTRD and apologies to Carol Ott, the article is online here. It touches on the (undeniable) power of coop boards to approve or reject purchase applications, but in the specific context of whether the coop board can or should decide based on the contract price. This is one of those back-in-the-day topics, where Manhattan real estate veterans might regale (bore) newbies in (say) 2006 with stories about the Bad Old Days (early 1990s) when coop and condo prices in Manhattan were at best stinky and stagnant. Things go 'round and 'round....

Habitat found an actual Manhattan coop board president faced with an actual dilemma and a 7-member board split 3-3 (pending the president's vote) on whether to approve or disapprove a purchase. In broad terms, there was a shareholder with a contract to sell, who had been trying for quite a while to sell, and who presented a contract for approval at a price that some board members felt was "too low". The board clearly has a fiduciary obligation to act to protect "shareholders", but that duty -- simple to state -- is not so easily applied.

the law is a ass
Apparently there is court precedent in the Bronx and Manhattan that is different from the court precedent in Queens and Brooklyn. A lawyer described the decision pertaining to Queens and Brooklyn as "to turn somebody down because his price is too low is an unreasonable interference with a shareholder's ability to sell his apartment", while the one covering Manhattan and The Bronx "said that it's not unreasonable because a board was within its rights in making decisions in the best interests of the building". As one sighing lawyer said, in turning on-the-one-hand-on-the-other-hand to the other hand: "you do have an obligation to protect the property value for the rest of the people." Neither decision is controlling (they must have been by low level courts), but I am less interested in the legality per se than in the stupidity.

coop boards protect value like Canute protected beaches
Having been a coop board president in a small Manhattan loft building for ten years, I can't think of any other 'reason' for the board to reject a deal because of price than that articulated by the sighing lawyer: the board absolutely has "an obligation to protect the property value for the rest of the people." My considered judgment is that the solution (rejecting a shareholder's application to sell and get out because remaining shareholders will be struck with a bad comp) has nothing to do with the purported problem (fear that units will be worth less after the sale than before it); even putting aside for the moment the harm the board would do to one specific shareholder and the risk that other shareholders will be left dealing with a fellow shareholder who may be financially strapped (after all, is selling at a 'distress' price) and will be emotionally pissed.

In the case of the president about to cast a deciding vote, the shareholder had been in the marketplace for quite a while and found exactly one buyer, at the best price the seller could negotiate. Whether the board wanted to keep it secret or not, that contract price was the value for that coop at that time (if it was really worth more, someone else would have paid more, no?). A board who decides that this is a bad comp and wants to protect other shareholders would reject the deal not to protect value, but to protect a secret: the secret that one unit was worth 'only' $X. In a world in which information was available (e.g., if an appraiser -- such as the one probably involved -- knew the deal had been rejected), the lending community (at least) would use that deal in assessing value (in this case, probably as a ceiling).

For a board to insist that market value contracts will not be approved actually says this about units in the building: they have no value because they are unsaleable; any price that is low enough for The Market to accept is too low for us to approve.

So I think that the best argument in favor a board rejecting a deal on the basis of price is that they think that other shareholders benefit from keeping this arm's-length transaction a secret. So I think that this (best) argument is stupid.

practical consequences
As noted, a board rejection will likely render units in this coop illiquid until The Market shifts. But at that point the utility of a 'bad comp' is limited by the then-current (improved) market conditions. But what else will happen if the board rejects that deal?

One shareholder is very definitely screwed -- nothing conjectural about that. And -- if that shareholder is less financially responsible than the rejected buyer -- the coop may be screwed as well, if that shareholder can't afford the maintenance, or can't contribute to an assessment for needed building improvements. Not to mention that the social fabric of the building may be at risk from a severely screwed shareholder's interaction with the board and other shareholders.

If the board approves the sale, they trade one shareholder for another and they acknowledge (not set, acknowledge) that The Market value of their coops has declined. People may not be happy with the facts, but they at least know that if they need to sell, the board will not interfere with The Market. Isn't that likely to be a happier building than one in which people feel locked in, perhaps desperate?

If the lower court decision taking the contrary view were readily available I would be curious enough to read it, but I cannot imagine that there is any better 'analysis' than is presented here. The only conceivable reason for a board to reject a deal because the price is 'too low' is to protect other shareholders from the facts in the marketplace, notwithstanding the actual (potentially huge) harm done to one shareholder and the potential harm to the coop from losing the opportunity to trade a weak shareholder for a stronger shareholder.

