All in all, this was a very successful marketing campaign that took longer than average to get to contract (almost 6 months) despite taking a lager than average discount off the asking price (11%).
the definition of 'successful' marketing
I characterize this as very successful because -- in my judgment -- they stretched significantly in their pricing and closed above where the comps and building stats indicated the range of values.
Data like these make the Manhattan loft market so interesting and -- to me -- so very different from the "apartment" market. Yes, all real estate is "unique", but scarcity drives value. In this case, the buyer obviously determined that this specific loft represented value for him/her at levels not implied by the comps or past building sales.
(Note that I am
not saying that this buyer overpaid. Since I assume that no guns were involved in the negotiation, this buyer paid no more than s/he was willing to pay and no less than he seller was willing
to accept. The 'fact' that other market data implies a lower valuation means only that they'd have had trouble financing a 'standard' mortgage.)
a lofty conundrum
As I noted in my September 23 post, the last sale in the building was "
the much smaller #6S ("1,300 sq ft" which is charming, but not very bright, and in serious need of updating, even though designed by an award-winning architect (I have seen it; funky rather than spacious). It sold fairly quickly in May for $1.25mm (above the $1.195mm asking price). That's under $1,000/ft for the mathematically challenged."
Two years ago the other loft on the top floor sold. "
The last sale before that one was #9N, which sold in February 2006 (and went to contract in two weeks). City records don't show that closed price, but the ask was $1.85mm for "1,700 sq ft" described (modestly?) as having "brilliant light and towering city views" and "intelligent room coordination, design and fine fixtures". Not a premium description like that for its neighbor on the 9th floor, but one could do a lot of renovation in 9N's 1,700 sq ft before getting close to $1,600/ft all-in". (With a little more digging, I see that the clearing price for #9N was [a heavily negotiated] $1,792,500; less than $1,100/ft and about $400/ft lower than #9S traded for.)
I scratched my head in September, searching for the plus factor for #9S.
For buyers to pay the primo premium asked for 9S, there's gotta be something special about it. The other sales in the building indicate that location is not the plus factor here. The views could be a plus factor, but they appear not to have helped 9N much. The "possible" roof deck should not be a plus, since (a) you'd still have to pay for it, and (b) it is merely possible at this point. (Out door space -- especially private roof space -- can be a significant plus factor, I just don't think this possibility qualifies.) Perhaps it is the finishes and fixtures.
For finishes and fixtures to be the plus factor driving an atypically high price, they have to overcome the buyer's mental math how much would it cost me to build out my dream loft? and it has to match the buyer's tastes. So the market of really interested buyers shrinks as the finishes and fixtures become more (personally) stylish. The seller wants a buyer whose taste exactly matches theirs, or else the buyer won't be willing to pay a premium.
Time will, of course, tell.
points, general and specific
My general point here is that the truism that The Market Is Determined By The Decisions Of Individual Buyers And Individual Sellers generates -- in my opinion -- more variation for lofts than for "apartments". Perhaps because there are so many more "apartments" than lofts in Manhattan, an "apartment" buyer is more likely to have more directlycomparable choices of units in similar locations, of similar size, in similar condition. Thus, the general market should be more 'efficient'.
My specific point is that this loft closed above where it could have been expected to (by me, at least), taking into
consideration its location ( a great Chelsea block, yes, but one that did not generate a premium for #9N or #6S), condition (is that renovation worth $400/ft over #9N? or even more over #6S?) and thepossibility of paying an additional and unknown amount for roof rights.
The Market is The Market is ...Whatever I think, this buyer and this seller established The Market Price for #9S at $1,450/ft. Props to the LaChance team at Corcoran. Best wishes to the buyer for a long enjoyable life in the loft.
Hate to sound like a snob, but cookie cutters can be easier to value than "unique" lofts.
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