small Chelsea Merc loft dresses up + trades up 14% since 2007

bang for the buck?
Sometimes just a little bit of “renovation” juices the market. The Manhattan loft #3M at 252 Seventh Avenue is one of those generally less-favored lofts in the iconic Chelsea Mercantile, being on a low floor and having no windows except in the living area. Yet this “979 sq ft” condo unit just sold (October 1 deed, filed today) for $1.2mm, or $1,235/ft, which is a 14.3% premium over the last sale of #3M, in January 2007.

It is also an 11.5% premium over the immediately prior sale at The Merc, which was one of the generally less-favored high-floor-but-few-windows-courtyard-’view’ lofts: the “2,066 q ft” #11A with 1 bedroom, 1 home office and 3 windows, which sold on September 29 at $2.275mm, or $1,108/ft.

How’d that happen?

is it the floors + cabinetry, Mars?
The pregnant word in the babble for the recent sale of #3M is “renovated”, as in:

this large, open renovated loft has 14’ ceilings, ebony-stained oak floors, three huge tilt-and-turn windows,…. Chef’s kitchen with white, European-styled cabinets, stainless steel appliances and jet black tile floors. The loft features large custom closets with glass doors and the bathroom has limestone tiling with a custom-made glass shower wall

There is no change in the floor plan of #3M since its last sale in January 2007 and the listing photos show only a few changes (the old listing photos are not available on StreetEasy but are still on Corcoran, here). The main changes since 2007 are the ebony finish on the floors, new kitchen cabinets, new closet doors in the bedroom home office; I can’t tell if the “custom-made glass shower wall” is new since 2007. (Note, by the way, the total lack of proper proper names in the recent babble.)

Whether these changes amount to a “renovation” might be a question for metaphysics, but — however cosmetic — they dramatically change the look of the loft. Formerly blonde (bland?) floors have more ‘pop’; a tired (suburban?) kitchen becomes sleek; and very pedestrian bi-fold closet doors morph into modern. I wonder what the budget was, but the “white, European-styled cabinets” are probably only new cabinet fronts … generally not a big-ticket item. While the whole thing probably cost more than $15,000, it might well have been done under $30,000.

For that (small) investment, they generated a 14.3% gain over the January 2007 on-the-way-to-peak prior sale. That looks like a good return for a 3rd floor loft that looks over Seventh Avenue with its single sleeping area lacking windows. But did it make a difference?

on the other hand, maybe M beats A
This on-the-one-hand-on-the-other-hand stuff gets complicated …. On the one hand, #3M just traded at a significant dollar-per-foot premium over the much larger and high floor (but also window-challenged) #11A. On the other hand, although #3M traded up 14.28% over its last sale in January 2007, #11A also traded up since its prior sale. In fact, #11A was up 15.8% since its prior sale in June 2006, apparently in the exact same condition.

Looking at #3M and #11A as a pair of paired sales, they are essentially flat. #11A sold for 89.72% of #3M on a price-per-foot basis in the last few weeks, and at 88.53% when #11A sold in June 2006 and #3M in January 2007. Which leads me to a different hypothesis; one that I can’t plumb now: given that the Chelsea Mercantile has long been the premium condo in the northern fringes of Chelsea, with the scale to support a premium package of amenities, I wonder if buyers of smaller lofts there proportionately overpay to get the benefits of the full package at The Merc.

small unit premium at The Merc?
I will drop one more recent sale, which might support this hypothesis: the next most recent sale after public marketing at 252 Seventh Avenue was  #10V, which sold on September 1 for $1,605,285, or $1,093/ft. This “1,468 sq ft” loft has 1 bedroom and a windowless home office and is described as “sunny” (unlike the low #3M or the 3-windowed #11A).

Manhattan Loft Guy note to self: explore that hypothesis further.

ignore non-market sales
Can we digress (again)? StreetEasy uses an asterisk to indicate what it considers to be non-market sales, and then excludes those sales from its building stats: “* Non-market sales (sales between related parties, auctions, foreclosures and income restricted sales) are excluded from building statistics”. But you won’t be surprised to see that this system is porous. The sales history for #3M provides an example.

None of these #3M “sales” has an asterisk:

One of these doesn’t make sense, right? That second sale in 2007 looks like about half of the value, right?

If you click on that July 18, 2007 sale on StreetEasy you will see a deed transfer from One Guy to Another Guy, with no indication that this is may be a related party transaction, other than the artificial price. But if you go back one trade to the January 17, 2007 sale, you will see that the two buyers then were that same One Guy and that same Another Guy. Whether this pair changed living arrangements or not, they clearly changed the ownership structure of this condo 6 months after buying it, and what was really transferred in the second transaction was a half-interest in #3M.

But you wouldn’t know that unless you did more clicking. Moral: when you see an odd price, do more clicking.

I am going to stop now, for fear that otherwise I will digress again….

© Sandy Mattingly 2010