the ‘complete transformation’ does not explain 28% gain over 2010 for 312 East 23 Street loft

by Sandy MattinglyPosted on Posted in lofts in other neighborhoods — No Comments ↓
this broker babble is accurate, but …?

You’d be forgiven for thinking that the reason that the “1,200 sq ft” Manhattan loft #7B at 312 East 23 Street (the Foundry) just sold for $1.24mm after having been purchased in July 2010 for $965,000 was that the brag worthy “complete transformation” (as babbled very enthusiastically, below) was an intervening, game changing, event. After all, the  marketing enthusiasm is almost boundless (but the italics are mine):

This stunning and dramatic loft has undergone a complete transformation, integrating luxurious finishes with thoughtful and creative design. This architect-designed 1,200 square foot home offers a custom kitchen with breakfast bar and stainless appliances including Viking and Subzero, two lavish spa-like designer baths and two serene bedrooms. This incredible layout also offers a spacious living room with open city views, separate dining area, gallery style foyer and three exposures (North, East and South). Sliding rift oak panels and floor to ceiling frosted glass doors easily transform the second bedroom to an open space, a den or tranquil home office. Exceptional features include soaring 11-foot barrel vaulted ceilings, exposed brick, built-ins throughout, custom lighting, built-in sound system, washer/dryer, and gleaming oak floors.

The eye just sort of slides over that “has undergone” tense, reading it as though it has recently undergone these magnificent changes. I guess this deserves a tip of the hat, in much the same way as the “as if” word trick worked in that artful babbling (“[a]s if pulled from the cover of Architectural Digest…”) in my October 24, did a rising tide sell 250 Mercer Street mini-loft, unsold in slack of 2013?.

The loft #7B  did not say that the loft was recently transformed, only that it has been transformed. In that sense, however, any true loft (one repurposed from a prior industrial or commercial use into a residential space) has been transformed. Though not necessarily worthy of being bragged about….

Here was the broker babbling back in 2010 when the loft sold for $965,000:

This stunning and dramatic loft has undergone a complete transformation, integrating luxurious finishes with thoughtful and creative design. This architect-designed 1,200 square foot home offers a custom kitchen with breakfast bar and stainless appliances including Viking and Subzero, two lavish spa-like designer baths and two serene bedrooms. This incredible layout also offers a spacious living room with open city views, separate dining area, gallery style foyer and three exposures (North, East and South). Sliding rift oak panels and floor to ceiling frosted glass doors easily transform the second bedroom to an open space, a den or tranquil home office. Exceptional features include soaring 11-foot barrel vaulted ceilings, exposed brick, built-ins throughout, custom lighting, built-in sound system, washer/dryer, and gleaming oak floors.

If there is a single change of word or in punctuation, I missed it. (Same agent, by the way, so we don’t have a plagiarism issue.) So the transformation had been completed by 2010, if not earlier. (I can’t find a sales listing prior to 2010.) Technically, as true in 2014 as it was in 2010, but that feels just a bit … off. I have no trouble with “triple mint” as a description of a long-ago renovation, so long as it’s truly worthy of the mints.

But no matter. Anyone who saw the place was not deceived by its condition (it was what it was). And The Market demonstrably did not provide a premium for the mistaken belief that the loft had been upgraded between 2010 and 2014.

to demonstrate, I give you the StreetEasy Manhattan Condo Index …

… which was 187.62 when #7B sold as “completely transformed” in July 2010 and 235.92 in August this year (the most recent month in the Index). That’s a gain in the overall Manhattan residential real estate market of 26%, quite tolerably close enough to the 28% difference between $965,000 and $1.24mm to be ‘market noise’.

I find that heartening.

No doubt, the loft is lovely. (You’ve now read the enthusiastic babble, twice.) And was rewarded by The Market with a building record price, both on an absolute basis and apparently as dollars per foot (see the StreetEasy building page, Past Activity tab).

a fascinating head-to-head loft neighbor competition

Loft #7B came to market on May 14 at $1.225mm and found the above-ask deal by June 10. At “1,200 sq ft” and with two full baths and two real bedrooms, loft #7B was a larger, premium version of the upstairs loft #8A, which is only “approximately 1,000 sq ft” (our listing system has it at “1,100 sq ft”, curiously), one-and-a-half baths and a floor plan that suggests it started life as a 1-bedroom (before being transformed into a 2-bedroom, one might say). (If the link doesn’t work, see the floor plan on the StreetEasy link to #8A, above.) Loft #8A also came out on May 14 (at $999,999, correcting to $995,000 the next day) and took until July 1 to find the above-ask contract that closed on September 16 at $1,016,000.

Loft #8A was also enthusiastically babbled, with an architectural designer owner reference and claim to “quality customarily found in far more expensive homes in NYC”. It may have even better light and better views than #7B, but The Market preferred #7B to #8A by a hefty 22%. Given the similar quality and utility, I find that surprising. But there must be reasons that I don’t pick up on from the listing descriptions, photos, and babbling, as every potential buyer for #7B must also have seen #8A in the 4 weeks it took #7B to get into contract.

Both sellers were happy, of course, with #7B clearing $15,000 above ask and #8A $21,000 above ask. Everybody wins, including the buyers for these two lovely and moderately-sized lofts, who were forced by the competition to go over ask.

 

 

Tagged with: , , , , , , ,

did an ‘upgraded’ kitchen add $750,000 to way West Village loft at 380 West 12 Street?

by Sandy MattinglyPosted on Posted in Loft neighborhoods - West Village — No Comments ↓

21 months, that improved kitchen, a new bedroom, and those $750,000 between sales

Unless you know the Before and After details (I don’t), the recent sale of the “1,400 sq ft” Manhattan loft #2E at 380 West 12 Street (in the aptly named Waywest) is fraught: it was sold on September 24 for $2.575mm by the folks who bought it on December 27, 2012 for $1.825mm. In between, the overall Manhattan residential real estate market was up 22% (per the go-to StreetEast Manhattan Condo Index, of course), while the similar arithmetic for loft #2E is 41%. There’s some ‘extra’ appreciation here, no doubt due (in part) to the changes in the loft from the December 2012 purchase and the September 2014 sale.

No professional agent would soft-sell an extensive renovation with broker babble as modest as this:

The recently upgraded pristine cooks kitchen features a large counter top space, Viking cook-top & oven, Subzero Refrigerator, microwave and dishwasher and a wine cooler drawer. … The master suite features a large walk in closet …. The master bath is outfitted with a glass enclosed shower. The apartment features two more generous sized bedrooms and one more bathroom.

The 2012 floor plan was very similar to the present version, though with only two bedrooms.

the only thing completely missing in 2012 was the 3rd bedroom (from Corcoran site)

The present version suggests some other (minor?) changes:

the new bedroom borders a new kitchen wall and new closets for it and the master (a Nest Seekers pic)

Especially with curves and irregular shapes, it can be dangerous to put too much faith in floor plans (which are, after all, not to scale, blah blah blah), so I assume the funky bedroom is exactly as it was. The addition of the 3rd bedroom provided a wall to anchor (and expand) one end of the kitchen, and to do the same for the master closet. I have to guess that the master bath is reconfigured, from tub to that “glass enclosed shower”, but there’s not much bragging about that change (if it was a change). The kitchen and (possibly) the shower are much more expensive elements to change than the mere carpentry of adding maybe 25 linear feet of walls for the new bedroom and closets.

