20 East 17 Street loft sells plus 6% over Peak

after some work
There are other fun stories here, but the big story in the listing history of the recently-resold “2,125 sq ft” Manhattan loft on the 7th floor of 20 East 17 Street is the increase of $129,000 from the near Peak sale. Read that again: the loft that sold for $2.31mm on May 16, 2008 sold again on November 11 for $2.439mm, becoming one of the rare instances of a Manhattan residential resale exceeding Peak pricing. Before seeing how much of that unusual spread can be accounted for, a full 10-year history is in order:

and other funny sale numbers

• Nov 11, 2011   $2,439,000
• May 16, 2008  $2,310,000
• Oct 15, 2002    $1,925,000
• Jan 4, 2001         $825,000

I can explain the jump from 2001 to 2002. The 2001 sponsor sale may well have been in a condition that was competitively okay for that era, but was hardly brag-worthy; our data-base has that babble as pretty restrained (“Floors – hardwood, Great closet space, Modern kitchen, Walk in closets, Washer/dryer, Windows – new, Windows – oversized”). By the time it sold 22 months later, it had been upgraded by this husband & wife architect & designer team, into the “downtown loft” on their “residential projects” page (architects take much better photos than real estate brokerages, don’t they?).

Some of the details of the renovation are found only in notes in our data-base (that was a Corcoran listing in 2002). The loft was tricked out: $50,000 sound system; white glass walls in the master bath; a shower hidden behind an oak wall in the guest bath; Sub-Zero and Viking appliances, and Dornbracht fixtures; see those architect photos for the massive marble mantel on the fireplace.

I am always curious about renovation costs, but here the only important number is the $1.1mm that The Market though was the after-renovation premium in October 2002 compared to sponsor-quality in January 2001. Chances are, that was all done for under $500,000, give the timing and that the loft is (only) “2,125 sq ft”; chances are, the 2001 buyers either intended to flip or had some sort of life change, as they owned it only 22 months and could not have lived there through the gut renovation. Chances are, they hired the same team for their next residence (project), but that is one digression too far, even for Manhattan Loft Guy.

In context, that first spread of $1.1mm is not so funny. But that next spread is, and not in a funny ha-ha sort of way.

up The Peak
As rare as it is for the loft to have sold in 2011 at a premium to Peak, the fact that it sold for only 20% more (exactly!) at the Peak in 2008 than in 2002 is probably even more rare. Funny, even. Especially for a loft with such premium finishings.

The loft came to market just as The Peak of the overall Manhattan residential real estate market was peaking, being first offered on March 5, 2008. Perhaps they were too modest, as they asked (only) $2.3mm and went to contract within 3 weeks at a very slight premium to the ask. Again, I think it unusual for a premium loft to have gained only 20% from 2002 to 2008, but that is something for a note to self … to confirm as unusual, at another time.

and up from The Peak
There is no doubt that the post-Peak sale at +5.6% is unusual.

It can be maddeningly difficult to read floor plans and listing photos to figure out how extensively a loft has been renovated between sales, but this one starts with some hints in the broker babble from when the loft went on the market on September 15: “top of the line, recently completed renovation of the apartment was done with the highest quality materials and attention to detail”. The before and after floor plans show that the main utilities are in the same places, that home office space in the front corner has been built out, the (interior) bedroom has been modified and an adjoining media center created.

You can’t tell from the pix or floor plan, but the (reliable) word on the street is that the kitchen was replaced, floors were refinished, and some marble added to the (already massive!) fireplace. Apparently, tenants over the years had not been kind to the 2002-vintage Schefer team’s work. The remarkable thing about all this work is that it is reliably estimated to have cost between $125,000 and $150,000 … or essentially exactly the scale of difference between the sales prices in May 2008 and November 2011.

cost vs. value
I am quite sure that it is a coincidence that the money-spent number is essentially the same as the premium-over-2008 number. Given that the overall Manhattan residential real estate market is not back at parity with The Peak, you’d think this would be a Red Queen’s race, requiring that an owner improve a loft twice as much in order to get half the benefit in market value premium.

The issue of how much resale value might result from a given renovation or upgrade is a perennial source of ‘news’ articles, blog posts, real estate association surveys, contractor puff pieces and similar stuff. Not having seen this loft, I cannot say whether the new parts of the kitchen were needed to bring it back up to standard, but I suspect that the general buffing and refinishing was money better spent to goose value for a buyer than any of the structural work in the kitchen, den, media center, or home office.

I don’t agree with this approach, but if you were to do a dollar-for-dollar analysis, the 2008 ‘before’ value would be exactly the same as the 2011 ‘not-buffed’ value. This is still an extraordinary result.

The more so based on the actual sale prices, as I suspect that it is very hard to find $139,000 in added resale value in the work that cost an estimated $125,000 – $150,000.

The 7th floor loft at 20 East 17 Street in the not-quite-prime-Flatiron was spruced up between 2008 and 2011. Regardless of sprucing, selling at even a small (5.6%) premium over a Peak sale is an anomalous result, if not a remarkable achievement.

A tip of the Manhattan Loft Guy hat to sellers and their BHS team. Note to self … find other examples of a premium-to-Peak resale….

© Sandy Mattingly 2011