how to make sense of 475 Broadway loft sale, at $1,280/ft or $1,608/ft??

caution: rant is coming
You don’t need to know how big a Manhattan loft is to put a sale in the context of sales in the same building (assuming same footprints, of course), but it is very difficult to do a broader comp analysis if you don’t know if the loft is really “1,990 sq ft” or “2,500 sq ft”. That’s the challenge posed by the oh-so-provocative recent $3.2mm sale of loft #6E at 475 Broadway in the east half of the Soho Tower Condominium. The deed record has it as “1,990 sq ft” ($1,608/ft), while the listing has it as “2,500 sq ft” ($1,280/ft). That is a maddeningly high difference.

Did the buyer think this loft was more like other lofts valued under $1,300 ft or more like other lofts valued above $1,600/ft? Why oh why is there such confusion in the wacky world of Manhattan residential real estate over something as … er … simple as the size of a loft?

love from The Market
I did not notice this discrepancy when I used this sale as a comp in my May 23, playing with 475 Broadway loft comp that is up +58% over 2004, which used loft #6E to make a point about another loft that a client has been looking at (without identifying it, of course); now I need to revisit that post now that I know #6E is 20% smaller than advertised. I hate when that happens…. But that possible editing job is not (directly) the cause of my rant.

As I said in that May 23 post, The Market did not take long to make up its mind about the value of this loft:

There can be quicker and higher sales, but 15 days to contract at a “discount” of 1.54% shows some serious love.

And why not? Nearly 25 feet wide, with 13 foot ceilings, and huge windows in front, there is great volume in the public space. The May 23 post lists other brag-worthy elements in the loft.

feets don’t fail me now
How do these myths start? For those of you who can read ACRIS documents, the Condo Declaration lists “Approximate Square Foot of Unit” in Schedule B (page 22 of 79), with #6E being “1,990.27” sq ft, just like 3 other “E” lofts (for reasons unknown, #4E is listed as 13.5 sq ft bigger and #7E is 112 sq ft bigger; #8E is a penthouse with newly built upper level and terrace, listed as “2,636.81 sq ft” interior and “668 sq ft” of terrace). Nonetheless, our listing system and the Streeteasy building page claim “2,500 sq ft” for the non-penthouse “E” units, as does the recent PruDE listing for #6E.

I will see if I can get an answer from our Listings Dept, but I can’t find anything other than the brokerage community as a source for “2,500 sq ft”. The Condo Dec shows that the “1,990.27 sq ft” calculation was made from interior wall surfaces of exterior walls and mid-wall of walls separating a loft from common space or the other loft on the floor (see p 7 of 79). The floor plans (done by Manhattan Loft Guy bromancer Joseph Pell Lombardi; see my June 6, a Manhattan loft pioneer (of a different sort) remembers, records) are not part of the Condo Dec, but even the #6E listing floor plan shows dimensions that easily ballpark consistent with “1,990 sq ft” and inconsistent with “2,500 sq ft”. (Start with space 24’8” wide, then add the room dimensions all the way back to the master bath [19’7” + 14’6” + 8’6”? + 5’ + 11’5”? + 7’ + 19’8” + ?5’? = 90’8”] = 2,235 sq ft before deducting for the common stairway, elevator, or where the second bedroom ends, all easily ballparked at 245 sq ft or more.)

so what?
So who cares if it is “1,900 sq ft” rather than “2,500 sq ft”? Apparently neither the #6E buyers nor their lenders, for two on the negative side. Anyone who would use any loft in this building as a comparable sale at $1,280/ft (assuming “2,500 sq ft”) should care; like Manhattan Loft Guy and the client with whom I had the conversation in my May 23 post.

Looking at the Master List of Manhattan Lofts Sold Since November 2008 for downtown lofts that have sold since January 1, I find only 6 that sold between $1,508/ft and $1,708/ft (out of about 185; I see I have not updated the Master List in weeks … Note to Self …):

• 124 Hudson St #5C $1,554/ft
• 160 Wooster St #3A $1,580/ft
• 99 Jane St #6A $1,631/ft
• 252 Seventh Av #17E [Chelsea Mercantile] $1,684/ft
• 48 Laight St #5S $1,698/ft

Let’s just say that these are all very nice properties.

In contrast, I count 46 lofts that sold between $1,180/ft and $1,380/ft since January 1. Can we agree that those lofts are not in the same category as the richer 5 above? (If not, do your own darn comparisons; the addresses are there.)

If you were a potential buyer for #6E, it would make a huge difference if you thought it was like:

• the “1,600 sq ft” 3 bedroom 48 Laight Street #5S, which sold at $1,698/ft,

or more like

• the “2,500 sq ft” “architecturally designed” #3C at 117 Prince Street, which sold at $1,240/ft

Two different markets, right?

does #6E even fit in the building?
When I used #6E as a comp (at “2,500 sq ft”, als) for my May 23 discussion I did not need to look at other sales in the building. But now I am intrigued (provoked!) into doing so. The last sale in the building was the east penthouse: #8E cleared at $3.940,627 on April 21, 2011. As noted above, that is a duplexed ( and rounded) “2,637 sq ft” (as the deed record says), with a “668 sq ft” private roof terrace, although the listing claimed “3,000 sq ft”. A simple riff would ballpark the outdoor space as 50% of the interior, implying an adjusted value of $1,326/ft.

At $1,608/ft, #6E just outsold #8E by 21% on a dollar per foot basis. Does that seem rational, or efficient to you?

Before that, loft #3W (overlooking Mercer, not Broadway) sold on December 23, 2010 at $3,000,000, the same price at which it sold on May 7, 2007. That’s $1,570/ft using the “1,911 sq ft” in the Condo Dec Schedule B, roughly at par with #6E in May 2012. That should make efficient market theorists more comfortable with #6E, but start them on worrying about the penthouse ‘discount’.

we’ve been here before, of course
Really attentive Manhattan Loft Guy readers (thank you, thank you!) will remember that the last time I addressed this kind of thing at length I pilloried REBNY for a lack of leadership. My November 3, 2010, the square footage dilemma: REBNY "leads" by protecting brokers, not buyers, took off from (and took off on) a REBNY acknowledgment that square footage measurements are very important to consumers and then, instead of looking for a way to help consumers, advised REBNY members how to avoid liability for quoting measurements that turn out not to be correct.

See that post for my suggested rule (in this case, loft #6E would easily be marketed as “1,990 sq ft” based on the Condo Declaration, or actually (re)measured by an agent) and for the very informative video discussion by industry maverick and occasional blogger Doug Heddings, which features The Miller. I also point out that REBNY has had a guideline for measuring square feet in office buildings since 1987. (Cynic that I am, I have to wonder if there is such a standrad because there are often major players who are REBNY members on both sides of an office building deal.) Sadly, there is no will to fix this, even though REBNY knows this is a big deal for consumers:

We all know that buyers of apartments and townhouses in New York City often look to the approximate square footage of a property as a measurement for a property’s value. Indeed, often one of the key factors for a buyer in their decision to purchase is a calculation of the cost or price-per-square foot of an apartment or townhouse.

I will stop here, before I spin off again…

© Sandy Mattingly 2012