save our flip tax! are coop flip taxes in danger from Fannie Mae?


odd ducks make for odd rules
Interesting catch by The Miller on his blog on Thursday, [Fannie Mae] Proposed FNMA Rule Change Could Damage Co-op Prices. I had been vaguely aware from national real estate sources that there has been some controversy brewing about the practice of home builders in some parts of the country adding covenants to deeds requiring that resale buyers pay a kick back to the builder when the house is sold by the original buyer. One real estate ListServ I am on has been buzzing about the practice, and the possibility that federal regulators may seek to limit it, but I had not paid attention to this thread in the (mistaken) belief that it was just another real estate practice out there in America that had nothing to do with Manhattan.

As The Miller points out, that is wrong. As with so many laws and rules that have to do with "real estate", life on our peculiar little island is so different from life as practiced in America that general rules that make sense elsewhere can create real (and unintended) problems in New York County (special rules permitting coop shareholders to take advantage of tax deductions for coop expenses are one example of a work-around). God bless the folks at REBNY (for once!) for being on top of this.

See The Miller’s blog for the whole story, but the Long Story, Short version is that the feds are looking at ways to discourage builders from adding these kickbacks by prohibiting Fannie Mae from buying mortgages on homes with that kind of covenant. Apart from being a shady way for developers to reap revenue from a home long after they have sold it, one problem with these covenants out there in America is that they may not be fully disclosed; another is that they make comp analysis more difficult. It is not heard to see that these are legitimate issues in America.

Nor is it hard to see that these issues have nothing to do with coop flip taxes. A builder who wants an income stream from future sales is (by then) a remote party with no legitimate interest in the future transactions; a coop that uses a flip tax to generate operating revenue or to increase a capital fund when its own shares are transferred is a direct party in interest to the sale. In addition, flip tax information is routinely shared in coop marketing (at least among REBNY firms), so the non-disclosure issue should be a non-issue here.

my REBNY dues [finally?] at work!
So kudos to REBNY for being on top of this issue. This is one area in which the political clout and government affairs efforts of REBNY work in favor of everyday coop owners. Nice catch by The Miller, who includes in his post a link to the 2007 treatise he co-authored (much recommended!) about coop and condo valuations, which found (among a great many other interesting things) that coop flip taxes are associated with (mild) increases in coop share value.

© Sandy Mattingly 2010
 

 

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jaw-dropping renovation of a Manhattan loft

so nice, I gotta post twice (today)
I simply could not resist the temptation offered by today’s Curbed post, The Future is Now at Transformed Greenwich Village Loft, to probe, to ponder, to track, and … to drool over the photos. Lover of classic Manhattan lofts I may be (I am, I really am), but this loft renovation is awesome. (Whether it is to your taste or not, there can be no argument that this is one spectacular loft.) So I ‘wasted’ some time today tracking this beauty down. (And I ‘owe’ you more August posts.)

Curbed has the links to the architect’s web site, to a design blog that has more commentary than is found on the taciturn (discrete?) architect’s site, and seven photos and the floor plan. Even if you have been there already today, go back and click back and forth between the text (particularly on Dezeen), the photos and the floor plan to get a good idea of how this loft flows. Not (usually) my cup of tea, but my of my that is one spectacular space. Talk about scrapping the "classic" loft conventions and starting over….

details, and a curious loss
I am not going to out the anonymous art collector, but I can say that in January 2007 he paid $4.6mm for a "5,800 sq ft" full-floor loft. The listing description at that time suggests that the loft needed a great deal of work:

This private full-floor loft is located in the heart of Greenwich Village, just steps from Lower Fifth Avenue. The immense 5,800 space boasts open Village views to the North and South. There are also Eastern windows, which could be enlarged. The apartment currently features a massive central gallery, large master suite and bath, a windowed eat in kitchen, and south facing balcony, which can be expanded. The space lends itself to most any configuration, however, as it has an internal width of 58 and has three exposures.

