is the 2010 strength in Manhattan loft sales odd, or even notable in a Lake Wobegon sense?

by Sandy MattinglyPosted on Posted in market data reports — No Comments ↓

absolutely: maybe
I’ve been staring at the quarterly Manhattan loft market data in various metrics …. Blame it on The Miller (for giving me the numbers); blame it on Diane Ramirez (for calling the bottom); blame it on the Red Sox (not sleeping).

Here is something I see: if there are as many Manhattan lofts sold in the Fourth Quarter of 2010 as were sold in any other quarter this year, this year’s total will approach or exceed the best year for loft sales in the last seven (2008). Here is something else that i see: if you took the last four quarters as a “year” (4Q09 – 3Q10), the total loft sales in that not-a-real-year would come within 2.5% of the 2008 total. (And: that that 2008 total [for a ‘natural’ year] is the highest of any four-consecutive-quarter set going back to 1Q02 – 4Q02.)

One more thing: in this string of the last four quarters, each quarter is at or above the average for quarterly loft sales in the the last 5 years and very, very, very near the average for quarterly loft sales in the last 10 years. As far as data, that’s all I’ve got at the moment.

does “average” = “strength”?
In the current world (post 2007 liquidity crunch, post 2008 Lehman bankruptcy, post 2009 ‘nuclear winter’), reaching a long-term average four times in a row seems like it is approaching normal.

I am not saying this 4-quarter run is “normal” or that it represents the bottom, because “normal” is an awfully elusive concept (notice I wiggled with “seems like it is approaching …”) and The Bottom will be seen only in the rear-view mirror. But I am saying that this consistently average sales volume indicates a now-4-quarter-long market that has been deeper than the market that preceded it.

Deeper in the sense that there have been a consistent and consistently average number of buyers and sellers who have agreed on market prices for an average number of lofts. By my lights, a deep market (in which buyers and sellers meet, in quantity) is a more efficient market, a market in which buyers and sellers find it easier to negotiate to an agreement. The Days on Market data of late are consistently (if not yet conclusively) in support of this depth: the last two quarters have the two lowest DoM figures of any quarter going back (so far) through 2007 [updated:] the Second Quarter of 2005 (I have not yet gone back farther).

so what?
So what I am saying is that the latest loft sale data on volume (transactions) and velocity (DoM) suggest that the loft niche has been in a period of relative strength. I am not saying that this period will continue, but I will be watching to see if it does.

so, when?
In yesterday’s post about the loft niche vis-a-vis the overall Manhattan real estate market, October 2, Manhattan loft market outperforms in volume (big) + absorption, i talked about two intriguing loft metrics:

the reported loft numbers show that this niche outperformed the overall Manhattan real estate market year-over-year in two metrics: transactions (volume) and inventory change (absorption). …

 

I suspect that the first number is more due to the inherent volatility of Small Numbers (a niche is a niche), but that the second may be more significant.

Everything that I have said about Manhattan loft sales volume in this post is based on those Small Numbers (the five- and ten-year averages are in the range of 180 and 185 loft sales per quarter), so it is possible that I am looking at essentially random variation but detecting a “pattern”. Maybe, but you’ll have a better idea of that when (not if) I do what I suggested in that post that I might, when I said immediately after the quoted portion above:

Which leads me to An Idea … I should track both Loft Transactions and Loft Inventory as a percentage of the overall market!

If I track the loft niche vs. overall market on transaction volume I should find some longer term sense of the volume trends, if it is in the numbers to begin with. I have already begun to collect these numbers (every number cited here is taken from a Miller Samuel quarterly report), but I have not gotten enough numbers across enough metrics to make a splash when presenting it as a table. But I hope to get to that … this week (?). Yeah, I hope.

If this post meanders too much for too little payout, don’t blame The Miller for his numbers or Ramirez for jumping the call to the bottom; blame Manhattan Loft Guy and (look at the time this is posted, compared to the end of “last night’s” game) blame the Red Sox (for me not sleeping). Go Royals!

© Sandy Mattingly 2010

 

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

Manhattan loft market outperforms in volume (big) + absorption

by Sandy MattinglyPosted on Posted in market data reports — No Comments ↓

nice (rare) consensus among firms!
Yesterday I beat up a little bit on Vivian Toy’s traditionally formatted New York Times article about the 4 major quarterly Manhattan real estate market reports for the Third Quarter and a bit more on the brokerage part of the Manhattan Real Estate Industrial Complex for its willingness to make predictions of “recovery, or “bottom”, or “normal” (Oct 1, why the race to (call) the bottom? third quarter Manhattan real estate market reports hit).

In today’s episode, Manhattan Loft Guy finds a pleasing consensus among the major firm reports about what happened last quarter in the overall Manhattan market, and explores the ways in which the Manhattan loft niche outperformed the overall market. (There’s also a rant or two, and an idea for more interesting loft data!)

The two tables below break out the (limited) loft-specific data from the three major firms that do quarterly market reports for Manhattan real estate and then provide some (deeper) overall market data from these three firms and from StreetEasy. [The Links: Miller Samuel report is here; Corcoran is here; the Halstead version of the Terra report is here; StreetEasy is here.] Even though I am often critical of the news articles about quarterly market reports, I have also noted the challenges to offering coherent analysis in our Wild West in which data differ between firms, so if you are looking for concise or brilliant prose, avert your eyes….

Loft data from the Third Quarter 2010 Manhattan real estate market reports, with year-over-year comparisons

  median sales price avg price per foot transactions days on market inventory
Miller Samuel $1.66mm [up 10.7%] $1,091 [up 6.2%] 190 [up 53.2%] 104 [down 24.1%] 521 [down 16.4%]
Terra Holdings   $1,077 [up 12%]      
Corcoran $1.775mm [up 18%] $1,119 [down 2%]      

Overall market data with year-over-year comparisons

  median sales price avg price per foot transactions days on market inventory
Miller Samuel $914k [up 7.5%] $1,095 [up 10%] 2,661 [up 19.3%] 125 [down 25.5%] 8,123 [down 3.2%]
Terra Holdings $890k [up 14%]   2,471 [up 4%] 97 [down 24%]  
Corcoran $900k [up 9%] $1,046 [up 2%] ~3,000 [down 5%]   9,243 [down 4.9%]
StreetEasy $875k [up 14.4%]   ~ 3,350 [up 1.9%] 123/113* [down 17.5%/19.1%] [down 6.5%]

*If StreetEasy has an overall market number for DoM, I didn’t find it; my table has Condo/Coop numbers (how awkward!)

