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September 2006

Sep. 29, 2006 - more limitations of loft living / not so bright on Prince

 
limitations of the Soho style loft
There’s an open house this Sunday (1 – 2:30) at 113 Prince St #4ER offered by Wendy Maitland of Corcoran. It looks like a sweet “Soho style” loft, though I’d put it just outside Soho (the wrong side of Broadway) and it embodies the limitations of Soho lofts.
 
beautiful loft with old + new features
Said to be 1350 sq ft, this newly renovated loft sounds deliciously done (beautiful kitchen, new baths) with 13 ft tin ceilings and original (restored) floors. The ask is $1.595mm (a post-Labor Day price change of $100k) with the typically low maintenance (for a non-doorman building) of $933/mo.
What’s not to like?                                                                   
 
one wall of “light”
Well, the four windows are along the (short) North face, meaning that any second “bedroom” would lack windows. I am pretty sure the building just outside these windows is five stories, so light may be minimal and “view” non-existent – as the listing photos imply (like so many Soho lofts). The “bedroom” has windows, but is open to the rest of the space – which is a great use of space for a single person or couple, but problematic when there are guests or kids.
 
Labor Day pricing
It has been on and off the market since February, starting at $1.695mm. The $100k price change after Labor Day may not be enough to attract fresh buyers.
 
© Sandy Mattingly
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Sep. 28, 2006 - top 6 six-figure Manhattan lofts

 
It surprised me to find as many as six ‘real’ lofts available for under $1 million (in fact, there are more).
 
All are in true loft buildings. All pass my "loft-smell" test.
 
 
$799k
sucking the envelope for how small a loft can be without being a studio, but this 650 sq ft unit is in a true loft building w doorman, it has 14 ft ceilings and huge windows (and “spectacular sunset and Grace Church views)
Miriam Sirota at Corcoran
 
 
$795k
750 sq ft w 12 ft ceilings, exposed brick and “elegantly crafted bath” (doorman) Open House Tuesday 5:30 – 7
Barry Silverman at Halstead
 
 
$870k
1000 sq ft fully renovated (“with incredible taste”) with original woodwork restored, 12 ft ceilings
Tom Doyle at BondNY
 
 
$895k
at 1200 sq ft, the giant in the bunch, with two terraces, 1.5 baths and the possibility of a 2d (interior) BR (part-time doorman) Open House Sunday 12:30 - 2
Gerald Germany at Corcoran
 
 
$899k
975 sq ft with along wall of floor-to-ceiling south-facing windows, with tin ceilings and “rustic columns”
Gabriella Winter and Alex Nicholas at Corcoran
 
 
$915k
1100 sq ft w 12 ft ceilings, “spectacular light and views” (but only 1 “sleeping loft”)
Georgia Asher from Stribling
 
© Sandy Mattingly 2006
 
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Sep. 28, 2006 - Ice House does fly / NY Times residential sales

agent told no lies about 27 North Moore loft

Today’s NY Times report on closed residential sales includes a Manhattan from the Ice House in Tribeca.
TRIBECA $1.995 million
27 North Moore Street
(Ice House)
2-bedroom, 2-bath, 1,700-sq.-ft. condo in a prewar loft building; 24-hr. doormen, private elevator to unit; living room with fireplace, 11-ft. beamed ceilings; private roof deck; health club in building; common charge $763; taxes $7,476; listed at $1.995 million, 7 weeks on market (broker: Corcoran Group)
This unit is #3E and was sold by Neil Levine at Corcoran, who claimed in his listing description that it was “priced to FLY!!”. Since it took less than three weeks for this loft to go to contract at full asking price, kudos to Neil. (But the “overlooking lovely park” part is a bit much, as the lovely park is the greenery at the Holland Tunnel spillway.)
 
The Ice House runs through the block from North Moore to Ericsson Place which, as noted, abuts the Holland Tunnel loops – though the compensation is that the North Moore entrance is across from Walker’s. It was converted to condos in 1998.
 

lots of choices up the Ice House ladder
Perhaps the Holland Tunnel depressed the price for #3E, or perhaps Levine and the seller were more realistic than other sellers there. There are three other units for sale in the building in the last five weeks, all by Corcoran agents, each with open houses scheduled.
 
#5B is the same size as #3E and is offered at $2.395m
 
#7C is larger (2300 sq ft) with bigger views and a heftier price tag: $3.925mm.
 
Going up the ladder, #9D is larger still (2800 sq ft) and is offered at $5.95mm (off its original pre-Labor Day price of $6.45mm).
 
are the sellers really “sellers”?
Repeat after me: there are buyers out there, who buy apartments that are well-priced. There are sellers out there who are “sellers” in name only, because they are asking a price that no buyers are willing to pay. Neil Levine hit it right; time will tell if his Corcoran colleagues do as well.
 
