weird fluff piece: “flip queen” may have actually lost money for mother-in-law

tangled webs woven by Manhattan Media wing of the Real Estate Industrial Complex

I’d like to think I’m more a skeptic than a cynic, as I habitually click through background data to better understand newspaper (or other) stories about real estate deals or ‘facts’ or personalities. But I am tempted to the dark side by a piece such as this one in last week’s NY Post real estate section.

From what Jennifer Gould Keil says (she is a prime member of the Manhattan Media wing of the Real Estate Industrial Complex [a term that I first heard from The Miller], leveraging tips about transactions and personalities into real estate “news”), the agent described as a “flip queen” did a heckuva job (Brownie!) in creating a vastly more valuable property through skill and insight.

The reality is rather more complex than Keil’s drooling suggests. First, the drooling:

  • the agent is identified as a member of the team that features a high-kicking star of “Million Dollar Listing” (a hint as to why this piece got published?)
  • the agent gets quoted as saying that she “design[s] and build[s] what the market forecasts”,
  • the agent had her partner (and mother-in-law) pay “$1.35 million in May 2017”,
  • the agent gets credited with doing research to find that outdoor space and views in Bushwick would be attractive features for buyers from Williamsburg or the East Village,
  • the agent is then credited with including those features in a “ground up development” that sold for $1.7mm to (ta da!) buyers from the East Village (“as I expected from the start”)

You’d be forgiven for thinking that this agent just made $350,000 for her mother-in-law. I think there’s a non-trivial chance that the MiL, in fact, lost money and a likelihood that any profit was small (as outlined far below). I suspect this piece was written to repay the Million Dollar Listing guys for past (or future) tips. I suspect few people care, but if you’re one who is curious about how the Manhattan Media wing of the Real Estate Industrial Complex works, read on …

fact-checking is for journalists (and bloggers)

The Post links to the StreetEasy history of this Bushwick building, from which past sales data is a few clicks away, establishing that the May 2017 purchase price was $1.38mm, not $1.35mm, perhaps a small error if the flip was a success.

Without coming out and explicitly saying so, Keil implies that The Flip Queen made at least substantial changes (after her research, possibly to add views and/or outdoor space, as those discerning buyers from Williamsburg and the East Village want) to the home purchased in 2017; indeed, suggesting that TFQ did a “ground up development”.

But the home in May 2017 was already 3,967 sq ft, when it was sold by an LLC with a developer-like name. StreetEasy shows plainly that that LLC paid $200,000 for “vacant land” in August 2015 and sold a house in May 2017 (i.e., did some sort of “ground up development”).

I can’t find drawings of the to-be-built-after-2015 building in the Department of Buildings files (note to self: learn where these are found!), but it seems clear from the Property Shark links to Permits that no permits were filed after TFQ’s MiL bought the building in 2017; if you want to go into the DoB rabbit hole, the BIN is here.) The only filings that I see after May 2017 are by the architect to make the temporary Certificate of Occupancy permanent. That building, by the way, was a 3-story 2-family that featured a penthouse that was not an additional “story” (which would apparently have prompted application of different regulations), at least one balcony, and a 3-feature bathroom in the basement portion of the lower duplex.

what did The Flip Queen do?

There is nothing in the listing description that specifies what improvements were made to the house between selling in May 2017 for $1.38mm and being flipped in November 2018 for $1.7mm. It seems that nothing was done that required a building permit (or else a building permit would have been filed), yet TFQ did something that increased the value of the home, as implied in the NY Post.

The lack of permits implies that nothing was moved, no systems (like central air) were added, no structural elements dramatically opened up. That leaves open the possibility that there were major cosmetic changes that can add value (kitchen and bath, for example). The timing suggests that some major cosmetic work was done, as it took a long time for the to-be-flipped house to be flipped:

May 18, 2017 purchased $1.38mm
June 15, 2018 new to market $1.995mm
June 28 $1.795mm
Sept 27 contract
Nov 9* sold $1.7mm

(*The StreetEasy listing page has November 15 for a “no longer available” date, but the deed record shows November 9 as the sale date.)

The plan was always to flip the house, so the 13 months before the house was put back on the market were almost certainly used in renovation or design work that did not require permits. Again, kitchen and baths can be redone without permits so long as nothing is moved. The Google eventually yielded the agent’s flipping business, which has this description of the project (emphasis added to highlight the claimed [or implied] improvements):

Nothing says Brooklyn like classic brick. This ground-up development was built to match it’s environment, but also to whet the palettes of East Village and Williamsburg dwellers looking to move into and invest in a place that would afford them space, luxury, and style. With all of that in mind, we added three roof decks and a glass penthouse on the roof, which gave unobstructed views of Manhattan and incredible sunsets. The floating staircase made the place look even more massive and gave an added hang out space/bedroom to the family who would live there. It was sold in just one year with a return on investment of 100%.

Since we know that the building had a penthouse when built, I guessed that brick walls were replaced by glass, substantially if not completely. (I would imagine “adding” roof decks would require an engineer and DoB approval, so maybe there’s a set of permits I haven’t yet found.) The three “added” roof decks all sit on existing structures:

the 3rd roof deck is on top of the penthouse (“accessible by ladder”); the others sit on the portions of the roof not covered by the penthouse (from Elliman listing)

It is rather maddening, even curious, that the listing does not include a single photo of the roof decks; at first, I thought the same about the penthouse, but then I realized this has to be it:

it’s not the living room or a bedroom, the stairs end, and the stairs and windows / door match the penthouse on the floor plan (another Elliman image, obviously)

Does that look like a “glass penthouse” to you??

One could reasonably assume that the failure in the description of the flip above to identify any work on the kitchen or baths means that no significant work was done on the kitchens or baths. (The description above goes to the trouble of claiming credit for the “floating staircase”, which presumably replaced a non-floating stair.) And claiming credit for adding three roof decks eschews credit for the deck off the kitchen that has stairs down to the garden.

counting is hard, making a profit even more so

Puff-writer Keil only implies that this was a successful flip; the flipping website makes that claim explicitly, so strongly that you wonder why Keil didn’t parrot this line:

It was sold in just one year with a return on investment of 100%.

I have my doubts. Skip down to the next bold subheading to avoid some weeds, or journey with me ….

Between the shared listing system, StreetEasy and Property Shark we know that

  • the house was bought for $1.38mm and sold for $1.7mm, so there is a maximum gain of $320,000
  • the flippers took out a 30-year mortgage of $814,788 and a second mortgage that looks like a secured line of credit for $350,000
  • the flippers had customary closing costs to buy in May 2017, including the “mansion tax” (1% = $13,800), mortgage recording tax (on both the mortgage and line of credit) (1.925% = $22,422), title insurance (assume 0.6%, or $8,280) … that’s $44,502 ‘off the top’ (or, added to their tax basis) on Day One, without considering attorney’s fees and other incidentals
  • a prudent homeowner would insure the house, and every mortgage lender would require insurance
  • the flippers carried the house from May 18,2017 to November 9,  2018, just shy of 18 months, paying interest and principal on (at least) $814,788, and paying real estate taxes ($6,093/yr in the current year)
  • the flippers had customary closing costs to sell in November 2018, including NYS and NYC transfer taxes (1.825% = $31,025), plus incidentals such as another set of attorney’s fees
  • the flippers were prepared to pay 5% sales commission ($85,000)

We do not know

  • whether they used the $350,000 credit line (either for purchase or for renovation or redesign work), so we don’t know the size of the down payment
  • the interest rate on either loan (this does not appear to be a principal residence, so the rate is likely to be higher than a conventional 30-year mortgage)
  • the smaller down payment in the purchase (without use of the secured line of credit in the purchase)is $185,212, while the larger (with use of the secured line of credit in the purchase) is $535,212; in the first case, the cash investment is smaller so the potential return could be proportionately greater, but mortgage-related expenses would be higher over the 18 months
  •  The Big One: how much the flippers paid The Flip Queen (and/or she paid contractors, architect, and/or engineer) for whatever renovation or redesign work was done (taken at face value, the “added three roof decks”, the “floating staircase”, and somehow or other the “glass penthouse”); perhaps there were cosmetic changes in kitchen, baths, or lighting that would increase this expense line

A word about the sales fee … we also don’t know whether the November 2018 purchasers were represented by a broker or if the entire sales fee went to Douglas Elliman, or if the firm made some concession to this agent for ‘family’ business. I don’t believe my firm would make a concession in this instance, particularly as the agent was not a record owner of the property and the listing description does not say that a listing agent has an ownership interest in this property, as NYS regulations would require. But if there’s a concession at all it would be limited, as there is at least one other listing agent to be paid (and both are identified with the Million Dollar Listing guys so there’s probably a team fee) and there may well be another firm taking half the fee, in any event.

let’s go to the (metaphorical adding machine) tape

On Day One, the flippers paid or committed themselves to soon pay(without considering incidentals like attorney’s fees):

  • $1.38mm, plus
  • $13,800 (“mansion tax”), plus
  • $22,422 (mortgage recording tax), plus
  • $8,280 (estimated [customary] title insurance), for a total  of …
  • $1,424,502

On Day Five Thirty-Nine, the flippers received $1.7mm, but paid (again without considering incidentals like attorney’s fees):

  • $31,025 (NYS and NYC transfer taxes), plus
  • $85,000 (likely sales fee), so they took home …
  • $1,583,975

Between those two Days, the flippers paid to carry the house, approximately:

  • $9,139 (estimated 18 months of real estate taxes, though the first year would have been at a slightly lower rate)
  • $70,020 (estimated 18 months of mortgage payments on the $814,788 mortgage of $3,890, assuming 4% interest, though the actual rate is likely to be higher because this should not have been a primary residence loan)
  • $7,500 (estimated 18 months of homeowners insurance premiums; I pay much more, but maybe they found a policy for an uninhabited house at low rates), for a total (without considering incidentals like utilities) of …
  • $86,659

If you’re in a business of flipping homes for a profit, you’d count all these things, right? (And probably more that haven’t occurred to me.) If you’ve scrolled up a bit as we were counting, you see how suspenseful this is, so let’s recap the bold numbers:

  • $1,583,975 (the Day Five Thirty-Nine proceeds), from which deduct
  • $86,659 (18 months of big-ticket expenses), and also deduct
  • $1,424,502 (the Day One expenses), which leads to a preliminary net of …
  • $72,814

There are two things we haven’t taken into account. This preliminary net would be further reduced by expenses if the flippers used any of the $350,000 secured line of credit (there is a reason they thought it prudent to line it up in advance). And it cost some amount to “add[] three roof decks” and the “floating staircase”, and to do something or other to turn the existing penthouse into a  “glass penthouse”, even if, as seems unlikely, there were no other improvements to the house. Remember, it took 13 months for whatever improvements were made to be show-ready, and brought to market … something was spent, doing something.