I don't mean to pick on coop boards, just on stupid coop boards. I have talked before about coop board authority, and public commentary or analysis of that authority, so this post joins a list. (By the way, that actual Manhattan coop board president in the Habitat article faced with an actual dilemma and a 7-member board split 3-3 [pending the president's vote] on whether to approve or disapprove the purchase did the right thing: that board voted 4-3 to approve the deal.)  See my other posts about coop boards:

Nov 21, 2008: picking on coop boards but in need of editing (NY Post) (about a crappy NY Post article and coop boards tightening standards in a changed market)
March 16, 2008: coop boards behaving badly / 32 Gramercy Park South edition (about a coop board lawsuit over a shareholder's holiday decorations)
May 29, 2007: advantages to the much-maligned coop ownership, vs. condos (about one advantage of coops compered to condos -- the ability of aboard to deal with misbehaving owners)
Feb 9, 2007: coop boards behaving badly / can you imagine? (about ways in which some coop boards do bad things, sometimes)

then, vs. now
Back in the day, this low-price-dilemma was last an interesting topic but in a very different world. (In my loft coop, shareholders who bought in the late 1980s were under water for 5 to 7 years; in which time there were few transactions, but there were some.) That was a world in which coop prices were still (largely) secrets -- known only to those in the know and not publicly available anywhere. The power of a negative comp probably had more of a bogeyman aspect, and boards could more legitimately think about keeping secrets. But those days are long gone....

The Market is The Market, is The Market. Coop boards have no positive effect on market value, but they can make units unsaleable (or, to reduce the actual value of unit) by rejecting deals for reasons having nothing to do with the financial qualifications of the buyer. If they want to increase shareholder value, they should run a tight building and not do things that have little benefit but make it more difficult to sell (such as making open houses difficult or impossible, or preventing shareholders in dire financial circumstances from sub-letting, or discriminating against buyers who are ... different). End of rant. Resume normal Manhattan Loft Guy reading....
 

Jun. 17, 2009 - 'apartment' or 'loft' / sometimes you just have to laugh

still getting used to the new listing system, but smiling on occasion
My new mantra is if 'change is good', why is transition so hard? I offer that thought as a transition to this nugget in the Corcoran data-base that caught my eye. I am still not sure what The Rules are (there must be some, right?) for classifying "lofts" in the system, but this (internal) history about a downtown condo conversion from early in this century (definitely a "loft", to my Manhattan Loft Guy eyes, due to its prior non-residential use, interior columns and relative scarcity of load-bearing walls) shows a little ... ambivalence:

1/21/2004      Bldg Type: From Apartment to Loft
1/21/2004      Bldg Type: From Loft to Apartment
12/3/2003      Bldg Type: From Apartment to Loft
10/22/2003    Bldg Type: From Loft to Apartment
10/17/2003    Bldg Type: From Apartment to Loft

(grin) At least no one has tried to change it since then....

 

Jun. 16, 2009 - "absolute showplace" at 113 Greene Street in Soho goes for $918/ft (absolutely)

Jun. 15, 2009 - price drop can re-set expectations IF low enough

probably not low enough
There's a Manhattan loft newly returned to market in a brand-name Tribeca building that has been for sale for quite a while. It is now on its third firm and fourth price. It is hard to see that the new firm and new price will have more luck than the last firm and price, as there is not  a huge difference in then-vs-now pricing, but The Market will tell....

how big a change is big enough?
This seller is at least frustrated, and maybe pissed. Here's a bit of price history, then an explanation for the (certain) frustration and (likely) pissedness:

early 2008 asking $4.2mm
Spring 2008 drop to $3.95mm
Summer 2008 asking $3.85mm
(the new price is roughly 6% off the last price)

There is an extremely local and extremely timely comp for the value of this loft, a sale in July 2008 at $4.075mm that took about 10 weeks from offering to close. In other words, that successful sale overlapped with the newly returned to market loft, but was (a) offered at a higher price and (b) closed at a higher price. Hence the (certain) frustration....

thin market leads to inefficiency
Retrospect (bitch that is) establishes that The Market was changing (dropping) in Summer 2008, though some were quicker than others to notice. Manifestly, last Summer there was a buyer for a loft like the one newly returned to market and the one that sold in July. And I mean "a" buyer in the sense of a single buyer, for had there been two buyers, the second one would have bought this newly returned to market loft soon after the other one sold in July, as that sale established a market value above the then-current asking price. But it did nto happen that way.

The new price for the loft newly returned to market is about 15% lower than the original asking price, and more than 10% below that July 2008 clearing price. Unfortunately for this frustrated seller, they stayed on The Market long enough after the July sale below that July sale price to confirm that $4.075mm no longer represented The Market Value for this loft. Eight months later, the sellers are left with the difficult task of setting a new price to attract buyers in the current market. If the old price did not work (it didn't), it is hard for me to see that a price 6% less 8 months later will work.