Without going all anal on you, I can’t recall another quarterly market report in which the same-firm trends for the overall Manhattan real estate market matched so well. On median sales price, days on market, and inventory, all reporting firms report within a tolerably narrow range. Looking only at direction (not scale), there is only one arrow pointing a different way: Corcoran shows transaction volume down, while the other 3 reporting firms show a year-over-year increase in the number of transactions.

caution: Habitual Rant ahead
I have to point out the obvious here, sorry …. In what kind of rational market can the “simple” act of counting What Is For Sale come up with answers as variable as 2,471, 2,661, 3,000, and 3,350?? What is so frigging important to these firms about their own frigging numbers that they can’t see the importance of standardizing method to avoid being laughed at (by whatever small percentage of the consumer population that actually takes these reports seriously) because there is a 36% spread between the High and Low counts?

Yes, these numbers are all produced by professionals. And, yes, each firm believes in its heart of hearts that it has the best method. Probably, each firm believes that its method is “better” because of its proprietary advantage in data collection / data massaging / data interpretation.

Memo to brokerage firms: (educated) consumers don’t believe you. At least in part, they don’t believe you because you don’t agree.

a Modest Prediction
Sooner or later, StreetEasy (or something like it) is going to come up with a format that is sufficiently acceptable to (educated) consumers that its report will gain credence as the (only) objective report out there. At that point, essentially no one will pay attention to the (oh so expensive to produce) Proprietary Reports.

Obviously, Property Shark is betting the other way, as it allied with Corcoran (last year? in 2008??). I imagine that relationship has a contract term; I wonder how long it is , and whether The Shark will want to renew. Similarly, The Miller made a deal with PruDE way back when (when there was no dried fruit in DE); I wonder if he worries about whether that relationship diminishes his credibility in The New World. (Note that both the New York Times article and the Wall Street Journal article about the major firm reports now include citations to StreetEasy.)

UrbanDigs see this opportunity, clearly, but his approach is different from any of these reports: Noah wants to track a whole bunch of metrics for real-time trends. He is not so much competing with the major firms as playing a different game.

lofts (finally!)
Let’s get back on track here …. As I noted so far up top that it in the title of this post, the reported loft numbers show that this niche outperformed the overall Manhattan real estate market year-over-year in two metrics: transactions (volume) and inventory change (absorption). I scan the other metrics as roughly similar, overall market to Manhattan lofts.

I suspect that the first number is more due to the inherent volatility of Small Numbers (a niche is a niche), but that the second may be more significant. Which leads me to An Idea … I should track both Loft Transactions and Loft Inventory as a percentage of the overall market! (Meaning, I should re-frame The Miller’s numbers to calculate something he is not especially interested in.) I am inclined to think it will be less interesting to re-frame the median price data in this way, but let’s see what I think when I get around to actually doing this …. (Weigh in, you Manhattan Loft Guy Readers, if you have a preference.)

© Sandy Mattingly 2010

 

 

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

why the race to (call) the bottom? third quarter Manhattan real estate market reports hit

by Sandy MattinglyPosted on Posted in market data reports — No Comments ↓

a rainy day also rains numbers
I am pretty sure I am in the minority about this, but I believe that major players in the Real Estate Industrial Complex in Manhattan are missing a shift in how consumers want information processed for them. There may be more than enough business to do — for now — The Old Way, but a new way would pay more attention to why so many people are drawn to data sites like StreetEasy, Trulia and Zillow and commentary (gossip?) sites like Curbed and Brownstoner. I launched into this lane of thinking after reading the classically constructed article about the major firm Manhattan market reports for the Third Quarter of 2010 in that bastion of the Real Estate Industrial Complex, the New York Times.

In today’s Manhattan Real Estate Market Seems to Stabilize, With Prices Up and Sales Volume Down, Vivian Toy has the unenviable task of making some sense out of quarterly reports from firms that use different numbers. I will chew on the numbers over the next few days, but for now I want to focus on the Big Picture “analysis” in that article, as presented from the heads of major firms, after noting this consistent finding:

Prices increased for the fifth straight quarter, with the average sales price hovering around $1.43 million and the median price around $910,000, according to data provided by the city’s four largest brokerage firms.

Previous Manhattan Loft Guy posts on the art form of these newspaper articles include this April 2, first impression of First Quarter reports, where I said

I do feel badly for the reporters who have to summarize the major firm quarterly reports of Manhattan real estate activity, such as Christine Haughney in today’s NY Times, Slight Rise in Manhattan Apartment Prices in First Quarter, Data Show. With reports from Terra Holdings (Halstead and Brown Harris Stevens), Corcoran, and Miller Samuel for Prudential Douglas Elliman, there’s usually enough inter-firm variation to make a coherent narrative challenging even leaving aside the often incoherence of same-firm data comparisons. This quarter is no different.

For the post on the NY Times article introducing  last quarter’s reports, I complimented Ms. Toy for achieving “remarkable” coherence in synthesizing such varying numbers:

Toy’s summation about the Second Quarter in her lede today is actually remarkably coherent: "[b]ut … prices have not rebounded".

That was in my July 1, for real: Second Quarter Manhattan real estate market report numbers out.

“predictions are hard — especially about the future”
Physicist Neils Bohr is often cited as the source for that sub-heading above, but there are some who claim it for Mark Twain. Regardless, it is a great quote, and a terrific counter-point to the (natural human?) tendency to want to hear Smart People tell us What Will Happen Next. You know … that question that 97.41% of all buyers and sellers ask: “where is The Market heading?”