As you can tell from the photo looking downtown, this loft is high enough to have a clear south view. In this case, the height is high only for a loft building, as there are buildings nearby that are much taller (though they may lack the sight lines of this one). In fact, that view is what convinced me that I had found the right loft. I hope this link comes out all right (and without identifying the building); if you do that thing with your fingers (hands apart but thumbs together, fingers sticking straight up) you can frame this photo to almost exactly the same angle as seen in the fancy architect night-time photo.

The January 2007 seller of this "immense space" had bought it in early 2005 from a guy who had owned it since 1985 and probably did not do too much work in the intervening 20 years. Here is that 2005 listing description:

As prime as downtown gets! This immense private floor loft with epic proportions perched high above the historic village is situated steps off Fifth Avenue. Rarely is such a loft of this size available in such a desirable location. The flexibility of this enormous space can suit a variety of different needs and can make an unparalleled wide open loft or a generous family home. Windows of 3 sides offer excellent light and views. Other features include a massive central gallery, a large master bedroom with a luxurious master bath with steam shower, a windowed eat in kitchen, central air conditioning and an elaborate security system.

In those days, the ceilings were 10’6" and cross-beamed. Even then, the ceilings may have been dropped, as the old listing photos (not publicly available; sorry) show ventilation ducts in the beams and ceiling, and recessed lighting. The 8 structural columns are very much in evidence, framing that "massive central gallery". (In the ooh-la-la renovation, they almost disappear!)

eight million stories, as usual
Unless he always planned to be a(n early!) flipper, something must have happened to that 2005-buyer-turned-2007-seller soon after he bought it. Not only is there no indication that he made any significant upgrades, our data-base shows he was on the market a year after buying for $4.95mm. Too bad for him that he was asking $6.3mm to start, or that he ended up selling to The Anonymous Collector in January 2007 for $350,000 less than he paid. That had to hurt!

I wonder if he reads Curbed or, if he does, if he would recognize his loft from the pictures and description of what The Anonymous Collector and his Dutch architects did to the loft.

Did I mention that this is an absolutely breathtaking renovation??

© Sandy Mattingly 2010

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another developer haircut as 52 Thomas Street penthouse loft closes off 29% from original ask

"a little off the top, please" … and sides … and …
The Manhattan new development loft Penthouse A at 52 Thomas Street was featured in yesterday’s Just Sold section of the New York Post’s real estate section:

TRIBECA $1,850,000

52 Thomas St.

Two-bedroom, two-bath penthouse condo, 1,510 square feet, with dining room, windowed kitchen with Viking, Sub-Zero and Miele appliances, Kohler soaking tub and wraparound terrace; building features doorman. Common charges $1,285, taxes $1,363. Asking price $1,895,000, on market 21 weeks. 

As is usual with such brokerage-sourced PR, the Post’s data is a little … incomplete. Yes, it sold for $1.85mm from an asking price of $1.895mm; and yes, there is a sense in which it is accurate to say that it was on the market about 21 weeks. But here is some more complete information, taken from StreetEasy and the inter-firm data-base:
 
Oct 19, 2007 new $2.6mm
Feb 8, 2008 "temporarily off the market"  
Nov 3, 2009   $1.895mm
Dec 2, 2009 "temporarily off the market"  
Mar 1, 2010 back on the market  
Mar 26 contract  
July 8 closed $1.85mm
 
You see that from coming back to market on March 1 to the closing was about 21 weeks, but (as with many new development sales histories) it is difficult to say how long it was actually on the market, as anyone paying attention during the "temporarily off the market" periods would have known what it had last been offered at, and that it had not yet sold. I.e., they could easily have made an offer for it.

a little history, please
Lofts in this 2007 condo conversion came as close to perfectly timing the market as any new development loft I can think of: 14 of the 16 non-penthouse lofts closed between December 31, 2007 and April 22, 2008, while the other two closed in June 2008.

The four penthouses are true penthouses (set back from the edge of the building, 3 with terraces, 2 as duplexes) apparently built on top of the existing 5-story building. Since they came to market about a year after the non-penthouse units, most likely either the developer held them back (if so, oops), or they were not finished (so, not ready to be sold; in which case, sigh…) when the non-penthouse units started to close. Note the #PH-A history above: taken off the market at $2.6mm after less than 4 months of marketing, right at The Peak of the market.