We are operating on a very thin margin here.

Not having either been, or represented, a flipper, I can’t be certain how they measure their return. My numbers are logical to me, certainly as to category and direction, and I’ve tried to be conservative in estimating numbers I don’t know. The return is something less than $72,814, perhaps much less than $72,814, possibly even a red number. Remember, the work that was done between Day One and the day the house was brought to market took 13 months to plan and/or refine and/or complete (of course, they had however much time between purchase agreement and closing to plan). If they had cut that in-between time in half (and had the same success in marketing), they’d have avoided one-third of the $86,659 in big-ticket expenses, or almost $30,000, so you ‘d think that (a) they knew that, and (b) they couldn’t avoid it, or (c) felt that the investment of additional expenses was warranted by the scope of work.

If you measure a return against the cash downpayment, that baseline could have been as high as $535,212 (if the only loan taken was the $814,788), possibly as little as $185,212. The return was something less than $72,814, probably much less. To avoid red numbers, let’s assume the return (after renovation / redesign costs) was as little as $40,000 (a very conservative guesstimate). If the flippers put down only $185,212 when they purchased, that is a return of 22%; if they put down $535,212, that’s a return of 7.5%, in both cases over the 18 months between the initial payment and cashing out.

Not the result implied by puff-writer Keil’s account. And not the result described on the flipping website:

It was sold in just one year with a return on investment of 100%.

nothing personal (obviously?)

I hope this is obvious: I know nothing about this agent, her real estate agent practice, or her flipping / renovation business, other than what I’ve seen and described above. And I’m really not as much interested in her as I am in the fact that Keil wrote a puff piece implying this sequence of buy-improve-sell was a great success, without thinking it relevant to talk about the expense side of the deal (inevitable closing costs, inevitable costs to carry the house until it flipped, and the cost of actually making improvements), without even fact-checking the source hyperlinked in the article about the original purchase price.

As I said up top, I am skeptical by habit and will sometimes click on public sources to go behind the stated (or implied) ‘facts’. And once things start to look a bit askew … well, you see here we are, hundreds and hundreds of words later. All to document (and link, and metaphorically footnote) that this bit of agent-fluffing by the Manhattan Medias wing of the Real Estate Industrial Complex is simply an example of PR efforts by a brokerage firm on behalf of its star agent team, abetted by a newspaper writer who is more than happy to do PR and not especially interested in journalism.

Such a strange industry I am in, sad to say….

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Chelsea loft owner loved renovation more than The Market did

4 years later, $1.4 million off … oof!

From all appearances, the “2,250 sq ft” duplex Manhattan loft 263 Ninth Avenue #PHD (The Heywood) is a beauty, with a name-checked architect and designer and enthusiastic broker babbling full of proper proper names and materials.

Remodeled interiors by Architect and Artist Roy McMakin of DOMESTIC ARCHITECTURE showcase a customized home … for the discerning buyer. This fabulous Loft, in pristine condition, features exceptional finishes and stunning design throughout the open living and entertaining space.

… [S]un-filled South-facing Living Room/Dining Room with 12.2 ft beamed ceilings[,] open Chef’s Kitchen with a 48-inch double oven Viking Stove, Sub-Zero Refrigerator, Miele D/W, and a custom Big Leaf Maple island. The second floor offers a kitchenette to serve the terrace, glass doors to the outside, and a completely private Master Suite with a huge spa-like bath, separate shower, and deep soaking tub.

Additional features include dark solid oak floors, custom cabinetry throughout, stone countertops, a fully integrated entertainment system, architectural lighting and an automated irrigation system on the terrace, built-in outdoor Barbeque, exterior vented kitchen exhaust ….

kitchen checks the boxes (images from Stribling)

custom cabinetry, check; architectural lighting, apparently

the money shots are from the huge terrace

price discovery is …

Hard! You know it, especially for relatively unusual lofts. This loft qualifies as relatively unusual in having all that terrace space and sitting at a Chelsea corner not considered to be ‘prime’ or ‘charming’. How many people willing to spend nearly $6 million would choose to live here?

The owner, having done all that customizing, adding “exceptional” finishes, creating a “stunning” loft, thought there might be at least one buyer near $6 million, way back in 2014:

June 4, 2014 new to market $5.695mm
Aug 5 hiatus
Sept 2 back on market
Nov 18 $5.495mm
Dec 29 hiatus
Feb 10, 2015 back on market
June 1 $5.395mm
June 26 off market
Sept 2, 2016 back on market $4.95mm
Dec 23 hiatus
Mar 1, 2017 back on market
Feb 8, 2018 $4.7mm
Mar 2 hiatus
May 10 back on market $4.495mm
Aug 10 contract
Nov 9 sold $4.275mm

That’s a fascinating history, full of off-market times (most, not very long), full of price drops (most, not immediately after a hiatus), and one remarkable period of Job-like patience (17 months, less 3 in hiatus, asking a stable $4.95mm). From a professional point of view, the most remarkable thing about this history isn’t that it lasted 50 months to contract (less 20 months off, taken in 5 chunks) or had 6 asking prices, but that the same agent held the seller’s confidence throughout, presumably because they were on the same page. Love to see that!

The longest price was $4.95mm, from September 2016 to February 2018 (less 2+ months off), suggesting that was a pretty hard line for the seller.When that didn’t work, they tried $4.7mm, but only for 3 weeks. The last ask was the one that got it done, with $4.495mm asked generating a contract at $4.275mm in (only!) 3 months this past Summer.

To belabor the obvious, the $4.275mm clearing price was $1.42mm off the $5.695mm original ask, or 25% below.

what did the loft neighbors know?

Obviously, this seller had a difficult time figuring out what The Market thought about the value of his loft. His neighbors gave him some hints about that, which he did not take.

At the time that this penthouse loft was first brought to market, two neighbors had just sold. The “1,500 sq ft” loft #7D raced through the market (contract in 3 weeks) and closed on June 4, 2014 at $1.975mm. (That’s $1,317/ft for those without a calculator.) Then, in what appears to have been a private transaction (though publicly filed, so everyone would eventually learn, even if building scuttlebutt might not have been immediately informed), the “1,701 sq ft” loft #5E sold on June 5, 2014 for $2.495mm, a then-building record of $1,467/ft.

If you value the Penthouse D outdoor space as worth 50% of the interior (a reasonable place to ballpark it), the original #PHD asking price was an adjusted $2,071/ft. The first price drop (to $5.495mm) brought the ask down to an adjusted $1,998/ft.

The next sale in the building was the “1,489 sq ft” loft #3D, which closed above ask on May 4, 2015 for $2,252,200 ($1,513/ft), just before the first #PHD price drop. That new building record may have influenced the June 1, 2015 #PHD price drop to $5.395mm, but that was still too rich for The Market at an adjusted $1,962/ft.

Yet another building record fell when the “2,124 sq ft” loft #7C sold on October 22, 2015 for $3.9mm, or $1,836/ft. The #PHD seller didn’t take much solace in that, however, as he had the loft off the market from June 2015 into September 2016.

Nor was there much solace to be taken from two loft sales at The Heywood in June 2016. The “1,536 sq ft” loft #6B sold on June 6, 2016 for $2.5mm (essentially pennies above ask), or $1,628/ft; then the “1,489 sq ft” loft #5D sold on June 21,2016 for $2.22mm, or (gulp!) $1,491/ft.

You can do the math on the next 5 sales in the building to the present time (use the Past Sales tab on the StreetEasy building page; or skip down to the table below), but the October 2015 building record (#7C, $1,836/ft) has never been threatened.

Meanwhile, another penthouse owner had trouble discovering a clearing price. But the owner of the “3,184 sq ft” loft #PHC proved to be less patient than the #PHD seller, trying two prices over two months until going off the market for good in February 2017. With “1,476 sq ft” of terraces, that unsuccessful offering could be ballparked at an adjusted $2,250/ft at the last ask. Still too rich for The Market, and not a helpful data point for discovering the right price for #PHD (which by then was asking $4.95mm, or an adjusted $1,800/ft).

With this history in the building, you can see why the #PHD seller hung at $4.95mm for 11 months into this past February. At an adjusted $1,800/ft, that ask was below at least one sale in the building, even if still above every other sale. Dropping to $4.7mm in February 2018 brought that down to an adjusted $1,709/ft, but the seller didn’t give that price even 4 weeks to work before pulling the loft off the market (again!), then waiting 2 months to come back at $4.495mm (an adjusted $1,634/ft).

