240 West 23 Street penthouse loft sales illustrates trough, with a bonus anomaly

(not that you need another illustration)
Regular readers of Manhattan Loft Guy don’t really need to be reminded that the overall Manhattan residential real estate market has seen a cycle of Froth + Peak + Trough + Thaw (+ Rebound) since 2006 as there are a bunch of market-wide metrics to show that, and I hit on some part of that theme about 3 times each week. Yet it is always refreshing (to me, at least) to see a particular loft that fits that pattern with actual sales data. Today’s bit of refreshment is provided by the “1,580 sq ft” (plus 400 sq ft private terrace) Manhattan loft #7B at 240 West 23 Street, which recently sold for $1.975mm by folks who bought into the Trough at a 13% premium to the Trough price.

You know when Lehman filed for bankruptcy, so you can squirm about the missed opportunity, applaud the courage (or optimism) of those prior sellers, empathize with their fight-or-flight dilemma (introduced in my November 15, 2010 post), and imagine their pins and needles wondering for 9 months if their deal would actually hold together to get to the closing table:

These are people who were committed to selling!

this just in from the Department Of The Obvious…
2012 has had a different set of market conditions:

triplexes are awkward
You can have great separation in a stacked living space, at the cost of wasting space for stairways; the more so in a true triplex like this penthouse loft. (Many tri-level penthouse lofts have only 2 levels of interior living space, with only a stairway + bulkhead + terrace on the top level; this floor plan has a true living space [bedroom] on the third level, and [oddly] the roof deck off the middle level.) Let’s assume that the interior really has “1,580 sq ft”; perhaps as much as 200 of it is taken up with the stairway running through 3 levels. Note how little room there is on each level, with perhaps 400 sq ft each on the top two levels, leaving less than 800 sq ft for the main level. An uncharitable person would say this is 3 small boxes, stacked.

All the windows are north-facing, with the main photo featuring the “view” from the “living / bedroom” (never really usable as a bedroom, by the way) dominated by the furniture on the roof deck a few steps up a landing. There’s no photo of the lower level view, which would only be available to the public space if the “den / bedroom” doors were fully open. Feel like eating on the beautiful deck? There’s a grill (of dubious legality) and a kitchen with cold drinks 1.5 flights below.

The nicest thing that I can say about the floor plan is that the upper level master bedroom has a door that can be closed for complete privacy, and is not the access point for the roof deck. My other comment about the master suite will be succinct without a hint of charity: glass brick is so 1980s!

All that thrashing and trashing aside, the space has some brag-worthy features (“ceilings, exposed brick, steel, and glass … juxtaposed against warm hued wooden floors and northern artist’s light…. open kitchen with custom cabinetry, professional grade Capital stove, Fisher & Paykel double drawer dishwasher, and white marble counters …. custom lighting and a surround sound system by Harmon Kardon …. custom California Closets throughout, new windows”, among them) and a history showing the market appreciated the loft. (7 weeks to contract at a nominal discount of $20,000 = appreciation.)

let’s riff!
The prior sale in the building was the smaller (at “1,170 sq ft”) but “renovated to perfection” #3B, which sold (without sign of glass bricks) at $967/ft a year ago. Taking that single sale as establishing the interior value on a $/ft basis for the building (that’s all the data we have to riff on) implies both that #7B was very well appreciated by The Market (the awkward-to-some layout and glass brick notwithstanding) and that the roof deck was a very valuable feature, indeed. Working backwards from a typical case of Manhattan Loft Guy Miller-riffing (which I did first on May 6, 2010 and have done many times since), the “1,580 sq ft” of #7B interior space (even the stairways!) account for only about $1.525mm of the recent value, leaving the 400 sq ft terrace (trusting the dimensions) to account for the remaining $450,000.

In other words, if the renovated-to-perfection #3B sale sets the benchmark for valuing interior loft space at this address, the outdoor space is worth more than the interior! ($450,000 / 400 sq ft = $1,125/ft) In fact, 16% more than the interior on a $/ft basis.

In most cases I would say that such a result is so out of line with The Miller’s guidelines as to be patently absurd. In this case, however, I can see the logic. The interior space is (to me) extremely awkward. Without the exterior, it should be valued at less than #3B, if anything. The scarcity factor for outdoor space in Chelsea is a big plus factor, as is the utility. In fact, one could argue that the only thing that saves the floor plan from being fatally awkward is that outdoor space. (I know I can argue this, so that’s “one”.)

This just may be the singular instance in which outdoor space is legitimately and rationally more valuable than the interior space of a loft. That’s refreshing!

© Sandy Mattingly 2012