I suspect that Manhattan real estate prognosticators would do no better than the Brilliant Economists have done with projecting the federal budget deficit. This is from Ezra Klein’s February 2 Washington Post blog that used the quote above as its heading (my bold):

The New York Times has a cool feature today showing how rarely long-term budget forecasts get the picture right. …. As you can see, what forecasters do is extend the current trends. When something happens to break that trend — a massive financial crisis, say — they’re generally caught unawares.

predictions are seductive, especially if they are positive
I made that one up, as there does seem to be a natural human tendency to want to be told What Happens Next. And here are the leaders of four major Manhattan real estate firms to satisfy that need, all as quoted by Toy in the Times:

“We have hit bottom, and we’re probably improving ahead of schedule,” said Diane M. Ramirez, the president of Halstead Property. “But that just means we’re into a more normal market. We’ve moved out of critical care, and we’re stabilized now.”   

 

“I think it’s a sign that the wild ride is over and real estate is back to its basics,” said Pamela Liebman, the chief executive of the Corcoran Group.

 

“The market came back from the bottom up,” [Dottie Herman, the chief executive of Prudential Douglas Elliman] said. “Now the bigger units are selling again, and the market is basically flat, but it’s healthy.”       

   

“With the steady growth we’ve seen,” [Hall F. Willkie, the president of Brown Harris Stevens] added, “I think we can be optimistic looking ahead.”

These quotes are almost in lock step, not just in sync.

a different point on the food chain
Since no one has asked me to head a major Manhattan real estate firm, I have never been faced with the question of how to spin present quarterly data in ways that are both fair and in the interest of my firm. I just don’t know that the best way to present the Third Quarter Manhattan numbers is to present a Big Picture of stability, given that (a) the last few quarter-to-quarter ‘trends’ have hardly been stable, and (b) I don’t know what is going to happen next.

In all cases, the heads of these firms have more experience (and more staff!) than I do, and their comments deserve respect. But getting back to my original point up top, I truly believe that fewer and fewer consumers prefer this Simple Happy Talk to a more nuanced view, less capable of quick summary.

Something like this kind of nuance (from Miller, The):

“The only reason the average and median prices are up,” he said, “is because the two-bedroom market is returning from being depressed to a more consistent, normal level.”

To be fair, here is a pretty good summary, but I guess too much for a NY Times reporter who needs to include quotes from all firms who report quarterly numbers:

Since the downturn began, there has been an inconsistent pattern of seasonality as the market corrected rapidly. Since reaching a trough in First Quarter 2009, sales have climbed back, begun to stabilize, and returned to typical seasonal ebbs and flows. Last year at this time, pent-up demand from three quarters of low sales and lower pricing created an energetic buyers market. For Third Quarter 2010, we saw a 5 percent decrease in the number of market-wide transactions from a year ago and a 19 percent decrease from Second Quarter 2010.

 

Market-wide price metrics have stabilized and even improved from last quarter and one year ago. The median price of all Third Quarter 2010 transactions was $900,000, an increase of 9 percent versus a year ago and a 15 percent increase from Second Quarter 2010. Buyers are purchasing larger apartments with more bedrooms.

You’d have to read the Corcoran report to find this, but these are the second and third paragraphs, so not hard to find.

Old Grey Lady: part of problem?
Maybe my narrow focus on the major firms in my original point up top is a mistake. As you’ve seen from the introductory paragraphs of the Corcoran report quoted above and will see in the Miller Samuel report, there is a lot more from the firms than just the-market-is-back-to-normal. But the Times can’t find a way to report much nuance in the space allotted.

Presumably, they (who know much more about their readers than I do) don’t think their readers want more of the on-the-one-hand / on-the-other-hand stuff.  Sometimes (as hinted in The Miller’s Times quote and in the Corcoran report) the mix of apartments that sold is significant; other times, the number of transactions may be more important than an overall median price change; in other quarters, days on market might be a particularly telling data point.

But the Times template for doing these The Numbers Are Out! articles does not permit that kind of depth. A few Big Numbers, a few quotes from the Big People, a few anecdotes … that’s it. Maybe the Times, as well as other parts of the Real Estate Industrial Complex in Manhattan is just … behind the times (ouch).

links! we got links
The Miller Samuel report is here; Corcoran is here; the Halstead version of the Terra report is here.

Some commentary to follow in the coming days, as I digest the reports.

© Sandy Mattingly 2010

 

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

huge premium for condition, light + views for this 20-26 N. Moore Street loft

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

what a difference a day makes (+ light + views + renovation)
Let’s stay near the corner of N. Moore and Varick Streets, just above my favorite Tribeca bar, Walkers. Yesterday we stopped on the 5th floor of the western half of the two-building coop 20-26 N. Moore Street (20-26 N. Moore Street loft sells quickly if you don’t count 2008 and 2009), where #5W sold for $2.5mm in July, after a quick successful campaign in 2010 and a drawn-out unsuccessful campaign in 2008 and 2009. Today’s visit is to look at #8W, which sold for $3.6mm on August 2 after a public campaign that StreetEasy missed. How to account for that huge spread?

#8W looks to be a little wider than #5W, with “glorious lights and views” south, east and west (“glorious” is not a word you hear every day in this business) and is described at a whole ‘nother level than the likely-to-be-gutted #5W, in sum: “masterfully renovated and in mint move-in condition”, with 4 bedrooms, 3 baths, and central air. Those differences in width, condition, light and views earned a nearly 40% premium (assuming “2,700 sq ft” for #5W, for $926/ft, compared to “2,800 sq ft” for #8W, for $1,286/ft).

filling in the StreetEasy gap
The inter-firm data-base shows that #8W was marketed from February 15 at $3.95mm until the contract by March 30 at $3.6mm. The Tabak listing description is still live on their website as a closed sale here (scroll down, and down), with the pictures here and floor plan here. No idea why StreetEasy didn’t see this.

