is loft micro-market at 722 Broadway irrational? 3 very different prices can be explained

comping is hard
When the Manhattan loft on the 5th floor at 722 Broadway sold on January 14 for $1.575mm, it was the third loft in this 9-unit building to trade within 5 months. All 3 are said to be “2,200 sq ft”, all 3 obviously share the same market … errr … limitations from being in a small, old (1982 conversion), no frills (no amenities other than basement storage) coop, on that super block that runs the east side of Broadway from 4th Street to Astor Place. The clearing prices for the other two lofts bracket that of the 5th floor: the 7th floor sold for $1.35mm on September 8, and the 3rd floor on August 24 for $1.71mm.

As usual, there is an explanation rooted in differences in condition, but note the scale of the difference in a concentrated (5 month) time frame: the 3rd floor sold at a 27% premium to the 7th floor, while the 5th floor sold at ‘only’ a 17% premium to the low-achieving-higher-floor. Note the overlap between the prior two marketing periods, and the similar pricing strategies for 3 rather different lofts (omitting 2009 efforts):

Since the recent sale was the 5th floor, let’s start talking about condition there.

The broker babble through which the 5th floor was marketed is awfully muted. The bragging is about the skeleton (11+ foot ceilings, hardwood floors, 11 over-sized windows, brick walls, 3 exposures), with no mention of finishes. Usually when you see a sentence beginning like “Currently configured as …” you expect to see something about “potential” or “create your dream”; here, I think that is implied, as the layout strikes me as very primitive. The floor plan is unusual for a Long-and-Narrow as the bedrooms are all lined up on the middle of one long side, with the plumbing on the opposite long wall on both sides of the common stairwell. More primitive, none of the 3 bedrooms are en suite, and range only from a small 95 sq ft to a cozy 130 sq ft.

The 3rd floor is the beauty of the bunch. “Newly renovated”, “gourmet chef’s kitchen” (better than a regular chef’s kitchen I guess), new 5-zone ventilation system, double-pane City Windows, heated floors with the plumbing, digital and sound wiring. Same footprint, obviously, but this floor plan is more typical of a Long-and-Narrow, with the (large!) master suite in the back, with windowed guest rooms on one long side with an open dining area between them.

The babble for the 7th floor is explicitly about the potential (“the possibilities of change are as endless as the size”), which is more understandable with the listing headline that is missing from StreetEasy but is still on the Bellmarc site: “Huge Village Loft Estate Sale”. Consistent with a listing that invites a re-do, there is no floor plan for this loft. Consistent with a loft that was ‘finished’ in the early 1980s, note the glass brick in the 3rd photo.

the rational market at 722 Broadway
To review, we have one low-floor loft that is done, and sold in August for $777/ft; one that was marketed as though livable but could be upgraded, that sold 4 weeks ago for $716/ft; and a loft in (likely) 30 year old estate condition that sold in September for $614/ft. The sequence of values, once condition is taken into account, is quite rational. If anything, however, the scale of difference seems off, to the low side.

The renovation work required to make the 7th floor like the 3rd floor would be seem to be more expensive than $163/ft, though that is where The Market valued them when they were directly competing listings last Spring. Again, I could imagine that the 5th floor was in better (but still primitive) condition than the 7th floor, in which case the spread of only $61/ft with the 3rd floor does not compute.

Did I mention that comping is hard? Isn’t it interesting that there is such variety in a small (9-unit) building?

super block = micro nabe
Long-time Manhattan Loft Guy readers know how much of a loft snob I am; that I am prone to over-hyping the character difference between “apartments” and ”lofts”;  and that I believe that the loft market is more interesting than the apartment market because of the greater differences of living spaces within a building and on a block, or between one small loft neighborhood and another. Part of this may simply be that because I am more familiar with lofts I perceive granular differences, whereas if I were equally familiar with (say) the Upper East Side I might just as easily perceive value differences in apartments a few (critical) blocks apart. But I know what I know, and what I know leads me to believe that lofts (and loft neighborhoods) are different, dammit!