I found no information about this project to explain why the penthouses were on such a different schedule, nor any information about any financial difficulties the developer may have had finishing this project. Given the pace at which the non-penthouse lofts sold out, it is hard to believe that there were any financial issues so I am going to guess that construction on the roof took longer than anticipated and that the developer was content to keep these babies off the market.

sometimes you get the bear, but …

If I am right in that guess, that was a costly bet. On the one hand, the non-penthouse lofts appear not only to have sold as quickly as they were ready to be sold, but most appear to have sold at or above their asking prices. Look, for example, at the four fifth floor lofts, none of which has outdoor space:

  closed price $/ft original
#5A Apr 8, 2008 $2,469,256 $1,288 $2.35mm
#5B Apr 22, 2008 $1,858,306 $1,181 $1.825mm
#5C Apr 10, 2008 $1,832,850 $1,050 $1.8mm
#5D June 12, 2008 $2,596,537 $1,320 $2.6mm

For the anal among us, these four lofts sold at $181,949 above their original asking prices. A scant 2% above, but still above.

Miller Rules, applied
Now look again at the recently sold #PH-A: "1,510 sq ft" interior, with that wrap terrace ("848 sq ft"). Using The Miller’s ballpark rubric for valuing outdoor space generally at from 25% to 50% of the value of interior space (see May 6, riffing with The Miller on the value of Manhattan terraces, decks + balconies), the comparable price-per-foot for #PH-A would be from $1,074/ft to $957/ft. I would tend toward the lower valuation, as I suspect that The Miller would consider this outdoor space to be relatively premium (and therefore relatively more valuable [towards 50%] compared to the indoor space) for reasons of utility, privacy and location (see that post for what factors might be plus factors).

On the one hand, even at $957/ft, the #PH-A clearing price compares favorably to the At The Peak price-per-foot for #5B and #5C, given the dramatically different markets, now vs. then. (Not so favorably to #5A and #5D, of course.) On the other hand, this penthouse closed nearly 30% off from where the developer started in October 2007.

more hands
On the other other hand, the developer might take some comfort in having predicted the market price under new market conditions, having pegged the ask at $1.895mm in November 2009. On that same other hand, my guess is that the developer did well enough on the non-penthouse closings at peak prices not to have been too upset by the 4-of-20 units that lagged. But returning to that first ‘other’ hand, it has to hurt some to close #PH-A nearly 30% off from the original plan.

spot is not very prime, building is not very uber
A word about location, location, location: the corner of Thomas Street and Church Street is hardly prime Tribeca. In my highly personal rankings, Thomas is easily in the bottom third of Tribeca cross-streets for ‘charm’ (though it has a lot of ‘authenticity’), while Church Street beats only Broadway in my ranking of the five N-S thoroughfares in Tribeca (given the traffic uptown velocity at this corner, Church might even be ‘busier’ than Broadway). I mention this to add to my sense that this new loft conversion (expansion) did very well (even at The Peak) for a non-prime few-amenities condo. It was never an uber-loft.

Net, net … the developer did a great job on original pricing in at least 16 of 20 cases. I would love to know why the penthouses were not ready for sale when the others went At The Peak.

[UPDATE: I forgot to add the links to some other Manhattan Loft Guy posts about developers taking discounts to close out their inventory:

July 15, more developer haircuts, as 415 Greenwich lofts cut to close
April 1,
developer takes 27.2% haircut to close 166 Perry Street
January 19,
the last 13% haircut drives new development deal at 135 West 14 Street

As I said in that July 15 post: "This is not a secret technique."]

© Sandy Mattingly 2010

 

 

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loft market at 476 Broadway is pretty F'in efficient


you know I mean the "F" line market, right?

Regular readers of Manhattan Loft Guy know that I often beat the drum about The Market being not very efficient, at least as far as individual loft sales provide data points. One such percussive episode was my August 15, tales of one loft building / the inefficient market at 718 Broadway, circa 2006, weaker market, 2010. But let’s go south just a bit from that Noho address to a prime Broadway address in Soho, as two recent sales of lofts in the same line provide a contrary example, that of apparent efficiency.