Dept of Redundancy Dept
Again: these lofts directly competed with each other. Same building, almost the same footprint. #8W followed #5W to market by 9 days and found a contract three weeks sooner. It is hard to imagine that everyone who saw one unit did not also see the other, in the 6 weeks #8W was available. The Market did not just prefer the one with more light in better condition over the other; the spread was 40%.

every picture tells the story, sorta
The comparison to the condition of #5W is evident in the #8W pictures, but I wish there were pictures of the view. At this height, the south windows clear the roof top (barely, but still) of 156 Franklin Street, so #8W is laid out opposite to #5W: living area is at the back (south), bedrooms in front (north), facing the Atalanta at 25 N. Moore Street.

Depending on water tower and nearby building angles, there might be angled views of the Woolworth Building, the north end of Battery Park City, and (soon!) the World Trade Center towers. There should certainly be great light south and west from the living room. But there are no pictures to tell that story. Sigh.

from the Department of Picky-Picky
With so many rooms, it takes a long time for the loft to open up when you get off the elevator. (See that second picture.) And I don’t get the point of the “den” / living room wall; it would have a much more open feel if there were visual access to that third south window. But with 4 real bedrooms plus a den plus an “additional room”, this was built for quite a large brood. If the buyers have fewer kids and/or a different life-style, I expect some of those walls to come down. Opening up the den and removing the “second” bedroom would go a long way.

But this is mere quibbling, given the 40% premium over #5W.

[UPDATE 9/30:

well, this is embarrassing
i should always check that well-known source for information about Manhattan lofts before writing about a specific loft or building … Manhattan Loft Guy. I knew this loft sale was familiar, as I hit it soon after it closed, in my Aug 11, 20-26 N. Moore loft clears at $1,286/ft with no frills. Fortunately, this new post uses the actual listing photos and floor plan (i.e.,thre’s added value, while the Aug 11 point was:

I can’t think of another loft in a similarly classic small Tribeca coop with no amenities that has cleared recently at as high a price-per-foot as #8W.

At least I wasn’t totally redundant.]

© Sandy Mattingly 2010

 

Tagged with: , , , , , , ,

20-26 N. Moore Street loft sells quickly if you don’t count 2008 and 2009

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

what do you get?
The Manhattan loft #5W in the twin building coop 20-26 N. Moore Street finally sold on July 28, after coming back to market on February 6 and finding a contract by April 22. Why “finally sold” if it found that contract in 10 weeks? It is that “after coming back to market” angle, so let’s go into the weeds of the full listing history … after noting the details of the sale and playing with the floor plan and renovation.

Not surprising for the 2010 trajectory, the clearing price of $2.5mm is only a slight discount from the ask of $2.595mm (3.7%). At “2,700 sq ft”, you would expect there to be at least the potential for 3 or 4 bedrooms, as the listing description notes, especially with “[f]our exposures [and] abundant light”. However, the footprint is not as flexible as you would guess and the current floor plan is … errr … challenging. Oh, and this bit of the babble is about as gentle as selling babble can be, while communicating an important point: this loft is “an older renovation”.

it is not the age, it is the flexibility
An older renovation that is perilously close to a 2,700 sq ft One Bed Wonder, if you tend to believe (like the City of New York) that a “bedroom” should be wider than 6’ 9”. An older renovation that is, like a true One Bed Wonder, not suitable for living by people who sleep in more than one bed, with the only full bath in the master suite. The challenge of this floor plan is not so much that it is “older” as that it is not very flexible. There are no easy fixes.

To add real bedrooms to the current layout, you’d probably use the two west windows, but then you’d have to swing the kitchen around (in or adjoining the current laundry room?). The easiest way to add a second full bathroom would be to put it behind the kitchen, next to the powder room, but then you’d either lose the second “bedroom” or make another en suite full bath.

So … unless the new buyers have the same preference as the sellers (large open spaces, infrequent need for a second sleeping area), your architect will take out the proverbial drawing board and design a wonderful space with 3 or 4 bedrooms, 2.5 or more baths, and a renovation bill of around a half million bucks.

Given that it sold quickly in 2010, I wonder if the new owners just moved in, or started a do-over renovation.

what do you count? (but I digress…)
Although the 2008 and 2009 listing history for this loft is very interesting (I will get to it soon), there is no reasonable way to count Days on Market for the July sale of #5W as anything other than beginning on February 6, 2010.

But I want to note a conversation I had recently with Noah Rosenblatt of UrbanDigs about Days on Market. The short version is simply that this is yet another example of how not having a true Multiple Listing Service disadvantages people who want to really track the market (whether they are agents or civilians). A real MLS would have standards about counting Days on Market to avoid people gaming the system by, for example, entering a “new listing” for a listing that is being extended; indeed, a real MLS would have standards, period.

I see no indication that REBNY has any interest in this topic, so even people who are trying to be systematic about it take different approaches. The Miller counts days to contract from the last price change; his theory is that something is not really exposed to the market until it is at a price from which The Market will negotiate. I get his point, and understand that he has been using his own standard for many years, so it has a significant legacy value.

But The Miller’s approach is arbitrary in that it ignores time on the market before trivial price changes (such as a drop from $1.995mm to $1.95mm, intended by the agent and seller to get fresh attention as a Price Drop, but which should attract no more interest at $1.95mm than it did 2.3% higher).

I don’t know that I have ever articulated the standard I use for my Master List of Manhattan Lofts Sold Since November 2008, but it has a seriously arbitrary element, as well. My goal is to capture how long a Manhattan loft has been continuously offered for sale, so I skip over “temporary” periods off the market (whether with the same firm, or a change in listing firms). My arbitrary cut off for “temporary” is 60 days, and I am tempted to go higher when I see one that has a gap of just a bit more than 60 days, especially if that is over the summer.

different marketing periods, different markets
In looking at #5W at 20-26 N. Moore Street, there is nothing controversial in saying that it was on the market from February 6 until the contract April 22, and closing July 28. Nonetheless, the full listing history is interesting.

