how to value light without also valuing views? The Miller gives it a shot, NY Magazine gives it a forum

another riffing opportunity is born
In the reality-based Manhattan residential real estate world inhabited by The Miller, questions such as “how do you value the difference in light between different units, without considering differences based on view?” have at least the framework for an answer. It seems like Jhoanna Robledo at New York Magazine asked The Miller that question, and she turned his fact-based answer into her piece What’s the Price of Light?, with a great graphic. I will describe his answer as she reported (but, really, just scan her piece) but I first want to point out that what is too easily overlooked in the graphic is that this is a framework not a rule; The Miller makes this a little more explicit in his blog’s link to Robledo + Graphic, Valuing the Light in Your Condo or Co-op.

In this particular unidentified Tribeca condo the only difference in value is said to be that the 4th floor looks at a (presumably, former) warehouse across the street, while the 6th floor clears the warehouse roof while threading the interesting needle of not having a better view; based on (presumably contemporaneous) sales on both of these floors $100,000 apart, The Miller calculates a $10,000 incremental value for the ‘extra’ light in each of the 10 windows. Simple, yet elegant. This is a terrific bit of intelligence, and a significant aid for agents and consumers who like to at least visit the reality-based Manhattan residential real estate world.

Robledo only had so much space, but her suggestion about how to generalize from this framework is, to me, risky. Her middle step in the graphic is to apply this learning to another unit “in that building or nearby” and to use the per-window value to do that. In contrast (or, with more nuance), The Miller blogged (with his bold but my italics for emphasis):

Light is perhaps the most subjective of the view-floor level-light trio but this is the logic our firm has used for years (based on the “paired sales” theory that isn’t very practical in an appraiser’s daily life) but I feel it’s a good starting point, and of course it depends on the nuances of each situation.

In other words, don’t just say each window-with-better-light-but-no-better-view is worth $10,000. The per-window approach raises the difficulty in applying this specific example that other buildings may have much bigger, or smaller, windows. It also ignores the question (asked here, but not directly addressed by The Miller) of whether the better way to look at these 4th and 6th floor comps is as $100,000 worth of better light, or as as 11% premium for light. In a pair of much larger lofts than the “1,000 sq ft” Miller example, but still having ten windows, I bet the difference would turn out to be more like 11% than to $100,000. (But that is my provisional approach subject to testing in the reality-based Manhattan residential real estate world.

how narrow is this slicer?
Without knowing exactly which building is the source for The Miller’s framework (or rubric, like I often say when Miller-riffing) it is hard to imagine how many other loft buildings present lofts on different floors that differ in light but not in views, or what, exactly, Robledo means in saying that neither the 4th nor 6th floor lofts had “an especially wide vista”. I would think the situation like 4th and 6th floors opposite a 5-story building differing in light but not views is pretty rare. Especially at the scale of 5- and 6-story buildings in Tribeca, the light gets better on each floor going up, until you hit the floor that looks directly across at the opposite top floor, at which point the “view” includes much more sky and much more light, while above that height, you get the same light as the one below but much better views (starting from rooftop / water tower views and running up to iconic views or even water). No one ‘rule’ is going to include precise dollar adjustments.

the more typical scenario
I will be on the lookout f(Yes, that’s a Manhattan Loft Guy note to self ….) I addressed a pair of same building comps that differed by light and water views in my February 4, 2011, these water views from a 505 Greenwich loft are worth $370,000 (really). observing that nearly two years ago in that portion of Lower Soho the same-loft difference between the 7th floor (with very good light, as it happens) and the 12th floor (with that light plus river views) was $370,000, or a premium of 24%.

I have done a whole series on view differences at the Chelsea Mercantile, 252 Seventh Avenue. LINKS  Perhaps those posts can be plumbed to look for differences in light that do not include differences in view, especially with so many Merc lofts having good-light-but-NO-view because they overlook that large courtyard.

I also considered this issue, if obliquely, in my September 25, height matters for 51 Walker Street lofts, even 2 floors. That considered a very clean pair of sales (recent conversion, identical footprints) only two floors apart. The 8th floor unit windows look across at the opposite roof line (see 2nd listing pic here), which includes (per the broker babble but not visible on the angles pictured) the Chrysler Building 3 miles away. That spread of $295,000 (a 15% premium in that case) may very well be close to the better-light-but-not-(much)-better-view in The Miller’s example.

Similarly, I looked at a pair of fairly comparable-except-in-height-and-light in my September 24,for 69 Murray Street loft, The Peak was then, and almost now, with examples from the 2nd floor and the 8th floor on a south Tribeca block. In that case, the difference of $725,000 (a 47% premium!) may have been polluted by the second floor being so close to street level, but that just shows how much harder it is to riff with The Miller about rules than it is about rubrics or frameworks.

And, with no disrespect intended to Ms. Robledo for trying to apply $10,000/window “in that building or nearby”, that September 24 post about the 69 Murray pair also referred to loft very nearby that I hit in my October 20, 2010,interesting price history of 71 Murray Street loft bought by Famous Couple. Different market conditions than when the 69 Murray lofts sold, but this is … er … complicating the riff:

the 10th floor loft at 71 Murray Street has 4 exposures and boasted “dramatic northern city views”, yet it sold closer to the 2nd floor than the 8th floor of 69 Murray Street on a dollar-per-foot basis ($976/ft v. $847/ft v. $1,250/ft)

let’s review

  • fact-based analysis is fun
  • reporter Robledo and The Miller deserve our thanks
  • rubrics are more defensible than rules, even if
  • rubrics have room for nuance

Would that more work from the Manhattan Media Wing of the Real Estate Industrial Complex came from the reality-based world!

© Sandy Mattingly 2012



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