why did 48 Great Jones Street 1-bedroom loft sell 18% above Peak value?

“masterful renovation” does not explain
The story line for the recent sale of the “2,564 sq ft” Manhattan loft #6R at 48 Great Jones Street seems pretty obvious from the broker babble and the price history. The loft has been “[m]asterfully renovated with no expense spared” and sold on $3.5mm on March 15, after having sold at The Peak in the overall Manhattan residential real estate market, on January 3, 2008, for (only) $2.96mm. You might wonder if the cost of the masterful renovation exceeded the gain from 2008, but you would assume that such a large gain over a Peak sale is due to the difference in condition of the loft, Then v. Now, and not to a change in market conditions. The logic is impeccable, but the real world is more complicated, because when this loft sold in 2008 it was … (wait for it) … “[m]asterfully renovated with no expense spared”.

In fact, I am going to spoil the punchline to get to the dilemma: when this loft sold in January 2008 at $2.96mm it was not only “[m]asterfully renovated with no expense spared”, it was in essentially the same condition as when it just sold for $3.5mm. (I say “essentially the same condition” out of an abundance of caution: I am reliably informed that the recent listing photos portray the same finishes and condition as when it sold in 2008; if there are any differences at all they are (a) not visible in the photos and (b) not the subject of any broker babble.)

For reasons unknown, the listing leading to that January 2008 sale is not available StreetEasy, but our data-base confirms that the loft was fully exposed to the market before selling then for $2.96mm.

fans of the efficient market theory are not amused
Let’s beat this horse one more time: without a change in condition, loft #6R gained 18% in market value from The Peak of the overall Manhattan residential real estate market until now.

In the absence of a reasonable explanation, I have to label this sale a simple (dramatic) outlier. Wasn’t it just two days ago that I said “[t]he fickle market does as the fickle market does”? Of course it was, in my April 11, motivated seller sells classic Soho walk-up loft barely above 2005 at 477 Broome Street. I have (can conceive of) 3 possible “explanations”, none of which is particularly likely or supportable with data.   

• the power of aspirational pricing, or the Field Of Dreams theory (simply claiming a high price can set expectations, especially for a spectacular loft that has no obvious peer in the market), as discussed in my July 15, 2008, 130 West 17 Street #9S went for it + got it, and in my July 7, 2011, why did Chelsea Mercantile loft sell within 3% of The Peak?, and most recently in my March 7, 141 West 17 Street gets huge premium for sparing no expense
• the power of secrecy (with that lacuna on StreetEasy, portions of The Market might not have known in 2011 the condition of the loft when it sold at $2.96mm in 2008)
• the power of micro-nabe change (is Great Jones the new “it” street in Noho, after the Bond Street Boom chronicled in my November 1, 2007, re-setting values at 57 Bond / there goes the neighborhood, as the new developments there set a high tide that raised all boats before 2008)

I don’t love any of these theories, so I am leaning toward The Fickle Market. They are each possible, just not likely; but one is more likely than the other two (down below).

marketing sequences, and text
The recent listing history of #6R is odd, as it is not clear that the famous PruDE team that marketed the loft actually found the buyer, or whether this was a private deal that happened to hit the last ask:

(*StreetEasy says “listing sold” August 27, which sometimes really means it went into contract then, but the inter-firm data-base says the listing expired August 29, and the eventual sale is not associated with the PruDE listing.)

The campaign was successful (the loft sold at the ask, at a [ahem] ridiculous premium to the prior sale0; it may not have been remunerative for any REBNY members, however.