You will recall that The Peak in Manhattan real estate was more or less the first quarter of 2008 and that the Post-Peak market did not change dramatically until Lehman Brothers filed for bankruptcy almost exactly two years ago. And that the “drama” included a nuclear winter.

The full listing history for #5W shows all that (and more!): over-optimistic pricing after The Peak; unsuccessful attempts to adjust after Lehman; continued marketing in 2009 at prices lower than it later sold for in the fresh market of 2010. Again, there is no new lesson illustrated by the travails (and eventual success) of #5W, but I want to give a shout out to a Poster Child when I see one.

Without much further ado….

June 7, 2008 $3.1mm
June 20 $2.95mm
Lehman!  
September 22 $2.75mm
October 17 $2.6mm
December 2 $2.395mm
March 9, 2009 $2.2mm
April 10 off the market

At the risk of continuing to beat the horse well past efficacy, I would like to note a few dates and prices, keeping in mind that The Market determined that #5W was worth $2.5mm when it went to contract in April 2010.

  • if you are one of those people who looks at the macro Manhattan market as being off 20% since The Peak, the $2.5mm clearing price in April 2010 is within that range of the June 2008 asking price
  • see the buyers flee! the immediate post-Lehman market was characterized by an absence of buyers; hence #5W could not sell off four asking prices from $2.75mm to $2.2mm, despite being exposed to The Market for more than 6 months, and despite being within normal negotiating range of the eventual clearing price
  • it probably would not have done them any good to stay on the market after April 2009, especially near that last $2.2mm ask; #5W was by then at least perceived as a tired listing, if not a bruised, battered and shattered listing

Fun stuff!

One last huzzah: The Market refused a sale at $2.2mm, yet The Market later granted a sale at $2.5mm. Must have been different markets, right?

© Sandy Mattingly 2010

 

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

back into the Soho time machine, to Spring Street lofts circa 1972

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

The History Channel, again
We seem to be in the history cycle on Manhattan Loft Guy, and there is no telling when it will end. Today’s installment wanders back to 1972 Soho, when a few pioneers got together to buy a small building on Spring Street near Greene. At least one set of those pioneers is still living there, still making art there. The Habitats feature in yesterday’s New York Times real estate section has the story: The 3,200-Square-Foot Adventure.

In 1972 … he was approached by a friend. Would he like to join three families who were buying an old garment factory and converting its lofts to residential space? For a total cost of $146,000, each family would have an entire floor containing 3,200 square feet of space.       

good lawyering = priceless
The NY Times didn’t out them by providing the address (they still live there); I won’t mention the address either. But I know the building, and the four pioneer families may not have budgeted to get much lawyering in that initial $146,000. According to a New York State tax advisory opinion in 1994, the four pioneer families originally owned the building as a simple partnership, each having exclusive rights to reside in their full-floor lofts and each having a 25% interest in the commercial space on the ground floor and basement. This was about as simple a legal structure as could be imagined way back when, and it ‘worked’ for them for 20 years.

They wanted to change the legal structure in 1994, and sought the referenced tax opinion to see if they could avoid capital gains treatment converting from a simple partnership to a two-unit condo, with ground-floor retail as one unit and the 4-unit coop as the other condo unit. (I.e., a true “condop”.) They could. Whew!

Since the partners (now coop owners) retained ownership of the commercial space (now condo unit), they have gotten the benefit of the commercial rental income from the beginning without ever having to worry about 80/20 issues. I don’t know what the rent was like in the early days, but it has been sufficient to cover the coop’s operating expenses since at least the mid-1990s, as the coop owners have a one-digit maintenance expense: $0.

the early days: rats and vagabond living
Pioneering is hard. Each family’s initial investment of $36,500 gave them the right to live and work there, along with the need to fix the place up. Did they move in right away, with rats, broken windows, occasional heat and water? Sounds like it:

Even today, [owner] struggles to describe the chaos that greeted them. Rats scurried about as if they owned the place. Every window was broken. Decades’ worth of lint was embedded in the floor. The rackety boiler reminded [owner] of a 19th-century steam engine. Heat, hot water and electricity were sometime things.

 

***

Sleeping on mattresses and living like vagabonds, the couple gradually transformed the old loft. As an artist, [owner] knew how to work with tools. Together they covered the original floor with lengths of pine and refinished the floor-to-ceiling columns — actually pine tree trunks — left over from the loft’s industrial days. Friends helped patch the holes in the tin ceiling.       

 

In many respects, the undertaking was daunting.       

 

“We had no money,” recalled [owner], who along with his wife was a college teacher at the time. “And we literally had to rebuild the place. But it was very exciting. I think of that period as the good old days.”        

Think about that: these pioneers were essentially repairing and rebuilding their living spaces, while living there among rats and broken windows. That “sometime” electricity, heat and water was the responsibility of the four owners.

Yes, they were the “good old days” in early Soho (even as described by this pioneer), but the sepia tones of memory should not obscure the squalor, or the risks. It sounds as though these two college professors put all of their money into their loft, took on the responsibility of making it habitable, and had three partners to deal with. Among other things, they laid 3,200 sq ft of pine on top of the old garment factory floor.

at least they owned the building
The building was almost certainly not zoned for residential use, and obviously did not comply with the city’s Building Code for residences. It would be ten more years to passage of the Loft Law that gave people who were renting living space in buildings like this legal tenancies, so lots of Soho neighbors in 1972 were facing the same problems as these pioneers (rats, heat, holes) plus the risk that their physical improvements to the space (and sunk dollars) would be wiped out if the landlord kicked them out. (See my September 23 spin through the history cycle, time travel? a first person account of Early Loft Days in New York, for a contemporary account of that phenomenon in a new loft neighborhood.)

limited turnover
It is rather remarkable that two sets of pioneers are still in the building. According to phone, permit and ownership records on Property Shark, the 3rd floor has also been lived in by the same people since the early 1970s.

