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Manhattan Loft Guy

Sep. 27, 2013 - 50 West 29 Street build-out loft sale not as simple as it looks

 

here’s one I know something about
The recent sale of the “1,400 sq ft “ Manhattan loft #13W at 50 West 29 Street looks pretty simple: to market on April 10 at $1.475mm, in contract by June 20, and sold on August 22 at $1.5mm. That first period seems a little long for a loft to sell over ask and the second seems a little short for a coop, but all in all a quick sale. But you see from the extended history that it did not sell in 2011 while asking $1.45mm, or in 2012 while asking $1.415mm, as recently as that August. i know what the public listing history does not show: that there was an accepted offer in 2012 that took a really long time not to get to contract. For all I know there were other accepted offers in 2011 and 2012 that did not get to contract, but I do know why that one accepted deal failed. It gets complicated ….

you can’t sell what you can’t sell
You wouldn’t have known this from any of the marketing materials, and my buyer who made the bid that was accepted in 2012 did not know the funky details until due diligence, but there was then no residential Certificate of Occupancy for this (not quite) half of the 13th floor in this small coop. Of course, we were told more or less that “the paperwork is pending with the city” and should be completed “soon”.

The somewhat shorter very long story involves lawyers (of course) and expeditors and architects. I never got a full account of the details because it would have cost my buyer some professional fees for his team to explain it to me, but it came down to a difference of opinion between Team Buyer and Team Seller about how quickly and how likely a C of O would be issued by the city and, with the seller’s insistence that a contract be signed while all this was still murky, there were protracted negotiations about an escrow arrangement to account for this complexity. At the end of the day, Team Buyer was faced with the likelihood of signing a contract without the C of O, the possibility that no building permit would be issued for a renovation until the C of O was in place, and the certainty that seller would not agree to an escrow both large and long enough that he felt protected, and would give seller enough incentive to move heaven and earth to get ‘his’ C of O.

Did I mention that there was also uncertainty about the terms on which a bank would lend to purchase the coop shares associated with this loft?

None of this complexity was built into the price negotiation, by the way, as none of it was clear until the due diligence exposed the full facts, in all their convoluted glory. Buyer was willing to go to $1.3mm (seller’s then bottom line number) because this was the available loft that best met his needs within his financial resources, even though he thought (I thought, as well) that this value was beyond the comps, given that the loft was in very primitive condition and would need a gut renovation to truly compare to well-finished comparable lofts. (Take a quick look at the building page to begin to see why.)

Did I mention that there was some risk that the wonderful west light and views could be impaired by development on either side of Broadway between 28th and 29th Streets?

Seller was within her rights to want to offload as much risk as possible on my buyer, to reject the escrow terms proposed by buyer to sign a contract at the agreed price, and to reject a price concession as the last offer by that buyer to do the deal. No deal is a deal until it is a contract, and Team Buyer always assumed that Team Seller was acting in good faith (though in an optimistic fog as to what the city was likely to do, when).

Judging from the speed at which the loft was taken off the market when my buyer finally walked away (after incurring lawyer, architect and expeditor bills for the swamp work involved), Team Seller seems (finally) to have conceded that the loft was not saleable in that condition. Alas.

Team Buyer kept in touch with Team Seller in this (publicly) quiet period, at one point being assured that a Temporary Certificate of Occupancy “in 6 weeks”, to which buyer responded that he would do the deal at $1.3mm if that happened. No dice, alas. Six weeks later … same status (alas).

a new market emerges
My emails reflect that the TCO was (finally!) issued in February this year and that my buyer could not get seller to consider his money until seller had put it back for sale publicly. My guy (finally!) walked away and signed a contract elsewhere, loft #13W was brought to market on April 10, and the rest you know.

Did I mention that this was more complicated than it looks?

Seller ended up getting $200,000 more in the 2013 market than the “deal” with my guy almost a year earlier, so good for her. That buyer just paid $1,071/ft for a loft that needs $200/ft or more in renovation. I still think that’s beyond the comps (even with the ridiculously low maintenance of $522/mo), but this data point now exists for other primitive lofts on gritty blocks in non-prime loft neighborhoods.

That’s how values get reset. Alas.

(My guy has since closed on a much larger loft in much better [newly renovated and mint-y] condition with better views and light, at about $1,340/ft; he’s happy.)

reprise
Did I mention that this was a complicated story??

© Sandy Mattingly 2013

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Aug. 1, 2013 - 176 Broadway loft finally sells (at $556/ft!)


apparently, buyers prefer windows (go figure)

I know of no downtown Manhattan loft building that The Market treats the way it does 176 Broadway. There remains a mystery (to me*) legacy that causes things like this to happen: the “1,906 sq ft” Manhattan loft #8D at 176 Broadway just sold for $1.06mm (yes, $556/ft) after taking 18 months to find a contract. It is decidedly not a wreck, or even a project:
 

fully renovated ... stunning hardwood floors, exceptional closet space, many built-ins, central air conditioning.... large eat-in gourmet kitchen [with] stainless steel Sub-Zero refrigerator-freezer, Viking range, and Bosch dishwasher, with beautiful dark hardwood cabinets and an extensive work area with Corian counter-tops

The footprint is very close to the square that can be ideal for loft living. But, to repeat: FIVE HUNDRED FIFTY-SIX DOLLARS PER FOOT. I have not updated all the $/ft fields on the Master List of Manhattan Lofts Sold Since November 2008 yet, but that will easily be the lowest such value of 2013 apart from a ground floor and below working artist loft at 18 Mercer Street (and including a loft destroyed in The Storm that has yet to be rebuilt, which I hit in my June 18, when bad things ($605/ft!) happen to nice lofts, super storm edition at 79 Laight Street). And remember: loft #8D is “fully renovated”.

not hip to be square like this
The difficulty with the footprint is more evident from the photos than it is from the floor plan. Do you see how bright the living room and kitchen listing photos are? Do you see all the mirrors? Do you see any windows?

All the windows, such as they are, line the least wall of the loft, and are within the library, the office, and the bedroom. In other words, that nicely proportioned great room and kitchen completely lack windows. And if you look at (through) the windows in the photos you see … not much. There’s a nearby building through there, and little (if any) light.

The other limitation on the floor plan is numeric: 1.5, as in a full bath in the “master” (only) bedroom, and a half bath abutting the kitchen. If you converted one of those working rooms with windows into a bedroom, you need to add a tub or shower to the half bath. (Not a difficult task, very likely, but more than some buyers of “fully renovated” space would relish taking on.

Given that the buyer pool specifically interested in low-light lofts or apartments is rather thin, it is not so surprising that this loft had a history like this:

Oct 6, 2011 new to market $1.45mm
Feb 20, 2012   $1.3mm
April 20, 2013

contract

 
June 17 sold $1.06mm


The market for 1-bedroom lofts near 2,000 sq ft may not be similarly small, but the thin-on-small combination can account for timing and pricing problems.

The full history shows that the seller had considerable timing and pricing problems. She worked her way up to the final successful campaign:  tried to sell in
2006 (3 months, asking $1.7mm [!]) and in 2008 (5 months, asking $1.495mm and $1.275mm) and in 2010 (10 months, starting at $1.3mm and getting down to 6-figures). The final 18 months needed to get a contract done is nearly a linear continuation of those earlier efforts.

As much as a cynic is tempted to carp at a seller who has such a hard time finding the right price in the right market, give her credit: she started
seven years ago, she used 4 firms, but at the end of the day she took a final 18% off her last asking price to sign a contract.


‘tis a puzzlement
* I have touched on this mystery as long ago as six years ago, in the text and some commentary to my August 2, 2007,
more BOM pain / 176 Broadway is back. In reviewing then-recent sales activity, I commented
 

That’s four lofts in nine months at an average of $664 per sq ft.

In contrast, #4D is a low floor, overlooking a courtyard, and probably needs updating and a second bathroom. $611/ft seems a reasonable asking price. A bargain for people who love the neighborhood; unthinkable at any price for those who do not.


I’ve not been back here often, with the only other post that comes up being my December 9, 2008,
176 Broadway has a closing 40% off the original price (in which the headline only hints at that top-line story: that loft sold for $515/ft before adjusting for two patios).

Facts is facts, but reasons are reasons. If a reader knows why the market beats up on this building so much, please let me know.

© Sandy Mattingly 2013

 

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Jul. 25, 2013 - is the hyper-local Manhattan loft market at 80 John Street up more than 5% in a year?


and now for something a little different
After looking twice this week at Manhattan lofts that sold high recently after not selling in 2009, the recent sale of the “875 sq ft” mini-loft
#14A at 80 John Street (the troubled South Star) presents a slightly different wrinkle. Loft #14A just sold at $940,000 (quickly and above ask) after not selling for 5 months in mid-2012 while asking as little as $895,000. Rather than illustrating the difference in market conditions, now compared to the post-nuclear winter thaw that characterized the overall Manhattan residential real estate market in mid-2009, loft #14A is a data point in support of the proposition that the market is up more than 5% in a year, in this little corner of the Financial District at least.

Year-to-year, the ask (eventually) was the same; the results different:

May 4, 2012 new to market $950,000
May 17   $900,000
July 17   $895,000
Aug 27 off the market  
     
Mar 14, 2013 new to market $895,000
April 17 contract  
June 17 sold $940,000

If you take only the end of the 2012 marketing campaign, that market had only 6 weeks to digest the loft at $895,000, but also had another 4 weeks to digest it at its functional equivalent ask of $900,000. Indeed, I would argue that the asking price history suggests the seller in 2012 would have leapt at the chance to sell for $940,000 and would likely have happily negotiated well below that, if only a buyer in 2012 had been willing to deal. Clearly, no one was, then.

Fast forward less than 7 months and the market reacted to the old (reduced) asking price immediately and enthusiastically, driving the clearing price nearly to the original (May 2012) ask. Same loft, different market conditions.


litigation is a story for diligence
The numbers are the numbers are the numbers. Of course, they don’t lie; but neither do they explain. I don’t know
why the 2013 buyer was willing to pull the trigger at $940,000 in April 2013 when no one was willing to do anything like that a year ago, but it may have to do with the due diligence looking a little less dire now, than then.

When I hit this building for the first (and only other) time in my January 8,
the baths get a little crowded, as another South Star loft at 80 John Street clears below sponsor sale, I kinda sorta bragged about not knowing the details of litigation by this condo against the developer (and against my firm, so cynics should check their salt supply), and I am happy to still not have any details. My guess is that any due diligence by a competent buyer attorney before that case was filed 7 months ago would have revealed a lot of … debris. That debris likely contributed to the resale market being both thin and weak, with the #14A performance in 2012 as a likely example.

Maybe the suit actually being brought solidified things enough to make it easier for buyer attorneys to assess risk (thereby, to grease the hyper-local market), or maybe the overall Financial District small-loft market is just more solid in 2013. Whatever, just sold for 7% more than the sellers paid when they bought it from the sponsor on August 9, 2007. That January 8 post was about a neighbor that sold for 10% less than the full 2007 consideration, in which I noted why that sale was of interest:

Looking back at 10 resales in 2012 on the StreetEasy building page (2 sales were of sponsor units) and finding only two 2012 deed prices above the 2007 deed prices will pique my interest.


