Dec. 24, 2008 - NY Times highlight 142 Duane St sale, mis-counts weeks, omits land lease info
garbage in, garbage out?
The problem with relying on the NY Times sometimes for accurate information about Manhattan loft sales is that the Times has to rely on (shudder) real estate agents to supply "facts". That can lead to errors and omissions, as they say. Take the sale of #3B at 142 Duane Street reported in this past Sunday's Residential Sales Around The Region. For one thing, it was on the market longer than the 20 weeks reported, whatever theory of counting you use; plus (if our listing data base is correct) you'd never know from the Times (or from the listing agent descriptions, for that matter) that this coop does not own the land the building sits on.
Here's my quick-and-dirty on this loft, from an open house review I did on January 11 when it was a brand new listing:
$1.95mm and $2,290/mo for “1,650 sq ft” with 14 foot (tin) ceilings; nearly square with only one wall of windows, so flexibility is limited; set up as a 2 bath 1 Bed Wonder, with fireplace and balcony
With a deed dated October 3 (for $1.75mm, as the Times correctly reports), a listing history showing a contract as of July 30 off a (reduced) asking price of $1.895mm (as the Times correctly reports), and an original listing date of January 9 (then asking $1.95mm), I don't see how you get "20 weeks" on the market, as the Times reports (incorrectly, no doubt based on information supplied by one of the agents involved in the sale). From January 9 to July 30 is more like 29 weeks (total time to contract); from the May 27 price drop to July 30 is only 9 weeks (using the Miller Samuel way to count 'days on market').
so what?
A small point, perhaps, this discrepancy about the Times reporting 20 weeks on the market, but it is an example of the risks of relying on agents to provide accurate information (even in the inter-firm data-base). Feh...
not buying an interest in land
It is probably unfair to criticize the Times -- or even the agents -- for not reporting that this coop does not own the land underneath the building. (Assuming that our data-base is correct; see below.) That is typically revealed (to those to whom it would be a surprise) at the offer stage or in negotiations. It would be bad form, as well as counter-productive to a negotiation, to leave this important datum to be discovered only in due diligence.
a nasty rash you've got there
There are not many land lease buildings out there (outside of the unique situation of Battery Park City, nearly all are coops rather than condos) and some lawyers I know will counsel a client to never buy in a land lease building. Here's a colorful attorney quote from a NY Times article from 1998 (the article has an excellent overview of the issues with land leases):
''Owning a co-op with a ground lease is like having a chronic rash,'' .... ''It's not going to kill you, but it's always there and it sure can be irritating.''
A 1987 NY Times article talks about a land lease having more (negative) impact on value in a tough market than in a strong sellers market. (That article estimates that in 1987 there were about 50 coops that did not own the ground, with another 1 or 2 such coops "created each year"; undoubtedly that 'trend' slowed or stopped as fewer coops of nay kind were created in more recent years.)
looks like a land lease
If I am reading the city property records correctly, this document from 1999 (when the coop was created) is a sponsor-entity assignment of its interest in a lease including the land under 142 Duane Street to the new coop corporation. I may have missed it, but I don't see any records indicating that that lease has been sold to the coop or otherwise abrogated.
another sorta recent sale in the building
#4A closed in this coop about 2 weeks before this one. That one was on a faster track than #3B: it came to market May 21 at $2.35mm and found a contract just before #3B did (July 19). Interesting that the clearing price for #4A of $2.15mm was nearly exactly the mid-point between the asking price and the sale price in August 2005 ($1.955mm; a slight premium over the then-asking price). That one was said to be "2,000 sq ft" of "Old World detail [that] meets seamless Modern Luxury". (THX StreetEasy; here.)
one happier neighbor?
Both sellers should be happy they sailed through the sales process, of course. But with #3B getting $1,060/ft at pretty much exactly the same time that #4A got $1,175/ft, OOPS one Manhattan loft seller is just a little bit happier than the other.
[update 1.6.09, after noting my simple + obvious math error above:
2 happy neighbors, 1 efficient market
Both sellers should be happy they sailed through the sales process, of course. And with #3B getting $1,060/ft at pretty much exactly the same time that #4A got $1,075/ft, these two Manhattan loft sellers should be just about as happy as each other. With a spread of only $15/ft between the two clearing prices, these near-contemporaneous transactions imply a remarkably efficient market.
(what a difference correct math makes)]
© Sandy Mattingly 2008
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