© Sandy Mattingly
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Sep. 27, 2006 - when does Long Island City = New Orleans? More on the immense scale

 
prime office space is comparable
Today’s NY Times business section has pieces on facing pages (if you read the paper on paper) with a fascinating parallel about office space.
 
The entire prime office market in New Orleans is 8.8 million square feet (post-Katrina, which reduced the available total by ‘only’ 487,000 sq ft). That’s on page C8.
 
Page C9 tells us today that Long Island City -- hardly what most people would consider a significant part of the NYC commercial market – has 7.1 million square feet, with another “nearly one million square feet currently rising out of the ground”. Once completed, LIC would have 90% of the office space of New Orleans.
 
Big town, New York…
 
© Sandy Mattingly
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Sep. 26, 2006 - puzzling price policy / slow death near Union Square

 
why drop a price?
I have been watching a loft listing at 4 West 16 St (#8A) since it came to market in April, because I listed a unit in this building last year. I thought the original asking price of $1.35mm was pretty aggressive in April, even with what looks like a nice renovation (mine was in 20 year-old original condition, but a little bigger, on a higher floor and on the quiet [rear] of the building).
 
After not selling in two months, Pat Levy at PruDE dropped the price by $75k, and then by another $50k this week, to $1.225m.
 
price should help sell (d’oh!)
Which leads me to wonder “why drop a price?” The chorus will answer “to sell the apartment!!” but I was thinking on a different level. Or, on that level, but with emphasis on selling the apartment. The question-within-a-question then becomes “what price change will help sell the apartment?”
 
As I tell people to whom I pitch a listing, the asking price is the single most important element in setting buyer’s expectations about a listing. Does a $75k price change increase the likelihood of selling the apparent? I don’t think so, but others may have different opinions.
 
how to ‘suggest’ a seller is negotiable?
One theory appears to be that a small price drop makes sense because if suggests that the seller is negotiable without having to be desperate about that. I don’t agree. I think the fact that a Manhattan apartment has been listed for four months or more is enough of a hint to buyers that he seller may be (should be) negotiable about price.
 
One theory is that a price change makes sense if it brings ‘new’ buyers to the listing. I agree.
 
bring in new buyers
The hard part in doing this is to assess where the typical buyers establish price ranges. In this case, an original asking price of $1.35mm is – to me – not so radically different from the intermediate ‘ask’ of $1.275mm to bring in buyers who had not yet considered #8A. Anyone willing to spend $1.35mm is probably already considering anything price at $1.275mm.
 
In fact, the new price this week of $1.225mm is not very different from $1.275mm either. This is so, even though a move from $1.35mm to $1.225mm might have been enough of a spread to being in ‘new’ buyers – if it had been done directly.
 
The problem is that doing two price drops to get from $1.35, to $1.225mm risks boring people who are out there and familiar with the inventory. (To buyers who are just beginning to look, there is no problem with the new price being boring, but there are not as many new buyers each week as old buyers.) And anyone paying attention to days-on-market will realize that the listing is borderline ‘tired’.
 
sellers don’t like price drops that ‘take away’ money from them
Sellers hate to ‘give away’ money – even money that they never had in their pockets (like the $125k that the 8A seller has “lost” by dropping the price to $1.225mm). As a result, many sellers are tempted to drop the price by a minimal amount – if at all.
 
Which leads to death by small increments.
 
Most agents have stories about an apartment that finally sold well below where they thought it should have sold for. Often, these stories feature price histories with many small changes. (E.g., the 2 BR that went from $1.2mm to $900k in increments of $50,000.) In retrospect, the agents say that a larger intermediate price change (say, from $1.2mm to $1mm) would have resulted in a higher and quicker sale.
 
I know it is painful – for sellers and for agents.
 
pain, all around
I went through this with a seller recently. Our $2.5mm asking price looked good at the start – especially compared to three other apartments in the building. When we finally changed the price, I strongly recommended that we needed a ‘dramatic’ price change in order to capture a different set of buyers. The new price of $2.1mm did that, and we are about to have a signed contract.
 
In that case, the market place (bless its cold heart) told us that the $2.5mm was not a price that would get us the best price available in the marketplace. So we bit the bullet.
 
Not to pick on Pat Levy at PruDE, but I don’t think that moving #8A in two steps to $1.225mm will be as effective as doing it once. And – in this market of large inventories – it may not yet be even at the right price to attract the best price available in the market for that unit.
 
I will continue to watch what happens. Good luck, Pat.
 
© Sandy Mattingly
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Sep. 25, 2006 - unique strengths in the Manhattan real estate market – not just an urban myth?

 
“everyone” says the Manhattan real estate market is “different”, sometimes they are right
Thursday’s NY Times business section ran a data piece about income inequality in the US, which had a fascinating kernel for the Manhattan real estate market.
 
