161 Grand Street loft closes up almost 1% over 2007

streets not as mean a bit west
Yesterday’s post (no mistaking the condition of artist loft at 184 Grand Street that sold for $710/ft) hit a very primitive artist’s loft on Grand Street near Mulberry Street, in the immediate Johnny Boy neighborhood of Mean Streets. That coop loft building is typical of one kind of residential re-purposing of a former industrial or warehouse building, in which early residents (probably, former tenants) bought primitive units and, over the course of 30 years, either fixed them up, fully renovated them, or continued to use them in their 1980-era condition. There tends to be a wide range of conditions within the same building, when residential conversion occurs in that way. Potential buyers in such buildings need to do careful diligence, as early shareholders might (or might not) have upgraded building systems (wiring, plumbing, elevators, heat, windows) in the original conversion, or since.

In very specific contrast to that 182 – 184 Grand Street coop, the Manhattan loft building The Solita at 161 Grand Street is typical of 2002-era residential loft conversions in Manhattan: a total building-wide gut and rebuild, then sale as residential condominiums. Assuming the developer did the job right, all systems are top notch and there is relatively little likelihood that in ten years there have been many changes to individual lofts, so all units there are in similar condition, with the same high level of finishes.

Thus, the June 30 sale of the “1,816 sq ft” Manhattan loft #2B at 161 Grand Street at $2.22mm was valued by The Market at $500/ft more than yesterday’s oh-so-authentic (as in primitive) #2E at 182 Grand Street. Loft #2B has some classic loft bones shared with all authentic lofts: in this case the high ceilings are 11’ 6” and the huge windows are 7’ 6”; but the finishes are all top-of-2002’s-art, with central air, a stainless + stone kitchen, surround sound, custom window treatments and a state of the art lighting system.

161 Grand Street is legitimately billed as between Soho and Little Italy, as Little Italy has just about petered out by Centre Street and true Soho lies just a few steps west, across Lafayette. The location (just 2 short blocks west of 184 Grand Street) helps explain some of the $500/ft premium enjoyed by 161 Grand Street, but the main driver of relative value here is the 2002 conversion using high-end finishes. But that is not what first interested me in the #2B sale at $2.22mm.

premium over near-Peak value
Loft #2B sold in the conversion in 2002 for $1.075mm, so it doubled in value since then. But that is not what first interested me in the #2B sale at $2.22mm.

Loft #2B also sold in the oh-so-frothy days of mid-2007 at $2.2mm. Note that that is only two “2s”, not three as in the June 30 sale. The spread is only $20,000, but the fact that the spread favors the current sale over a sale so close to The Peak for the overall Manhattan residential real estate market is intriguing. Sort of a man-takes-small-bite-out-of-dog thing.

Data are data, and there is that premium. But I have to wonder if that 2007 sale (on July 13 that year) was hurt a bit by over-reaching. That full (two-firm) listing history is rather extensive:

(Note that I have omitted the StreetEasy reference to a contract having been signed on August 2, 2006 and the return to market two days later, as that history does not appear in our data-base, as I believe it would if it had actually happened to a Corcoran listing.)

Check that history again. In what was by 2007 the most active residential real estate market ever in Manhattan, #2B took from November 2005 to April 2007 to find a contract. It was clearly over-priced for the 2006 market (data are data) but I really wonder if the 2007 market punished this loft for having been on the market so long.

Perhaps I am committing the logic sin of reasoning backwards, but I started out wondering why this loft sold on June 30 at a (small) premium to the July 13, 2007 sale, because that strikes me as unusual. Maybe (just maybe) that is because the 2007 sale was a little below market.

Or maybe that is because some lofts are legitimately valued in the current market higher than they were legitimately valued in the 2007 market.

Fun stuff!

© Sandy Mattingly 2011