That one worked, generating the contract within 3 months that closed on November 9 at $4.275mm, or an adjusted $1,545/ft. Gulp, indeed.

Let’s try this in table form, with the long marketing history of #PHD showing only price change dates (not time off the market) and using a 50% adjustment factor for the outdoor space to get an adjusted $/ft, against the clearing prices for the neighbors at $/ft:

June 4, 2014 $2,071/ft
#7D $1,317/ft
June 5 #5E* $1,467/ft
Nov 18 $1,998/ft
May 4, 2015 #3D $1,513/ft
June 1 $1,962/ft
Oct 22 #7C $1,836/ft
June 6, 2016 #6B $1,628/ft
June 21 #5D $1,491/ft
Sept 2 $1,800/ft
April 12, 2017 #1A $1,296/ft
April 17 #3B $1,530/ft
June 20 #6A $1,543/ft
July 13 #9B $1,676/ft
Feb 8, 2018 $1,709/ft
April 24 #6B $1,563/ft
May 10 $1,634/ft
Nov 9 sold $1,545/ft

(*#5E was a private sale)

To recap, between #PHD coming to market and going to contract, 11 neighbors sold their lofts; of those 11, 4 (in bold) sold above the adjusted price per foot of #PHD, while 5 (in italics) sold within 5% of that adjusted force per foot (if you give me a rounding error on #5E). Take out the private sale, and the numbers are 4/10 and 4/10.

I’ve not gone into detail about light and condition in these other units, but most read as comparable in condition, and I don’t think it necessary to make granular comping adjustments to make the point that #PHD was priced dramatically higher than its successful neighbors (on a crude price per foot basis) the entire time it was marketed, catching up only with the last price drop (or two), and even then needing a discount to get a deal done.

Note that if you consider the pretty spectacular outdoor space to be even more valuable than the top end of The Miller’s standard rubric (of 25% to 50% of the value of the interior; see my May 6, 2010, riffing with The Miller on the value of Manhattan terraces, decks + balconies), the disparity gets worse because the observed market value of #PHD on an adjusted basis goes down (e.g., to $1,425/ft if you ballpark the terrace at 75% of the value of the interior). I’d be inclined to do that, based on the irrigation, cooking facilities, lovely plantings, and the fact that the terrace wraps.

While if you use the (to me, unreasonable) bottom end of The Miler’s standard range (25% of the value of the interior), the disparity between #PHD and its neighbors gets better, at an adjusted $1,710/ft, but it is still not a building record.

In vicious hindsight, the #PHD owner over-estimated the value of the loft for close to four years. It is possible that he was convinced that the loft was finished at a much higher level than anything else in the building (the babble shouted the name check: “Architect and Artist Roy McMakin of DOMESTIC ARCHITECTURE”); it is also possible that he thought the terraces were much more valuable than they are.

If the latter, I sympathize, as I have been known to say that

some people will overpay for outdoor space, particularly in a market marked by scarcity.

The “some people” card is often played, but when played prudently it is hedged when experience suggests a different scenario. No one but this owner can say whether he waited “too long” to sell, as we don’t know what else was going on in his life; the market facts imply he waited a rather long time to adjust to negative feedback.

Or, as I say (all too often?), comping is hard!

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small Chelsea lofts with height ceilings use high in different ways

which do you prefer: volume or storage or …?

The “800 sq ft” Manhattan loft #9J at 148 West 23 Street (Chelsea Mews) that just sold for its (reduced) asking price of $950,000 boasts of “grand ceiling heights” (later described as “eleven-foot ceilings”) that permit “a double height foyer …, a 12’7” X 9’8” loft mezzanine directly above [the dining area, and] …. a large living room with dramatic double height ceilings and the building’s highly coveted nine-foot tall windows”. That’s a lot of broker babbling.

There’s no listing photo of the foyer or the mezzanine, but this one shows the lower ceiling opening up to the “dramatic double height ceilings” in the living room.

if the tall part is 11 feet, can this area be much taller than 7 feet? (images are from Core, thx)

The floor plan shows the relatively small area that the mezzanine loft takes up.

the mezzanine seems bigger in the photo, doesn’t it?

I am really curious about the point of that mezzanine. In exchange for (humor me for now) “double height” throughout, the mezzanine allows someone to climb the ladder and … crawl around 100+ sq ft that is open to the living room. Maybe you have guests sleep up there, or you put luggage and other ‘stuff’ up there. But it can’t be very easy to move around up there without banging your head.

An upstairs neighbors didn’t need crawl space for guests to sleep over, or to store stuff, so they had a full-height dining area:

no mezzanine tricks = ‘volume’ + no need to duck your head (Corcoran image, as per the watermark)

That is loft #12J (aka “PHJ“), which sold two months ago for … $950,000.

nothing like some neighborly competition to get a well-priced loft sold

We’ll get to comparing the interior spaces, but there’s not doubt in my mind that the #12J seller used the #9J pricing to get her loft sold quickly.

May 14 #9J new to market $1.05mm
June 7 #12J new to market $950,000
June 22 #12J contract
June 24 #9J $950,000
Aug 15 #9J contract
Sept 12 #12J sold $950,000
Nov 5 #9J sold $950,000

Now that’s how to leverage a competing listing!

In a strictly impersonal sense, the #12J seller ‘took advantage’ of the #9J sellers by undercutting their price. The #12J buyer undoubtedly was aware of the opportunity to buy #9J, but preferred to (try to) negotiate with a seller priced $100,000 lower, and reached a deal two weeks after #12J was brought to market.

Not being asleep (and being able to read tea leaves), the #9J sellers immediately dropped their asking price to match the upstairs deal (hard to believe they didn’t know the price, though it is possible), and had to sweat almost another two months to strike their deal.

It is fascinating to me that The Market considered these lofts to be worth exactly the same.

I read the listing photos as #12J having a slightly higher level of finishes than #9J, but the broker babbling is equivalent. For #12J:

renovated kitchen features granite countertops, a Bertazzoni stove, Miele fridge and dishwasher. … bathroom has been tastefully updated. … custom California Closets and designer oak and quartzite built-ins throughout.

For #9J:

newly renovated kitchen featuring top-of-the-line appliances by Bertazzoni, Fisher Paykel and LG. … recently renovated bathroom ….

While #9J boasts of light and views (“tons of blue sky, amazing natural light and views of midtown landmarks”) you have to stand at the correct angles in the living room to see blue sky. (Check the listing photos for yourself.) Go up 35 or so feet, and blue sky is evident in all the #12J windows, offering this money shot:

can we agree that #12J has better views and light?

If we assume the two lofts have similar finishes, we still have to give the higher floor loft a premium adjustment for views (light might be strictly the same, but then we are into metaphysics).

I have to wonder if the #9J buyer really preferred to have the lower ceiling dining area plus the crawl space … er … mezzanine above, rather than the fully open feel and look if the mezzanine wasn’t there. That bit of carpentry is a plus factor only for people who need a place to stash guests out of sight (but not out of hearing) or who desperately need storage space. For any other buyer, I suspect that mezzanine is at best neutral, or something not worth spending money to remove; at worst, it interferes with the sense of space.

awkward elevator chats, or the dynamics of head-to-head loft sales

Putting aside for the moment The Fact that these two lofts were worth exactly $950,000, it is likely that the attitudes of buyers and sellers at 148 West 23 Street were something like this from May 14 to August 15:

  • the #9J sellers felt pretty good about asking $1.05mm for at least 3 weeks, because the highly relevant #6J had sold 3 years earlier for $1,085,750 (in “newly renovated” condition, but with the worst listing photos I’ve seen in a while)
  • the #12J seller wanted to sell quickly, so priced under #9J (and under #6J); possibly offering a below-market price, but not giving The Market enough time to correct it via a bidding war
  • no J-line buyer would offer more for #9J than for #12J while they were both available, nor did they have to later (absent a bidding war), as the #9J sellers accepted $950,000 as the current value
  • the #9J sellers were relatively patient at the new asking price, giving it 2 months to work instead of the 2 weeks that same price needed to get a deal for #12J
  • in the face of that apparent patience, potential J-line buyers from June into August were faced with a past sale at $1,085,750 and a current contract at $950,000, so weren’t going to get the patient sellers to take less
  • all the while, the #9J sellers may have been giving the side-eye to the #12J seller in the lobby and in the elevator (perhaps as they all exited the building for overlapping open houses), while wondering if the #12J seller had undersold both their lofts

For an outsider with no skin in the game, fascinating stuff!

But I still have no answer for whether The Market prefers to use the high ceilings as ‘volume’ or as a crawl space.

crimes against loft-selling language get a slap on the wrist

Forgive me, but I cannot leave this treatment without discussing the broker babble that eventually got #9J sold. I submit to the ladies and gentlemen of the jury that there cannot be a “double height” foyer or “double height” ceilings in a living room in a loft with only 11 foot ceilings. Indeed, that’s nonsensical.

Having gone there, for the listing description to include the width and length of the crawl space mezzanine down to the last inch but not to mention the height is … weird. No one who spent any time at all with the losing photos and parsing the broker babble would be surprised at how little room there must be ‘up there’, but  that’s just … weird. (Having used the weak modifier ‘weird’ twice, I have to stop.)


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unique lofts like penthouse at edge of West Village are hard to comp

comping is, of course, hard, yet harder for some lofts than for others

The word “unique” is vastly over-used in Manhattan real estate broker babble, where grammar misdemeanors can modify that word in ways that can be aggravating. I have a practical test for whether a given property is unique: unless it is difficult to find legitimate comps, try another word. The “1,829 sq ft” penthouse loft #502 at 300 West 14 Street (The Bank Building) exceeds that standard, and proved to be a hard sell, needing four prices and nearly a year to sell.

