hyper-local loft market in northeast East Village is flat since March 2014

adventures in anomalous Manhattan loft sales, cont’d

There’s ‘the forest’ of Manhattan residential real estate, in which median sales prices and average days on market are best viewed; then there are ‘the trees’ of Manhattan residential real estate, in which individual sellers and individual buyers set prices for individual apartments or lofts. Of course, ‘the forest’ has ‘trees’ of different heights and widths, different colors, different species, and many instances in which adjoining ‘trees’ bear little relationship to one another. Today’s installment of It Takes Many Trees To Make A Forest concerns the underwhelming sale of the “1,274 sq ft” Manhattan loft #5E at 125 East 12 Street (Zachary) for $1.9mm.

Underwhelming may not be the first word that comes to your mind when you see a loft sell at $1,491/ft with a challenging layout (a single exposure with one very large window, a mezzanine sleep area, and no true bedroom), but how whelming is this? The May 6 seller at $1.9mm bought this East Village curiosity on March 31, 2014 for … (wait for it) … $1.9mm. Ouch. ‘The forest’ (the overall Manhattan residential real estate market) is up 7% in those 14 months (well, through February, the most recent month in the StreetEasy Manhattan Condo Index); this ‘tree’ is up exactly 0%.

this is a ‘challenging’ layout

Yesterday’s adventure in anomalous Manhattan loft sales went in the opposite direction, which is what the best pair of anomalies do. In that May 28, hyper-local penthouse loft market at Church + Leonard up 9% since January, the ‘tree’ was even more anomalous, as the headline reveals: the same Tribeca penthouse loft that sold for $4.45mm in January sold in May for $4,487,500.

In that Tribeca case of a quick flip, the math that was so impressive from the perspective of a market analyst busybody Manhattan real estate blogger worked not quite well enough for the actual January buyer / May seller, as he clearly lost money on the round trip. To me it is obvious that that guy did not set out to do a quick flip (there, the key supporting data point was that that buyer had to beat the ask by 11% to win a bidding war to close in January), as it should be equally obvious that the Zachary loft buyer at $1.9mm did not set out to sell at $1.9mm, losing significant transaction costs in the round trip.

While the calendar gap between purchase and sale is much wider in the case of loft #5E than with yesterday’s Tribeca penthouse loft, the recent seller actually tried to flip much more quickly than the sale dates suggest:

As yesterday, I can’t imagine that this March 2014 buyer bought with the intention of selling so quickly. See that post for a litany of big ticket expenses involved in buying and selling a Manhattan condominium unit. There might have been a (net) profit if the resale worked right away and at the first ask, but that was chasing a rainbow, asking a premium of 17% five weeks after buying (yesterday’s 9% example notwithstanding).

Imagine yourself in this buyer-seller’s shoes late last year. The Market was creeping up (creeping, but up), but asking 5% over your purchase price was not attracting a new owner. Damn. Even exposing the loft within 3% of your (by then, year old) purchase price took more than three weeks to make that flat deal. Double damn.

yet another memo from the Department of Redundancy Department

As yesterday, two data points don’t make The Market. But they do contribute dots on the scatter graph that pictures The Market. It’s weird that two sets of willing seller and willing buyer agreed with each other at the same exact price, meaning that the market value of this loft was identical 14 months apart. But that happens because there are many trees in the forest.

speaking of a hyper-local East Village loft market …

Let’s say you decided that you simply had to live on East 12th Street, between 3rd and 4th Avenues. Would you prefer (a) a ground floor loft, or (b) a beautifully renovated loft with a challenging layout, or (c) a penthouse?

In the case of the recent purchasers of loft #5E, their answers appear to be All Of The Above, but in sequence, (a) then (c), then (b). Or maybe (a) first, and second both (c) and (b). (Stay tuned ….)

Note the notice address for the recent #5E buyers on the #5E deed record. They still own #PHA, a “2,376” sq ft duplexed loft with three bedrooms, a maid’s room, four baths, and three rather large “balconies” (they look more like terraces to me, but let’s not wander too far afield from a digression), which they paid $3.7mm for in July 2011.  I can’t find any publicly available photos for that loft from 2011, but the information from that “listing” on StreetEasy is awfully spare:

Stunning Penthouse with multiple terraces, four bedrooms and four baths.

Why would anyone leave a stunning penthouse for the challenging layout of the much smaller #5E? (Another hint: maybe they didn’t … below.)

Now note the notice address for the recent #5E buyers on the 2011 #PHA deed record. Yes, the recent #5E buyers sold the “1,935 sq ft” duplexed ground floor (and below) loft #1H (which also has a mezzanine master suite) for $2.2mm in June 2011, a month before closing on #PHA. They moved from one loft on the bottom (that also goes lower) into another loft on the top (that also goes up). A lot more light up there, and if the “stunning” but spare penthouse able is correct, the upper unit is much nicer overall.

2011 must have been a good year for thees folks, as they sold #1H at a loss to the $2.3mm they paid in July 2008, yet still upgraded to #PHA for $3.7mm. And 2015 seems to be another good year, as they add #5E to the mix at $1.9mm. It’s been awhile since I went all Manhattan Loft Voyeur on anyone, but this one is fascinating.

a theory of serial loft acquisition at The Zachary

The ‘building notes’ in our listing system describe The Zachary as a 5-story building on top of which four penthouses were added when this 1895 building was converted to condominiums in 1986. The penthouses appear to be duplexes, with the lower level and some outdoor space on the 6th floor (the old rooftop) and a smaller space duplexed above, with more terrace way up on top. That’s the layout of #PHA (link above), the recently sold #PHB, and #PHC, which sold in 2009; #PHD has to be similar.

Unless these folks are buying auxiliary living space to remain separate for teenagers, in-laws (staff?), I wonder if loft #5E sits below penthouse loft #PHA. Then they could triplex the penthouse. Loft #5E already has that mezzanine close to the 6th floor floorboards, which seems like an odd thing to keep if you were to combine the loft with the penthouse above, but money doesn’t seem to be an issue for these folks. If this is a combo-in-the-making, they are most likely to gut #5E down to the one level, sending the mezzanine master and kitchen to a dumpster.

The result will be three levels of more than 3,000 sq ft interior, with three huge “balconies” and one regular (modest) balcony. Anyone in the household could get lost in that configuration.

does #5E sit under here the First Floor somewhere? makes sense …