In 2013, there have been 6 other public resales, with uneven results. Three sold below the total consideration paid by those 2013 sellers in 2007; 3 sold above. The performance of loft #14A looks pretty good in comparison:

  • #4D sold 11% above the sponsor sale (perhaps because the sponsor sale was so early in 2007??)
  • #7F sold 4% above
  • #11A sold 1.7% above
  • #2C sold 19% off the sponsor sale price
  • #10D sold 14% off, explicitly as a short sale
  • #19B sold 9% off

© Sandy Mattingly 2013


 

 

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Jun. 11, 2013 - when bad things happen to nice lofts, 136 Baxter Street edition


then to now, with detours
The simple facts about the “2,558 sq ft” Manhattan penthouse duplex loft (with “600 sq ft” of private terrace) #7A at 136 Baxter Street (the Machinery Exchange) is that the guy who paid $4mm when he bought it from the sponsor on
June 5, 2009 just sold it for $3.8mm. Those simple facts are evident from those two StreetEasy hyperlinks, but the intervening history is a little garbled on StreetEasy, and painful for the recent seller. The last bit of history is on StreetEasy here (though it is not coupled with the deed); StreetEasy associates the deed with an older extended marketing campaign, though that trail ended a year ago. Putting it all together yields this long effort:

May 19, 2010 new to market $4.65mm
Aug 18, 2011   $4.795mm
Oct 22   $4.695mm
Oct 27   $4.495mm
Feb 28, 2012   $4.25mm
Sept 4   $4.15mm
Oct 18   $3.995mm
Dec 17 contract  
April 18, 2013   $3.8mm


(Obviously, ignore that “listing sold” with the March 15, 2012 date in StreetEasy, as the “new” listing started up soon after, by the same agents with the same firm.)

If the numbers could talk (er … type) they would say things like this: the guy really thought he had gotten a deal from the developer (after all, he started asking 22% less than a year later); the guy
should have gotten a deal when he bought from the sponsor (after all, it had been on the market from October 2007 at $4.5mm without finding a buyer until this guy stepped up to the plate in March 2009, still nuclear winter for the overall Manhattan residential real estate market); the guy (correctly) figured that the 2011 market was better than the 2010 market, but he was still too high; the guy was incredibly patient, being on the market continuously for 30 months (you rarely see that) without a break, and held at his last asking price that would give him a gain (after paying a sales fee) for 6 months in 2012, before caving twice in 6 weeks.

what’s not to like?
The loft has a pretty good
floor plan for a duplex, with entrances on both floors, with 2 bedrooms plus a quirky (windowed) home office on the lower (6th) floor and the living room, kitchen and terrace above. None of the rooms are cramped (even the quirky home office is 8x20 feet) and the upper level at 14x33 feet probably feels even larger, with floor to ceiling windows looking out on the terrace. The classic loft elements (“10 foot timber beamed ceilings, original cast iron columns and exposed brick”) seem to be limited to the lower floor, suggesting that the upper floor is a true penthouse: a structure built on the roof of an (originally) 6-story building. Finishes appear in the photos to match the broker babble: “modern luxuries like red oak floors, full length, custom designed, steel frame windows and a high-end Valcucine kitchen which vents out”.

The location is what it is, and is what it was when the sponsor was selling: the gritty commercial blurred border between Little Italy, Chinatown and the industrial past that give this condo its name (Machinery Exchange). While a market-limiting factor, in other words, it is not a new market limiting factor. (The description on the StreetEasy
building page is poetic, but not quite true in my experience: “quiet, undiscovered, almost secret, tree-lined street”.)

One thing does jump out in comparing the sponsor’s listing to the most recent listing: monthly real estate taxes were $1,264/mo and are now $2,643/mo, with common charges claimed to be unchanged at $1,992/mo. The extra $1,379/mo can be a new market limiting factor.

can comps help?
With 14 units and only one resale in 2010 and another in 2011, there is hardly a rich history on which to base comps. The only recent other sale was
#2C, a “1,558 sq ft” simplex 2-bedroom 2-bath that took 4 months and 3 prices to get to contract before selling on January 9 at $2,083,333. Unlike the #7A experience, the #2C original purchaser exited at a 19% premium to the original purchase (in this case, May 28, 2009); like #7A, the real estate taxes doubled since the sponsor sale. That sale at $1,337/ft, if used as a baseline for interior valuations in the building in order to riff with The Miller about valuing the exterior space, works pretty well:

The #2C sale implies the #7A interior was worth $3.42mm, leaving only $380,000 for the “600 sq ft” terrace, or $633/ft for the private terrace. That $633/ft happens to be 47% of the implied value of the interior, which fits nicely in The Miller’s rubric of outdoor space being worth 25% to 50% of the interior, with space like this (directly accessible from the interior public room, proportionate to the interior size) warranting the upper limit instead of the lower.

In other words, the #7A sale at $3.8mm, difficult as it was for the original purchaser at $4mm to accept, lines up essentially perfectly with the only other sale in the building since July 2011. And it is higher than the 2011 sale or the 2010 sale.

The 2011 sale deed is for “
#5A” at $1.7mm on July 28, 2011, which matches with the listing for the “1,594 sq ft” duplex “#6A”, or only $1,066/ft. That helps explain why #7A did not sell in 2011 when asking approximately an adjusted $1,678/ft to approximately an adjusted $1,573/ft. The 2010 sale was the “2,580 sq ft” #3AB combination, which sold on October 13, 2010 at $3,054,750, or $1,184/ft, at a time when #7A was asking $1,627/ft.

In other other words, it appears that the #7A 2009-buyer-turned-(eventual)-2013-seller overpaid in 2009 rather than getting squeezed by The Market in 2013. O. U. C. H.

 

© Sandy Mattingly 2013

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Jun. 6, 2013 - another irrational sales sequence, as 250 Mercer Street mini-loft sells up over 2011 ...

 

… down under 2007, with a (cruel) twist
It is a truism that individual sales don’t have to makes sense, even in the rational market of lore and legend. Nor do sequences of sales of individual Manhattan lofts, as like Bogey & Bergman we’ll always have outliers. Yet this sequence of sales of the “700 sq ft” Manhattan loft
#B1404 at 250 Mercer Street is rather jarring: (a) purchased on July 31, 2007 at $654,000 by people who (b) sold it on September 1, 2011 for $550,000, to people who (c) sold it on May 17 for $600,500. In each case, the loft was on the market long enough and publicly enough that you’d think it would have gotten the best price available to it in the (then current) market.

Here’s the whole sequence, with one bonus (fanciful) attempt to sell with (alas) bad timing. Perhaps the most strange simple numerical bit is the modesty of the near-Peak buyers, when they tried to sell the second time:

 

April 3, 2007 new to market $629,000
May 9 contract  
July 31 sold $654,000
     
June 11, 2008 new to market $995,000
June 18   $925,000
June 23   $889,000
July 7   $850,000
Oct 1 off the market  
     
April 16, 2011 new to market $595,000
Aug 9 contract  
Sept 1 sold $550,000
     
Jan 12, 2013 new to market $650,000
Feb 25   $626,000
April 30 contract  
May 17 sold $600,500

did you notice the punchline?
If you clicked on the various listings, you noticed that the loft was
babbled in 2007, on its way to a bidding war, simply as “voluminous”, with a kitchen that was ”separate”; the other features were bones (“ample closets ... 11ft ceilings, oversized wall-to-wall windows, ... imposing architectural column …. [with] natural light through the 8ft windows [that] is bright and in the evening, the landmarks such as the Empire State and CondEd [sic] light up beautifully”) or amenities (doorman, common roof terrace and landscaped courtyard). Having won a bidding war, the 2007 buyers did a major renovation, as indicated in the babble of their first attempt to sell (leaving out the bones and amenities with which you are now familiar):

an elegant ZEN -SPA bathroom that features top of the line fixtures, glass and river rock tiled shower with therapeutic stone flooring. A mini-loft designed with sleek and contemporary finishes, boasts a fabulous kitchen with all new stainless steel appliances.

No wonder they asked for (some) more than the $654,000 they paid. This (yes) mini-loft is no more than 700 sq ft; could they have spent $100,000 on the renovation? Perhaps, but in any event they thought it added $341,000 in value (the renovation, plus the passage of time between July 2007 and June 2008), or $261,000, or $227,000, or $196,000, only to be proven … wrong.

So wrong that when the mini-loft eventually sold (after the renovation, mind you) it sold for $550,000 (September 2011). Seriously. They resold for $104,000 less than they paid without considering the renovation cost.

In contrast to that part of the sequence, the resale 3 weeks ago by the 2011 buyers is unremarkable, as 9% gain after 20 months is barely an outlier in the current market. (Pushing the
unremarkable here …) But you have already noticed that the May 2013 price is still 8% below the (pre-renovation) value of 2007. That’s now two sales in a row that show that the 2007-buyers-turned-renovators-then-2011-sellers wildly overpaid running into The Peak.

Sometimes you can't explain. You just  shake your head in wonder.


© Sandy Mattingly 2013


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Jun. 5, 2013 - OYAToMLG about different market conditions, 2012 and 2009 (of course)


apparently, everyone wants to Gansevoort
Let’s take a step back from the
hysteria momentum of the current market and the New York Times-induced hysteria and revisit those thrilling days of yesteryear; more precisely, that thrilling day yester year when One Year Ago on Manhattan Loft Guy I posted my June 5, 2012, developer’s remorse? Gansevoort loft sells +50% over 2009 sponsor sale at 325 West 13 Street, about the travails of a condo loft developer in 2009 and the smiles of that original owner on resale a year ago.

The short story is that the developer wanted $2.5mm beginning in May 2008 (just 2 months after The Peak in the overall Manhattan residential real estate market) but was not able to close until July 2009. That first buyer paid $1,527,375 then, and got $2.3mm on May 17, 2012. I didn’t mention it in that post, but that buyer took a risk in going to contract in the very thin market of May 2009 (other “buyers” were then sitting on the sidelines, waiting to see when The Market would turn). A gross $772,625 profit is a healthy reward for having taken that risk, don’cha think?

My sub-head is a reference to the fact that there are now two “Gansevoort” condos on West 13 Street, and I lament that there is (apparently) no honor among developers. Not exactly,
news ….

 

© Sandy Mattingly 2013

 

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May. 21, 2013 - agent sells 15 Broad Street loft after 3 years with no discount

 

boat floated on a rising tide?
It is easy to miss the punchline by looking at the Streeteasy history of the recently sold “2,028 sq ft” Manhattan loft
#2014 at 15 Broad Street (Downtown by Starck), as StreetEasy shows a clean and brief recent history: to market January 23 at $1.775mm, in contract by March 21, sold for $1,757,500 on April 23. Zoom! And ka-ching!! The “previously listed” data starts in 2010 and is just two lines. Click on that however, and the whole picture changes. No longer zoom! and that ka-ching!! takes on a different value when you realize that the loft had been offered for sale from May 2010 into December 2011 at $1.75mm without selling.

Charitably, you’d say the seller was right about the price all along, just wrong (at first, and for a long time) about the calendar. After all, The Market rejected this loft at $1.75mm for 18 months before embracing it quickly at $1,757,500. Loft #2014 demonstrates that The Market in 2011 was different from The Market in 2013, though it does not tell us (as a single data point for an unsuccessful “sale”) the degree.

I will get back to the fact that the seller is an agent (the listing agent in the first offering, and one of two listing agents in the second go-round). For now, note that even professionals can be over-optimistic about how well a loft will be received, and stubborn in the face of persistent and clear market feedback. Fortunately for him, the seller (agent) obviously did not
have to sell in 2010 and 2011, as he offered it for rent in 2011 and took it off the sales market upon being rented in December 2011.

The fact that was offered “furnished only” suggests that this had been his residence, and that he kept open the option of returning one day. Indeed, I wonder if he moved back in during
2012 after the tenant moved out. That would explain not being on the sales market in 2012.

playing with number for fun (no profit)
Whether or not the rental was a positive cash flow experience depends on how much he borrowed up front and (especially) whether he re-financed, even at the last asking rent of $8,495/mo. Taxes (abated) and common charges were $1,832/mo most recently, and he paid $1,420,458 to buy it in May 2006. Prevailing mortgage rates were around 6% in those days, driving an 80% mortgage payment to about $6,600 and a 90% mortgage payment to about $7,400. Not making any money there on a cash basis, without re-financing, or putting down more. And even if he got a break from his firm, he may have been paying a fee to an agent who brought the tenant.

neighbor v. neighbor
It looks as though the #2014 seller was paying attention to what his neighbor 12 floors below was trying. Loft #814 is trivially larger (“2,039 sq ft”) with the same
footprint. Loft #814 has a pair of wine friges (is that a word??) and some customized storage, but otherwise seems to be the same high quality finishes as #2014 and the other units in the building, the babbling about being “unlike any apartment at 15 Broad Street” aside.

