1 Worth Street loft neighbor bails out neighbor, at a (likely) discount

not an act of charity

Hold on to your hats: this will be a bit of a bouncy ride. As I will explain, it is hard to blame StreetEasy too much for the sheer irrationality of the apparent listing history of the recently sold “1,525 sq ft” Manhattan loft two flights up at #3R at 1 Worth Street. Yes, the loft was listed for sale in 2011 and again in 2012 (the first link, above) at $1.495mm and $1.695mm, and yes, it did just sell on June 26 at $1.26mm, and yes, there is an active listing at $1.795mm on the brokerage firm’s website if you click through the “2012” listing on StreetEasy. The short story that most interests me is that the next-door neighbor bought the loft in pretty primitive condition (“[b]ring your vision and your architect”) after it failed in the public market, at a price well below the former asking prices; the longer story, explained further below, is that he only wanted a piece of it, and will eventually resell the remainder after it is all dressed up.

Start with that 2011 listing: it wasn’t a long effort (just 2 weeks), but may have planted a seed in the mind of the #3F owner. Now look at only the 2012 portion of the longer “effort” on StreetEasy:

• May 31, 2012 new to market $1.695mm
• July 4 $1.495mm

You can’t tell from StreetEasy, but at some point last Summer the sales effort petered out. I can’t tell if it was really off the market, or if it was still active on the web, but the inter-firm data-base shows that 9 open houses were scheduled between June 17 and August 1 last year, then … crickets. Agents don’t always enter the termination dates for exclusive sales agreements, and don’t always update a listing that goes dormant as “temporarily” or “permanently” off the market, but the fact that there was no public activity on the web and no open houses from August 1, 2012 until the June 26, 2013 deed suggests that the #3R seller was not actively marketing in that period.

But the guy next door knew he wanted to sell….

The guy next door has lived in #3F after completing a renovation of an even more primitive loft than #3R, purchased on May 24, 2007 for $1.135mm in this condition:

this is as close to old Tribeca as you will find today. … open beamed ceilings, original columns and hardwood floors. Seven large windows span the South wall to light the entire space and two in the kitchen face North. Currently an untouched one bedroom, its open layout allows for myriad possibilities. This third floor walk-up is an estate property and it looks it. If you have vision and are looking for a challenge this just might be your perfect match

Having done that once, it was not such a big deal to take on (another)

original Tribeca Loft…a limited number of places you can renovate to your taste!! …. Great storage and lots of flexibility for renovation.Bring your vision and your architect

(He already had the “vision”, and an architect.)

If loft #3R really is “1,525 sq ft”, the #3F owner paid $826/ft for the opportunity to use his vision and employ his architect and contractor, after the #3R owner failed to find anyone else to sell it to at $1,111/ft and $980/ft.

If only there were a way to put those three numbers ($826/ft, $1,111/ft and $980/ft) in context ….

a little history

As luck would have it, in my February 11, 1 Worth Street loft sells after renovation / how building values change, I reviewed past sales at 1 Worth Street going back a few years, with the specific angle of how a building with primitive lofts that get upgraded will be treated in subsequent markets.

Despite different market conditions and (slightly) different conditions, these three past sales [March 2008, December 2009, February 2011] line up nicely: $757/ft, $788/ft, and $800/ft. And they line up quite a distance from the new #6R at an adjusted$1,113/ft. A few more resales of renovated lofts at 1 Worth Street and The Market will be more reluctant to automatically apply a market discount to this sunny corner near prime Tribeca. There is at least one neighbor for whom the transition cannot happen soon enough.

That “one neighbor for whom the transition can’t happen soon enough” as of February was, of course, loft #3R. That neighbor did not sell (as noted) at $1,111/ft or $980/ft, and the eventual clearing price of $826/ft does line up nicely with the prior $757/ft, $788/ft, and $800/ft in those three different sets of market conditions.

remember: not an act of charity

Regular readers of Manhattan Loft Guy know that one of the circumstances that fascinates me is when a neighbor sells to a neighbor. I think this was the last time: June 7, extortion or neighborly consideration 505 Greenwich Street loft? you decide, but there have been so many….

• December 29, 2012, love the neighbor on neighbor action, as expensive 55 Hudson Street loft wall should come down soon

• August 23, 2012, 8 Warren Street loft buyer completes 2nd floor set at record prices

• February 14, 2012, did neighbor overpay for 381 Broome Street mini-loft due to light, or was it extortion?

• December 14, 2011, private sale of 150 Nassau Street loft with high-floor premium or neighborly extortion

• December 2, 2010, a tale of 2 neighbors tale at 150 West 26 Street, with 1 hard bargain

• November 9, 2010, another neighbor extorted, as Queer Eye tires of “Soho”, leaves 505 Greenwich Street loft for Chelsea

• November 1, 2010, no listing, but VERY motivated buyer for O’Neill loft at 655 Sixth Avenue greases a move to Tribeca

• January 31, 2010, buying (+ overpaying) next door at 121 West 19 Street loft (Lion’s Head, revisited)

In this case it is hard to know how the $826/ft paid by the #3F owner to buy #3R compares to true market value, as I am leery of the square footage quotes in this building. If pushed (go ahead: make my day!) I would say that the #3F owner got “a deal” for #3R at $826/ft given that this one is only two flights up and is essentially flat to the February 2011 sale at $800/ft, in very different market conditions. Yet the #3R owner tested the market and made the best deal he could with the only buyer willing to buy. Whether or not the buyer “took advantage of” the seller is a moral judgment no outsider can make; price just looks a little lioght to me.

the end of this story is just the middle of another

I am going to add this bit because the StreetEasy sequence is so bizarre, so in need of some explanation, and I happen to have heard one that makes sense. The word on the street is that the #3F owner only wants a little bit of #3R, which is why that brokerage website mentioned above (and the extant StreetEasy page) talks about a “Completely Renovated” loft. It ain’t yet, but it will be, after the #3F owner carves a little bit out of #3R and finishes fixing up what is left over.

It will be interesting to see how much value The Market thinks has been added in the renovation from a primitive 1-bedroom-1-bath loft to a (slightly smaller) 2-bedroom-2-bath loft. But that is a topic for another day, after The Market decides.

© Sandy Mattingly 2013