comping is hard / the laboratory at 321 West 13 Street is rich

a Fall theme emerges
Yesterday’s post was not the only time I have offered “did I mention that comping is hard?”; it is only the most recent time. (Rather than use a list of links, I will let The Google do the job, here.) But two days in a row suggests a budding theme that I may extend, given that there are so many opportunities…. Which is a long way of saying that a recent Manhattan loft sale at 321 West 13 Street (Gansevoort Lofts) led me to try to rationalize two other similar not-so-recent sales in the building. Instead of being completely redundant here (I will do that below), let’s just say it ain’t easy to comp.

The recent sale was the “1,200 sq ft” Manhattan loft #7A, which took a (errr … ) rather aggressive approach to the market when it came out at $2.275mm when it came out on January 15 before clearing (after 2 price drops) on August 25 at $1.852mm. On the one hand, that discount from ask of 18.6% might be disappointing to these sellers. On the other hand, clearing at $1,543/ft compares pretty well to the oh-so-not-quite-Peak sale of the “1,220 sq ft” #6B on June 17, 2008 at $2mm, or $1,639/ft. After all, that one boasted of Empire State views and high finishes, while #7A (just) has quiet Chelsea and Village views, and broker babble notably lacking in enthusiasm about condition. A 6% spread from (near) Peak to now is a strong sale under any circumstances, the more so with #6B being in significantly more updated condition and having better views.

I mentioned that there are two other similar loft sales at the Gansevoort. How aggressive does #7A at $2.275mm seem in relation to those? (Not to spoil the movie*, but pretty aggressive.)

Loft #6A has the exact same footprint as #7A and similarly restrained broker babble, but it suffered from a bad timing problem. Evidently, those folks had to sell, coming out at $1.485mm on January 24, 2009 as nuclear winter was in full force, and selling on May 27, 2009 at $1.325mm. That’s $1,104/ft, rather dramatically lower than #7A at $1,543/ft.

Loft #2B had a similar timing problem, coming to market with weeks of Lehman’s plunge at $1.75mm for the line’s “1,220 sq ft”. These sellers were also motivated, proven by two price drops and the February 20, 2009 sale (brrr…) at $1.5mm, or $1,229/ft. More so than any of the other lofts sold here, this baby was loaded! A summary won’t do justice, and this way I can include the opening bit of babble in the quote (an opening I find … baffling):

The heart and soul of this home lies within the evolution of its subtlety and detail. Remarkable Pre-war Condo loft, convertible 2, with beamed 11.5 foot ceilings and hardwood floors situated between the West Village and Meat Packing District. Custom built sliding walnut laminated glass doors transforms this open loft to an intimate one bedroom with a cozy wood burning fireplace and large walk-in closet. The renovated bath has double Duravit sinks with Dornbacht fixtures, custom teak cabinetry, and steam shower with glass tiles. The large open kitchen leaves nothing to be desired with a Pietra Cardoza counters and floors, Sub-Zero Refrigerator, Gaggenau range, oven and retractable ventless hood, Bosch dishwasher, Bosch washer/dryer and wine cooler. A home office is tucked away behind custom-built walnut cabinetry. The home entertainment system has a built-in flat screen Pioneer TV and Bose surround sound system.

Let’s review the “A” and “B” history before #7A came out:

Obviously, a rational campaign for #7A (in terms of building history, that is) would start somewhere between #2B and #6B, as #7A does not compare to either of those in condition and 2011 market conditions are different from both the near-Peak of #6B and the chill of #2B. The $64,000 question (more similar to which?) is where the fun lies.

The #7A sellers picked an initial asking price above the #6B clearing price, implying that the January 2011 market was at least as good as that near-Peak experience. $1,896/ft proved to be too rich for the 2011 market, but the second price drop (to $1.995mm) generated a contract at (only) a 7% discount.

Let’s review the “A” and “B” history with the #7A campaign, now sorted by $/ft with the #6B record price bolded:

Did I mention that #7A was aggressively priced? And that it worked?

another, not such a comparable, comp
There is a slightly more recent Gansevoort Lofts sale, but the “C” line lofts are much smaller than “A” or “B” lofts, at “860 sq ft”. Loft #6C sold on December 3, 2010 needing kitchen and bathroom updates, but boasting Empire State views, after a bidding war to $1,167,500. At $1,358/ft, that was a post-Peak high for the building until #7A came out.

Did I mention that #7A was aggressively priced? And that it worked?

Not to tie you too tightly in knots here, but that #6C loft had a great comp that needed a market timing adjustment. #7C was another chilly sale, coming out on December 12, 2008 and selling quickly (on March 11, 2009) at the ask of $995,000. That’s just $1,157/ft for quality finishes and those Empire State views. I will not digress further from the #7A comping issues, except to note that #6C at $1,358/ft in December 2010 and (the better) #7C at $1,157/ft in March 2009 are a close to trough-to-not-quite-now pair, showing a hyper-local market trend of +17%.

The Gansevoort Lofts condo has only 21 units. Such a rich history, no? I don’t think I would have read that history as implying such a strong value for #7A. These sellers and their agents did; they asked the market for it, and they got it. Adjusting #6B for condition (better) and view (better), the #7A clearing price two weeks ago looks like a near-Peak price to me. I would not have predicted that.

Possibly, this is a High Line effect. Personally, I doubt it, but I don’t have the data at hand to establish when the positive market benefits to High Line proximity kicked in at the lower end of the railway (i.e., the MeatPacking District). Again, it is possible that there is a rising tide in this micro-nabe since 2008 that is not general to the overall Manhattan residential real estate market, the way that the new uber-loft condos on Bond Street floated nearby classic loft boats higher than the overall market (overall story, and links to prior Manhattan Loft Guy Bond Street posts in this March 13, 2008 post). Note to self.…

Did I mention that (yes!) comping is hard??
______
*Speaking of movies, unless the #6B buyer merely shares the name of a famous actor (I’d need to hear him pronounce it to know), it appears that the Gansevoort Lofts may be a Harry-free zone.

© Sandy Mattingly 2011