Jul. 28, 2009 - didn't build it, but they came to 21 Bond Street at $692/ft
seek and ye shall find
Yesterday's post, if you don't build it will they come? buy + build opportunity, posited that $830/ft was not likely to get a deal done for a Manhattan loft that needed a build-out because other 'finished' lofts had sold (or not) at or around the current offering price. I closed that post with "I will have to find another buy-and-build to track to really test this limitation...." and did not have to look hard or long for another loft that better tests the degree to which selling a loft that needs a lot of work cuts into The Market enough to be a problem.
The Manhattan loft #3 at 21 Bond Street was sold this month (July 17, deed filed last Friday) as an artists's live/work loft in "bring your imagination" condition (no interior pix), and suggests that the limitation of a buyer needing 'extra' cash to fund a renovation -- like many -- can be "solved" by fans of Bill Cullen. For you folks too young to get that reference, that solution is The Price Is Right. At "2,400 sq ft", the clearing price of $1.66mm is (only) $692/ft and a mild 5% off the asking price of $1.75mm. The campaign was quick, as well as efficient, as this unit was first shown on April 8 and found a contract as of May 13. PDQ, indeed.
if greed is good, prudence is better
In the mental math Olympics that sellers have to play, figuring your buyer will have to shell out $200/ft to fill out your shell of a loft is a prudent way to assess value. If these sellers were at those Olympics, they were estimating a post-build value of around $900/ft for their not-yet-built-out loft.
The neighbors next door at 19 Bond Street found out -- much to their dismay, no doubt -- that The Market for a loft sold with the come-on of "potential" in this micro-nabe ("open square layout is very functional and has tremendous potential ") had dropped 14% in a year, in their case to about $1,000/ft. I hit that loft and its May 2009 and April 2008 clearing prices, #2 at 19 Bond Street, on May 22 in perfectly bad timing for 19 Bond Street to flip. (We show that loft as "1,400 sq ft", though it has been listed at different sizes, as you will see, but "1,400 sq ft" yields just over $1,000/ft for the April 1 clearing price of $1.457mm.)
The neighbors just down the street at 1 Bond Street #2D also found a clearing price around $1,000/ft, but their smaller loft ("1,205 sq ft") was "impeccably designed" and nine-times published when it sold in April at $1.195mm after what must have been a frustrating marketing campaign. That small-but-impeccable loft had been offered in September at $1.75mm (just after the Lehman hit the fan) and suffered 3 price drops and a 14% discount from the last price.
the ambiguity of $1,000/ft on this block
The two April 2009 sales at 1 Bond Street and at 19 Bond Street at around $1,000/ft posed a bit of a challenge to the sellers of 21 Bond Street #3 when they came to market. As noted above, one infers that their mental math Olympic calculations back out to an implied market value for their buy-and-build loft of around $900/ft if renovation costs were $200/ft. The disappointed neighbors at 19 Bond Street #2 did better than that for a loft sold with an appeal to imagination, while the disappointed neighbors at 1 Bond Street #2D did better than that, but they sold a magazine-worthy loft. It may be that the corner-of-Broadway location of 1 Bond Street deserves a market discount that the mid-block buildings at 19 Bond and 21 Bond don't get (a careful reader of StreetEasy might get that impression about 1 Bond Street). Presumably, the 21 Bond Street #3 sellers had these considerations in mind when they started selling in April.
Prudence, meet Bill
With 21 Bond Street #3 clearing quickly off an asking price of $730/ft, it is clear that these sellers made the right call. Asking $1.75mm for "2,400 sq ft" allowed room for renovation costs and generated a very quick contract and closing at $692/ft.
In other words, the 21 Bond Street #3 sellers were prudent, Bill Cullen is a useful icon for Manhattan real estate even in this market, and the need to renovate a loft is a limitation in the current market -- but a limitation that is manageable through prudence. (At least, it was in this instance.) I will keep an eye out for other examples of how this need-to-renovate plays out, though I don't expect to find another one tomorrow.
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