The Manhattan loft #6E at 476 Broadway closed on August 12 at $2.5mm, fairly soon after the upstairs neighbors in #8E sold their "2,350 sq ft" loft with an identical footprint (but very different layout) for $2.65mm on June 24. The lofts came to market within two days of each other in January, and with contract dates of March 18 (#8E) and June 24 (#6E), the two lofts were simultaneously available to the market for nearly two months. The Market clearly preferred one to the other.

same footprint, different floor plans
Let’s look at the more expensive #8E first, the one that found a contract in 2010 within 8 weeks. Reading between the lines of the listing description, this loft was in good shape, with a lot of classic loft premiums, but may have been a little dated.  Note the relative lack of bragging about condition, as opposed to structure, volume and light:

An original 2350sf SoHo COOP loft with great architectural details inside and out. 11.5’ ceilings, 3 massive columns, refinished dark wood flooring, 2 full baths, 3 bedrooms, open kitchen with new GE Profile SS appliances, W/D, and option for Central AC. 16 oversized [sic] windows with THREE exposures, and wide OPEN N/S/W views, providing light all day long, and a birdseye view of SoHo’s cast iron buildings and the infamous water towers, silhouetted against the setting sun. Move in now or redesign into a four bedroom, 3 bath loft.

The somewhat awkward shape of the "F" line at 476 Broadway has, on the 8th floor, been divided into a master suite on the east (narrow) end, with two additional bedrooms sharing the long west wall (with the 50 feet of windows over Broadway) with a living room. The big advantage at this height is the set of windows along the long (north) wall.

In contrast, the  6th floor has no north windows, so the array is rather different: a narrow bedroom over Broadway (8’6" "wide"), a window-less "sleep area" at the opposite end, about the size of the bathroom it leads to, with narrow functional rooms-without-windows opposite the north wall (a 9’3" "wide" office and a 9’9" "wide" library). The effect is seen in the 4th picture for this listing (kitchen, then hallway) compared to the 1st pic from #8F (kitchen and wide, windowed living area). This loft took 5 months+ to find a contract.

bragging on an architect’s name, not her work

As with #8F, the listing description for #6F is an interesting example of Things Unsaid, as it speaks as much about the neighborhood as the space, suggesting that this loft was (also) in good shape, with a lot of classic loft premiums, but may have been a little dated.  Note the relative lack of bragging about condition, with the pregnant name-drop of a famous architect (click on Bond Street on the firm’s projects page to see her 48 Bond Street development):

… classic loft home. Approximately 2350 square foot home combines pre-war character with modern day convenience. Enter into a grand living space with approximately 11 foot ceilings, 10 windows, hardwood floors throughout and open kitchen floor plan. Western exposure offers brilliant light. Master bathroom designed to have a spa-like feel. The original renovation was done by Deborah Berke.

One gets the impression that the "original renovation" was done by Ms. Berke some time ago.

back to efficiency
With both #6F and #8F available in early 2010, The Market valued #8F $150,000 higher than #6F, a scant 6% premium. All buyers would prefer the north windows on the 8th floor to the blank north wall on the 6th floor; some buyers might prefer the true 3-bedroom floor plan of #8F to the 2-bedroom+office+library floor plan of #6F; most buyers would probably be tempted to update #8F, while it is unclear how much of that Berke renovation would survive the new buyer.

Net, net … it seems to me that the (probably) deeper market for #8F (as a true 3-bedroom) and better light are appropriately valued by The Market at $150,000 over #6F. More or less, of course. (Wiggle, wiggle.)

This may also be a case of a deeper market being more easily rational than a thinner market (one with fewer buyers). I will leave that digression for another day.

yes, another unsuccessful 2009 price that worked in 2010
I can’t avoid another digression, one that will be familiar to regular MLG readers. While #8F was ‘new to market’ on January 24, 2010, it had been on the market (on and off the market) during much of the period from February 2007 into October 2009. The unsuccessful prices in the nuclear winter market of 2009 included (briefly) $2.995mm, but after February 6, 2009, this loft did not sell at $2.625mm, $2.7mm, or $2.525mm. When it came back this year, they tried $2.84mm, but only for a single week. The asking price of $2.685mm took less than 7 weeks to result in a signed contract at a minimal discount (1.3%).