That loft had been on the market for almost 8 months, at decreasing but (still) unsuccessful prices ($2.25mm, $2.15mm, $1.995mm), when #2014 came back to market in January. My guess is that the #2014 ask of $1.775mm as of January 23 was an attempt to use the higher-and-unsuccessfully-priced #814 to get a quick deal. The calendar will tell you that it worked for #2014 (contract in 8 weeks), but the calendar won’t tell you the whole story.

The #814 seller sat in the market at $1.995mm from September 8 until getting a contract by February 15. But that contract was at $1.85mm, compared to the March 21 contract that #2014 finally got at $1,757,500.

Maybe the wine
refrigerators and the custom storage do add significant value to #814. After all, the much higher #2014 (boasting “exquisite sundrenched WESTERN city views”) went head to head for 3+ weeks, and lost. That #814 buyer had the opportunity to buy #2014 for about six figures less than the deal for #814, but preferred #814.
 

why do agents do that (or, don’t do this)?
You can read two sets of broker babble by the agent / owner (now seller) of #2014 without discovering that he was the agent / owner. I don’t get that.

We’ve been here before, so you probably recall that New York State does not require that the fact of agent ownership be disclosed in the listing description, though it does have to be disclosed. (See my June 7, 2012,
agent sells Chelsea Mercantile loft from San Francisco, and May 24, 2012, 40 Mercer Street news: nothing says successful new development like a 7-figure gain since 2007.) I can’t figure out why an agent wouldn’t disclose that in the broker babble, eliminating any possible claim that a buyer was not informed, but I guess that’s just me.

I also don’t know why, with all the major Manhattan residential real estate firms bringing heightened scrutiny on compliance with agency disclosure rules (see my very recent May 16,
OYAToMLG dual agency was in the news), firms don’t mandate that as a matter of fail-safe policy. But I am not involved in management at any firm.

 

© Sandy Mattingly 2013

 

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May. 20, 2013 - Cocoa Exchange loft at 82 Beaver Street sells for 3rd time in narrow range

 

odd numbers, for being so similar

The “928 sq ft” Manhattan loft #1309 at 82 Beaver Street (the Cocoa Exchange, aka 1 Wall Street Court, ugh) recently sold for $905,000, which is both a tiny bit more than it sold for in July 2010 ($880,000) and a tiny bit less than the original purchaser paid when it was a new development in April 2007 ($915,406, which no doubt included the New York City and New York State transfer taxes that the sponsor would otherwise have had to pay). I have to wonder if there is something going on at this 2007-era new development that scares purchasers, or else this loft is evidence of a remarkably consistent hyper-local market just below (not touching) Wall Street.

With 2 bedrooms and 2 baths, there is a lot of utility crammed in to not-very-spacious space, an efficiency not ameliorated by ceiling height (under 10 feet) or by the “five enormous windows”, as there’s not much to see except brick and stone, even at this height down in the canyons. The loft sits at the wide west edge of the wedge shaped (er … “flat iron”) building, with a
floor plan that just goes to show how narrow even the widest part of this building is. I suppose it can be described as “cookie cutter” even with the angled exterior wall and angled wall between living room and master.

a different vibe from classic loft nabes
This is the typical product in near-Peak new developments of converted office buildings in the Financial District, appealing to a different buyer pool than are interested in classic (spacious) lofts. These buyers have to have 2-bedrooms and prefer to spend 6-figures. Owners no doubt expand their living space by using the “living room like amenities” on the roof (“sky terrace / roof lounge bring the indoors out with continuous hardwood flooring, moving glass panels, outdoor shower, flat screen TV and wet bar”). (See the 6th and 8th listing photos.) The light’s much better up there (only 3 floors above loft #1309), with no roof over the outside decks.

I don’t pay much attention to sales in this kind of building, even though they are definitely lofts. (
So many lofts … so little time!) Manhattan loft snob that I am, these units are just not as interesting to me. But this sale caught my eye because of the sequence of sales prices. So it is no surprise that I have not posted before about a loft sale in this building. Recent history tells me, however, that the folks downstairs in #309 did a little better when they sold December 21, 2012. It cost them only $809,508 in November 2006 and sold for $840,000 5 months ago.
 

The tiny (“367 sq ft”) “loft downstairs at #406 did even better on resale, having been bought at $336,384 in October 2006 and just sold for $425,000 a month ago. I am going to guess that the sponsor was able to set increased prices at higher floors that the market is not willing to sustain. The high floor (little additional light, no better view) #1309 sold at 1% less recently than was paid in the new development; the two lower floor units #309 and #406 sold at slight premiums to their new development purchases (4% and 10%). Maybe the gap between #1309’s history and those of the other pair is simple market noise, maybe it is a sign that the developer was smarter than The Market.

Regardless, these numbers for #1309 are odd.

 

© Sandy Mattingly 2013

 

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May. 15, 2013 - 260 Fifth Avenue loft missed opportunity to sell before world found out about nearby development

 

you do hate to see that
You will often see a comment on Manhattan Loft Guy to the effect that a seller missed the best opportunity to sell (First Quarter 2008, aka The Peak) by being too aggressive in pricing, even for 2007, or by waiting too long in 2008 to come to market (thereby stepping into the deep freeze that followed Lehman’s bankruptcy petition in September 2008). Indeed, I would say examples are too numerous to mention, so if this sounds new to you: pay more attention! The recently sold “1,800 sq ft” Manhattan loft #12S at 260 Fifth Avenue in the newly christened NoMad illustrates that there are other risks in delays caused by pricing too high, in this case the extraneous event of new development nearby that could impact a wonderful view.

Let’s start with the loft, then move to the overlong campaign that cost the seller.

The recent babble:

This stunning loft in the historic Flatiron district offers pristine, modern finishes while maintaining the old world charm of its historical identity as an industrial space. It was designed by Pol Theis of P&T interiors and has been featured in prominent architectural and design magazines. This 1,700+/- sf home is surrounded with 21 oversized windows, providing sunlight and spectacular open views. Meanwhile, the towering 11' ceilings yield gallery-size walls that are ideal for displaying art.


You noted the “21 oversized windows, providing sunlight and spectacular open views”, of course, as you probably also nodded on seeing the last two listing photos, with “spectacular open views” northwest and southeast (the Met Life clock tower and One Madison Square). (An earlier listing shows an angled view of the Empire State Building, as in listing pic #5,
here.)

The
floor plan in this nearly square footprint highlights why that is an ideal loft shape when there are two exposures (here, it is one window on a third exposure; see my  May 13, 45 Lispenard Street loft takes a year to sell at small discount to ask, 11% premium over Peak, for the last time I enthused about this shape): the bedrooms are as far from each other as they could be, the essentially square (600 sq ft!) living room has the corner exposures, there is enough room for a huge “foyer” (an unusual element in a post-industrial loft), and even the bedrooms are essentially square.  The only limitation in this floor plan is major, and presumably structural: there is a single bathroom along the only wall with plumbing (that wall might be reconfigured to fit two baths, the kitchen and a washer dryer, but not without great expense).

a long voyage of pain
The recent sellers bought in September 2004 at $1.36mm and just sold for $1.63mm, a meager return over 8+ years after a magazine-quality re-design. Of course their plan was more ambitious. It started much earlier than you’d know from StreetEasy (the early dates are from our listing system) and is characterized by fits and starts:

April 19, 2006 new to market $2.25mm
July 31 “temporarily” off the market  
     
Oct 10, 2009 back on market $2.25mm
Dec 4 “temporarily” off the market  
Sept 11, 2010 back on market $2.2mm
Nov 13 hiatus  
Jan 6, 2011 change firms  
Feb 14   $1.95mm
June 15 hiatus  
Sept 9 back on market  
June 13, 2012 hiatus  
Sept 11 back on market $1.875mm
Jan 14, 2013   $1.695mm
Feb 13 contract  
April 25 sold $1.63mm


That’s only 28 months of active marketing but over 7(!) years, 5 prices, 2 firms, and a deal 28% lower than their long ago starting point. (Evidently they did not like to be bothered with showing appointments during the summer.)

 

Yes, they missed their best chance to sell, by being off the market in 2007 (still, by far the highest volume year for Manhattan residential real estate sales). Cruel second guessers (like Manhattan Loft Guy) have to wonder what would have happened had they been on the market then at, say, $2mm. But even after The Thaw in the overall market they wanted $2.25mm, and as the overall market picked up in 2010 they came down only cosmetically.

uncertainty is a female dog
I don’t know if this was “news” that was publicly available before that mid-2012 hiatus, but by the time loft #12S came back to market last September any proper view diligence by a Google-enabled buyer would have turned up
this report of plans to put a 23-story tower on top of a portion of 250 Fifth Avenue. (Someone tuned into Community Board 5 news would have seen it sooner, I assume.) That can put some fear into a potential buyer of a 12th floor loft on the south side of a building on the same block of Fifth Avenue, couldn’t it?

I will confess to originally having misread the reports and renderings, which I would hope a professional due (and view) diligence analysis would not have done. I originally thought the plan would block the south view from 260 Fifth Avenue except for the angled view across Fifth itself, but if they really build as in the rendering in that Mad Park News link, and in this
follow-up on Curbed after the Community Board met in October, the loss of view for loft #12S would be much reduced. The rendering is from 28th Street (looking north), rather than from Fifth Avenue (looking west), showing that the hotel (as planned) would sit a little to the west of 260 Fifth Avenue, to cut off (some) light and whatever the views are to the southwest, not the southeast view pictured in the listing of Met Life and One Madison Square.

I don’t know anyone who was interested in loft #12S at any time, so I don’t have firsthand knowledge of how a buyer reacted to the possibility of development, and whether this potential-then-planned development just to the south actually dampened the market for #12S. I suspect the most savvy buyers would be the most leery, those who could see the potential for some development south without knowing it would be massed slightly west. As you will see below from my earlier posts in the building,
something has to explain the fact that #12S got only $906/ft.

but that something might be the actual design of the loft
The latest broker babble notes that the loft was “designed by Pol Theis of P&T interiors and has been featured in prominent architectural and design magazines”, without revealing that Theis was also one of the owners. Certainly, it is designed within an inch of its life, though most of the “design” elements are removable or can be painted over, or otherwise softened; the exception is that love-it-or-gut-it bathroom.

From the perspective of Staging 101, high design can be … idiosyncratic, and idiosyncratic is a code word for problematic, and the likelihood that some buyers will be put off emotionally, notwithstanding the fact that most of what would “bother” such people is temporary. The challenge for the listing agent(s, as it turned out) for a high design, magazine-featured loft that was highly designed by an owner, is that the agent is not likely to get very far playing the Staging 101 card. Find the (perhaps) unique buyer who shares that design sensibility or (drum roll, please) produce only buyers willing to buy at a significant discount.

As I hinted above, it looks to me that the loft sold at a greater discount than would be predicted by past sales activity. Perhaps it was the looming (but vague) possibility of development at the end of the block; perhaps it was a thin-buyer-pool for this specific loft due to this specific loft’s style.

history suggests a discount
I am surprised to have focused on a sale in this building only once, and touched on another contract, also once. In my July 15, 2011,
interesting loft sale at 260 Fifth Avenue, but Observer gets it wrong, I noted a pair of sales of full floor lofts with identical footprints but very different levels of finishes (and views) that cleared within an uncomfortably narrow range (uncomfortable for fans of a rational market, that is), at $1,000/ft (8th floor) and $900/ft (5th floor). Way back in my April 26, 2007, newly in contract at 22 W 26, 260 Fifth, + 57 Bond (even 735 E 9), when I was still blogging about lofts that had not yet sold, about the oh so minty #9N, which ended up selling in that run-up to The Peak at $1,116/ft.

