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November 2011

Nov. 29, 2011 - secretly very negotiable penthouse loft seller at 129 West 20 Street secretly negotiates a 28% discount


why not be public about it?
What is the purpose of an asking price? Feel free to tell me what you think, as I am not shy about telling you what I think. A successful asking price does (should do) only one thing, but there are 3 ways to do it. In order to achieve the highest price available in a reasonable time in the current market, an asking price will:

  • tell The Market what other listings buyers should look at in order to decide to bid on this one;
  • open the bidding, by inviting (acceptance! or, more likely) a counter-proposal from a buyer;
  • signal to buyers the range of offers (those counter-proposals) that will be given a serious response.

Simple stuff, right? Which is why I do not understand either of the asking prices, or the marketing strategy, for the Manhattan loft #PH-C at 129 West 20 Street (the Chelsea Quarter):

Feb 25 new to market $3.995mm
May 6   $3.495mm
Aug 3 contract  
Nov 1 sold $2.5mm

(That must have been a difficult June and July!)

This strategy worked in the sense that it achieved a bid that advanced to contract from a buyer who was able to close. But I have no reason to think that $2.5mm was the highest price available in a reasonable time in the market of early 2011 because I do not see that many potential buyers who might actually have been  willing to pay close to $3mm were in fact encouraged to do so by the initial asking price of $3.995mm or the reduced asking price of $3.495mm.

To end negotiations a million dollars short of the asking price, how low must that initial offer have been? How many others might have bid if they had suspected that the seller would entertain an offer more than one-third off??

bad comps
I don’t get it. If I wanted potential buyers to compare this “2,120 sq ft” “very special retreat” with “three large private terraces” (a total of “780 sq ft”, sizes per our data-base) to other lofts on the market under $3mm, I’d have asked under $3mm. (The StreetEasy listing has lovely photos but lacks details and a floor plan; see the broker’s website for those.)

Instead, the listing would have been compared to

each of which had been asking between $3.45mm and $3.595mm and each of which sold between $3.2mm and $3.5mm.

like jumping off a cliff
Again, I wonder how many potential bidders would have thought they could buy this penthouse loft at $2.5mm, given that it had been asking $3.995mm to start and then $3.495mm. Penthouse C would have looked good in comparison to
and might even have been preferred to
signalling negotiability to The Market
One way for a seller to hint to the buyer pool that you will take less than your asking price is, when you have clearly started too high (say, at $3.995mm), to drop, and drop, and drop until you get some traction (i.e., interest; say, by dropping to $3.5mm, $3.25mm, and $3mm). The buyer pool will wonder how much further that seller will go to get a contract, but that seller might find multiple interested buyers in the upper $2s.

A more … errr … subtle way to hint that you are negotiable would be to adopt a wildly inappropriate price (again say, at $3.995mm) and then drop only once to a slightly less inappropriate price (say, at $3.495mm) and wait for some bidder at some price to call. I prefer the first course to the second (subtle) course, especially for someone who is secretly harboring the fear that only a really big discount will get a deal done.

I don’t have any systematic data for this, but doesn’t it seem logical that a loft that sells while being way over-priced (i.e., needing a large negotiated discount) is much more likely to sell ‘below market’ than if that loft had been priced near the market to begin with? Time for a Manhattan Loft Guy note to self ...

I suspect that more potential buyers would have viewed Penthouse C at 129 West 20 Street as a purchase opportunity above $2.5mm if the asking price had not stuck at $3.495mm. The sellers were willing (eventually) to entertain an offer way below that last ask of $3.495mm, but more people might have figured that out if the last ask had been $3mm. Sitting 20+% above The Market after your only price drop is just not very inviting, except to bottom fishers.

sitting out the market?
Of course I remain interested in where loft buyers come from, and where loft sellers go. The Penthouse C sellers traded down in size from “2,210 sq ft” with 3 terraces and up in Chelsea, by moving from their small building to a very large building across 23 Street, as renters.

Sellers rented this high floor condo unit at 101 West 24 Street in the Chelsea Stratus, perhaps at $7,250/mo. (That “1,113 sq ft” condo unit with a terrace had been purchased on August 25 at $1.78mm; it has Empire State Building views.) They cashed out of the Chelsea Quarter at $2.5mm and should have a lot of cash to pay that Chelsea Stratus rent, having bought at 129 West 20 Street way back in 2000 at $1.604mm. Not as much cash as they might have had, but I think I should stop flogging that horse, finally.

© Sandy Mattingly 2011
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Nov. 27, 2011 - Sunday diversion / baseball and Camus, seriously


but first, a more diverting diversion
It is better the older you are, I think. (How often do you get to say that?) Posnanski tracks major league baseball player quality by birth year.

heavier stuff, but a diversion for me
Part II is from Steven Rubio, this Thinker Guy, developing a theme about baseball that I find useful in looking at the residential real estate market in Manhattan (no joke): that statistics (facts) exist, in part, to permit questions to be asked, and that Conventional Wisdom deserves to be tested by facts. Like all good baseball nerds, the Thinker Guy starts his baseball analysis with an homage to Bill James. (My collection of Bill James Baseball Abstracts must still be in a box somewhere, there should be at least 7 from the 1980s.)

Some insights, as he works his way into Albert Camus (the Camus stuff is recommended only for Camus nerds; sorry):

The primary point is always that it’s not just about baseball; it’s about a way to see the world. I can’t tell that story without a digression.

***

Baseball supplies the statistics; analysts like James ask the questions; but computers make the process of analyzing much easier. The computer is a tool, just as statistics are only data. If you don’t have a question that needs to be answered, tools and data won’t be worth much.


This aside about a movie I have not seen (but a movement I am well familiar with) hits a nice grace note:

Much of this is behind the recent Hollywood hit Moneyball. The film, like the book on which it is based, gets many things right. But its portrait of the old school is harsh in unrealistic ways, falling victim to the stereotypes of the most extreme thinkers of the new paradigm. In fact, success comes in part from a useful blending of all sides, with old school and new bringing their particular talents to the table. Conflict makes for a better movie, though. When Brad Pitt is playing the exemplar of the new way, the old guys don’t stand a chance.


h/t Jonathan Bernstein on The Plum Line

If it is 60+ degrees, it must be time soon for baseball, no?

© Sandy Mattingly 2011

 

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Nov. 26, 2011 - holiday weekend diversion / leftovers


no, not those leftovers
These leftovers, and what Mark Bittman suggests you can do with the stuffing, potatoes, sauce and turkey that are still in your frig:

http://www.nytimes.com/2011/11/20/magazine/rethinking-thanksgiving-leftovers.html?hpw

And, as a bonus, an analysis of why we remember a sandwich with 3-day old turkey fondly:

http://gizmodo.com/5859714/the-science-of-leftovers-why-dont-they-taste-as-good

h/t Andrew Sulivan re 3-day-old turkey

© Sandy Mattingly 2011

 

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Nov. 25, 2011 - serendipity: 113 Prince Street loft that took a year to sell took 113 days to file deed


nothing happens quickly here, apparently
The sale of the “1,490 sq ft” Manhattan loft #5ER at 113 Prince Street is another example of not new news (like in my November 23, 67 Hudson Street loft closes off 9% from 2005, with long history) but it is interesting nonetheless, in a Manhattan Loft Guy obsessive kind of way. First, the sucker took a year to sell, starting on June 5, 2010 and selling on June 7, 2011. Second, the deed signed on June 7, 2011 was not filed until September 28, a frustrating gap for people who follow The Market and which set me off on a search for whether there are penalties for such late filings. Third, it cleared at $1.39mm, compared to a last ask of $1.59mm and a first ask of $1.85mm, in a 3-building 16-unit coop in which nothing had changed hands since The Peak. You want more?? Fourth, the layout is funky, even challenging.

Let’s look first at the loft and the marketing, before getting into the inside baseball of deed filing foibles.

even a ‘flexible’ layout can be challenging
Not a lot of bragging in the broker babble, with these highlights:

perfectly located between Wooster and Greene streets. This is a one bedroom open loft plus office with an extra sleeping area. Has a flexible layout with high tin ceilings, wood floors, exposed brick walls, washer/dryer in the unit and private storage in basement. The apartment is very quiet.


The most obvious challenge to the floor plan is that the 4 windows are at one end, and given that the building sits on the north side of Prince and the babble heralds that it is “very quiet”, these would be north windows, facing the rear or side of buildings fronting on Wooster or Greene (as in #5ER as on the 5th floor of the east building in the rear). The plumbing stacks appear to cluster around the middle of the east wall (i.e., not very flexible), further supporting the logic of putting a master suite on the window wall, but leaving only two windows for the public areas.

I wonder if the rooms near the door were added at some later point, closing off what had been a public bath into the back of a ‘sleeping area’ that is itself accessible only by going through the oddly shaped office. And I don’t think I have ever seen a kitchen as oddly configured as this one, with appliances at three corners zigging and zagging.

great bones
The major draws are height and what’s on the height: probably 13 foot ceilings covered in tin. Even on the PruDE site, some of the pictures are fuzzy (what’s up with that?), but the lack of bragging and the ‘feel’ of the place suggests this is a somewhat primitive space with a relatively new kitchen.

That photo of the fireplace, however, is awesome. I hope it really looks like that in real life.

Net-net, this is a perfectly livable classic Soho loft that can be moved into as is, or configured by someone who wants more space and can live with interior bedrooms, to open up the window wall. Look back at the schedule to see how difficult it turned out to be to attract the right buyer.

fewer feet, more mints, more money in 2007
The loft right downstairs has a slightly different (smaller, at “1,350 sq ft”) footprint, and that #4ER sale on February 26, 2007 at $1.45mm is the last similar loft to sell in this coop. The spread between #4ER at $1,074/ft and #5ER at $933/ft can be explained by condition. There was a great deal of bragging about #4ER when it was marketed:

classic, XXX mint loft defines Soho style. Featuring extraordinarily high tin ceilings, java-stained original restored wood floors, oversized windows, and a spacious layout, this property is unparalleled. This just renovated one (open) bedroom features state of the art kitchen with stainless and glass Sub Zero refrigerator, Fisher Paykel dishwasher, Miele convection oven and six burner range. The 2 beautiful bathrooms are tiled floor to ceiling in tumbled marble, juxtaposed with seamless glass shower doors; Dornbracht fixtures throughout.


That floor plan (taken from a later unsuccessful listing, here) shows that the missing feet are near the entrance and that #4ER has much less flexibility than even #5ER. But the level of finishes for the smaller loft is clearly much higher than for the larger. If you assume that market conditions were roughly similar in early 2007 compared to this year (as I do, based on my paired resale analysis of September 27, is the Manhattan loft market back to (up to) 2007? 61 repeat sales say “probably”, “a bit”), the spread of $141/ft seems a bit low, based on condition, but more rational based on the greater utility in #5ER.

Note that #4ER did not sell in late 2009, when the overall Manhattan residential real estate market had definitely been thawing for a while. No surprise, then, that #5ER could not sell in 2010 above #4ER’s 2007 clearing price, or #4ER’s failed 2009 asking price. The wonder is that they thought that it might.

no penalties for filing a deed late, but ...
I put this loft sale aside when I saw it nearly 2 months ago, as it was one of a series of loft sales with very late filed deeds that I observed around that time. I wondered why deeds are filed late, and whether anyone (other than me) cares about this as a data ‘problem’.

I was not surprised to learn (from the coop and condo attorney who blogs at CoopAndCondo.com that New York City does not officially care about late-filed deeds, but that it cares very much about money. Counselor Gitter advised that city regulations require the transfer tax returns and payments be made within 15 days of closing, and there are escalating penalties thereafter (first month's penalty is 10% of the amount owed, then 2% per month).