I keep saying it, because it is true: the 2010 market continues to reward prices that were ignored in 2009. And:

I know you don’t need them, but here are the basic loft links: July 7, 12 examples of the (rapid) velocity of the Manhattan loft market, and July 8, another sign that 2010 is not 2009, as 60 West 15 Street loft sells.

© Sandy Mattingly 2010

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is this 66 Leonard Street guy the savviest loft seller ever??

big premium, no marketing
I am scratching my head over the August 12 sale of Manhattan loft #12A at 66 Leonard Street (Textile Building) for $3.45mm. For one thing, the loft has been officially off the market for a year (i.e., there has been no marketing); for another thing, the (unsuccessful) January – June 2009 marketing had been at $3.695mm and $3.25mm, a chilly market indeed, but with a 70 days listing history 6% lower than the recent sales price; for yet another thing, the eventual sales price-per-foot exceeds two almost-as-recent (June) sales in the building by at least 25%.

I guess that second "thing" is not so unusual, given the Manhattan real estate history of 2010 sales at / above / near unsuccessful 2009 prices (once again, I know you don’t need them, but here are the basic loft links: July 7, 12 examples of the (rapid) velocity of the Manhattan loft market, and July 8, another sign that 2010 is not 2009, as 60 West 15 Street loft sells), but the first and third things generate a MLG WTF?

paging Warner Wolf
There are many funny numbers here. Let’s go the videotape (errr … data):

  cleared on "sq ft" $/ft last ask original to market prior sale for
#12A $3.45mm Aug 12 2,319 $1,487 $3.25mm $3.695mm 1/15/09 1/28/05 $2.95mm
#11C $3.15mm June 23 2,846 $1,106 $3.395mm $3.395mm Jan 4 11/15/05 $3.975mm
#6B $3.4mm June 1 2,813 $1,179 $3.35mm $3.6mm 5/29/09    

paging Mars Blackmon
I don’t read the listing descriptions, pix or floor plans as accounting for the huge premium of #12A over #11C and #6B, all of which are set up as 3 bedrooms (3.5 baths in #11C, 2.5 in the others). Could it be the views?

#12A:

A bright, corner unit with high ceilings and two exposures, original cast-iron columns, custom-designed lighting and a gas burning fireplace offers serenity amidst awe-inspiring views including the Chrysler Building. Highest quality finishes, dark hardwood floors and custom mahogany cabinetry. Chef’s kitchen, with Subzero, six burner stove, mosaic back splash and limestone island/countertops. Wired Crestron audio throughout; two flat screen TVs. Luxurious master bedroom suite with huge walk-in closet.

#11C:

soaring ceilings, original steel columns, beautiful wood floors, generous rooms, grand baths, chef’s open kitchen, abundant large closets, central air and heat, Crestron audio system, and washer/dryer. This mint high floor residence has a huge corner living room with fireplace and views south, west and east from 16 oversized, sun-flooded windows.

#6B:

The "B" line is the best in the building with windows everywhere – 16 in all. A custom limestone fireplace anchors the living room and the dining area is simply huge. The kitchen is superb with Thermador (6 Burner), Sub-Zero, granite and cherry counters PLUS a walk-in climate controlled wine cellar. The luxe master suite features huge closets and an oversize bath with freestanding tub. Split bedrooms ensure maximum privacy. All in mint, pristine condition from end to end.

Maybe (just maybe) you take some points off #6B for only being "sun-flooded", without the 3 exposures of #11C or the single exposure but "awe-inspiring views including the Chrysler Building" in #12A. But

  • how then to account for the fact that #11C sold at 6.6% less than #6B on a price-per-foot basis? and
  • that does not impact the direct #12A vs. #11C comparison

Not even Walter Chrysler should (rationally) be willing to pay much more for a single exposure of an icon, compared to 3 sun-flooded exposures one floor down … let alone the price-per-foot premium of nearly 35%.

warning: don’t play poker with this guy
I don’t get it.