This difficulty must have frustrated the sellers, and the sales team. Heck, in retrospect it frustrates me. While the degree of frustration is different (it was their money, of course), the source was the same: while this penthouse loft is very difficult to comp, the comps that are most relevant implied the loft was priced correctly for the entire marketing period, and that it should have sold higher. It didn’t, alas.

To begin to appreciate how difficult this loft was to comp, tell me what word is missing from this bit of broker babble:

…this pin-drop quiet home, a stunning duplex loft with two full baths, and two terraces.

If you said “bedroom”, come on down! The listing description does refer to a “home office / guest room” and a “master suite” and the floor plan uses the magic word, but the so-called master bedroom is open to the living space below (i.e., it is not a “room” let alone a “bedroom”), and it is not clear that the labeled Office / Bedroom is a legal bedroom (is that irregular space 80 sq ft??).

a funky duplex floor plan, more Short-and-Wide than Long-and-Narrow (thx Compass, for all the images of this penthouse)

Keep that floor plan in mind when you consider the main listing photo:

that column on the right is the one in the upper level floor plan

This is a great listing photo, taken from the single spot in the loft that best presents the “dramatic 18-foot high wall of windows [that] showcases open views of the West Village and leads to a sunny terrace”. Every step you’d take away from that window will emphasize the (10 ft??) ceiling rather than the 18 ft of window height. This photo makes it plain what nearly all the the lower level must feel like, away from the 18 ft height window:

the “dining room” (see floor plan) might not feel cramped (the rear windows ‘open up’ the space), but that ceiling doesn’t read as ‘voluminous’ as the main listing photo

Don’t get me wrong, this is a pretty spectacular loft, and that main listing photo isn’t misleading; it is, however, selling. I’m trying to help folks ‘read’ the floor plan and photos (especially folks who don’t look at actual interiors and floor plans plus photos of those actual interiors as part of their day job). All in an effort to demonstrate how unusual this loft is, even in a Manhattan loft world that contains many unusual lofts.

The loft claims “1,829 sq ft”, which is Pretty Darn Large by any measure. And a portion (a slice, if you will) has 18 foot ceilings (and window). The fixtures and finishes look pretty good, though there’s no bragging about any materials or brand names. Chances are, it feels pretty luxurious, possibly even the “stunning” the babble claims. But it is a loft optimized for the one or two people who sleep on the upper level.

Let me put this delicately … the master suite is not only open to the light through that huge window, it is open to all sounds in the entire loft, unless the two bathroom doors and the door to the guest / office space are closed. And vice versa. If one half of a couple wants to be alone (out of earshot of the other half), get behind one of those closed doors. One partner can read downstairs while the other sleeps, but probably can’t watch TV without bothering the person upstairs. If a couple entertains (the loft looks like a terrific entertaining venue) and (as in my house) one partner ‘calls it a night’ while the guests are still at the table … that partner won’t get to sleep unless / until the guests leave, or they go outside on one of the terraces.

These considerations will be significant for some buyers, irrelevant to others. But you don’t see that many spaces this large in which these practical life considerations might be ‘issues’. Certainly not many at this price point.

Did I mention that this loft is sufficiently distinctive that it is difficult to comp?

sellers had trouble discovering the market clearing price for this loft

By the numbers, and dates:

Nov 8, 2017 new to market $2.75mm
May 2, 2018   $2.6mm
June 25 $2.5mm
Aug 27 $2.35mm
Sept 25 contract
Oct 30 sold $2.26mm*

(*StreetEasy has the unfortunate habit of not being able to match things like a sales listing for “#PH502” [“cannot find gov’t record” on the Past Sales tab; “sales reported but not yet recorded” on the listing page] with the deed record for “#502”, which may be why humans still have a future in real estate data.)

That’s 51 weeks from start to finish, 46 weeks from marketing to contract. It took nearly six months for the sellers to appreciate that The Market wasn’t going to bite at $2.75mm, but only about eight weeks for each of the next two prices to result in another price drop and then only a month for that last price to provoke a contract. The deal was done $490,000 off the first ask, or 18% ‘discount’.

a nightmare of adjustments to comp

If you were trying to put this property in context with “similar” properties a year ago, where would you start? You won’t find many “+/- 1,800 sq ft” spaces with two bedrooms, and even fewer with a single bedroom, and then you’d have to adjust for this maybe-a-bedroom-called-a-guest-room plus open master suite. You’d have to give this loft a significant premium for light, compared to most (somehow comparable) units. Of course, this is the West Village, a premium and charming neighborhood; but the corner of 8th Avenue and 14th Street is not at all charming, and not necessarily premium. Make an adjustment for that, too, if you can.

Two terraces are rare, especially in the West Village. (Notice, I didn’t say unique.) Ten foot ceilings (as on most of the lower level) are not so unusual, but an 18 ft wall of windows is (again) rare. How to adjust against a conventional duplex (with, say, 9 ft ceilings), or a simplex layout, even with tall (12 ft) ceilings? My math education didn’t teach me much differential calculus, but that’s what this feels like, with a host of indeterminate values. (Tell me in the comments if I just committed a math term crime.)

we can get closer

Even my one go-to Manhattan loft comp principle fails in this case. I’d generally start with same-building sales, and prefer to adjust for time than to adjust for the myriad other adjustments needed for sales in different buildings. The Bank Building is a slippery source for comps, as there are only 11 units, each different from each other in size and configuration, as well as outside space.

When #502 came to market at $2.75mm in November 2017, the most recent sale at 300 West 14th Street was the “3,450 sq ft” combo unit #202/204, which sold for $4.85mm 14 months earlier. I saw that with a client at the time, and it certainly has the renovation and drama (er … “wow factor”) claimed  in the broker babble. They didn’t say “unique” explicitly, but “one-of-a-kind” will do (and did). That one is similar to #502 in having a huge window wall (20 ft high, in that case) and an upper level (here, termed a mezzanine, probably because it is set further back from the huge window). No real bedrooms there, either, with the two sleep areas in #202/204 on the mezzanine level and open to the lower level at the window wall.

same trick with the upper level here, with lower level with awkward (dark) ‘den’ space (2nd floor images from Elliman; thx Dougie)

There’s just a tiny bit of outdoor space, of a character much inferior to the terraces of #502:

patio gets some light, some rain, but no view (and, at the end of the ‘den’ stub, it is pretty remote); pretty modest overall

That one sold (quickly: 2 weeks to contract!) for $1,406/ft before adjusting for outdoor space. Call the patio value at 25% of the interior space to get this over quickly (it is truly trivial in scale, in any event), and we’ll ballpark that sale at $1,396/ft. Which implies that #502 would be worth about $2.55mm for the interior, before adjusting to add the terrace value, for light, and adjusting for time.

Time is easy to adjust for, at least in ballpark terms. The StreetEasy Manhattan Price Index (scroll and hover, scroll and hover, here) was $1,145,653 in September 2016 and $1,165.047 in November 2017. I’d call that ‘flat’, but you anal types might add 1.7% to the implied $2.55mm interior value and get to about $2.6mm.

You know how to do this: at $2.6mm for “1,829 sq ft”, that’s $1,422/ft. Guesstimate the two terraces (275.5 sq ft, or so) at (conservatively) worth 50% of the interior and we add about $196,000 for the terraces … or roughly $2.8mm for the entire unit (at an adjusted 1,997 sq ft).

Whether the sellers and sales team went through this sort of analysis, or this was just a real estate coincidence, they offered #502 for $2.75mm. (They wouldn’t have had up-to-date market data, such as the StreetEasy Manhattan Price Index yet.) Not a bad place to start, “objectively.”

There’s theory and there’s reality (or Theory and Reality). That theoretical very rational price didn’t work, as we saw.

By the time the #502 sellers dropped to $2.5mm (giving away the terraces! again: see my November 6, Tribeca penthouse loft sells at 81 White Street with 3 free terraces), there was a new data point in town. The “2,500 sq ft” penthouse unit next door (#503) had just sold for $3.85mm. That one zoomed through The Market while #502 was lingering, finding a contract $100,000 over ask within a month. That floor plan is even more broken up than we’ve seen so far, with three levels of living space, including two real bedrooms and the easy prospect for at least one more, but lacking a dramatic high window wall. Plus, even more outdoor space:

2 balconies + 2 terraces + 1 roof deck … wow

Among friends, let’s call that as 700 sq ft of outdoor space and ballpark it as worth 50% of the interior. Hence, the $3.85mm spent for the entire loft #503 in June 2018 yields an adjusted price-per-foot of $1,351/ft. Uh-oh ….

Applying that implied value to the adjusted 1,997 sq ft for #502, the not just same-building but next-door sale of #503 while #502 was offered for sale implies that #502 would then have been worth about $2.66mm. At the exact time that the asking price of $2.6mm was not working. Uh-oh ….

I could argue that #502 is more dramatic than #503 because of the 18 ft wall of window, but that the #503 outdoor collection (and maybe the kitchen finishes) are superior. Let’s not argue, k?

In Theory, based on the mid-June sale of loft #503, loft #502 was asking exactly the right price to get a deal done, before dropping the price in late June to $2.5mm. In Theory, dropping the loft #502 ask to $2.35mm before Labor Day should have provoked a bidding war.

But Facts is Facts, and each of these lofts is sufficiently different from each other to weaken the predictive value of one for another. Certainly, each of these lofts is sufficiently different from each other to confuse the predictive value of one for another.

In Fact, #502 took much longer to sell than the neighbors. In Fact, loft #502 sold for a significantly lower adjusted price per foot than the others (if you accept my ball parking of the various outdoor space values). At $2.26mm, #502 is badly bringing up the rear.