While there is no requirement that I am aware of that all the paperwork get filed together, I suspect that the deed (with no penalties) gets filed with the tax returns and payments as a matte of course, as happened with loft #5ER. The dates on the deed record on StreetEasy match those for the city and state transfer tax payments in ACRIS: document date June 7, filed September 28. In this case, they filed late having paid $39,367.50 in fees.

Why? No idea, but it cost somebody $5,511 in penalties if I am counting late days correctly. Not a trivial amount, even for a seven-figure transaction.

You’d think that would be enough incentive to file things on a timely basis, including the deeds. You’d be wrong, in at least some cases.

© Sandy Mattingly 2011
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Nov. 23, 2011 - 67 Hudson Street loft closes off 9% from 2005, with long history


was it shy about the loss?
The sale of the “1,000 sq ft” Manhattan loft #3D at 67 Hudson Street is not new news, as the sale was way back on May 31. Nor was it new news when the deed was filed late, on September 26. It has been sitting on my Get To Me Sooner Or Later pile (formerly known as my To Do list) because it is one of the relatively rare 2011 Manhattan loft resales that sold at a loss from the last sale in 2005. Old news, yes; but interesting nonetheless, with even more interesting old news, as we will see.

  • July 15, 2005 $1.3mm
  • May 31, 2011 $1.2mm

It is not as though the 2005-buyer-at-$1.3mm-turned-2011-seller was ‘greedy’, especially when you factor in a renovation, as below (just a lover of nines):

Aug 5, 2010 new to market $1,399,999
Nov 5   $1.345mm
Jan 10, 2011 contract  
May 31 sold $1.2mm

you can’t measure greatness, but you can see some of it
The loft weighs in at “1,000 sq ft” and benefits from a corner location with two exposures, so there are enough windows to have two good-sized bedrooms and a (ahem) ‘great room’. Yes, the (ahem) ‘great room’ is nearly half again as large as the 16’ x 13’6” master bedroom, but calling a living / dining room ‘great’ at 18’7” x 17’ is some enthusiastic broker babbling. Not that there’s anything wrong with enthusiasm, especially not when all the details are clear.

I would not call that room great, obviously, but I would say that the floor plan is extremely efficient. (Seriously, you see a lot of larger lofts, and a great many apartments, in which the second bedroom is smaller than 12’6” x 10’10”.) The corner and dual exposures help, of course, and this particular corner helps a lot. This has to be one of the great 3rd floor views, down the wide Hudson Street to Gehry on Spruce Street and the Woolworth Building (see the 5th pic in full screen mode).

Unfortunately, the windows are not so large, and the ceilings not very tall (9 feet, per our data-base), so you probably have to be pretty close to those windows to get the premium view. But that is one heck of a view for a low floor.

With the efficient floor plan and corner exposures, this “1,000 sq ft” loft plays big, sort of like Charles Barkley in his prime. The opposite of the much larger lofts I hit in my November 21, cop loft sells at 240 Centre Street with challenging layout, off 46% from very first ask, and in my, November 16, O’Neill loft at 655 Sixth Avenue closes resells at 21% loss over 2007. Those are Lofts That Plays Small, more like Rik Smits.

about that renovation
I confess to having assumed from the sale prices in 2005 and 2011 that the loft must have been in the same condition for both sales. After all, isn’t a 9% hit over six years enough of a kick in the proverbial teeth? You can’t tell from StreetEasy (the old sale is just outside its history) but our data-base has the shocking pix and floor plan from 2005.

That 2005 buyer moved the door to the second bedroom from the foyer to french doors open to the living room (providing a more open feel, no doubt) and completely re-did the kitchen without moving any major pieces. The cabinet fronts (at least) are all new, with a new backsplash, new appliances (including a hood that might just vent outside), a rebuilt island with wine frig and power, and new granite counters (including on the island).

The guy paid $1.3mm in 2005 and out in a new kitchen and made some other minor small changes. See what I mean about not being greedy at $1,399,999 in August 2010? I would understand this history if the seller had come out in Fall 2008 and stayed on the market through the nuclear winter, finally accepting a discount in a thin market. But the market a year ago was not significantly worse than the current market, and much better than the market of early 2009.

Yet the guy improved the loft and could not sell above his 2005 purchase price. Props to him for taking what The Market would give. Shocking that it did not give more.

different story downstairs
The only other recent paired sale was the much smaller (“600 sq ft”) loft #2C, which sold on May 18, 2011 at a 7% premium to its prior sale on February 1, 2007. It was in great condition in 2007:

11 foot ceilings and two exposures ... a Varenna Poliform Kitchen, Sub-Zero Refrigerator, Washer/Dryer and a wonderful built-in table with storage. Lovely Brazilian Cherry hardwood floors are a nice contrast to the modern skim-coated white walls and high ceilings. ... This home feels bigger than it is due to the light and volume ….

Obviously, the overall Manhattan residential real estate market was getting frothy in early 207, on the way to the single deepest and sharpest market we have seen. Yet that #2C 2007-buyer-turned-2011-seller made out comparatively much better than the #3D 2005-buyer-turned-2011-seller.

Did I mention that The Market is not fair? Or rational?

There is a chance that all of this weirdness is caused by the 2011 seller having overpaid for #3D in 2005. I don’t have enough comp data from 2005 close at hand to have an opinion about this, other than that is always a possibility in a specific paired resale analysis. But I do have data suggesting that the 2005 purchase was The Market. Per our data-base:

May 5, 2005 new to market $1.2mm
May 19
offer accepted  
May 31
contract  
July 15 sold $1.3mm

That, my friends is a bidding war. There was at least one other buyer willing in May 2005 to pay at least as much as the loft later sold for in 2011 (after being improved).

Individual data points are not The Market. This guy got screwed.

fun facts, with a major twist in 1997
This long sales history of #3D from StreetEasy is deep and deeply weird. I wonder if that second buy was a foreclosure.

  • May 31, 1996 $234,500
  • May 27, 1997 $175,000
  • Sept 9, 1997 $381,00
  • May 27, 2003 $776,500
  • July 15, 2005 $1.3mm
  • May 31, 2011 $1.2mm

Property Shark shows that the first buyer (and second seller) in this sequence was a lender, as that lender filed a lis pendens in 1995. Guy must have refinanced, as he bought in 1985 (price unknown, but it had to be pretty low.) Lender probably did not want to hold long, but it took a year to get out. Then the next buyer flipped in about 100 days, selling at more than twice what he paid. Fun stuff!

Look at that jump from 2003 to 2005! (But remember that there was a bidding war in 2005.)

One can say that there were two unlucky owners of loft #3D going back 25 years: the guy who got foreclosed on, and the guy who just sold. And maybe that bank. Two did awfully well: that 1997 flipper and the guy who held for 26 months capped by that 2005 bidding war. Sometimes it is better to be luck than smart, no?

This history is an example of Manhattan real estate as a spectator sport … fun stuff, indeed!

© Sandy Mattingly 2011
 

 

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Nov. 22, 2011 - uber-renovated (?) loft at Chelsea Mercantile sells 7% above Peak


what does it cost to uber your renovation?
The “1,344 sq ft” Manhattan loft #4J at 252 Seventh Avenue (the game-changing Chelsea Mercantile) just sold for $1.725mm in “perfectly uber-renovated” condition (“[n]o stone was left unturned in this state-of-the-art renovation”), closing on November 1. That seller bought the loft on May 21, 2008 (essentially at The Peak) for $1,617,500 in “absolutely stunning …. triple mint” condition with “en-suite luxurious bathrooms[, a] kitchen is fit for a chef with top-of-the-line appliances and granite counter tops, sophisticated lighting, ... an integrated sound system....”. Of course I wonder how much money the-2008-buyer-turned-2011-seller put into uber-ing the place and whether, now that he has sold for just over $100,000 more than he paid, whether he thinks that was worthwhile.

Unless I am missing something, the floor plan after no stone was left unturned is exactly the same as the floor plan before the stones turned. (I guess they out the new stones back where the old ones were.) The pictures tell a different story, with a dramatically different kitchen look (again: in the old configuration) and at least one bathroom that has been completely re-furnished and re-covered. (You can’t see tat on StreetEasy, but our data-base has kitchen and bathroom photos in the ‘before’ condition.) That old “sophisticated lighting” in the living room appears to have been changed from tracks to high-hats, but if anything else was changed I can’t see it in the pix.

Clearly, The Market agreed with the ‘after’ babble that the loft has been beautifully redone, as there may not be another example of a 2011 resale beating a price as close to Peak as May 21, 2008. I suspect the seller put more into it than The Market repaid him for, but almost certainly not as much as 10% of his purchase price plus the $107,500 resale premium. The space, after all, is only “1,344 sq ft” and no walls or lines were moved. You’d think you could upgrade an “absolutely stunning …. triple mint” skin to a “perfectly uber-renovated” skin for under $200/ft.

But then again, if it were me doing the work I would want to get more than 3 years to enjoy it before moving on.

downsizing from a Chelsea #4J to a Village #4J
The seller’s notice address on the deed by which he sold loft #4J at The Merc is apartment #4J at 2 Horatio Street on Jackson Square in the West Village, so I tracked him. He bought that apartment (with a partner) for $945,000 10 weeks before selling at The Merc, in a transaction for which I find no public listing. The chances are really really good that the new apartment has the same floor plan and is in a similar condition to #6J at 2 Horatio Street, which sold for $995,000 on May 5.

The old loft was a 1-bedroom+home-office in a turn of the century loft conversion; the new apartment is a straight 1-bedroom in a classic prewar Bing & Bing building. Our data-base says #6J (and, presumably the new #4J) is “880 sq ft”. The guy moved into space one-third smaller than his loft, paying $1,074/ft (and $1,260/mo in coop maintenance) after having sold at $1,283/mo (and $1,404/mo in taxes and condo common charges). He got back his Chelsea Mercantile down payment plus $107,500 (less expenses like the sales commission and transfer taxes, and less his renovation costs) and turned that into the new coop.

I remain ignorant of the details behind a move like this, as I am ignorant of nearly all of the other eight million stories in the naked city. But I can hope that the move was a positive one (maybe he got married), and that the guy is happy looking at One Jackson Square.

fun fact
Both times that #4J at 252 Seventh Avenue last sold, the original asking price was $1.995mm. It took a bigger discount to get it sold in late 2007 into 2008 than it did in 2011. An uber-renovation can do that, I guess.

© Sandy Mattingly 2011
 

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Nov. 21, 2011 - cop loft sells at 240 Centre Street with challenging layout, off 46% from very first ask


in search of a new locution
The Manhattan loft #4R at 240 Centre Street (the venerable Police Building) is said to be “1,800 sq ft” but it plays smaller, to use a basketball term. It took some energetic price chopping to sell, having started (this time) on April 25 at $3.68mm before closing on November 2 at $2.6mm. Last year they tried 6 months at $3.95mm and $3.7mm. You don’t see many 7-figure price drops at this price point. Nor do you see many clearing prices off $2mm from first ask.

This footprint is very challenging, as there are but 4 windows on one long wall and what looks like a load-bearing wall mandating the separation of the master bedroom from the main living space. One bit of good news is that the very high ceilings (16 feet?) permit a mezzanine; up a real staircase is a second bath, a ‘study’ and a second (open) ‘loggia bedroom’, all on the wall away from the windows. One bit of bad news is that the very high ceilings make it difficult to carve up the space differently, or you’d end up with rooms in which the by far biggest dimension is floor-to-ceiling. (I saw this place with a buyer, probably in 2010, and even in the relatively large master bedroom, the ceiling height is distracting … almost too tall.

