260 Fifth Avenue loft missed opportunity to sell before world found out about nearby development

you do hate to see that
You will often see a comment on Manhattan Loft Guy to the effect that a seller missed the best opportunity to sell (First Quarter 2008, aka The Peak) by being too aggressive in pricing, even for 2007, or by waiting too long in 2008 to come to market (thereby stepping into the deep freeze that followed Lehman’s bankruptcy petition in September 2008). Indeed, I would say examples are too numerous to mention, so if this sounds new to you: pay more attention! The recently sold “1,800 sq ft” Manhattan loft #12S at 260 Fifth Avenue in the newly christened NoMad illustrates that there are other risks in delays caused by pricing too high, in this case the extraneous event of new development nearby that could impact a wonderful view.

Let’s start with the loft, then move to the overlong campaign that cost the seller.

The recent babble:

This stunning loft in the historic Flatiron district offers pristine, modern finishes while maintaining the old world charm of its historical identity as an industrial space. It was designed by Pol Theis of P&T interiors and has been featured in prominent architectural and design magazines. This 1,700+/- sf home is surrounded with 21 oversized windows, providing sunlight and spectacular open views. Meanwhile, the towering 11′ ceilings yield gallery-size walls that are ideal for displaying art.

You noted the “21 oversized windows, providing sunlight and spectacular open views”, of course, as you probably also nodded on seeing the last two listing photos, with “spectacular open views” northwest and southeast (the Met Life clock tower and One Madison Square). (An earlier listing shows an angled view of the Empire State Building, as in listing pic #5, here.)

The floor plan in this nearly square footprint highlights why that is an ideal loft shape when there are two exposures (here, it is one window on a third exposure; see my  May 13, 45 Lispenard Street loft takes a year to sell at small discount to ask, 11% premium over Peak, for the last time I enthused about this shape): the bedrooms are as far from each other as they could be, the essentially square (600 sq ft!) living room has the corner exposures, there is enough room for a huge “foyer” (an unusual element in a post-industrial loft), and even the bedrooms are essentially square.  The only limitation in this floor plan is major, and presumably structural: there is a single bathroom along the only wall with plumbing (that wall might be reconfigured to fit two baths, the kitchen and a washer dryer, but not without great expense).

a long voyage of pain
The recent sellers bought in September 2004 at $1.36mm and just sold for $1.63mm, a meager return over 8+ years after a magazine-quality re-design. Of course their plan was more ambitious. It started much earlier than you’d know from StreetEasy (the early dates are from our listing system) and is characterized by fits and starts:

That’s only 28 months of active marketing but over 7(!) years, 5 prices, 2 firms, and a deal 28% lower than their long ago starting point. (Evidently they did not like to be bothered with showing appointments during the summer.)

Yes, they missed their best chance to sell, by being off the market in 2007 (still, by far the highest volume year for Manhattan residential real estate sales). Cruel second guessers (like Manhattan Loft Guy) have to wonder what would have happened had they been on the market then at, say, $2mm. But even after The Thaw in the overall market they wanted $2.25mm, and as the overall market picked up in 2010 they came down only cosmetically.

uncertainty is a female dog
I don’t know if this was “news” that was publicly available before that mid-2012 hiatus, but by the time loft #12S came back to market last September any proper view diligence by a Google-enabled buyer would have turned up this report of plans to put a 23-story tower on top of a portion of 250 Fifth Avenue. (Someone tuned into Community Board 5 news would have seen it sooner, I assume.) That can put some fear into a potential buyer of a 12th floor loft on the south side of a building on the same block of Fifth Avenue, couldn’t it?

I will confess to originally having misread the reports and renderings, which I would hope a professional due (and view) diligence analysis would not have done. I originally thought the plan would block the south view from 260 Fifth Avenue except for the angled view across Fifth itself, but if they really build as in the rendering in that Mad Park News link, and in this follow-up on Curbed after the Community Board met in October, the loss of view for loft #12S would be much reduced. The rendering is from 28th Street (looking north), rather than from Fifth Avenue (looking west), showing that the hotel (as planned) would sit a little to the west of 260 Fifth Avenue, to cut off (some) light and whatever the views are to the southwest, not the southeast view pictured in the listing of Met Life and One Madison Square.

I don’t know anyone who was interested in loft #12S at any time, so I don’t have firsthand knowledge of how a buyer reacted to the possibility of development, and whether this potential-then-planned development just to the south actually dampened the market for #12S. I suspect the most savvy buyers would be the most leery, those who could see the potential for some development south without knowing it would be massed slightly west. As you will see below from my earlier posts in the building, something has to explain the fact that #12S got only $906/ft.

but that something might be the actual design of the loft
The latest broker babble notes that the loft was “designed by Pol Theis of P&T interiors and has been featured in prominent architectural and design magazines”, without revealing that Theis was also one of the owners. Certainly, it is designed within an inch of its life, though most of the “design” elements are removable or can be painted over, or otherwise softened; the exception is that love-it-or-gut-it bathroom.

From the perspective of Staging 101, high design can be … idiosyncratic, and idiosyncratic is a code word for problematic, and the likelihood that some buyers will be put off emotionally, notwithstanding the fact that most of what would “bother” such people is temporary. The challenge for the listing agent(s, as it turned out) for a high design, magazine-featured loft that was highly designed by an owner, is that the agent is not likely to get very far playing the Staging 101 card. Find the (perhaps) unique buyer who shares that design sensibility or (drum roll, please) produce only buyers willing to buy at a significant discount.

As I hinted above, it looks to me that the loft sold at a greater discount than would be predicted by past sales activity. Perhaps it was the looming (but vague) possibility of development at the end of the block; perhaps it was a thin-buyer-pool for this specific loft due to this specific loft’s style.

history suggests a discount
I am surprised to have focused on a sale in this building only once, and touched on another contract, also once. In my July 15, 2011, interesting loft sale at 260 Fifth Avenue, but Observer gets it wrong, I noted a pair of sales of full floor lofts with identical footprints but very different levels of finishes (and views) that cleared within an uncomfortably narrow range (uncomfortable for fans of a rational market, that is), at $1,000/ft (8th floor) and $900/ft (5th floor). Way back in my April 26, 2007, newly in contract at 22 W 26, 260 Fifth, + 57 Bond (even 735 E 9), when I was still blogging about lofts that had not yet sold, about the oh so minty #9N, which ended up selling in that run-up to The Peak at $1,116/ft.

Hmmmm … $1,116/ft for a hypothetical sale of #12S even a year before The Peak would have been $2,008,800, as cruel second guessers smirk. That would have predated any specific concerns about development at 250 Fifth Avenue, though not any market-thinning decor effect.

The last sale in the building was the 5th floor, which sold again in September at $3.65mm (an increase of $230,000 in 15 months, to $960/ft), still marketed as a bones + view set of “countless configuration possibilities with no interior load bearing walls”. To restate the obvious: #12S is much higher than the 5th floor and was marketed as the opposite of a “project”, yet the 5th floor set of possibilities sold for a 6% premium to the magazine-quality #12S.

Second-guessing is hard, absent specific buyer feedback in such a potentially rich field for second-guessing. But second-guessing is mandatory with such an interesting (disappointing!) sale.

© Sandy Mattingly 2013