542 LaGuardia Place loft zooms through market, with a very expensive roof deck

hard to beat this calendar
January 11 = new to market at $2.35mm
January 21 = contract
February 28 = sold for $2,461,100

You will be excused if you missed it, but that is the Manhattan loft #5B at 542 LaGuardia Place. Ten days for a contract after a bidding war; money in the bank within 7 weeks of coming to market; and a 5% premium to the ask. Granted, this clearing price does not quite compare to #6B when it sold on the way to The Peak on September 7, 2007, but it is within 10% on a price per foot basis.

Loft #5B is a duplexed “1,400 sq ft” of evenly sized (but offset) equal boxes, with a roof deck on an even higher level. You’d think that the roughly 700 sq ft boxes would not feel especially spacious, but you’d be wrong. Ceilings are 13 feet and the living room windows (especially) are large, offering unobstructed views into the middle of the super block with NYU housing to the east. The kitchen and bath finishes are enthusiastically babbled about, as is the new roof deck (with irrigation and gas grilling).

understatement of the year candidate
Of course, one should be leery of offering any snark about such a successful marketing campaign, but sometimes fools rush in, don’t they (we).  I had to smile when I got near the end of the babble, and wonder what word had been left you out of this description: “[t]his home is livable and …”. “Livable?? I’d say YES.

buyers risk whiplash
I mentioned that the upstairs unit sold for a higher price about two quarters before The Peak. The listing history for #6B shows that it was also a very quick sale:  to market to May 31, 2007 and a full price contract by June 15. The other recent sale in the building (before #5B) was #2B, which was hardly a laggard when it closed on June 7, 2010. That one took all of two months to close (to market April 5, closed on June 7); I can’t find a contract date, but with a closing within 2 months, it did not linger.

To recap: the last three loft sales at 542 LaGuardia Place closed 7 weeks after coming to market; 2 months after coming to market; and 13 weeks after coming to market. A word to the wise is sufficient, no?

this outdoor space is very valuable
These three “B” lofts are very similar in interior size, though #2B is laid out on one level and lacks the roof decks that both #5B and #6B enjoy. That is an expensive bit of outdoor space. How much value to assign solely to the roof deck is an interesting question. Follow me into the weeds a bit….

Because the bank across the street is low and set so far back from the curb, the light on the second floor is quite comparable to the fifth floor light, though the view will not be quite as nice. As a slightly larger simplex with windows and space for 3 bedrooms, #2B has slightly greater utility than #5B as a 2 bedroom duplex. Yes, #2B sold in a market that may have been a bit thinner than the more current market in which #5B sold, but I believe that the difference between the “1,400 sq ft” #5B $2,461,100 two weeks ago and the “1,435 sq ft” #2B $1,780,000 nine months ago is nearly all due to the roof deck (“850 sq ft”, per our data-base).

playing with numbers (don’t try this at home, kids!)
If that is true, the $681,100 raw difference between #2B and #5B includes roughly $725,000 in value for the #5B deck, because #2B sold at $1,240/ft. You can get different roof valuations depending on the assumptions, of course. You can play with whether there is a high-floor-premium, and whether the market has improved since June. I am going to lump both those factors into some round numbers, to keep from going calculator crazy.

If you assume the market has improved in the last 9 months so (together with a higher floor premium for #5B?) is worth a 10% premium over the #2B sale, the deck’s value is still $551,500 (1,400 sq ft interior at $1,364/ft = $1.91mm; total price for #5B = $2,461,100)

Even if you think the (higher floor) + (market change since June) is worth a 20% premium for #5B’s interior over #2B, that values the deck at $377,900 (1,400 sq ft interior at $1,488/ft = $2.083mm; total price for #5B = $2,461,100) Personally, I don’t think 20% is a reasonable premium to assume, but that level is required to bring the roof deck valuation into the range that The Miller would generally consider reasonable.

If instead of working backwards from the two clearing prices I were to start with only #2B (at the assumed 20% premium) and The Miller’s rubric for valuing outdoor space from my May 6, 2010 post, I would ballpark the “850 sq ft” roof deck (per our data-base) as worth about 33% of the interior space on a $/ft basis, taking points off for being relatively large (more than half the interior space) and for being up a flight of stairs. That is almost what The Market did:

• 850 x .33 = 280.5 sq ft (in equivalent space)
• 1,680.5 (1,400 + 280.5)  * 1,488 (120% of $1,240/ft) = $2,500,584
• (which is tolerably close to the actual clearing price of $2,461,100)

Changing the assumed premium over #2B to 10% (for timing and the higher floor), you can get the market result if you use The Miller’s upper reasonable range for the outdoor space of 50% of the interior.

• 850 x .50 = 425 sq ft (in equivalent space)
• 1,825 (1,400 + 425)  * 1,364 (110% of $1,240/ft) = $2,489,300
• (which is even more tolerably close to the actual clearing price of $2,461,100)

Personally (and no offense to The Miller), I think the overall market is broadly similar to last June and that there is a trivial higher-floor-premium for #5B over #2B. I think the observed market difference of $681,100 is nearly all about the deck. (Indeed, the market difference is understated because I believe #2B has a layout with greater utility.) I am going to reach a bold conclusion, then move on:

In round numbers, somebody just paid over $800/ft for that “850 sq ft” deck.

quick as that was …
#5B at 542 LaGuardia Place  is the quickest market-to-contract loft sale of 2011 (so far!) but I was a little surprised to note that the December 22 deed for 140 Thompson St #2F was an even quicker contract (8 days, last September).

© Sandy Mattingly 2011