You could fairly say this loft is a One Bed Wonder, but the #4R footprint is more challenging even than that locution suggests. If you put a ‘real’ bedroom (with window) on the main space, you would surely ruin the sense of volume, and make a silo of even the living room.

Some One Bed Wonders can be transformed into lofts that sensibly have multiple bedrooms, though often at considerable expense because a lot of thought and money went into the current design. I don’t think I have ever before identified my original One Bed Wonder, and it is very unfortunate that the surviving listing for loft #2B at 22 West 26 Street, has only one picture and no floor plan. I described that loft in my first post using the term One Bed Wonder (nearly 5 years ago!) as:

This loft – which has been on and off the market for 2+ years – is a quintessential 1 Bed Wonder. Part of its (considerable) charm is that it feels so open, that it flows so well. Part of that charm is because the “walls” did not completely enclose the master bedroom, the guest room, and the library, all of which shared these walls with the open living area.

The original owners had great taste – and a house in the country for entertaining grandchildren overnight. It was simply not a space in which you would want someone else sleeping in a different bed. The present owners put it on the market as they were about to have a child. I have no idea how they live in that space with a child.

The “problem” with that specific space is that if you were to renovate it to make it suitable for a family, you would probably ruin its charm. It may live and die (and sell, or not sell) as a wonderful space in which everyone but the owners go somewhere else to sleep every night.

Other 1 Bed Wonders are more forgiving of renovation possibilities. Add some walls, expand a half bath into a full bath – or even more substantial renovations – would not necessarily reduce the beauty of the space.

Loft #4R in the Police Building is basically a 1-bedroom+mezzanine of “1,800 sq ft”. There are only a precious few lofts that size that cannot accommodate multiple bedrooms, if money permitted. That is why I say of this one that it plays smaller than its size. The loft I hit in my November 16, O’Neill loft at 655 Sixth Avenue closes resells at 21% loss over 2007, has the same issue, at a slightly different scale (a “2,400 sq ft” 2-bedroom layout that cannot support a 3rd bedroom). I talked there about how challenging that layout is, but now I see that I could have coined Loft That Plays Small for that one last week.

Note to self … look for other lofts that are distinguished from, as I put it on February 24, 2007, “1 Bed Wonders [that] are more forgiving of renovation possibilities[, in which …. a]dd[ing] some walls, expand[ing] a half bath into a full bath – or even more substantial renovations – would not necessarily reduce the beauty of the space”. You’d ruin (reduce the beauty of) #4R by adding a second bedroom, just as you’d ruin #3F at the O’Neill by adding a third. That’s not true of all One Bed Wonders, like #2B at 22 West 26 Street.

a tough building
Loft #4R has an even more extended listing history than last year. The 2011 sellers tried to sell in 2007 by asking from $4.78mm to $3.95mm for two quarters just before The Peak. But even the most active and deepest residential real estate market ever in Manhattan could not support those prices by generating a contract. So one way to measure the sellers’ eventual disappointment is that they sold at a 16% discount to the last asking price; another is that they sold at a 29% discount to the first asking price in 2011; yet another is that they sold at a 34% discount to the first asking price in 2010; but the kick in the teeth is that they sold at a 46% discount to their very first asking price (June 2007).

The experience of the #4R sellers of having The Market thumb its nose at their listing at their price is different from the experience of many neighbors in only one way: they eventually sold #4R. Let’s start by saying that the Police Building residents have had an exceptionally difficult time finding willing buyers. In fact, I can’t think of another building in which there have been so many unsuccessful listings and so few successful sales as this:

  • in 2009, 5 units were offered for sale, none sold
  • in 2010, 4 units were offered for sale (including #4R), 2 sold
  • in 2011 (so far), 4 units were offered for sale, only #4R sold

Net:

  • total sales since June 2008: 3
  • total listings since June 2008: 13

the wide world of lofts
Another way to look at it is that the Police Building loft owners love their lofts so much that they think others hold love them as much as they do. They have been notably unsuccessful in convincing the rest of the world, that’s all.

One of those successful sales was the “2,000 sq ft” loft #4G, which cleared at $2mm on May 5, 2010. That floor plan is much more sensible (and flexible) than that of #4R, in part because it is a corner unit with 2 exposures, and in part because the mezzanine doubles the bedrooms over each other. That seller also had a difficult time selling, having started just before the onset of nuclear winter at from $4.2mm, and bouncing to $3.7mm, to $3.495mm and finally to $2.995mm. That seller then negotiated a further drop to get a contract in February 2010 at that even $2mm -- a 33% negotiated discount. Talk about the agony of victory....

I cannot reconcile the #4G sale at $2mm with the #4R sale at $2.6mm. Functionally, they are very similar, and are of a very similar size, though #4G is both larger and enjoys a better layout. Yet #4R sold at a 44% premium to #4G on a $/ft basis. Yes, #4G endured through the nuclear winter, while #4R sat out the worst part of The Market. The comparative results are simply irrational to me.

buyer (hearts) Police Building
Obviously, the #4R buyer likes the building enough to pay $2.6mm this month. What you wouldn’t know without nosing around is that this #4R buyer also owns the “980 sq ft” #2L, which he bought for $1.2mm in June 2008. Obviously, that was a very close to Peak purchase. He appears to be holding on to that one at this point. (He really loves the building!)

fun fact from the last century
Per our data-base, the loft was purchased in 1999 for $745,000, probably by this month’s seller as I see no intervening closed sales.

[UPDATE Dec 2: Curbed has the link to a New York Observer piece with the back story on both the buyer and seller of #4R, and squinting to find a mystery:

It’s unclear, however, if he will combine the two as the brokers refused to comment citing a strict confidentiality agreement on behalf of Mr. Gobbi. International man of police building mystery!


Note to Observer: no mystery! The buyer would have to be a magician (or buy a few more cop lofts) to combine a duplex on the 2nd floor facing east with one on two floors above facing west. Unless the Gobbi guy needs permanent guest quarters, expect #2L to be available for rent as soon as he moves in to #4R.]


© Sandy Mattingly 2011

 

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Nov. 19, 2011 - was rooftop terrace at 105 Fifth Avenue loft as valuable as the interior?


depending on how you cut the numbers, it is
The “1,925 sq ft” Manhattan loft #11D at 105 Fifth Avenue, with its “500 sq ft” private rooftop terrace, just sold for $1.8mm. (November 9 is “just” sold in my book!) Trying to second-guess the market value depends on whether the interior space is somewhat primitive (or, at least more primitive than the 3 lofts in the building that have closed since July 2010), or whether that rooftop space should be worth less than 20% of the interior space.

The loft has windows across nearly the entire 41 foot north wall, with a ‘master bedroom’ that gets light only from a skylight, a den with two exposures, and an upper level bedroom with direct access to the roof deck. (When was the last time you saw a bedroom with a wet bar?) There are 3 reasons I suspect the loft is pretty dated:

  • the seller has lived there since at least 1990
  • the only quality-based modifier in the babble is “upgraded kitchen”; the rest of the babble modifiers are size, shape or puffery (oversize northern windows, large open living space, separate home office, serene master bedroom, oversize bathroom)
  • that over-sized master bath features a large whirlpool tub, which to me dates a loft almost as well (but not quite as old) as glass brick (20+ years old)

The loft celebrated a birthday before The Market bit near an asking price:

Nov 4, 2010 new to market $2.1mm
Jan 25, 2011   $1.95mm
July 6 agent changes firms  
July 27   $1.83mm
Sept 1 contract  
Nov 9 sold $1.8mm

first cut
I mentioned that 3 lofts in the building have sold in the last 16 months, all “1,500 sq ft”, and all cleared within a remarkably narrow range (a welcome, if miscellaneous, sign of market rationality, perhaps):

  • #8E Feb 11, 2011 $1.35mm $900/ft
  • #6C Dec 6, 2010 $1.3mm $866/ft
  • #7C July 22 $1.3mm $866/ft
There was a lot of bragging about the condition of #8E, with an overuse of capital letters:

Architecturally Designed .... The Custom Built Kitchen Features Soap Stone Counter Top and Island. Ample cabinets and Storage in Addition to a Wall of Built in Closets … Sub Zero Refrigeration. Miele and Gaggenau Appliances. ... Master ... Bathroom, Marble Throughout with a Large Soaking Tub.


Ditto #6C, which leads with a heavy modifier:

Magnificent Mint Condition Fifth Avenue Loft .... Enormous ceiling heights, grand proportions and huge windows set this mint condition home apart from anything else on the market. Features include master suite with large dressing room and ensuite bath with his & her sinks, walnut stained floors throughout and stunning architectural details including corinthian columns.


The #7C babble is more restrained, but does date the renovation:

The loft is currently set up as a luxurious one bedroom with one large bath but could easily be altered to house a second full bath and separate home office area. Renovations of the kitchen, bath and floors throughout all took place in 2008 making it ready for immediate occupancy.


Each of these sounds like it is in superior condition to #11D, right?

These 3 sales pretty strongly suggest that renovated interior space in this building is worth about $877/ft, the average of those sales.

second cut
A moderate #11D renovation, focusing on the kitchen and bathrooms could probably be done for under $150,000, which would be about $83/ft. To keep things simple and the numbers round, let’s ballpark the renovation adjustment to bring #11D into the league of the neighbors at $138,600, or $77/ft. The round result is an interior space valuation for #11D of $800/ft, or $1.44mm for the interior.

The $360,000 balance of the purchase price would then be allocable to the private terrace with direct access from the wet bar room (errr … second bedroom). That is $720/ft for “500 sq ft” of private terrace, a rather high result compared to the interior space under the (by now familiar, right??) Miller’s Rubric, but to allocate more to the interior and less to the terrace bumps up against the 3 neighborly sales.

I can live with the working theory that the terrace adds 20% to the value of the loft (and is worth an extraordinary 90%) of the interior on a $/ft basis because this terrace (a) has great utility (direct access form the unit), (b) is a modest 28% of the size of the interior, (c) has a level of light and views not available from the interior (on the main floor, at least), and (again) (d) because the 3 recent sales are such strong evidence of an interior value of $877/ft for space in better condition than #11D.

crossroads of the world!
105 Fifth Avenue does not sit at the crossroads of the world because it sits at the southeast corner of 18th Street and Fifth Avenue. Nope, it sits ATCOTW because the #11D sale involved a Florida seller and an Oregon buyer. You don’t see that every day.

Speaking of crossroads and intersections in Flatiron … can anyone tell me why the building addresses don’t match on this part of Fifth Avenue. 108 Fifth Avenue should be across the street from this building, but sits two blocks away, on the southwest corner of 16th Street and Fifth Avenue. I have always wondered about that....

© Sandy Mattingly 2011
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Nov. 18, 2011 - high floor low ceiling loft at 25 West 15 Street closes on 2nd contract, 2nd price


strange history
The “1,800 sq ft” Manhattan loft on the 6th floor at 25 West 15 Street took 5 months to find a contract that stuck, using two asking prices (the second higher than the first), but until August all the action was in the first 6 weeks. This history is unusual (with one date added from the inter-firm data-base):

Mar 15 new to market $1.75mm
Mar 28* offer accepted  
April 9 contract  
April 29 back on market $1.85mm
Aug 3 contract  
Oct 28 sold $1.67mm

Note that the loft was quick to find a buyer in March, but that the loft sat from May through July before getting another. Note also that the sellers expected the momentum of March to continue, even at a higher ask. (Oops.)

I saw this one with buyers in those heady days in March. The buyers liked the finishes, hated the ceilings. This loft was marketed as a blend:

Original details include distinctive tin ceilings (9 foot) and egg and dart moldings. The master suite with study faces a quiet garden. The kitchen has been meticulously renovated with top of the line appliances and finishes. Two new bathrooms with Waterworks fixtures.