This whole scenario is similar to the dueling neighbors at 144 West 18 Street that I hit on June 11, neighborly competition / laggard at 144 West 18 Street closes off 15% since December. One of those neighbors got 'the' buyer for the building (as in, the single buyer), selling at $1.675mm in December to a buyer who signed a contract in October; the other got stuck with a buyer who closed at $1.425mm on June 2, after signing a contract in April. In other words, more evidence that a thin market is very dangerous for sellers and that even contemporaneous sales in the same building can be distracting comps.

In the case of the newly-returned-to-market-in-Tribeca loft, I think The Market expects more of a change over 8 months than 6% -- the July 2008 sale be damned. Perhaps the new price will attract a (in a former lexicon) low-ball offer that the old price did not. Seems unlikely to me.

Please note that this is not fair. In a rational (efficient) world, this unit would have sold when the other one did. But it didn't. Sucks for them.

 

Jun. 12, 2009 - opportunity knocked at 60 West 15 St for $828/ft (and more), answered at $622/ft

the incredible vying architects + designers
The Manhattan loft on the 4th floor at 60 West 15 Street was marketed as a masterpiece (to be), with the interesting come-on that "architects and designers are vying to renovate" it. At "3,133 sq ft", there's a lot of work for those architect and designers to do. The raw materials include three exposures, columns, brick and high ceilings.

Jun. 11, 2009 - neighborly competition / laggard at 144 West 18 Street closes off 15% since December

first one to $1.7mm wins
Two Manhattan lofts at 144 West 18 Street (known, not poetically, as the Chainworks Building) closed 6 months apart. You won't be surprised to learn that the one that closed 6 months ago (#4N) closed higher than the one that closed last month (#3N), though I was surprised by the degree of fall-off. (I bet the June 2009 seller was really surprised.) Their remarkably similar tales demonstrate -- again -- the dangers (to sellers) posed by a thin market.

Both are "1,363 sq ft" and appear to be in very similar condition (unsurprising for a 2003 conversion). #4N did not brag about a lot: a "spa-like" master bath and a "spacious well laid out kitchen" is the extent of the puffery. #3N was similarly restrained: "a sleek, contemporary Arclinea kitchen and richly outfitted bathrooms".

very neighborly, very competitive (one 'won' easily)
The parallel histories to these two essentially identical Manhattan lofts are striking.
 

I have no information about the actual discussions that occurred between buyers and sellers, or between sellers and their agents, of course, but the basic facts scream out very different public positions for #4N and #3N. The #4N sellers challenged The Market to distinguish between the two units by starting at the same price as #3N 3 weeks after #3N had first been offered. After determining that The Market reaction to these two units at $19mm was "(yawn)", the #4N sellers then told The Market that they were serious sellers, by dropping $100k in 3 weeks and another $100k in another 4 weeks. They were rewarded with a contract in another month, for which they were able to hold very close to their last asking price.

The #3N sellers, in very stark contrast, were principled, or firm, or persistent, or stubborn, or hard-headed (add your favorite description here: ____). For which The Market hammered them. It took the #3N sellers two weeks after #4N went to contract off $1.7mm for the #3N sellers to drop the price at all, which they did by only $100k. (Stop the narrative here for a minute .... If The Market valued these two lofts at $1.675mm as of October 17, 2008 [as is proven by the contract for #4N], then it is reasonable for the #3N sellers to predict that they could attract a buyer willing to pay $1.675mm by offering #3N at $1.8mm. That is, this prediction is reasonable if and only if The Market is sufficiently liquid.)

how a reasonable prediction turned out to be wrong
This prediction (reasonable under certain circumstances) was wrong. It is obvious that no buyer appeared who was wiling to negotiate to pay anywhere near $1.675mm for #3N. Even after #4N closed on December 3, it took the #3N sellers another 2 weeks to drop -- and then only to the last #4N asking price. Again they were principled, or firm, or persistent, or stubborn, or hard-headed (add your favorite description here: ____), taking 2 more months to accept that they were reasonable-but-wrong, by dropping to $1.55mm. And that price drop took still 2 more months to generate the contract that closed last week at $1.425mm -- 15% off their upstairs (former) neighbors in #4N, who came to market 3 weeks after they did but who moved out 6 months before they did. (And those neighbors moved out a quarter of a million dollars ahead.)