202/204 September 2016 $1,396/ft*
503 June 2018 $1,351/ft*
502 October 2018 $1,132/ft

*Raw price, without adjusting for time.

In Theory, this sequence is … nuts. But that’s life in the Manhattan loft world (sigh).


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Tribeca penthouse loft sells at 81 White Street with 3 free terraces

(bear with me, I’ll explain)

Until recently, the last loft to sell in this small (6-unit) condo loft conversion in way east Tribeca was the “2,563 sq ft” second floor at 81 White Street, which closed for $3.29mm in April 2015. I saw that one at the time, with clients who found the finishes lovely, the layout rather strange (“uniquely designed”, in broker babble), the classic loft elements delightful, and the micro-neighborhood a bit remote. Nonetheless, that sale established a base-line value for a well-finished classic loft way over by the courthouses in the early 2105 market at $1,284/ft.

Which is a roundabout way of introducing the 6th floor unit, which sold three weeks ago at the $5mm ask. A true penthouse, the top-floor loft has the same full floor footprint as on the second (and other) floors, plus a large interior space built on the roof, plus three terraces. All told, that’s “3,625 sq ft” of interior space and another “2,750 sq ft” among the three terraces.

a profligate use of space currently, with a single bedroom across the rear wall, otherwise open on each level (easily adapted upstairs); images are from Modlin Group

Let’s (try to) ignore the outdoor space for a moment …. With “3,625 sq ft” inside, the asking / selling price of $5 million comes to $1,379/ft. To compare this penthouse sale to the second floor sale in 2015 (remember: $1,284/ft), we’d have to adjust for time, for condition (possibly), for light, and for the outdoor space.

I will spoil the ending for you, then go back and show my work. The $5 million for the penthouse is such a ridiculous per-square-foot price compared to the second floor that I would be dumbfounded, were I not overly inclined to type, and type some more, in an attempt to ponder this bizarre event.

(I’m going into the weeds a bit, so if you’re satisfied with the spoiler, skip to the next bold heading.)

I like the StreetEasy Manhattan Price Index as a single-number proxy for the overall Manhattan residential real estate market. You have to scroll down and hover here, but you’ll see that in April 2015 that Index was at $1,092,838 and was $1,160,419 in June 2018 (the most recent month available, alas). In other words, the overall Manhattan market was not quite flat, ‘up’ 6% from the time the second floor loft sold and the most recent month of data before the penthouse sale. Maths: 6% of the April 2015 second floor per-foot value is $79/ft.

As I mentioned, I’ve see the second floor. I’m inclined to think (from the photos and babbling) that the quality of finishes is higher in the penthouse, and that floor plan much more sensible and adaptable (if you want more than one true bedroom) than on the second floor; I might be inclined to be conservative about this comparative feature and to call it a wash, but the scale of the more open interior on the 6th floor, especially with 17 ft ceilings (versus the not-too-shabby 13 ft on the lower floor), is pretty compelling. Conservatively, that’s a modest premium factor in favor of the penthouse space.

Not much light on the second floor (and no apparent direct light), despite the large windows front and back. The penthouse main level is about 60 feet higher in elevation than the lower floor loft, and the photos suggest decent-or-perhaps-better light through those taller windows on the sixth floor and much better light on the rooftop level. Conservatively, that’s another at least modest premium factor for the penthouse.

If you’ve been following along, that’s two modest premium factors for the penthouse, plus a $79/ft time adjustment in favor of the penthouse, over the observed second floor market value. Time alone accounts for nearly all the difference ($1,284/ft + $79/ft = $1,363/ft, compared to $1,379/ft for the penthouse counting only the interior), so I’m not going to even try to guess what the (conservatively!) modest premiums the penthouse should have earned for the finishes / scale or for better light.

If the penthouse had no outdoor space, I’d struggle with reconciling these two same-building sales. I’d consider hindsight rationalizations that don’t feel very strong, or susceptible to empirical testing.

Such as, maybe there just aren’t many $5 million buyers who want to live in this (still fringe-y for Tribeca) remote area, hard by an edge of Chinatown and a row of courthouses. Or, not that many $5 million buyers who want to take on small-building risk in a condominium that lacks a doorman or any other amenities.

Or maybe I’d consider (and find a way to test) that the penthouse loft needs a downward reduction in per-foot (interior!) value because it is more space than many humans would want, and 40% larger on the inside than the second floor loft. But this is getting ridiculous, even for Manhattan Loft Guy.

Without some hindsight rationalization, the penthouse interior ‘should’ (objectively / empirically / rationally) be worth as much if not more than the second floor interior. That cannot be a controversial conclusion.

the elephant in the room is outside

(Welcome back, readers who skipped 8 paragraphs.)

We’ve established that the penthouse loft at 81 White Street should have sold last month for a little bit more than the second floor sale from April 2015, on a per-interior-foot basis. Which it did!

But but but but BUT …

You already know that the penthouse has three terraces that total an additional “2,750 sq ft” (that is, an exterior larger than the second floor interior). You would know (if you clicked on the listing description and photos) that the three terraces are pretty darn sweet.

al fresco dining, under the water tower

lower lounge, with fire pit (+ bocce!)

the upper terrace (with bar! + “breathtaking views”!!) is “the star of the show”

Contrary to all the snarking arithmetic I’ve done comparing the second floor loft sale in 2015 and the penthouse sale last month, these terraces are very valuable.

My starting point for the question of how to value outdoor space in a Manhattan loft is always The Miller, specifically, my May 6, 2010, riffing with The Miller on the value of Manhattan terraces, decks + balconies, where you will see that his rubric posits a normal range of 25% to 50% of the value of interior space, and I consider some possible enhancers.

As above, I’d generally consider things like whether the outdoor spaces are disproportionately too large (potentially, a discount factor), or the scarcity of truly private outdoor space in Tribeca (potentially, a premium factor), or the huge utility of such varied outdoor choices (potentially, another premium factor). But, as I said above, this is getting ridiculous, even for Manhattan Loft Guy.

Hence, my headline that the seller threw in three free terraces to get the gorgeous loft sold.

(Deep breaths ….)

Let’s be conservative and assume that the exterior space for the penthouse loft at 81 White Street is worth only 25% of the value of the interior on a price-per-foot basis, mostly due to a discount for being ‘too big’. That math looks like this:

$5 million value divided by 4,312 sq ft (3,625 interior + 687 [1/4 of 2,750 exterior]) = $1,159/ft

Ridiculous as that is, the math looks worse if the exterior space is worth as much as 50% of the value of the interior (a round number $1,000/ft).

true reconciliation can be a pipe dream in an irrational world

The Market has given us two Facts at 81 White Street.

  1. the “2,563 sq ft” second floor loft was worth exactly $3.29mm in April 2015, or $1,284/ft
  2. the “3,625 sq ft” penthouse loft was worth exactly $5mm in October 2018, or $1,379/ft (interior only), and it has “2,750 sq ft” in outdoor space (which, as you well know, confuses the hell out of me because the terraces cannot have been ‘free’)

The initial factual conclusion from these two data points is that The Market preferred the lower floor loft to the penthouse on a price-per-foot basis (note the qualifier).

We can apply General Principles to try to see how these Facts can fit together, but we quickly get beyond specific and directly relevant facts. And none of it makes ‘sense’, anyway.

  • StreetEasy thinks the overall Manhattan market is up 6% from April 2015 well into 2018
  • Manhattan Loft Guy thinks that lofts are appropriately and generally compared on a price-per-foot-basis
  • The Miller thinks that larger units are generally more valuable than smaller units on a price-per-foot basis
  • The Miller thinks that outdoor space is generally valued at 25% to 50% of the value of the interior on a price-per-foot basis
  • there is much industry chatter about softening in the luxury market through 2018 (this includes $5 million properties; here’s just one example from The Real Deal today: “… the market slowdown has been particularly tough on high-end condos”)
  • The Market is never wrong, in the tautological sense that each individual sale is at the ‘right’ price, but The (Overall) Market is the result of decisions of hundreds and hundreds of individual buyers and individual sellers that get aggregated into average and median data ‘points’

My take-away is that sometimes you have to acknowledge that Facts conflict to such a degree that post-hoc rationalizations get sillier and sillier. Today is one of those days, and 81 White Street presents two such Facts.

(A tip of the Manhattan Loft Guy hat to reader CT for bringing this conundrum to my attention.)

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seller of Flatiron loft believes Manhattan loft market is not rational

I have to agree, and sympathize

When the owner of the “2,352 sq ft” second floor loft at 26 West 20 Street brought his “estate condition”, “[b]ring your architect and contractor” property to market in February 2017, he had a fairly recent, very close by comp to consider. His upstairs neighbor sold the 3rd floor as a “blank canvas … ready for you and your architect to build your dream home” in July 2016 for $2.875mm. A believer in data, or someone who believes that the Manhattan residential real estate market is more rational than not, would have viewed the second floor owner as reasonable (and not greedy) for asking that same price.

To say that didn’t work out is an understatement:

Feb 16, 2017 new to market $2.875mm
April 27 $2.725mm
June 23 $2.495mm
Aug 30 contract
Dec 11 back on market $2.495mm
Dec 19 hiatus
Jan 22, 2018 change firms
Feb 22 $2.4mm
April 4 $2.3mm
July 25 contract
Oct 18 sold $2.25mm

(I’m going to ignore the short-lived and overlapping Town listing in January that StreetEasy shows, as it doesn’t show as a co-exclusive and it doesn’t change my narrative.)

