151 West 17 Street loft sale is a Headscratcher's Special: 5% below 2005

fans of efficient market theory should avert their eyes
Let’s stick with John McCain (“The Market is cruel”) another day. In yesterday’s market cruelty or mean streets?  gut renovated sundrenched 347 West 39 Street loft closes at $675/ft, unadjusted for terraces, the remarkably low sales price was certainly related to a Gritty Block discount, with just a touch of Market Cruelty. That the “2,485 sq ft” Manhattan loft #2A at 151 West 17 Street (in the Campiello Collection) sold for $2.15mm ($865/ft before adjusting for “547 sq ft” of bi-level terrace) cannot be blamed on a location discount: the last 5 sales in this 2002 newly constructed condominium were between $1,054/ft and $1,278/ft, going back through 2010.

I can’t tell why The Market would have been specifically cruel to this loft, but let’s claw at the facts and scratch our heads together.

you’ve seen bigger lofts this size
It is one of the peculiarities of Manhattan lofts that feet are feet but space is different. This loft is “2,485 sq ft” but feels smaller than other lofts of its size The floor plan is here). In part, this is typical of duplexes, where the real stairway ‘wastes’ space on both levels and because chopped up space never feels as big as space that flows, and duplexes necessarily involve more chopping than single floor loft spaces. In this case, it is also partly due to light and view, or, more precisely, to some light but no view. This is a second floor problem, with the master looking across 17th Street at taller buildings and the north windows facing into the courtyard between the north and south buildings of the Campiello Collection, with the lower bedroom / office / media room being on the courtyard at ground level.

No matter how good the light (the babble claims “great southern light” for the master), it will be indirect light unless you are standing at a window when the sun is directly overhead.

But there are many lofts on second floors, and many that are duplexes. This second floor duplex loft was unusually disfavored by the market.

The outdoor space is, of course, a complicating factor in considering value. In this case, it is ridiculously complicated; if I were to riff with The Miller by looking at the past 5 sales to get a baseline for interior values in this building since 2010 I would conclude that the “547 sq ft” of bi-level terrace had negative value. So let’s not riff from that direction.

If the terrace were at the same level as the living room, this loft would feel more spacious: your eye would experience the outdoor space directly out the windows as extending the interior space. But that only happens in loft #2A from the lower floor, in that space that is “perfect for a quiet office, a TV room or a guest suite”, despite having a structural column right in the middle of it.

While not increasing the sense of volume, that outdoor space is a valuable amenity. It is quite large enough for as much entertaining as building rules allow, and it is directly accessed from the living room. To be conservative (and not to depress the values too much), let’s ballpark the terrace space as worth only 25% of the interior. That assumption yields an adjusted per-foot value for #2A of $820/ft based on the recent sale at $2.15mm.

measuring disappointment by discounts, candles, and loss
Before considering the past building sales, it is clear that the seller was even more surprised than Manhattan Loft Guy at this market response. She thought The market would respond favorably one-fourth higher:

That’s almost 54 weeks to contract, four prices, a final negotiated discount of 10%, and a clearing price fully 25% below the original ask.

Bad as celebrating a listing birthday is, bad as being so wrong about The Market is, disappointed sellers who sell at a gain over their purchase tend to be less disappointed than sellers who compound the disappointment by selling at a loss. This is a one compounded seller:

• Feb 11, 2005 $2,267,500
• May 11, 2012 $2,150,000

That’s a loss of 5.2% before considering expenses, on a purchase that was a full three years before The Peak for the overall Manhattan residential real estate market. This is a one very compounded seller.

the comps are painful, of course
The only other lofts in the Campiello Collection to sell since 2009 all sold well higher than #2A on a $/ft basis, as noted up top. I will do this quickly, like ripping off a band-aid:

#5H Jan 5, 2012 $1.775mm $1,067/ft
#6A Dec 14, 2011 $2.45mm $1,278/ft
#4B Oct 25, 2010 $1.25mm $1,149/ft
#6A* Aug 19, 2010 $2.25mm $1,174/ft
#2D Feb 11, 2010 $2.4mm $1,195/ft

(Yes, #6A sold twice in this period, as Manhattan Loft Guy readers with good memories know from my January 4, 151 West 17 Street loft sells up 9% in 16 months; those same readers remember my February 17 post about the #5H sale, 8 months to contract at 6.5% discount for 151 West 17 Street loft)

one more so than others
You will recall that I wondered about #2A and the second floor, the light-not-views, even the complicating terrace. Loft #2D should have had some similar issues, with a floor plan with a living room over West 17th Street, bedrooms over the building courtyard, and a terrace of “850 sq ft” accessed only through the master. Directly comparing #2A and #2D, #2A has the additional deficit of the ‘wasteful’ duplex arrangement, while #2D claims an additional benefit of custom finishes.

But neither that con nor that pro can account for the different market valuations of these two lofts. (Applying the same 25%-of-interior value for the #2D terrace as with #2A, the #2D implied adjusted value was $1,081/ft, compared to the $820/ft for #2A.) I can’t think of any reason The Market would consider the moulding and the simplex floor plan of #2D as worth much more than #2A. Some premium? Yes. But not 32% more.

disappointment, compounded further, or ameliorated?
There is a bit more to the #2A listing history than the successful campaign just concluded (if lengthy and discounted). Not to pile on, but this seller misplayed her hand at The Peak, offering to sell as The Peak came and went, from January 8 to July 22, 2008, at prices ranging from $3.5mm to $2.89mm. In other words, she failed to sell high.

Many sellers had a disappointing experience like that, but most of those simply hung on to sell later. This seller-but-not-before-2012 had already had a Peak experience of her own. She paid $2.95mm on January 31, 2008 for this “triple mint renovated apartment designed by award winning architect” 4 bedroom combination at 425 Park Avenue. In other words, she bought high, not low.

Of course, it is nice to have the resources to own two units at once. In this case, it appears that the #2A seller rented #2A as of August 2008 off an asking rent of $11,000/mo, and again a year later, and again two years later. Even with 7 vacant months to start, rental income of five figures per month will carry a lot, even with two units.

To review:

• comping is hard
• I can’t rationalize the #2A clearing price
• this seller bought high and sold low, yet still may have made out all right on a dollar basis, and she moved from space that she did not prefer to space she clearly wanted

Good for her! It is not all about dollars, right?

© Sandy Mattingly 2012