unique buyers make deals with unique sellers, market trends be damned
You can tell pretty easily that the recent sellers of the “3,963 sq ft” Manhattan loft #402 at 500 Greenwich Street were rather disappointed to have sold their oh-so-classic loft for $4.95mm on June 14: the darn thing was brought to market way back in June 2015 … for $6.75mm. Before we look at the full (painful!) listing history, there is one additional data point that even more starkly proves that these sellers were very disappointed: the slightly larger (“4,300 sq ft”) but very similar loft #201 downstairs sold for $5.325mm … nearly four years ago.
At this scale, I’m not sure price per foot is a more useful metric than absolute dollar price, but the loft #201 sale at $1,238/ft in November 2012 would imply a present value for loft #402 currently of about $1,604/ft (the StreetEasy Manhattan Price Index is up 29% in that time, from $762,070 to $987,271 in May 2016), instead of the $1,249/ft that the cold cruel market just provided. (If you ignored the small-at-this-scale size difference between the two lofts, that 29% calendar-based market gain ‘should’ have yielded more than $6.8mm [keep that number in mind …] instead of the $4.95mm actual result.)
Here’s the full (painful!) listing history of loft #402:
|June 2, 2015||new to market||$6.75mm*|
|Jan 28, 2016||$5.25mm|
* remember “more than $6.8mm??
** contract date from the inter-firm database
As wild as that stand-alone history is, the real pain is due to the failure of the 2012 loft #201 sale to set the 2016 market value for loft #402. Let’s look at the charms of loft #402 before trying to deal with that madness.
a brick lover’s paradise, in massive scale
No matter how laid out, a “3,963 sq ft” loft with only two exposures presents challenges. In this case, the loft is nearly square, with windows east and west:
You really need to love brick to spend time in this space:
These two photos amply show the classic loft elements, beyond brick: the beams and columns, the exposed pipes and sprinklers, and that sliding door cover (they call it a “barn door”, which is a funny way to describe a Manhattan loft feature; I’m guessing it is an original fire door). A loft snob might quibble about that (slightly) dropped ceiling (moi??), as that expanse of flat white surface feels oppressive to me, and is especially jarring at the tops of the windows. Your mileage may vary, and if you own it you can do what you want, snobs be damned.
While I’m in a quibbling mood, with all that space, even a 17x13ft kitchen can feel cramped:
Looking at the floor plan, it is possible that the kitchen has to be fitted between that arched opening in the photo and a structural wall (with risers?) behind the frig. I’m not suggesting that this kitchen alignment is a market deficit, but the footprint of loft #201 appears to permit a more impressive kitchen set-up:
was this loft the canary in the luxury market coal mine?
I would go so far as to say that the prices for loft #201 in 2012 and #402 in 2016 are irrational, in the most basic sense of defying sense. I am certain the listing agents had many (painful) conversations with the sellers, trying to understand why loft #402 didn’t sell more quickly, and didn’t sell closer to any of the first three asking prices. Those of us in the market-data world would certainly have been surprised, even (for someone who did not have money in the game) frustrated. To have been party to the deal … unimaginable for me.
Maybe buyers for this much space with this much money really did have more choices in 2016 than in 2012, leading to a competitive deficit for 500 Greenwich Street lofts. (Emphasis on maybe.) Maybe this loft’s experience in 2015 was the beginning of market-softening at the $4 million-plus market, as so many commentators have been commenting on recently. If you saw my February 26, more on the $5 million Manhattan loft market, a year over year look, you saw me struggle with exactly that issue, using the thin data about loft sales at the top of my dollar level of interest, year over year.
One weakness in doing year over year analysis based on what sells is that the mix of what has just sold, compared to what sold 12 months before, presents a host of variable comp factors. And there are not enough data points to inspire much confidence in the conclusions one can (should) draw, especially in a niche market such as Manhattan lofts, or in niche-ier submarkets such as Soho lofts, let alone such niche-ier submarkets sliced thinner by price.
The same-building paired loft sales of #201 in 2012 at $5.325mm and #402 last month at $4.95mm eliminate many of the variable comp factors that complicate a Manhattan loft year-over-year analysis: there is no need to adjustments based on location (unless one feels that this frontier corner of Soho has become marginally more marketable in the last four years), the character of the two lofts is very similar (similarly, the level of finishes), view and light seem not to make material differences here. In other words, #201 is a very good comp for #402, mainly requiring adjustment for time and market conditions, then to now.
I’ve already tipped my hand about that: the StreetEasy Manhattan Price Index is up 29% in that period. By any rational analysis, loft #402 should have sold in 2016 at a more or less proportionately higher value than loft #201 in 2012.
That. Did. Not. Happen.
One can’t (shouldn’t) argue with market facts. (The Market emphatically stated that loft #402 was not worth around $6.25mm last Fall, was not worth around $5.95mm at year-end, was not even worth $5.25mm at the beginning of the year; instead, The Market proved that this loft was worth exactly $4.95mm when it went to contract in February.)
The Market does not care that these market facts are irreconcilable with the market facts involved in the sale of loft #201 four years earlier. Damn The Market!