Of course, my buyers did not mind that the ceilings were of distinctive tin; they minded the height. That public space in the loft is rather long, and even with what is essentially a front wall of glass, there is surprising little volume in the loft -- less than the numbers generally imply.


“high floor” is relative in a 7-story building
There was a fairly recent and nearby comp when the 6th floor came to sale in March: the 3rd floor had sold in July 2010 for $1.575mm. That loft has a dramatically different floor plan than the 6th floor, with a true master suite across the back and the second bedroom fit into a front corner (near a weird closet). With the plumbing in exactly the same places and very similar functionality on both floors (2 bedrooms plus a “study” or “den”), I imagine these two lofts have very different ‘feels’. (This is why I find lofts so fascinating; apart from some new conversions that over-used the cookie-cutter, there can be tremendous diversity even in a small building like 25 West 15 Street.)

I have not seen the 3rd floor, so I do not know if there are differences in the quality of finishes in these two lofts. 3rd floor bragging concentrated on the kitchen (“open kitchen features a Sub-Zero refrigerator, Miele dishwasher, Thermador oven and granite countertops”), with no mention of baths, so perhaps the Waterworks on the 6th floor make a difference. But probably not much of the difference between the 3rd floor in July 2010 at $1.575mm and the 6th floor last month at $1.67mm.

Neither set of babble talked about views or light, which is not surprising with much higher buildings across 15th Street and only “a quiet garden” in back. I am hesitant to project form these sales that being 3 floors up should be worth almost $100,000, but that is the way the numbers work. My provisional approach is that the higher floor accounts for some small amount of the spread, that the improved market from 2010 to 2011 accounts for a small amount of the spread, until the difference is small enough to be considered customary market ‘noise’.

is low maintenance always a good thing?
Both sets of babble mentioned that there is no underlying mortgage on the coop, and the 3rd floor marketing specifically called attention to “a notably low monthly maintenance”. That might not be such a good thing, however.

My buyers thought the entrance and lobby were not particularly well finished or maintained. This is fairly common with more … errr … mature coop lofts, but coupled with a low maintenance I would worry about whether the 7 shareholders are being only penny-wise as far as the coop budget is concerned. Our data-base shows that 3 shareholders have been in the building at least 15 years and paid, on average, less than $350,000.

I am not saying that I know that shareholders in this small coop are worse than frugal; I am saying that these circumstances suggest a heightened level of diligence to be done, and a willingness on the part of a buyer with an accepted offer to walk away rather than sign a contract. Sometimes low maintenance is the tip of a large iceberg.

© Sandy Mattingly 2011
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Nov. 17, 2011 - O’Neill loft at 655 Sixth Avenue resells at 21% loss over 2007


that will leave a mark
Until recently, there were but two lofts at the O’Neill Building, 655 Sixth Avenue, on the spreadsheet of 2007 and 2011 paired sales. (See my September 27, is the Manhattan loft market back to (up to) 2007? 61 repeat sales say “probably”, “a bit”, for details and an overview of the paired results.) That was mini-loft #2M, which re-sold in February at a tiny 1.16% more than the January 2007 sponsor sale, and #3M in the same line, which sold in July at a 25% premium to the (much cheaper) sponsor sale in January 2007. 

To say that the Manhattan loft #3F at 655 Sixth Avenue had a different result on resale is an understatement: at a loss of 21.43% from February 2007 to October 24, 2011, only two of (now) 73 pairs of downtown lofts that sold both in 2007 and in 2011 did worse. (See that September 27 post for how to see the details on the spreadsheet.) Both “M” resales sold above ask; #3F sold 8% below last ask, 17% below first ask in this campaign, and 38% below first ask in the initial resale attempt. Different results, indeed!

This is the listing history of motivated sellers, also of sellers who had to learn an expensive lesson by mis-timing and mis-pricing just before Lehman filed for bankruptcy:

Feb 15, 2007 sponsor sale $3,156,575
     
Aug 11, 2008 new to market $3,975,000
May 11, 2009 off the market  
     
Aug 12, 2010 new to market $3,000,000
Nov 23   $2,800,000
May 10, 2011   $2,700,000
Aug 9 contract  
Oct 24 sold $2,480,000

(2 brief periods off the market, 33 days in total. omitted; one post-contract “price drop” ignored.)

Note how chastened the sellers were after taking a flyer beginning a month before Lehman fell. Note that they re-started 15 months ago slightly below their sponsor purchase price. Note how long they waited to give each new price a chance. But don’t lose sight of the $676,575 difference between what they spent in 2007 and what the got in 2011.

O. U. C. H.

hard to profit if you buy high
A quick and incomplete scan shows that the #3M re-sellers did so comparatively well precisely because they got a relatively low sponsor price (16% lower than #2M), while the #3F re-sellers paid a relatively high initial price of $1,328/ft. In contrast the sponsor did not sell #2F (a bit larger than #3F, “2,522 sq ft” v. “2,376 sq ft”) until November 2007 and got (only) $2,749,745 for it, 18% lower than the sponsor got for #3F on a $/ft basis.

Only the original #3C purchasers paid a higher sponsor price (that I noticed) than that of #3F (at $1,386/ft), but look what those smart fortunate people did: they flipped #3C in 6 months for a 10.5% gain.

Other than penthouses, loft #3F is the only large unit to re-sell in the O’Neill since that #3C resale in June 2007. Perhaps there is a very local resale problem limited to the large units, as neither the 1-bedroom #2M nor #3M had this problem. And neither did 1-bedroom #3B, which sold 10 months ago at a 9% premium to its December 2006 sponsor sale, or #2G, which sold 15 months ago at $1,340/ft after the sponsor sold it for only $1,158/ft in July 2007.

terrific views did not get it done
If you have ever driven up Sixth Avenue in Chelsea, you know this loft. #3F is that rounded unit (on the 3rd floor, obviously) facing all that traffic from the northwest corner at 20th Street. I saw it from the inside, with buyers early this year, and I remember that we thought the foor plan was surprisingly small. That is an odd reaction to “2,376 sq ft” that has only two bedrooms, especially one with such high ceilings (“13 ft”), but the space (to us) feels smaller.

I think that is due, in part, to the most interesting feature of the loft, that large curved corner that is, in real life, difficult to use. Certainly, that shape makes it hard to add a third bedroom without a radical re-do (probably requiring moving the kitchen, or swinging its axis). An unusual problem to have in a “2,376 sq ft” corner loft with 14 windows.

We had the impression that the loft suffered from street noise, which should be a problem that (if shared by others) can be remedied with money spent on new windows. (Why wouldn’t the developer have done that?) My buyers hardly gave it a second thought, as the sound and size issues made this loft, in our view at the time, a very poor competitor in the $3mm price range.

© Sandy Mattingly 2011

 

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Nov. 15, 2011 - old news, as build-a-loft takes 2 years to sell for $646/ft at 129 West 22 Street


breaking news, from March
The reason that the March 23 sale of the “2,400 sq ft” Manhattan loft #5A at 129 West 22 Street for $1.55mm is news is that the deed was just filed last week. No, that’s not right; that makes it new. The reason it is news is that it sold for $646/ft. And that this long-delayed (no longer new) news capped only the most recent effort to sell, an effort that lasted two years (this time; the last time they gave up after a year). But is that $646/ft really 'low'?

If you crave a tale of gritty perseverance, or of bottom-fishing, today is your day, and this is your blog.

the little loft that couldn’t, until it could
Loft #5A was offered for sale for 51 weeks in a hot market, without selling into February 2007 at prices starting at $2.2mm but ranging from $2.4mm to $1.999mm. When they tried again two years later they bounced around again but found success just over 104 weeks later:

Mar 19, 2009 new to market $1.725mm
Dec 3   $1.599mm
Mar 18, 2010 (failed) contract  
April 23 hiatus  
June 21 new firm $1.75mm
Sept 8   $1.625mm
Dec 14 contract  
Mar 23, 2011 sold $1.55mm

Of course you wonder about that failed contract off an asking price of $1.599mm given that they ended up at 97% of that ask a full year after that first contract. Leap year is not until next year, so from launch to close this marketing campaign lasted 734 days. But at least they started anew in 2009 at different prices than they’d failed at during 2006 and 2007.

faint praise for the condition
Our data-base has a description of the condition of this “2,400 sq ft” loft that  you can’t see. You don’t often see this word in this context, but it is “Condition: Fair”. Inexperienced shoppers might not have read between the lines of broker babble to get to that same point, but the point is hardly subtle. The second sentence of babble highlights a claim to fame:

Having both "Trader Joe" and "Whole Foods" this close to your apartment is almost impossible.

The third sentence tells why an ‘almost impossible’ loft (location) was last offered at $677/ft and why it eventually cleared at $646/ft:

Don’t miss this extraordinary opportunity to create your own LOFT in Chelsea.

“Opportunity” costs, of course; just a lot less than its realization. Not to mention, one-third off what they wanted for the same opportunity for 6 weeks in Spring 2006.

Just after the #5A ‘sellers’ gave up in February 2007, the neighbors upstairs in loft #10A found where the market valued one of these lofts in “excellent” location. That loft is a little larger, at “2,525 sq ft”, and closed on August 18, 2007 (2 quarters short of The Peak for the overall Manhattan residential real estate market) at $1.995mm, or $790/ft. That value highlights how far from The Market the #5A sellers were, stuck (persisting) at $1.999mm from June 22, 2006 to March 14, 2007 with their only “fair” loft, at $833/ft.

primitive floor plan and floor
Yes, the floor is beaten up in this loft, as is evident especially in the second (of only two) interior pix. But what I mean by ‘primitive floor’ in the sub-head is the fact that it is raised across the whole middle of the footprint, to accommodate plumbing no doubt. In the floor plans for #10A (in our data-base) and #12A, the kitchens and baths are almost in the same position as in #5A, but without the raised floor. In those cases, the kitchens and baths are at the east edge of the loft, apparently where the waste and water lines are.

Probably long ago, an owner (these sellers?) put in that huge master bath and what was probably a very fashionable kitchen for a Chelsea loft for its day, on west wall. Fro whatever reason, they put them on that far wall, away from the plumbing lines, needing a raised floor to get the necessary pitch back to the east wall, and that awkward raised floor extending to in front of the public bathroom.

You don’t see that very often any more.

This floor plan has the look of one that started out as a 1-bedroom layout, with just those two small windows in the rear of the ‘master’ bedroom. There are only 6 large windows facing south in the loft, and four are taken up by bedrooms. I will bet you a quarter that those bedrooms were not part of the original layout, that first the corner one was added, and later the oddly shaped third bedroom. You are left with a “2,400 sq ft” loft with exactly two windows in the public areas and a ‘living room’ 13’6” x 16’. That floor plan is neither efficient nor spacious.

surprise, surprise
Net-net, the sellers fully expected the eventual buyers to “create [their] own loft in Chelsea”. One surprise for the sellers was that it took such steep haircuts (and so many months, and years) to sell. One surprise (to me) is that The Market did not exact a larger discount.

The difference between #10A in August 2007 at $790/ft and #5A in March 2011 at $646/ft is barely enough for a low-end renovation (assuming that market conditions at those two times are more or less the same; work with me here, because if you suspect that The Market 2 quarters pre-Peak was a stronger and deeper market than in early 2011, you would expect the spread between #10A and #5A to be much larger).

This is one of those sales that is interesting at first blush because it is at such a low dollar-per-foot value, but ends up as interesting because it was not lower, once you get to know it.