To recap: guy with loft to sell looks for a same-building past sale from seven months prior, prices at the same level yet doesn’t get to contract until he drops his price by 13% and then that contract fails (oy); he changes firms and has to drop twice more (by $575,000 in total, 20% off the first ask and the nearby comp), before closing at $2.25mm twenty months after he started. That’s $625,000 less than his nearby neighbor sold in July 2016.

Don’t blame overall market trends. As measured by the StreetEasy Manhattan Price Index, the overall Manhattan residential sales market was a little bumpy but essentially unchanged from the third quarter of 2016 ($1,150,541) to the third quarter of 2018 ($1,154,524) (do the hover-and-hold thing over the chart).

a gut should be a gut

The second floor loft needs … everything. The broker babble hits all the notes that the buyer should expect to erase all the lines on the floor plan, redo all the surfaces, and build out a brand new loft (sorry for the shouting):

currently laid out as 1-bedroom, 1-bathroom in estate condition. This is a rare opportunity to build a dream KEYED ELEVATOR, FULL FLOOR, PRE-WAR LOFT. … a chance to build immediate equity in a prime downtown location. … this blank canvas is currently being used as a live/work space. Convert this unit into a residence and create your dream home with a flexible floor-plan and no load bearing walls. The space could be made into an expansive 3 bedroom, 2.5 bathroom home plus office space and closets galore. …Bring your architect and contractor.

(I didn’t find any “historic pre-war details” in the photos, unless beamed ceilings now qualify as historic.)

do you see anything historic?

one idea for erasing the lines in the top (current) plan and redrawing to get 3 bedrooms in the bottom plan (note the limits imposed by the Long-and-Narrow form: to get that 3rd bedroom, the great room becomes not-so-great)

Back in 2016, the marketing for the third floor loft was not as chatty, but made the same point:

This blank canvas has a large layout ready for you and your architect to build your dream home! … This space must be seen to fully understand the potential!

So that architect or contractor whom a prospective buyer would have invited to view either loft would likely be asked to present a few potential renovation plans, at different price points. At “2,352 sq ft”, the likely math is easy if you use units of hundreds of dollars per foot for different renovation plans: a cheap plan might be as low as $200/ft, or about $470,000; for a renovation at $300/ft, about $700,000; a more expensive plan at $400/ft gets near a million bucks, and (of course) the sky’s the limit ….

thin markets can lead to strange results

Let’s review: the third floor is an “objectively” (LOL) ideal comp for the second floor due to proximity in the same building, with the overall Manhattan residential real estate market being essentially unchanged at the time that each was professionally marketed to the entire marketplace (at least, as measured by the StreetEasy Manhattan Price Index). Indeed, in contrast to other pairs of same-building lofts in which there may be a difference in the quality of “move-in” finishes, this pair is in full gut renovation condition, as much “commodities” as two brand new identically finished luxury lofts in a new development.

But but but … the third floor sold for $2.875mm, the second floor for $2.25mm.

The fact that this would never happen in an efficient market is a tautology. Thus … ta da! … the Manhattan residential real estate is not an efficient market.

That’s not to say that this experience cannot provoke a rational explanation, in theory and especially in hindsight. Lofts are generally the anti-commodities in the market, with more potential buyers for fine “apartments” than for lofts. Then, buyers of to-be-gutted lofts need financial resources that folks who buy move-in units don’t need: the third floor buyer needed at least 20% of the purchase price to put down (to satisfy the bank, and, likely, the coop board) and would also need the projected renovation budget in cash (at a mid-level renovation, that’s $575,000 down plus [say] $700,000), and would need in reserve whatever post-closing and post-renovation liquidity that a prudent bank and prudent board would require. And then, these folks need to carry two living spaces to permit time for the gut renovation to proceed to completion.

There are an amazing number of potential buyers in Manhattan with income that can carry the mortgage on a $2.875mm purchase, many of whom haven’t yet built up the wealth to commit much more than a $575,000 down payment. Or to carry two mortgages.

The potential buyer pool for gut renovation lofts is always more limited than the move-in buyer pool, for these and other reasons. (Not everyone has the confidence that they can manage a contractor / architect relationship to actually end up with the loft of their dreams, to use but one example.) I can’t provide data in support of this, but it is my firm impression that demand for to-be-gutted lofts waxes and wanes on cycles different from demand in the overall market, more as a matter of fashion and changing tastes than anything else.

But as a financial matter alone, fewer folks will qualify as buyers of to-be-gutted lofts, even at the same net price point. (Remember, the third floor buyer committed to [say] $3.575mm in purchase plus renovation but could finance only $2.3mm [80% of the purchase price], while a buyer of a move-in loft at $3.575mm could borrow up to $2.86mm.)

If I find the Manhattan Loft Guy posts from the distant past that I have in mind, I will edit this one, but I recall having posted about same building loft sales in which there was a significant observed market price, unexplainable except by reference to the (apparent) fact that at the time of the first (higher) sale there was only one buyer for such a loft at such a price; by the time the second loft came out, with that buyer no longer in the market, there were no potential buyers at that same value, so the second loft dropped, and dropped, and …, until it found a market-clearing price for buyers then in the market. (Here’s one blast from the past: my August 6, 2011, 28 Laight Street loft sale under-performs neighbor’s sale.)

That has to be what happened here.

There is also the matter that there is a limited pool of buyers who want to spend more than $3.5mm and live in a building without a doorman, or a gym, or a common roof deck (without even getting into uber-amenities like common media rooms or golf simulators). The StreetEasy “list” of “Amenities” at 26 West 20th Street is almost laughably concise: “elevator”.

And who wants to make a significant investment in a building with only three other shareholders? Some folks, certainly, but many will not want that concentration of risk, and even the willing may find it very difficult to borrow on conventional terms in such a small building. (Four units is really small; the perils of small building risk can strike in even much larger buildings, with my April 12, 2011, 95 Greene Street, deadbeat condo owners, and small building risk, hitting what has probably become the Manhattan poster child for small building risk.)

A thin buyer pool can still get thinner and thinner …. But I will stop before I digress again.

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Noho loft sells at $2,077/ft, all about the Noho street scene

second floor lofts can bring the outdoors indoors

Not everyone wants to live right above the street. The “1,367 sq ft” Manhattan loft #2A at 17-19 Bond Street appeals to that subset of downtown Manhattan loft buyers for whom being part of the street action is a feature, not a bug. Indeed, having sold at $2.84mm, being a voyeur over a busy (and lovely) Noho street scene was a major feature of this loft.

that’s the sidewalk across Lafayette in the big window, visible from the middle of the loft

If that’s a direct view of sidewalk in the west-facing window from many steps away, imagine how much street life you could see if you got closer to that window, or to the four north-facing windows over Bond Street! Not to mention, how many folks walking by could see into your loft!! (Love it or hate it, it is a feature.)

High floor lofts can get views of sky, sometimes of icons, often of building tops.Second floor lofts can get views that include actual New Yorkers, New Yorking their way along (and, in this case, including tourists clogging oh-so-trendy Noho). It is kinda sorta like Riverside Drive apartments with river views that pull people to the windows to watch traffic on the river … when you get bored with that passing parade, it is time to move. (To the ‘burbs, maybe.)

“modern, eccentric, and effortlessly chic” loft?, or “cold”?

The broker babble is rather over the top, but it is certainly fitting to call the renovation “meticulous”. Also, “modern” and “eccentric”, the latter being a synonym for love-it-or-hate-it. I still can’t figure out whether I am on Team Love or Team Hate over the kitchen:

the most open of open kitchens, with not a single piece out of place

I wish they had taken a photo with those two back cabinets opened, as they contain “a Liebherr refrigerator, Miele dishwasher and oven, and compartmentalized storage “. I have to assume the frig opens directly when one of those handles is pulled forward, but the dishwasher and oven seem to require two steps: (1) open the cabinet, then (2) open the dishwasher or the oven. And, do you leave the cabinet door open if using the appliance (especially, the oven?)??

By the way, if you are a design snob you will be impressed with the claim that this is “the first [avant-garde Bulthaup Model 3 kitchen] to be installed in the United States”; otherwise, meh….

The flame in the pictured fireplace notwithstanding, the loft has a cold vibe to me. (Again, love it or hate it.) Hard, sleek surfaces abound, abetted by a decor without rugs, (much) art or wall adornments, all those windows, and only the most spare blinds (there have to be blinds along the top of the west windows and one panel down on the north windows, right?).

If you’re the sort of person who leaves some cookware on the stove, or wants a dish towel or wooden spoon handy, or who makes coffee, this doesn’t seem like the most comfortable setting for you. Similarly, if you own some books … (I feel I am drifting toward Team Hate, with a grudging respect for the design, nonetheless).

The new floor plan differs from the old in one important respect: count the steps added to a journey from the bed to the bathroom!

exit going west, then north, then all the way east

a much shorter walk in your pj’s, back in the day

(The old floor plan is from Triumph Property Group, obvs; all the other images are from Compass.)

I will leave it to you to click around to compare the many new images from the recent listing and the ten-year old (fuzzy) photos from the old listing, but it is clear that every surface of the space has been redone, and the interior gutted.

One thing I love about the new loft is that the column has been taken out of the sheetrock box it had been hidden within. (A hint of that is in the different shapes in the two floor plans.) And I do love all the new surfaces, individually; I just find the full impact (minimalist as the design is) oppressive. YMMV.

Manhattan loft comping is always hard, at times very hard

This is a “1,367 sq ft” one bedroom, one bath, that is optimized (within an inch of its life!) as such. Don’t even think about ‘ruining’ it by adding a second bath or bedroom, as the seller from 2009 suggested in the dotted lines in that floor plan above. You’d be throwing good money to taking out expensive (not to mention, “meticulous”) work; better to buy a less-expensively dressed loft if you must have a second bedroom or bathroom.

