Soho gut job for $762/ft, as 81 Grand Street loft sells after 14 months, 5 price drops

did I mention that comping is hard?
This one hurts. The “1,575 sq ft” Manhattan loft on the 3rd floor at 81 Grand Street sold on January 17 at $1.2mm, apparently in line with the sale of the 4th floor in August at $1.25mm. The 4th floor was sold directly by the owner; the sale is in our data-base as “entered for comp”, without any of the photos, description or floor plan, but the StreetEasy listing is still up. Before snickering at me sometimes comping is not so hard, you should know that there is one wrinkle here. And one monkey wrench.

The wrinkle is that there is no elevator, so the usual higher-floor-premium is reversed: all other things being equal, the higher you walk the less you should pay. (Suggesting that the $50,000 spread between these two lofts is reversed.)

The monkey wrench is big: the 4th floor was in top condition; the 3rd floor in bottom. That 4th floor civilian mimiced good broker babble pretty well:

Mint renovation maintaining period details: Antique floors, 11 ft White brick walls, Tall tin ceilings, Large windows, Doors from around the globe, Mansard window transom. Large and luxurious limestone bathroom. New Kitchen: Viking stove, Liebherr fridge, Bosch dishwasher, Marble countertops and backsplash. Plenty of storage, including 2 large walk in closets. The unit is flooded with light from North and South exposures

The 3rd floor babble was professionally redundant:

Perfect opportunity for the loft of your dreams. … This is a chance to design the perfect SoHo loft. It is not everyday that a blank slate such as this is available and at such a great value, it only needs someone who wants to make it their own. Approx 1575+/- Sq Ft, 11′ ceilings and large windows facing north and south that let in all the light. Currently one bathroom and the rest is open space. The possibilities are limitless. … This loft is perfect for the visionary looking for an authentic piece of property in this quiet and charming part of SoHo.

The 3rd floor babble certainly gives you the idea, but seeing it in person (as I did) made it plain that this “opportunity”, “dream”, “blank slate”, “open space” with “limitless” possibilities could only be realized after taking it down to the floors and ceiling and stripping the walls, and (probably) upgrading the electrical and replacing the windows. G. U. T.

Assume the market spread for an extra flight of stairs is $25,000 (remember that you get better light up there). Someone just paid $1.2mm for the opportunity to realize their dreams (etc, etc) and is probably planning to pay at least $300,000 more for the privilege (using $200/ft as a ballpark, as proposed in the comments to my December 10, 2010, Dec. 10, 2007, need renovation stories / a reader writes for help). Someone else paid $1.25mm for a loft one flight up in already mint condition. (Only one bathroom, but this is mere detail.)

Did I mention that comping is hard?

buy low, sell high
The 4th floor seller bought the loft in October 2009, before doing some work. Comparing the 2009 floor plan to the 2011 floor plan, the renovation was pretty simple: take down the walls of the former bedroom to make the entire rear of the loft the bedroom and move the kitchen (that had been in the rear, with a unwanted commercial Vulcan stove) a bit forward and on the opposite long wall. That’s it. The bathroom and fittings are the same shape in the same location, as is the washer-dryer closet and the other closet.

“Authentic architectural details” (floors, walls, ceilings, doors, windows) are both before and after. Not a gut job, but a new kitchen, some demo and some carpentry on top of floors (and within walls and ceilings) that were already in good shape. That August 2011 seller at $1.25mm was the buyer in September 2009 at $1.01mm. Nicely played, sir; nicely played.

That October 2009 seller not only missed The Peak, but came to market at about the worst possible time to commence a residential real estate marketing campaign in Manhattan:

Chances are, the 2009-buyers-at-$1.01mm+2011-sellers-at $1.25mm put in a good deal less than $240,000 in the intervening two years.

The recent 3rd floor buyers will start from a higher purchase price and will have a much higher renovation bill to pay than the recently departed neighbors up the stairs.

which is the outlier?
I hope that it is obvious that I am convinced that these two sales cannot be reconciled factually. Yet they are both facts.

If The Market value of a “1,575 sq ft” walk-up gut job just off Greene Street in prime Soho is really $762/ft (as implied by the 3rd floor last month), then the 4th floor buyer got a very good deal in August for a mint-y loft at $794/ft. If the 4th floor was … errr … correct, then the 3rd floor people overpaid. A lot. I’d be inclined to think that the $762/ft for a gut is appropriate, except that the 2009 (brrr!) price for the 4th floor in decent condition was only $641/ft. Even for a chilly sale, that is a big adjustment to make. Even if that April 2009 contract was the bottom of the trough….

Did I mention that comping is hard? I know I mentioned that this one hurt. It hurt because I had a looking-for-gut buyer who (like me) got fooled by the 4th floor sale in August. We did not figure the 3rd floor to go near $1.2mm, though he was working on his (to be lower, given the price history) bid when the winning bid was accepted.

This one got away, higher than expected. (I guess it hurt twice.) Sigh.

© Sandy Mattingly 2012