171 Duane Street loft closes at 12% premium, contract in 3 weeks

"every once in a while …", indeed
Every once in a while, a listing description not only does justice to the loft listed but to potential buyers, giving an appropriately enthusiastic description of the loft instead of merely babbling. The Manhattan loft on the second floor at 171 Duane Street was just sold with such a description. That lede, excerpted:

I was going to replace the "poetic setting where time stands still" with an ellipsis, as it is (to me) a bit over the top, but it worked. This loft came to market on March 10 with an asking price of $2.495mm that was 11% higher than the December sale of the 4th floor "architecturally published masterpiece" and found a contract by April 1 at $2.8mm (it closed on August 2). No reason to quibble with that marketing campaign.

how special is special?
The footprint of this "2,000 sq ft" loft is classic Long-and-Narrow but the layout is not traditional. Taking advantage of windows along the long east wall (over the alley that is called Staple Street), the two bedrooms line that wall, with a (windowed but dark?) guest room that shares the rear with the elevator. The plumbing is on both sides, giving the flexibility for baths that are separated rather than back-to-back, and a kitchen on the other long side.

But the layout is not what makes this loft special enough to trade quickly and at a premium. The premium comes from the combination of items such as 12′ beamed ceilings, "sleek ebonized wood floors", white painted exposed brick walls, "enormous" double-hung windows, poured concrete kitchen countertops, a hand-cut glass-tiled backsplash, top-of-the-line appliances, a long hallway lined with antique bookshelves, vintage hand-painted wood doors, custom wallpaper, "Federal-style" windows and built-in cabinetry.

more special than an "architecturally published masterpiece"
The 4th floor is a great comp for this loft, with no adjustment needed for location or functionality (with 3 real bedrooms, the 4th floor is slightly more functional than the 2nd floor, with 2 bedrooms with a guest room that doubles as the elevator landing). Level of finishes are probably comparable; though that comes down to personal taste, the 4th floor is described as an "architecturally published masterpiece" and I will not repeat the prose about the "magical" 2nd floor.

Two things account for the dramatic spread between the December 4th floor closing at $2.25mm and the August 2nd floor closing at $2.8mm: market timing and market reaction.

2009 is not 2010
We’ve been down this road before, about the difference between the thin 2009 market and the more active 2010 market. (Some links: July 8, another sign that 2010 is not 2009, as 60 West 15 Street loft sells, June 30, Chelsea House kinda sorta holds its own, reveals Truths in The Market, June 15, 808 Broadway seller bites painful bullet, closes off 15% since 2006.)

The 2nd floor had the advantage of coming to market in March 2010; the 4th floor started in the still-chilly month of June 2009. The 4th floor was pretty successful in its own right, finding a contract in less than 3 months at only a slight discount from ask (2.2%). But I have this nagging feeling that market timing cannot explain the entire premium between the 2nd floor last September and the 4th floor this past March.

tautology department?
What I term above the "market reaction" to the two lofts being different is probably circular, but I can’t come up with a better locution. The Market valued the 2nd floor in March 2010 24% more than it had valued the 4th floor in September 2009 because … because that is what The Market did (meh). Put another (no less circular) way: the 2nd floor buyer loved the 2nd floor more than the 4th floor buyer loved the 4th floor. But that’s not quite right.

The 4ht floor buyer may have loved the 4th floor in September as much as the 2nd floor buyer loved the 2nd floor in March, but the 4th floor buyer had competition that the 4th floor buyer did not have. The competition was there because (tautology alert!) The Market was more active in Spring 2010 and (possibly) because the 2nd floor was perceived as the more desirable loft (arrgghhh).

Let’s try this from a different direction.

Yes, the Spring 2010 market was different from the Summer 2009 market. But because I just don’t believe that that difference was 25%, I am stumbling about for an additional explanation. Because I doubt that the condition of the two lofts is significantly different, I am at a loss.

when I get to a loss
Here’s my best ‘answer’ to ‘explain’ the radically different market valuations of these two very very comparable lofts: because The Market is made up of individual decisions by idiosyncratic individual buyers and sellers, it is not efficient. That does not mean the 4th floor seller under-priced that loft, or that the 2nd floor buyer over-paid. That just means that the difference between these two loft sales cannot be rationalized.

At least not by the Manhattan Loft Guy. I would stop now, but for one quibble about that 2nd floor layout and one additional note about timing.

a quibble for your thoughts …
I’ve been through the poetry and the ecstasy of the "magical", "sophisticated", "elegant" 2nd floor, etc, etc. But the layout lacks one thing that a high-end loft buyer typically wants: a bedroom larger than "second bedroom" size.

The largest bedroom on the second floor is 13’4" x 11’9". Let’s just say that many "sophisticated" lofts of 2,000 sq ft have one bedroom much larger than that. Plus, the layout is such that there’s no way to make one bedroom much larger without losing the second one (absent a major renovation). Yeah, yeah … The Market didn’t mind.

quick contract, slow closing
This loft took four months to get from contract to closing, a little slower than is typical for coops but hardly a glacial pace. But if it had closed in June I might have caught it for my July 7 post, 12 examples of the (rapid) velocity of the Manhattan loft market, as it was on the market at exactly the same time as those dozen lofts that also went to contract quickly.

Props to Richard Orenstein of Halstead, and to the 2nd floor seller.

© Sandy Mattingly 2010