The 5th floor sold in an estate sale in 1998, for $998,500. The 2nd floor has sold twice: for $1.075mm in 1998 and $4.3mm in 2008 (still in “classic” “raw” condition with one bath). That 2008 sale at nearly $1,350 sq ft raw is a stunning price for a 2nd floor no-amenities coop, even in prime Soho and even one month before Lehman filed for bankruptcy.

pretty primitive, still
The slide show that accompanies the Habitats article in the Times is focused more on the owners’ life, art and furnishings than on the loft, per se. So the several pictures that include the kitchen don’t focus on the kitchen, but on the collections of hat forms or Japanese battle toys, or the columns, or have a deep field (especially in the 1970s, $400 for a Garland stove must have seemed an extravagance). The pix show a still-primitive space, with that pine flooring, simple light fixtures, classically exposed sprinklers and electrical conduit, window air conditioners, and a studio section that puts the “artist” in artist’s loft.

Of course there is no floor plan, but the pix suggest a Long-and-Narrow that is 4 windows wide in front, with the studio in the back getting gentler north light. (The 2008 5th floor listing claims a space that is 36 x 81 feet, with 14 foot ceilings, and windows only north and south.) With no windows on the long sides, flexibility for legal “bedrooms” is limited. (Not an issue for these folks, at least not for the last 38 years.)

it is a small Manhattan Loft Guy world
This post fits within a recent Manhattan Loft Guy cycle touching on the history of loft neighborhoods in New York, as I mentioned up top. Indeed, there were 3 Back In The Day posts just last week. But because the New York loft world is a small world after all (did anyone just start singing??), this post is also related to another recent MLG thread.

This four-unit coop might be the single biggest per-owner victim of the low-life property manager who pleaded guilty two weeks ago to stealing $2.3mm from 19 properties he managed (September 19, thieving coop and condo property manager pleads guilty).  Based on the lawsuit that this coop filed against that bad guy a year and a half ago, this 4-unit coop lost $790,000.

It is a wonder that the owners pictured in the Habitats piece yesterday can still smile after being fleeced of $197,500. Hardy pioneer stock, indeed!

To repeat from my September 19 post’s closing note:

Manhattan Loft Guy note to self: write about how that rippling effect may cause lots of problems between coop shareholders / condo owners and boards, and among shareholders and owners. Soon.

© Sandy Mattingly 2010

 

 

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

the Lower West Side before “Tribeca”

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

great site, great pix
If you have not been to Kevin Walsh’s website Forgotten New York, you owe it to yourself to click around there. I came across it (again) in the course of trolling the inter-tubes for some depth and detail for my September 22, Heisenberg’s Uncertainty Principle for Manhattan Loft Neighborhoods / Tribeca loses Bazzini, gains .

Anyone who coins “Pre-beca” is a winner on the Manhattan Loft Guy scoreboard; if you can also post photos from the 1970s, 1980s (and much earlier) of the land on which “Tribeca” later stood, you head to the Hall of Fame. Check out The Lamps of Pre-beca for such photos. I don’t share Walsh’s interest in street light variations, but the “streetscapes” in these photos are deliciously desolate.

some personal reflections
My dad worked in an office down by Rector Street in the late 1960s and I remember taking the Broadway Local down there to visit. I had to walk a pedestrian bridge (over some spillway of the Battery Tunnel, perhaps), and it was a strange world down there in those days. The World Trade Center site was a huge construction zone; I assume the landfill from the foundation work was already dumped into the Hudson by then, later to become Battery Park City.

I may be conflating romantic imagination with memory, but I have a sense of the odd mix of office towers and commercial spaces along Washington and Greenwich Streets down there. (Were they electronics / radio suppliers?)

It was a very dynamic time for Manhattan, with a huge building boom in full swing, yet many of the Washington Market food businesses that got razed for the World Trade Center headed to the Bronx, leaving as orphans some butter, egg and provisions businesses further north around Duane, Reade and Jay Streets (Bazzini, Wils and Hotel Bar Butter among them, as noted in my September 22 post). The decline of that neighborhood on the Lower West Side lead to the creation (eventually) of a new neighborhood in the exact same location. Just this once I will use the pain-in-the-butt capitalization: TriBeCa.

I have no recollection that I ever wandered those streets in the late 1960s; probably not, as I had no business there. By the time I did get down just below Canal Street on the west side occasionally, it was to visit clubs and bars in the late 1970s. The one time that I probably walked Pre-beca south-to-north was well after dark, after watching the Bicentennial fireworks from The Battery (more or less). I know we walked back to Chelsea that night, probably “inland” from crowds walking under the West Side Highway, so probably up Greenwich, Hudson.

If I had known on July 4-5, 1976 that this area would soon be famously christened, or that I would live there within 5 years, I might have paid more attention. But it was dark, and desolate (apart from crowds of pedestrians streaming north, of course).

bonus points!
Another thing I remember learning about as a kid: the coelacanth. Walsh earns even more MLG Points (redeemable in very limited locations) by using the word in a blog post about New York City lampposts:

A quirk of fate allowed the skeletal remains of the streets where Washington Market used to be– as well as a cache of extremely old castiron lampposts–to remain in place 20 years after their contemporaries had long vanished, like the coelacanth of Indonesia, still swimming 400 million years after its brother fish had disappeared.

note to readers
I am going to update my Favorite Links column, to the right. (One of these days, other than this day.) Forgotten New York will make the list.

© Sandy Mattingly 2010

Tagged with: , , , , , , ,

extra BR + extra bath cost exactly $475,000 at 270 Broadway loft

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

I hope everyone was polite at the closing
What do you do when you grow out of your loft? For most people who can’t make to do with … say … 2 bedrooms and 2.5 baths (such as … say … the Manhattan loft #16C at 270 Broadway, Tower 270, which sold on September 15) you uproot your family to get that additional space. But these sellers-of-2-BR-seekers-of-3 were lucky: they did not put their too-small loft #16C on the market until they had an accepted offer for the larger loft right next door. They bought #16B with 3 bedrooms + 3.5 baths on August 31.

sometimes The Numbers work
#16B sold at $2.2mm, a tiny discount from the $2.225mm asking price, or $862/ft. It came to market on March 30 and had a signed contract with the next-door neighbors by May 1.