Whatever they spent, it appears to have been money very well spent. It’s not this simple, of course, but the StreetEasy Index implies that the ‘extra’ value realized last month over the end of 2012 was about $350,000. I am highly confident that the (merely) “upgraded” kitchen and (possible) new shower and the miscellaneous carpentry cost the sellers much less than $350,000. Nicely played, folks; nicely played.

a weird layout to get $1,717/ft

It’s obvious from the listing photos that there are no views from the much-ballyhooed windows (babbled as “impressive over-sized” and again as “expansive”). And that loggia? Nothing to see here, folks, nothing to see:

nothing to see, that is, unless you like walls (Nest Seekers pic)

Whatever else you can say about this loft, living here is an entirely interior experience, with no thrills to be gotten by standing at the windows, gazing. You can take some air out on the loggia, but there’s not likely anything to be seen from here, either (you’d see that premium feature in the babble, right?), though you might be able to look up and see a slice of sky. And fancy kitchen appliances aside, this was not marketed as a loft with deluxe finishes. (Not a single material is given a proper proper name in the babble, for example.) Yet if the loggia is worth as much as half the interior space, the loft just sold for $1,717/ft (higher, if the loggia is worth proportionately less). With a very oddly shaped 2nd bedroom.

That value compares very nicely to the last sale in the building for which StreetEasy has a size, the “1,975 sq ft” duplex #7G, which sold a year ago at $2.995mm ($1,516/ft) in no-detail-overlooked condition and a host of proper proper names for materials, appliances, and fittings. (The StreetEasy Index is up 8% in that year, but that loft is much nicer than #2E.) And $1,717/ft looks very good in comparison to the smaller (“1,100 sq ft”) #7C that sold in June 2013 that sold for $1.605mm ($1,412/ft, if you count the small terrace as worth half the interior), which had an “updated” kitchen, “open city views including the Empire State Building”, and river and sunset views from the terrace. (The StreetEasy Index is up 20% in those 15 months, but that one looks to be in at least as good condition as #2E but with those views.)

Loft #2E will not appeal to the a great many buyers. It clearly had great appeal for the new owners. Enjoy!

Tagged with: , , , , , , , , , , , , ,

did a rising tide sell 250 Mercer Street mini-loft, unsold in slack of 2013?

by Sandy MattinglyPosted on Posted in loft neighborhoods village — No Comments ↓
finding the right price at the right time for a Manhattan loft sometimes takes time

Asking $630,000 for the tiny (“600 sq ft”) Manhattan loft #B1507 at 250 Mercer Street was too high a price in 2013. Heck, even $599,000 was too high a price last year. But coming back to market at $690,000 this year, only five months after slinking off the market at $599,000 worked. If anyone asks you how the Manhattan residential real estate market is different from the market last year, you could point them to this one:

April 12, 2013 new to market $630,000
May 13 $619,000
Sept 12 $599,000
Dec 3 off market
May 9, 2014 change firms $690,000
June 22 contract
Sept 25 sold $711,000

(Two periods of hiatus in 2013 that total about 6 weeks, omitted.)

Would you have been bold enough to raise the price in May?

To restate the obvious, the May 2014 asking price was at least 15% higher than The Market had been demonstrably unable to provide at the end of 2013. Yet The Market loved the loft at that price, so much so that it goosed the clearing price up to $711,000 … 19% above the last impossible asking price of 2013.

In terms of the overall market, the StreetEasy Manhattan Condo Index was up only 5% from the last full month loft #B1507 was on the market in 2013 until May 2014 (from 217.06 to 228.83), so this loft performance was unusual. D’oh. (Up 9% to August 2014, the most recent month for which the Index has data.)

How likely is it that this mini-loft finally sold because The Market rose up around it? The StreetEasy Index suggests … not very likely. But The Numbers are The Numbers, right?

bloggers can show sympathy, though The Market never does

I have to sympathize with the first sales team. They did everything right from a marketing perspective, but The Market (irrationally, in clear retrospect) refused the offering. I mean that this bit of broker babble is rather terse, but enthusiastic and descriptive:

A mint loft like studio with fantastic wide open city views in move in condition. There are high 11.5 foot ceilings, oversized windows, newly renovated kitchen with full size stainless steel appliances and bathroom with a soaking tub.

And their photos are much better. Note especially the contrast between this photo in support of the “fantastic wide open city views” and the one from 2014 on StreetEasy in support of “unobstructed spellbinding views of Manhattan”:

this 2013 BHS photo from our listings database looks better on StreetEasy

(I can’t get the 2014 image to copy-and-paste, except as an unhelpful thumbnail, but compare the photo above to listing photo #6 from StreetEasy.)

The 2014 broker babble is a bit more descriptive, but not materially, IMHO:

This loft offers unobstructed spellbinding views of Manhattan and features industrial style attributes like dramatic 116 high ceilings and oversized windows, complemented with elegant beamed ceilings.The apartment has been gut renovated and offers a great use of space with dressing room, a sleeping loft as well as a spacious new chefs kitchen with stone countertops and ample storage space.

In other words, the mini-loft was professionally exposed to the market for 6 months at the end of 2013 without selling. The (eventual) selling price makes that a mystery. So does other activity in the building last year.

why this, but not that?

Remember: loft #B1507 was gut renovated, with a sleeping loft, and those “unobstructed spellbinding views of Manhattan”. You’d think it would have sold in the low $6s (or just a smidge under, to use a technical real estate term), and you’d think it would have sold in that range before others in the building of similar size on lower floors and/or not quite as well-dressed. How to explain the fact that the “600 sq ft” studio loft #B804 sold on September 4, 2013 at $599,000?

That babble suggested a bit lesser renovation than the “gut” in #B1507 (“updated kitchen has stainless steel appliances and a beautifully renovated bathroom in tumbled marble and slate”) and boasted of sun but not views. In a rational market, #B1507 would sell before #B804 during the months they competed head-to-head.

May 10, 2013 new to market $615,000
June 10 $599,000
July 16 contract
Sept 4 sold $599,000

It certain appears as though the units knew they were going head-to-head, with #B1507 dropping its price to within $5,000 of #B804 within 3 days of the latter hitting the market. Is it possible that the #B1507 seller stubbornly refused to drop from $619,000 until after #B804 not only went into contract, but until it sold? Possible … of course, but there was good reason to think that the higher floor and actual view should be worth at least $20,000 more.

Next consider the “600 sq ft” studio loft #C408, which also went head-to-head with the pair above, with fewer charms still. That babble was very restrained, with a hint of renovation to come and no bragging about finishes, or light, no photos of the kitchen and a photo showing a pedestrian bathroom. This marketing history also seems to be a reaction to #B804:

May 31, 2013 new to market $579,000
June 7 $599,000
July 5 $579,000
Oct 8 contract
Oct 17 sold $579,000

This one was well inferior to #B804 (eventually acknowledged by the seller with the July 5 return to original pricing), and even more so to #B1507. Did this buyer, too, not make a play at #B1507?

The performance of the even smaller studio loft #B604 (“525 sq ft”) must have been even more confusing (infuriating!) for the #B1507 seller. That one was babbled much more enthusiastically than any of the others, but also asked for a significant premium. Grudging props to the agent for sliding the “as if” intro by at least some buyers:

As if pulled from the cover of Architectural Digest, this loft features industrial style attributes like the raw metal and concrete staircase which complement the dramatic 116″ high ceilings and oversized windows. The apartment was recently gut renovated by a professional designer and offers a great use of space with a sleeping den as well as a spacious new chefs kitchen with stone countertops and a large bathroom with Emprador dark marble.

Let’s assume better condition even than #B1507, but note that there’s no bragging about light, let alone views. This seller did not consider the loft to be in competition with the others, and The Market agreed:

June 18, 2013 new to market $750,000
Sept 5 $725,000
Sept 28 contract
Dec 5 sold $720,000

(I’ve ignored the StreetEasy second contract, as that appears to be a record-keeping revival of the listing, rather than a return to active marketing.)

This tiny beauty sold for at least $121,000 more than the trio above, which represented more than $200/ft. That is one hell of a premium.

buyer expectations and reactions don’t have to be rational

The failure of #B1507 to sell in 2013 really stands out in this crowd.

The 2013 buyer pool for tiny lofts in Greenwich Village saw these four neighbors, one of which was outstanding for having light and views (#B1507) and one of which was (apparently) outstanding for being nice enough to have appeared on a magazine cover, without actually having done that (#B604). The Market at the end of last year absorbed the best, and the two that were merely ‘okay’, but not #B1507, even though #B1507 was priced well below the best one, and only slightly above the two that were inferior to it.

