price discovery can be hard, even for pros, as at 738 Broadway

marked down from $6 million!

The “2,396 sq ft” Manhattan loft on the 2nd floor at 738 Broadway (the Broadway McKenna Building) in the most NYU-ish stretch of Noho that sold for $3.85mm at Christmas started life as a $6mm listing. Of course it made a few stops on the journey from $6mm to $3.85mm, which proves that the sellers seriously misapprehended The Market. What is most interesting (to me) is that, if any sellers can be said to have the greatest motivation and resources to correctly suss out how a listing will do, those sellers are developers, and the money folks who love (and lend to) them.

You know all that press you’ve been reading about the new condo development craze, with the new stuff flying off the shelves because [low inventory]? It is not a universally enforceable law of nature, apparently. There’s still that other law of nature: correctly priced lofts sell quickly and (even in a Seller’s Market) lofts that are priced too high will linger:

Jan 14, 2014 new to market $6mm
Feb 12 $5.25mm
May 27 change firms $4.995mm
Sept 9 hiatus
Oct 3 back on market $3.995mm
Nov 5 contract
Dec 23 sold $3.85mm

That’s nine months of active marketing, four asking prices, and (my favorite counting stat) a sale 36% off the original asking price. That’s not supposed to happen to (well advised) civilians, yet it happened to this professional seller.

Of course I don’t know a thing about the financing, but it is reasonable to assume that neither the developer nor any lenders (if there were lenders) were happy to sell an asset they thought was worth $6mm at a 36% discount. Indeed, if this turned out to be a profitable venture for the developer, there must have been an awful lot of profit built into the original pro forma.

no rookies here

While the seller is an eponymous LLC (“The Broadway McKenna Building, LLC”), the notice address in the deed when this building was bought (way back in 2005, for $8.2mm) indicates this is a boutique project of a well-known developer, “Chetrit Group, LLC”. Indeed, the project is commonly referred to as a Joseph Chetrit project; The Real Deal article when sales launched a year ago, here, the Daily News about the technology and finishes last February, here. In other words, folks who have the greatest motivation and resources to correctly suss out how a listing will do.

Of course I have no inside information about the project, but this has the look of a labor of love for a developer. Note the gap between the purchase of the building and first marketing: February 24, 2005 to January 14, 2014. That’s a long time to have parked the $8.2mm purchase, and a very long time to figure out what to do with a 4-story building. And note the finishes, some decidedly not loft-y.

Of course they went ultra deluxe, with more marble than you see in most lofts, that curiously babbled fireplace (“focal point centers around a stunning floor to ceiling gas fireplace clad in white Calcutta marble accentuated by custom LED cove lighting above”; a focal point that centers??), and a master bath with a curiously “overflowing” tub that is described in a bit more detail in that Daily News puff piece above.

Almost outshining the fireplace is the master bath. It’s lined in the same Calcutta marble and features a TV hidden behind the mirror and an “overflow” tub. The water pours out of the ceiling, fills the tub and then goes over the sides into the drain.

(That has to be more impressive in real life than in prose.) The overall feel is more New Condo than classic loft, at least to this loft snob.

dropped ceilings, and even that huge fireplace will have trouble warming up this cold space

The layout is total classic loft, a Long-and-Narrow with (of course) plumbing in the middle, two bedrooms splitting the rear wall, windows only front and back, and (as laid out) no place to put even an interior third bedroom.

“2,396 sq ft” with 12 foot ceilings implies great volume, but this is forever a 2-bedroom space, period

And those back bedrooms epitomize one classic feature of a classic Long-and-Narrow loft: there’s no view and little light back there, as you infer from the sheers with which the loft bedrooms are staged. (Listing pix #5 and #6; you can find them easily enough.)

The 2005-era pitch was easy enough to back out: at a time when a huge number of new developments were being penciled out, designed, then actually built, 738 Broadway would be one of the few in Noho, and the only one along Broadway. (Gwathmey Siegel’s “Astor Place” aka “Sculpture For Living” was about to be finished, breaking new ground [so to speak] in luxury condominium developments just up and around the corner from 738 Broadway.)

I have to wonder what the hell was going on from 2005 until 2014…

that sound you hear? the accountants weeping

And if each loft here will see a similar discount ….

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