It is difficult to imagine a better set of circumstances to illustrate how dangerous a thin market is to sellers: identical lofts, starting at identical prices, with the early bird getting the only worm out there.

comp value???
Going forward, how does one value another loft for which these two are good comps? Does this history prove that The Market for 6 year old lofts under 1,400 sq ft in southeast Chelsea dropped 15% in the first six months of 2009? I tend to think not, but that The Market over-reacted by punishing #3N so much for being so ... (you remember) principled, or firm, or persistent, or stubborn, or hard-headed.

But the only way to tell what The Market thinks is to see what The Market does....



© Sandy Mattingly 2009

Jun. 10, 2009 - getting out of the Zinc with some of shirt, as 475 Greenwich flips

not much fun, or profit
The Manhattan "loft" #3A in the new building dubbed Zinc, 475 Greenwich Street (love the Tribeca pix and Talking Heads on the building's website), sold in the first offering for $2.45mm and was immediately (10 days; they had to do some paperwork) put back on the market for $2.895mm. That did not work out too well....

The building is obviously brand new. This unit is "1,862 sq ft", set up as 3 bedrooms with the WOW of river views because of the angled streets at this edge of Tribeca.

is that handwriting on the wall?
They held at $2.895mm for 3 months, until -- after Lehman -- dropping to $2.425mm in October. When that drop -- below the July purchase price -- did not work either, they dropped again to $2.35mm in November. And sat.

And sat.

That price finally attracted a buyer and a contract in February, closing on May 14 at the uneven even number of $2,112,500. (Whenever I see a 7 figure purchase price that is hard to shorten I imagine someone just throwing up their hands, as in: all right dammit, here's another $500 but that's all I will move.) That's 14% off the July 2008 purchase price (which looks like a February 2007 contract), for sellers who (probably) had to pay transfer taxes on the way in and out. But, they did get out....
 

Jun. 9, 2009 - ending up where they started / $4mm closing at 99 Jane

head scratching in a thin market
The Market just proved that the Manhattan loft #10A at 99 Jane Street is worth $4mm, as that is the clearing price just now publicly available from the May 30 closing. That strikes me as at least a bit odd, as this loft started to market a year ago at that exact price but did not find a contract until April 25, 2009 -- after changing firms (once) and prices (twice; both above $4mm). You'd think (at least, Manhattan Loft Guy'd think) that with someone willing to pay $4mm in April 2009, either that someone or a different someone would have been wiling to pay $4mm earlier, and would have persevered through higher asking prices of $4.495mm and $4.3mm. Perhaps another example of The Market being rather inefficient....

ooh-la-la views
This "1,920 sq ft" high-floor loft has a long wall of windows west (with "panoramic river and city views" and "streaming sunlight and magical sunsets") and a south-facing terrace. The building is only ten years old, so I take the description of "pristine" condition as being original-but-luxe. The plus factor for this loft is the view outside those windows (secondarily, the 10 x 35 ft terrace). So why didn't it sell last year for this year's price?

dangerous, but fun, speculation
The history of a neighbor suggests (only a theory here) that the June 2008 $4mm seller stiffened, and would not have accepted only $4mm last year. The hard evidence for this supposition is that they raised the price in July 2008 to $4.495mm. The intriguing fact here is that the neighbor in #9C rocketed through The Market last June at that same $4.495mm (on the market June 6, 2008; in contract June 20, 2008; cleared on July 10, 2008 -- I said rocketed through The Market -- at full ask).

In comparison, #10A came to market the day before #9C last June, and it is unlikely to be a coincidence that the #10C sellers raised the price to exactly #9C's clearing price 4 days after #9C closed. In an efficient market, #10A figured to command a similar value to #9C, off-setting the larger terrace of #9C (821 sq ft) and possibly higher level of finishes against the river views of #10A. This was not an unreasonable view in July 2008. Except that The Market, even then, had changed and was decidedly more thin than it had been.

My supposition is that the #10A sellers were swayed by the #9C sale and stiffened their resolve enough to prevent a sale at their original asking price of $4mm. Alternatively, there was just one buyer for 99 Jane Street lofts in the $4mm to $5mm range last Summer, and #9C found that buyer.

Fascinating, no? If only as an illustration of how The Market can work, even if not precisely descriptive of the #10A sellers state of mind.

One wonders whether it was the sellers or the agent who decided in July 2008 that #10A was worth more than the original $4mm ask. One wonders about the conversations in which the former agents were not given an extended listing when the listing expired in December at $4.495mm, and how the new asking price in March 2009 of $4.3mm was divined with the new agents. One wonders how relieved the sellers were to end up in contract within 6 weeks of coming back to market (I assume, very relieved).

other neighborly ruminations
Turns out there were two $4mm+ buyers for 99 Jane Street, but maybe only one in 2008 and (so far) only one in 2009. This much I know: a thin market is a dangerous market for sellers.