Hmmmm … $1,116/ft for a hypothetical sale of #12S even a year before The Peak would have been $2,008,800, as cruel second guessers smirk. That would have predated any specific concerns about development at 250 Fifth Avenue, though not any market-thinning decor effect.

The last sale in the building was the
5th floor, which sold again in September at $3.65mm (an increase of $230,000 in 15 months, to $960/ft), still marketed as a bones + view set of “countless configuration possibilities with no interior load bearing walls”. To restate the obvious: #12S is much higher than the 5th floor and was marketed as the opposite of a “project”, yet the 5th floor set of possibilities sold for a 6% premium to the magazine-quality #12S.

Second-guessing
is hard, absent specific buyer feedback in such a potentially rich field for second-guessing. But second-guessing is mandatory with such an interesting (disappointing!) sale.

 

© Sandy Mattingly 2013

 

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Apr. 24, 2013 - Petersfield loft at 115 Fourth Avenue asks for big gain over 2011, market refuses

 

data points tend to scatter

One of the great fascinations for me in looking at deed records as downtown Manhattan lofts sell is noting sales that deviate from the narrative for the overall residential real estate market on The Big Island. Many examples are listed at bottom, but today’s case in point is the “1,000 sq ft” Manhattan mini-loft #3G at 115 Fourth Avenue (The Petersfield), which was bought in June 2011 at $1.28mm by folks who went for the moon in trying to sell in 2012 but who succumbed to gravity (and, perhaps, bad karma), eventually selling at a tiny premium. Here is the full sequence for this “flawless ... loft [that] merges comfort with style”:
 

June 17, 2011 sold $1.28mm
Aug 8, 2012 new to market $1.7mm
Aug 26   $1.5mm
Sept 16   $1.35mm
Jan 3, 2013 contract  
Jan 23 sold $1.325mm

 

(The sale is not very recent. but the deed was filed only on March 19; it has been sitting in my Bright Shiny Object pile ever since.)
 

I am not sure what is more remarkable about this sequence: that folks who paid $1.28mm thought The Market might reward them in the 30% range after 14 months, or that they dropped so far so fast, with those 2 drops to 80% of the first ask. The result was a resale that reflects market appreciation for the loft of 3.5% from mid-2011 to early 2013, but a net loss to the sellers after paying the sales fee and transfer fees on the sale (and mansion tax on the buy). This history is kinda sorta like the histories in the lofts I hit in my October 10, 2012, 53 N. Moore street loft sells up 17% over 2005, only 4% above unsuccessful 2011 price, and in my September 21, 2012, flip city: 99 Reade Street loft sold in 2011 sells again, up 4%, in that they run against the larger market trend.

 

squeezing a lot in

The loft is small for a “loft” but makes for a large “1-bedroom apartment”, with 2 bathrooms, and a kitchen, office/dressing room and master bath that are each scaled for a much larger overall space, with 4 closets plus additional storage above the foyer. The babbling agent was enthusiastic and specific about the quality:

 

sun-filled ... six dramatic eight-foot windows ... northern and eastern exposures offer picture-perfect tree-filled views …. triple-mint open kitchen features antibacterial Silestone counters, stainless steel appliances including a dishwasher, custom cabinetry and a tasteful mosaic glass tile backsplash. … a most enviable custom-fitted dressing room.... abundant storage with four closets and expansive storage space above the foyer. The newly-renovated en suite master bath features a seamless Corian vanity with double sinks, custom-wood cabinetry and an oversized soaking tub. Soaring 11'7" ceilings, oak hardwood floors, custom shades, recessed lighting, and a washer/dryer

 

The 2011 agent was exactly as enthusiastic and specific, with verbiage that will be so familiar that it should embarrass the more recent listing agent (as if agents could be embarrassed by something like mere plagiarism). Thus, the master bath that was “newly renovated” for marketing purposes in April 2011 was also “newly renovated” for marketing purposes in August 2012. I’d be quibbling (and rather naive) to hope that the later babble might soften the “newly” thing, but I am often naive, and live to quibble.

 

One thing I do love about the more recent marketing: the living room shows so much better with the long green sheers, doesn’t it? A simple illustration of the power of staging, emphasizing both the height of the room and the trees out the tall windows (even if the 2011-buyers-turned-2013-sellers lived there with the sheers, it is great staging).

 

tracking the trends

In addition to the two Manhattan Loft Guy posts above, which involved loft sales that did not show dramatic gains over past sales a year or so earlier, I have explicitly hit dramatic short-term gains many times in the last year, in calendar groupings that suggest my attention waxes and wanes on different themes:

 

 

I can’t anticipate exactly what will catch my eye in posts in future, but sellers of lofts that they only recently bought often are Bright Shiny Objects.

 

© Sandy Mattingly 2013

 

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Apr. 22, 2013 - 400 shoes that used to live in 12 East 12 Street loft need a new home, carry big profit


hello old friend

If you are a fan of well designed small lofts and a reader of Manhattan Loft Guy, you will remember the post I did about the tiny (“840 sq ft”) renovated loft with lots of shoes at 12 East 12 Street (November 7, 2010, another loft in New York Times, another inexpensive renovation, with 400 shoes) after it had been featured in the New York Times (A Nightclubber’s Quiet Retreat; slideshow here). The loft (#2NW) is back in the spotlight for me, as it sold on March 1 at $1.4mm. The fascinating thing for me is that some of the questions I had about the (only) $100,000 renovation after the Times fluffed the club impresaria and her shoes can now be answered, as the listing used an architect’s drawing specifying changes and dimensions as the floor plan for marketing purposes. That, and wondering how people can actually live like this. Two thats, plus marveling at the profit turned in this 2007 to 2013 round trip.

 

First, the loft made a quick splash on the market, coming out at $1.4mm on December 6 and finding a full-price contract by the first day of winter. The listing description is enthusiastic without being specific, but contains a link to the Times piece as a source of non-marketing salesmanship:

 

gut renovated industrial loft condo .... Oversized commercial windows with Northern exposures and 16 foot high ceilings. Interior features have superior finishes and fixtures, a full laundry closet with washer/dryer, oak floors, and over-sized bathroom. In addition, there is a loft that features a separate guest bedroom, plus a study that is perfect for working at home.

 

No names of materials, appliances, or other finishes, apart from “oak”. Back in 2010 I tried to read between the lines to gauge the extent of the renovation, and got pretty close:

 

The kitchen is almost certainly completely new (in the same location as before, most likely). There are no photos of the bathroom, or any mention in the text, but what are the chances that this oh-so-chic-and-tidy couple with a Jetsons kitchen would not have put in a similar bathroom?

 

Let’s assume they did little structural work. Apart from replacing the narrow stairs to the lofted (low ceiling-ed) office / guest room, they probably had to add that featured shoe closet in the (tiny!) bedroom. And we have no idea if they had to upgrade any plumbing or electrical, or put in fancy stuff like in-wall sound or upgraded windows.

 

then v. now

The floor plan tells us that they added (replaced?) a washer-dryer and added new tile floor and drain, replaced the fixtures in the bathroom without moving anything, put in a brand new kitchen on the footprint of the old one, that famous shoe closet was newly built in the bedroom, there are new doors, hardware and light fixtures throughout, the plumbing was to be replaced back to the risers, and the place was to be skim-coated. This is a whole lot of work for “about $100,000”. There was probably a second page (or a change in plans) as there is no mezzanine space (with an office / guest room) and it is not clear if the pre-existing ‘too steep’ stairway is the same as the one on these plans.

 

The missing mezzanine aside, I wonder how much of the work was actually completed as drawn. Note that the two-way fireplace (Slide #6 on NYT and 2nd listing photo) is not in the drawings and that the bedroom door is now hinged rather than sliding. (The shoe closet sits above the fireplace, as built; see Slide #8 on NYT ). The Times implied the oak floors were repaired and retained; the plans specify new wood floors in all areas but bathroom and laundry.

 

Regardless, it is clear from the descriptions in the Times and in the broker babble that the essential structure was not changed (other than the wall separating the bedroom from the living room, with the fireplace and shoe closet), with the kitchen, bath and mezzanine remaining where and how large they were. There is now a safer climb to the mezzanine and everything else in the loft (except the column and, possibly, the floors) have been replaced.

 

About that mezzanine … look at the NYT Slide #10, with the tall owner nearly bumping his head on the beam while seated in the office, and then at this bit of babble: “a loft that features a separate guest bedroom, plus a study that is perfect for working at home”. The no-outside-rail stair is not the only dangerous element of this loft.

 

I snarked a bit at the NY Times for not fact-checking the owners’ memories about basic stuff such as that they “bought [it] for $840,000 in spring 2008 — ‘the peak of the market,’ [as one of the couple] noted gloomily”, because “city records have their deed as dated March 14, 2007, a good year before ‘the peak of the market’” and for $20,000 more. Their memories may be bad, but their taste is market-certified as excellent: they turned an $860,000 loft into a $1.4mm loft by spending only “about $100,000”. As I said up top, this is a whole lot of work for that small number of dollars, counting a new kitchen, new bath, new plumbing piping, new fireplace, new fixtures, doors and hardware, and skim coated walls. If their memories about the renovation budget are accurate, I wonder if they got a club-owner discount.

 

speaking of math

With all the attention to detail and fine work done in this loft, it is easy to overlook just how small it is, in real and practical terms. As I said in the November 7, 2010 post, they told the Times “900 sq ft” and we have it as “840 sq ft” in our database. The only dimensions on the architect drawing ae around the bedroom; not how small that is: probably less than 8 feet wide and only 14 feet to the doorway. The living room to the kitchen/bath wall is only about 15 feet by 28 feet, with that back wall of plumbing being maybe 9 feet by 14 feet. At these numbers, the footprint is something less than 700 sq ft. On the one hand, this increases the renovation budget on a $/ft basis (above $140/ft) without including the surviving mezzanine; on the other hand this emphasizes how efficiently one has to live in the space (or, in the case of a couple, how efficiently two have to live in the space).

 

There is a closet opposite the bathroom that was not used for linens and towels (per NY Times):

 

The hall closet brims with a seemingly endless expanse of silky black tops and dozens of chic little hats.

 

The plans call for a pair of closets, each 32 inches wide where (instead) there is now a fireplace with shoe closet above. In other words, there is no place to store clothing on-site (other than hats, shoes and silky tops), including in furniture, apparently. Look at the the bedroom as pictured in NYT Slide #7; there’s no space even for a night table in there. Look at the living room as pictures in NYT Slide #3; there’s a credenza-thing-y under the wall-mounted television, but no other visible storage. At all.

 

Not many people can live this close to the wind; apparently “lots of storage space” is a life saver:.

 

The apartment might also qualify for honors as New York’s tidiest living space. The lack of clutter is almost surreal, with not so much as a stray paper clip visible to the naked eye.

This is partly because the couple are blessed with lots of basement storage space, where belongings not needed at the moment are tucked away in clear, well-labeled plastic containers. The absence of shedding pets also helps. But, perhaps most important, the two are on the identical page when it comes to clutter.

“A jacket on a chair bothers me,” Ms. Cardoso admitted.


Mr. Campbell added proudly, “I think the most common thing people say about our apartment is that it’s so neat.”

 

not judging, just sayin’

Personally, I don’t think I know a single couple who could live in this space the way these sellers did, and very few who could live in it without converting the mezzanine to dangerous storage. Yet: to market on December 6, in contract by December 21 at full price.

 

Even with these sellers (portraits of OCD, no?), there was a limit. They outgrew the space, or had a baby, or got tired of going to the basement all the time (where did he keep his clothes??). After 5+ years of ownership above the Gotham Bar & Grill, they sold to a family trust. It makes a lovely pied a tierre, doesn’t it?