The #12A seller told the world in Spring 2009 that he would take $3.25mm for his relatively small 3-bedroom loft (compared to #11C and #6B) with its single-exposure Chrysler Building view. Not getting what would have been a 10% premium over his January 2005 entry price, he pulled it off the market.

Yet sometime after both neighbors in #11C and #6B went into contract (same day, on March 24), the #12A seller found someone so willing to buy his loft that the buyer paid:

  • 6% more than the last public asking price from July 2009
  • 26% more than #6B, on a price-per-foot basis
  • $300,000 and 34% more (on a price-per-foot basis) than for the much-larger #11C (23% larger, with one more bathroom)
  • 17% more than the 2005 price, compared to #11C selling at 20.7% less than its 2005 sale price

All this, without public marketing (very likely, without a brokerage commission). Talk about driving a hard bargain!

© Sandy Mattingly 2010

 

 

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can a “loft” in Manhattan change your way of thinking?

or, just provoke a gentrification rant?
I missed this last Thursday (I was on vacation), but there is a fascinating web-only New York Times piece in the Living Rooms section of the Opinionator blog, Our Buildings, Ourselves by Elizabeth Hawes.

It is fascinating in its own right, as a meditation on the author’s personal experience of how moving from a classic prewar apartment on the Upper West Side to a Tribeca loft changed the way she thought about space; indeed, changed the way they lived. The piece is well written and thoughtful, by someone who is informed and sensitive enough about how spaces impact public living to have written a book about it. But it is equally fascinating for the on-line commentary it generated, much of you-inauthentic-blankety-blanks-ruined-loft-neighborhoods, not just in Manhattan, but everywhere.

in her own write
In just nine paragraphs, Hawes reflects on how the contrast between the difference in "apartment" space and "loft" space changed their viewpoint, and offered some general history references, no doubt informed by the work she put into her book, “New York, New York: How the Apartment House Transformed the Life of the City, 1869-1930".

First, life in that classic prewar apartment:

Without realizing it, we depended on the well-defined architectural structure of our Upper West Side prewar apartment to impose order on our chaotic domestic lives: doors to close on sleepy children or work-at-home parents; halls to separate the public quarters from private bedrooms; a progression of formal rooms to shape gracious living. Even the names of the rooms — the entrance gallery, the parlor, the dining room, the maid’s room — conjured up a respectable if rather quaint life. The interior decoration, which was conspicuously elaborate, with classical moldings, a marble mantle, two brass chandeliers and inlaid flooring, had promised a certain station in life, as it was meant to in the early, uncertain decades of apartment living in Gilded Age New York.

Second, adapting to life in a Tribeca loft:

We live casually and without ceremony in the loft, which is in the nature of the space and one of its lessons. Like an early generation of apartment dwellers, we have been unshackled from tradition. Without the formality of carefully named rooms, home is flexible and accommodating and ever more expansive. With the line of eight-foot casement windows along our north wall, the streetscape is always in view, and part of our lives as well. The small loft buildings across the way are of the same era and very beautiful with their rosy old brick and verdigris trim, especially late in the day, when the slanted rays of the sun suddenly shoot down the block. For as long as I’ve lived here I’ve watched at night as a woman works on the sculpture of a man’s head. I’ve never met her, but I feel a connection nonetheless.

There’s more, of course (you should read the entire piece; it’s short), but this contrast represents her family’s experience with two kinds of space. Yes, there is the implied invitation to consider her family’s experience as representative, if not typical. The personal narrative, and the focus on how space is experienced, are aligned precisely with the series of which the Hawes peice is a part.

My emphasis is added to the NY Times description of the Living Room segment of their on-line Opinionator series:

A house is more than just a shelter from the storm. How we shape our homes, and how we behave within them, speak volumes about our history, our values and our way of life. Living Rooms explores the past, present and future of domestic life, with contributions from artists, journalists, design experts and historians.

die! Yuppie scum!!

Maybe I am overly sensitive, having been a gentrifying yuppie in Tribeca back in the day (see, February 21, 2009,

1981 to 2009: progress, or not so much?