In 2014, however, the response to #B1507 was completely different.

The Market in 2014 reacted to #B1507 as if the sales of #C408 and #B804 at $579,000 and $599,000 were simply not relevant; indeed, as though its own failure to sell in 2013 was irrelevant. The Market in 2014 reacted as though #B604 at $720,000 was the only relevant thing in these intertwining histories from 2013. And the conclusion drawn was that #B1507 was kinda sorta like #B604.

Keep in mind that this is not an explanation for what happened, but my best backwards facing rationalization, given what happened.

If this is right, the genius of the 2014 marketing campaign was in the (otherwise, to a data nerd) irrationally aggressive asking price, set by reference to #B604 and ignoring the former head-to-head comparisons with #C408 and #B804. The $699,000 asking price needed only 6 weeks in the Spring of 2014 to drive the clearing price within 4-figures of the super premium value achieved by #B604.

There is one intervening data point, relevant enough to extend this long post. Mini-loft #B1207 came to market 7 weeks after #B1507 vacated, and is an obvious attempt to build on the #B604 super premium sale. The same agent used much the same babbling (with the same “as if” intro), again to great effect. The now familiar verbal flourishes:

As if pulled from the cover of Architectural Digest, this loft features industrial style attributes like dramatic 116 high ceilings and oversized windows, complemented with elegant dark wooden beams. The apartment has been gut renovated by a professional designer and offers a great use of space with a sleeping loft as well as a spacious new chefs kitchen with stone countertops and ample storage space. The apartment has two Murphy tables. The wood blanks on either side of the TV unfold.

The (great) effect:

Jan 30, 2014 new to market $710,000
April 8 contract
Aug 22 sold $710,000

Now the #B1507 owner had a new super premium comp, in addition to #B604. So, back to market it came, one month after the new comp went into contract.

You will sometimes hear the advice that a price can be ‘too low’ to attract the right buyers. I can’t remember seeing as good an example of that principle in the entry loft niche as this 2013 set of four studio lofts at 250 Mercer Street, with #B1507 as ‘too cheap’ in 2013 (inviting interest from buyers who only wanted ‘a deal’) and ‘just right’ in 2014 (attracting buyers who would pay for quality).

Fascinating.

Tagged with: , , , , , , , , ,

Flatiron loft gains 71% over 2010, 5% over ask, for no apparent reason

by Sandy MattinglyPosted on Posted in loft neighborhoods flatiron — No Comments ↓
Manhattan lofts with outdoor space sometimes do weird things

The “1,280 sq ft” Manhattan loft #2W at 11 West 18 Street that just sold for the very crooked number of $2,101,111 was purchased by these recent sellers in October 2010. The four years were good to these folks, as their purchase price was a modest $1.225mm. This is a coop, so this pair of same-loft sales did not factor into the StreetEasy Manhattan Condo Index of repeat sales, which regular readers of Manhattan Loft Guy know that I treat as a single number proxy for trends in the overall Manhattan residential real estate market. That index in October 2010 was 188.28; now (or, in August, the most recent month with data) it is 235.92.

My calculator tells me that that’s an overall market gain of 25%, and that loft #2W appreciated by 71%. That makes me wonder. I wonder if (had it been a condo) StreetEasy’s ‘magical unicorn dust’ would have excluded this pair of data points as aberrant. I wonder how many bidders there were, to drive the September 11 resale above the ask of $1,999,999. I wonder whether any of those #2W bidders were among the disappointed folks who failed to buy the loft immediately upstairs (#3W sold for $1,627,500 on May 12, well above the ask of $1.475mm), which was a tough comp because it is slightly larger, lacks the terrace that #2W has, and was in “bring your vision” condition instead of the “fantastic” condition claimed for #2W.

There’s nothing like writing your own blog, as I get to think (and write) out loud about things that I wonder about. Much to chew on here, but I’ve tipped my hand in the sub-head. When all else fails in rationalizing a downtown Manhattan loft sale that includes outdoor space I tend to fall back on the buyer pool that has to have outdoor space may overpay for that unusual amenity. Let’s start chewing on the facts, before leaning into conclusions.

same loft, same condition, 47 months apart

The floor plan, the photos, and the details in the broker babble all suggest the loft was not improved by the 2010-buyers-turned-2014-sellers. Now:

ornate tin ceilings, a custom cherrywood-and-granite kitchen with appliances by SubZero, Viking and Wolf, exposed brick walls, central climate control and in-unit washer/dryer. … A long hallway… features an expansive wall of built-in closets, … renovated bathroom with two sinks and a large soaking tub. The master bedroom … [has] multiple walk-in closets and many additional storage areas.

Then:

mint condition …. original tin ceilings, exposed brick, custom Cherrywood work throughout, excellent storage and walk-in closets, washer/dryer and central AC. The custom wood-and-granite kitchen is equipped with SubZero refrigerator, Wolf oven, Viking convection cooktop and wine fridge. The bathroom offers double sink and a large soaking tub.

Maybe something changed on the first floor, leading to the skylight that used to sit in the terrace being covered over, increasing the usable outdoor space. This was the terrace in 2010:

the skylight is pretty prominent, right?

The terrace now looks like this:

is this photo simply well cropped, or is the skylight gone? (Town photo)

This issue aside, I have no reason to think there has been any change of economic significant to the space in between selling for $1.225mm and $2,101,111. (I can see that the recent sellers shortened the kitchen island considerably, but it was huge and is now perfectly conventional. I doubt that change has economic significance.)

No, the only internal change I see of economic consequence is the calendar.

one strong sale in the building can lead to another

When the recent sellers bought loft #2W there had been no sale in the building for several years at least, spanning the froth and the the peak. But when they sold, the folks upstairs had just sold #3W above ask, as noted above. Zillow might treat this pair as direct comps, but #3W is bigger (at “1,450 sq ft”, it is a full rectangle, lacking the cut-out that #2W has), was in worse condition (“[f]irst time on the market in over 20 years”), and lacked the terrace that distinguishes #2W. And loft #3W is one flight of stairs higher than #2W … the lack of an elevator being a fact curiously omitted from the recent #2W babble.

There are a great many adjustments to make between the two lofts, with #2W plus factors including condition, the lower floor, and the terrace, with the only adjustment in favor of #3W being interior size. So let’s just play with numbers here. Loft #3W, with all these deficits, got pushed to $1,122/ft. Guesstimate $200/ft as a low ball full renovation, and $50,000 as the deficit for the extra flight of stairs, and the implied interior valuation for #2W comes to $1,356/ft, or approximately $1.74mm. I don’t love this ballparked result, because it implies the “442 sq ft” terrace was then worth about $827/ft, or about 60% of the value of the interior, but I can live with it as a ballpark. (For more on that, see my riff on The Miller from May 6, 2010.)

All this fuzzy math aside, the key to applying the #3W sale to #2W is that #3W closed 12% above ask the day #2W came to market. Potential buyers for #2W were on notice that there was at least one person who bid for #3W still out there, who had already vetted the building and the micro-neighborhood, and who might well appreciate that #2W was already ‘done’, and had the terrace. The result was a second consecutive sale in the building above ask.

The #2W sellers should send a bottle of champagne to the #3W buyers for breaking a price ceiling and re-setting values in the hyper-local market at 11 West 18 Street.

bringing it all back to The Index, and the truisms that flow therefrom

As noted, #3W at $1,627,500 was the ice-breaker for #2W. The #3W seller coming out at $1.45mm started that ball rolling, which was an aggressive approach based on the last sale in the building. That sale was, of course, #2W in October 2010 at $1.225mm. If the #3W seller and agent used the #2W sale as a ballpark comp, then adjusted for condition, size, the lack of a terrace, and the calendar, I suspect they’d have come out at an even lower price than they did.

