2005 white box loft conversion 835 Broadway sells with walls +50%

well, not quite 50% and not necessarily 835 Broadway
The Manhattan loft #2W at 835 Broadway is part of the 2005 condominium-from-rental loft conversion in “The 835 Broadway Condominium”, but for some reason agents market lofts there under an alternate address, 60 East 13 Street. Does “East 13 Street” have greater cachet than “Broadway”? Not to my Manhattan Loft Guy ears ….

When #2W was sold by the sponsor in May 2005 it was marketed as a luxury white box: beautiful stainless+granite kitchen, one bath, one laundry room and no other walls. The Condo Declaration and the listings claim “1,875 sq ft” in a classic Long-and-Narrow array: kitchen on one long side, laundry and bath opposite (with another stack available), with 3 windows in front and 4 in the rear and 2 valuable windows on the kitchen side, suitable for adding real bedrooms. In those heady days, the sponsor asked $1.3mm and the original buyer must have been on the hook for some sponsor closing costs (transfer taxes, most likely, as that is a 1.825% premium to the ask), with the recorded price of $1,323,725.

That original buyer put in the second (master) bath and a wet bar, and did enough carpentry for 3 bedrooms, creating the floor plan that was just sold (December 16; deed filed today!) for $1.975mm. That $650k spread is a gain of 49.2% for the anal among you, on a build-out budget that was probably closer to $100k than $200k. Nicely traded, no?

everything is relative, isn’t it?
Not as nicely traded as they wished, or (kinda, sorta) as their 4th floor neighbors got when they flipped out (so to speak) in July 2007.

The #2W sellers wanted to sell in April 2009 (yes, during the nuclear winter), then asking $2.495mm. They faced the 2009 headwinds until October last year, finally pulling off the market while asking $2.35mm. This loft is not one of those that can prove how much better the 2010 market has been than the chilly 2009 market (unlike in my December 21, ground floor loft at 7 Worth St proves how bad 2009 was), as it was simply over-priced then, and was over-priced when it came back to market on June 18, again at $2.35mm. The price drop to $2.195mm eventually did it, resulting in the $1.975mm contract sometime between the last open house (November 9) and the December 16 closing. That is $1,053/ft for what is claimed to be a deluxe build-out.

#2W is the second unit to flip in this seven-unit condo; the first was #4W, which re-sold (as I mentioned) in July 2007 with a very similar 3 bedroom + 2 bath floor plan, but which is a more typical Long-and-Narrow, with 2 bedrooms sharing the rear wall of windows and the 3rd bedroom behind the kitchen. The 2nd floor enjoys high ceilings (14 feet) but not nearly as high as the 4th floor (the top floor in the west side of this condo), which range from 15 to 19 feet, with two large skylights. The ‘extra’ height plus the top-floor skylights were a big premium in both the original offering and in the resale.

#4W sold for $1,663,057 in June 2005, a 25.6% premium over #2W originally. When it resold in July 2007 it took only 3 weeks to find a contract and enjoyed a bidding war (clearing price was $2.45mm, ask was $2.35mm; that is $1,306/ft). That resale spread between #4W in July 2007 and #2W two weeks ago was only 24.05%. Given the radically different markets for the two resales, it is surprising that the gap between the two resales is not larger.

looking back into a crystal ball: 2 hypotheses
I, for one, take this as evidence that the sponsor set the 4th premium too high in 2005. Since #4W did sell for $1,663,057 in June 2005 (i.e., the sponsor found a willing buyer at that price), it seems to me that this proves that the sponsor under-sold #2W in May 2005, getting only $1,323,725.

The contrary view would be that all this Gap Analysis proves only that the July 2007 market for this corner of Broadway at 13th Street was essentially the same as the current market. At least for a developer who was smart (or lucky) enough to get all units sold 2 to 3 quarters before The Peak.

Anyone else care to weigh in with an opinion on the market metaphysics: what does it all mean??

© Sandy Mattingly 2010