130 West 17 Street #9S went for it + got it

how to determine "worth"?
A top-floor Manhattan loft at 130 West 17 Street was the subject of one of my occasional Going For It! posts way back on September 23, 2007 (when I was still commenting on other firm’s active listings), 130 W 17 9S is new + really going for it. As in similar Going For It! posts, I was intrigued by an asking price that I could not find justification for in any traditional analysis — nearby comps, past sales in the same building, particularly.

first, the listing history
The loft came to market on September 20 "[as a] "2,000 sq ft" loft with a skylight and the possibility of purchasing roof rights, asking a new-construction-like Manhattan loft price of $3.2mm and $2,062/mo". As I said in September, "this listing description presents a premium justification (persuasive or not is a different story), dropping "exquisitely finished", 4 exposures, "beautifully appointed", "sky-lit cook’s kitchen" and "superb bathroom renovations". The listing pix are consistent with this prose…."

The price dropped on November 14 to $2.995mm, then they had a couple of "almosts": an accepted offer, then Back On the Market in January; then another accepted offer and BOM in February. Pay dirt came when a contract was signed on March 5, followed by a deed being filed June 5 for $2.85mm. (I saw that it had closed soon after, but waited to blog about it until the clearing price was available on ACRIS.)

All in all, this was a very successful marketing campaign that took longer than average to get to contract (almost 6 months) despite taking a lager than average discount off the asking price (11%).

the definition of ‘successful’ marketing
I characterize this as very successful because — in my judgment — they stretched significantly in their pricing and closed above where the comps and building stats indicated the range of values.

Data like these make the Manhattan loft market so interesting and — to me — so very different from the "apartment" market. Yes, all real estate is "unique", but scarcity drives value. In this case, the buyer obviously determined that this specific loft represented value for him/her at levels not implied by the comps or past building sales.

(Note that I am not saying that this buyer overpaid. Since I assume that no guns were involved in the negotiation, this buyer paid no more than s/he was willing to pay and no less than he seller was willing to accept. The ‘fact’ that other market data implies a lower valuation means only that they’d have had trouble financing a ‘standard’ mortgage.)

a lofty conundrum
As I noted in my September 23 post, the last sale in the building was "the much smaller #6S ("1,300 sq ft" which is charming, but not very bright, and in serious need of updating, even though designed by an award-winning architect (I have seen it; funky rather than spacious). It sold fairly quickly in May for $1.25mm (above the $1.195mm asking price). That’s under $1,000/ft for the mathematically challenged."

Two years ago the other loft on the top floor sold. "The last sale before that one was #9N, which sold in February 2006 (and went to contract in two weeks). City records don’t show that closed price, but the ask was $1.85mm for "1,700 sq ft" described (modestly?) as having "brilliant light and towering city views" and "intelligent room coordination, design and fine fixtures". Not a premium description like that for its neighbor on the 9th floor, but one could do a lot of renovation in 9N’s 1,700 sq ft before getting close to $1,600/ft all-in". (With a little more digging, I see that  the clearing price for #9N was [a heavily negotiated] $1,792,500; less than $1,100/ft and about $400/ft lower than #9S traded for.)

I scratched my head in September, searching for the plus factor for #9S.

For buyers to pay the primo premium asked for 9S, there’s gotta be something special about it. The other sales in the building indicate that location is not the plus factor here. The views could be a plus factor, but they appear not to have helped 9N much. The "possible" roof deck should not be a plus, since (a) you’d still have to pay for it, and (b) it is merely possible at this point. (Out door space — especially private roof space — can be a significant plus factor, I just don’t think this possibility qualifies.) Perhaps it is the finishes and fixtures.
For finishes and fixtures to be the plus factor driving an atypically high price, they have to overcome the buyer’s mental math how much would it cost me to build out my dream loft? and it has to match the buyer’s tastes. So the market of really interested buyers shrinks as the finishes and fixtures become more (personally) stylish. The seller wants a buyer whose taste exactly matches theirs, or else the buyer won’t be willing to pay a premium.
Time will, of course, tell.

points, general and specific
My general point here is that the truism that The Market Is Determined By The Decisions Of Individual Buyers And Individual Sellers generates — in my opinion — more variation for lofts than for "apartments". Perhaps because there are so many more "apartments" than lofts in Manhattan, an "apartment" buyer is more likely to have more directlycomparable choices of units in similar locations, of similar size, in similar condition. Thus, the general market should be more ‘efficient’.

My specific point is that this loft closed above where it could have been expected to (by me, at least), taking into consideration its location ( a great Chelsea block, yes, but one that did not generate a premium for #9N or #6S), condition (is that renovation worth $400/ft over #9N? or even more over #6S?) and thepossibility of paying an additional and unknown amount for roof rights.

The Market is The Market is …

Whatever I think, this buyer and this seller established The Market Price for #9S at $1,450/ft. Props to the LaChance team at Corcoran. Best wishes to the buyer for a long enjoyable life in the loft.

Hate to sound like a snob, but cookie cutters can be easier to value than "unique" lofts.

© Sandy Mattingly 2008
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