14 Jay Street penthouse loft sells in a small mystery, with numbers that are mysterious

details lacking, until you find them
The mystery of the August 30 deed at $2.3mm for the “penthouse” at 14 Jay Street is not that StreetEasy found “[n]o listing associated with this closing”, because it hardly takes a Holmes to connect the dots to the “active listing” for the 8th floor in this 8-story building, which offers “2,220 sq ft” for $2.8mm and a link to the broker’s website. Nor is there (much) mystery about why a seller asking $2.8mm on April 16 would have taken a $500,000 haircut so quickly to close 4+ months later (the seller is an estate, after all).

For fans of inside baseball only (and those who pine for a true Multiple Listing Service), the mystery is why the inter-firm data-base has no details about the loft and no contract date. From what is evident in our system, you’d never know that this listing includes private outdoor space (not quite a true “penthouse” because the outdoor space is up the stairs, but that is quibbling).

For Manhattan loft fans who do not fixate on the politics of listing data, the mystery is a standard one: how to adjust for comps that are from differnent times and in different conditions, and how to value outdoor space. Those fans will have to wait a bit….

Like the 8th floor listing on StreetEasy, our data-base lacks photos, floor plan, and a prose description, and shows only a start date and price and the closing date and price. The brokerage link on StreetEasy is also in our data-base (though it did not work the first 3 times I tried it, that is an inter-tubes mystery not worth talking about) and opens up a world of information:

2200 square feet of TOP FLOOR (8th) light filled loft space with interior private access to entire roof. 360 degree views from the loft AND roof. A brand new lobby and a new automatic elevator opens directly into this Two bedroom two bath loft with four exposures and a Wood burning fireplace. Ready to renovate into the penthouse of your dreams.

comparing pictures to missing text
Reading between the lines of this restrained broker babble, you’d not expect to find high-end finishes. If you look at the pix, however, you see that the place is … rather a mess, in beyond primitive condition. It looks as though the floors have recently been refinished (they shine!), as in comparison the walls have not been touched in many years (see pix 4, 5 and 8, especially), the “kitchen” looks as though it was installed 50 years ago and has been dismantled since (pix 3 and 7), it is hard to tell the condition of the exposed joists, and the baseboards are certainly beat all to hell. In other words, the “ready to renovate” is a bit of an understatement.

If all the systems are up to date (a big “if”), this is much less than a white box, since a white box would have clean (“white”) surfaces and one serviceable bathroom (a small favor: no photo of the current bathroom) and kitchen (with appliances). At best, the floors are in good condition and the plumbing and electrical lines can support modern usage.

The floor plan shows a classic Long-and-Narrow footprint, 87 x 23 ft with plumbing ringing the common stairwell (that’s odd), claiming “1,717 sq ft” on the 8th floor and a “den” on the “second floor” of “112 sq ft”. Don’t be distracted by the mystery of how 1,717+112=2,200 (this is a coop in Manhattan, people!) but you should assume that the “den” is little more than a bulkhead to provide a direct and dry entry to the roof. The babble is silent on expansion possibilities, so it is unlikely that the den can be enlarged (a rooftop master suite would be nice, alas).

The floor plan lacks windows and it is hard to tell from the pix just how many side windows there are (babble claims four exposures and 360 degree views). The more windows on the long sides, the more flexibility there will be to create real bedrooms, of course. On the 7th floor there is only one long-wall window, but the 8th floor may clear the neighbors enough for more.

guessing at values
The 7th floor loft sold in very different condition in a very different market, for $1.85mm on April 21, 2006. That marketing claimed (only) “1,700 sq ft”, though it lacks only the “112 sq ft” den compared to the interior space on the 8th floor, so it is very similar to the 8th floor in interior space. There’s no private roof space on 7, obviously. That loft was billed as in “[a]bsolute turn key” and “[n]o detail … overlooked” condition — a state that it could take the 8th floor up to a half million to achieve.

Even if renovation costs on the 8th floor were ballparked as low as $200/ft, that is a $366,000 project. Taking that (very conservative) cost off the top of the 7th floor comp, the remainder of (roughly) $1.5mm implies the unimproved value of interior space at 14 Jay Street was about $880/ft in 2006. To take a bullish approach, assume that the 2011 market is +10% over the 2006 market, bumping that interior comp to $1,012/ft. If that is a reasonable value for the interior of the 8th floor in the current market, somebody just paid $450,000 for the private roof. Guesstimate that the roof is about 1,500 sq ft (taking off the den and allowing for elevator bulkhead and a water tower footprint), that would be $300/ft for the roof, sweetly within the general rubric of The Miller for valuing outdoor space at (generally) between 25% and 50% of interior values ($300/ft = 30% of interior at $1,012/ft).

a million dollar roof? as we just play with numbers
But there is a more recent sale in the building, of a loft in more directly comparable condition to the 8th floor. I overlooked it at first because January 29, 2010 sale of “#3S” at $1.25mm looked to me as it was less than the full floor. However … the StreetEasy listing for #3 is clearly a full floor loft, one that sounds like the 8th floor wold sound if the 8th floor listing had filled in the blanks about condition: “Needs everything, nothing is salvageable.”

Using “1,700 sq ft” as the baseline for a full floor loft in the building, that much more recent sale in a much more comparable condition to the 8th floor implies a no-view nothing-salvageable interior value at 14 Jay Street of $735/ft. A generous person might add $100,000 to the interior value of the top floor because of the (claimed) 4 exposures and the (claimed) 360 degree views. That still only gets you to $794/ft for the implied value of the 8th floor interior, or $1.45mm. A very aggressive person might think that the mid-2011 market conditions warrants a premium over early 2010, and might stretch to get to $870/ft for the inside space on the 8th floor, bringing us up to $1.6mm.

In which case the private roof deck was worth much less than a million bucks, but still $700,000, or roughly $467/ft, which is uncomfortably 54% of the notional value of the interior. I have seen higher values for scarce roof space I am sure.

As noted, this has the aspect of mere calculator madness, with assumption piled on to of assumption, to adjust from a no-detail-overlooked 7th floor sale in 2006 and from a no-view nothing-salvageable 3rd floor sale much more recently. I could conservatively make a case that the 3rd floor sale is not only a much better comp, but really requires little upward adjustment for view and market conditions. If so, straight application of that $735/ft to the 8th floor allocates only $1.35mm of the recent clearing price to the 8th floor interior (including den) and leaving $950,000 to the private roof. That would be over $600/ft for the roof compared to $735/ft interior, but that is a cleaner analysis,  more closely tied to the 3rd floor facts. So what if that is 85% of the value of the interior space!

Did I mention that comping is hard?

final mystery
One final question before I go (to prevent further digressions): Who’s that guy leaning on the window sill in the 6th photo?

© Sandy Mattingly 2011

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