I hope you’re not tired of the Guess The Budget game for Manhattan loft renovations
I don’t think that I have ever been to a Sunday open house that was as crowded as the one for the pre-renovation “1,350 sq ft” Manhattan loft #7A at 682 Broadway at the corner of Great Jones Street in Noho in February 2013. Everything about it enhanced the feeling of being cramped, from the narrow building foyer leading to the small elevator, to the gatekeeper in that lobby counting people leaving before letting a similar number of people up, to the experience of moving sideways (always sideways!) through the throngs in the relatively narrow unit, to the bottlenecks of people at the doorways to each bedroom, or passing through the dual doorway bathroom. The loft was marketed as “the perfect canvass on which to project ones unique design visions” and there were multiple pairs of people taking notes and photos, discussing just how they would project their own unique design visions onto this blank canvass.
The loft was not quite large enough for my buyer client (though it had terrific flexibility and significant ‘volume’ due to the long line of windows facing north over Great Jones), so he was pleased not to participate in what looked like it would be a vigorous bidding war. The surprise was that the loft went (only) at ask, selling at $1.295mm on June 14, 2013, and taking only 11 days to get into contract.
Fast forward two years. The 2013 buyer completed a “meticulous gut renovation” and the loft was back on the market by May 19, 2015. (Sadly, it appears that the 2013 buyer died, as the 2015 seller was an estate.) This time it took only eight days to find the contract that closed on July 22 at $2.75mm. (Again, a full price deal.)
Let’s defer guessing the renovation budget and consider the work that was done.
The 2013-vintage loft was described as an “authentic artists loft”, but I don’t recall seeing any evidence of recent usage to create art in that space. Perhaps there was an earlier owner (or the 2013 seller, in an earlier life) who used the terrific light at the west end of the loft to create art, but by 2013 the space was more ‘primitive’ in condition and array than it was ‘artist’.
The wiring into which that kitchen appliance is plugged appears pretty primitive, as does the weathered flooring. Of course, the (brick) walls and ceiling hadn’t been painted in … quite a while.
In the 2013 usage, that’s the public living space in the loft pictured above, with the kitchen unseen behind the photographer, and the master bedroom at the far end through that doorway. The old floor plan suggests to me that the ‘master’ was added after the kitchen and bath:
If that far west room was there back in the day, I bet that was the artist workspace. Check the view from those west windows and imagine the quality light at the northwest corner:
what would you do with this space?
As noted, as a blank canvass, the space offers a lot of possibilities. You’ve got nine north windows and the four west, you’ve got at least two plumbing stacks along the south wall, and the 11 foot (barrel vaulted!) ceilings help ameliorate the pinch at the entry (only 12 1/2 feet “wide” at that point).
If I only needed two bedrooms I would do what the 2013 buyer did:
(Note that this floor plan flips north and south, compared to the earlier plan.)
You walk into this space and immediately look west, to the (now open) sunset views at the widest part of the loft. The kitchen separates the public space from private, and the old kitchen wall extends to fitting a laundry room and then two full baths. The entire space is modest in size (“1,350 sq ft”) but the master suite is spacious, the Great Room is both nicely proportioned and relatively large, and even the second bedroom is larger than many secondary rooms.
This is what you can do when you ‘erase the lines and start over’.
Compare the sense of volume in this photo (“After”) to that from almost the same angle above (“Before”):
gaming the renovation possibilities
The “meticulous gut renovation” extended to the floors, to bringing the brick wall back to a natural finish, and to lovely details, of course:
kitchen features solid walnut Henrybuilt cabinetry, Danby marble countertops and center island, Subzero refrigerator and freezer, Wolfe and Miele appliances and a deep farmhouse sink.
… 7 inch wide English oak flooring ….
Both bathrooms … feature custom medicine cabinets, Duravit and Kohler fixtures, Jerusalem pearl raked limestone and hand-painted talavera tile flooring.
The laundry rooms features a Miele washer and dryer….
Other features … [include] the custom bookcase with integrated projector screen ….
There’s no bragging about new wiring or new windows, so I’d guess they didn’t change those loft elements. But from new floor to refinished walls, to new kitchen, new baths and a new laundry room, to other custom features, this is a brand new loft. In order to play Guess The Number, we’ll start with a guess as to renovation budget.
I’m going to go with $400/ft because of the scale (smaller units can cost more than larger lofts with the same utilities, because proportionately more of the money goes into one kitchen and two baths in 1,350 sq ft than in 2,000 sq ft) and the evident quality of materials and work. For “1,350 sq ft” that suggests the 2013 buyer paid a bit more than half a million bucks to create this lovely loft. That would put his Buy & Fix budget around $1.85mm.
For Manhattan Loft Guy personally, the fun of playing Guess The Number is to assess whether a renovation resulted in more value than it cost. (We played recently in my August 25, from $1.15mm in 2012 to $1.975mm, so we have to play Guess The Budget for 161 West 15 Street loft, and my August 14, before ($1.55mm) + after ($2.935mm) gut renovation of Soho penthouse loft at 8 Greene Street; for a recap of prior posts that folds in conventional Real Estate Industrial Complex treatment of renovation Cost v. Resale Values, see my June 26 LinkedIn post, Renovation Cost v. Resale Value: some real Manhattan loft stories.)
To play fair, we have to adjust the 2013 purchase for the intervening change in market values, as the loft would be worth more than $1.295mm now even if it hadn’t been renovated. I’m still not used to the new StreetEasy Manhattan Price Index (and I’m not certain how I feel about it, except that I know that I hate that it is not [yet??] available as a stand-alone resource) but if you scroll down (and choose Manhattan All) you will see that the new Index is up almost 18% from June 2013 to July 2015 (from $835,777 to $983,207). Thus, the current value of the unimproved loft would be just over $1.5mm, if the new dollar-denominated StreetEasy index is as good a proxy for the overall Manhattan residential real estate market as the old Index was.
Now add my guesstimated renovation cost to that, and I conclude that the time-adjusted purchase price and guesstimated renovation budget of $400/ft imply that the 2013 buyer generated significantly more value by renovating than it cost him. ($1.5mm plus $540,000 = $2.04mm)
Even if you assume he spent $600/ft, there is still a great deal of additional implied value in the observed market fact that the loft was worth $2.75mm on July 22, 2015. ($1.5mm plus [$600 times 1,350 ft, or $810,000] = $2.31mm)
Do that again: if the renovation cost $600/ft, the renovation generated more than $1.50 in value for every dollar spent on the renovation, even after adjusting for 25 months of market appreciation. At $400/ft, the ratio is more than $2.30 in value for every dollar spent on the renovation.
Look at the recent sale through another lens. Someone just paid $2,037/ft in a no-frills 15-unit coop.
This comparison startles me: loft #7A is nearly the same size as the “1,322 sq ft” #9E at 252 Seventh Avenue (the full service uber-condo Chelsea Mercantile). StreetEasy knows that the Merc loft sold for $2.85mm on July 31 (or $2,156/ft) but doesn’t know anything else about the loft or the listing. The listing agent’s website thinks #9E is still In Contract, but it does have a photo and some broker babbling about this 2-bedroom+2-bath condo loft.
Nicely played, 682 Broadway renovator; nicely played.