So the next door neighbors in #16C knew they had a handshake deal to buy #16B when they put their #16C on the market on April 29. They obviously knew that they had valued #16B at $862/ft in that contract, but they first gave it a shot at $1.875mm, or $938/ft. When that had not worked by June 3 they dropped to $1.795mm, from which they generated a contract by July 22 at $1.725mm, or $863/ft.

I assume that the #16C buyers did not know the contract price for #16B, which was by far the most relevant comp in July, when they started negotiating for #16C. It is likely that the #16C sellers used their #16B contract price to justify drawing a firm line in the sand for #16C at that $1.725mm, essentially identically valued as #16B.

Let’s push these numbers a little farther …. These recent sales show that The Market valued these two lofts the same on a price per foot basis. I guess it is not surprising (but it is cool) that the sponsor achieved essentially the same values for these two lofts when they originally sold in 2002 ($16C at $558/ft, or $1,115,142; #16B at $547/ft, or $1.395mm). Put another way, #16C sold for 79.9% of the #16B price when they both sold in 2002, and then sold for 78.4% when they both sold in 2010.

That is a pretty efficient market, no?

similar condition
Although #16C got to be too small for these folks, at “1,998 sq ft” it is hardly “small” for a 2 bedroom loft in Manhattan. The problem is that this particular Long-and-Narrow footprint provides little flexibility to add an additional room, as all the windows are along (most of) one long wall and it is not quite wide enough to make two bedrooms on the back (narrow) wall, even if one wanted to rip out the master bath to do it and even if one could live with a bedroom with no window.

The building was converted only in 2002, so the condition of all units in the “Tower” portion that have not been renovated should be pretty much the same. Here is the babble on the 2 BR #16C:

Balthaup [sic] designed chef’s kitchen featuring stainless steel counter tops, a Sub-Zero refrigerator, Miele cook top and double ovens and a Kitchenaid garbage disposal …. en-suite [master] bath with a glass paneled stall shower, a Phillippe Stark tub and Dornbracht chrome fixtures ….

In not very great contrast, the 3 BR + 3.5 bath #16B (with “2,551 sq ft”) contains these (now familiar) elements:

Bulthaup kitchen and Miele appliances …. en-suite master … [bath]  features a glass paneled shower and freestanding Philippe Starck bathtub with Dornbracht chrome fixtures ….

(Snark alert!) So it is fair to say that these two lofts were in essentially identical condition when they sold, so long as a "Balthaup deisgned chef’s kitchen" is really identical to a "Bulthaup kitchen".

same commute, same dry cleaner
One of the reasons that people don’t like to move is that they don’t want to disrupt their lives: they are loathe to break in a new dry cleaner, or to learn to time the walk to the subway and the subway trip to work, or to risk losing play date partners for kids by moving to a (new) inconvenient location. Not a problem for the folks who moved from #16C to #16B.

And they probably saved thousands on movers, without tying up the elevator.

fun with broker babble
What are the chances that #16B really has ceilings that are two feet higher than #16C? (See the listing descriptions….)

© Sandy Mattingly 2010

Tagged with: , , , , , , ,

time travel? a first person account of Early Loft Days in New York

by Sandy MattinglyPosted on Posted in lofts in other neighborhoods — No Comments ↓

parallels between 1970s Soho and 2010 Bushwick
There is a fascinating first person account of someone who looks forward (kinda, sorta, perhaps) to being under the new loft law on a Brooklyn blog that Brownstoner linked to yesterday. In broad outline, the story is similar to what was happening at The Dawn Of The Manhattan Loft Era (ed. note: read that title with a Deep Voice; it will sound better).

The common elements include very rough (relatively inexpensive!) space, absent or distracted landlords, a lack of building services, conflicted relationships with the Fire Department, a desire to stay under the radar, appreciation of Loft Living and The Envy Of Friends, and Anxiety about the future.

that new law
I hit the content of the law extending the loft Law, and the last minute political maneuvering that preceded and followed its passage, in my June 25,  loft law extension / what’s the big deal? UPDATED w maps. That is a rather long post (even by Manhattan Loft Guy standards), but here is the main relevant section:

that handwriting on the wall? creeping loft-ism

If there are official estimates for how many buildings will soon be subject to the new-and-expanded Loft Law, I have not seen them. (This unattributed "fact" is reported in the Bushwick blog on Tuesday:  "The law will now cover tenants in about 3600 more units in around 300 buildings who can prove their tenancy for 12 months or more in 2008 and 2009.")

 

Formally, the law applies only to buildings that already meet this criteria:  buildings in which at least two families have been living for at least 12 consecutive months in the 24 months of 2008 and 2009 (reports say that "two" will be amended to "three" families as the trigger for coverage). Only those buildings, and only if they are outside of the surviving 13 IBZs [Industrial Business Zones].

 

But I gather that everyone assumes that, over time, these grandfathered and legal residences will inevitably spawn nearby illegal residential use, which will come to dominate some of these neighborhoods, as happened in Soho and Tribeca. When (if?) that happens, the facts on the ground will inevitably require the landlords to upgrade and/or the City to legalize additional buildings for residential use.

loft neighborhoods are different, in Manhattan, Brooklyn, elsewhere
Here is fodder for a future post, building on this Bushwick = Soho parallel and yesterday’s Heisenberg’s Uncertainty Principle for Manhattan Loft Neighborhoods / Tribeca loses Bazzini, gains. Maybe a Grand Unified Theory on loft neighborhoods ….

The simple observation is that loft neighborhoods are much more changeable (in scope and velocity) than areas that have been ‘established’ residential neighborhoods for many years; when things change, they tend to change more radically and more quickly in loft neighborhoods than elsewhere.

Something else for the Manhattan Loft Guy to-do list. Regular readers will know not to hold their breath.

