137 Duane Street loft seller makes same mistake that developer made

eventually bites bullet, like developer
It was deja vu all over again, as the “3,000 sq ft” Manhattan loft #2E at 137 Duane Street (Diamond Duane) finally sold on June 30 for an even $3mm. The listing history is full of stops and starts, but it started in September 2009 (hence “finally”). The Groundhog Day scenario is based on starting at $3.65mm to end at $3mm nearly two years later, by a seller who was the purchaser from the sponsor who started at $3,567,600 in July 2006 and ended at $3,156,575 18 months later.

it gets worse, because it got better
if you are thinking that a $3mm resale after a Peak buy at $3,156,575 isn’t so bad, just wait. The 2008-buyer-turned-2011-seller spent some dough in between.

The footprint of this loft would be a Long-and-Narrow if one corner had not been bitten off, resulting in very large a 2-bedroom (remember: “3,000 sq ft”) with the one bedroom in the back taking the two windows on that wall, and the other (master) bedroom splitting the front with the main living space. One result of this alignment is that the main space may suffer from a bowling effect: roughly 22 feet wide and about 70 feet from entry to the (huge!) front windows, with *16 foot ceilings.

The broker babble enthuses about a renovation after the sponsor sale:

renovated by award winning interior designer Jamie Drake and published in Interior Design Magazine. With 3,000 sqft and 16 foot ceiling heights, the space is ideally suited for large scale entertaining. Original details, such as cast iron fluted columns and heavy handcrafted steel doors have been carefully preserved. The custom kitchen features a SubZero refrigerator, Viking stove, Miele dishwasher and espresso/cappuccino machine. In addition, there is a large separate laundry room.

But those original details were there originally, and the developer sold it with some proper proper names:

totally renovated and equipped with top-of the-line finishes: Sub-Zero refrigerators, Miele ovens, cooktops, and dishwasher. Luxurious extras include built-in coffee systems and Sub-Zero wine coolers.

I wonder if some of the developer’s kitchen survived the renovation (some of the appliances, at least?). The renovation dressed up some original elements (those columns and steel doors) but completely re-did the middle of the loft. Compared to the original floor plan, the new floor plan shows that the kitchen moved south (permitting the master closet to be lengthened and the master bath to be enlarged with double sinks and large shower) and west (adding the laundry room behind it), as well as shifting from E-W to N-S and adding a kitchen island.

There were probably other changes that don’t show up on the floor plan (the master suite entrance is a bit changed), but the work I have identified has to be easily a six-figure project, probably $200,000+.

Now add that additional investment to the 2008 purchase and re-check the resale math. Instead of a (relatively mild) 5% hit in the eventual resale, the hit is more likely to be 10% or more. In other words, more in line with the post-Peak experience of the Manhattan residential real estate market generally.

Back to my original point….

drip, drip, drip go the dollars, clang, clang, clang goes the bell
The developer thought the loft was worth more than The Market did, and it took the developer a while to adjust: that July 2006 ask of $3,567,600 was never changed, but it was successful in that it generated a contract in six months that failed and another in 13 months that stuck, but the sticky contract ($3,156,575) required a discount of 11.5%. In other words, even in the frothiest market ever in Manhattan, the developer over-shot the market.

The original purchaser thought the loft was worth more than The Market did from 2009 into 2011, and it took the original purchaser a while to adjust:

Sept 15, 2009 new to market $3.65mm
Oct 21 hiatus  
Nov 17 back on market  
Mar 24, 2010   $3.495mm
June 22 contract  
Aug 12 back on market  
Dec 4 contract  
April 19, 2011 back on market $3.195mm
May 24 contract  
June 30 sold $3mm

There is always a mystery behind failed condo contracts, so there are at least two mysteries in this listing history. But the outline is clear: it took the seller from September 2009 to May 2011 to find a contract at an 18% discount from the starting point.

hints at a mystery
The other mystery is why the seller did all that work after buying in January 2008 only to put the loft for sale in September 2009. Eight million stories in the naked city, right, and we don’t get to hear all of them. But sometimes we do get hints.

The #2E renovator-seller at Diamond Duane did not leave to get more room, but perhaps it was to get a better view. Or the most convenient parking deal in Manhattan.

I can’t tell when he signed a contract to buy this amazing apartment (with real 16 foot ceilings?) at 100 Eleventh Avenue, but it was probably before launching the #2E campaign in September 2009. He paid just over $5mm for the new “2,400 sq ft” apartment on November 19, 2009. So he carried the two units for 18 months. If that had hurt more, he’d have sold loft #2E sooner, right?

*The developer thought the #2E ceilings were 14 feet high.

© Sandy Mattingly 2011

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