resale was way up, but profit … don’t ask
The guy who just sold the “2,135 sq ft” penthouse loft #5 at 249 Church Street may have worried when he paid 11% over the ask to buy it in what must have been an exciting bidding war. He needn’t have been concerned about having stretched past The Market to buy, as we found out when he sold it after four months for another 9% above what he paid. That’s a pretty strange way to flip a loft, so is unlikely to have been his plan from Day One.
One wonders what his plans were, but here’s what happened to this busy loft on this busy corner in northeast Tribeca:
|Oct 15, 2014||new to market||$3.995mm|
|Jan 16, 2015||sold||$4.45mm|
|Mar 6||new to market (!)||$4.895mm|
It’s a beautiful loft, of course, but let’s wait to take a direct look until we play with the numbers a bit.
The history table shows an awful lot of excitement in less than eight months, with the first seller in this set being very excited and the buyer-turned-second-seller being more relieved than anything else, I suspect. After all, if the January sale price was truly a market price, the market value of the loft increased by 9% in four months (a period in which the overall Manhattan residential real estate sales market was likely flat), but the accidental flipper pocketed no profit.
Start last fall, when the first seller was surprised (thrilled!) that a bidding war drove the value to $4.45mm. That seller thought it was worth $3.995mm or something close to that, yet in eight days found a deal 11% above ask. I have some qualms about whether a bidding war price is a good comp (see my May 18, no rational market evident in 708 Greenwich Street loft sale $260k over ask, for example), but here there’s little doubt.
The StreetEasy Manhattan Condo Index is, as regular Manhattan Loft Guy readers know, my go-to single-number proxy for The Market; it hasn’t yet been updated to include March or April index values, but is essentially flat in January (244.54) and February (243.76). If you prefer to use contract months rather than sale months as market values (let’s not get distracted now with why you might do that, but for present purposes I won’t quibble), the Index was (again) essentially flat, at 239.68 when the first contract was signed in October and (again) 243.76 in February (the closest month to the second contract).
To repeat: no one wanted to spend more than $4.45mm for this loft as of October (contract) or January (closing), yet someone wanted to pay $4,847,500 in April (contract) or May (closing). While exciting for market analysts, The Guy Whose Plans Changed didn’t get to pocket the $397,500 in (gross) profit. TGWPC paid the ‘mansion tax’ plus title insurance in January, then paid a sales fee plus New York State and City transfer taxes when he sold this month. Worse, Property Shark shows that TGWPC got a mortgage of $3.192mm to buy the place, so he paid a mortgage recording tax. These are big chunks out of what started as $397,500 in “gross profit”:
($44,500) buy-side mansion tax (1% of his purchase)
($26,700) title insurance on the buy (let’s ballpark that at 0.6%)
($61,446) mortgage recording tax on the buy (1.925% of principal)
($242,375) sell-side sales fee (5%, per our listing system)
($84,467) transfer taxes on sale (1.825%)
($61,988) net loss
To repeat (again): no one sets out to buy a loft in a bidding war, planning to sell so soon after. In this case, it took an appreciation of 9% to lose only five-figures, after considering obvious big ticket transaction costs on the round trip. Indeed, had the January-buyer-May-seller (aka TGWPC) gotten his full asking price that last number above would be smaller, but still would be in red.
There are eight million stories in the naked city, as we well know, and this guy’s plans changed. It could have been worse, but this couldn’t have been a happy experience. Not least because he no longer has the chance to live in this lovely penthouse loft.
potential, realized, in a lovely Tribeca loft renovation
The loft has two structural things going for it: a square footprint with windows on the entire south and west sides, and high enough ceilings to permit a mezzanine level on about one-third of that footprint. Make that three things, as there is a deeded roof deck of maybe “500 sq ft” (per the border babble) or “480 sq ft” (though the floor plan disclaimer cautions against doing something so simple as multiplying the dimensions 24 x 20 ft), or some similar number. (Access to the roof terrace is a mystery, and still “requires a deck build out”.)
