masterpiece designed since 2009, 60 West 15 Street loft doubles in value

cashing out on meticulous + to the 9s

Not every agent has the credibility in the business to be taken at face value when saying things like “Renovated to the nines” and “Come home to the extraordinary”, but the listing agent for the recently sold “3,133 sq ft” Manhattan loft on the 4th floor at 60 West 15 Street does. There’s some detailed and enthusiastic babbling to support these claims, of course, as do the listing photos. Like yesterday (September 17, 56 Warren Street loft renovation added more value than it cost), I’d love to know the renovation budget that it took to create this beauty (not to my taste, but a beauty nonetheless) so that I could know how much money these folks made by buying at a very chilly $1.95mm in May 2009, renovating at some significant expense, then selling at $4.05mm 4 years later.

Even if they spent $400/ft, there’s a lot of room between buy ($1.95mm) + fix (say, $1.25mm) and the sale at $4.05mm … about $850,000 in value added from 2009 to 2013 by the renovation, and by the change in market conditions in that time. Unlike yesterday’s Tribeca renovation story, it is likely that the change in market conditions was an even bigger factor in whatever the gain turned out to be, rather than the renovation itself adding value beyond its cost, but that is an impressive spread by any measure.

buyer fortitude meets seller motivation (low, but they met)

I will get to the loft details below, but in this case the key to their success was sown at the beginning, getting the first part of the Buy Low, Sell High instruction right. Hindsight shows that they made a brilliant move in buying at a time in the overall Manhattan residential real estate market when others were forced to the sidelines, but in real time there were such significant risks that no one else snapped up this loft, especially in the last 6 months it was on offer before they bought it. The 2009 sellers apparently were highly motivated, but with a bad sense of market values in environments that shifted up then down, and they made a critical timing error:

You see what they did wrong here? Start with asking near $1,000/ft for a choice framed in an interesting manner, either to “great canvas to create their masterwork loft” or to “spend nothing and live the way things used to be” in a market that was … er … unresponsive to that offer but pretty much willing to buy pretty much anything else on offer at the end of 2007. To compound the error, they then sat out the only part of 2008 in which they had a chance of getting a fair value, while the overall market was slowing but without (yet) a significant drop in values.

That significant drop in values began with the Lehman bankruptcy filing on September 15, 2008, of course. A month before they came back to market, still too high. I am not convinced that the last recorded price drop was really offered to the market, as it is suspiciously close to the contract date and because it is not in the inter-firm data-base history. Regardless, in 2009 they were at the wrong price for (at least) 3 months and had to work to a 15% discount from that $2.295mm ask. Some would call that negotiated discount a sign of motivation; others would call it more like desperation; still others, a (finally) realistic assessment of value under difficult conditions. They paid for their miscalculations, finally getting a full 7-figure discount from their hubristic 2007 ask.

That’s the sell-side play-by-play in 20-20 hindsight. The buy-side is where the fun is, especially giving full weight to the reason these 2009 buyers were able to buy for $1.95mm an asset they were able to improve and then re-sell at $4.05mm 4 years later. These 2009 buyers had the … er … intestinal fortitude to make a deal at a time when they could not know that The Market, long in decline, had actually bottomed out.

some sobering numbers

I can’t put my finger on full quarterly numbers right now, but the most recent Miller Samuel 10-year market report has these sales totals for Manhattan (on p5):

• 2007 13,430

• 2008 10,299

• 2009 7,430

These numbers from the 2Q09 Miller Samuel report show the carnage that persisted precisely when these 2009-buyers-turned-renovators-and-2013-sellers met their 2009 sellers:

Number of sales

• 2Q09 1,592

• 1Q09 1,185

…

• 2Q08 3,081

Those 2,777 buyers in the first half of 2009 either had to buy or were risk-takers who saw opportunities that the nominal ‘buyers’ did not see, or were not willing to risk. Their reward is great in heaven on West 15 Street.

Once again:

• May 28, 2009 $1.95mm

• (a renovation)

• May 16, 2013 $4.05mm

what do you think this renovation cost?