That math would have looked something like this: starting with the terrace adjustment, ball parked at 50% of the value of the interior feet, implies #2W was worth about $817/ft, then adjusting for time based on the StreetEasy Condo Index (up, to $1,021/ft), then adjusting for condition (down, say $200/ft, to $821/ft), yielding about $1.2mm, then adjusting for the extra flight of stairs (say, $50,000).

All this playing around would suggest a round number asking price of $1.15mm for #3W this year. Obviously way too low. Obviously, not the way the #3W seller and agent (or competing buyers) approached #3W.

This post is long enough (and I’ve gone from wondering to true head-scratching), so I won’t do what the interested parties must have done about #3W: looked at sales in 2014 of lofts of similar size nearby, but not in the building. Obviously, that analysis suggested a much higher value for #3W in 2014 than playing around with a hard-to-comp #2W sale, adjusted for time based on the StreetEasy Condo Index.

Did I mention (today) that comping is hard?

Tagged with: , , , , , , , , ,

did Tribeca Summit loft get slammed for being second floor?

by Sandy MattinglyPosted on Posted in loft neighborhoods tribeca — No Comments ↓

or, is there another explanation for breaking the comps at 415 Greenwich Street?

This looks pretty good at first blush: the “2,276 sq ft” Manhattan loft #2C at 415 Greenwich Street (the Tribeca Summit) sold on September 4 for $4.545mm, or $1,997/ft. Second blush is not bad either: just over 3 months to contract, needing a single price drop from $4.75mm. Further blushing raises some serious questions, however. In view of a consistent and recent string of very comparable sales in the building, did the sellers start at only $4.75mm in order to start a bidding war, and, of course, given that question, why did The Market not refuse to go to war, but to treat this loft so shabbily?

Let’s start with the charms of the space.

very enthusiastic Manhattan loft broker babbling is appropriate sometimes

The agents think the space is very charming:

Bright & Airy Loft perfection in Premier Full-Service Condo Building! Remarkably expansive, this state-of-the-art 2,279 square foot space is an architectural masterpiece featuring bamboo flooring, beamed ceilings, and oversized windows with both northern and western exposures. This loft showcases a Bulthaup b3 eat-in-kitchen with Viking cooktops, Miele oven, SubZero refrigerator and Bosch dishwasher. A flawless dreamloft wrapped in an elegant, landmarked TriBeCa full-service building.

The proper proper name check is limited to the kitchen, but the bath looks like it has proper materials, at least:

master bath with bath + walk-in shower, but not babble-worthy, alas (pic per Elliman)

That’s curious restraint for a bit of babbling that hits “perfection”, and “state-of-the-art”, and “architectural masterpiece”, not to mention “flawless dream loft”, but I suppose there are limits to everything. To me, however, the genius in the space is the floor plan:

3 good-sized bedrooms, each en suite, with that massive master bath, and a 500+ sq ft living room with corner exposures … nice!

That’s a great deal of utility in “2,276 sq ft”: three very good-sized bedrooms and three-and-a-half-baths. There are four west windows looking across Greenwich Street and four more north across Laight Street. The babble claims “bright and airy”, which seems right, given the corner location.

I can understand this footprint as a 3-bedroom layout, but I wonder how long it will be before someone in the “C” line reduces to 2 bedrooms. Just imagine the volume in the great room if you take out that second bedroom on the west wall. It wouldn’t be cheap, as you’d have to swing the kitchen around to fully recapture the bedroom space, but the result would be a nearly square great room of about 1,000 sq ft.

there used to be an efficient hyper-local loft market in the “C” line at Tribeca Summit

When #2C came to market on April 4, there were three “C” line neighbors in contract:

contract date closing price
#6C Jan 20 $4.93mm
#7C March 24* $5.15mm
#3C April 1 $4.93mm

* #7C fell out of contract 18 days later for reasons unknown, but went back into contract by May 5; note that it sold above ask.

So far as I can tell from the listings descriptions, photos and floor plans, these units are identical to #2C. The higher floors get better light and a have a west view, while loft #3C gets only gets better light but no better view, as the west windows don’t quite clear the building across the street, as is apparent in the main listing photo:

blue sky peaks out above the building across Greenwich Street from the 3rd floor (a Stribling photo)

Fans of the Efficient Market Theory love the spread between the 6th and 7th floor units, but are mildly confused by the 3rd floor parity with the 6th. Let’s just say that this trio is within ‘market noise’ range of each other.

did #2C simply run of out competing buyers?

I wonder if there is something about the second floor here that I can’t see and don’t know. But if you had asked me where to price #2C on April 4 (and if I knew the contract prices for the three neighbors), I’d have said $4.93mm. And I ‘d have been pretty confident that the clearing price would not be significantly discounted from that ask. Yet the sellers and agents went out at $4.75mm.

And sat.

I’d have thought there was a reasonable chance for a bidding war off that ask, as each of the three neighbors sold above ask. I’d have been wrong. It took a price drop to $4.675mm to finally sell #2C at $4.545mm.

I have a theory, but it is only a theory, and a backwards looking one, at that. (Again, if there’s something about the second floor invisible to me … well, I just don’t know what that might be.) There are limits to the depth of any buyer pool. In this case, the buyer pool for 3 bedroom lofts in high-amenity condos in northwest Tribeca had no trouble swallowing the three neighbors between January 20 and April 1 (May 5), but it choked at a fourth sale on this corner, at this price.

(Again: note how weird it is that the pool was deep enough to put #7C back into contract by May 5 above ask, after it fell out of contract the week after #2C came out. None of the disappointed suitors for #7C were willing to pay more than $4.545mm for #2C, which competed head-to-head with #7C at a lower price for almost a month.)

Any rational observer would have said on April 4 that #2C would sell near $4.93mm because that was what the comps said. Same building, same corner, same floor plan, same finishes, just a little bit closer to the sidewalk. Even though these four “C” line lofts are as close to commodities (when compared to each other) as the downtown Manhattan loft market is likely to present, #2C sold at an 8% discount to the 3rd floor (and 6th floor).

truth in aphorisms

It takes a willing buyer and a willing seller to set THE market price for a given loft. In this case, there simply was no willing buyer above $4.545mm. While I am merely disappointed (and confused) as an observer, these #2C sellers were all that, and about a half million bucks poorer. They have my sympathies.

 

Tagged with: , , , , , , , , ,

condition trumps location, earns $1,875/ft in busy corner of northeast Tribeca

by Sandy MattinglyPosted on Posted in loft neighborhoods tribeca — 2 Comments ↓

not quite a million over 2007 purchase

The “1,200 sq ft” Manhattan loft #15C at 395 Broadway that just sold at $2.25mm has seen some upgrades since it was bought by the recent sellers back in April 2007 at $1.295mm, but it is hard to say how much, beyond carpentry. The overall Manhattan residential real estate market is up only 16% from the April 2007 purchase and September 23 sale (per the StreetEasy Manhattan Condo Index, of course), while this lovely little loft is up 74%. Guesstimate 2 new spectacular baths, a little kitchen tinkering, and some carpentry to create two rooms in what was formerly an open loft at … what? … $200,000?? That’s gotta be high, but if you add $200,000 to the April 2007 purchase price, the sellers’ gain drops to an even 50%, still vastly over-performing in relation to the overall market.

Let’s start with what the recent sellers started with. The StreetEasy listing from 2007 lacks photos or floor plan, and the description just peters out mid-sentence. But here’s the relevant except from the broker babble back then from our listings system:

Currently configured as an open loft, this easy 2-bedroom 2-bath is situated on the top floor of an excellent prewar elevator condo building. 4 huge north facing windows and an oversized skylight allow light to stream in all day. Designer chefs kitchen with Gaggenau oven and range, Meile dishwasher, Viking refrigerator, Varenna mini bar and cabinetry, and a Sub zero wine cooler, 11 foot ceilings, 5 inch Brazilian cherry plank floors, walk in closet with custom shelving, and a magnificent Kohler bath with a double 2 person steam shower and Jacuzzi tub that leaves nothing to be desired. Apartment even has its own water pump for extra power.