 

© Sandy Mattingly 2013

 

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Apr. 3, 2013 - Starck loft at 15 Broad Street with no bedrooms sells at $833/ft, for that reason

 

a theme emerges

The “1,470 sq ft” Manhattan loft #1926 at 15 Broad Street (Downtown by Starck) that sold on February 21 at $1.225mm is the third sale of a loft with no legal “bedroom” that I have hit in the last week (March 29, Lion’s Head no bedroom mezzanine loft at 121 West 19 Street closes up $25,000 since 2008, then April 2, ancient floor plan drives 43 Murray Street loft down to $864/ft). In this case, there is enough market activity in the building to say that the hyper-local market in a high-amenity condo loft at the heavily defended corner between George Washington and the New York Stock Exchange does, in fact, penalize a … er … crappy floor plan (to use a technical term). With #1926 clearing at $833/ft with this 2-window floor plan and the other public 2013 sales clearing at $1,021/ft (for “1,777 sq ft” with 3 real bedrooms) and $896/ft (for “1,174 sq ft”, also with no legal bedrooms), it is nice to see a demonstrably rational market response to layouts.

 

The premium went to a corner 3-bedroom layout, while Long-and-Narrow spaces with but one exposure sold for less, even if they squeezed two sleeping rooms into the space. Loft #1926 would have enough space for 2 bedrooms, if it were conventionally laid out (“1,470 sq ft”!), but it ain’t. It may be a “sophisticated and elegant loft in an unbeatable lifestyle building”, but the lifestyle in this loft (as lived in by the recent sellers) included parking two teenagers in raised “bedroom” sleeping area, while the older generation presumably sleeps in the oddly shaped “office”, with its oddly en suite bath and odd second entrance. (Loft #1904 is the “1,174 sq ft” “studio” that went for $896/ft with a kid’s room in the raised internal “bedroom”, an internal “master bedroom” without windows and only one bathroom; I have no idea why that traded at a premium to #1926 on a $/ft basis, so there are some limits to rational analysis on this corner.)

 

Look at the #1926 kitchen to see just how awkward this “1,470 sq ft” layout is: the kitchen is the narrow channel that must be passed to get to the living room, where the only two windows are. That channel is narrow because that raised teenager room sits opposite. With the teenagers occupying the space that might otherwise be an (oddly raised) dining area, you’ve got to walk a long way to get to the living/dining room with a bottle of wine taken from the frig. Or to set the casserole that just came out of the oven on the country dining table in pic #3.

 

The more I look at this floor plan, the more I see to hate it understand why The Market discounted it. The “office” was obviously used as the master suite by the sellers, with the bed squeezed into that stub at the extreme end of the unit. Did you notice that there is no closet in this room? You could do something along that wall near the separate entrance, but that entrance may be needed as a fire exit, so there are limits to how to use that corner. And the over large glass sliders take up a lot of real estate on the opposite wall. And did you notice that the other bathroom has double sinks? Monsieur Philippe apparently wanted the grown-ups to sleep in the raised “bedroom” (despite not having walls that go to the ceiling), then sharing the double sink bath with guests. (Phillippe is a weird guy.)

 

How do grown-ups entertain in this space if there are teenagers lurking in the raised “bedroom”?

 

For people not turned off by the layout, loft #1926 represents value on a money-for-space basis. For the buyer who wants the amenities in “an unbeatable lifestyle building” and likes the location, and who can live with one set of sleepers having no windows and another set of sleepers having walls that don’t touch the ceiling, “1,470 sq ft” for $1.225mm makes sense.

 

each sale is up

I have to admit that there has been a ready market for loft #1926, as it has now been purchased 4 times. It is nice to see successively higher prices at a pattern that conforms to the major trend lines in the overall Manhattan residential real estate market, from Froth to Peak to Nuclear Winter to Thaw to Precovery:

 

  • Oct 6, 2006 $590,585
  • May 29, 2009 $935,500
  • Oct 15, 2010 $1.15mm
  • Feb 21, 2013 $1.225mm

There is a buyer for every loft; for the right buyer this space makes sense (4 times!). Don’t take my sniffing over the layout as being anything other than an analysis of market response to a layout with limited appeal. I’d happily show this sort of space to buyer clients for whom this might match their criteria. At the right (discounted) price, of course.

© Sandy Mattingly 2013

 

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Mar. 22, 2013 - cheating to talk about market conditions during nuclear winter, courage, and risk-bearing

 

my analysis from March 2009 holds up pretty well, I think

I started another OYAToMLG draft for today to shorten my keyboard time from New Orleans, but in looking at it and the posts this week I realized I am probably not the only one getting tired of March 2012 at this point. A quick scan of the Manhattan Loft Guy archives found what I think is a gem. My March 25, 2009, am I a coward? assessing + bearing risk in a risky world, was written not quite exactly Four Years Ago Today on Manhattan Loft Guy, but it is close, and it was an unusual attempt (for me, on this blog) to talk generally about current market conditions.

 

The context was the nuclear winter that was (in retrospect) soon about to begin to thaw in the overall Manhattan residential real estate market, the theme was the different risks for sellers and agents from being over-priced in that market, and the hook was an (of course) unidentified then-current listing:

 

a Manhattan loft recently to market that (a) is a pretty spectacular loft, (b) in a building I am pretty familiar with, (c) in which there is a fairly timely and extensive set of market inputs (i.e., closed sales), (d) that is offered through a very experienced and professional agent, and (e) that is priced well above where I think The Market for that building is in March 2009.

 

(I will identify that loft below, with its full history.)

 

Remember: this post was real time during a nuclear winter that was of then unknown duration. I talked about the risk the sellers took in not just taking a long time to sell, but of possibly never selling, because the buyer pool at that time was so thin:

 

the risk is not just in dollars

As I said, I assume that these sellers understand the risk in asking these prices in these times. .... Of course there is a risk that these sellers will end up selling for fewer dollars after a longer time than if they had priced closer to The Market to begin with, and that the number of dollars and additional months will be determined by their speed in dropping the price when they are unsuccessful. Of course, if current trends continue in the near term, the more months it takes, the fewer dollars there will be. ...

 

I assume that these sellers also understand that there is a serious risk that their pricing will prevent them from getting any dollars for these lofts, not merely fewer dollars. How can that be? Because it is the law.

Back in the day, Supply and Demand got along well enough for [there] to be a broad and deep Market. Back in the day, Demand was sufficiently robust that even an over-priced loft would sell eventually, because the seller would have the time to adjust and still "do well", or because the rising tide floated that boat eventually. Back in the day, time was not an enemy of above-market property the way it is today.

 

one form of cheap courage

It wasn’t my listing, so it may have been easier for me to be blunt about the sellers’ predicament than for their agents:

 

To me, if they have a $2mm listing, that means I expect them to be prepared to drop the price every month or so by six figures until they at least reach a point of serious interest from buyers. I hope they would consider a 'ridiculous' low ball offer if one came in early in the listing, but I suspect we will not see an immediate negotiation to a clearing price 25% off the ask.

 

whose risk is it anyway?

Agents are supposed to explain risk; sellers bear nearly all the risk. If courage is measured by the potential consequences one is willing to (knowingly) assume, these sellers are more brave than most. In addition, these agents are more brave than I am, as I would be very afraid of wasting my time with a listing at a price with a small prospect of finding 'the' buyer -- unless I had a firm commitment to 'take a shot' then address the price 'accordingly'. So there's risk all around.

 

More for the seller, no?

 

Here’s the punchline, with details to follow: that March 2009 offering was then asking $2.199mm, dropped only twice (to ‘only’ $2.049mm), and sold 13 months later for ... (wait for it) … $1.81mm, without taking a break from The Market. To review: instead of making more than one six-figure price drop, the sellers held at an unavailable price before (finally) negotiating to a deal at a 12% discount to last ask, 18% below first ask, and to do that they had to wait until April 2010, two to three calendar quarters after the overall market was in full thaw.

 

details! we got details!!

That was the “2,190 sq ft” Manhattan loft #4D at 22 West 26 Street, with this history:

Mar 2, 2009   $2.199mm
June 3   $2.099mm
June 27 agents change firms  
June 29   $2.049mm
Jan 7, 2010 contract  
April 8 sold $1.81mm


This history reveals that sellers did not have to sell in 2009; if they were that motivated, they would have dropped the price more often, more deeply. Yet they were surely beaten up that year.

Again, I assume that these sellers were well-advised by their professional agents, such that they knowingly undertook the risks they took on, from coming to market in March 2009 (brrrr), to dropping the price but twice, to standing pat to wait for The Market to come to them in 2010. Note that I am not saying that anyone did anything wrong here, even in retrospect. What I am saying is that this loft delightfully lived up to my contemporaneous expectations, offered within weeks of it coming to market under very trying conditions.

 

It is nice to be proven right, once in a while, even if it did not take much courage on my part.

 

© Sandy Mattingly 2013

 

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Mar. 15, 2013 - 99 John Street loft sale is the very picture of motivation in a difficult environment


3 prices in 16 days, at a loss to 2008 buy
I find listing histories like that of the “677 sq ft” Manhattan mini-loft #1704 at 99 John Street (99 John Deco Lofts) fascinating. Sometimes a listing history reveals patience (which can border on stubbornness); sometimes hubris (or its opposite, modesty). This one is different, dramatic without being impatient.

The #1704 seller’s need to get out of Dodge is palpable:

Sept 4, 2008 sponsor sale $773,870
     
Oct 1, 2012 new to market $775,000
Oct 9   $740,000
Oct 16   $720,000
Nov 16 contract  
Jan 29, 2013 sold $700,000

What happened to this guy at the end of September? What clicked for him? All of a sudden, he had to sell, and he had to sell now. I was going to say, “no matter the loss”, but there clearly are limits, even for this guy; he held at the last asking price a full month to get a deal at a still further discount. Net-net, he got what he wanted: a quick deal at (what I presume to be) the best price available to him in The Market, though that was nearly 10% less than his original purchase (remember, that deed price is what he paid, including New York City and State transfer taxes, rather than the consideration paid directly to the sponsor). That net-net was, of course, further reduced by the sales fee and out-going transfer taxes (another $54, 775).

betting against the house is often a losing proposition
One could argue that even the decision to market #1704, by itself, indicates high motivation, in a circa 2008 conversion with 442 units whose sponsor is still selling units. In fact, of the last 13 recorded deeds, 12 were sponsor sales (#1704 being the lucky 13th), and the StreetEasy building page shows 16 other units in contract, 21 others for sale, and another 15 that sold since #1704 came to market on October 1. That is 65 of 442 units sold or selling in the 5 month period between putting #1704 for sale and closing. There should be no surprise that competition by original owners selling into an inventory dominated by the sponsor would feel rather cutthroat.

The only other time I have hit a sale at 99 John Deco Lofts the story was similar. In my September 8, 2011, John Deco loft resells off 11% since 2008, 7% off sponsor's comp, I was struck by how heavy the sponsor’s inventory would weigh on a resale campaign; in that case with a similar result of an original owner having to take a significant hit from their purchase (in that case 10.8%, in this case 9.5%).

The “837 sq ft” Manhattan (mini-) loft #815 at 99 John Street might not have been the first resale at the John Deco Lofts (lofts started selling there in 2008) but it is the first that I have noticed. More interesting than the 10.8% decline from original purchase from the sponsor in September 2008 (2 weeks after Lehman; ouch!) is that this re-seller was still competing against the sponsor when he made the deal that closed for $687,000 on July 29.


The #1704 original owner spent some time this past September studying this history, no doubt, yet barged into the scrum on October 1, obviously prepared to discount quickly and often (up to a sharp point). He achieved his objective about as quickly as humanly possible, at a considerable cost. Good luck to him in the future.

Think of this building the next time someone makes a broad statement like “Manhattan is a seller’s market these days”.

