124 Hudson Street loft finally sells, above nearby comp but below 2006

perhaps you have heard?
To look at the most obviously relevant data on StreetEasy regarding the recent sale of the “3,217 sq ft” Manhattan loft #5C at 124 Hudson Street, you’d think the sellers did fairly well. After all, the clearing price of $5mm computes to $1,554/ft, which is nearly 10% higher on a dollar-per-foot basis than the “2,473 sq ft” loft #5A in June 2011, the last sale in the building (in fact, this was the only sale since January 2009 here), at $3.5mm, or $1,415/ft. (Since both lofts sold with a storage unit, I have ignored that “+” factor for purposes of this analysis.)

Then you’d see that the history for loft #5C in the recent listing shows a prior sale way back in 2001, at $2,622,000. You’d see from that history that the recent sellers had been trying to sell since November 2010, asking $5.75mm, so you’d imagine they were a little disappointed not to have done better than $5mm, but in comparison to loft #5A you’d hope that they were ultimately pleased. However, if you are a regular reader of Manhattan Loft Guy you have often seen comping is hard. In this case, perhaps not so hard to comp between two high quality lofts in the same building selling 9 months apart, but there is one critical data point available in StreetEasy but not in this listing history that is highly relevant to these sellers’ reaction to finally selling at $5mm.

as they say on late night television…
“But wait, there’s more!!!” These sellers thought that their lovely loft was worth up to $5.75mm in 2011 and 2012 because they discovered in April 2006 that it was worth $5.25mm then – nearly two years before the Peak for the overall manhattan residential real estate market. They “discovered” that fact because the loft was offered for sale briefly at the beginning of 2006 at $4.95mm yet they felt that they had to agree to pay $5.25mm to get that seller to sign a contract with them. (For reasons unknown, StreetEasy does not match up that sale with the sequence of 2001 and 2012.)

Evidently, there was a bidding war in 2006. It is an interesting metaphysical question whether a bidding war price is as much a true market value as a process that is less open-ended, but I don’t have data to pursue that question at this point. I will say that the tautology of the Sales Price is the Market Value is logical but unhelpful. There was nothing precisely like loft #5C available for sale in April 2006; there was no seller with the exact same motivations and interests as that #5C seller; and the 2006-#5C-buyers-turned-2012-sellers had a particular set of goals, resources, and options that no other sellers then in the marketplace exactly matched.

Net-net … the April 2006 clearing price of $5.25mm for #5C was a data point, to be plotted with other data points to find a trend line. In this case, it appears from the more recent sale that the 2006 was a high outlier.

After all, if loft #5C was really worth $5.25mm in 2006, it would be reasonable to think that it is now worth a bit more, consistent with overall market trends. That is certainly what these thought, until The Market taught them otherwise:

(Omitting one brief hiatus between firms and, per the inter-firm data-base, ignoring the immediate delisting.)

Note how long the sellers were willing to sit at $5.25mm (their 2006 purchase price), after having twice dropped the price by a quarter of a million. Not surprisingly, that old purchase price seems to have been a barrier for them, at least as fr as asking price. Props to them for recognizing that if they wanted to sell they would have to compromise further.

a recent same-building comp
I mentioned up top the June 28, 2011 sale of the “2,473 sq ft” loft #5A as the last sale in the building before #5C sold. In fact, #5A overlapped with #5C for as lng as #5A was on the market:

Loft #5A is not a perfect comp for #5C because it is 25% smaller than #5C, with 3 bedrooms and 2.5 baths compared to 4 bedrooms and 3.5 baths, but I bet that a lot of people looked at both from November 2010 through March 2011. Though they are functionally somewhat similar, the larger #5C floor plan is a much better floor plan than that of #5A, and not merely because it is bigger. #5A has only 6 windows, with long expanses of blank walls, and the east exposure is into the building courtyard. There is precious little flexibility in that footprint, with the only simple change being to open up that 3rd bedroom into a larger foyer.

Loft #5C, in contrast, has a corner with two long exposures, with both outside walls being almost entirely windows. One could easily add a 5th bedroom where the dining area is, or enlarge the living area by opening up the 4th or even 3rd of the bedrooms.

The level of finishes seems similar in the two units, which is not surprising for a building built new in 2001. On a per-foot basis, the comp question is how much more valuable the larger #5C is because of the layout. #5C would attract buyers who needed more than the 3 bedrooms that #5A offered, but my guess is that the space was a better premium than the utility of the extra bedroom.

The #5C sellers dropped their price to $5.25mm within a few weeks of #5A going into contract at $3.5mm. Whether they knew exactly or not, one can assume they had a good idea of the range of the #5A accepted offer of $1,415/ft. By dropping (only) to $5.25mm, they took the position that #5C was worth up to $1,632/ft (a 15% premium over #5A on a dollar/ft basis).

In the event, after holding out 6 more months, the #5C sellers got their deal at about a 10% premium. They may quibble with that, but I can’t.

a rarity among large loft kitchens
You don’t often see this kind of babble about a high-end kitchen in a large loft: “[t]he renovated chef’s kitchen is cleverly concealed…”. As you see in the floor plan, the nearly 10 x 15 ft kitchen is in the middle of the loft but has only two doorways, one into the foyer and one into the dining area. (The kitchen photo does not do justice to this layout, as it looks just like an open U-shaped kitchen in that photo.)

I can’t say you never see kitchens like this in lofts, but I will say it is unusual. Open kitchens came into vogue in Manhattan, in my eyes, because they were popularized by lofts, in which a great deal was open. (I am not talking about Pullman kitchen in small “apartments”, obviously.) The classic prewar large apartment kept the kitchen out of view of the living space; even when kitchens in such apartments were enlarged by combining with (former) maid’s rooms, the new kitchen had walls blocking foyers and dining or living rooms.

Since #6C has the same arrangement, it is clear that the developer built these large lofts with closed kitchens. I wonder if in 2000 and earlier the developer was concerned tht the kind of buyers who would want as many as 4 or more bedrooms were used to “apartment” living, so enclosed these “C” line kitchens.

Note to self: find another closed kitchen in a different loft building.

© Sandy Mattingly 2012