So that’s one distinguishing factor that make it hard to find truly comparable lofts from which to extrapolate a market value.

The nearby neighbors include over-the-top high profile newly built loft condominiums (40 Bond Street, to take just one example), which are very different buildings than this no-frills no-amenities low-monthly condo.

The best comps are always recent sales from the same building, but this 1989 condo conversion has only ten units and the most recent sale before #2A sold last month was … #2A in 2009. Not helpful!

illustrative (and weird) Past Sales data

Loft #2A has a fascinating sales history, illustrative of The Peak, and The Thaw in the overall Manhattan residential sales market:

April 12, 2009 $1,457,000
June 12, 2008 $1.72mm
July 2, 1998 $570,000

That 1998 buyer enjoyed ten boom years before the loft tripled in value; the 2008 buyer (one calendar quarter past The Peak) had some misfortune, and had to sell into a declining market; that Spring 2009 buyer was one of few people then willing to buy anything in Manhattan (about one quarter before The Thaw), and we know how that worked out. She did a meticulous renovation in a loft that, over ten years of ownership, nearly doubled in value.

Stop reading until the next bold section if you don’t want to get into the weeds of deed records ….

The earliest sale in the building on the StreetEasy Past Sales tab was in 1995, which usually means the condominium was formed then. But I was so intrigued by the sales sequence that I went over to Property Shark to find that the condo declaration is from January 1989. The first deed for loft #2A is from June 1989, to the individual who sold nine years later for $570,000. Sadly, that instrument was a trust indenture that shields the actual sales price, but we can see that the 1989 buyer secured a mortgage for $230,625 (scroll down on this Owner page) (you could put only 10% down for some condo mortgages in those days, so maybe the purchase price was $256,250; or maybe $276,750 with 20% down).

The condo declaration limits occupancy to the residential units to working artists certified by the New York City Department of Consumer Affairs, which is consistent with the local zoning designation of M-1B (there is a single commercial unit on the ground floor and basement). The early condo history of the building suggests that the sponsor was wither affiliated with, or made arrangements with a specific group of artists (click around the Owner tab on Property Shark for various units, and you will see that an entity called “Artists Working For Artists, Inc” was the original lender on mortgages for the commercial unit and at least five residential units when the condo was first formed).

Bond Street in 1989 was not (yet) “NoHo”, or chic, or trendy. It seems quite likely that a group of artists got together to participate in the preservation of what was (per the condo declaration) a vacant building, to be used by artists. Also, that all the original occupants of the ten residential units were certified artists.

I’m guessing that some agreement among the original artist occupants (or patrons) expired or changed in 1995, when the StreetEasy Past Sales history begins. The guy who sold loft #2A in 1998 also sold loft #3A in 1997; the sponsor sold two units in 2001 that had not previously changed ownership (loft #3C and the duplex 4/5B). Something was going on, but The Google hasn’t rewarded my clicking around the intertubes, at least not yet. (Note to self ….)

‘ancient’ history of the building

The Google did reward me with history I hadn’t been looking for, much further back than I had been looking. Tom Miller, the estimable Daytonian In Manhattan, published a post about the history of the building, from construction in 1880 through to condo conversion 109 years later (see his October 27, 2016 post, where you will learn [among other things] that Bond Street had been home to exclusive residences, then dentist’s offices [“there were more dentist offices on Bond Street than anywhere else in the city”] in the years before this building was constructed as lofts for manufacturing firms).

is this still an artists-only loft building?

Another angle to leave for another day (or to leave entirely) is the fact that the zoning hasn’t changed for 17-19 Bond Street, but there was no reference in the broker babble for loft #2A this year about any artist restrictions, or to a “Soho letter”, or an A.I.R. waiver. (I’ll just mention one of my A.I.R. series, the December 17, 2010, real world impact of Soho artist-in-residence rules and Certificate of Occupancy enforcement, as the dialogue continues.)

But I digress, so let’s shut this down.



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do you prefer a Chelsea loft with light or a patio?

Campiello Collection loft pair says The Market wants the patio

The “1,524 sq ft” ground floor loft #1H at 151 West 17th St (in the Campiello Collection) that sold last week for $3.2mm did so for one reason: the “789 sq ft” wrap-around patio. We can be certain of this because the upstairs neighbor in #7H (essentially the same interior footprint, though “1,663 sq ft”) sold a month ago for (only) $2.68mm.

The Market valued the deluxe finishes and bright southern sun in #7H at $1,611/ft; at that value, the slightly smaller #1H would be worth something less than $2.45mm without that patio, as the ground floor unit finishes are, at best, no better than the finishes upstairs, and the higher floor has to earn a premium for light. Thus, the downstairs patio contributed at least $650,000 to the established value of the loft (more likely, at least $750,000, in my view). That would be $823/ft for the patio, or even $951/ft, in either case comfortably more than half the per-foot value of the interior space.

Of course, that implied allocation of value between the interior and exterior space of loft #1H is at the upper margin of The Miller’s general rule for valuing outdoor space. (See my May 6, 2010, riffing with The Miller on the value of Manhattan terraces, decks + balconies, for a refresher on that topic.) That makes sense to me given the scale of the patio and its evident utility, despite being overseen from the windows of so many neighbors.

not much direct sun down here, but all the neighbors can watch you grilling, and eating, and lounging, and … (thx for the pic, Dougie … err, Elliman)

there’s nothing like head-to-head competition to refine relative loft values
Feb 2 7H new to market $2.995mm
May 15 7H $2.85mm
May 21 1H new to market $3.25mm
Aug 2 7H contract
Aug 16 1H contract
Sept 28 7H sold $2.68mm
Oct 19 1H sold $3.2mm*

(*The #1H clearing price is not yet public, but is in our listings system.)

For ten weeks this past summer, pretty much everyone who was interested in one of these lofts would have seen the other, and everyone interested in one would certainly have been aware of the other. One subset of buyers might have had a hard limit under $3 million, another might have had outdoor space as a ‘must have’. Regardless, The Market treated these two lofts with similar urgency (once #7H dropped to $2.85mm, at least) and The Market clearly considered the patio to be a significant valuable differentiator.

Can’t argue with that.

does that look like a “garden” to you???

Sometimes broker babble makes me laugh, sometimes it makes me cry. The #1H (successful!) listing description describes the outdoors pictured above as a “large south-facing private garden”. Yup, large, for sure. Factually, south-facing, I will grant (though the implication of “south-facing” is usually that there’s a lot of sun). Technically, “private”, in the sense of being used exclusively by this loft, but not private in that any of those neighbors bored enough to track the patio can see everything that goes on. (“Fishbowl” is a more accurate term than “private”.) But “garden” takes the cake … LOL.

People who read the listing description before seeing the patio photo, or seeing it in person, would be forgiven if they did a double take. “Garden” implies, you know, dirt, plants, greenery. It is hard to tell if the smudges of green in that back corner are live or fake, but the stuff in the vase in the center is certainly fake (or cut). One more photo shows three real-live plants in the corner missing from the photo above:

do 3 potted trees in a grey and brick environment make a “garden”? (not a forest, for sure) (your lexicon may vary)

And look … more neighbor windows on this side!

Seriously, there’s a good chance that the three trees get enough sun to survive, but an even better chance that it is light reflected off the windows of the building in back. If a lot of south light actually made its way to the ground back here, you’d expect the recent sellers to have lots of growing things back here, not just the stragglers in the photos. “Garden”, ha! It is enough to make me cry.

speaking of subtle support for broker babbling …

On the other hand, I had to (legitimately) smile at the way this photo supports the listing description of #7H as “sun-filled”.

do you see the light streaming into the hallway and by the kitchen island? that’s some bright south light (Compass photo; where’s the watermark, king-of-all-tech firm??)

By the time you’ve seen this photo, you’ve already seen big south-facing windows  that appear to clear nearby buildings in that direction, like this one:

see the shadow the coffee table casts on the patterned rug?

Enough about babbling by (other) brokers …

one very realistic loft seller, who only lost a bit in 3 years

I used The Miler in my post yesterday about the difficulty to (some) sellers have in adapting to a changing market. (October 24, Tribeca penthouse loft seller takes 30% off to sell.) The #1H seller didn’t have that problem.

The recent seller at $3.2mm bought the loft in June 2015 for $3,112,500 (scroll down after clicking “see more” in the StreetEasy Listing History). So he “made” $87,500 in “profit” kinda sorta in the same way that he sold a “garden”.

The 2018 tax returns will show a significant loss on the loft, once their accountant asks about expenses like New York City and New York State transfer taxes on the sale (1.825% = $58,400) and the sales fee (6% = $192,000), not to mention the “mansion tax” they paid when they bought (1% = $31,125) and the mortgage recording tax paid back then (1.8% on the $2,178,750 mortgage that Property Shark shows = $39,217), and (what the hell!) the likely title insurance premium paid on purchase (0.6% = $18,675).

One way to look at the math:

$3.2mm received on sale

($3,112,500) purchase price

($58,400) paid on sale in transfer taxes

($192,000) paid as sales fee on sale

($31,125) paid on purchase for “mansion tax”

($39,217) paid on purchase for mortgage recording tax

($18,675) paid on purchase for title insurance

($251,917) O. U. C. H.

Another way to look at it is to start with the down payment on the purchase ($3,112,500 purchase less $2,178,750 mortgage = $933,750) and follow the big-ticket cash outlays:


($58,400) paid on sale in transfer taxes

($192,000) paid as sales fee on sale

($31,125) paid on purchase for “mansion tax”

($39,217) paid on purchase for mortgage recording tax

($18,675) paid on purchase for title insurance


On a cash basis, he didn’t burn through the entire sum he put down, so he walked away from the closing table with something more than a half-million bucks, but still … O. U. C. H.

