John Deco loft resells off 11% since 2008, 7% off sponsor's comp

competition is hard
(No, it’s not one of a comping-is-hard sequence, if you are a careful reader.) The “837 sq ft” Manhattan (mini-) loft #815 at 99 John Street might not have been the first resale at the John Deco Lofts (lofts started selling there in 2008) but it is the first that I have noticed. More interesting than the 10.8% decline from original purchase from the sponsor in September 2008 (2 weeks after Lehman; ouch!) is that this re-seller was still competing against the sponsor when he made the deal that closed for $687,000 on July 29.

The 2008-buyer-turned-2011-seller launched his campaign to sell his 1-bedroom loft on January 19 at $775,000, dropped his price twice (and raised it once!), while needing two contracts to get the thing sold. Since that campaign began and until #815 closed, StreetEasy shows that the sponsor has sold at least 24 1-bedroom units, has one more in contract, and is still offering 5 more. That is a lot of competition.

Among the sales, the sponsor got someone to pay $735,000 for #615 on May 13 (the same “837 sq ft” layout as #815, obviously on a lower floor), and more than the $820/ft that #815 got at least 19 other times:

• $971/ft for #PH04
• $938/ft for #2108 and #2502
• $937/ft for #1804
• $933/ft for #PH09
• $911/ft for #1604
• $900/ft for #2404
• $878/ft for #1106 and (as noted) #615
• $877/ft for #2407
• $873/ft for #910
• $872/ft for #1014
• $869/ft for #1005
• $868/ft for #1607
• $865/ft for #908
• $861/ft for #507
• $844/ft for #1707
• $841/ft for #945
• $833/ft for #306
• $822/ft for #608

I think I mentioned … that is a lot of competition.

why would The Market prefer to buy from the sponsor?
These sponsor sale prices, as recorded, are the total paid by the buyers (they include the state and city transfer fees if the sponsor negotiated that as part of the purchase, which appears from the many “000” prics not to be very often), so the price comparison to #815 at $687,000 and $820/ft is apples-to-apples.

Obviously, many of these higher $/ft sponsor sales were on higher floors than #815, but not all of them, and i have not controlled for whether any of these sales were of units with better views. I did not include the 1-bedroom 2-bathroom units in this $/ft list, though they are part of the 24 sales counted above, so it is clear that there are very few 1 bedroom sponsor sales at lower than the $820/ft of #815.

It appears that the #815 re-seller could not do as well as the sponsor in head-to-head competition. (Look, especially at #615, #910, #908, and #507, which range from 5% to 7% premiums over #815 on a $/ft basis.)

I can guess at only three reasons. (a) The sponsor’s units may have greater visibility in the marketplace and people interested in the building my simply pay a premium to have a choice (sales office can show them a number of units in the same price range; the re-seller has only the one unit). Or (b) the sponsor’s units may have that new unit smell (and the availability of punch lists to fix every last thing), while the re-seller may not appear to be as willing to fix every hinge. Or (c) perhaps buyers feel they have better warranty protection buying direct.

I had not thought about this before; perhaps I will come up with another theory. Comments are always welcome, of course!

© Sandy Mattingly 2011