Aug. 25, 2009 - did 525 Broome Street get value for the 2008 renovation?
paired sale shows apparent gain over 2008
The major improvement to the Manhattan loft sales data I aggregated into a Google Docs spreadsheet and posted (as MLG #1,000 on August 23) (click here to access it in the cloud) is that I have past sales data for those lofts that were recently sold and that were bought by those recent sellers sometime in the last five years. Indeed, there are 82 such paired sales in my 229 loft resale data set.
from "open canvass" to "painstakingly renovated"
When the Manhattan loft #3 at 525 Broome Street sold in June 2008 it was billed as an "open canvass" with "infinite potential". This "2,100 sq ft" loft had been in live/work space (in the delightfully named American Nut & Screw Building) with 11 foot ceilings, steel beams and columns, maple floors, a fireplace, big windows, maple floors ... and all that potential. It was on the market from July 2007 to January 2008 (in retrospect, the height of the market) but at the wrong price ($2.59mm). When it came back to market in March 2008 it was at the right price ($2.35mm), as that price generated a contract in 18 days (at $2.15mm).
quick work
The June 19, 2008 buyer wasted no time in filling out that canvass, as it was back on the market barely 3 months later (September 25) at the pre-Lehman-price-in-a-post-Lehman-world of (feel the burn) $3.45mm. I hope that price was not a reflection of the cost of the 90 day renovation, as The Market battered the asking price to $2.95mm (November), $2.75mm (December), and finally to $2.59mm in April, which generated the contract in June that closed on July 31 -- at $2.35mm. (Ooooohhh, that burn!)
It is difficult to assess the level of finishes in this painstaking-but-90-day renovation, as the listing description lacks proper proper names and is relatively lacking in detail description of, for example, the "beautiful bathrooms" or the "custom design features". Using the $200/ft ballpark figure, that's approximately $450k in renovation costs to put on top of the $2,15mm purchase when measuring how this flip worked out.
the temptation to over-shoot on price
From that perspective, it is understandable that they wanted to be aggressive on price in September 2008, even after the Lehman hit the fan. They were already in for about $2.6mm (purchase + renovation) before considering that they paid a 1.925% mortgage recording tax and the 1% mansion tax, that they had to carry the purchase mortgage and the monthlies (did they ever live there?? there's very little furniture apparent in the pix), and that they were due to pay a 5% commission plus the 1.825% in city and state transfer taxes on the sale.
Of course The Market does not care what a seller has to pay, or has paid; The Market only cares about what the seller and buyer can agree upon. In this case, the July 31, 2009 buyer of a renovated loft and the June 19, 2008 buyer of a blank canvas agreed that the loft was worth $2.35mm after all the renovation. Net-net, these rough ballpark scribbles suggest they took a bath of about $500k or $600k in 13 months. Ouch.
What looks like a nice (odd) gain from just looking at deeds turns into a painful and sweaty loss. Maybe they bought in June 2008 intending to make it a beautiful home for them for years to come, and then something happened; or maybe they closed then always intending to flip. Eight million stories ....
those feet, odd
Marketed in 2007 at "2,100 sq ft", the flip offered in September 2008 was billed as "approx 2,250 sq ft". StreetEasy uses each figure for each sale. Property Shark, on the other hand, rates this loft at "2,900 sq ft" -- probably assigning it a percentage interest in the condominium's common space since the building is only 40 x 61 ft. With a footprint of 40 x 61 ft, both of the marketing measurements seem within the range of reason, figuring that the elevator and common stair take up from 200 to 350 sq ft. In my spreadsheet, I use "2,250 sq ft" (the number used in the listing that sold recently).
floor oddity
This loft is designated #3 but is on the second floor. (The basement is a separate condo unit and is designated #1.) I bet that confuses people who visit the loft all the time.
noise oddity
I grimaced when seeing that this loft was marketed as being "in quiet Soho", until I realized how far west they are. Since my office now sits along Broome Street I see (and hear) traffic heading toward the Holland Tunnel back up as far back as Broadway. But this loft sits between Sullivan and Thompson Streets, just past the dogleg when tunnel-bound traffic bends left from Broome Street onto Watts. I wonder how easy it is to get in front of this building in a cab at high-traffic times, but I am not surprised that this loft could be quiet.
[update: I realize that I hit this loft twice when it was being sold for it's potential. This March 24, 2008 post notes the price change from the (formerly patient) seller and includes a link to an open house review way back in the frothy days of November 16, 2007.]
© Sandy Mattingly 2009
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