© Sandy Mattingly 2013

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Mar. 14, 2013 - 50 West 29 Street loft sells with challenging layout, challenged windows


but lots of energy
Under what circumstances might it be a good deal for a Manhattan loft seller to sell 24% lower than a similar loft that sold just 6 months earlier, when that similar loft was on a lower floor and required a renovation of half work/half residential space for full residential use? In the case of the “2,131 sq ft” Manhattan loft #9E at 50 West 29 Street, those circumstances include that the loft was in somewhat primitive condition, with a floor plan funky enough that an Alternate Layout was proposed that changed some angles and moved the kitchen, and that it had been on the market for more than 8 months before selling at $1.7mm on Lincoln’s actual birthday.

The contrast was with the mixed use “2,286 sq ft” loft #7E, which had been asking $1.8mm but cleared at a rather astounding $2.136mm on August 30, which needs to be integrated to create a fully residential loft (but the now-residential half was “completely renovated”), and which boasted all-day sunlight and “spectacular” city views from 3 exposures and 17 windows. In other words, this slightly larger slightly lower neighbor was half ‘done’, with a fairly clean build-out needed to integrate the half (present) office use into full residential use, easily done with the addition of a bedroom.

You won’t see the main reason why $1.7mm for #9E should have seemed like a good deal in any of the marketing materials. By the time that my buyer saw #9E, potential development plans for the adjoining lot to the east were public that would probably so change the light and views on that side of the building to make the current and proposed Alternate Layout untenable.

first the bad news, then the BAD news
You have to go to the Corcoran site to see the current #9E floor plan, though you can see the Alternate Layout there and on StreetEasy. Judging from the dated feeling from being in the space in real life, especially of the kitchen and baths, this loft has the look of one that was laid out with a single bedroom at the south end, with that diagonal wall, with the rest of the loft originally open; only later, I am guessing, were the two bedrooms added at the north end. This bedroom-bookends layout works in the classic Long-and-Narrow footprint only because of the 4 very wide east windows, bringing light into the public space in the middle of the loft. The bad news is that the entire loft needs updating, if not a gut renovation. The bad news is that the current allocation of space (no matter how well renovated) will not work in the future.

Sometime before #7E closed at the end of August, demolition permits were filed for the two 4-story buildings to the east, with the rumor circulated that a hotel would be built on the site. I don’t know what information was publicly available (to someone who diligently dug in the right places), but it appears likely that there was nothing to see (but much to fear) when the #7E contract was signed by July 12. By the time my buyer became seriously interested in #9E, the hotel cat was out of the bag, with the discussion topic being the interplay of mass, height, setback and F.A.R. regulations under different scenarios, with the very real risk that the east lofts at 50 West 29 Street would lose most east windows up to some height (probably including the 7th floor and possibly including the 9th floor) and that some east windows above the to-be ‘bricked-up’ level would likely face a hotel tower wall.

In the most likely best case scenario involving loft #9E, both sets of east windows in the middle of the loft would face a nearby hotel wall, with the east windows at both the north and south ends possibly retaining a sliver of view and light, either in front of or in back of the hotel tower at this height. Hence, the option of keeping the living and dining rooms and the kitchen in the middle of the loft would be far less attractive, with the most logical place for the public space (assuming a renovation complete enough to erase all the lines and begin fresh) would be at the north end, with its wonderful light and Empire State Building views.

An owner who wanted only bedrooms with windows would then put two across the south end, exactly as so many classic Long-and-Narrow lofts with windows only front and back are set up. (An owner with an appetite for interior sleeping areas could retain a wide master suite at the south end, and string one or two interior rooms along the east wall.) The planned hotel changed the calculation for people considering buying it and living with it as presently configured, people who might have an appetite for a small-scale upgrade (freshening up the more primitive elements) upon moving in, and a plan to afford a more extensive renovation down the line. No one who wants light in the public area could leave those bedrooms in the front of the loft, once the hotel possibilities were known.

timing is, as they say ...
The #7E sellers got out at the latest possible good time, obviously at a price that far exceeded their expectations. The #9E sellers were just a few months too late on the draw. The difference is dramatic, $416,000 in hard dollars, or $934/ft v. $798/ft. Looked at from a different perspective, the #9E buyers negotiated knowing that the always-at-risk lot line windows that flooded the loft with eastern light were likely to be substantially blocked, and paid accordingly; while the #7E buyers got bid up in an environment in which the eastern risks were only theoretical, with the specific pain of paying for light and views present when they signed the contract that were no longer likely when they bought the deed.

You have heard the expression that it can be better to be lucky than smart in real estate; assuming those #7E buyers exercised appropriate View Diligence, perhaps it can be worse to be unlucky than ignorant.

I like that “view diligence” locution a lot; it captures the issues and the context. Given that Manhattan lofts tend to be in Manhattan neighborhoods that are / have been / or will be developing (by definition: the buildings had prior non-residential use), this comes up a lot. Last time I hit it in a comprehensive way was in my January 24, 2012, banging the View Diligence drum (again), for Glass Farmhouse loft views from 448 West 37 Street, which has links to no fewer than 7 prior manhattan Loft Guy posts that are relevant. At least one of those links has a what-to-do-if-a-potential-bidder angle; all, of course, are fascinating.

about the energy in the sub-head...
There is a striking thing about loft #9E that is not apparent from the listing photos. In fact, it is such a memorable thing about the space that I shared a chuckle with somebody months later who had also seen this loft; I don’t remember who, or how #9E came up in conversation, but one of us asked the other if we “felt the energy” in the space.

If you look in the main listing photo you see a glass topped coffee table in the living room, resting on two very large stones that have been sliced open to reveal crystals. It seems as though there were at least 50 other crystals in the living room, none quite that large but of varying sizes. That is not my thing, but was clearly a big deal to the recent sellers. Alas, all that energy did not help them sell....

© Sandy Mattingly 2013

 

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Mar. 12, 2013 - small 250 Mercer Street loft sale suggests seller got great deal in 2011


unless you think market is up 21% in 2 years
I am 98% certain that if you look at the 2012 listing photos for the “850 sq ft” Manhattan loft #A301 at 250 Mercer Street you will find that this mini-loft just sold in the same condition, with the same finishes and “elegant mint condition” as in the 2011 listing photos. I am, however, 100% certain that if you compare the sales prices, you will find that the February 15, 2013 sale at $940,000 is $162,000 higher than the April 5, 2011 sale at $778,000, and that the difference is a premium of 21% over 22 months.

I will concede that there are not quite enough parallel details in the respective broker babble to conclude that everything is identical, 2011 and 2012, such as the “new large Friedrick air-conditioner unit[s]” or the 2 flat screen mounted televisons, but the floor plans are identical (2011 here, 2012 here), down to the office-in-a-closet and the (unnoted on the floor plans but described in each listing description) sleep / storage loft. Again, there is about a 2% chance that there were any significant additions or improvements to the loft between April 2011 and September 2012, and by “significant” I mean worth $10,000 or more.

how can The Market be wrong (again)?
How do these things happen? Both sales were market sales, at arm’s length after being fully exposed to the public market. Yet they both can’t be “right”. Either one is an extreme outlier (2011 low, 2013 high), or both are moderate outliers.

Loft #A301 came to market last on September 20 at $960,000 and found a contract by October 29 at $940,000 (the closing took another 4 months, but at least this one is a coop, unlike the storm-tossed condo I hit yesterday, in my March 11, Seaport loft in very old building sells up $10,473 over 2005, neighbors tremble). When sold in early 2011, the timing was even quicker: to market January 4 and in contract by January 27.

There may be a hint in that 2011 history, and there is a parallel to that Seaport loft in yesterday’s post, a backwards parallel if you will. In that case, the two sales prices for that loft (2005 and 2013) were too close for both to fit the overall market trends; in this case, the two sales of loft #A301 are too close in time yet too far apart in value. I have always found the coop 250 Mercer Street to be a difficult building in which to comp, despite there being many data points in the 275-unit building, as the “A” - “D” prefixes to unit numbers indicate what were originally four buildings, and the unit numbers in one don’t match the floor plans of the same unit numbers in another.

nosing around the building
This last sale of #A301 did not overlap with the marketing campaign for loft #C301, which closed on December 18 at $780,000, but that one was a “1,200 sq ft” bring-your-architect gut job, hardly attracting the same buyer pool as the mint 1-bedroom #A301.( I hit that one in my January 14, when bad things happen to high ceilings: 250 Mercer Street loft sells at $650/ft.)

Nor did it quite compete in time with the “800 sq ft” loft #D804, another neighbor that came and went before #A301. That one was similar in scale in both size and price ($855,000, on December 14) and, as noted in my February 8, 250 Mercer Street mini-loft sells up only a smidge over 2005, may not have been marketed to get the highest possible price (as odd as that sounds). At least with #D804, the sale suggests that #C301 was in the right ballpark in value.

In contrast, the prior time that #A301 sold there was some direct nearby competition. If these things have to have reasons, my provisional theory is that the 2011 seller made a mistake by coming to market too low, perhaps (overly) concerned about going head-to-head with the “completely renovated” “900 sq ft” #D504, which had some difficulty finding a deal while asking $799,000 (it took 2 contracts to sell that one, at $765,000 on April 20, 2011). The Market, in fact, preferred #A301, and quickly bid up the $759,000 asking price to $778,000.

Two things about this pair of 1-bedroom loft sales in April 2011.... The #D504 sale appears to have been at a low price, as the same loft sold in 2004 for slightly more ($775,000). Second, with #A301 coming to market soon after #D504 came back to market after a failed contract, the sequence and pricing suggest the #A301 seller had an eye on the competition and intentionally priced low for a quick deal:

#D504   Sept 18, 2010 new to market $799,000
#D504   Oct 18 contract  
#D504   Dec 2 back on market  
  #A301 Jan 4, 2011 new to market $759,000
  #A301 Jan 27 contract  
#D504   Mar 5 contract  
  #A301 April 5 sold $778,000
#D504   April 20 sold $765,000

This may be a case in which the higher quality loft was undersold due to direct building competition. The #A301 seller got what she wanted (a deal above her asking price, in only a few weeks). But my guess is that she left significant money on the table, as proven by the sale 22 months later.

Either that, or the Loft Gods are just screwing around with us, because the numbers don’t add up.

© Sandy Mattingly 2013

 

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Mar. 11, 2013 - Seaport loft in very old building sells up $10,473 over 2005, neighbors tremble


can’t blame That Storm
Manhattan lofts in buildings with slim past sales histories are, of course, difficult to comp. (If you are a buyer or an appraiser, or a Very Interested Spectator of the Manhattan residential real estate game.) And difficult to price. (If you are a seller or listing agent.) Such was the conundrum facing the seller and listing agent of the “1,424 sq ft” Manhattan loft #3R at 273 Water Street, in a 4-unit condo in which the last sale was … way back in 2005, when this seller bought #3R.

Given that they guy paid $1,089,527 then, asking (only) $1.225mm when coming to market on May 2, 2012 could be seen as a sign of humility, a (mere) 12% above the 2005 purchase price. The price drop after just 3 weeks to $1.15mm (a tiny 5% above 2005) then looks like an immodest attempt at humility. Perhaps tired of maintaining virtue, the seller dug in stubbornly at $1.15mm, with no further price drop until the contract was (finally!) signed by October 26. (As an aside about stubbornness, I have to wonder who was so stubborn in the post-contract period to delay closing until February 21; 4 months is a long time between a condo contract and closing.)

If you’ve been doing the math as these numbers are revealed, you already know that the (eventual) clearing price was $1.1mm, or $1,089,527 + $10,473. That’s almost a 1% “gain” for those tired of doing their own math. In other words, a more significant net loss, after paying a sales fee, New York City and State transfer taxes and other closing costs.

which one is the ‘wrong’ price?
Let’s slow down and stare at those numbers. The guy who paid $1,089,527 for loft #3R in April 2005 was hardly one of those (rudely derided) “greedy” sellers, asking first a 12% premium, then a 5% premium, but could not find a buyer for 6 months, when the best he could do was $10,473 more than he paid, which is more like a rounding error than a gain. O. U. C. H. A net loss of 6%, at least.