All in all, I wonder how distracting it was for the #10A sellers (remember, they started as if they'd be happy at $4mm) to see what happened to #9C at $4.495mm. Sometimes neighborly competition gets in the way, even if it provides (what used to be considered) a wonderful + nearby + recent comp:

April 17, break away to win the neighborly competition / so many lofts, so many dollars ... but no sales (yet)
January 7, are they fooling only each other? / 3 neighbors push, 1 smiles
December 12, more unintended consequences in petri dish of Tribeca neighbors
December 7, selling the neighbor's loft / unintended consequences in a Tribeca petri dish?
November 30, neighborly competition leads to neighborly mistakes? the laboratory at 24 East 22 Street
 

Jun. 8, 2009 - new listing + sales data OH NOES / (over) optimism stopped by Dreaded Data Discontinuity

can this data set be saved?
In my announcement that Manhattan Loft Guy (the guy, not the blog) has found a new home at Corcoran (June 4, ch ch ch changes ... the Guy moves to Corcoran in Soho) I offered very optimistically that I did not think there would be much impact on the data reporting in MLG from the move from an OLR-based system to Corcoran's TAXI:
 

Gulp .... I need to ask some questions at The New Firm, but as of now it appears that

"loft" category is much smaller than

(as I got only 4 new listings and less than 600 lofts in inventory) and that I cannot (easily? at all??) count loft sales for the last 7 days. If true, there will be

continuity (comparability) in my sets of weekly Manhattan loft new listings, closed sales and inventory

and CE (that is Before Corcoran Era and Corcoran Era, of course). The drawing board may await.

.

Stay tuned ....

Jun. 5, 2009 - 4 months to close, 4 years to zero out at 260 West Broadway

threading the needle to a quick sale, through the Way Back Machine
The Manhattan loft #5G at 260 West Broadway (the American Thread Building) slid through The Market this year, starting on January 8 and finishing on May 6. (Not as fast as the ten week close at 155 Hudson Street that I hit on May 28, but almost as quick as the 15 weeks to close at 644 Broadway that I hit for the second time on May 29, but PDQ for this market.)  I'd say they were well-priced for this market. I'd also say they were ready to deal ....

I have been waiting for the clearing price to hit public records since I noticed it as Sold & Closed 4 weeks ago (my original draft said "I'd say they were well-priced for this market"); it finally hit this week (leading me to add "I'd also say they were ready to deal" to that draft). The clearing price of $1.29mm is a healthy 19% off the asking price, and an anemic $35,000 lower than the price this May 2009 seller paid when buying in March 2005.

I would say that the low price has to do with the new-ish hotel blocking most of the north views (and probably light) on the 5th floor, except that #4G sold in July 2007 quickly (7 weeks to contract) for much more than #5G just did (#4G cleared at $1.775mm). So, I guess it was The Market (same old, same old). I have absolutely no idea what to make of the transfer of #9G in March 2008 at $2.3mm -- a price per foot that is radically higher than any other transfer I see in this building; neither StreetEasy nor our data-base has any record of a listing for that unit, and that is a very high price for the north view above the hotel. #9G is a large distraction, even a mystery (but i digress) ....

odd numbers
#5G was marketed as "1,500 sq ft", but #4G was marketed in 2007 as "1,450 sq ft" and #8G was marketed in 2004 as "1,400 sq ft". I believe that the condo's floor plan in the inter-firm data base from the Select Registry is taken from the official floor plan in the condo declaration; the "G" line is there said to be "1,420 sq ft" on floors 4 through 10. City records (per StreetEasy) shows this unit as "1,334 sq ft". Why oh why can't they get that right?

quirky numbers
Taxes and common charges for #5G in 2009 were $685/mo and $948/mo, respectively. Monthlies for #4G in 2007 were $766 and $1,312 (I wonder if that common charge included an assessment for the elevator replacement project); while way back in 2004, the monthlies for #8G were $663 and $975 (essentially the same as #5G this year). Assuming the numbers in the listings were correct (counting on agents is ... errr ... problematic), it appears that taxes went up and down in the last five years in this line, and that common charges (assessments aside) have been flat. That's roughly $1,600/mo for a "1,420 sq ft" condo with a doorman, common roof deck, and (pretty spartan) fitness room -- a relative bargain.

Props to the #5G sellers (and to their agent, PruDE's Lisa Sinclair) for biting the bullet in a biting market and doing what it takes for a quick deal.


© Sandy Mattingly 2009

- 'nuff said