what a difference a million dollars can make
One way to measure the difference between the seven weeks that the “2,314 sq ft” Manhattan loft #2B at 161 Hudson Street spent on the market in the Spring of 2016 and the five weeks that it spent on the market in the Spring of 2017 is by time (seven being, you know, greater than five); another way is by asking prices ($5.75mm then being much greater than $4.95mm more recently); but the most significant difference is result, with the more recent marketing having succeeded in generating the contract that closed on May 24 at $4.8mm.
Only the insiders know what was going through the owners’ minds last year, but that brief marketing suggests that there just wasn’t any market response (perhaps, few showing appointments). It wouldn’t surprise me to learn that the owners blamed their 2016 agents for the lack of response, as they not only changed prices dramatically when they came back to market around the same time of the year this year, but they changed agents.
The happy result (for the former owners, recent sellers) is that they got a deal only 3% off their asking price. Almost a million bucks off the first ask of 2016, but who’s counting? And they got that deal after only 5 weeks on the market, and closed only 10 weeks after starting. It is hard to get a more successful asking price than that.
they bought a beautifully renovated Tribeca loft in 2013 and sold a very different beautifully renovated Tribeca loft in 2017
People with sufficient financial resources can adapt even a beautiful Tribeca loft any way that they like, of course. These recent sellers bought a “beautifully designed and renovated … Architect’s residence” in April 2013 for $3.7mm. That iteration featured “exquisite custom mahogany built-ins throughout, stunning walnut floors [… , a] chef’s kitchen … completely customized and featur[ing] Poggenpohl cabinetry, with SubZero and Miele appliances”, as well as custom closets, central air, and Crestron home automation. They made significant changes to the overall look and feel of the loft, and to that chef’s kitchen, probably none of which generated many additional dollars in value on resale.
When they sold last month, the loft was fairly (and enthusiastically) described as “perfectly renovated and light-filled […,] the epitome of chic downtown style[, e]xpertly blending the grand industrial scale of Tribecas best architecture with a warm material palette”, featuring “extensive built-ins, high ceilings, central HVAC”, an “entry hall … with a built-in bench crafted from vintage wood and painted diagonal wall panelling”, (the same) “monumentally scaled original columns [and] wide-plank Brazilian walnut flooring, [and new] beautifully crafted exposed copper pipe lighting, electric solar shades”, and a master suite “featuring walls clad in reclaimed wood planks, which are also repeated on the ceiling of the en-suite bath”.
The partly-old partly-new kitchen
features top of the line appliances including a Viking range and hood, and a Sub-Zero fridge. Integrated into the Poggenpohl cabinetry are a Miele dishwasher, microwave, and espresso/cappuccino machine, as well as a Gaggenau wine fridge and a roll-up door appliance garage. Open wood slab shelves provide additional storage and complement the handmade aesthetic of the white-glazed Dutch tiled walls and the encaustic tile floors.
It is impossible to say from the two sets of broker babble whether the coffee machine or appliance garage is new, but it appears from the photos that the Viking range and hood came with the loft in 2013 (uncredited in that babbling?), yet we know that the Poggenpohl quotient is much reduced and the overall look completely changed, without changing most appliances (at least) or the footprint.
Aside from the functionality change from upper cabinets to open shelves, these are cosmetic changes. A great many cosmetic changes, swapping out expensive well-crafted elements for different expensive well-crafted elements. (Whether the Poggenpohl color changed, I can’t say for sure; but it certainly looks from the cabinet contrast with the old white floor as though the recent sellers replaced the remaining cabinet fronts to bright white.) It’s a free country, and people with money are free to demolish lovely cabinets and tile work, and to replace those elements with a style that suits them. I just don’t see any added value here, from the 2013 kitchen to the 2017 kitchen.
I won’t beat this horse further, but will add two more pairs of Before and After photos, each involving very different aesthetic judgments and some money:
Just to highlight two elements in the After pair, above … I consider the copper lighting in the public area of the loft and the wood walls in the master suite to be Love It Or Hate It elements, in terms of appeal to the broad potential buyer pool. The sort of choices that the Conventional Wisdom strongly argues against if (a) resale value is a consideration the owners care about when they renovate, or (regardless) (b) the owners think they might want to sell within three or four years. And neither of these elements came cheap.
performance against The Market runs slightly in favor
If the StreetEasy Manhattan Price Index is the best single-number proxy for the overall Manhattan market (as I continue to think that it is), the overall Manhattan market is up 22% from April 2013 (when these sellers bought) to April 2017 (they sold in May, but April is the most recent month reflected in this iteration of the still-awkwardly-located chart; select “Manhattan (All)” and hover carefully!), having risen from $817,151 to $993,592.
That implies that had the 2013-buyers-turned-2017-sellers done nothing to the space other than keep it well maintained, the loft would have been worth more or less $4,514,000 when they sold it, instead of the $4.8mm observed value. That’s not a bad outcome!
It is, of course, impossible for an outsider to know what those folks paid for the wood-clad walls, all that new kitchen tiling (and demolition), and custom copper lighting, etc, etc, etc, but it is unlikely they spent as much as $300,000. But if their budget approached $300,000, the entire affair approaches break-even status compared to overall market expectations.
I would typically add here a comment along the lines of ‘it doesn’t matter so long as they got enjoyment out of the loft, and they evidently could afford it‘, but for one niggling fact: they were asking $5.75mm for the ‘upgraded’ loft in April and May of 2016. That suggests to me that they (or their first agent team) believed that their renovation added significant value to the loft. (The increase in the StreetEasy Price Index to April last year was only 20%, implying an ‘unimproved value to that point of more or less $4.44mm.)
It is inconceivable to me that they spent anywhere close to a million bucks doing the ‘improvements’, but that first asking price is evidence that somebody thought the loft had undergone a 7-figure improvement. Granted, they didn’t hold that belief for very long, but still ….
we’ve been to this corner of Hudson and Laight before
Because the Intertubes never forget, you can ready the post I wrote way back on May 28, 2013 when these recent sellers became buyers. The big story then (you’d have to see 161 Hudson Street loft to hope to know why it sold 53% above 2009, 9% above ask) was how brave that 2009-buyer-turned-2013-seller was in buying as The Thaw was beginning following the Nuclear Winter that chilled activity and dropped prices after Lehman filed for bankruptcy in September 2008. (Anyone remember those days??) A second story was that the loft had changed relatively little in an architectural sense, if not a cosmetic sense. The more things change ….