© Sandy Mattingly 2010

Tagged with: , , , , ,

Heisenberg's Uncertainty Principle for Manhattan Loft Neighborhoods / Tribeca loses Bazzini, gains Sarabeth’s

by Sandy MattinglyPosted on Posted in change is a constant — No Comments ↓

old to new, again (and again)
The New York Observer noted yesterday that the long-awaited lease for Sarabeth’s has been signed, signaling the end of the Bazzini presence in Tribeca. If the story sounds familiar, that’s because the family that owns Bazzini said publicly at least as long ago as this April 2009 Downtown Express article that they planned to close (“[w]e are eyeing leasing the space….A year or a year and a half from now, we could still be there”) and in October 2009 Downtown Express identified Sarabeth’s as the potential new tenant.

This story leads me to a new Manhattan Loft Guy locution about the nature of loft neighborhoods. Let’s call it “Heisenberg’s Uncertainty Principle for Manhattan Loft Neighborhoods”, though it probably ‘works’ equally well in describing any true loft neighborhood.

To do rough justice to the original concept from physics, we will start with a lay description from How Things Work, with some pregnant bolding:

To know the velocity of a quark we must measure it, and to measure it, we are forced to affect it. The same goes for observing an object’s position. Uncertainty about an object’s position and velocity makes it difficult for a physicist to determine much about the object.

Of course, physicists aren’t exactly throwing medicine balls at quanta to measure them, but even the slightest interference can cause the incredibly small particles to behave differently.

The Manhattan Loft Guy adaptation:

even the slightest interference increase in residential population can cause the incredibly small particles dynamic loft neighborhoods to behave differently change in ways the new residents will eventually lament

the back story
Although the Bazzini operation at Jay and Greenwich Streets has only been a cafe and retail store since 1997, the change from a Bazzini cafe to a Sarabeth’s restaurant and retail store is yet another sign of Change in Tribeca. As the Downtown Express put it 17 months ago, Bazzini is “perhaps Tribeca’s last tie to the old Washington Market food trading days”. Or, as they put it more broadly last October, this is “the latest example of ‘new Tribeca’ beating out ‘old Tribeca’”.

We’ve been here before. Yes, the ‘character’ of Tribeca is not what it was in the 1970s, when there were still food processing and warehouse facilities. Which is not what it was in the 1980s, when there were fewer such active businesses. Which is not what it was in the 1990s, when there were still fewer such active businesses.

any excuse is a good excuse
I need very little excuse to reprise one of my favorite all-time quotes, which is from the last of the Tribeca butter-and-egg guys, so is very relevant to this story:

You’ve never seen so many people under three feet high…

That was Steve Wils in a Downtown Express article from July 30, 2000, explaining why he moved his business to New Jersey in 1998, which I quoted in my March 12, Quote For The Day, 2000 edition. (That post has a bunch of links to old New York Times stories around the theme that Tribeca is changing.)

Various articles I have seen feature quotes from local residents or people who come to Tribeca for work or school complaining that Bazzini’s is closing, and about the change in the neighborhood. There are laments from residents of Independence Plaza (built in the early 1970s), nearby loft dwellers resident since the 1980s, kids from Stuyvesant High School (moved to Chambers and West Streets in 1992), workers from Citicorp up a few blocks on Greenwich Street (built in late 1980s), and I remember somewhere reading about a sad five-year old (born in the 2000s). You see where I am going here?

It is likely that all of these people came to the neighborhood because they liked its ‘character’, and the movement there of similarly like-minded people changed the character. Eventually, there were enough additional people living and working there that long-time businesses were no longer compatible with the new environment and new businesses were attracted to the new environment. Eventually, the people felt that the environment had tipped enough that it was no longer what it was before they moved there.

I suppose one could look at this phenomenon as an application of The Law of Unintended Consequences, but I might start calling it The Loft Law of Eventual Lament (on another day; don’t worry about that digression).

Here are some data points on a timeline for the area now known as Tribeca (formerly known as the Lower West Side):

  • 1886  21 Jay Street / 339 Greenwich Street built for Mohlmann family wholesale grocery business (per NY Times)
  • 1943 Bazzini family bought building (per NY Times)
  • 1968  Bazzinis start processing nuts there (“driven there from Park Place by urban renewal programs that swept many of its competitors to the Hunts Point market in the Bronx or out of the city entirely”; per NY Times)
  • 1972  Independence Plaza development began by city (middle income housing, Borough of Manhattan Community College, Washington Market Park), Greenwich Street from N. Moore to Chambers
  • mid-1980s  D’Amatos [sometimes “Damato”] buy five buildings along Greenwich and Jay Streets from Bazzini family (per NY Times); originally used in the business, the D’Amatos eventually sell them for residential development
  • 1986  Hotel Bar Butter leaves 16 Jay Street; there since 1947 (May 4, 1987 New York Magazine, starting at page 96)
  • 1987? PS 234 opens down the block from Bazzini’s
  • 1988  small Bazzini cafe opens on ground floor (1,000 sq ft)  (per Tribeca Trib)
  • 1996 zoning changed from industrial to permit residential (per NY Times)
  • 1997  Bazzini nut factory moves to Hunts Point, Bronx (per NY Times)
  • Wils butter and egg business moves to New Jersey
  • 1999  21 Jay Street conversion to 10 residential loft rentals (“2,000 to 2,600 square feet of space, are $7,200 to $9,400 a month. …$15,000 and $17,000 for the two duplex penthouses, with 3,900 and 4,500 square feet”) (per NY Times) (later converted to condos)
  • 2002 amended condo declaration filed
  • April 2009  Downtown Express article about Bazzini plans to close
  • October 2009  Downtown Express identifies Sarabeth’s as potential new tenant
  • September 2010 Observer article about Sarabeth lease signing, 15 years

don’t be mad at me, I am not blaming you
I am not saying that all change is good, or that people who liked the way things were are not entitled to complain. I am saying that change is inevitable, and that sometimes the people who complain about the changes bear responsibility for the changes. And I mean “responsibility” in a causation sense, not a moral sense.

© Sandy Mattingly 2010

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