Sep. 24, 2008 - one sobering data point / 684 Broadway loft sells slowly, reluctantly
(9.26.08: my apologies about the hrrible formatting of this post originally; undoubtedly it was human error [fire that guy!])
one small data point for NoHo, how big a fact for broader market??
The Manhattan loft 684 Broadway #7E has been on my radar since it came to market almost a year ago, as I thought (and wrote) then that it looked like a pretty reasonable asking price and I was pretty familiar with the building. Now that it has sold and the clearing price has been posted on city records, it is clear to me that the market for this loft building is flat in the past year-plus. The $64,000 question is what this small fact portends for The Market generally.
first, the facts about this loft
I hit #7E when it was brand new (on October 4, 2007), 684 Broadway has a new one, where reader Larry pointed me to the difference in footprint between #7E and the other "E" line units sold ("2,700 sq ft" vs. "3,100 sq ft"). My original comment placed #7E's then-new price in the context of #5E, which sold as a complete gut job, and #3E, which was 'done' when sold:
Early in the year [2007], #5E (in primitive, needs-a-complete-build-out condition) sold for $2.495mm (a $5,000 discount to the asking price), while #3E was done ("renovated to perfection", in broker-babble; check the pix) and sold for the $3.1mm ask. #7E gets even more of the sky over the low buildings across Great Jones Street. If it is also done, this is a very reasonable asking price.
Allowing for the difference in size (THX again, reader Larry) and in the condition of one, the clearing prices show -- at best -- a flat market since April 2007 to September2008. Allowing for the difference in view and light from the higher floor (which clears the roof line of 680 Broadway to the south across Great Jones Street), this 7th floor clearing price shows a softening market since #9E sold in April 2006.
The agent's description and pix for #7E show that it had at least a comparable level of finishes as #3E (I saw #3E but have never been in #7E). As reflected still in StreetEasy, #7E was described as the "most spectacular designer NoHo loft on the market". #3E closed at $1,000/ft, as requested, which is essentially the same as #5E if the needed renovation of #5E could be done for just under $200/ft (a somewhat risky assumption, with no discount for the time and trouble of a renovation).
trading prices give me pause
While #7E is oddly smaller than other "E" lofts in this building, it's September 4 clearing price is exactly in line with the sales of #5E and #3E even though it sold 17 months later, even though it is almost 50 feet higher than the 'done' #3E and even though it is renovated to at least $600k worth of difference from #5E.
Perhaps more significantly from the perspective of market trends, #7E traded at a lower price per foot this month than #9E cleared at almost 2 and a half years ago. (They were asking $3.675mm for the "3,100 sq ft" of #9E in November 2005, and closed at $3.4mm in April 2006; thx again, StreetEasy.) While the $300k difference between #9E in April 2006 and #3E in April 2007 may be attributable to light, views and (possibly) finishes, one wonders (well, I wonder) why the improved light and views of #7E took so long to do so poorly, compared especially to #3E. I bet the #7E seller and agent wonder also....
optimism, punished?
The market reaction to #7E may be explainable as missing a market, serially. #7E started at $3.25mm in October 2007 -- a price that did not strike me as ridiculous at the time. (Remember that #9E traded at $3.4mm for "3,100 sq ft" in April 2006.) They dropped #7E to $3.05mm after four months (in February), then waited only another 4 weeks to change the (crucial?) first digit, down to $2.995mm. It took almost another 3 months to find a contract off that price, on June 4. As we just learned, that contract price was $2.65mm -- a hefty 10+% discount from that last asking price, and nearly 20% off the original asking price.
Long-to-sell lofts can skew the market, as buyers tend to view mature listings with suspicion. Absent multiple buyers being interested in a mature listing at the same time (as sometimes occurs), mature listings can get hammered. Based on the fact that the #7E seller negotiated to an 11% discount off the last asking price, I have to believe that the seller understood s/he was getting hammered.
what does hindsight cost?
Had they started #7E at $2.65mm in October 2007 I have to believe that they would have gotten that or better. Perhaps significantly better. They didn't, so we'll never know. But what does this say about The Market, going forward?
damned if I know
One of the things about me that my sellers (and buyers, as well) probably hate is that I don't like to make predictions. As I hope you can tell from this blog, I like fact-based analysis (which is why I always pay attention to The Miller, and am amused by agents and RE firm managers who pontificate, as evident from last Friday's post Brown Harris vs Brown Harris / 25% drop in coop value at the top already??).
Based on this one data point, the very-local-to-Broadway-at-Great-Jones-Manhattan-loft-micro-market looks to be flat or worse, year-over-year. I would be very leery of premium-over-last-sale pricing here. And I would certainly look closely in other neighborhoods to test the supposition that The Manhattan Loft Market (overall) has softened. (Not much of a limb to climb out there on, I know, but I will close with tongue partly in cheek by quoting a major Manhattan firm owner quoted in Friday's post in the immediate wake of the Lehman-AIG froth:)
While it is clear that there will be an effect, it would be irresponsible to provide a market forecast and we remain confident in the fundamental strength and resiliency of our market over time.
(Except that I don't like predictions, so any comment I would make about the fundamental strength and resilience of our market over time would have to make it plain that I was talking about over a long period of time....)
What do you think?
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