New York, interestingly enough, showed large increases in per capita income both during the Internet boom and the Internet winter that followed
 
Income-gain concentration is stark
The thrust of the piece was about how The National Income Inequality Story in the dot-com era was really not a “national;” story at all, but a very localized story. (I guess income, like real estate, is “local”). Two researchers at the University of Texas drilled down to county income data and found that (1) the late-1990s surge in “national” income inequality originated in a very small number of counties, and (2) these very few counties were heavily focused in information technologies.
 
How concentrated was this surge? If four out of the top five counties in growth in income inequality had experienced only average growth in income inequality, the “national” results would have been essentially flat. That’s FOUR out of 3100 counties.
 
US income-gain data driven by tech
How dependent on information technology were the top “disparate” counties? Four out of the top five were King County WA (home to Microsoft) and three counties in Silicon Valley (San Mateo, Santa Clara, San Francisco). The fifth county is actually the top county for income disparity in the US: New York, New York – also known as Manhattan.
 
So … small parts of the country made tons more money than the “average” during The Boom, and then the disparity shrunk with the Bust (what Hal Varian in the Times calls the “Internet winter” – nice locution!).
 
no internet winter in Manhattan (yet?)
But the boom did not turn to bust in Manhattan – in which income disparity continued to grow after 2000. (Not a lot of post-2000 data, however).
 
So … because the coop, condo and loft market in Manhattan is driven by money “at the top” (Manhattan residents “at the bottom” are disproportionately renters), the availability of so much money at the top is a rather unusual driver for Manhattan real estate compared to the nation as a whole – especially as that driver persisted in Manhattan after the trend reversed in the metro-Microsoft area and Silicon Valley.
 
Some data supports local happy-talk
So … it was nice to see some real data suggesting that (at least some of the time) (at least some of) the people who crow about Manhattan being “different” might be on to something. (“Bubble-proof” is another matter, of course.)
 
© Sandy Mattingly
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Sep. 24, 2006 - how close is that hotel in the window? Light, lost; lowers lucre

 
More change + less light in Flower District loft = less value
I’ve had my internet eye on a West 28th Street loft for a buyer customer and had a chance to see it at an open house today. 1300 sq ft of “[u]nique loft with beautiful hardwood floors, original tin ceilings, open kitchen, 2 bathrooms, great light” seemed like something to check out, either at its September 14 price of $995k or especially at its September 20 price of $800k (it started in April at $1.195mm).
 
What’s down with that pricing? The listing agent (Paddington Zwigard at Brown Harris) sells a lot of lofts; she knows her stuff.
 
Having seen it “in person” I must say that the loft needs a lot more work than the listing (details here) implies. I knew already that the block is very commercial, with the last vestiges of the wholesale flower businesses on both sides of 28th St, but I was surprised at how worn the hallway was. But a lot of old loft buildings in commercial areas have crummy hallways and busy street scenes.
 
accounting for big dollar reductions
Although the unit needs a lot of work, that’s not the point of this story or the reason for its pricing slide. The unit is in the back of the building, not too far from the back of its 29th St neighbor, with four large windows giving some light from the rear. Four large windows on the east provide most of the light (and all of the “great light” touted in the listing). Today.
 
Seems that there is a 16 story hotel planned for the burned out commercial shell next door. The agent at the open house did not know how close the new hotel would come to the windows in 4D, but expressed the view that “all” eastern light would be lost.
 
Labor Day might not have been happy
That owner and Zwigard must have had a painful heart-to-heart after Labor Day (remember the post about post-Labor Day price drops?). They decided to drop $155k the week after Labor Day, then another $195k a week later. That is serious pain.
 
I will try to figure out when news of the hotel plans got out, but it looks as though the owner or agent discovered that problem this month.
 
test case of 2D with no light
Interesting that the same footprint on the second floor has been for sale since June – without any eastern windows at all. #2D was initially offered at $995k but that post-Labor Day discussion resulted in a drop to $925k. Without any light except from the rear windows, that unit is marketed by Corcoran’s Adam McLaughlin as “a quiet, generous space to create an urban sanctuary”on the second floor in the rear of the building, [with] low light”. Note the white floors, white walls, white ceilings in the listing photos – they know they are dealing with a poorly lighted space.
 
So no surprises about light for anyone visiting 2D. But 4D visitors are in for a big surprise – and an explanation for dramatically dropping dollars.
 
© Sandy Mattingly 2006
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Sep. 19, 2006 - not exactly a ‘Man Bites Dog’ story / Willie Nelson busted for …

 
… well, it wasn’t tax fraud, so it must have been …
… yes, it was pot (and “psychedelic mushrooms”), according to today’s NY Post.
 
