interesting data point: primitive 5th floor walk-up loft sells at 8 Greene Street

hot off the press
The Manhattan loft on the 5th floor at 8 Greene Street sold on April 29, with a deed filed today(!), and not a very long listing history (to market January 13; in contract February 16), with not a very significant discount from asking price (asked $1.375mm, got $1.3mm). I think it is a fascinating data point, as it has several characteristics that should shrink the buyer pool significantly.

It looks to me like a listing that probably would not have sold at all in the dark months of the Manhattan real estate nuclear winter, or — if it sold — would have been at a much reduced price.

Why pick on a Soho loft described as "authentic", with "charm" and a renovated kitchen?

despite pluses, major minuses

I see three major reasons why most buyers would resist even looking at this one. (a) 5th floor walk-up. (b) "Authentic", yes, but needs work. (c) Location, location, location. Nonetheless, it cleared for $925/ft (using the city’s "1,404 sq ft").

There are probably not enough high-floor walk-ups in prime loft neighborhoods with recent sales to see how big a discount The Market generally applies to these lofts, but the fact is that any buyer will place a real discount on it and many buyers will say the discount is 100%. I mean that many buyers will ignore a 5th floor walk-up because (for them) there is NO price that makes sense. Thus, the Buyer Pool is immediately shallow for these lofts, and a shallow Buyer Pool is a volatile, speculative market to sell into.

Not much reading between the lines is required to see that this loft is a likely ‘project’. Apart from the one bathroom and the closets, there are no walls in the space. There’s a sleeping "area" "anchoring" one end, with an artist’s studio at the other. This is a layout that looks to me like things (closets) got added as needs changed. There is no over-arching plan for this space that would end up with a "walk-in" closet that — but for having a door in an angled wall — would be a rarity among rarities: a windowed closet.

how big is your Project?
buyer is going to put in another bathroom and build some walls. The proposed floor plan for a 3 BR + 2 bath configuration is logical, and does the minimum to change the current layout, while adding a master as the second bath (with window!). But I bet that most architects and owners would use this space differently, with interior "bedroom(s)" to keep that front light for the living room at the east. (Or, if the light is better west, making that the living area and putting 2 new bedrooms east, mid-block, where it may be quieter.)

How much work depends on taste and budget, but the thing about renovation budgets in the New Credit World is that they are paid in cash (i.e., no second home loans to renovate, for now). So the pool of buyers at this price point is more limited than people who can put a standard down payment down, and then have enough assets left over to satisfy banks these days. This pool is shallower because the person who puts down (say) 20% ($260k) needs liquid assets of (say) $150k to minimally build it out (likely, more), with money left over. Other lofts at $1.3mm will look ‘cheaper’ because they need less work, and will be more attractive to a bigger pool of buyers.

mash-up at Greene + Canal + Church
Speaking of quiet (and its implied opposite), this building sits at the bottom of Greene Street and is (I think) the first building north of Canal. So there are trucks, buses and Other Miscellaneous Traffic 24/7 running between the Manhattan Bridge to the Holland Tunnel. And this particular intersection has the potential for gridlock (think: car horns) whenever things get backed up and there are no ‘Brownies’ around. Cars coming up Church Street often try to cross Canal at this angled intersection to go up Greene. Often, they don’t quite make it through the intersection before the light changes. (Then chaos, ensues.)

Traffic and noise aside (hah!), this block / intersection is among the most gritty and un-Soho of Soho blocks. None of that quiet pedestrian traffic or sidewalk cafe life here. No trendy boutiques or art galleries. This block is (to me) a purgatory to be endured between prime Tribeca and prime Soho. But Your Mileage May Vary.

When people talk about The Three Most Important Things In Real Estate Being Location, Location, And Location, they mean it in a positive and negative way. Here’s the flip side to The Best Block in Soho.

is that horse dead yet?
There should be no doubt that I view this listing as presenting major challenges to attracting multiple buyers interested enough to bid (the best way to achieve any premium pricing available in a given market). Or (as is more likely with a listing like this) attracting one very motivated buyer, for whom this is it.

Net-net, I think this loft sale at $925/ft is a pretty strong sale for a loft with a lot of ‘issues’. One further indication that market conditions are much improved of late. (I am not saying that prices are heading up, but that there are more buyers and more sellers finding themselves valuing lofts similarly, and making more deals.)

squaring the feet
The loft is said to be "approximately 1,500 sq ft", which (if the building dimensions given in the listing floor plan are accurate) is a pretty fair approximation: 19’8" x 85′ = 1,679, then deduct something for the stairwell. But maybe those numbers are off, just a tad, as city records for this condo claim "1,404 sq ft". A small point, but one that changes a dollar-per-foot calculation here from $867/ft to $925/ft.

ignoring local comps
In assessing this sale of #5, I noted that the 2nd floor sold in 2007 at a recorded price of $2.425mm. That’s a huge difference from today’s filing of the 5th floor at $1.3mm, a difference that cannot be reconciled by a walk-up adjustment (4 flights up, versus one), or by pre-Peak versus post-Lehman market conditions. Here’s why I decided to ignore it as a comp.

The StreetEasy building page shows that the 2nd floor and the first floor commercial unit sold n the same day, at the same price, to two entities with very similar names. In other words, these look like integrated transactions. The commercial unit sold with basement space, according to Property Shark, and The Shark has the sizes of the two units as 2,897 sq ft (with some cellar) and 1,259 sq ft (I have no idea why the 2nd floor footprint is smaller than the 5th floor).

With all this, I believe that the $1,926/ft "paid" for the 2nd floor condo is an arbitrary figure, part of a single deal in which someone paid $4.85mm for two floors plus some cellar space, until you show me otherwise.

In this context, the 4th floor sale in April 2006 at $1.55mm is a little more relevant as a comp, but ultimately too obscure. There was no real listing for this sale, so I have no idea of its condition and the loft was not exposed to the full market (a circumstance sometimes associated with over-eager or related buyers).

The comp analysis between the 4th floor at $1.55mm in April 2006 and the 5th floor at $1.3mm four years later breaks down without knowing condition. I don’t think that the $250,000 difference is explained by the four year gap and the one higher floor, in other words. But I don’t have a principled way to even argue about it.

© Sandy Mattingly 2010

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