Since (we can agree) the overall Manhattan residential real estate market is not flat, 2005 v. 2012 (or 2013), if we want to be polite and consider the market as somewhat rational it appears that the problem was the 2005 price (too high) rather than the 2013 price. Yes, any arm’s length real estate transaction is (by definition) “at” The Market, but if you forced me to choose, 2012 into 2013 was much more of a seller’s market than a buyer’s market, with buyers famously starved for inventory. I would alibi this 2012 into 2013 at $772/ft as a micro-nabe issue, unless there are building problems I am unaware of.

That’s an unfair hint to make you guess that one micro-nabe issue that might account for the too small spread between the 2005 price (high) and the 2013 price (too low) had something to do with the Zone A thing-y that StreetEasy now helpfully appends to buildings in FEMA Flood Zone A. That’s unfair, because That Darn Storm (please don’t use the name given to it during its hurricane career) didn’t hit New York until Monday night, October 29 last year … at least 3 days after this contract was signed, a blissful period of ignorance (as it turns out) of storm surge damage potential for Zone A buildings in lower Manhattan. (I guess I just explained why this October 26 contract did not close for an unusually long time.)

the cost of mis-pricing can be high (unknowable, but high)
Under ‘normal’ market conditions, sellers keep dropping their price to attract one of the (normally) plentiful buyers out there. That might apply to the 2012 marketing campaign for #3R, with the seller going against that conventional wisdom to hold to a price that might give him a gross gain, but what I really want to focus on is the time between 2005 and 2012 when the 2005-buyer-turned-2013-seller tried to sell, without success. I trust our listing system more than I trust the scraps of information available on Streeteasy about the prior campaign:

Sept 16, 2007 new to market $1.495mm
Jan 9, 2008   $1.445mm
Mar 17   $1.3mm
July 30   $1.18mm
Dec 2 off the market  

You know the calendar for the overall Manhattan residential real estate market: that first asking price was just about 3 months before Peak Manhattan, the first and second price drops were at Peak Manhattan, the 3rd drop was in a period of flat pricing but reduced activity, and by the time the seller gave up the market was in deep freeze.

Retrospect is cruelly clear: starting at +37% over 2005 was a mistake, in the deepest set of buyers Manhattan has seen to date. As was +33%, and even +19%. The guy seemed to be negotiable in those days (note the next price drop), further supporting my theory that the 2005 price was the ‘wrong’ market price (it does not fit with the observed clearing price in 2013 or with the observed failing-to-clear prices in 2008).

Obviously, 2007 and 2008 were missed opportunities for this would-be seller. I have to believe that if he had started in September 2007 at $1.3mm, then adjusted as and if necessary, he would have sold (at higher than $1.1mm). Can’t prove it, but that’s my best guess. That period from August into mid-September 2008 is a bit troubling for fans of a rational market, but I would guess (reasoning backwards) that the listing was just too tired by then, so the shrinking buyer pool passed on loft #3R. Until September 15, 2008, after which the shrinking buyer pool passed on pretty much everything.

Then the would-be seller tried this (StreetEasy matches our listing system this time):

Oct 28, 2009 back on the market $1.2mm
April 26 2010 off the market

Rational market fans will have trouble explaining that failure. (Regardless, more evidence suggesting that 2005 was a too-high purchase.)

what’s not to like in this picture (or floor plan)?
Hint: not much. The interior space of #3R is a fairly conventional duplex of roughly even-sized stacked boxes, with the standard complaint about such a floor plan, that it ‘wastes’ space with the stairway and the don’t-clog-with-furniture spaces at the top and bottom of the stairs. In this instance, there is also the very inefficient space upstairs between the bath and the closet along the west wall. But “1,424 sq ft” should be more than enough space for a comfortable 2-bedroom set-up, even with this wasted space, as it proves to be with a nearly square 400+ sq ft living / dining space downstairs and 2 good-sized bedrooms upstairs.

These defects from the ideal could well drive the $/ft to the observed anemic $772/ft. But then you’d have to count 180 sq ft of private rooftop “patio” as free space. Let’s, instead, count it as worth 25% of the interior (no direct access from a residential space), yielding an adjusted value of an even more anemic $749/ft.

Note that there is no enthusiastic bragging in any of 3 sets of broker babble about the interior finishes. (A kitchen described merely as “open” and no comment about finishes other than the floors being “hard wood” is the very exemplar of a lack of enthusiasm in babbling.) So there’s nothing special about the space (ceilings look a little low, don’t they; un-loft-y for a 19th century loft building but not for one from the 18th century), and no views to speak of (none spoken of, at the least).

An adjusted $749/ft begins to make more sense, doesn’t it? I still can’t figure out that 2005 price, however. Neither (now) can the 2005-buyer-turned-2013-seller, especially having been a non-seller for 3 months in 2007, 11 months in 2008, 2 months in 2009, and 4 months in 2010.

The neighbors who were probably thrilled to have seen that 2005 purchase are now brought back to earth. Not as hard as the #3R seller, of course. O. U. C. H., indeed.

© Sandy Mattingly 2013
 

 

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Mar. 4, 2013 - when beautiful things happen to high ceilings / 720 Greenwich Street loft sells big after mezzanine re-do


it’s nice when it works
How big does the footprint of the Manhattan loft #1J at 720 Greenwich Street (floor plan here) look to you? Put aside for the moment the high ceilings that permit a mezzanine and do the math; you will see why the listing is coy about size (not mentioning square footage) and why I am impressed at its recent sale price. The footprint is nearly a rectangle, with a bite in one corner offset by a bulge at the kitchen and entry. The interior space in that rectangle is roughly 900 sq ft, assuming the 30’9” long living space does not include the 3’10” wide library (an East - West axis of roughly 34’8”), and assuming the 17’9” wide living space and the 8’4” long office comprise the North - South axis of roughly 26’1”.

I have no idea what the official coop measurement for this space is, but I am very impressed that this (roughly) 900 sq ft of interior space sold easily on December 21 at $1.7mm, especially as it sold at The Peak (unknown to StreetEasy*) in similar condition with a slightly different floor plan for $1.345mm (as in, “only” $1.345mm at The Peak).

How do such things happen?

When last sold (did I mention this was at The Peak?), loft #1J featured (per our listings system):

2 sleeping areas, 18ft barrel vaulted ceilings with industrial-sized windows, open chef s kitchen with granite countertops, Gaggenau stove, Sub-zero refrigerator, and Miele dishwasher, walk-in closet, built-in bookcases, oak floors, exposed brick, custom sound system, closet built-ins [with bath condition checked as “new”]


The reason that the 2008 broker babble sounds like this bit of 2012 babble is that the loft was in (somewhat) similar condition, then and now:

14 1/2 foot barrel-vaulted ceilings, exposed brick and cast iron beams, original columns, hardwood floors, tons of storage, built-ins, and great closet space. The open kitchen with center island has granite countertops, a Subzero fridge, and Gaggenau cooktop. There are 2 full baths outfitted with Hansgrohe and Duravit fixtures, and finished with glass and porcelain tiles

The big ticket item (the kitchen) is confirmed as the same in the photos, with the only change being the color of the walls and cabinet facings. The old babble did not specify the bathroom details and there is no surviving photo of a bathroom in our system, so I can’t tell whether the “new” (single) bathroom as of 2008 was upgraded by 2012.

Of course it is infuriating that the critical detail of ceiling height was described as “18ft barrel vaulted ceilings” in 2008 and “14 1/2 foot barrel-vaulted ceilings” in 2012, especially as those high ceilings permit the mezzanines that account for the biggest difference between this loft in 2008 compared to the recent sale. You can’t see the former floor plan (sorry!) but there used to be a wall making a (real) bedroom in the northeast corner, with a small (8 x 8 feet?) “office loft” on a mezzanine at the south end of the bedroom, plus another similarly-sized lofted area over the kitchen.

The new mezzanine is probably three times the size of the total of the old pair, with a full bath added on top of the original bath. Thus, the loft as sold at $1.7mm at the end of 2012 is larger than the loft that sold at the beginning of 2008 at $1.345mm. Not 26% larger, to match the sales premium from Peak to 2012, but larger by more than a trivial size, and reconfigured as to be much more spacious in feel and utility.

The 2008-buyer-turned-2012-seller traded the former main level bedroom for a mezzanine “sleeping area” on the south wall with a glass wall for a much larger living room, and used more of that (infuriating!) ceiling height along the east wall to add the mezzanine open to the living room below.

new space = (many) new dollars
Trading the much larger single mezzanine along the south and east walls (with that additional bathroom upstairs) could not have been cheap. Based on the stated room dimensions, that new space is something larger than 360 sq ft. I wonder what new mezzanine space costs to build … if $200/ft, that’s only $72,000, which sounds low, considering there is a new bathroom up there. Regardless, based on any reasonable likely cost ($300/ft is only $108,000), the 2008-buyer-turned-2012-seller created a lot more extra value than extra space by opening up the living room by removing the main level bedroom and by replacing two small lofted areas with two walls of mezzanine, including a sleep area and new bathroom.

It is more alchemy than creating something from nothing, but the difference in value 2008 to 2012 was $360,000.

This all worked because the ceilings are high enough, that north wall is long enough and the windows on it are tall enough, and because the quality of the work was high enough.The 2008-buyer-turned-2012-seller thought he created up to $280,000 in new value with the new mezzanine, as he started to market on October 5 at $1.625mm. It took until November 1 for a contract to be signed, with some set of multiple buyers fighting over the honor and the winner agreeing to the $1.7mm that closed on December 21. Nice work, all around.

more shapely + taller
The last time I recall making such a big deal about lofted (mezzanine) space in a Manhattan loft was in my January 14, when bad things happen to high ceilings: 250 Mercer Street loft sells at $650/ft, in which the title tells the main story. That one involved ceilings that were not as high as loft #1J (even if only 14+ feet) and a very narrow loft with the only windows on one very narrow end. That unfortunate loft actually traded for less than another loft (with a smaller footprint) in that same building that did not have “extra” mezzanine space, as though the mezzanine in that case was a negative value factor. (“As though”, although it is more likely that the different shapes for those two lofts accounted for much of that difference.)

not a Tax Uncertainty Sale
Add the December 21 loft #1J sale to my (so far unscientific) collection of late 2012 sales that do not fit the Conventional Wisdom about which I was skeptical in my January 4, in which Manhattan Loft Guy bravely calls BS on the Market Trend Meme Of The Day. First off, a coop seller really motivated to close in 2012 would have started sooner than 87 dsays before the end of the year. Second, this seller did not anticipate much of a taxable gain; he asked only $280,000 more than he paid, so would have no recognized gain after deducting his sales fee from a full price deal (due to the $250,000 non-recognition threshold for single filers). (Indeed, even selling above ask is not likely to generate any federal income tax bill, as the $355,000 gross gain over 2008 would be offset by that sales fee [here, 5%, or $85,000] plus the 2% flip tax imposed by the coop [$34,000], putting him only $31,000 above the non-recognition level before considering his renovation / construction costs for 360 sq ft of mezzanine.)

We will look elsewhere, sooner or later, for evidence of actual Tax Uncertainty Sellers. Note to self ...
__________
*Note to StreetEasy: maybe the error is in ACRIS, but if you look at the deed record on February 11, 2008 for “#4B” at $1.345mm, you see that the notice address for the buyer is 720 Greenwich Street #1J [this loft] but for the seller #4B in a building uptown. As a result of this coding error, the #iJ history in the recent sale goes from April 4, 2006 at $985,000 to December 21, 2012 at $1.7mm, omitting the February 11, 2008 at $1.345mm. You can easily confirm the proper sequence by noting the seller and buyer names on the deed records.