Take the immediate area around 722 Broadway as an example. While there happens to be rich and fresh comp data within this building, if that were not the case there are real limits to where I would look for comps. In fact, I would probably not want to cross a single street if I could possibly avoid it. Not to step west across Broadway (which is mostly NYU and commercial anyway), not to step across Astor Place to the north (again, mostly commercial for a bit), and not to step south across 4th Street (where there are residential lofts, but that just have a different feel).

Look again at the 3rd floor at 722 Broadway, a “newly renovated” loft with much to brag about. Yet it took 6 months to find a contract at $777/ft. In contrast, the primitive Tribeca loft I hit yesterday that sits right on the Holland Tunnel spillway cleared at $829/ft. Or consider the lofts bearing massive Holland Tunnel-bound traffic at at 477 Broome Street that I hit on February 2, which sold from $1,000/ft to $1,102/ft. Or the white box at 251 West 19 Street that cleared at $847/ft in need of a build-out, which I hit on January 27. I am going to stop after this one, but also consider the total gut job loft on a (ahem) crappy Tribeca corner that sold at 395 Broadway for $1,000/ft, which it hit on January 26. And these are just loft sales that I have hit in the last two weeks!

This super block opposite NYU takes a huge hit in The Market compared to even the less-favored micro-nabes in other loft areas. Did I mention that comping is hard? In compensation, let’s have some fun…

fun facts from the 19th Century, onward!
Of course The Google is my friend! Clicking around the inter-tubes about 722 Broadway (painstakingly) generates a host of data points about activity in the building over time. I am sure there is nothing particularly unusual about this history in a loft bulding, but I am grateful that there are so many data points about commercial activity here, with so much variety.

722 Broadway has been home to

• a new furniture business run by a William Frost in 1851;
• in 1876 a publisher of sheet music;
• in 1884 to a warehouse (“warerooms”) of Decker’s Billiards & Pool (“prices low and terms easy”), per the ad in an issue of Puck (scrolll down to page 268) and New York’s Great Industries, page 226 (“among the patrons of this house are General Grant, the Vanderbilts, the Goelets, and scores of others of our most eminent citizens”);
• in 1918 to the Linecord Suspender Company (#306: “manufacturers of suspenders, belts and garters”);
• in 1930 to Saperstien & Bro., a clothing manufacturer;
• and in 1954 to the Munves Manufacturing Corp., a machine shop.

Among the current owners taking advantage of the live/work rules in this 9-unit building are a clinical social worker and therapist, a casting director, an attorney, some kind of “kool” clothing business, and a charitable foundation serving families in Iran. Until recently, there was a manufacturer of (small?) modems, multiplexers, ethernet converters and transceivers. More prosaically, downstairs there are now exemplars of ubiquitous Manhattan retail: a Blimpies and a Sprint PCS store.

My favorite link, buried way, way deep in The Google’s results, is that there had been a campaign club headquarters at 722 Broadway for the brand-new Republican Party. You think political supporters use “violent rhetoric” nowadays? Here is some real violence, not to mention mere rhetoric (“sundry opprobrious epithets”) from September 25, 1860 (6 weeks before Lincoln’s election):

a deputation of Wide-Awakes … were attending the raising of a Lincoln and Hamlin pole in front of the Republican Central, Campaign Club Head-quarters, No. 722 Broadway. While the Wide-Awakes were drawn up in line on the sidewalk, a number of members of [Democrats] hissed them, and applied sundry opprobrious epithets, and, it is said, made several personal assaults. Gen. WARD gave the order to "charge!" and a general melee ensued. The Republicans drove their opponents into the New-York Hotel, and were themselves in turn driven back, with the loss of a number of their torches.

The Fifteenth Ward Police were promptly on the spot, and arrested a number of the alleged offenders, who were lodged in the station-house.

That is one to quit on, so I will.

© Sandy Mattingly 2011