Arithmetic is not for the faint-hearted!

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Tribeca penthouse loft seller takes 30% off to sell

two half-million dollar price drops get it done

The owner of the “2,015 sq ft” loft #10D at 25 Murray Street (Tribeca Space) that sold on October 16 had a rather optimistic but decidedly disciplined approach to pricing this duplex penthouse loft with “315 sq ft” terrace, coming to market way high, but adjusting, and adjusting again, in big gulps:

April 25 new to market $3.995mm
June 6 $3.495mm
July 16 $2.999mm
Sept 4 contract
Oct 16 sold $2.75mm*

(*The deed has not yet been recorded, but many thanks to listing agent Anna Kahn of Halstead for sharing the closing price.)

Only the principal and the agent know what the strategy was, but this sequence implies that they understood they had started from a ‘reach’ level and were prepared to make a significant adjustment if the market reaction warranted (the first drop of $500,000 after six weeks equals 12.5% of the initial ask), with the next drop lined up quite soon thereafter, especially considering the late summer context ($496,000 after six more weeks, 14% off the second ask).

They remained responsive to market inputs, with the seller willing to take another quarter-million off the ask to get a contract, a final 8% discount.

That’s serious work: taking only four-and-a-half months to strike a deal $1.245mm off the first ask.

Which is not to say that it was easy. (Repeat after Manhattan Loft Guy: price discovery is hard.)

not a very loft-y loft

As the listing description says, Tribeca Space was “built in 1930 and converted to a full-service residential loft condominium in 2005”. Yeah, because it was converted from a prior non-residential use, but this photo doesn’t scream “classic New York loft” does it?

could be a new condo off Park Avenue, right? (photo: Halstead)

Ceilings look to be about 9 feet, and any prewar character has been scraped away, with the dropped ceilings (to fit recessed lighting) that loft snobs (I’m looking in the mirror, of course) despair over. (Other photos are in the Halstead listing; why does StreetEasy make it so hard to see photos??)

The floor plan is neither classically loft nor offensively cookie cutter:

more squat than a classic Long-and-Narrow loft, while brutally efficient

There’s no wasted space in this loft. Classic prewar apartments (such as Bing and Bings) use foyers and hallways as transitional spaces, but there’s none of that here.The downstairs bedrooms are two steps from the kitchen, and closer than that to each other. The salvation of the footprint (IMO, of course) is the corner location, with two long runs of windows.

Tribeca Space was hardly the most deluxe of Tribeca condos in the early ‘Oughts. The lack of ‘character’ in the photos is one proof of that, but there’s further proof in the allocation of space on this floor plan. Consider how much more luxurious this loft would be if the master bath (at least) were twice the size. But the developer chose to (relatively) oversize the bedrooms (the third bedroom is about 200 sq ft … with a single tiny closet), including putting in a master suite sitting area as big as many cookie cutters bedrooms. Strange choices.

One final cavil about this floor plan: I’ve never understood the charm of spiral stairs, or their utility in a large space that could otherwise support a stair-with-landing. Here, the developer stuck that prong next to the entry in this unit solely to put a spiral stair in, a cheap way to address the problem of getting from one level to the other. Particularly with a terrace up there, I’d get pretty tired of balancing a tray of glass and a bottle of wine round and round those steps to entertain on the roof.

Other units in the building are more loft-y. Consider the ceiling height and beams in the “1,557 sq ft” loft #3F, which sold five months ago for $2mm. Hmmm … that third floor loft sold for $1,284/ft, without the “spectacular views and light” of #10D, not to mention without the terrace up there, either. If the penthouse loft had the same interior value as its third floor neighbor, #10D would have been worth just under $2.6mm, implying that the “315 sq ft” roof terrace was worth only about $517/ft ($163,000), which seems a little low for relatively rare rooftop space in Tribeca. (I hit a previous attempt to sell in the building at an aggressive price in my November 17, 2014, The Market has its way with “above ask” Tribeca Space loft sale, as is its wont; vintage snark!)

I’d say the lack of loft character in the penthouse was a drag on market value, based on this simple same-building comp. But I digress ….

props to the seller and agent for dropping the anchor

I want to come back to the speed and scale of the (non) response of The Market to the offer to sell loft #10D at $3.995mm and then at $3.495mm, each for six weeks. Not every seller is willing to take a million dollars off, let alone so quickly.

I keep coming back to this insight by The Miller about seller expectations in a stagnating market (I’ve seen this same thought in many Miller places, methinks, but here’s the first place that came up in my Google search): “It takes them [sellers] 1-2 years to de-anchor and not feel like they haven’t left money on the table.”

Not this seller! Took her only six months.

speaking of stagnating markets, or worse …

Th extended listing history (in the StreetEasy link above, and aw heck, here) has two interesting data points. The loft was purchased in the original offering in August 2008 for $2,611,811 (the new development contract was signed the previous Fall, just before the market peaked) and that (unfortunate!) original owner sold it to the recent seller in September 2009 (as The Market was recovering, in fact) for (only!) $2.28mm.

That’s quite a hit on that first owner ($330k, before considering sales expenses) and still a gross gain for the recent seller of almost a half million bucks. Not what she had in mind, but The Market giveth and (etc, etc).

Nicely played, ma’am; nicely played.

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lure of the great outdoors drives value of Soho penthouse loft at 118 Wooster Street

it ain’t the ‘needs updating’ condition

The “1,238 sq ft” (interior) loft #6B at 118 Wooster Street in the heart of Soho that just sold for $2.45mm didn’t sell because of the quality of the interior space. Although there’s a fancy red refrigerator, there’s no bragging about interior finishes or materials in the broker babble (indeed, the kitchen pic suggests cabinetry straight outta the ’80s). No, this top-floor loft sold for $2.45mm for the same reason behind the featured listing photo: the “800 sq ft” private roof deck.

there’s a lot of sky on top of even 6-story buildings in Soho (thx Triplemint for the pics)

The interior not only “needs updating”, it lacks flexibility.

it is what it is, exactly

You can’t move the kitchen or 1.5 baths, and if you expanded any of these plumbing rooms you are eating into the space in a big way. Same with the spiral stair that takes you to the private roof space. While the space needs updating, your renovation choices seem to be limited to whether to have an open or closed sleep area on the south wall, or whether to trade more closet space next to the spiral stair for the existing ‘office area’.

Unless I am having a particularly unimaginative day, “updating” means changing surfaces, appliances, fixtures, and the like. Maybe you’d gut the interior to do that, but you’re options are still pretty limited.

open the sleep area or not? keep the (weird?) decoration in front + on top of the sleep area, or not??

The kitchen is very functional, hardly luxurious, and quite big enough in the scale of the entire space.

a love-it-or-hate-it frig?

(I bought a loft in 1993 with the same [then dated!] kitchen cabinets in [not-yet] NoMad, which didn’t reach the ceiling in my loft, either.)

babbling misdemeanors, at least

Between the two interior photos above you have at least a glimpse of all of the interior space, with the exception of the bath and half, and the small foyer. How would you describe the ceiling height you can see? If you would say “about 9 feet” you might not have a future in sales. The folks who successfully sold this loft said “as high as 20 foot ceilings throughout”, which is pretty … er … enthusiastic, given that the “massive glass atrium that drenches the whole apartment in light all day long” appears to be something less than the (10 ft?) width of the sleep area.

No doubt, it is a nice feature, but it is difficult to see how that atrium would stream light into the kitchen, let along drench the kitchen in light.

playing with numbers, in feet, dollars, and $/ft

There are eight listing photos (the ten images, in all, include the floor plan and map). Fully half of the listing photos are of the roof deck. Given that the interior is “1,238 sq ft” and the roof deck “800 sq ft”, this is a modest over-emphasis on the smaller upstairs, but in terms of value the emphasis is understandable. This loft, suitable for a single person or a single couple, sold at all because it is (a) in prime Soho and (b) has a relatively large private roof deck.

To ballpark how much of the value of the loft is based on that roof deck, we have to estimate the value of the interior space. Fortunately, a third floor loft at 118 Wooster Street sold last May. The “1,840 sq ft” combo loft #3CD closed for the ask of $3mm (StreetEasy has a deed record that refers to only part of the combo loft #3CD; don’t be confused by that). That loft was marketed as “stunning”, with a marble bath, chef’s kitchen, and some proper proper namedropping of brands and materials. In other words, not a ‘needs updating’ loft. Also, 2.5 baths and “nearly 10′ high ceilings”, but I digress ….

What’s the difference in the interior condition of #6B and #3CD? Bringing the top floor interior up to match the quality of the third floor would take (let’s guess) $200/ft. That implies the value of the interior of the top floor is about $1,430/ft, for a total interior value of approximately $1.77mm. Hmmmm …. That leaves about $680,000 of the established market value of the interior plus roof deck for the roof deck alone, or about $850/ft. While that result (just under 60%) is only a little outside The Miller’s general rubric for valuing outdoor space compared to the interior (25% to 50%; the uninitiated will want to refer to my May 6, 2010, riffing with The Miller on the value of Manhattan terraces, decks + balconies), that still strikes me as still a bit low.

I’d argue that there should be a scarcity premium for this outdoor space. I’d argue that the marketing emphasis on the outdoor space recognizes a premium beyond the norm. I’d argue about this for too long, realizing that we are just ballparking here, and making a series of untestable assumptions. So I will stop arguing.

Let’s just say that the outdoor space drove the value of the penthouse loft at least slightly beyond expectations. Then we can argue about the red frig.

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