The finishes are enthusiastically babbled:
impeccably-renovated ….[,] chic, triple-mint living space … 11 massive triple-glazed windows …. with classic and modern elements like gun metal steel columns, a remote-controlled fireplace, top-quality 7″-wide LV Hakwood smoked white oak floors, floating steel stair and solid oak bookcases standing an impressive 14′. … a premium stone wrapped chef’s island kitchen styled with only the finest Eggersmann Cabinetry, Gagganau, Wolf, Miele and Dornbracht hardware. … master bedroom wing with a custom walk-in closet and indulgent Carrara marble/Basalt spa-like bath graced by radiant heated floors, a heated towel rack and other fine appointments. … automated Control4 system gives you remote one-touch control of lighting, heating/cooling, door locking/unlocking, security and camera surveillance from your smart phone or tablet, plus is wired for easy AV install. … electric zoned solar and black-out shades, a laundry room with sink & pro-sized appliances, wine storage room, high-pressure HVAC and sound-proofed flooring.
Other creature comforts are presented with a peculiar syntax: “flooding natural light from South & West exposures, and stretching views down to One World Trade Center.”
There’s only a single photo left on the Elliman site (more on the StreetEasy link, above), but it is perfectly consistent with the enthusiastic babbling:
Between buying the place in January and selling in May, it is doubtful that the guy lived here. If he did, his selling team preferred the previous owner’s furnishings to that of the (short-term) owner, as the photos (and much of the listing description, paraphrased) are taken directly from the prior listing (which might explain why the photo above doesn’t have the Elliman watermark). What had been “a thoughtful and meticulous renovation” became “impeccably renovated”, perhaps because the previous owner was more proud, having done the renovation in the first place.
When I saw the recent listings, when I noted it had sold twice, the loft seemed familiar … but not quite. That’s because when I had a buyer interested way back in 2012 the loft was smaller (!) and invited a renovation. That listing was bare bones:
50′ x 40′ full floor corner residence with full private roof rights, 11 windows surrounding and soaring 16′-17′ ceilings. … A traditional loft space as-is or create a 2-3 bedroom with standing mezzanines and internal stairwell to roof deck.
Those dimensions must have been from the outside walls, as the condo unit was apparently “1,588 sq ft” back then (as reflected in the January 2015 deed record). (It is possible that the ceiling heights were dropped in the renovation; what had been “16′-17′ ceilings” are now “15 ft”.) Sold as a simplex in need of a renovation in 2012, the renovation added about a third to the interior space (as noted above, hence, “2,135 sq ft” as recently sold and “over 2100 sq ft of interior” when sold in January).
It is curious that the 2012-buyer-turned-renovator-then-2015-seller didn’t add the “internal stairwell to roof deck” promised in the 2012 listing. (The January-buyer-turned-May-seller didn’t have time, so no mystery there.) Maybe the elevator goes all the way up to the roof; otherwise, not having direct roof access is a strange compromise for a luxury “penthouse”. Stairs are a very disruptive element to add to a loft after a “meticulous” or “impeccable” renovation, but maybe it could be done by extending the existing stair up to the “gallery”; otherwise, that doesn’t feel very “thoughtful” to me. Apparently, the 2012 buyer thought he’d done enough (roof build-out “[p]lans already drawn up for the purchaser”) to make the roof a salable commodity, even if he didn’t use it. Weird ….
But not as weird as the January buyer putting the place right back on the market, seven weeks after closing a winning bidding war by bidding 11% over the ask.
And certainly not as weird as The Market rewarding the January buyer by providing a new buyer in April at another 9% over the January price. (Recall that the guy [aka TGWPC] still lost money on the round trip, which is not weird at all.)
a data point is not a trend; nor is a pair of data points
Nobody should extrapolate too much from this peculiar (unique?) pair of free market transactions on top of 249 Church Street. The facts are that the penthouse loft was valued by The Market at $4.45mm in January and in May at $4,847,500. An aggressive seller of another loft in Tribeca might look at this sequence as inspiration for raising an unsuccessful-in-2014 price. That aggressive “seller” should likely remain an “owner” longer than if a price drop followed, but that’s what’s fun about Manhattan residential real estate, especially in the downtown loft niche: facts is facts, but everyone is entitled to an opinion.
Manhattan Loft Guy readers are, of course, entitled to my opinion, in fact.