long story about a small loft at 650 Sixth Avenue that finally sells up 28% over 2011

there’s a 2011 new loft development sale and a “reconceived” loft sale, not far enough apart

The simple facts about the “942 sq ft” Manhattan mini-loft #6J at 650 Sixth Avenue (in the Cammeyer) are simple: the recent seller at $1.45mm paid $1,130,257 when buying from the developer 29 months earlier. My abacus says that is a gain of 28% over a period in which “the feel” about the overall Manhattan residential real estate market you get from the StreetEasy Condo Index is that the overall market was up only 15% (from 1,890 to 2,170). Looks like a happy seller, until …. Until you see that it took the recent seller a full year to get that contract and that the ask was $1.85mm for 10 months; and until you read the broker babble and look at the lovely listing photos and learn that the loft was “totally reconceived” (which seems like a fancy upgrade to the conventional bit of broker babble, “meticulously renovated”). Assuming reconceiving is as expensive as renovating, you begin to see why $1.85mm was the original starting point and why $1.45mm might pinch a bit.

To stretch the story even longer, that starting point above ($1,130,257, on April 29, 2011) was itself the punch line to a shaggy dog story. The developer started marketing loft #6J in April 2008 and used three brokerage firms over 19 on-and-off months to get that deal, asking a variety of prices between $1.325mm and $1.125mm, finally taking a 10% haircut to do the deal.

And the full history shows that the recent seller owned the loft only 16 months before beginning trying to flip it, with some portion of those 16 months consumed by the work of reconception. So there’s little joy in reviewing the numbers (except for a cold-hearted blogger; I love these numbers) but there’s much joy in looking at the loft.

turns out you can do a great deal of work in a small loft

You start with your basic rectangle studio, with the bathroom on the left and the galley kitchen on the right as you enter and 3 windows on the far wall. In other words, a very large studio that is also a very small loft. The developer’s floor plan included a 2-sided closet and wall closet that provide a visual break to the bathroom and two access points to that essential plumbing. The developer’s last marketing boasted of “kitchens by Poggenpohl, with Corian countertops and Miele, Sub-Zero and Thermador appliances, and bathrooms by Waterworks, Duravit and Catalano” and staged this unit with the “bedroom” in front of the windows separated from the rest of the studio loft by sheers, with lots of mirrors, of course of course. You wouldn’t think there was much to reconceive with these basic utilities fixed and the scale so small, but then you must (like me) have little imagination.

The new loft seems not to have touched the kitchen or bath (which are not even featured in any of the multitude of photos in the first flipping marketing)  but to have redone the closets and other storage completely. (I prefer the floor plan in the later flipping marketing, as more easily read). In fact, the kitchen has been expanded to the left wall as you enter, though there’s still no good photo that tells you what that new part looks like, or does. You see from the floor plan that new closets have been built as a very long “L” outside the bathroom and along that long wall, with still more storage added on the wall past the kitchen.

No kidding around: the loft has been “totally reconceived”, resulting in a much larger kitchen (particularly for counter and work space) and dramatically more storage. While the photos in the later marketing give you an idea of what’s been done, the many same-angle shots in the first flipping marketing show how the space adapts. (It’s not over-kill if the additional photos impress you more; they did me.) The babble is worth quoting at length, as it seems true to the new loft:

stunning apartment was designed by award-winning architect Rick Joy, who created distinct areas allowing for separate living, dining and sleeping. Open city views from this sixth floor exposure provide wonderful light throughout the day. This chic and serene home was totally reconceived after being developer delivered and now offers an abundance of custom millwork, state of the art central heating and cooling, new white-washed Dinesen Douglas Fir 18 wide/ full length plank floors, Venetian Mamarino plaster walls and ceilings, soundproofing throughout

Note: new floors, new walls, new soundproofing. And it does appear that “totally reconceived” is as expensive as “meticulously renovated”, even without  changing the kitchen that was there, or the bathroom at all. Which brings us back to tawdry math.

the math has too much addition on the left side

The recent seller paid $1,130,257 to buy (presumably, with such a funny number, including the transfer fees as a new development buyer; the 1% “mansion tax” would have been on top of that). Read the babble excerpted above and fill in this blank: the seller then paid $_____ to reconceive the loft “totally”. (I’m going to be conservative and go with $150,000.) The seller had to pay a sales fee on the way out, in this case 6% ($87,000) and transfer taxes (again!), or $26,462. That ballparks as $1.425mm. Look again at the September 30, 2013 sales price (I don’t have the heart to repeat it).

Looking only at the buy + renovate costs, I am guessing that’s about $1.28mm. StreetEasy says The Market then-to-now is up around 15%, which would get you to $1,472,000 if The Market valued the renovation (per my estimate) at 100 cents on the dollar. On the one hand, that’s within the range of market noise for the StreetEasy Index. On the other hand, the seller is not wrong to think that the new loft is a lot nicer than the old-but-new-in-2011 loft.

In other words, that’s gotta hurt.

other neighbors in other lofts, other numbers

The last public sale in the building was the “1,063 sq ft” Manhattan loft #5G on July 30 for $1.675mm, or $1,576/ft (if you look at the full history of the #4G sale on September 4 you will see that this was not a public sale, but a StreetEasy glitch). Loft #5G is a true 1-bedroom but is in the same (perfectly nice, with Poggenpohl and Waterworks and and and) condition as when the developer sold it. In other words, not reconceived. Yet it beat the oh-so-lovely #6J on a dollar-per-foot basis by $37/ft, a mere 2%.

In other words, that’s really gotta hurt.