there’s a thin loft line between raw and gut
There’s no chance that anyone would have been tempted to buy the “2,000 sq ft” Manhattan loft on the 2nd floor at 56 East 11 Street and hope to salvage anything usable (appliances, bath fixtures … anything) before doing a complete renovation. After all, the terse broker babble says
Approximately 2,000 sq.ft of raw space. 12 foot ceilings. Needs FULL renovation. Bring your architect.
And the marketing campaign features not a single interior photo, just a building shot with a floor plan that is more a footprint, as it lacks indications of any interior walls, any kitchen, any bathroom facilities. Again: “raw” space needing “FULL renovation”.
Chances are that there are some walls, and some place to cook and use a sink, and probably a toilet, but the listing is a warning to think only of starting over. With these … er … hints that no one would buy this loft and consider moving in, this loft is different from the invitation to a buyer to bring an architect to the small Tribeca loft I hit yesterday (in my January 7, one of the rare small lofts of Tribeca sells at 151 Hudson Street in need of architect for $1,374/ft). Somebody there might have been tempted to leave the architect home and simply move in to the finished-but-not-so-highly small loft, particularly if pushing $1,374/ft to the table to buy had depleted the buyer’s financial capacity.
Don’t do that here (“raw” space needing “FULL renovation”). Somebody just bought this second floor loft for $2.24mm, apparently to avoid someone else buying it instead. The spare listing history on StreetEasy corresponds to that in our listing system (to market July 21 at $1.95mm, price increase on July 29 to $2.1mm, contract by August 22, and sold on December 19 for that $2.24mm), but there’s one interesting wrinkle in our listings system. I’d have guessed that the price was raised after an cheek-by-jowl open house, but the first open house was not until July 31. Reading between the lines, the phone (and email) lines must have been on fire for the seller to raise the asking price so quickly and before an open house. Also interesting, there were only two more open houses, on August 4 and 7, after which there had to have been enough active and qualified bidders for the seller to forego other open houses before signing a contract by August 22.
As you know, that contract was at $2.24mm, 7% higher than the bumped ask and 15% higher than the first ask.
what’s your renovation budget to go from raw loft to design magazine level design?
I’d be impressed if you could spend as little as about $300/ft on the second floor loft to create a space that is not only mint-y but of a quality to be used in model and commercial shoots, and featured in New York Magazine’s design issue. But that’s what The Market seems to think. The 6th floor loft in the building sold on August 29 at $2.875mm (with a contract that was only 8 weeks before the 2nd floor deal) with very enthusiastic babbling and very shiny photos.
designed by interior designer Bruce Bananto…. soaring 12′ nickel-tin ceilings and huge double-hung windows that reflect and disperse the stunning light …. Sleek chef’s kitchen has top-of-the line stainless steel appliances and beautiful Corian countertops and island …. Two full Euro-style bathrooms. … professionally wired for video, audio, cable TV and has CAT-7 wiring for high-speed internet. There are also 16 audio ports pre-wired throughout the living room, kitchen, bedroom and both bathrooms, and 6 speakers wired in the wall so bulky speakers won’t take away from the sleek minimal design.
With “stunning” light at that height, there should be a premium for being on the 6th floor rather than the 2nd. The difference between the sales prices was $635,000 ($317/ft) and you’d expect the nearly 50 feet difference in height over 11th Street must be worth at least $35,000. So no more than $300/ft in the observed market value between #2 and #6 was due to timing (8 weeks apart, which accounts for some) and condition, two elements that push in opposite directions.
Humor me, and assume for the sake of simplicity identical market conditions during the two marketing campaigns that concluded with contracts on June 26 and August 22. Somebody just paid $1,120/ft for the opportunity to completely build out a raw loft on this block just east of University Place, while somebody else spent $1,437/ft four floors higher to buy a loft that is oh-so-done (in fact, “a gem, [that] has appeared in TV commercials, modeling shoots, and New York Magazine’s annual design issue”).
Looks like one of those instances in which a bidding war drove a beyond-market deal, except for the tautological problem that a market deal is a market deal.
as with so many Manhattan loft buildings after all these years, we’ve been here before
(Though we’ve only been here once before; it’s a small building.)
Sharp-eyed Manhattan Loft Guy readers remember that I hit a same-loft paired sale set in my July 13, 2010, 56 East 11 Street loft was hot in 2005, sold again in 2010. That post touched on the “meticulously renovated” 8th floor, which was sold on June 16, 2010 for $2.1mm by the folks who bought it (in that meticulous condition) in November 2004 for $2.005mm. My point then was how disappointing that resale must have been. I wasn’t using the StreetEasy Manhattan Condo Index in those days for the simple (single-number!) tool that it is, but if I had been I’d have noted that between those two sales the Index was up nearly 11%, so the $95,000 ‘gain’ (less than 5%) was a market under-performer.
By reference to the June 2010 8th floor sale, the recent 2nd floor sale was, of course, $140,000 higher in absolute dollars. But the 8th floor was “architecturally stunning” compared to the raw 2nd floor, so height and condition are two comp adjustments to be made in addition to timing. From June 2010 the StreetEasy Index was up 17%, which would imply that the 8th floor is now worth about $2.46mm. Using the November 2004 8th floor value as the baseline for the Index (up 30%) implies a value of only $2.6mm in the current market.
But we’re just playing around with Index values that are intended to give ‘a feel’ for overall market conditions. Both of those calculations based on the 8th floor imply values too low compared to actual sales of the 6th floor and the 2nd floor in 2013. The 6th floor comp suggests the 2nd floor seller did very well in provoking buyers into that frenzy to $2.24mm; the 8th floor Index-based comp suggests the 2nd floor seller did very very well.
That’s enough for a well played, sir; well, played. There ya go.