Louisiana state troopers found 1.5 POUNDS of marijuana and some magic mushrooms after they stopped Willie’s tour bus for a “routine” inspection. (If I were a cop, I would figure it pretty routine if I stopped Willie Nelson’s bus at every opportunity, just to see if there was any drug stuff on board.) Willie does not like to let his fans down.
 
other routine stops
The “routine” inspection is like the occasional news reports in Manhattan about a rapper’s car being pulled over “for changing lanes without signaling”, followed by an arrest for drug or gun possession. Changing lanes without signaling?? Not even Giuliani had enough cops to stop people who do that in Manhattan. Cops just get lucky though.
 
After the routine inspection stop, a trooper smelled marijuana, and the search found the pot and mushrooms. No word on whose bags they were in, but Willie and four passengers face up to six months in jail.
 
Willie needs some camouflage
Memo to Willie: change the sign on the bus to Celine Dion Tour.
UPDATE 10.6 (thanks to Mike Lembo) for pointing out (one of) Sweet Willie's post-arrest quotes:
"It's a good thing I had a bag of marijuana. If it had been a bag of spinach, I'd be dead by now."
 
© Sandy Mattingly 2006
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Sep. 16, 2006 - loft owners open their own doors

 
Now that I covered what it costs for full-time doorman coverage (yesterday), I tested my generalization that many loft owners and buyers do not want a doorman (or don’t want to pay to have one, or don’t have the space to fit one).
 
Chances are that most apartment buildings on the Upper West or Upper East Sides that have sales in the $2mm range have doormen. That is absolutely not the case downtown, at least in lofts (other than new ones).
 
A sample of loft buildings having Sunday open houses
I looked at the list of open houses for Sunday between $3mm and $2.4mm in loft buildings.
 
 
Even at this price range, there were many open houses (15), not so many buildings with doormen (5). In fact, all five doorman buildings were recent conversions (since 2004) and two of those have ‘only’ part-time doormen. I have noted the asking price, size (of the building and the loft) and the monthly maintenance (for a coop) or  common charges (for a condo; real estate taxes will be additional), to see if there is anything interesting about what people pay per month, with and without a doorman.
 
The most interesting buiding on that score was 476 Broadway, in which condop shareholders pay no maintenance (due to the very high rent paid by their commercial tenant). Even paying no maintenance, those residents will not (more likely, cannot) have a doorman.
 
In this sample of 15 buildings, the smallest building with a doorman is Altair 20, with 17 units. The largest building without a doorman is the Capitol Building with 45 units.
 
no doorfolk at
The buildings without doormen in this range having open houses on Sunday are:
 
new 4 unit loft condo conversion, asking $2.995mm for 3500 sq ft; common charges $498/mo
 
current 15 units asking $2.85mm for 2056 sq ft common charges $1065
 
11 story condop (15 units??) asking $2.995mm for 2250 sq ft  maintenance = zero (big tenant), still no doorman!
 
1980 coop conversion 9 units asking $2.8mm for 2850 sq ft  maintenance = $2375
 
2004 new construction condo (The Paradigm) 9 units asking $2.775mm for 2544 sq ft common charges $1400
 
5 unit condo asking $2.7mm for 2457 sq ft common charges $704
 
7 unit 2000 condo conversion asking $2.675mm for 2500 sq ft common charges $313
 
45 unit coop (Capitol Bldg) asking $2.56mm for 2560 sq ft  maintenance = $2680
 
22 unit condo conversion in 1999 asking $2.475mm for 2700 sq ft  common charges $1182
 
10 unit condo asking $2.475mm for 2264 sq ft   common charges $779
 
 
The five buildings with doormen are:
 
2000 condo 43 unit loft conversion asking $2.995mm  common charges $1037/mo
 
current condo loft conversion of 65 units asking $2.85mm for 1751 sq ft common charges $1077
 
2004 condo conversion 20 units asking $2.8mm for 2202 sq ft common charges $1931 p-t door
 
current condo conversion (Altair 20) 17 units asking $2.75mm (down from $2.875mm) for 2322 sq ft common charges $2060 part-time doorman
 
2004 condo conversion of 110 units asking $2.49mm for 1819 sq ft common charges $1846
 
loft owners are different
It is difficult for me to imagine that uptown buyers in this price range would not all prefer a doorman (except for small townhouse units). At these prices, the owners can afford door coverage if they want it.
 
I suspect that there are even fewer doormen in loft buildings that don’t have units selling in the $3mm to $2.4mm range that I used here….
 