Did I mention that the Manhattan residential real estate market is not observably rational, in (many) specific cases? Or, that ... (say it with me) … comping is hard?

© Sandy Mattingly 2011

 

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Nov. 14, 2011 - did 30 West 15 Street lofts sell at premium due to combination potential?


numbers are hard things
It is not a coincidence that both lofts on the 3rd floor at 30 West 15 Street closed on the same day. Although owned by different people and listed by different firms, the closings of lofts #3S and #3N were coordinated because they were bought by the same folks, obviously to be combined. One interesting question raised by these sales is whether the buyers paid a premium to get both (following the 1+1=2.5 math VToy in the New York Times explained [but did not well support; see my September 10, deconstructing NY Times article about combining apartments to increase value] and which The Miler takes as a given).

Another interesting question is about the negotiating dynamic, as they signed the contract to buy one before they reached a deal on the other … why give the second seller so much leverage?

Sad to say, these are interesting questions to discuss, but we are not going to get any answers. Numbers being the hard things that they are, it is impossible to prove through comps whether there was a to-be-combined premium. (What data there are suggest the answer is “no”.) And no one is going to reveal their negotiating strategies. But let’s look at the first question, at least, knowing we won’t find definitive answers.

dual histories, curious parallels
The relevant histories for the two lofts begin in 2007:

#3S May 3, 2007 sold $2,900,000
#3N   sold $1,737,500
       
#3N June 26, 2008 new to market $1,795,000
#3N Sept 19   $1,650,000
#3N Sept 25   $1,595,000
#3N Feb 11, 2009   $1,495,000
#3N April 22 off the market  
#3S April 26, 2011 new to market $3,100,000
#3N May 5 new to market $1,895,000
#3N May 31 contract  
#3S June 21* contract  
#3N Sept 22 sold $1,845,000
#3S Sept 22 sold $3,050,000

(*Our data-base has this earlier contract date for #3S.)

The change in value for these two lofts since 2007 for #3S is 5.17%, for #3N is 6.19% … essentially the same. While a nice parallel, this tells us nothing about a Combo Premium. But looking at where these two lofts sit on the spreadsheet of (by now) 71 lofts that sold both in 2007 and 2011 makes it very hard to find a Combo Premium. (See my September 27, is the Manhattan loft market back to (up to) 2007? 61 repeat sales say “probably”, “a bit”, about the overall conclusions to be drawn from those pairs [hint: see hte title] and for how to get free access to the spreadsheet [hint: send an email].)

The short story is that the 2011-over-2007 gains for these two lofts rank 34th and 36th in percent gain among the 48 pairs of lofts that had some gain, then to now. 22 of those lofts showed gains of more than 10%.

You can argue that this method is not an ideal way to measure market changes (the N in the data set is still pretty small), and that one example does not prove anything about The Market, overall. But you cannot argue from this data that the buyers paid a premium to be able to combine these two lofts.

figurative math is not literally math
To be fair to VToy and to The Miller, the argument is not that 1+1=2.5 exactly or in all cases of to-be-combined units. In that September 11 New York Times piece, VToy relies on The Miller for some general points, including that The Combo Premium is more like a “not uncommon” occurrence than a rule, and that it depends on the layout logic of the two units:

Jonathan J. Miller, the president of the appraisal firm Miller Samuel, says the 2.5 in the equation is more figurative than literal. “If you have two adjacent apartments and they logically connect to a bigger and better layout,” he said, “it’s not uncommon to see a 20 percent premium on a price-per-square-foot basis. And that’s before the renovations are even done. It’s just the fact that they’re put together.”

To be sure, not all proposed combinations make sense architecturally, but for two units that can easily be merged, Mr. Miller said, buyers are willing to “pay more for the potential to enhance the value.”

In this case, the proposed floor plan is hardly imaginative, but there are few things easier than combining two lofts that share a wall on which there is plumbing on both sides of that wall (compare the two separate floor plans here for #3N and here for #3S). In fact, the combination solves the biggest floor plan problem in the #3S separate layout: those two long hallways that wrap around part of the adjoining loft are so awkward that one was billed as a 21 x 5 foot storage space. In other words, if you would ever expect to see a combination premium based on both the ease and the logic of the combined floor plan, this pair is that example.

Except that there is no evident premium. At all. Let alone a 20% premium.

a strategy that showed doubt about the theory
These lofts at 30 West 15 Street might not be the ideal test case for the 1+1=2.5 theory because the sellers were not all-in on that theory. Each loft was offered as a stand-alone property, in the case of #3N for almost 4 weeks before contract, while #3S was available to a stand-alone purchaser for 9 weeks before contract. The eventual combo buyer had at least some weeks to see that the individual loft buyers had not (yet) snapped up either loft.

Separate marketing as separate lofts might have depressed the combination premium by making explicit the single-unit market values (lower, in theory). From one of VToy’s sources:

the “ideal way” to market a combination was at a single price. Listing one of the units individually “waters down” the power of the combination... and makes it harder to get as much of a premium, because buyers can see the fair market value of one unit and then “look at the two pieces and argue that they don’t add up to the number you’re asking.”

Perhaps that is what happened here, and that this form of either-or-both marketing is simply not a good test of 1+1=2.5 math. But it should be at least telling (and disappointing for 1+1=2.5 fans) that the professional agents who marketed these two lofts did not persuade the two sets of owners that they could both be as much as 20% better off if they marketed jointly only as a combination, with the theoretical premium baked in to the asking price.

If the theory works, you’d think that the sellers might try that exclusively combo marketing at first, with a back-up plan to split up into separate marketing plans if Plan A did not work. But maybe in the real world getting separate owners (and agents!) on the same page is akin to herding cats.

© Sandy Mattingly 2011
 

 

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Nov. 12, 2011 - Astor Place loft seller takes wee bath since 2005 at 445 Lafayette Street


almost a diversion, for being tardy
This one has been sitting in my To Do pile for a while, but is interesting enough for even a tardy post because it involves A Famous Building that (in this case, at least) has not held its own since the original sale in 2005. This case is the “1,681 sq ft” Manhattan loft #7B at 445 Lafayette Street (aka “Astor Place”, being that it is on Astor Place), purchased from the sponsor for $2,443,800 on November 18, 2005 and sold by that purchaser on July 22 for $2.395mm. (In fact, it leads to all sorts of places and times, as you will see.)

I say “wee bath” in the title, but the bath is actually a wee bit bigger than these numbers show. Because of the vagaries of how prices are recorded in New York City’s ACRIS system, that 2005 recorded purchase price includes the City and State transfer taxes (1.825%) because they were (by common convention in a hot new development market in Manhattan such as this building at that time) paid by the buyer, not the seller. The asking price in 2005 for loft #7B was $2.4mm, and the recorded purchase price is exactly that plus 1.825%.

Why does this matter? Because the NYC and NYS transfer taxes are paid by the seller on resale and not recorded in the purchase price, so the 2005-buyer-who-paid-transfer-taxes sold this Summer for $2.395mm and paid transfer taxes of 1.825% (again!), or $43,709. He netted $2,351,291 before considering other (smaller) transaction costs, so his bubbles-to-bubbles-bath on resale was $92,509, or 3.8%. Still a wee bath; just not as wee.

With only two bedrooms, there is an awful lot of room in this “1,681 sq ft” loft, enhanced by floor-to-ceiling windows. Of course, this is the building that put the sex in curved curtain walls, so there are curved walls in opposite south corners, in the master and in the great room. The money views in this building are on the other side of he building, facing north up the broad crossing of Fourth Avenue and Lafayette Street, and I cannot be sure how far the south views extend from the 7th floor. But one certainly hopes the babble is not being maddeningly precise but inaccurate in suggesting that the “undulating walls of floor to ceiling glass that maximize views of the Manhattan skyline”, if there is not much to ‘maximize’. I have reason to be skeptical.

bigger bath higher up (not much higher, but much bigger)
In wondering whether this guy’s experience of taking a small bath from his sponsor purchase in 2005 was typical, I noted that loft #9B sold last year at $2.375mm (I will trace that deed in a bit). That seller is hard to trace, but (trust me, and i will explain) took a real bath. Enough of a bath that I can conclude that Astor Place has a problem keeping its head above water (at least from the south), and that the 9th floor must have much better southern views than the 7th floor (even if the 7th floor views are “maximized” by the windows).

The #9B sponsor sale (offered at $2.95mm, per our data-base) matches up in price and deed names to this purchase on October 29, 2005 for $3,003,837 (the ask was $2.95mm, that plus 1.825% = the recorded price). Lofts #7B and #9B have the exact same floor plan in the exact same corner of the building, yet they were priced by the sponsor in 2005 $550,000 apart. What might account for the 23% premium of #9B over #7B? The only thing that makes sense is the view, or rather that #9B has a view and #7B has only “light”. Damn that maddeningly precise but inaccurate broker babble for #7B!

no bath lower
Let’s do one more, with a very different resale experience due to very different timing (luck!). Loft #6B is the last “B” line to sell before the 7th and 9th floor specimens, way back in another world, on June 27, 2007 for $2.71mm (I know that deed is #6B because our data-base links that listing to that sale price on that day). The phenomenon of new development resellers having hugely different results depending on which year they sold is not new, so chalk this up to Exhibit H or L in that series. The 6th floor “B” seller sold for $300,000+ more than either the 7th or 9th floor seller because that seller had the good fortune to sell into The Peak rather than after it.

It should not be a surprise that that #6B seller in June 2007 made a profit instead of taking a bath. Matching up sale dates and asking prices in our data-base, and 2007 deed name to sponsor deed name, confirms that the 2005-#6B-buyer-turned-2007-seller paid $2,392,887 on November 3, 2005, or nearly $400,000 less than it sold for two years later (before expenses, of course).

Note another thing about that 2005 price: it is evidence that the sponsor assessed view-independent values on this part of the “B” line as worth exactly $50,000. If that formula held for the 9th floor, the 9th floor original sale price would have been only $100,000 more than the 7th floor … not $550,000. In other words, the sponsor valued the view from #9B as worth $450,000 more than the “maximized” light in #7B in 2005, and The Market agreed by paying full price for each. Double damn that maddeningly precise but inaccurate broker babble for #7B!

seller has a thing for neighborhood icons
Voyeur alert: I have not discovered (yet!) where the July seller of #7B has gone, but the deed record notice address shows where he came from. To move to loft #7B in the gateway to NYU-ville the East Village in 2005, he sold the “983 sq ft” Manhattan loft #10N at 252 Seventh Avenue (the Chelsea Mercantile) for $1.095mm on April 25, 2005, in a building which was as groundbreaking / neighborhood-making in its day as Astor Place was in 2005.

StreetEasy’s past listings don’t go back that far, of course, but our data-base shows that it took him just 2 months to get a contract for loft #10N, and that this loft has a studio layout: windows on only one wall, with a (dark) “home office” at the other end of the loft, behind the kitchen. (No doubt, everybody who lives in this layout sleeps in the work space.) That marketing did claim that the loft is “drenched with morning sunlight”, but does not claim a view, though it faces Seventh Avenue.

I can’t find the deed record for his original purchase at the Chelsea Merc (I am probably scrolling right past it), but our data-base shows that he purchased #10N in the original offering on October 27, 2000 for $485,000.

paging Patti Lupone
So even if you are inclined towards sympathy for new development buyers who don’t make a huge profit on resale (such as this guy at Astor Place), you may be heartened by his experience of selling a new development buy at the Chelsea Merc for more than twice what he paid for it. Of course, through the magic of leverage, his gain at the Merc was more like 500%, if he put down as much as 20% in 2000.

That’s how one gets one’s foot in the door of Manhattan residential real estate. That $500,000 profit from the Chelsea Merc would have made a lovely down payment on the 2005 purchase at Astor Place for $2,443,800.

