interesting pricing gambit does not work as 214 West 17 Street loft sells at 14% discount, 22% from first ask

how does that “if at first you don’t succeed …” thing work?
No diversion today, as I missed a weekday of substantive Manhattan loft blogging. (if you are disappointed, call 3-1-1.) One way to look at the recent sale of the “4,040 sq ft” Manhattan loft combination #5AB at 214 West 17 Street in prime Chelsea is that The Market responded rationally, as the same loft that did not sell post-Peak at $4.995mm did not sell close to $4.95mm in late 2011. From a dispassionate clinical perspective, however, I find the seller behavior fascinating: after that post-Peak experience of not selling at $4.995mm, the new price in April 2011 was … (wait for it) …  $5.495mm. Same loft, same condition, different market (just not a dramatically better market in 2011 than in late 2008). Looks like they were just taking a shot ….

Note the unfortunate first timing. Loft #5AB came to market just weeks after The Peak (no one could know precisely that at the time, of course); a few months earlier and this loft may well have sold before Lehman flushed the market. Sometimes luck is a 4-letter word.

Again speaking from a dispassionate clinical perspective, notice the last spread: seller was secretly negotiable to the tune of 14%. Sometimes sellers that drop by a half million bucks are reluctant to drop (much) again. Of course I wonder if an intermediate drop from near $5mm after October might have provoked more interest, and gotten something higher in the mid $4s. But it was not my loft, and not my seller, and the team made the choices they made.

a simple combo, nicely done
It appears as though these two lofts were put together in 2004, after the then-#5B owner (shown by The Shark as having a phone number at this address since 1992) bought the loft next door. They are about as natural a combination as you can imagine, being side-by-side floor-through lofts with plumbing in the middle of the building.

The resulting floor plan yields 3 ample bedrooms across the back (a masterful master at 22’6” x 18’6”); a front living area that is nearly 50 feet across, with fireplaces on the opposite side walls; and the middle of the loft containing the 3* bathrooms, the kitchen and (in one former kitchen) a den / library, all arranged around the elevator shafts and public stairwell. (There is a disconnect in the floor plan and the babble, as the floor plan clearly has 4 bathrooms; I suspect that the 2 bathrooms on the left side were combined into that master, in which “[n]o expense was spared”. Look at the 5th photo and see if you agree that it appears to show one very long master made out of two ‘conventional’ baths; note the shower head between the tub and the sink, and the black bands on the floor that are probably drains, not mere decoration.)

In fact, this is one of the great loft floor plans, in my opinion. Some people complain about the open kitchen style in lofts; this kitchen is angled away and separated from half the living room. Of course, that front room at nearly 1,100 sq ft helps put the mass in massive. There are long visual ranges not only across the front room, but from the master suite door and along the opposite long wall. yet the only completely enclosed spaces (bathrooms aside) are the 3 bedrooms.

The master bedroom is not only separated from the other bedrooms, on a walking basis, by about a hundred feet, but the wall between the bedroom wings is the original wall that separated the “A” loft from the “B” loft. It even seems as though the secondary bedroom dwellers could use the separate (old “B”) entrance if they did not want milk and cookies before going to bed.

Put it another way: not counting the entries, bathrooms and closets, there are only 3 doors in the “4,040 sq ft” loft. Take a footprint like this in a grand prewar apartment uptown and you are likely to have separate rooms for kitchen, dining, gallery, library, and a few other “rooms”. Of course, that will be wonderful for what it is; but it ain’t loft living.

One more odd thing about size, scale and perspective in this huge loft. you would not know from a quick look at the kitchen photo (pic #3; view it with Click For Large Photos, of course) just how big that kitchen is. The angled photo seems to squeeze the space, which takes up more than half of the 23’8” x 20’ kitchen / dining space on the floor plan. (Stop and count the number of gas dials on the cooktop and oven; that is one massive appliance, that looks to be shortened as it gets farther from the camera’s viewpoint.)

speaking of a rational market reaction…
No doubt that the seller was disappointed not to have sold higher, either in the 2008-09 marketing period or in the successful 2011-12 effort. Negotiating to a $675,000 discount from last ask could not have been easy. But there is reason to believe that this sale was a strong one; that the selling team simply over-reached in both marketing efforts.

Half the same loft downstairs (the “1,850 sq ft” #4B) sold in fully renovated, fully loaded condition in a near-Peak sale at $1,038/ft ($1.92mm on June 30, 2008). Unless you are of the view that the current market conditions are similar to early 2008 conditions, that sale implies that the recent #5AB sale at $1,058/ft, discounted though it was, was a rather strong price.

In fact, you could look at the near-Peak #4B comp for the recent #5AB sale as a data point in support of the elusive 1+1=2.5 Conventional Wisdom about which I riffed with VToy and The Miller back in my September 10, 2011, deconstructing NY Times article about combining apartments to increase value. My point in that post was not that the 1+1=2.5 Conventional Wisdom about combo premium does not exist, although that got lost enough that even The Miller took me to task on that. (As well, for lumping him into the Real Estate Industrial Complex, a phrase that he finds derogatory.)

Perhaps that post was a little too much inside baseball. I offered:

I don’t doubt that there is such a premium in the right circumstances, as I will explain in a minute. But my basic response to the article started with “sheesh … that’s not very helpful without real past examples”, which led to “why aren’t there real past examples”, which morphed into “no one with the data is motivated to find real past examples”, as the role of the New York Times in the Real Estate Industrial Complex came into focus for me.

I was frustrated then that we get articles in The Paper Of Record that offer no actual sales data for a sensible proposition. (Still am.) Reporters like VToy are at the mercy of the people with actual sales data who really want to sell their potential combos that have not yet sold, rather than talk about past examples that prove VToy’s thesis:

The developers and sales agents for new developments know [where the real life examples are], but that is not what they really want to talk about. The sales agents with one-off combo listings might or might not know, but that is not what they really want to talk about.

The #5AB sale is a win for fans of the 1+1=2.5 Conventional Wisdom. Unless you believe that the 2012 market is as strong as the immediate post-Peak market, the fact that #5AB just sold at even a tiny premium ($20/ft = 1.8%) over #4B in June 2008 is evidence of a premium for larger lofts over smaller lofts. Especially considering that #4B was a hardly cramped 2-bedroom at “1,850 sq ft”, while #5AB has ‘only’ the one additional bedroom.

© Sandy Mattingly 2012