© Sandy Mattingly 2006
 
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Sep. 15, 2006 - How much is that doorman in the doorway? What owners pay for staff

 
what can you do with two-tenths of a doorman?
Yesterday’s NY Sun has an article about doormen that focuses on costs. They estimate that 24-houir coverage costs about $160,000 pre year (for “4.2” doormen). Shared among 100 owners in a building is only $133 per month per unit, but is $665/mo per unit in a 20 unit building.
 
doormen do not work alone
Of course, lots of buildings that have 24-hour coverage have other staff as well – at a minimum, a part-time superintendent. But The Sun talks about a building with 40 employees (that would be for a resident manager, doormen, concierge, porters, and handymen out the proverbial wazoo … everything but a candlestick maker). Figure a million and a half dollars for that staff – at a minimum. That is a big nut to carry, even among several hundred units. (Over $500/mo per unit just for staff in a 250 unit building.)
 
feeling squeezed at the holidays?
Then there is the delicate matter of the vig (I mean tips for the staff at the holidays). Lots of people I know tip a couple hundred bucks in even small buildings with small staffs – on top of a holiday “bonus” from “the building”. In a large building? The sky is the limit.
 
[one anonymous resident] estimates he collectively spent roughly $3,000 on year-end gifts for about 40 building employees last year, including the superintendent and maintenance staff.
 
For lots of buyers, the cost of staff is almost irrelevant – they must have the people running to the curb with an umbrella when they pull up in a cab in the rain, or the engineer to change the light bulb immediately.
 
“priceless”?
With those people I think it is hard to say “what the doorman [etc] is worth” because they simply will not buy in a building that lacks the requisite staff. And they will to count on changing a non-staff building to a staffed building, because it is very hard to get a group of residents used to a certain level of ‘service’ to radically increase their monthly expenses to add more service. Not to mention that many smaller buildings literally do not have the lobby space to accommodate any staff.
 
but not ‘true’ loft-dwellers
Most of those people are not loft buyers – at last not ‘classic’ loft buyers. But that is for another post.
 
© Sandy Mattingly 2006
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Sep. 13, 2006 - West 30s ready for a close-up (but send Max back to Bible study)

 
lofts for less in a less labeled land
The Manhattan loft nabe I called Big Sky country a month ago was featured in the NY Post two weeks ago as a land of less expensive lofts, but reporter Max Gross garbled his Bible references.
 
Low-priced condos and lofts with tons of space and amazing views - the 21st-century equivalent of loaves and fishes - are on the market in the heart of Manhattan, west of Sixth Avenue from 34th to 41st streets.
 
Space + views = loaves & fishes?? Miraculously multiplied by Jesus, that was loaves and fishes. Coveted and unusual, that is “tons of space and amazing views”. Huh?? But I digress….
 
“We really loved the industrial feel,” says Michelle Turner. “But we didn’t have the TriBeCa checkbook.” So they turned an 1,100-square-foot former office in the Glass Farmhouse building on West 37th Street into their own gorgeous two-bedroom.
 
I agree with Gross about the light and views at the Glass Farmhouse (see my Big Sky post from July 31), and mostly about the space there, as well. But I am not sure his math holds up.
 
The Glass Farmhouse, a mixed-use office/ residential building, has been selling lofts for just over $900 per square foot. That's significantly less than the average of $1,038 per square foot you'll find a few blocks south in Chelsea, but it's still a huge step up for the Garment District, where many units are still less than $800 per square foot.
 
Unit 9A in that building has been in contract since July -- probably well under $900/ft -- for a gut renovation. The PruDE listing by Marian Levitt is said to be 1,650 sq ft and was first offered by Sotheby’s at $1.795mm last November, then in a classic death-by-dripping-dollars, it went to $1.695mm, to $1.595mm. to $1.495mm and then to PruDE for $1.45mm, and (ta-da!) to $1.295mm. If they got the full $1.295mm asking price, that is $785 per square foot.
 
Unit 10E is still for sale, through Adrian Noriega and Tamir Shemesh of PruDE. This one needs some renovations, perhaps (“endless possibilities” and “bring your designer”), and is 1261 square feet offered for $925k. That is asking $734 per square foot.
 
(Note to NY Post editors: send Mr. Gross to math class after Bible study.)
 
Round up the usual suspects
Reporter Gross found a broker to offer the obligatory comparison:
 
And some brokers are even saying this area could become the new SoHo.
"It definitely has the potential," says Andrew Barrocas, owner of the Real Estate Group. "It has a lot of the same characteristics."
 
Well, sort of.
 
It has grit (what Gross calls the “raffish, unpolished feel”), check. It has too-hip-types (“the funky artists and photographers that made the SoHo of yore so gritty and delicious”), check (“delicious”??). And few residential services, check.
 
Highway 61, redux
But 8th and 9th Avs are way busier than any of the main thoroughfares in Soho or Tribeca. And – although Tribeca has the Holland Tunnel – the Lincoln Tunnel and its approaches eat up a huge swath of the West 30s. So let’s wait on the Next Soho thing (another digression … the Next Soho is to Manhattan neighborhoods as the Next Dylan was to ‘70s music).
 