The (missing) campaign in 2007 from the inter-firm data-base shows the loft was long exposed to the market approaching The Peak, and that even that market insisted on a discount off the first ask, while offering a premium to the last ask:

Indulge me for a(nother) moment, as I quote from the broker babble from the recent sale, and that of the 2008 sale (again, taken from the inter-firm data-base):

ONE BEDROOM PLUS A SECOND INTERIOR BEDROOM. Masterfully renovated with no expense spared, this gorgeous triple-mint loft offers approximately 2600SF of unique luxury living in the historical and most vibrant neighborhood of NoHo. This chic property features a sleek living and dining area complete with a 55’ Samsung plasma TV, elaborate entertainment center with B&W surround-sound speakers; a magnificent open chefs kitchen featuring White Carrera marble counter tops, Viking refrigerator, Sub Zero mini refrigerator, Sub Zero wine storage and Marvel ice machine, Wolf range w/Faber hood, Thermador oven, Fisher Paykel dishwasher, custom fine dark Walnut wood cabinetry and large breakfast island. Separate laundry room with Tromm W/D. Tastefully designed custom slate baths and California style custom Walnut closets and doors; 11ft high ceils, Brazilian walnut hardwood floors, exposed brick walls and abundant light from the 11 huge, double Thermopane windows. Grand master suite and bath features unique floor lighting throughout, huge oversize 8 jet Jacuzzi tub with 19? flat screen TV and separate rain shower stall. This entire property has been fitted with elaborate easy touch lighting.

That 2011 prose is a pretty sincere form of flattery of this, from 2007:

Masterfully renovated with no expense spared, this gorgeous triple-mint loft offers approximately 2600 square feet of unique luxury living in the historical and most vibrant neighborhood of NoHo. This chic property features a sleek living and dining area complete with a 55 Sony plasma TV, elaborate entertainment center with B&W surround-sound speakers and sound proof walls; a magnificent open chefs kitchen featuring White Carrera marble counter tops, Viking refrigerator, Sub Zero mini refrigerator, Sub Zero wine storage and Marvel ice machine, Wolf range with Faber hood, Thermador oven, Fisher Paykel dishwasher, custom fine dark Walnut wood cabinetry and large breakfast island. Separate laundry room with Tromm washer/dryer.

Tastefully designed custom slate baths and California style custom Walnut closets and doors; high 11ft ceilings, Brazilian walnut hardwood floors, exposed brick walls and abundant light from the 11 huge, double Thermopane windows. Grand master suite and bath features unique floor lighting throughout, huge oversized 8 jet Jacuzzi tub with 19 flat screen TV and separate rain shower stall. This entire property has been fitted with an elaborate easy touch lighting system and remote control air conditioners.

I know it is rude to offer such large block quotes, but here is a short-cut: the only difference I see is that they changed the 2008 Sony plasma television into a 2011 Samsung plasma television. The proper names are still proper and otherwise identical; the materials are the same; 2011 is nearly 2007, verbatim. Sincere flattery, indeed.

how far off the (building) charts?
Compared to itself, the recent loft #6R sale is off the charts, at a premium of 18% over the last sale in the quarter with the highest recorded prices ever in the overall Manhattan residential real estate market.

But it is not so far off the charts in the building, based on the sale of the “2,500 sq ft” #4F on April 22, 2011. I will spare you a block quote, but that loft was in wonderful condition (“[d]istinguished design and an impeccable renovation”, “meticulous attention to detail and materials”). When it sold just over a year before The Peak it was a build-your-dream loft, full of potential. Starting with that sale, here is the history of loft #4F:

I hit that sale when it was fresh, in my May 1, 2011, was Great Jones Street loft a million dollar renovation?, in which I wondered how much value between the sales was added by the renovation and how much by The Market. (Hint: if they spent under $400/ft, they banked some money; if not, not.)

Here we have an example of a pre-Peak sale of a needs-everything loft that resold a year ago (essentially the same overall market conditions as today) at a 50% premium (gross). That hardly seems outlandish, right?

Yet #6R just sold at an 18% premium to itself at Peak, but at a much smaller premium to #4F on a dollar per foot basis. (5.3%, with #4F at $1,296/ft, #6R at $1,365/ft.) Maybe it is a micro-nabe thing, and for reasons that I can neither see nor guess, Great Jones Street is undergoing a post-Peak boom. Maybe.

Or maybe it is just a fickle darn market.

© Sandy Mattingly 2012