© Sandy Mattingly 2011
 

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Nov. 11, 2011 - when the market does not appreciate your renovation, appreciation is limited (43 West 21 Street loft edition)


numbers don’t lie, but they can obscure
If you look at only the October 5 sale of the “1,850 sq ft” Manhattan loft on the 3rd floor at 43 West 21 Street (at $2.04mm) and its most recent resale (July 24, 2009 at $1.5mm), you’d think the recent seller (a) did pretty well, and (b) must be pretty happy. But let me add some more letters, and you may change your mind: (c) it sold before that on August 11, 2005 for $1.775mm, (d) since the 2009 purchase the loft has been “recently designer renovated to create a residence full of understated elegance, detail and unique character”, and (e) the recent seller started trying to sell on July 19, 2010 at $2.7995mm. Now how well do you think the seller did, and how happy?

In simple terms, the loft sold last month at a 15% premium to its price in 2005. That result seems to be within an expected range of results, 2005 v. 2011, even though I have not (yet!) done a paired resale analysis for 2005 like the one I did for 2007 sales (September 27, is the Manhattan loft market back to (up to) 2007? 61 repeat sales say “probably”, “a bit”; Note to Self …). But there is that intervening sale, and the change in condition, so 15% understates what the appreciation should have been expected to be. But but the seller thought The Market would react well to an asking price a full seven figures above the 2005 sale price.

from architect’s dream to designer renovated
This is two owners in a row who were disappointed when they left. That 2005-buyer-turned-2009-seller simply missed The Market. Having paid that $1.775mm, he came out on October 25, 2008 -- 5 weeks after the Lehman bankruptcy filing changed everything -- at $1.95mm, held there through the calendar winter (well into the nuclear winter for the Manhattan residential real estate market), before dropping to $1.795mm on March 3, 2009. That seller needed another 16% discount to sign the contract by May 29 at $1.5mm that finally closed on July 24. O. U. C. H.

That version of the loft was finished, though perhaps not finished so well, as it was marketed as an opportunity:

rich interior space offers two large bedrooms, two full bathrooms, a utility room with a washer and dryer, and a beautiful kitchen with a Viking stove. In many ways, this in an architects dream as there is space enough to create your own office, media, and den areas in this already open and spacious dream apartment.

That is pretty restrained babble.

The 2009-buyer-turned-2011-seller wanted, as I mentioned, to have turned into a 2010 seller, but The Market did not cooperate:

This full campaign history omits two brief periods of hiatus, 22 days in total, but none of the pain:

July 19, 2010 new to market $2.795mm
Aug 3   $2.695mm
Nov 3   $2.675mm
Dec 15   $2.55mm
May 3, 2011   $2.295mm
??? contract  
Oct 5 sold $2.04mm

This seller held for almost exactly a year before putting the loft on the market at 186% of the 2009 purchase price, with much of that year probably taken up with the dream of some designer.

This babble is not at all restrained (and I am cutting it liberally):

An Island of Sophistication in the Flatiron District ... recently designer renovated to create a residence full of understated elegance, detail and unique character. ...south facing large-scale bay windows with seating at sills atop custom cabinetry. The pre-wired, state-of-the-art audio visual system with prodigy control on wall and via remote with surround sound and speakers throughout … Sunlight streams through the five north-facing brand new Anderson windows in the master bedroom with Roman shades and shears for privacy and tranquil sleep. ...luxurious walk-in closet hidden behind pocket doors .... The oversized master bathroom is your own spa with its unique spacious 6' x 3' shower with rain shower head and body sprays. Hansgrogh fixtures, double Wetstyle vanities, a Robern Uplift double vanity mirror with night light, internal convenience sockets and mirror defoggers will provide a remarkable bathroom experience. ... Open chef's kitchen with Viking stove and wine cooler is surrounded by a beautiful Caesar stone counter top and stainless steel appliances.

(Odd locution alert: unless I have an outdated babble handbook, this phrase is not standard, so was most likely lifted from the 2009 listing: “[t]his rich interior space”; and these two are just weird: “a remarkable bathroom experience” and “custom hanging and shelving by Elfa”.)

No restraint: I hate the floor plan for this listing, not for what the designer / architect did, but for making it so darn small in the listing. It is hard to tell how much the floor plan changed since 2009, even tugging it larger on an iPad. It is clear that the back wall was changed dramatically to create the new master bedroom, but if there are other ‘renovation’ changes, the rest is hard.

It is not hard to see that much of the skin changed. Start with the kitchen, which has the same basic configuration, but which is clearly a new kitchen. (Compare old pic #3 to new pic #6.) One sort of hopes that the “recent designer renovation” cost a great deal of money, given the premium that the 2009 buyer thought it justified in 2010.

But it did not work.

Fortunately, the seller had been a Buy Low buyer in 2009, if not a Sell High seller in 2011. Whether the seller even had a gain depends on what the “recent designer renovation” cost; she sold for $540,000 more than she paid (before transaction costs), so there is a gain if she spent less than $300/ft in that year after he bought it. Not much of a gain, but still ...

is this post the opposite of yesterday’s?
Perhaps the 2009 buyer should have turned to that Henderson guy who worked the magic just 2 blocks from here that I hit yesterday (November 10, at 140 Fifth Avenue, “B” lofts go wild, designer effect boggles).

© Sandy Mattingly 2011

 

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Nov. 10, 2011 - at 140 Fifth Avenue, "B" lofts go wild, designer effect boggles


comping is … (you know)
The “2,000 sq ft” Manhattan loft #8B at 140 Fifth Avenue had a pretty successful campaign this Summer, coming to market at $2.195mm on June 17 and finding the contract by July 29 that closed at $2.1mm on October 18. That is 6 weeks to get a contract at 95.7% of the ask. PARA However (you knew this was coming, right?) … the last sale in the building was #6B a week and a half before #8B came to market. Details below, but #6B is only a bit larger at “2,200 sq ft” yet is a very different animal, closing on June 8 at $3.1mm. That is $1,050/ft for #8B and $1,432/ft for #6B. Almost the same footprints.

do the kids know?
There is not a great deal of detail about the condition of #8B in the broker babble, but the thrust is enthusiastic and positive: not only is the loft “[r]ecently renovated” but it is “[s]un flooded and sprawling”. It takes a while to get into the loft (see the floor plan, with that long gallery), but once there there is a lot to like: big windows looking north (that flooding sun), a nicely proportioned open living / dining / kitchen area (22 x 32 ft?), with 3 bedrooms and 2 baths.

And one “dressing room”, sadly not pictured but said to be windowed and “not to be believed!”. That dressing room is nearly as large as the 2nd and 3rd bedrooms. Perhaps those other bedrooms are guest rooms or offices; but perhaps they were used as children’s rooms, in which case I can imagine a child (say, 14 years old) wondering why she is in a room less than 10 x 9 feet when the parents clothes egt nearly twice that much space. But perhaps I have an over-developed imagination....

happier kids on 6?
The most significant difference between the #8B and #6B floor plans is probably not that the 2nd and 3rd bedrooms on the 6th floor are larger (at 11+ x 11+ ft) but that loft #6B floor is about 10 feet longer than loft #8B. There is no measurement given in the #6B listing, but our data-base has it at “2,200 sq ft”, which not only looks right based on the floor plan (#6B has that library and still is one window longer than #8B in the living area), but is consistent with the respective monthly maintenance charges ($2,257/mo for #8B and $2,512/mo for #6B). But a 10% difference in size does not explain a 36% difference in market value per foot.

you can see (some of) the million dollar difference
For reasons unknown to me, the listing description is missing from the surviving material on StreetEasy. Here is what it used to say (taken from our data-base), which will help you a bit in enjoying the photos on StreetEasy (be sure to click for a full screen view):

Published in House Beautiful, designer Shawn Henderson combines intrinsic prewar architectural details with natural stones, rich woods and calming colors to create a home that both soothes and captivates the soul. This circa 1920 loft has 17 windows north and south, 11'+/- ceilings. The art gallery hallway leads to an expansive living, dining, media area and professional chef's kitchen perfect for gracious entertaining. Master bedroom has en-suite bath and closets galore. There are two additional bedrooms plus library. Other features include: custom built-in shelving and cabinetry, large pantry room, full-size washer/dryer, state-of-the-art audio/visual with two plasma TVs and Lutron lighting system. ...

 (For more photos, you have to dig a bit on that designer’s website: click Homes, then Flatiron Home.)


do the math
The “2,000 sq ft” #8B was recently renovated and sold for $2.1mm. The “2,200 sq ft” #6B was designed since the recent sellers bought it in 2003, and sold for $3.15mm (taking 3 weeks for a full-price contract). Two things about that design: our data-base shows that loft #6B had not been renovated after that 2003 purchase (the floor plan before is the exact same as after), and the condition before was pretty darn good (“Triple mint ... gourmet kitchen. …[t]ruly spectacular!”).

I am not the person to riff on the contributions that interior designers make, but here I can do the math. This guy Henderson changed the skin of loft #6B (exactly how, and what materials, I don’t know) and created a space that was worth 36% more than the “recently renovated” #8B, on a $/ft basis.

That boggles my mind. And makes me wonder what that design cost....

more numbers
Loft #6B has sold at least 4 times in the last 20 years, not quite doubling each time:

  • June 8, 2011 $3,150,000
  • Aug 19, 2003 $1,850,000
  • Dec 12, 1997 $950,000
  • July 1, 1993 $495,000

(Prior sales are from our data-base; the first price is “estimated”, which was frequently captured that way in olden times.)

This history suggests another way to look at the premium factor for the Henderson design. Some part of the 8-year appreciation from $1.85mm to $3.15mm is the change in market, and some part is the Henderson Effect. For now, I am content to guesstimate that The Market change is probably less than half the difference, with a Note To Self... to check if the overall Manhattan residential real estate market is up 33% 2003 to 2011. If true, that would leave more than $650,000 in difference in value from the Henderson Effect, using the internal comps from #6B having sold in “spectacular” and “triple mint” condition at $1.85mm in 2003 and then post-Henderson at $3.15mm in 2011.

repetition is the mother of memory
That boggles my mind. And makes me wonder what that design cost....

2005 was pretty wild, too
StreetEasy shows two other “B” line lofts sold at 140 Fifth Avenue in 2005, again at a (seemingly) huge spread:

  • Dec 1, 2005 #3B $1.89mm
  • Sept 27  #7B $2.9mm

Maybe my mind is easily boggled today, but there is an explanation for what looks like a ridiculous spread. Our data-base suggests that the reason is mostly size: #7B was “2,400 sq ft”, #3B was “1,437 sq ft”. (Not to go crazy here, but our data-base actually says “437 sq ft”, but that really seems like a typo that dropped a digit, as the whole floor seems to be about 3,000 sq ft and we have #3A at “1,475 sq ft”; but I will stop.)

All I see about condition is that #7B was babbled as an “[e]legant light-filled,and beautifully finished loft”, as we have no listing corresponding to that #3B sale. On a $/ft basis, the spread reverses, with #3B as the one favored by The Market: $1,208/ft for #7B and $1,315/ft for #3B.

What do they (I?) say about comping …?

