higher floor, higher price: artist loft at 81 Grand Street sells high, 4 flights up

new kitchen, though
It is hard to tell from the broker babble exactly how much renovation would be needed, given the condition of the “classic” Manhattan loft that just sold on the 5th floor at 81 Grand Street. New kitchen aside, they were marketing bones here, not skin:

Imagine a classic Soho loft and it’s all here: top floor with 2 amazing skylights, original floors, exposed brick, and 10 foot high ceilings in this sunny floor-through walk-up. The expansive size (approx 1400 sq ft) is configured as a one bedroom with a spacious open plan living room, but could easily be a two or three bedroom

The prior listing adds the detail that the bathroom is “luxurious [and] renovated”, while going beyond “classic” to claim “artist” status:

a Gracious, Spacious Top Floor Artist’s Walk Up Loft in Prime Soho. Upon entering this "Classic", featuring 10 foot ceilings, you are greeted by the light from 2 large skylights ( 6’x5’ & 6’x4’) & welcomed by the warmth of the original exposed brick & original hardwood floors. … Open Plan Layout with updated Kitchen, Home Office/Guest Room, Artists Studio, & Super Sunny Master Bedroom with a walk in closet

Reading between the lines, the plumbing rooms are new, the rest is “classic” in the hasn’t-been-updated-in-years sense of classic. Certainly, there is no mention of mints. So this listing history is evidence of success, especially considering there is no elevator to take you to this 5th floor classic Soho loft:

Does this sequence remind you of any particular listing history? How about the one from yesterday, in my April 30, Flower District loft at 133 West 28 Street sells at small discount after 11 months, 2 firms, only a $5,000 drop, where the sequence for that Chelsea loft was a little shorter (11 months in total, not the 14 months here) and more exciting (a failed contract on that one), but also involved a change in firms but no (significant) change in price. Here, the deal got done at an even lower discount than yesterday (5% vs. 8% off the ask yesterday).

Of course I wonder why it took 12 months to cut a deal with a 5% discount. And, of course, I wonder what lead to the change in firms but not a change in price. Just like yesterday.

a deal at $950/ft, or at $844/ft?
This 5th floor classic was marketed as “approx 1,400 sq ft”; at that size the clearing price of $1.33mm comes to $950/ft. Among other comps, that price-per-foot puts this loft

• well ahead of the needs-a-gut loft not too far away that I hit in my April 16, artist loft clears at $742/ft in south Soho, 307 West Broadway
• ahead of the photography-studio-with-new-kitchen-and-bath that I hit in my April 24, offered with permission to dream, 5 East 16 Street photographer’s loft sells at $862/ft, most likely, but that may simply be a neighborhood premium for “prime Soho” over Union Square east
• even ahead of the smaller primitive loft in upper Tribeca that I hit in my March 29, primitive loft at 474 Greenwich Street sells at $908/ft
• behind the smaller prime Tribeca loft that sold at $1,083/ft that I hit in my April 20, “great bones” 100 Hudson Street loft sells above where it “should” have

The question in the sub-head is because the $/ft for the 5th floor depends, of course, on the feet. (We know the dollars.) There are two other fascinating comps that are very relevant to this sale. They are fascinating because they are in the same building, sold recently, and were in very different conditions from each other. They sold as though the footprint for lofts at 81 Grand Street is “1,575 sq ft” rather than “approx 1,400 sq ft”, so I have them on the Master List of Manhattan Lofts Sold Since November 2008 at $762/ft and $794/ft, but at “approx 1,400 sq ft” they would be $857/ft and $893/ft. Since they sold at $1.2mm and $1.25mm, they are both below the 5th floor sale, regardless of size, but I need to consider what the ‘right’ size is for the 5th floor on the Master List, and going forward….

bad comps
Those two same building sales were in January and last August, so do not need serious adjustment to comp against the 5th floor. I hit the January sale and discussed the August sale in my February 21, Soho gut job for $762/ft, as 81 Grand Street loft sells after 14 months, 5 price drops, where the headline told part of one story. You will see in that post my problem with that pair of loft sales: the 3rd floor sold at $1.2mm needing a total gut job, but the 4th floor had already sold at $1.25mm in mint condition; the spread is too small for a rational market fan to accept.

I am reduced to insulting those sales (“bad comps”) because they don’t work very well compared to the 5th floor. The light might be a bit better up there (especially with the skylights), but it is one flight up from one of these sale (the one in mint condition) and 2 flights up from the other. And the condition of the 5th floor seems to be pretty squarely in the middle of the gut-needing 3rd floor and the mint-y 4th floor.

But the 5th floor loft did not sell that way. It sold at a premium of 11% to the gut-needing 3rd floor (possibly rational, as a direct comparison) and at a 6% premium to the mint-y 4th floor (not rational as a direct comparison, in any world). &^%$*(#) comps! (Pardon my … french.)

a theory I do not love
My lot in life (at least on the blogosphere) is to look at sales when they sell, then trying to back out a theory for why they sold where they did. Reasoning backwards is always awkward, but using data points of actual sales requires hindsight. The fact that I can come up with a theory that ‘explains’ what happened does not mean the theory is an accurate description of the market mechanisms at work.

That navel-gazing is the prelude to the suggestion that the market of potential buyers for the 5th floor may have been persuaded that the 3rd floor sale in January ($1.2mm for the gut) was the more relevant comp than the 4th floor 5 months earlier ($1.25mm for the mints). That rationalization would account for a gap in favor of the 5th floor compared, at the cost of ignoring the 4th floor sale.

Might the actual 5th floor buyer have looked at things this way? Maybe. Or, perhaps that buyer really liked the location, tolerated the condition, and struck the only deal that could be struck with a stubborn seller. The market can only be rational (if at all) on a macro level; the idiosyncratic decisions by individual buyers and individual sellers can be expected to be all over the proverbial map.

a new poster
In this case, I still think that these 3 sales in the same small building within 8 months cannot be rationalized, but I am happy to add a (mental) photo of 81 Grand Street to my (imagined) wall of posters, this one captioned Why Can’t We All Just Get Along?

(sigh)

© Sandy Mattingly 2012