We never got a new Dylan (unless you count the schizoid permutations of Robert Zimmerman himself) and we don’t need a new Soho. A more well-developed, better serviced West 30s will be fine.
 
© Sandy Mattingly 2006
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Sep. 12, 2006 - a classic loft, warts and all / limitations of the form

415 W 55 St has a beautiful loft, but…
Unit 3C at 415 W 55 St (offered by Karen Fornash at Corcoran) is the archetype of a (small-ish) loft: the building has some kind of industrial background, ceilings are 12 ft (and seemed higher when I saw it), the space is mostly open, the windows are big. While it is ‘only’ about 1200 sq ft, it definitely passes my smell test for being a real loft.

 ... there are some 'issues'
3C is beautifully designed (featured in two magazines), but it also exemplifies many problems with loft apartments, especially with smaller ones.
  
 

It is a classically long and narrow space, with the large windows along one of the narrow sides, seemingly without any load bearing walls. This layout permits only 1 bedroom with windows (unless the living area is to be window-less), so the other “room” cannot be a legal “bedroom” (though it is not illegal to sleep in it), as it is configured here. The kitchen (which looks so bright in the photos) is a looooong way from the windows, more than fifty feet.
 
There is only one bathroom, since the building’s plumbing stacks obviously run in the middle of the building, along that far-from-the-windows wall. Adding a second bath, if possible at all, will involve some creative plumbing work and either a raised floor or a dropped ceiling to run water and waste lines through. No matter what, the bathroom(s) will be a long way from the bedroom.
 
The apartment entrance is along this same wall, so one enters alongside the kitchen – which is not everyone’s idea of a graceful entryway.
 
The apartment itself is beautiful – showing what can be done in an open loft. But the layout will be awkward for many.
 
 
© Sandy Mattingly 2006

 

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Sep. 12, 2006 - more not-staying-the-same, East Village edition / will a developer develop?

maybe they are diversifying down?
Gothamist is calling the new nabe Extell-land, referring to the East Village area bounded by 10th and 14th Sts, 2d Av and Av B, since the Extell Development Corporation bought 17 buildings in that grid. The NY Post has the detail that the buildings were bought for (only?) $72.6mm from a single landlord, and consist of 253 rent-regulated apartments in the four and five story tenements.

 (per Gothamist.com)

let’s just say that Extell did not make its name collecting controlled rent
Extell was the developer recruited by Ratner’s Atlantic Yards opponents who bid a basketful of money (pun intended!) for the right to develop the Atlantic Yards, and lost to ForestCity’s smaller basket. Extell is building the twin “Ariel”s on the Upper West Side, where most apartments are going from the high $1s to the low $4s (that’s millions, of course). Then there is the condo conversion of the Stanhope Hotel across from the Met, where the “smaller units” (everything is relative) run more than 4,000 sq ft and go for $10mm+.

 
what would Bert & Ernie say (or sing)?
I really don’t remember my CTV enough to know who sang“one of these things is not like the other”, but if Bert, Ernie, Oscar or any of the Muppets looked at (a) Atlantic Yards, (b) Ariel East or West, (c) the Stanhope, and (d) the East Village (pick a block) even a stick and cloth figure would recognize that Extell is probably not going to engage in regulated tenement rentals for long.
 
how do you stop a developed from developing? Cooper Sq Comm is trying to find out
Something about this is coming up at a Community Board meeting on September 19.
 
Steven Herrick, executive director of the Cooper Square Committee, is no Muppet, but he can sing the song:
 
"This type of acquisition, tenement housing, is a big departure from what Extell has done before"…
 
and
 
"Luxury development is unacceptable in our community, which has historically been primarily the working poor," he said [in the Post].
 
same plan, different class, 60 years later?
StuyvesantTown and PeterCooperVillage may be one thing (PCV is across 14th St from “Extell-land”); Alphabet City is quite another. Indeed, as I blogged a week ago, “Extell-land” is what Stuy Town and PC Village used to look like, before Met Life assembled, demolished, and developed those middle class havens. The current Alphabet City is more “working poor” (according to un-Muppet Steven Herrick) than the same area sixty years ago (according to Prof. Zipp). Whether it remains that way, remains to be seen.
 
Of course, things just don’t stay the same. But this should be a donnybrook. Tune in after September 19….
 
© Sandy Mattingly 2006
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Sep. 12, 2006 - nahhh, don’t rush to enroll / Tribeca school construction delayed

 
remember those two new public schools for downtown?
The TriBeCa Tribune is reporting that two of the new schools slated for construction downtown are delayed, due to what the Mayor’s office terms “delayed funding”. (Not much of an explanation, huh?)
 