The 2014 babble about the kitchen sounds similar:

fully-equipped chef’s kitchen with a Gaggenau oven and range, brand new Sub-Zero refrigerator and Sub-Zero wine refrigerator, Meile dishwasher, Varenna mini bar and cabinetry….

And the 2007 kitchen photo in our data base suggests that the new kitchen is basically the old one, with the kitchen shifted from the back wall to the near corner, with new facing on some cabinetry:

the new frig is where this wastebasket is, the same cabinets are now blackened, and maybe the island has been re-shaped, right?

The new one looks like this, of course:

(from Town, of course) that’s a “brand new Sub-Zero”, replacing the old Viking frig, and a new island top; the rest looks familiar

There’s still Brazilian 5″ flooring and central air (specified in our listing system, though not in the babble) but the formerly deluxe (single) bath (no picture survives, alas, but it was a “magnificent Kohler bath with a double 2 person steam shower and Jacuzzi tub that leaves nothing to be desired”) is now two jazzy “spa-like baths are featured on Houzz, the largest collection of design and decorating ideas on the internet”. In other words, they ripped out one lovely bath in favor of two different and lovely baths. You own it, you can do what you like, but it is not likely a rational market would give them credit for more than a second bath, in terms of added value. The new home theater also adds some value, but that can’t be significant at this scale.

Again: bought for $1.295mm in April 2007, upgraded as noted, and re-sold 3 weeks ago for $2.25mm. Nicely played, folks; nicely played.

loving baths, and closets

The floor plan tells you how much those recent sellers like baths and closets, Of course, the dimensions given are only approximate and the drawing is not to scale (blah, blah, blah disclaimers!), but compare the scale of the master bedroom to that of the master bath and that humongous closet:

it can’t be a coincidence that there are no dimensions given for either bedroom

The master utilities, taken together, are longer and wider than the master bedroom, and are maybe half again as large. The study/guest room is as wide (er, as narrow) as the master closet, but shorter. Not to mention irregular due to the sellers’  need for a second full bath. From the kitchen photo comparison above, it seems pretty clear that the 2014 sellers extended the kitchen and the master bath and the walk-in closet east (by the width of the new frig), and that the principal renovation effort was behind (south of) the kitchen wall.

Since that’s an area of about 400 sq ft, I doubt they spent as much as the $200,000 guesstimated above.

location, location, and location are, in each case, a matter of taste

It is the job of an agent to babble in an enthusiastic manner, about things for which one can be enthusiastic about. This qualifies:

The prime Broadway address between Walker and White Streets sits amid excellent gourmet dining, shopping, incredible schools and transportation options, and in close proximity to City Hall, SoHo, TriBeCa, Nolita and Chinatown. And steps from a brand new Gourmet Garage on Franklin.

In Tribeca terms, “395” can qualify as a “prime” Broadway address, as there are none better (yet) in Tribeca. And the location is “amid” a bunch of stuff and “in proximity to” even more stuff. Indeed, even a cynic would admit that there is very good subway access here, especially compared to prime Tribeca buildings west of Hudson, and north. But if you’ve walked this block of Broadway you know that no one will step out of the lobby and think “charming” when they regard the pedestrian frenzy (alongside the gentlemen-start-your-engines experience when the canal Street  light changes to release the tour buses, taxis and trucks that have been impatiently waiting). In other words, the positives of this precise location will appeal to some in the buyer pool (obviously), but will be at least a negative (if not a deal-breaker) for others.

At the moment, the street level retail along Broadway is not very edifying, even extending up into Soho. Nor are there any high end loft buildings until you get to Franklin at least, and then not many.

but wait … isn’t $1,875/ft evidence of a high-end loft building?

395 Broadway is a lovely (condo!) building, but it will never be confused with a high-amenity condo, even with “live-in super who accepts packages, laundry room on every other floor, a bike room, and a stunning planted roof deck with 360-degree views”. Until a few years ago, The Market consistently put lofts here in a non-prime price zone for Tribeca. Manhattan Loft Guy readers have gone here with me a lot over the years, and this is the second sale here that is not only above ask (here, it was a mere $1.98mm, I’ve forgotten to note until now) but a sale that will be impossible to (rationally) fit into comps.

I touched on this in my February 15, 2013, about that bidding war for (not THAT) well-dressed 395 Broadway loft, about the pretty spectacular#14A  when it sold for $2.106mm off an ask of $1.675mm. See that post for links to many prior Manhattan Loft Guy visits to 395 Broadway, but here’s how I concluded that post:

Stepping back from this dynamic sequence to cold hard facts, before October 25, 2012 no one looking at market data could have thought that loft #14A was worth anything close to $2.016mm. The initial ask was in the range of a reasonable upper limit, based on 6 data points of lofts of the same size, in the same building, from December 2010 through August 2012, all in a reasonably narrow range. There is no reason to think that anything about this building became more attractive to The Market in the Fall of 2012. There are no reasonable comp adjustments in favor of #14A over the prior 6 sales that I can imagine that justify #14A at 48% more than the prior building high sale.

I am sure there was no mortgage contingency on the winning bid. I would love to see the bank appraisal if there was a mortgage.

Since the #14A sale at $2.106mm 21 months ago, the overall Manhattan residential sales market is up (thanks StreetEasy!) 20% and there have been no fewer than five sales at 395 Broadway before #15C, at $1.9mm, $1.825mm, $1.589mm, $1.65mm, and $1.55mm (StreetEasy build page, here), with those last three having been within the last 5 months. In other words, The Market treated the #14A super sale at $1,680/ft as an outlier.

But here’s #15C at $1,875/ft. Well within #14A plus 20%, but then you have to ignore the five intervening sales. And the fact that #14A had better views than #15C does, and may be even more nicely renovated. As I said above, “I am sure there was no mortgage contingency on the winning bid. I would love to see the bank appraisal if there was a mortgage.”

corner to corner, northwest to northeast in Tribeca

The buyer pool for loft #15C has absolutely no overlap with the pool for the loft three times larger that I hit yesterday (quiet & “quintessential” northwest Tribeca loft in move-in condition sells at $843/ft). But c’mon … $843/ft and $1,875/ft.

I find this pair fascinating. That one punished for new development that will not “obstruct” the south or west windows, despite being in a “high rent” micro-nabe; this one not punished for being on a heavy commercial strip, and lacking brag-worthy views. That one needing a full renovation (at least, at its price point); this one being ‘done’, but only for the 1-bedroom plus guest room buyer. That one with a great deal of loft character; this one … not. That one a coop; this one, a condo.

And, of course, $843/ft and $1,875/ft …  c’mon.

Tagged with: , , , , , , , , , , , , ,

quiet & “quintessential” northwest Tribeca loft in move-in condition sells at $843/ft

by Sandy MattinglyPosted on Posted in loft neighborhoods tribeca — 4 Comments ↓

… so, of course there’s an explanation (there are hints in the broker babble)

The raw numbers associated with the three-week old sale of the Manhattan loft #3W at 466 Washington Street yield a stark equation: “3,500 sq ft” + $2.95mm = $843/ft. There are nearly 200 loft sales on my Master List of Manhattan loft sales between $500,000 and $5,000,000 since July 1, exactly two of which sold at less than loft #3W on a price per foot basis. And this one is in that corner of northwest Tribeca that is only getting more and more high end development.

The loft lacks the high ceilings that characterize truly great residential lofts, but there’s lots of good stuff here: [h]and sewn beams and columns” are the highlights, but the exposed brick is far more interesting here than in many lofts (that massive brick wall in the living room has arches and other detailing). Having seen the loft, I understand why the broker babbled “[b]ring your architect and interior designer” but the place, as is, is definitely in move-in condition. (Just not likely to be left alone after being purchased for $2.95mm.) But the condition has little to do with the discount.