), but I found that part of the commentary that followed to be both fascinating and (often) churlish (or worse). Here’s one, that notes there is a theme to earlier comments and that rejects the premise of the series:

Go with a bouquet or a brickbat? I am afraid it is the brickbat. A truckload. David (second post) hit the nail on the head, as did subsequent critical-writers. There is something precious and cloying about these sorts of tales: how the well-heeled, haute bourgeoisie) live their pleasant lives, foraging among the fine offerings of the city.

I should think that a far more important difference in a life is which city you live in, and whether you have the minimal means – psychological, cultural and/or financial — to benefit from being there. Given the minimum, I wouldn’t think that whether you lived in an expensive apartment building (entrance gallery, indeed!) or an expensive loft would matter more than slightly.

The lifestyle of the haute bourgeois (at least the way it is presented in these pages) is more about surface, style and decor, not substance. Perhaps their lives are loaded with substance, but that doesn’t seem compatible with the focus of articles like this one.

This guy thinks that Hawes‘ description of her own experience is "precious and cloying", but she was doing what The Times asked her to do: contribute how she shaped her home and how she behaved within her home. I have not read enough of the Living Rooms pieces to assess whether all contributors are members of the dreaded haute bourgeoisie, but this criticism seems an unfair response to Hawes.

And this comment is worse than churlish:

she should mind her own business and stop spying on her working artist neighbor

I suspect that

Hawes

could have knowledgeably written something about how neighborhoods change, and how those changes impact some people negatively, and some more negatively than others. I have hit the gentrification button a few times, thoughtfully (with great links) in my May 15,

required reading: gentrification, preservation and King Canute

, and recently in my August 12,

Jesuits adapt to Lower East Side gentrification by moving; will lofts follow?

. There is a lot of interesting commentary to offer about gentrification, specifically in loft neighborhoods, but I never seem to find the time for an extended treatment.

Suffice it to say (for now) that change is a constant in New York (especially in Manhattan), that I personally preferred the Tribeca of the early 1980s to the current Tribeca of the

uber

-condos (bringing with it

yuppier

and wealthier people), that there is a need for some amelioration of raw market forces in some neighborhoods, and that much of the preservationist impulse has the (unintended?) effect of reducing economic diversity by driving prices higher by enforcing scarcity (I am looking at you, West Village). Complicated stuff. Books are written about this. But my personal perspective is just that: my personal perspective.

As I said up top, the comments are fascinating. Chiming in with yuppies-ruined-my-neighborhood may be cathartic, but not (to me) very interesting, unless there is some substance. Here’s some substance:

As a sculptor and art-writer I have watched changes like these transform and limit opportunities once available to NY artists. The rise of cyber artwork, computer generated work and video could be seen as a direct response to the diminution and lack of availability of workspace.

Interesting point, about which the commenter has direct experience that I lack. But I wonder if it is true. Opportunities for artists have always been limited in New York, by economic forces more than anything else. Inexpensive space with light in neighborhoods congenial to an artist lifestyle and physical needs always get squeezed in economic good times. Irrevocably so, unless one takes a very long view.

But that fact that

this other guy

can’t find affordable studio space in Manhattan and ‘has’ to "share a tiny, expensive East Village apartment with two roommates" is a present fact (unless he considers East 106 Street and north as "Manhattan"). I would like to think that it won’t happen in my life time, but there is no reason to think that at some point economic forces will not change direction, and presently ‘unaffordable’ areas will be come affordable again (remember the Upper West Side in the early 1970s?). And if not (at least for a while), That Other Guy may be right, and

At some point, we’re going to be pushed so far beyond Manhattan it makes no more sense to stay in New York. What are we going to do then?

I don’t know what "they" are going to do, but New York will definitely be a less interesting place if that happens. Different, definitely; less interesting, for sure. But that is what happens in New York (and, especially, Manhattan). Things change. I won’t like that change, if it happens. Other people will.

whose ox is being displaced?

From a very high altitude perspective, the early artist colonizations of Soho and Tribeca had little displacement effect, as the buildings they occupied (illegally, at first) were at least under-utilized, if not vacant. Very, very few residents were forced out in the early days. That may also have been true of DUMBO. That is less true of

Williamsburg

. But the issue of displacement is an inevitable consequence of change in a neighborhood, and the issue involves more than residential space.

