another developer haircut as 52 Thomas Street penthouse loft closes off 29% from original ask

"a little off the top, please" … and sides … and …
The Manhattan new development loft Penthouse A at 52 Thomas Street was featured in yesterday’s Just Sold section of the New York Post’s real estate section:

TRIBECA $1,850,000

52 Thomas St.

Two-bedroom, two-bath penthouse condo, 1,510 square feet, with dining room, windowed kitchen with Viking, Sub-Zero and Miele appliances, Kohler soaking tub and wraparound terrace; building features doorman. Common charges $1,285, taxes $1,363. Asking price $1,895,000, on market 21 weeks. 

As is usual with such brokerage-sourced PR, the Post’s data is a little … incomplete. Yes, it sold for $1.85mm from an asking price of $1.895mm; and yes, there is a sense in which it is accurate to say that it was on the market about 21 weeks. But here is some more complete information, taken from StreetEasy and the inter-firm data-base:
Oct 19, 2007 new $2.6mm
Feb 8, 2008 "temporarily off the market"  
Nov 3, 2009   $1.895mm
Dec 2, 2009 "temporarily off the market"  
Mar 1, 2010 back on the market  
Mar 26 contract  
July 8 closed $1.85mm
You see that from coming back to market on March 1 to the closing was about 21 weeks, but (as with many new development sales histories) it is difficult to say how long it was actually on the market, as anyone paying attention during the "temporarily off the market" periods would have known what it had last been offered at, and that it had not yet sold. I.e., they could easily have made an offer for it.

a little history, please
Lofts in this 2007 condo conversion came as close to perfectly timing the market as any new development loft I can think of: 14 of the 16 non-penthouse lofts closed between December 31, 2007 and April 22, 2008, while the other two closed in June 2008.

The four penthouses are true penthouses (set back from the edge of the building, 3 with terraces, 2 as duplexes) apparently built on top of the existing 5-story building. Since they came to market about a year after the non-penthouse units, most likely either the developer held them back (if so, oops), or they were not finished (so, not ready to be sold; in which case, sigh…) when the non-penthouse units started to close. Note the #PH-A history above: taken off the market at $2.6mm after less than 4 months of marketing, right at The Peak of the market.

I found no information about this project to explain why the penthouses were on such a different schedule, nor any information about any financial difficulties the developer may have had finishing this project. Given the pace at which the non-penthouse lofts sold out, it is hard to believe that there were any financial issues so I am going to guess that construction on the roof took longer than anticipated and that the developer was content to keep these babies off the market.

sometimes you get the bear, but …

If I am right in that guess, that was a costly bet. On the one hand, the non-penthouse lofts appear not only to have sold as quickly as they were ready to be sold, but most appear to have sold at or above their asking prices. Look, for example, at the four fifth floor lofts, none of which has outdoor space:

  closed price $/ft original
#5A Apr 8, 2008 $2,469,256 $1,288 $2.35mm
#5B Apr 22, 2008 $1,858,306 $1,181 $1.825mm
#5C Apr 10, 2008 $1,832,850 $1,050 $1.8mm
#5D June 12, 2008 $2,596,537 $1,320 $2.6mm

For the anal among us, these four lofts sold at $181,949 above their original asking prices. A scant 2% above, but still above.

Miller Rules, applied
Now look again at the recently sold #PH-A: "1,510 sq ft" interior, with that wrap terrace ("848 sq ft"). Using The Miller’s ballpark rubric for valuing outdoor space generally at from 25% to 50% of the value of interior space (see May 6, riffing with The Miller on the value of Manhattan terraces, decks + balconies), the comparable price-per-foot for #PH-A would be from $1,074/ft to $957/ft. I would tend toward the lower valuation, as I suspect that The Miller would consider this outdoor space to be relatively premium (and therefore relatively more valuable [towards 50%] compared to the indoor space) for reasons of utility, privacy and location (see that post for what factors might be plus factors).

On the one hand, even at $957/ft, the #PH-A clearing price compares favorably to the At The Peak price-per-foot for #5B and #5C, given the dramatically different markets, now vs. then. (Not so favorably to #5A and #5D, of course.) On the other hand, this penthouse closed nearly 30% off from where the developer started in October 2007.

more hands
On the other other hand, the developer might take some comfort in having predicted the market price under new market conditions, having pegged the ask at $1.895mm in November 2009. On that same other hand, my guess is that the developer did well enough on the non-penthouse closings at peak prices not to have been too upset by the 4-of-20 units that lagged. But returning to that first ‘other’ hand, it has to hurt some to close #PH-A nearly 30% off from the original plan.

spot is not very prime, building is not very uber
A word about location, location, location: the corner of Thomas Street and Church Street is hardly prime Tribeca. In my highly personal rankings, Thomas is easily in the bottom third of Tribeca cross-streets for ‘charm’ (though it has a lot of ‘authenticity’), while Church Street beats only Broadway in my ranking of the five N-S thoroughfares in Tribeca (given the traffic uptown velocity at this corner, Church might even be ‘busier’ than Broadway). I mention this to add to my sense that this new loft conversion (expansion) did very well (even at The Peak) for a non-prime few-amenities condo. It was never an uber-loft.

Net, net … the developer did a great job on original pricing in at least 16 of 20 cases. I would love to know why the penthouses were not ready for sale when the others went At The Peak.

[UPDATE: I forgot to add the links to some other Manhattan Loft Guy posts about developers taking discounts to close out their inventory:

July 15, more developer haircuts, as 415 Greenwich lofts cut to close
April 1,
developer takes 27.2% haircut to close 166 Perry Street
January 19,
the last 13% haircut drives new development deal at 135 West 14 Street

As I said in that July 15 post: "This is not a secret technique."]

© Sandy Mattingly 2010



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