ta da! Silk Building penthouse loft on East 4 Street sells at 10% premium to 2008

I can’t quit her
I am having trouble getting that penthouse loft sale at 144 West 18 Street with all those impressive numbers out of my mind (August 29, 4 terraces = 1 bidding war for penthouse loft at 144 West 18 Street). Noting that the Manhattan loft #1104 at 4 East 14 Street (the storied Silk Building) just sold with one terrace and at a premium over a 2008 sale won’t help. (Sigh.)

Here is the most impressive number about this sale: when #1104 just sold, it closed on August 15 for $3.4mm, but you need to know (in order to be impressed) that it last sold on November 19, 2008 at $3.1mm, after having been offered for sale that time from October 2007 until the contract in September 2008 (within two weeks of the Lehman bankruptcy). More about that Peak marketing campaign in a bit, but go back to these numbers:

• $3,400,000
• $3,100,000

August 15, 2011 beats November 19, 2008. By 9.7%. That wouldn’t sound more impressive if we called it a 10% gain.

The loft is one of the Silk penthouses, “2,210 (triplexed) sq ft” of interior, with another “579 sq ft” of terrace off of the master suite on the top-most level. Do residents really only use the (main) entrance to the loft, on the lower level which has just a bedroom, bathroom and stairs up to the living area??

It did not last long, this time: to market on May 13 at $3.575mm; in contract by June 26.

overshooting The Peak
This does not warrant a Note To Self, as I am never going to do it, but it would be interesting to collect lofts that did not sell at The Peak — the most active residential real estate market in Manhattan, ever — because they were over-priced. This loft has to be in that collection, with this listing history:

That is a million dollar discount from first asking price. But put on your retrospective spectacles (through which you see the recent close at $3.4mm) and look again closely at the January 31, 2008 asking price. Why didn’t that generate a bid, if the 2011 value was $3.4mm? The fact that the seller dropped again in May 2008 to $3.25mm indicates some flexibility, no?

The buyer pool was starting to thin after the First Quarter of 2008, but transaction volume (and pricing) did not fall of a cliff until after this loft went into contract. Perhaps the impossible-to-prove answer is that this loft was going to sell, if at all, with a contract in the last quarter of 2007 and that $4.1mm was just too rich for that market (even if something like $3.6mm might have been).

Here is another part of the Silk penthouse loft #1104 history that makes this even more confusing: that 2008 seller at $3.1mm had been a September 2003 buyer. You’d think the value of the loft from late 2003 into 2008 (four years of serious froth) would have appreciated more than … say … 15%, or even 20%. (I would.) Yet I would be wrong, as the September 10, 2003 clearing price was $2,725,000, for a run-up in those 4.5 frothy years of only 13.8%.

comping is hard
That November 2008 price for loft #1104 of only $3.1mm this looks odd from two directions: from the recent sale at $3.4mm and from the ancient sale at $2,725,000. (Note to self: look for other lofts that sold in 2011 and 2003 to see how they compare to the #1104 gain of 25%.) Apparently the recent sellers considered the $3.1mm 2008 sale as to be non-Peak, in the sense that they should not use it as an upper limit to market value in 2011. They did, after all, start a very successful campaign at $3.575mm.

If they looked at the last two public sales of residential lofts in the Silk Building, they’d have seen smaller lofts on lower floors sell at $1,156/ft in July (#821) and $1,106/ft in April (#803). They would also have seen that the last penthouse unit to sell was #1108, which is comparable in size to #1104 at “2,007 sq ft” but has many more windows (as a corner loft), a more efficient layout (IMO) and a larger terrace. Indeed, I would argue that the #1108 layout is much better than that of #1104 especially as to the integration of the terrace and a top-level media room, instead of the terrace being off the top-level master suite and sitting room in #1104.

The Market agrees with me, as #1108 sold on September 6, 2010 at the asking price of $4.695mm, a huge premium (over #1104 two weeks ago) for the windows, an extra bedroom, a more efficient layout, larger terrace, and a better inside-outside integration for entertaining. That’s a nearly 40% premium, in fact.

Net-net, the #1104 sellers and their agents interpreted the comps correctly, getting a contract within 6 weeks at a bare 5% discount from ask. Props and more props. Especially for going for the moon over the November 2008 purchase at $3.1mm. Buy low, sell high, right? Right!

© Sandy Mattingly 2011