TYAToMLG talking about the huge premium that some people will pay for a view, in this case of Madison Square
hitting it out of the ballpark
As on Monday (March 18, OYAToMLG talking about post-Peak and square floor plans at 161 Hudson Street) this will be a relatively short post based on the Manhattan Loft Guy archives, due to the conflicts for time and attention presented this first-time visitor to New Orleans. The topic is views, and the learning is that in some instances any effort at applying norms to determine in advance the market value of a view is simply doomed. The data point is the difference in price paid for loft in #14A at 15 East 26 Street (15 Madison Square North) compared to loft #14F down the hall. I will eliminate any suspense and tell you that these essentially identical-except-for-view neighbors sold with a 75% premium for the view ($2.014mm), before going back to show you that this premium can only have been due to the view of Madison Square.
It was THREE Years Ago Today on Manhattan Loft Guy that I presented my March 20, 2010, a $2 million view on Madison Square? comping at 15 East 26 Street, and (because I love this post so much that I used as a true OYAToMLG before) only a year after hit it again in my March 20, 2011, OYAToMLG / two million dollar Manhattan loft views edition, which worked in a then-current exploration of the same topic in a different neighborhood (March 18, 2011, under $800/ft for brand new Lifesaver lofts at 120 Eleventh Avenue). Look at how good a controlled experiment this was:
as clean a comparison as you are ever going to get
The two units are on the same floor, are essentially equal in size ("2,380 sq ft" vs. "2,390 sq ft", with the "smaller" one being a 2 bedroom / home office / 3 baths vs. 3 bedrooms / 3.5 baths), appear to have identical finishes, and have essentially the same common charges and taxes. The "larger" one has a "full spectrum of sweeping city views", facing north, though with only 3 windows giving that north view
the "smaller" one … [has] only 5 windows, … all large and south-facing, giving "sweeping southern views over Madison Square Park" from both bedrooms and the living room.
These were new development sales, which is often a complicating factor for comps analysis, due to things like different contract dates, the simultaneous availability of multiple similar units, and that the developer may have (in retrospect) under-priced certain units. But in this case the contract were close in time, there were not that many units for sale, and The Market rejected the developer asking prices on both these units as too high. In other words, the developer did not merely set the value by fiat, but had to discover the value.
As you will see, that post was prompted, in part at least, by an inquiry in my office about what agents think a “spectacular” view was worth, and included my unsourced bit of hearsay:
I suspect that this spread is out of guidelines for any appraiser, as I have been told that direct river or park views can add "10+%" in value; I don’t know how much range an appraiser would put on that "+".
Again: a willing buyer at 15 East 26 Street paid $4.73mm for a “2,380 sq ft” loft with 2BR + office + 3 baths, while another contemporaneous willing buyer paid ‘only’ $2.69mm for a “2,390 sq ft” loft with 3BR + 3.5 baths, with the only significant difference being the “full spectrum of city views” away from Madison Square at $2.69mm and “sweeping southern views” over the Square at $4.73mm.
In the case of the Eleventh Avenue pair I hit two years ago, the spread was smaller (25%) between one set of “treetop” views and one set of Hudson River views. I will let you click around for details on that.
I have long had in mind a to-be-written post about the difference between how buyers, sellers and agents look at individual Manhattan lofts, compared to how appraisers and macro-market observers look at lofts. (Note to Self ….) On the one hand, it has to do with timing (buyers, sellers and agents are generally looking at individual Manhattan lofts that have not yet sold, while others look at lofts in contract or sold); on the other hand, buyers, sellers and agents often more readily entertain “irrational” possibilities.
I am pretty sure that most rational market fans would reject the #14A / #14F 75% view premium at Madison Square, and would guess they would be at least skeptical of the 25% river / treetop premium on Eleventh Avenue. Too darn bad….
© Sandy Mattingly 2013