riddle me this / the naked data point at 35 Wooster Street

what does it mean?
I had a WTF? moment when I noticed the December 28 "sale" of the Manhattan loft #4F at 35 Wooster Street, as the clearing price was a most un-lofty $985k for space said to be 2,100 sq ft. The $469/ft price is so low that I immediately doubted that it was a real (arm’s length) transaction, especially as there is no listing associated with this "sale". The price seems too low even if the space was a total wreck or completely raw.

By coincidence, I happened to have had a real (face to face!) conversation with long-time Manhattan Loft Guy reader Lofty last week about the difficulties in interpreting raw sales data in Manhattan, including specifically the problems in figuring out if a transaction is a legitimate indication of The Market because it was at arm’s length, or if it can’t be used as an indication of real value because (for example) it is between two related parties. I had in mind in that conversation the hard-to-interpret resale of a loft at 260 West Broadway (December 2009 clearing price was lower than the March 2005 price) that I addressed in my Welcome Back post of January 4, American Thread loft sells on Groundhog’s Day, again.) In that instance, there have been enough other sales in the building that this one stuck at as perhaps not at arm’s length, and I speculated about a possible explanation.

With 35 Wooster Street (the Lyall House condominium), there have been no sales since 2005 and the three sales in 2005 were at prices between $850/ft and $950/ft. One of those lofts sold in 2005 had been offered for sale in 2008 into 2009 at prices ranging from nearly $1,300/ft to nearly $1,100/ft, but all that did was establish where The Market was not for this building. Again, I just don’t believe that $469/ft is anything but a distraction.

The Google is my friend
The #4F ‘seller" is a corporation that a very quick Google search established is a high-end lighting designer and seller. Fortunately the name is distinctive enough to make the Google search instantly rewarding, unlike if the company had a more generic name, like Superior Lighting or some such. And luckier still, the buyers also have sufficiently uncommon names that a Google search on one of them showed that he is affiliated with … voila! … the same high-end lighting designer and seller that sold him the loft.

Thus, I have absolutely no doubt that the recent sale of #4F at 35 Wooster Street was not only not at arm’s length but is probably part of a larger corporate plan involving this guy’s compensation. (Will he report to the IRS the difference between the purchase price and true market value as compensation?? hmmm….)

The reported sale price in this case was so seemingly ridiculous that this one had little credibility as a true market indicator from the get-go. And the names of the parties were so distinctive that their relationship could easily and quickly be discovered. But what if the not-arm’s-length transaction had been (a) at a price much closer (but still below) true market value, or (b) been between parties whose relationship had been much more difficult to identify?? In that case, the price would merely have been odd. People seeking to interpret it may have been suspicious, but it would have been just a questionable data point.

As they say, sometimes a cigar is just a cigar. Except when it is not. This "sale" was not a "sale".

As if Manhattan real estate were not difficult enough as it is….

© Sandy Mattingly 2010