As listing photos often do, you can’t quite tell from the angles and windows (and in what is barely visible outside the windows) what The Issue is. The map helps (if you know your new development sites), and as quality broker babble often does, there is a lemons-into-lemonade aspect disclosed in a positive way:

The Southern lot line windows will NOT be obstructed. In fact, those windows will overlook the courtyard to the Related building current being erected. Additionally, the Western windows will face the garden of 290 West Street, a beautiful new development condo by VE Equities that will likely be priced well around $2500/sf .

Nope, the south windows in what is now the living room won’t be “obstructed”, but did you notice that in the alternate floor plans, the living room is either moved to the west wall or reduced in size? That’s because the coming courtyard (still under construction when I saw it) with the associated building, of course, won’t be much of a ‘view’. I gather the south exposure will admit light, however. The news about the west windows is better, and worse.

What you can see out the window on the left side of this “dining room” photo is the corner of the building to the west and south. What you can’t see is what is just to the right of that view:

(from Town) the mystery view is just out of view to the right …

That’s where “the garden of 290 West Street, a beautiful new development condo by VE Equities that will likely be priced well around $2500/sf” will go, with its associated building, of course. And pretty darn close to the west walls of 466 Washington Street. So formerly open views from loft #3W extending way south and west over the river are both obstructed somewhat blocked by new condo developments. But if the new neighbors at 290 West Street cooperate, #3W will still have a river glimpse … glimpsed when the new neighbors cooperate by keeping their window treatments open on both the east and west windows. (When I saw the loft, you could see clear through the window openings, to the river.)

Hence, $843/ft.

this “truly unique loft in the heart of TriBeCa with original details and a charm that is impossible to replicate” will be renovated, nonetheless

You noticed that the broker babble says nothing about finishes, only character and charm. Having seen it, I can assure you that it is in move-in condition … but not for buyers who are already paying $2.95mm and who are faced with a floor plan that was laid out when there were open views south and west. Shrink this loft enough to be sold for $1.5mm in (say) the West 30s, and I suspect that it would be purchased by someone who would move right in, then maybe update kitchen and/or baths. But not the $2.95mm buyer in (yes) “prime Northern Tribeca”.

My guess is that it will be gutted, as the two alternate floor plans imply. There are many options, with plumbing stacks all over the place. (Again, look at the present and two alternate floor plans for the varied bathroom and kitchen placements.) Personally, I’d line up 3 bedrooms along the north wall and leave the reset of the place as open as those massive brick interior walls permit. I suspect the light from the south and west will be lovely, once the Oh So Chic (and expensive) neighbors are fully built out.

timing is, as always, everything

Sometimes aphorisms really do say it all. The recent sellers have been trying to be “sellers” for quite a while. They tried for 8 months into the Summer of 2012 and then for 7 months into Spring 2013, asking $2.9mm and $2.995mm, respectively. Had a buyer in any of those months been willing to pay $2.95mm, they’d undoubtedly have taken it. In that sense, their pricing was too early.

Yet at the same time that The Market was rising to meet their price, the fact that construction eventually began on the two new developments just to the south and to the west added, in my estimation, a serious drag on their hyper-local market. Having seen the loft, and stood for a long time with buyer clients at the west and south windows, it is difficult for most buyers to fully envision what those views will be like, even with the structures already rising above the 3rd floor at 466 Washington. In other words, I suspect there was a significant penalty suffered by these sellers that will (likely) be removed once the two Oh So Chic (and expensive) neighbors are done, and occupied. There are a great many lofts that have light but not views, and that do very well in the resale market.

In prime northwest Tribeca, $843/ft does not qualify as ‘doing very well’, even allowing for a $400/ft gut renovation.

celebrity connection, lost in my memory

There is one design element in the loft, as is, that might survive a gut renovation. There are no pictures (obviously) and a mind (my mind) is a terrible thing to waste, but the current master bath (placed, awkwardly, in the middle of the footprint) has a wall that was either tiled or muraled by A Famous Musician. I wish I could remember the details, but my buyers were not impressed (enough) with the loft and certainly not by The Famous Musician for it to have stuck in my mind. I am thinking John Cougar Mellencamp, who (may have) rented the place before the current sellers bought in 1995.

In other words, a very narrow slice of the Manhattan loft buyer pool might be tempted to preserve that wall in some way. Maybe the new owners are in that slice….

Let’s bring this to a close with a fun fact about that 1995 purchase: $580,000.

Tagged with: , , , , , , , , , , ,

huge Flatiron coop loft sale at $1,435/ft proves there is no accounting for taste

by Sandy MattinglyPosted on Posted in loft neighborhoods flatiron — No Comments ↓

some very un-loft-y elements here at 73 Fifth Avenue

Let’s start with the floor plan of the “3,100 sq ft” Manhattan loft #5B at 73 Fifth Avenue that sold for $4.45mm down at the bottom of Flatiron (northeast corner of 15th Street). It is an unusual layout for a residential loft, in several respects: it features 2 irregular rectangles joined more or less at a right angle, but it’s not on a corner of the building; it’s huge (those “3,100 sq ft”), but has just 2 bedrooms; it’s got perhaps the longest kitchen plus pantry I’ve ever seen; it boasts of being “sunny” and “bright” with 4 exposures, but it looks like only one of the exposures brings light, while the others aren’t worth a damn. Very strange, but by no means the most strange thing about this loft.

Let me leave that hanging a bit and give you this tortured footprint, while noting how quickly The Market absorbed the loft.

 

To market on April 2 at $4.675mm, in contract by May 16 at $4.45mm, and closed on August 28. That is especially impressive when you see that the loft directly above sold for only $3.5mm right around The Quarter Formerly Known As The Peak in “sun-flooded” and “recently renovated to include every modern convenience” condition. I can’t find many photos from the upstairs loft, but the claim about the condition and light makes it very likely that it was in at least as nice condition in 2008 as #5B when it just sold. Loft #6B has almost the exact same footprint as #5B (it claims only “3,000 sq ft”, as the great room doesn’t extend as far west as in #5B) but has a different layout, featuring 3 bedrooms.

Loft #6B sold for $1,167/ft in October 2008, after having been offered from May 2008 at $3.5mm and for 6 months at the end of 2007 at $3.5mm and $3.6mm. (Weird, that: it didn’t sell heading into The Quarter Formerly Known As The Peak, when the sales in that quarter went into contract, yet it sold quickly when offered at the end of May 2008; but that’s another [missed opportunity for a] post.) Loft #5B sold 6 weeks ago for $1,435/ft.

the two wings were not created equal

The glory of the space is that open south wing, with living / dining and kitchen / pantry. They key is not the size (the north wing is nearly as large) nor the ceilings (the same 12 ft throughout, d’oh), nor the number of exposures (there’s just one), nor the size of the windows (all windows in the loft appear to be hip-to-ceiling); the glory is due to the volume (“ballroom-sized”) and the quality of the single (south!) exposure.

The loft is “bright” because that south exposure is bounded by the buildings across 15th Street rather than by whatever is hidden by closed window treatments in the master suite.

the lights are on (cheating!) but this room is “bright”

what is your favorite antonym for “bright”? (there’s a window behind the headboard, believe it or not)

taste, unaccounted

Going back to my intro, you can see the most strange thing about this huge Flatiron loft in the floor plan, and just off camera in the master suite photo above. What makes a master suite a suite? An “en suite” bathroom, of course, which you can see in the lower left of the master suite (double sinks, toilet, shower). Walk-in closets are also very suite (sorry), so the pair of flanked walk-ins helps. You see that rectangle on the floor plan between the two closets?