The 6 to 8 classroom annex for PS 234 will be in the lot just west of the school (in the 200 Chambers St condo), but will not open until Fall 2008, one year later than anticipated. The Beekman St school, with room for 600 students, will not open until Fall 2009, again a year later than planned.
 
no funding delays for condos
Meanwhile, new housing development is not facing any “funding delays” (unless they don’t sell; not a problem to date). Nearly 1,000 new units will be ready for occupancy before these schools are ready. The new developments are at 101 Warren, 200 Chambers, and 88 Leonard, all of which (theoretically) feed into PS 234, which is already over-capacity.
 
Maybe they should only sell to families with really young children, or much older children…. (Just kidding.)
 
© Sandy Mattingly 2006
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Sep. 11, 2006 - September 11 / 343 firefighters

 
Another powerful number from the World Trade Center on September 11.
 
343 New York City firefighters died on September 11, 2001. Think about that. Three hundred and forty-three.
 
How many cities in this country even have 343 firefighters??
 
© Sandy Mattingly 2006
 
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Sep. 10, 2006 - September 11 – read the names

 
It turns out that I am most definitely not able to post much of anything today, and still unable to read (let alone watch) what passes for media coverage of the fifth anniversary.
 
Please click on http://www.september11victims.com/september11victims/ for a list of the people who died that day at the World Trde Center in Manhattan, the Pentagon and Shanksville, PA (with personal profiles).
 
As this is a blog about Manhattan real estate, please reflect as you read the names on the many places around the globe these New Yorkers came from (or their families came from in an earlier generation). A terribly sad, terribly potent cross-section of the global village that is Manhattan.
 
Pray in whatever way makes sense to you … for the people, their families, the world.
 
Amen.
 
© Sandy Mattingly 2006
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Sep. 10, 2006 - yikes they did it again / NY Times recent sales report suggests optimism?

 
This week's set of 5 Manhattan sales in the Sunday Residential Sales Around the Region again reflects (a) a coincidence or (b) an editorial view to breed optimism about he market. As with the last time I commented on this, you could not tell from the five Manhattan choices that it was a buyer’s market.
 
Two of five listings went for the asking price; one went above, after multiple bids; one went for a $12,000 discount from a $4.5mm asking price, and the last took a ‘hefty’ $10,000 off a $298,000 asking price.
 
Bubble, what bubble?
 
Coincidence, or the Old Grey Lady is trying to keep our chins up?
 
© Sandy Mattingly 2006
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Sep. 10, 2006 - five falling prices / “price improvements” on five lofts

 
‘tis the season
There is a new market after Labor Day, or at least new energy. Both buyers and sellers are “back” from the summer, whether they have been physically elsewhere or not. Many sellers decide to change the market’s reaction to their lofts by dropping prices.
 
I picked out five examples.
 
105 Fifth Av #4A
This Brown Harris listing (Elaine Clayman) came out in March for $1.695mm; it just dropped last week to $1.575mm. It is a 1300 sq ft “exquisitely renovated” coop, facing Fifth Av from the fourth floor. I hate when they say “this will not last so call me today”, then forget to edit the listing after six months. Open house Tuesday 9.12 from 5 to 6 PM.
 
80 Chambers St #15D
This was new on August 13, but Stan Ponte at Stribling dropped the price last week $150k, to $1.645mm. This 1640 sq ft condo was converted in 2002, and carries taxes and common charges of $2,841/mo. This may be an unsold unit from the original offering. Does that kitchen look “lived in” to you??
 
258 Broadway #2A
This one is around the corner from 88 Chambers and came to market in June at $1.925mm. The post-Labor Day price is $1.75mm. It is 1750 sq ft, on the second floor “overlooking CityHallPark” (and the Broadway traffic), but the 11 custom but windows might take care of that noise. Either it is an unusual sales inducement, but someone there has stopped playing the piano, as “the best offer get s a free baby grand piano”! Offered through ThomasFalls at Warburg, with an open house Wednesday 9.13 from 6 – 7 PM.
 
471 Broadway #4
This unit offers a ton of space (2171 sq ft) and roof rights for a post-Labor Day price of $1.795mm (it started in March at $1.995mm). The major drawback? It is the top floor of a five story building without an elevator. And on Broadway 2 blocks above Canal St. Offered by Rebecca Edwardson of Warburg.
 
88 Laight St #2
Way west on Laight St (last block to the river), this is a new small (7 loft) building, dubbed the Glass Condominiums, that is a solar energy building. This 1677 sq ft unit came to market in January at $2.588mm. While it has not had a new Labor Day price, there were two price changes in July, bringing it to $1.95mm, which caught my eye. It has 17 ft ceilings and a wall of floor-to-ceilings windows (a lot of glass!) and (they say) Hudson River views, Details are accessible through the Project Real Estate website. Only the penthouse unit is in contract; the others are priced above $2.6mm. They must be testing the waters with the price drops on Unit 2, as #4 went up n price in July, #3 has its original price, while Units 5, 6 and 7 have had about $300k price drops.
 
