neighbor bails out neighbor at 52 West 22 Street in first resale at Paper Factory lofts

a good deed, rewarded
It has been a while since I looked at the neighbor-on-neighbor action involved when kinda one wants to sell and another sorta wants to buy. In today’s episode, the owner of the “1,048 sq ft” Manhattan loft on the 4th floor at 52 West 22 Street (in the Paper Factory, off the corner of Sixth Avenue in Flatiron) had been trying to sell on an all-comers basis in the latter part of 2011, without success. The deed that just got filed last week (as I have informed The Twitterverse via @ManhattnLoftGuy, the Master List of Manhattan Lofts Sold Since November 2008 is [again] updated!) reflects that the loft sold on September 18 at $1.3mm, a significant discount to the last ask, to the folks who own the loft underneath. The numbers suggest the downstairs folks did well for themselves.

Keep in mind that this is a small (5-unit) condo residential loft conversion that got started marketing, but not completed, in 2008. Per the StreetEasy building page, units on the ground, 3rd and 4th floors sold before Lehman’s bankruptcy upended the overall Manhattan residential real estate market (and, possibly, the sponsor’s finances), then the 2nd floor sold in 2010, and (finally) the 5th floor penthouse in 2011. What i had not noticed until today is that each floor of this building has a different footprint; not just a different floor plan in the same size rectangle, but different lengths and (to some extent) widths.

This oddity makes direct comparisons within the building difficult (sigh … comping is hard), but let’s start with the fact that the recent 4th floor sellers paid $1,420,458 when they bought from the sponsor on June 2, 2008. (The ask was $1.395mm; the difference did not go into the sponsor’s coffers, but saved the sponsor the city and state transfer fees.) Last year they wanted to see off asking prices of $1,549,999, $1.495mm, and $1.45mm from May into October, without success. (Ignore that “Listing sold” on October 20, 2011 on StreetEasy; the inter-firm data-base reflects that PruDE made the listing “temporarily off the market” on that date.) One can infer that The Market did not think that the loft last year was worth what the owners paid for it in 2008.

Rather than test the all-comers market in 2012, at some point the neighbors started talking. Most likely, the upstairs folks commented that they did really want to sell, or (less likely) the downstairs folks asked if something could be arranged. I take the 4th floor sellers as the more likely openers to that conversation because they ended up well below their purchase price, suggesting an opportunistic purchase by the 3rd floor owners rather than a hard bargain over unique real estate to permit the 3rd floor owners to get more space without having to leave the building. At $1.3mm, the sellers saved the 5% sales fee and the buyers got a 8.5% discount off the 2008 purchase. Maybe a win-win for everybody but PruDE.

what does the back of this building look like?
If you look at that StreetEasy building page you see different numbers for each loft (and, in the case of the 4th floor, different numbers for the same loft, alas):

1. “1,849 sq ft”
2. “1,376 sq ft”
3. “1,472 sq ft”
4. “1,256 sq ft” (and “1,058 sq ft”)
5. (“PH”) “1,057 sq ft”

Each loft is Long-and-Narrow, with windows only front and back and plumbing at multiple points in the floor plan, but the length varies from this very long 1st floor footprint (you can’t even see the entire rear bedrooms in the floor plan, but note how far back they extend from the elevator) to this 4th floor footprint, with just a bathroom behind the elevator. And note how narrow the front of the 1st floor is compared to the 4th floor living room, because of the different lengths of the common stairway. The 3rd floor footprint, in turn, is long enough for a full bedroom and a closet behind the elevator. Obviously, the terrace on the shorter 4th floor is on top of the back of the 3rd floor bedrooms, with the 3rd floor’s rear terrace extending over this 2nd floor footprint, which has room for a bathroom and a closet and a bedroom behind the elevator. As you see from the building photo associated with the Penthouse listing, the 5th floor footprint is a duplex set back from the front of the building.

The buildings opposite this building that front on 21st Street get the benefit of this stepped-back series of terraces, as the building is deepest into the mid-block at ground level, and steps back in big jumps on each of the upper three floors before the two boxes of the penthouse jut back even further. I wonder if it was built with this strange array, or if the extensions were put on in the conversion to residential.

a small discount, perhaps
The 4th floor measurements make it a bit of an effort to comp out what the new owners paid for the 4th floor in comparison to what they paid for the 3rd floor. I am pretty confident that the first 4th floor measurement above is based on the same sponsor measurements as for the other floors, even though “1,058 sq ft” is probably more accurate for the interior space. Using that (presumed) standard approach, the 3rd floor owners paid $1,141/ft in 2008, compared to the original 4th floor owners having paid $1,131/ft. Those 3rd floor owners, in turn, became owners of the 4th floor two weeks ago at only $1,035/ft. (All these calculations are unadjusted for the [roughly equal] terraces.)

Is the overall Manhattan residential real estate market down 9% from late 2007? (The 4th floor sponsor sale contracts that closed in 2008 were signed in September 2007.) I would say probably not. (See my September 27, 2011, is the Manhattan loft market back to (up to) 2007? 61 repeat sales say “probably”, “a bit”, for a hint as to why.)

not all neighbors treat their neighbors that well
Looks to me that the new owners of a to-be-combined duplex did pretty well for themselves (almost doubled their space while lowering their average cost, without having to move), while the 4th floor sellers who couldn’t sell last year at $1.45mm “saved” 5% by selling privately for $1.3mm. Not such a one-sided transaction, compared to some we have seen.

More often, it is obvious that the seller really needs to sell and the buyer next door / upstairs / downstairs swoops in for a deal; or the opposite happens, when a buyer really needs more space and makes a can’t-refuse offer on the unique adjoining loft. I collected examples of each in my August 23, 8 Warren Street loft buyer completes 2nd floor set at record prices, which dealt directly with an opportunistic seller. That seller got a building record price after going on the public market, but not all opportunistic sellers have to do that. And some opportunistic buyers taek advantage of … err … motivated sellers nearby.

Keep your eye out for the Queer Eye in this excerpt from that August 23 post, which has a compilation of other neighbor-on-neighbor transactions:

I last touched on this in my February 14, did neighbor overpay for 381 Broome Street mini-loft due to light, or was it extortion?, where I collected a few other candidates and offered another (sigh) Note To Self …:

Unless someone produces a photo, I have to believe that the penthouse owners at 381 Broome Street willingly overpaid for #6F, for them the most unique piece of real estate in Manhattan, whose location location location could not be beat.

But I do wonder in a case like this (obvious over-payment) how hard a bargain the seller drove, or whether the buyers started at a simple can’t-refuse number. As I said up top, this phenomenon happens in different ways.

In my December 14, 2011, private sale of 150 Nassau Street loft with high-floor premium or neighborly extortion, I eventually concluded that the upstairs neighbor had not really overpaid. The Manhattan Loft Guy tag “extortion” has been applied to neighbor-to-neighbor sales since late 2010, and this collection includes 6 such examples, from Flatiron, Cheslea and Tribeca. I should edit this November 9, 2010, another neighbor extorted, as Queer Eye tires of "Soho", leaves 505 Greenwich Street loft for Chelsea, because that Queer Eye guy definitely squeezed by his neighbor. That post linked to another example, in my November 1, 2010, no listing, but VERY motivated buyer for O’Neill loft at 655 Sixth Avenue greases a move to Tribeca.

Note to self: collect all such posts (one day).

That Note to self … is still operative. (Sigh.)

© Sandy Mattingly 2012