if gut renovation loft at 33 Greene Street went for $1,188/ft the roof rights were free

playing with numbers
What is your guess as to what a $4mm buyer would pay to gut renovate a ”3,200 sq ft” classic Soho loft? Let’s say a minimum of $250/ft for ballpark purposes, so figure that the recent buyer of that “sun-blasted” “architect ready” Manhattan loft #5W at 33 Greene Street at the corner of Grand Street in lower Soho is planning to pay another $800,000 (probably more) after spending $3.8mm to buy it. That’s $1,188/ft in pre-gutted condition to get to over $1,400/ft once built out. Did I mention (yes: re-read the title) that there’s a roof deck thrown in at this price? That’s “1,800 sq ft” of private space to be (minimally?) built out, as well.

Let’s look at what that buyer got, before considering what the adjusted price per foot could be, and before considering what the listing info does not tell you about the loft, but that you would find out from the sidewalk, alas.

the demo work is assumed
The listing does not give you the option of using the loft as-is, telling you that there are 3 bedrooms and 2 baths now, but giving you a floor plan as if all demolition had been done, indicating 3 “plumbing locations”, so it does not matter that I cannot figure out where that kitchen is in the single interior photo on the broker website. The numbers are impressive: a south wall of 66 feet that is more window than wall, high ceilings (15’ in one set of broker babble, 12’-14’ on the other babble, and 13’3” on the floor plan, alas), 3 exposures, 6 columns, 1 skylight, and, of course, “3,200 sq ft” interior and “1,800 sq ft” of dedicated roof rights.

The marketing campaign for this build-it-yourself loft had a hiccup, but no one need feel sorry for the seller:

Mar 29 new to market $3.995mm
May 11 contract
June 19 back on market $4.15mm
Sept 26 contract
Nov 20 sold $3.8mm

Yes, it took 8 months to get it finally done, but the sales price was 95% of the first ask. (I would guess from the price increase that the first contract was closer to the first ask.) Before adjusting for the roof rights, the market valued this demolition opportunity toward the bottom of central Soho (corner of Grand Street) at $1,188/ft. While this location is more prime than on the other side of Grand, it is not as prime a Soho block as several that are further north.

Yet that $1,188/ft is higher than all but 10 of the 25 other November loft sales (so far) for which there is a $/ft calculation on the Master List of Manhattan Lofts Sold Since November 2008, and only 18 of 50 October loft sales are more than $100/ft more valuable.

comping without complications (don’t take these to the bank)
I don’t have the same-building comps to permit the best simple way to value the interior space of this loft, but the bottom end of the Miller-riffing rubric for allocating value between indoor and outdoor space is simple enough for present purposes: assume the “1,800 sq ft” of roof rights are worth only 25% of the interior on a $/ft basis, in part because there is no direct access (you’re going to have to take the building stairs or build your own) and in part because the roof is more than 50% of the interior.

At that reasonable but modest value, the adjusted ballpark value of the interior of loft #5W falls to $1,041/ft, still well above the similar opportunity to build out the smaller (“2,300 sq ft”) Manhattan loft on the 5th floor at 114 Mercer Street (sold at $936/ft on November 20), and right at the level of the smaller (“2,200 sq ft”) Manhattan loft #3 at 5 Great Jones Street (sold at $1,052/ft on October 5). If you could do that gut renovation to as high a standard as the “meticulous” renovation of the “3,000 sq ft” Manhattan loft #6D at 284 Lafayette Street, you’d end up with a loft that cost about what that beauty sold for on November 15 ($1,433/ft).

did they do the diligence that was due?
One interesting thing about the broker babble is that the loft is described not as having, for example, a private roof deck, but as having “1800 SF of Roof Deck Rights. Call for details”.

I assume that the buyers were told whatever the agents knew about those “rights”; I wonder if the buyers’ lawyer got to the bottom of the reason that the New York City Buildings Department disapproved one application to use those rights to build on the roof. That there was one failed attempt to exploit roof rights is clear from this DoB record reflecting a May 2009 application and July 2011 disapproval. I haven’t spent the time with these records (or, obviously, had access to the seller and the managing agent) so I don’t know if the “roof rights” are limited to decking by this administrative action, or if the ability to still build something on the roof (just not that particular plan) still exists.

I really hope the buyers figured that out before they bought. That seems to be important.

© Sandy Mattingly 2012

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