(Countdown … 10 … 9 … 8 … 7 … 6 … 5 … 4 ... 3 … )

© Sandy Mattingly 2013

 

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Feb. 21, 2013 - 712 Broadway loft sellers are the very model of modern motivated sellers (and unhappy flippers)


4 drops in 80 days, selling at huge haircut
Because it can be hard to track sales by units in the 2-building coop that includes 712 Broadway and 714 Broadway, there is no sales price associated with the StreetEasy listing for the “2,825 sq ft” Manhattan loft on the 3rd floor at 712 Broadway, but if there were, it would appropriately be in red. As would at least the last price drop or two. The pictures suggest a motivated seller (I can almost hear those 2 black leather chairs in the 4th photo pathetically shout out “no one lives here, make an offer … please”, as they are the only furniture in any listing photo), but nothing screams motivation quite like this listing history:

May 12 new to market $2.979mm
June 12   $2.869mm
June 21   $2.695mm
July 10   $2.569mm
July 31   $2.34mm
Sept 19 contract  
Dec 12 sold $2mm

I am going to draw my fingernails across this chalkboard a bit: that’s price drops after 31, 9, 19, and 21 days, of $110,000, $74,000, $96,000, and $229,000. That last one was much larger than the rest and must have hit bone, as the sellers sat there for 7 weeks before (finally!) getting a contract. And what a contract! Off another $340,000 (14%) from the last ask, off 33% (but not quite 7-figures) from where they’d started.

If I’ve seen another example of a price history that screams ‘motivation’ as loudly as this one, I must have covered my ears, or otherwise blocked out the sound.

how to lose money by buying low then selling high
Streeteasy can’t match this listing up with the last time the 3rd floor loft was offered, and sold, either. Comparing that listing to the recent one tells you why the 2011-buyers-turned-2012-sellers were so excited about the loft, without explaining quite how they were over-excited. Yes, they bought low ($1.6mm on November 9, 2011) and sold high (the $2mm you’ve already seen), but the spread between buying at $1.6mm and asking $2.979mm 6 months later suggests they thought they had added huge value by renovating in between, while the spread between their (various) asking prices and their exit price proves The Market was not (very) impressed.

Here is what they bought: the opportunity to …

Design Your Own Floor-thru 2800 sq. ft. Loft!

This true artist's studio features a wide open and expansive floorplan, approx. 2800SF, high ceilings, rear studio space with poured concrete floors (not pictured on floorplan), passenger and freight elevators direct-to-floor, west and east exposures, tree-lined view, hardwood floors, 1 bath, w/d, & great location!


The post-renovation broker babble is quite enthusiastic about what they did:

Brand new gut renovation of a 2,825 square foot 2 bed, 3 full bath full floor loft ... 4 zone central air conditioning, barrel vaulted 12 foot ceilings, exposed beams and brick, solid white oak plank floors, antique Spanish and French tiles, custom zinc counters, Herbeau kitchen facets [sic], Wolf 5 foot self-cleaning double oven range that vents outside, 8 foot long reclaimed pine kitchen work island, Duravit baths, full size Bosch washer/dryer. .... Great light provided by huge thermopane tilt/turn windows with open views down Washington Place to the Park. ... sub-basement storage room ..., walk-in closets, built-in bookcases, huge pantry closet with space for waste and recycling cans, plus 20 x 25 foot vaulted storage attic. All rooms wired for cable/Internet/phone. Finished with 0% V.O.C. paints, waxed pine doors and water-based satin floor finishes. A special property, thoughtfully restored by true craftsmen.

I’ve already snarked on the photos (the black leather chairs), but I will have to take their word for the quality of the work and the truthiness of the craftsmen. I see wonderfully restored bones (the brick walls and [especially] valued ceilings, the front windows, the new floors) but the kitchen and bath photos leave me cold. Let’s just say that the plumbing rooms pictured are very stylized but not to my style, and not to a style that (to my eye) matches the loft character they so painstakingly (and truthfully) revealed or recreated.

Among other dissonant choices: the (huge!) kitchen appliances are stainless and the custom counters are zinc, yet the towel bar in front of the sink, the faucet, and the electrical outlets above the counter are finished in … brass? (As is the pot faucet above the [stainless] Wolf range and below the [stainless] hood.)

I won’t even take a stab at guessing the renovation that resulted in the truthy work (sealing all that brick!), the thoughtful materials (no VOC paints!), the designer faucets, custom this-or-that, new (4-zone!) air, new thermopane windows just 25 feet over Broadway, and the other elements in a (huge: 20x13 ft) kitchen or the 3 new full baths. Let’s just say that it blew past the old ballpark figure of $200/ft I’ve been using for a full loft renovation of basic (good) quality.

Take the $1.6mm they paid in November 2011, add a renovation budget well beyond basic (good) quality at $200/ft, and you are well beyond $2.1mm in hard costs before getting tinto transaction expenses and costs of carry. If I am not reading too much into that last (painful, large) price drop (I probably am, but you see where I am going), $2.34mm was a meaningful number for these erstwhile flippers. $734,000 in renovation costs for a “2,825 sq ft” loft is hardly out of the question (just $260/ft) and is probably low. Pain, indeed.

But they endured the pain, if not embraced it, in the sequence of price drops in the listing history above, and (especially) in negotiating to an exit a mere $400,000 above their November 2011 entry price (before renovation, obviously). Is there any chance at all that they could have gotten all that Euro-tiling and no-VOC-painting (etc, etc) done at $142/ft? Not unless they are so closely related to a large team of craftsmen that they didn’t have to pay them in money, and unless they owned discount suppliers of high-end materials.

blame the guy downstairs
I have to believe they were distracted by the experience of the loft below. Two months before they signed their contract to buy the 3rd floor (full history is below), the 2nd floor loft went into contract at $2.7mm. That one was beautifully renovated indeed (more on that soon), so there was certainly potential to buy-fix-and-flip at this address, if one could buy low (enough), renovate well but inexpensively (enough), and tap a buyer pool that would appreciate the work that was done enough to make the whole thing profitable (enough).

We know it didn’t work out, but the fact that the 3rd floor sold for $2.7mm in July 2011 means the idea was not crazy.

Remember my snark a few paragraphs up about having craftsmen in the family and access to quality materials? I will always regret not having blogged about that 2nd floor loft when it sold … it remains one of my all-time favorite classic loft renovations, and was done by a guy with lots of friends in the trades and with access to low-cost materials. (Regrets? [oh yes] I've had a few.) That guy also had impeccable taste (even if they did largely match mine), the patience to do the job right, and the foresight to have done it many years earlier (perhaps 10; I can’t remember at this point).

I have seen the 2nd floor loft up close, a few times. Those listing photos don’t quite show the quality of the work (just as they might not in the 3rd floor), but every detail was finished to a very high standard on the 2nd floor, including those that I might have done differently (the platform under the bed, the sauna). Maybe I am cheating here, but those listing photos obviously show an empty (unlived in) loft, but the black leather furniture in the 2nd floor photos do not strike me as pathetically screaming at all.

By the time the 3rd floor flippers came to market on May 12, 2012 at $2.979mm, the guy who bought that lovely 2nd floor loft for $2.7mm had been trying to flip the 2nd floor at $3.2mm for almost  6 months, and had just dropped the ask to $2.995mm. If you squinted just right in May of 2012, you could apparently convince yourself that there were two lofts in this 8-story building in the very NYU part of Noho worth almost $3mm.

By the time the still-not-a-flipper on the 2nd floor bailed from the market in August at $2.75mm, the still-NEED-to-be-flippers on the 3rd floor were down to $2.34mm, touching bone. You know what happened after that.

I have to guess that the 2nd floor history had an impact on the 3rd floor decisions. The timing and values match too closely for this to be a mere coincidence except in a world governed by capricious Manhattan Loft Gods. (Say it ain’t so.) Let’s take a look at what happened before our folks bought the 3rd floor, to see caprice in action.

they weren’t the only ones who over-valued the loft
The long-time owner of the 3rd floor (a “true artist”, they claim) thought the loft was worth a lot more than The Market did, circa 2010, as demonstrated by this history:

Oct 8, 2010 new to market $2.2mm
Dec 10   $1.995mm
June 1, 2011   $1.8mm
June 25   $1.5mm
July 19 contract  
Nov 9 sold $1.6mm

I am not going to beat this horse much longer, but note what that last Summer sequence implies. The true artist over-corrected by dropping to $1.5mm, to the extent that there was enough competition (finally!) to drive the eventual clearing price up to $1.6mm.

Settle on that for a sec …. The 2011-buyers-at-$1.6mm-turned-unhappy-flippers-in-2012-at-$2mm came thisclose to someone buying the opportunity out from under them before they got started picking out tile and faucets.

Regrets? They have a few....

a word to the wise
We see that the Manhattan Loft Gods can be capricious. Don’t make them angry. Sufficient?

© Sandy Mattingly 2013

 

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Feb. 19, 2013 - hyper-local market for 18 East 12 Street mini-lofts is up 14% YoY


a head scratcher’s special
It is an understatement to say that The Market loves the “970 sq ft” Manhattan loft #2A at 18 East 12 Street. In 2011 it took 25 days to find a contract and only 40 days to close; the recent campaign took only a little longer (contract in 39 days, closed in 74 days) but was even more successful (selling at $1.395mm on January 7, compared to $1.225mm way back on November 16, 2011). Whether measured as contract to contract or deed to deed, that’s less than 14 months to re-sell at a $170,000 premium, or 14%.

If you can find a difference between the loft then and now you are a better Guy than I am. The floor plans (then, and now) are direct copies, down to Mr. Murphy on his wall. The pictures (look at 2011 in large format on the Corcoran site) show identical structure and elements (down to the kitchen island light fixtures and the 1985-era cabinetry). The 2011 broker babble claimed vaguely that the space has been renovated; the more recent babble claimed “stone counters, stainless steel appliances, under-mount sink, glass tile backsplash, storage pantry and breakfast bar with seating for four” plus “twin solid-core wood pocket doors, new hardwood floors”, all of which are visible in the 2011 pix or floor plan. (The doors are fully open [not visible] in the old photos, but the same track is there.)

Does anyone think that the overall Manhattan residential real estate market is up 14% in 14 months? I don’t either.

You might wonder if the 2011 seller sold too quickly (25 days to contract!) and too low ($1.225mm), but the fact is that she started then at $1.295mm and had to negotiate (apparently, with only one serious bidder). In contrast, the 2011-buyer-turned-2013-seller had to wait 39 days for a deal (ha!) but got the full ask of $1.395mm.

reality check, until reality gets sliced too thin
The 2011 market was not demonstrably different from the 2012 market. Using The Miller’s numbers in his 10 Year report the average and median prices in the overall Manhattan market were down nominally YoY 2012 to 2011 (0.7% and 1.8%), with transaction volume up 3.4% in the later year (p5 of the report).

If you want to drill down into sub-markets, the data get dangerously thin. The Miller counts only 41 1-bedroom condo sales in Greenwich Village in 2012 (and 56 in 2011). You can play with the numbers on page 48 of the report, but you will play alone; these numbers are too small to draw conclusions about one particular sale.

The more relevant data to loft #2A at 12 East 18 Street are the two sales, 14 months apart, the second just a week into 2013. Problem is, these data don’t make sense to me. Nor does the fact that this last #2A sale set a building record on a dollar-per-foot basis, whether you count #2A at “970 sq ft” (as the two listings did) or “1,000 sq ft” (as StreetEasy has it). (The StreetEasy building page is here; the reigning champion had been the #9C “1,900 sq ft” duplex combo in January 2007 at $2.521mm, despite there being 3 later sales here in and toward The Peak.)

is the guy in the wrong line of work?
The 2011-buyer-turned-2013-seller has such an unusual name that The Google should drool over. It seems he is an actor, with deed notice addresses suggesting he came to New York fro Sweden to make it on stage then (perhaps) was lured to film on the west coast. Unless I see him soon on an Oscar list, I will continue to think of him as a real estate flipper par excellence.

Or, maybe he just got lucky. Either way, no way an outsider should complain about flipping in 14 months, plus $170,000. That is still $60,000 net after paying a sales fee and transfer taxes.

© Sandy Mattingly 2013
 

 

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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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