The words are not so prominent on the floor plan, but there’s no mistaking the element in this listing photo:

HOT TUB!! flanked by mirrors *in* the master suite

Let’s repeat:

1. there’s no accounting for taste

2. this (startling) design did not prevent this: $1,435/ft, a premium of 23% over essentially the same loft upstairs at (former) Peak pricing

I bet you $0.25 that the new owners change the configuration of the master suite. And color scheme. (In what decade was Black & White hot? Not the twenty-teens….)

let’s repeat, again, differently

As I said, there’s no accounting for taste. In the Conventional Wisdom, unconventional design choices depress prices because they reduce the buyer pool. (Can we agree that a black hot tub in the master suite and flanked by mirrors is unconventional?)

If you are a long-time reader of Manhattan Loft Guy, you know that I have played with design choices like this in the past. The most recent example was in my March 22, 2012, love it or hate it? glass master bath sells at 181 Hudson Street loft, which I ended with this:

I do not expect to talk about bathing functions in (or public to) master bedrooms for quite a while, but you never know…

I believe that was a correct prediction. Two-and-a-half years is quite a while.

That one dealt with a glass wall directly behind the headboard, through which is visible the walk-in shower, tub, and sinks. There’s no wall at 73 Worth Street in loft #5B, but the point is the same. Here’s how I put it on March 22, 2012, with a few more unusual bath-and-bed layouts:

for fans of public bathing

I started up top from the perspective that the #3F master suite with glass wall separating the headboard and shower is an unusual choice, one that will shrink the buyer pool a bit. Sharp-eyed Manhattan Loft Guy readers will remember that it was just a few days ago that I mentioned a loft with an even more unusual blending of master sleeping and master bathing space.

In my November 11, 2010, nice flipping loft at 49 Howard Street, I dug through the designer’s website of before and after pix of a gut renovation:

From these many photos and the before-and-after floor plans you can see what those “ten foot glass doors” do: they bring light into the master bedroom at the (otherwise) dark end of the loft. Look closely at the master bedroom photos.

Yes, somebody designed it with a huge bathtub in the master bedroom. Undoubtedly there is a proper proper name for this tub, and the modifier “soaking”. And, yes, someone else bought it that way.

I mentioned that deluxe renovation and very strong sale (for a 2-story walk-up!), but not the in-room bathtub, in looking at a nearby gut renovation with a spectacular view, in my March 19, a question of views for gut renovated 29 Howard Street loft at $1,383/ft.

When will the next weird bath-and-bed layout strike me? Probably after it strikes a buyer as not so weird…. With that, I will close. For now.

Tagged with: , , , , , , , , ,

Gilsey House loft seller disappointed in setting building record at 1200 Broadway

by Sandy MattinglyPosted on Posted in loft neighborhoods nomad — No Comments ↓

… and in getting only 62% above 2010 purchase price

Not many folks would be disappointed by beating the building record on a dollar-per-foot basis by about a quarter, but the listing history of the “1,850 sq ft” Manhattan loft #5G at 1200 Broadway (the Gilsey House) tells me the seller was unenthusiastic about selling a few weeks ago:

Mar 20 new to market $3.2mm
April 12 $2.95mm
May 19 $2.725mm
June 20 contract
Sept 12 sold $2.35mm

If you can’t find the calculator on your smartphone quickly, the sale was 36% off the original asking price, and 14% off the last price. That sure looks as though it stung.

But here’s an additional data point, foreshadowed in the sub-head: the recent seller at $2.35mm bought the loft in essentially identical condition on May 26, 2010 for … (wait for it) … $1.45mm. The subhead told you that’s a gain of about 62%, but not that the overall Manhattan residential sales market was up (only) 29%.

The seller got $1,270/ft for what is (and was, in 2010) a lovely loft (more on that below). The last sale in the building was a lovely (if dated) loft of similar size and shape, and loft #4B got (only) $2.25mm this past January. You can’t tell from StreetEasy (because it doesn’t know how big that loft is) but that was $1,023/ft based on the data in our listing system. You won’t find another past sale at Gilsey House that reached $1,000/ft (see the Past Activity tab for the building page; note that the listing description for #4D in 2011 allows that computation: $657/ft!).

adventures in (not) anticipating The Market

I am not going to use the poor guy’s name to spare him some Google Juice he might not appreciate, but the same agent who brought the lovely loft #5G to market at $3.2mm in March 2014 (to see it sold for $2.35mm) brought the gut renovation project loft #3D to market in September 2013 at $1.489mm (to see it sold for … wait … $1.9mm). To recap: #5G sold 36% off the first ask; #3D sold 28% above the ask. Same building, similar sizes, six months difference, very different conditions.

You could say sometimes you get the bear and sometimes the bear gets you, or you could say … comping is hard. Meanwhile, back in the lovely loft ….

name-branded design, proper proper names, with the Empire State Building somewhere out the window

The broker babble is enthusiastic, specific, and justified. I don’t get the fascination with being able to close the foyer, but the babble did its job:

The closeable foyer, with walk-in closet, makes it extremely quiet w/no outside city noises. … designed by interior designer Marc Schlessler. The open chef’s kitchen has teakwood cabinets with blumotion soft close drawers. The Dornbrach faucets, Electrolux oven, Diva Provence Induction cooktop and Sub-Zero refrigerator accentuate the Caesar Sone Quartz countertops. The great room showcases the bright views of the Empire State Bldg and enhances the room w/wide plank Brazilian walnut floors and 12 ft ceilings. … custom California walk-in closets. … spa like baths made of Greek Thassos marble and Tuscan Pietra Serena limestone. The ensuite master bath has a delightful rainfall shower head, while the 2nd bath has a steam shower. … 3 zone central air conditioning and the Bosch w/d ….

Syntax is a little weird (“the great room … enhances the room w/wide plank … floors”?) but the nouns and adjectives promise quality materials. The photos support the promise of quality. The floor plan shows that the space is efficiently laid out, with the limitations that the two exposures in a nearly square footprint ameliorated, a bit. Though “1,850 sq ft”, there can’t be more than two bedrooms:

The photos show that the 12 ft ceilings are beamed, with exposed pipes and tall windows. The dropped ceilings provide cover for light fixtures, soffits house the central air ducts, and the sole structural element (the column at the edge of the kitchen) is squared off and encased. Not my preference, but apparently it is high design that Mr. Schlesser was happy to be associated with, and two sets of owners have liked.

As implied by the price, The Market thinks the design and finishes were worth a significant premium to anything else in the building, so any blogger quibbling is just that … quibbling.

the view is an invisible selling point

(More quibbling ….) Did you read in the babble about how the “great room showcases the bright views of the Empire State Bldg”? Did you see those bright views in the listing photos? I didn’t either, alas.

is the Empire State out  there?

Quite often, when views are enough of a selling point to be featured in the babble, the views are actually pictured. And the Empire State Building is usually a money view. In this case, however, I suspect that the icon is visible from the window, rather than from within the room. Gilsey House sits only 3 blocks due south of the ESB, and the three angled living great room photos suggest that you have to be stand close enough to those north windows to look up to see the ESB. Certainly, none of the seating is arranged to take advantage of the view. It’s almost as though you have to go ‘visit’ the ESB in this loft.

what was different about this NoMad loft in 2010?

I’ve already told you that the recent seller at $2.35mm bought the loft in May 2010 at $1.45mm, and that this gain of 62% vastly out-performed the overall Manhattan residential real estate market (at least, as measured by the same sale condo index of StreetEasy). It was the same loft then, as now, as revealed by the 2010 marketing photos and babble:

pin-drop quiet ,modern loft home, renovated by interior designer Marc Schlesser, … soaring 12′ ceilings, huge windows that view The Empire State Building to the North and direct Western sunlight, wide-plank Brazilian walnut floors, open cooks kitchen with beautiful Teakwood cabinets equipped with Blumotion soft close drawers, Sub-Zero refrigerator,Dornbracht faucets, Electrolux oven and Diva Provence Induction cooktop, CeasarStone quartz countertops, 2 full spa-like Greek Thassos marble, Itailian Nero marble, Tuscan Pietra Serena limestone bathrooms with amazing rainshower over the master bath, steam shower in the 2nd bath, … California closets, Bosch washer/dryer laundry, 3 zone Central Air Conditioning, special lighting to highlight your art.