Click the (large format) photos to see what this detailed and enthusiastic babbling is talking about:

Renovated to the nines with soundproof sheetrock, Brazilian walnut flooring, 2-zone central air, 2 Ecosmart fireplaces and Niles Audio system. … Eat-in-kitchen has 2 Viking ovens, warming drawer, 6-burner stove top, Sub-zero refrigerator, 2 freezer drawers, 144-bottle wine cooler, bar, 2 Miele dishwashers, 2 sink areas & built-in marble dining table. Cool gray guest room has built-in cabinetry & desk. Stunning Mosiaco tiled powder room. Master suite features dressing area, limestone spa bath with Zuma air/jet tub, separate rain, spray system and steam shower, bidet & double-sink vanity.  

The overall look is too shiny for me (the high-gloss floor finish as much as the master closet of mirrors; see pix #5-6) and the kitchen strikes me as more Hamptons than loft, but The Market (and the buyers) could care less what I think. Perhaps the wall and furnishing colors do ”induce calm and relaxation” in real life, but whatever the mechanism and whatever the reasons … $4.05mm, or $1,293/ft, in a 2-building coop in which the highest prior sale was $1,147/ft.

comping is, as usual, hard

The last sale in this 5-unit building was the 3rd floor in June 2010. That was babbled as “beyond triple mint” and went for $3.45mm. That was a very confusing sale because it is 4% less than the same loft had sold for in August 2005 (that was the $1,147/ft sale). It is also 15% less than the 4th floor sale in 2013.

This 6-story building is part of the same coop as the 10-story, 9-unit 58 West 15 Street next door. Those lofts have a little smaller footprint than at 60 West 15 Street so that last sale on that side (also in 2010, the 2nd floor at $2.45mm) came to only $980/ft for a loft described as a “recent renovation” with “Incredible attention to detail”.

With this very scattered and spare hyper-local history, the 4th floor at $1,293/ft is less impressive as a comp (an exceptionally well renovated space beating a 2005 sale by 13%) than it is as a flip. Again, the recent sellers at $4.05mm had the … er … cojones to buy at $1.95mm when angels feared to tread, before doing their 9+ renovation.

Nicely played, folks; nicely played.

we know where they’ve been

Having put this listing aside for an eventual post, I looked back at it today and decided to post even though the sale is hardly fresh, for two reasons: it fits yesterday’s theme about sellers adding value through renovation; and I recently hit these buyers so I can indulge my Manhattan Loft Voyeur side. The new owners of this “3,133 sq ft” 4-bedroom masterpiece in technical Flatiron that feels more like Chelsea were the sellers of the “1,140 sq ft” 2-bedroom loft at the busy edge of Tribeca that comes with jaw-dropping views of the Brooklyn Bridge and other icons that I hit in my September 3, jaw-dropping views provoke jaw-dropping price for 261 Broadway loft.

It is difficult for me to imagine a loft-to-loft move that is more extreme than this, including scale (from “1,140 sq ft” with 2 bedrooms to “3,133 sq ft” with 4 bedrooms), to feel (from a small loft that draws you outward with the light and pictures seen through the picture windows, with a private rooftop, to a space with only ‘city views’, space designed to induce calm), to expense (from $1.705mm to $4.05mm).

Nothing says Life Is Good (and getting better!) like a move like this; unless it is a move like this done by buying before selling. (They signed the contract to buy way back in December, closing on May 16, but did not put their penthouse loft on the market until April, closing July 17.)

There’s a lot to enjoy in the new place, as there was in the old loft. The charms of each could hardly be more different. Best wishes for a lovely life on West 15 Street.

another StreetEasy brain cramp

Let’s close by ruining the mood with a mini-rant. StreetEasy continues to make life difficult for Manhattan loft lovers by failing to match the 4th floor deed record to the 4th floor listing. They did a similar thing for the 2009 sale, marking the deed record as “No listing associated with this closing” but then including a link to the deed (and closing price) in the (expired) August 2007 listing rather than to the October 2008 listing that actually got the thing sold. You can figure all this out from the building page because this is a 5-unit building with few sales (and the match of “#4” and “4THFL” is hardly taxing; hence all those hyperlinks in the 2007-09 history up top) but in a larger building this would be more difficult.

Note to StreetEasy: please clean up your stuff.