© Sandy Mattingly 2011

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Nov. 9, 2011 - 600 sq ft loft that “comfortably sleeps 8” sells at 21 East 22 Street, with happy back story, and different front story


telling part of your story on TV
It is a cliche to say that there are 8 million stories in the naked city, but it is also true. The listing description for the “600 sq ft” Manhattan mini-loft #6G at 21 East 22 Street that sold last month for $590,000 links to the beginning of the story for one Manhattan couple with an unusual (newsworthy!) solution to being a new family unit, while the deed record hints at the end of their story. Let’s look at the real estate angle of the (happy!) (clever!!) beginning of their story, before delving into darker material.

tight, like a ship’s cabin
The broker babble describes mini-loft #6G as “easily convert[ible] into a one bedroom layout”, but that is hard to prove without a floor plan. That is a much more modest description than they way the owner described it in an April 20, 2003 New York Times “Habitats” feature in the Sunday real estate section done when the mini-loft was newly renovated and there was a happy couple sharing two units 4 floors apart in the building; then these few, these proud 600 sq ft were claimed to “sleep 8”.

More likely, the current broker babble means that the sleeping area can be closed off with a wall to make a(n interior) room. That’s the “sleeping area” below the two sleep lofts, and not the sleeping that can be done on the pull-out couch, of course. The layout is not hard to read from the pictures (especially if you click the ‘full view’ feature on StreetEasy) -- after all, we are only talking about 600 sq ft. The “bedroom” is on your left as you enter, with the bathroom immediately right and the kitchen one step ahead and right. Only 2 more steps and you are in the dining area / living room. The 11 foot ceilings are squeezed within an inch of their lives to fit the two sleep lofts above the ‘foyer’ and the bedroom, and that orange thing is a clever ladder that folds up into the cabinet when not needed for access under the ceiling.

The Times describes how this loft came to be designed this way. Short story:

    • Woman on the 2nd and floor gets together with Guy
    • her place is too small for her child and him and his occasional children
    • he buys #6G and she designs the Nice Touches, such as that foldaway ladder, the 6-burner professional range, the lighting system
    • they bathe in his, shower in hers (spend most nights in hers)
    • they put up his kids and out-of-town guests in his
As the headline says: living together but 4 floors apart. Cute story, right? Amazing use of #6G’s limited space, right?

As the babble notes, this design was “[f]eatured in a dedicated segment on HGTV’s Small Space, Big Style television” and the babble helpfully provides the (pretty low quality) link to that show. It is worth a look, as you get a very good sense of the space, as well as the choices they made as renovation opened up unexpected things (e.g., where his ‘office’ is) and she decided to light up the bottom of futon springs as foyer lighting (cool!). Cute story, right?

a step back for some back story
You can’t get clearing prices on any public web site that go back to when The Guy bought #6G, but our data-base shows that he paid $368,000 on August 9, 2000. Obviously, they did the renovation work after that. No way to say how much they spent on the renovation, or how much the renovation contributed to the gain since 2000, but at $590,000 on October 11, 2011, he came nowhere near to doubling his price in 11 years.

But he did do a lot better in selling #6G than the seller of #2E, which I hit in my Oct ober 27, tough times in mini-loft market? or just at 21 East 22 Street & 77 Bleecker Street. We show “600 sq ft” and #6G at #2E at “750 sq ft”, so the $/ft spread ($983/ft v. $740/ft) is much wider than the difference in sales price ($590,000 v. $555,000). Presumably, much of the market $/ft difference between these mini-lofts is due to the very efficient (and well appointed) use of space in #6G.

moving the story forward, alas
If you are at least as sentimental as Manhattan Loft Guy, you wondered, on seeing the #6G sale 8 years after the cute New York Times piece, whether The Guy and The Woman finally got rid of the extra loft, with the youngest of their 3 kids now 24. That would be a nice way to end the his-and-hers real estate story, but would be difficult to confirm.

However, it appears that that is not what happened, but that they have ended this experiment of storing pasta and taking baths on the 6th floor while sleeping and showering on the 2nd. The notice address for The Guy on the deed recording the sale of #6G, sadly, is an Upper West Side rental building.

I wouldn’t have had a clue as to any of the personal information about these folks (I almost said private information) without having clicked on the links to their happy life circa 2003 provided by the listing agent. The good news was not private then; the apparent change in their living arrangements is not private now.

Alas.

© Sandy Mattingly 2011
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Nov. 8, 2011 - 53 N. Moore Street loft finds right price, eventually, to sell, eventually


I love history
There is much to love about the listing history of the “1,746 sq ft” Manhattan loft #3A at 53 N. Moore Street (the North Moore) that sold eventually (in case you missed it in the title) for $2.3mm on October 25. (Not to mention, there is much to love about the loft itself.) I cannot decide if my favorite factoid is that it did not sell for 10 months asking only 6.5% more than the eventual clearing price, or that it took more than 5 months at the last asking price to get a (by then) full price contract. Did I mention that the Manhattan residential real estate market is not (always? often?) efficient, or rational?

Follow me down this long (curiously patient) path, which started nearly 2 years ago, with important dates* missing from StreetEasy taken from our data-base:

Nov 19, 2009 new to market $2.45mm
Aug 20, 2010 hiatus  
Dec 3* back on market  
Jan 31, 2011*   $2.4mm
Mar 11   $2.35mm
Mar 18   $2.3mm
Aug 23* contract  
Oct 25 sold $2.3mm

Now, step back from the path …. No sale at $2.45mm for 10 months overlapping 2009 - 2010 (all post-thaw, clearly), and no contract within 6.5% of that original ask for those 10 months plus another 9 months extending well in to 2011. It cannot be so simple as The Market waiting for the seller to signal ‘negotiability’ via trivial price drops, right?

you can be too thin
That bromide about too-rich-or-too-thin-(not!) does not apply to The Market. The only rational way to look at this extended history is to see it as evidence (a) that the eventual buyers were not actively looking until at least sometime this Spring, (b) that the seller was very stubborn once he reached his line in the sand, (c) that the buyers really liked the loft once they (eventually) saw it, and (d) that the buyers were convinced they had to match The Price if they wanted the seller’s signature on a contract.

I concede it is possible that a long-delayed full price contract suggests a second bidder may have appeared (as a refinement of my “(d)” point), but here is why I think that unlikely. First, it looks as though the eventual buyers showed up in June, as the inter-firm data-base shows a busy open house schedule (2 - 5 every month from December to June) that simply stops after June 26. Second, it is the rare (unheard of by me) bidding war that ends precisely on the asking price.

Net-net, this looks like a stubborn seller who met willing buyers, where that seller had no other qualified buyer and those buyers had no other listing that they liked better for the money. This looks like one tough negotiation, as it took almost 2 months from the last open house to the contract, all to end up at the seller’s (by then, old) asking price. Again: there was only one interested set of buyers, but the seller convinced them that they could not buy at a discount.

Faaaaaaasss - inating stuff.

awkward locutions, new to Manhattan Loft Guy
Babble babble: has anyone ever heard this “location” referred to as “The Park Ave of Tribeca”? Does “location” mean the intersection? N. Moore?? Hudson??? I agree it is a great Tribeca location, but the babble seems inapt.

Quibble, quibble: if it is fair to describe a kitchen with a door-width opening (but no door) as “open yet tucked away”, what is the point of describing a kitchen as “open”?

yet … an efficient micro-niche
Agent-on-agent snark aside, this location / intersection / “Park Ave” can be seen as an efficient market, even if the market mechanisms that took so long for #3A to find a buyer can hardly be described as efficient. There have been only 3 non-penthouse sales in the last 30 months at (how I hate this name) The North Moore Condominium. Though of very different sizes, all sold within a tolerably small $/ft range:

#3A Oct 25, 2011 “1,746 sq ft” $2.3mm $1,317/ft
#2BC April 21 “2,674 sq ft” $3.8mm $1,421/ft
#5H Dec 15, 2010 “1,083 sq ft” $1.48mm $1,367/ft

The other two sales were both quick contracts above asking prices, while the whole story of this post is about how long it took the #3A seller to squeeze any buyers to a discounted ask. So #3A is the laggard, but not by all that much: 3.7% off #5H and 7.3% off #2BC, both on a $/ft basis. I wonder if it got punished by discounted in The Market because it is a relatively large 2-bedroom that has no flexibility to add a 3rd.

pushing the comparative market data, 2007 and 2011
Loft #3A last sold on February 20, 2007 at $2.15mm. People who view Paired Resales as the gold standard for measuring market trends (like the boys at Case-Shiller, the folks at StreetEasy, and the old feds at OFHEO) would take this history as some evidence that The Market is up (a bit) in Manhattan. Of course, I made the same point in my September 27, is the Manhattan loft market back to (up to) 2007? 61 repeat sales say “probably”, “a bit”. I continue to update the spreadsheet that contains the details of that analysis (it now has 71 pairs of 2007 and 2011 sales, with the general trend continuing, with 48 pairs showing gains 2011-over-2007 and 23 showing losses). See that post for how to get access to that spreadsheet (it’s free, with no obligation, blah blah blah).

© Sandy Mattingly 2011

 

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Nov. 7, 2011 - Vision Loft at 124 West 18 Street sells with huge premium for roof deck


“Art, meet Science”
I don’t know why I continue to be surprised when outdoor space drives value … errr … through the roof, but perhaps that capacity for surprise helps keep me young. Today’s Ponce de Leon moment is occasioned by the Manhattan loft on the 7th floor of 124 West 18 Street (Vision Lofts), which has “1,436 sq ft” of interior space and another “725 sq ft” of “roof top oasis”. It sold on October 5 at $2.63mm, which was a 5.4% premium to the asking price; more significantly (for present purposes), that sale reflects that The Market put a value on that oasis that was in the range of $700,000 and $900,000. Put another way, it is likely that the roof deck (if separately valued) was worth the same as the interior space on a price per foot basis.

Let’s do the (simple math), then look at what we’re looking at here.

hard numbers need interpretation (softening)
The Miller would tell you that to evaluate outdoor space you first determine a value for the interior space. (He did tell you [and me] that, and I riffed on his work in my May 6, 2010, riffing with The Miller on the value of Manhattan terraces, decks + balconies.) For the 6-unit Vision Lofts, we are lucky to have a relatively recent sale of the 3rd floor, on May 6 at $1.7mm. With the same “1,436 sq ft” footprint, that sale reflected a market value of $1,184/ft for interior space in the building earlier this year. The prior sale before that was the 6th floor, a near-Peak sale for $1.9mm on June 24, 2008, or $1,323/ft.

Straight math suggests that that spread of 11.7% between those two sales reflects only the difference in markets between June 2008 and May 2011. If you would figure a slight premium for the 6th floor as higher than the 3rd floor, we are still looking at roughly a 10% drop from Peak to 2011, which seems reasonable to me. With that assumption, we can ballpark the 7th floor interior space at roughly $1.75mm, with a $50,000 premium for being 4 floors higher than the May sale at $1.7mm. That is $1,219/ft for the interior, leaving the $880,000 balance of the $2.63mm 7th floor purchase price on October 5 to be allocated to the “725 sq ft” private roof terrace.

That is $1,214/ft for the roof deck … essentially identical in value to the interior at $1,219/ft.

(You could argue that the October 2011 market is better than the May 2011 market, so that the 3rd floor comp needs an adjustment for current conditions; you could also argue that my assumed high floor premium at this low level is overstated. The first would allocate more value to the interior, and less to the outdoor space; the second would do the reverse. We are dealing with small variations, however.)

one framework
If you are interested in how one very professional appraiser approaches he issue of valuing outdoor space, you should read the whole analysis by The Miller, which is linked to in that May 6, 2010 Manhattan Loft Guy post. His analysis is entirely forward-looking, presumably because that is his role as an appraiser: what is the market value of a loft (apartment) before it has sold? Since I mostly write about loft sales, I start with his analysis to second-guess how The Market has treated a particular Manhattan loft.

