do you prefer a Chelsea loft with light or a patio?

Campiello Collection loft pair says The Market wants the patio

The “1,524 sq ft” ground floor loft #1H at 151 West 17th St (in the Campiello Collection) that sold last week for $3.2mm did so for one reason: the “789 sq ft” wrap-around patio. We can be certain of this because the upstairs neighbor in #7H (essentially the same interior footprint, though “1,663 sq ft”) sold a month ago for (only) $2.68mm.

The Market valued the deluxe finishes and bright southern sun in #7H at $1,611/ft; at that value, the slightly smaller #1H would be worth something less than $2.45mm without that patio, as the ground floor unit finishes are, at best, no better than the finishes upstairs, and the higher floor has to earn a premium for light. Thus, the downstairs patio contributed at least $650,000 to the established value of the loft (more likely, at least $750,000, in my view). That would be $823/ft for the patio, or even $951/ft, in either case comfortably more than half the per-foot value of the interior space.

Of course, that implied allocation of value between the interior and exterior space of loft #1H is at the upper margin of The Miller’s general rule for valuing outdoor space. (See my May 6, 2010, riffing with The Miller on the value of Manhattan terraces, decks + balconies, for a refresher on that topic.) That makes sense to me given the scale of the patio and its evident utility, despite being overseen from the windows of so many neighbors.

there’s nothing like head-to-head competition to refine relative loft values

Feb 2	7H		new to market	$2.995mm
May 15	7H			$2.85mm
May 21		1H	new to market	$3.25mm
Aug 2	7H		contract
Aug 16		1H	contract
Sept 28	7H		sold	$2.68mm
Oct 19		1H	sold	$3.2mm*

(*The #1H clearing price is not yet public, but is in our listings system.)

For ten weeks this past summer, pretty much everyone who was interested in one of these lofts would have seen the other, and everyone interested in one would certainly have been aware of the other. One subset of buyers might have had a hard limit under $3 million, another might have had outdoor space as a ‘must have’. Regardless, The Market treated these two lofts with similar urgency (once #7H dropped to $2.85mm, at least) and The Market clearly considered the patio to be a significant valuable differentiator.

Can’t argue with that.

does that look like a “garden” to you???

Sometimes broker babble makes me laugh, sometimes it makes me cry. The #1H (successful!) listing description describes the outdoors pictured above as a “large south-facing private garden”. Yup, large, for sure. Factually, south-facing, I will grant (though the implication of “south-facing” is usually that there’s a lot of sun). Technically, “private”, in the sense of being used exclusively by this loft, but not private in that any of those neighbors bored enough to track the patio can see everything that goes on. (“Fishbowl” is a more accurate term than “private”.) But “garden” takes the cake … LOL.

People who read the listing description before seeing the patio photo, or seeing it in person, would be forgiven if they did a double take. “Garden” implies, you know, dirt, plants, greenery. It is hard to tell if the smudges of green in that back corner are live or fake, but the stuff in the vase in the center is certainly fake (or cut). One more photo shows three real-live plants in the corner missing from the photo above:

And look … more neighbor windows on this side!

Seriously, there’s a good chance that the three trees get enough sun to survive, but an even better chance that it is light reflected off the windows of the building in back. If a lot of south light actually made its way to the ground back here, you’d expect the recent sellers to have lots of growing things back here, not just the stragglers in the photos. “Garden”, ha! It is enough to make me cry.

speaking of subtle support for broker babbling …

On the other hand, I had to (legitimately) smile at the way this photo supports the listing description of #7H as “sun-filled”.

By the time you’ve seen this photo, you’ve already seen big south-facing windows  that appear to clear nearby buildings in that direction, like this one:

Enough about babbling by (other) brokers …

one very realistic loft seller, who only lost a bit in 3 years

I used The Miler in my post yesterday about the difficulty to (some) sellers have in adapting to a changing market. (October 24, Tribeca penthouse loft seller takes 30% off to sell.) The #1H seller didn’t have that problem.

The recent seller at $3.2mm bought the loft in June 2015 for $3,112,500 (scroll down after clicking “see more” in the StreetEasy Listing History). So he “made” $87,500 in “profit” kinda sorta in the same way that he sold a “garden”.

The 2018 tax returns will show a significant loss on the loft, once their accountant asks about expenses like New York City and New York State transfer taxes on the sale (1.825% = $58,400) and the sales fee (6% = $192,000), not to mention the “mansion tax” they paid when they bought (1% = $31,125) and the mortgage recording tax paid back then (1.8% on the $2,178,750 mortgage that Property Shark shows = $39,217), and (what the hell!) the likely title insurance premium paid on purchase (0.6% = $18,675).

One way to look at the math:

$3.2mm received on sale

($3,112,500) purchase price

($58,400) paid on sale in transfer taxes

($192,000) paid as sales fee on sale

($31,125) paid on purchase for “mansion tax”

($39,217) paid on purchase for mortgage recording tax

($18,675) paid on purchase for title insurance

($251,917) O. U. C. H.

Another way to look at it is to start with the down payment on the purchase ($3,112,500 purchase less $2,178,750 mortgage = $933,750) and follow the big-ticket cash outlays:

$933,750

($58,400) paid on sale in transfer taxes

($192,000) paid as sales fee on sale

($31,125) paid on purchase for “mansion tax”

($39,217) paid on purchase for mortgage recording tax

($18,675) paid on purchase for title insurance

$594,333

On a cash basis, he didn’t burn through the entire sum he put down, so he walked away from the closing table with something more than a half-million bucks, but still … O. U. C. H.

Arithmetic is not for the faint-hearted!