you get a massive discount, and a project
It is not often that you see weather impacts in Manhattan loft listings or sales, or that you see lofts for sale that have actually been wrecked (as in destroyed) as opposed to having been allowed to decay. The recently sold “2,973 sq ft” Manhattan loft #1A at 79 Laight Street (United States Sugar Warehouse) fell squarely in the post-super storm flood and was, as the updated listing put it, “damaged by the hurricane and needs a full gut renovation”. Unlike the neighbor in a similar position (addressed below), these owners decided not to fix the place but to leave it to new owners to “imagine what your[ imagination] will do…”. It is not hard to estimate what that choice cost, though only the sellers and their homeowner’s insurance adjusters know the net numbers:
|Feb 10, 2012||new to market||$2.95mm|
|Sept 12||back on market||$2.595mm|
|[super storm landfall: Oct 29]|
|April 24, 2013||contract*|
(*Contract date is from the inter-firm data-base.)
That’s $605/ft for a full service condo converted into residential lofts in 2002. And a 30% discount off last ask; 39% off first ask.
the perils of over-pricing (in this case: you keep the risk)
What happened to the loft (and to all flooded areas) when the storm hit was a tragedy of the Act of God variety; what happened before then was a miscalculation of The Market of the most human variety. They had 10 months to make a deal at whatever The Market would offer; instead, they asked a series of unavailable prices.
when God acts, who pays?
Thankfully, I have never had to find out about flood damage under a standard homeowner’s insurance policy, so I don’t know that the #1A sellers have been paid a hefty sum. Whether covered or not, and at what levels, the #1A sellers were probably in the same boat (ouch) as their next-door neighbors. The #1B owners also decided not to rebuild and stay after that super storm, but their exit strategy was very different when they put their "2,212 sq ft" loft on the market on January 22:
This residence will be undergoing a complete gut renovation that will be paid for and guaranteed by the current owner. Select the layout, finishes and overall style that suits you and undertake the design of your brand new downtown trophy loft.
You’d think that would be a tough set of details to negotiate, but they found a deal by April 1 and closed on April 11 at $2.445mm. That’s $1,105/ft, including an unknown renovation budget. A reasonable guess is that they’d cap the budget in those pre-contract negotiations; let’s guess $350/ft to recreate the loft’s former glory. It was not likely to be $500/ft, which is the spread between #1A (pay for your own darn renovation) and #1B (will pay for your imagination).
Whether the damage was paid for by insurance or left for the #1B sellers and #1A buyers, I have to believe that The Market looked at these two opportunities differently. That is, unless $500/ft is the right spread for a gut renovation.
Although the two lofts are on the same floor in the same building (and in the same condition when marketed, selling within 5 weeks of each other), they are not perfect comps for each other. The smaller (“2,212 sq ft”) loft #1B ($1,105/ft, post-renovation) is a corner 2 bedroom, with a floor plan that implies that all the windows face the street (i.e., sidewalk). Loft #1A ($605/ft, pre-renovation) fits 3 bedrooms into a long, narrow rectangle floor plan of “2,973 sq ft”, but has only two windows facing west (the river, across the sidewalk and West Street), with all the bedrooms on a light well that our listing notes describe as “very dark”.
I can’t connect all the dots between them, or do the comparative math in detail, but this a fascinating pair.
© Sandy Mattingly 2013