The short-form Miller approach is simple: (A) figure out what the interior space is worth on a $/ft basis (a standard comp analysis), then (B) apply some magic dust to see where in the normal range of 25% to 50% of value (exterior space as discounted interior space) this outdoor space falls (a highly impressionistic analysis driven by considerations of scale and utility, among other things). To his credit (per usual) The Miller acknowledges how contingent this is, with a disclaimer worth quoting again (his bold):

Disclaimer: No comments by an appraiser would be complete without a disclaimer. It is important to note that these are only rules of thumb to guide you – the value of a terrace is not formula driven – these relationships are developed from market data and can vary significantly depending on the combination of amenities and time. If you are unable to grasp this, close your eyes very tightly, think about a cool ocean breeze on a warm breeze sandy beach, while holding a large set of perfect comps, until memories of this post fade completely away.


hindsight is easier (if unfair)
If The Miler’s job is hard because it answers the question ‘how should The Market value outdoor space for a loft?’, my job is easier because it plays with the question ‘how did The Market value outdoor space for a loft?’. In the case of the 7th (top) floor at 124 West 18 Street, the general answer is very simple: there was a huge premium paid for the rooftop terrace, far beyond what The Miller’s analysis would have predicted. (Remember: I say this not to criticize The Miller’s approach, but to comment on how the real world is messier than any set of guidelines can easily deal with.)

Granted, one can argue with the details of adjustments to be made in applying the 3rd floor May 2011 sale to the 7th floor sale a month ago, but the starting point is that interior space was valued at $1,184/ft by The Market in May. Using that number for the sake of simplicity, the 7th floor buyer paid $1.7mm on October 5 for the “1,436 sq ft” interior space and $930,000 for that “725 sq ft” rooftop oasis … or $1,283/ft … or 8.4% more for the outside space than the inside space.

pluses and minuses
Funny thing is that I am not finding much about this rooftop deck that would justify an exceptional value, above and beyond The Miller’s typical spread of 25% to 50% of interior value. It is just above the ideal size (The Miller puts that limit at 50% of the size of the interior, after which “the ppsf contribution falls off considerably for the additional space over the 50% threshold”). It has a great shape (not a long, narrow balcony), though there is a skylight that interrupts the rectangle. In Miller terms, that’s about it for pluses.

It does not have premium access: the deck is accessed by walking up an interior stair rather than by merely stepping from the living area. The lone photo suggests that it is not the most private deck, as people living in the adjoining buildings look directly onto the deck. I don’t see any reason to think that the views are dramatically better on the roof than from the living space. While the photo shows that the “oasis” has greenery, there’s no bragging about landscaping, watering systems, or any special facilities (wireless sound, shower, built-ins).

Personally, I suspect that the major plus here is one that I mentioned in that May 6, 2010 post that The Miller did not mention (though I suspect he would agree): scarcity. I have not done an extensive search, but I suspect that private rooftop space is relatively rare in Chelsea … not so rare as to compel a 100% valuation parity with interior space, but rare enough to justify some beyond-typical premium.

how big is big?
I cannot off-hand think of another Manhattan loft in which the apparent market value of the outside space was equal to the inside on a $/ft basis. I have seen ‘million dollar’ terraces before (that May 6, 2010 post was about a terrace on top of the 12th floor at 110 West 25 Street that I valued at $1,152,000) but this one at ‘only’ $930,000 is noteworthy both because it grades out at roughly the same $/ft as the interior space, but because that value is more than half of the interior value: assuming parity with the 3rd floor interior, the interior of the 7th floor loft was worth $1,700,000 and the roofdeck $930,000.

Even in the case of the million dollar deck at 110 West 25 Street, that deck was still only 42% of the (implied) value of the interior of that loft.

I found a roof deck that was apparently worth about $800/ft (a total of $725,000) in my March 15, 542 LaGuardia Place loft zooms through market, with a very expensive roof deck, close in size and scale to the Vision Loft roof deck and top-floor loft, but still less expensive by any measure.

The loft building that I hit on my May 3, how much were those roof terraces worth when 211 East 2nd Street loft sold?, is similar in scale to 124 West 18 Street: the full-floor lofts were in that case “1,860 sq ft” and the building was only 6 stories, but those private roof terraces were much proportionatly larger pieces of that roof (“1,640 sq ft”, in total). In that case, the terraces carried implied values at around 25% of the interior on a $/ft basis.

bottom line for rooftop (and other) outdoor space
Leaving some room to argue about the adjustments to make to comp the 7th floor interior space (as above), the analysis is otherwise simple, and results in a huge relative value for the roof deck. You might not get to $930,000 or to $1,283/ft for the outdoor premium, but you will get to some numbers that are close to those, and those numbers will be extraordinarily large as a premium for outdoor space.

Indeed, at this point I cannot think of another Manhattan loft in which the implied value for the outdoor segment was as high.

I have said before that I believe that outdoor space (like a view) is something that some people will over-pay for, meaning that they will pay a higher premium than market data would support. In my March 20, a $2 million view on Madison Square? comping at 15 East 26 Street, I found a direct View vs. Not View same building comp:

Everyone will still have opinions about what a view may be worth, but in this instance this view over Madison Square Park was worth $2,014,000. Indeed, while I believe that few people would estimate a view premium on this scale, facts are facts.


Look at it another way: the #14A buyers paid a 75% premium over #14F for the view.


Whether they can get a bank to lend on that value is a different story. What is also interesting about the 7th floor sale at 124 West 18 Street is that there were at least two buyers willing to ‘over-pay’ (beyond hard market comps), as the clearing price exceeded the asking price by $135,000.

The Market is The Market, is The Market. That roof deck is worth something like $1,300/ft and something like seven figures. It does not matter that Manhattan Loft Guy would argue differently. (Sigh.)

© Sandy Mattingly 2011
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Nov. 6, 2011 - Sunday diversion / "Woody Allen & Earl Monroe" is not a buddy movie


down memory lane
I came across this 1977 Sport magazine piece a month or so ago, thanks to the magic of one of the editor-thingys on Instapaper. In 'honor' of the doofuses running the No Basketball Anymore league, I offer it as a basketball diversion in a season that will be artificially short of basketball diversions.

Short story: Woody Allen (famous Knick fan before Spike) wrote a profile of one of his favorite players. Insight ensues.

Don’t know Instapaper? Check it out if you like to read on a computer or tablet. It is a great way to park a long piece from the web for future reading.

© Sandy Mattingly 2011
 

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Nov. 4, 2011 - Renwick penthouse loft at 808 Broadway underperforms the neighbors


it is nice to have comps
There is nothing wrong with the Manhattan loft #PH-L at 808 Broadway (the Renwick) that sold for $1.805mm on October 12. There is “1,700 sq ft” of interior space on 1.5 floors (the master sits a ‘real’ stairway above the wall end of the loft) with a “450 sq ft” terrace atop the front of the loft. The Market liked it well enough: offered on April 20 at $1.999mm, it took a June 19 drop to $1.845mm to get the contract by July 12. Less than 3 months to get a contract (just) above 90% of the original ask is not to shabby.

One other Renwick penthouse sold this year, and two sold last year. Each of those sales was discussed in a Manhattan Loft Guy post, and each proved to be more highly valued by The Market than #PH-L.

My May 31, 808 Broadway penthouse loft lost 15% of value since 2007, hit #PH-C, with “1,400 sq ft” of duplexed interior space and “400 sq ft” of terrace that sold for $1.695mm on May 19. That post focused on how that sale compared to its prior resale leading into The Peak (poorly) but there is a lot in there about that layout (also awkward) and finishes (brag-worthy; unlike #PH-L).

In my October 29, 2010, how to sell a loft quickly? (not a secret!) another 808 Broadway loft does it, the focus was on how #PH-A compared to the then-very-recent sale of #PH-H. Obviously, I found the #PH-A marketing campaign to have been a good example of price-right-to-sell-quickly. The two lofts are of very similar interior size, but the respective terraces are much different (“558 sq ft” in the case of #PH-A; only “125 sq ft” in the case of #PH-H). I read the listing descriptions as indicating that they were in similar condition.

Before comparing these other 3 penthouse sales to #PH-L last month at $1.805mm, I want to look closely at what is and is not presented about it.

a floor plan that grew with a family?
The strangest thing about the current floor plan is the northeast bedroom, but the southeast bedroom + office + closet is close behind. That NE ‘bedroom’ not only lacks a closet, but it blocks the living room from the east windows (leaving the living room dark except for the skylight, unless the bedroom doors are fully open). That just screams to me that this bedroom was added late in the life of the loft, when 2 bedrooms turned out to be not enough for the owners’ family and/or lifestyle.

Now look at the SE wall, with that bedroom + office + closet, accessed by 2 sets of doors, and including a hallway. I will bet you $0.25 that this entire complex was the second bedroom originally, with no office space carved out, and no hallway. At some point, the needs of the owners changed so that a 25 ft 2nd bedroom was an extravagant use of space better utilized by carving it up. Had that office been part of someone’s original plan for the loft, there’d be no need for that segment of wall creating the hallway between the walk-in closet and the living room.

Note that the pictures tell a different story than the floor plan. The “master bedroom” on the floor plan is shown as used for some work space (lots of tables!) that use magnification, while the captioned “master bedroom” in the pix is that NE bedroom … the one without a closet and furthest from the bathroom. (The pictures are bigger and captioned on full screen view on the Corcoran website.)

Note also that there are no photos of the kitchen or either bathroom. Nor any bragging in the broker babble about them. (describing a kitchen as both “large [and] open” is the opposite of bragging.)

I will offer that quarter that I won on the bet about the bedroom + office + closet complex and bet that this loft has not been updated in at least 15 years, other than carving the office out of the former 25 ft long 2nd bedroom. I won’t risk any capital on it, but I think it likely that these owners started out using the floor plan “master” as the master, then added the NE bedroom at some point, then carved up the SE bedroom at some later point … perhaps at the same point that they moved downstairs to the NE bedroom and began to use the upstairs as work space. Probably when the nest emptied.

The new owners will, almost certainly, take down the wall (doors) separating the NE bedroom and its windows from the living room. And update the invisible kitchen and baths.

playing in the sandbox with numbers (and a special friend)
Direct comping among these four penthouse sales over 14 months is difficult because of the different sizes inside and out, but the trend is clearly against #PH-L; these values adjust all the outdoor space at 25% of the interior (an arbitrary but consistent approach, based generally [of course] on The Miller’s approach):

#PH-L Oct 12, 2011 1,700 sq ft 450 sq ft $1.805mm $996/ft
#PH-C May 19 1,400 sq ft 400 sq ft $1.695mm $1,130/ft
#PH-A Sept 17, 2010 1,337 sq ft 558 sq ft $1.735mm $1,175/ft
#PH-H Aug 3 1,300 sq ft 125 sq ft $1.695mm $1,273/ft

Adjusting all the outdoor space at 50% of the interior (an equally arbitrary but consistent approach) yields little difference in the comparative values and no difference in the value rank:

#PH-L $938/ft
#PH-C $1,059/ft
#PH-A $1,074/ft
#PH-H $1,244/ft

The Market loved #PH-H and hated did not love #PH-L. #PH-H bragged of a chef’s kitchen and updated baths, and was set up in a logical and efficient 2-bedroom layout; I have hit (and hit again) the challenges implied in the listing description and floor plan for #PH-L, which should be a 2-bedroom and probably needs significant upgrades in the wet spaces.

another hit, another pair of lofts in the building
The Renwick is a cool building at the eastern edge of central Greenwich Village. I also hit it in my May 14, 808 Broadway loft sellers did not move far, about people moving within the building to get larger space and a garden, describing both the loft that they sold and the loft that they bought. Nothing directly relevant to the penthouse valuations, but (more) fun stuff....

© Sandy Mattingly 2011

 

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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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