© Sandy Mattingly 2006
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Sep. 8, 2006 - what’s messing with Texas / foreclosure rates up

 
RISMedia reports that Texas is #3 among the top states in home foreclosure rates in July. It sticks out among states that have had significant speculator investors (Nevada, Colorado and were #1 and #2) and those whose economies are characterized by Perot’s sucking sound (Michigan, Illinois, Indiana and Ohio are all among the top ten in number of new foreclosures).
 
The data is from RealtyTrac (TM) (www.realtytrac.com), “the leading online marketplace for foreclosure properties”. James J. Saccacio, chief executive officer of RealtyTrac, is quoted as saying that
“[w]hile foreclosure activity continues to remain slightly below historical averages, there appears to be the possibility for a significant amount of upward pressure on foreclosure rates in the next few months.”
He cites the usual suspects of (1) ARMs about to re-set for many, and (2) the “cooling” real estate market nationally. But I found it interesting that foreclosure activity continues to remain slightly below historical averages.
But who is messing with Texas? Texas has been reported as one of the “bright spots” in the national real estate scene – one of the few states expreieincing more robust price growth. Must be is the yin to the yang of Texas foreclosures.
© Sandy Mattingly 2006 
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Sep. 8, 2006 - and the answer is … timing the market “doesn’t work in real estate”

 
WSJ’s Stewart gets smug
Jonathan Miller started a thread on Matrix about market timing, in response to James Stewart in the Wall Street Journal expression of relief about not having to listen to more people brag about their real estate. Quoting Stewart:
 
Let’s be honest with ourselves: Aren’t you just a little glad the real-estate boom is over? No more bragging from self-congratulatory owners of property in high-priced areas. No more breathless tales of bidding wars and comparative sales.
 
Miller’s law on market timing
Miller then went right at Stewart’s thesis that buyers are on the sidelines because they are worried that prices will fall. Says Miller:
 
The problem with this mindset is knowing when the bottom is upon us. Its more like hindsight, you know after its starts to increase again. (And it was kind of like knowing when the top Its often characterized by a burst in activity. Buyers hold off as long as they can and their participation is often triggered by an unforseen significant economic condition. Market-timing [Wikipedia] doesn’t work in real estate.
 
I have always had this view, but I have been unable in many conversations to cogently explain why market timing is so difficult. (I took another shot on this Matrix thread, but I would not consider my contribution to be one of the highlights.) II tried it last month on this blog.
 
Some of the (real) highlights from the responses to Miller’s post:
 
I might be able to market-time the cost of housing, but I can’t market-time things such as losing my job, getting a new job, having a baby, terrorist attacks, parents dying, getting divorced, having a mental breakdown, or inheriting wealth.
From John K
 
While I agree that many are on the sidelines, I disagree as to why.
 
I don’t feel people are not purchasing because they fear prices MAY fall, people are not purchasing because prices have NOT fallen.
From Rich n NNJ
 
New Jersey bubble-blogger James Bednar talked about efficient market theory and real estate:
 
Market timing is a perfectly valid concept in an imperfect market, especially in those markets where information isn’t equally shared among all players (an information asymmetry exists). A single participant who receives advanced notice of information will most certainly have an advantage over the other market participants.
 
***
 
While I don’t believe it possible to “time the market” in a traditional sense, I do believe that the price of an asset will revert to it’s fundamental-driven mean when both overpriced and underpriced.
 
He then explained that if the real estate market were an efficient market, there would be no need for appraisers:
 
Why?
Because there is no need for valuation experts in an efficient market.
Why?
Because the market price is always perfect, always represents all known information. There is never any reason to doubt that the market price is the correct price at that moment in time.
 
Caveat time-or
Miller summed it up in response to Bednar:
 
With all the technology and public disclosure, real estate is still an incredibly inefficient transaction. If you are objective and immersed in the market, you can get a sense of a general direction on many occasions, but try to narrow that down to increments of a month, quarter or even a year. If you are able to do this, its really just luck.
 
I will keep this thread for future reference. 
© Sandy Mattingly 2006
 
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Sandy Mattingly is Manhattan Loft Guy; now with The Corcoran Group (http://corcoran.com/ ; but see the disclaimer at the bottom of the page), he can be reached most easily at Sandy@ManhattanLoftGuy.com or 917.902.2491, and followed on Twitter @ManhattnLoftGuy (note "mis-spelling"). After 7+ years, the blog has moved. Links here on RealTown will work for the foreseeable future, but new posts (and all the old content) has migrated to ManhattanLoftGuy.com.

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