Same loft, same proper proper names, same materials, same lighting and air and closets … up 62% over the time period the overall market was up 29%.

Put aside the fact that the seller asked The Market to double his purchase price (for me, that’s hard to put aside, but if I can do it, you can do it). While it is possible there was something about the niche 2-bedroom loft market between 23rd and 34th Streets to account for some of the appreciation in value, it has got to be the micro-nabe that accounts for the bulk of the increased value, in my opinion.

‘NoMad’ is what has changed. (Were we calling it that in 2010? Note to self  ….) More precisely, it is probably The Ace Hotel Effect that is pulling up values on and off Broadway near 30th Street, as Eataly has pulled up values a few blocks south. I have a few clients who bought lofts last year near both Gilsey House and The Ace, and we have been pinging NoMad puff pieces back and forth for months. (Most recently, this piece from The Real Deal only 5 weeks ago, which is better than most of its type because it is more specific than most of the broker puffery that you see.)

Yes, there has been a loft market around (and in) Gilsey House for 30+ years, but that slice of a niche has bumped along in sync with the overall market (consistently at a discount to the market, but largely in sync). Loft #5G at 1200 Broadway is evidence that the discount is shrinking around here.

Tagged with: , , , , , , , , ,

massive headline fail over first flip at One57, by folks who should know better

by Sandy MattinglyPosted on Posted in manhattan real estate business — No Comments ↓

not chump change, but the actual gain is neither “close to $4mm” nor “$3.5M profit”

Hat tip to The Real Deal blog yesterday for linking to Thursday’s New York Daily News report about the first unit to flip at the media magnet One57 mondo condo project. The info is so fresh it is not only not yet a public record, it is not in our listing system as sold (it was a Corcoran listing; shown as still “in contract” as of Wednesday). Somebody on the inside spilled the beans to Katherine Clarke of The News.

The outline is as simple as the numbers are staggering: some Rich Folks hiding behind a LLC paid $30,551,000 to buy the “4,483 sq ft” unit #58A on May 1, put it up for sale almost immediately and re-sold to Other Rich Folks (a hedge fund guy; go figure) for $34mm (“sources told the Daily News”). It’s not a loft (obviously) and is at a price point I hardly pay attention to (my Master List of Manhattan loft closings tops at a measly $5mm), but the news coverage gets my dander into rant mode. It’s not just the fuzzy math, but the netting that gets to me.

The Daily News headline was:

Investor flips first unit at exclusive 57th St. tower to make $3.5M profit in five months

Clarke’s scoop is the purchase price ($34mm) and identity of the buyers (the hedge guy and wife), but she pooped the math:

The former owner, Sso Enterprises, paid just $30.55 million for the unit in May, meaning it netted a more than $3 million profit in just five months. (my italics)

Her math (“more than $3 million”) is better than the headline writer’s (“$3.5M profit”), but I wouldn’t be irritated enough to write about this if she hadn’t “netted”.

The Real Deal needs a better calculator than the one that generated this headline:

One57 condo flip nets close to $4M profit

No “netting”, but that math is embarrassing, or it should be. Sold at $34mm, less the purchase price of $30,551,000, equals a (gross) profit of $3,449,000 … not very close to $4mm.

unless you are Humpty Dumpty, words have meanings

I get it that people in the business often say “profit” to refer to the difference between purchase and resale prices, without taking into account that there were some transaction costs on both sides of that round trip. But that doesn’t make it right, especially not for card-carrying members of the Media Division of the Manhattan Residential Real Estate Industrial Complex. And especially when someone like Clarke gratuitously adds “netted” to “profit”, as though some consideration had been given to the economic realities of the round trip transactions.

I hope that in no other business does the trade press ignore transaction or other expenses that erode “profit”, especially when gilding “profit” with a “net”. What else could “net” mean, other than after-considering-expenses??

It is not as though it is difficult to get a scaffold of some of the likely expenses in a condo sale. You’ve got a sales fee (often 5% or 6%, sometimes less, as we will soon see), city and state transfer taxes of 1.825%, a “mansion tax” of 1% for purchases over $1mm, and somewhat variable items such as title and filing expenses (often ball parked at 0.6%), even without getting into the necessary myriad expenses that in this instance are truly trivial (including attorney’s fees, working capital contributions).

You don’t have to know the exact numbers to realize that there are many things that will chip away at the $3,449,000 difference between purchase and resale prices before you get  a”net” number.

Start with the purchase at $30,551,000 (a number that already includes the city and state transfer taxes, thanks to a change in ACRIS policy two or so years ago). The flippin’ LLC also paid the buy-side “mansion tax” of 1% ($305,510). The tax basis as of May was at least $30,856,510. I confess to being ignorant about title fees and associated expenses in the stratosphere, but if the ballpark holds, that’s another 0.6% ($183,306). Feel that drip, drip, drip yet? We are probably up to a tax basis of $31,039,816.

On the exit, the flippin’ LLC again paid the city and state transfer taxes (again 1.825%, but on the higher resale number this time: $620,500 … drip), and paid a sales fee. We show the sales fee on our listing system, and the fee was ‘only’ 4% (as, I am told, is typical of sales in the stratosphere): that’s a cool $1,360,000. Drip, drip, indeed. Not all of that $34,000,000 sale price went back into the coffers of the flippin’ LLC; just taking these two big chunks out brings the sell-side ‘net’ down to $32,019,500.

Without getting into other actually expenses that the flippin’ LLC had to consider (to take just one example the green-eye shades would insist on: the LLC probably put down at least 10% when it signed the contract to buy in November 2013, so lost the use of at least $3,055,100 for the 6 months it took to close, and then of the full $30,551,000 for the 4 months it took to flip), the raw numbers are not so very far apart, all things considered (especially considering the press):

$32,019,500
($31,039,816)
$   979,684

Of course, they wanted more. They asked $40,000,000 originally, then dropped to $36,000,000 in 6 weeks, and then got negotiated down to the deal at $34,000,000 reported by The Daily News. A deal at the last ask would certainly have been more impressive (they’d have “netted” “close to $3mm”, indeed). But that’s not what happened.

does Big Money play for six-figure returns?

I have to wonder if they’d have gone through all the trouble, and parked all that money for all those months, if they’d known the return would be six figures.

Disclaimer: As our Corcoran cheat sheet for “typical” condo closing costs notes:

Additional taxes on capital gain associated with the sale of real estate including Federal, State and the specialized Medicare tax may apply. Please consult with your tax professional to ensure compliance with all applicable tax regulations. Corcoran is not a licensed tax advisor.

A better more accurate headline would have been something like:

Disappointed investor flips first unit at exclusive 57th St. tower to make less than $1M profit in five months

That might not have attracted many eyeballs for The News or for TRDNY, but the text might then have expanded on this Clarke detail in The News:

The 58th-floor, three-bedroom home was originally listed for a whopping $40 million but faced competition from remaining developer-owned units at the building.

The take-away might then have been less “look at the huge flippin’ profit!” and more like the other news articles you’ve seen recently about the possible glut in the mondo condo niche. I mean articles like this one from Bloomberg, about a certain West 57th Street condo. [UPDATE 4:40PM: Or, articles like this one, on the front page of tomorrow’s New York Times Sunday Real Estate section.] Other flipping flippers have likely taken note, and little comfort.

It was the guy’s birthday this week (and the anniversary of the founding of his semi-eponymous firm), so let’s give The Miller the last word on this mondo condo world:

“In other words, the sky is not the limit.”

I’ll take the last word (here) on the Manhattan Media Division of the Residential Real Estate Industrial Complex: “net” profit means, you know, “net” of obvious and huge expenses. To simply subtract purchase price from resale price is much too simple for professional real estate writers like Clarke and for the usually reliable The Real Deal.

Tagged with: , , , , , , , ,
Top