I hit on some of these themes in my June 25,

loft law extension / what’s the big deal? UPDATED w maps

. The fact that artists (and non-artist residents) have moved into

Bushwick

in the last 10 to 20 years, for example, creates political pressure on the local City Council Member to address their concerns and jeopardizes some of the relatively few suitably industrial zones in the city. Hence the conflict between the

Bloomberg

Administration and ‘tenant groups" over the extension of The Loft Law and the ‘protection’ of Industrial Business Zones (protection from artists, and others!).

final comment

(I promise!) You already know that I find that

Hawes

piece fascinating, along with the comments it spawned. My last fascinating comment is that precious few of the comments were from New York: 6 of 34, with just a handful more by people who clearly know the city. Yet another indication that The Old Grey Lady is not (just) my hometown newspaper.

© Sandy Mattingly 2010

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ka-ching! ka-ching! as uptown widow moves to 7 Hubert Street loft

change in lifestyle
I had to guess that "Time Warner conglomerator Steve Ross" lived uptown, although in the brief Page Six mention about his widow moving to Tribeca there’s nothing about where she moved from. For Manhattan Loft Guy purposes, this transaction is interesting because of the price history of the "[s]pectacular 2,758 sq. ft. loft with a beautifully planted 564 sq. ft. terrace" she bought at 7 Hubert Street:

  • August (?) 2010 $7.3mm
  • May 2007 $6.45mm
  • August 2004 $3,137,228.

Local cultural anthropologists may have a different focus than MLG, but let’s talk about the loft first.

(By the way I have that "(?)" for the August 2010 sale because I don’t see it (yet) on Property Shark, StreetEasy or our data-base; but the Post report includes a price, an identified seller and an identified buyer. With that seller identified, the loft has to be #8A.)

There’s a pretty enthusiastic listing description captured on StreetEasy, not surprising for a Manhattan loft asking $2,800+/ft (and getting $2,600+/ft). But the loft is almost certainly in exactly the same condition that it was in when it sold three+ years ago. Back then, it was a "[r]ecently completed, totally spectacular renovation by world renowned architects Ferguson Shamamian", with the same materials bragged about in the 2010 listing.

Obviously, this loft commended a premium in 2010 over the pre-Peak prior sale in May 2007 (13% over that May 2007 price, to be precise). #8A did not last very long, either, as it came to market only on June 24. At 60 days from new listing to closed sale, that’s PDQ.

Not sure why #8A cleared above $2,600/ft, even apart from the prior sale above $2,300/ft. (Yes, I am ignoring the terrace of #8A in these calculations.) The last sale in The Hubert was not very long ago (March 18) and was a loft described nearly as enthusiastically as #8A. #7C was marketed as

"[v]oluminous and light-filled, bear[ing] the signature mark of New York architect and designer Alan Wanzenberg. This new 3 bedroom, 3 bath (plus powder room) loft balances vast open spaces with precise detailing with a focus on day-to-day livability. Every luxury has been included".

While this "2,542  sq ft" light-filled loft features two terraces, they are (combined) much smaller than the #8A terrace. But not so much smaller as to account for the entire difference between #8A at $2,647/ft and #7C at ‘only’ $2,077/ft ($5.28mm). Those olive doors and cabinetry, and other embellishments by Ferguson Shamamian in #8A must trump the oak cabinetry and embellishments by Alan Wanzenberg in #7C. $600/ft is a long trump suit.

paging Billy Joel (and Christie Brinkley)
Enough (for today) about Manhattan lofts. Turns out that the descriptor "Time Warner conglomerator Steve Ross" tricked me into guessing that they had lived in Time Warner Center. Assuming that his widow is actually going to move into The Hubert, this is a bigger change in cultural and psychological location to Tribeca than a move from the uber condos in the Time Warner Center at Columbus Circle would even be.

Of course, if she actually moves to Tribeca she would have to severely cut down her stuff to fit into the "[s]pectacular 2,758 sq. ft. loft with a beautifully planted 564 sq. ft. terrace", since she currently owns a rather enormous duplex (at least 4 [four!] apartments, combined) at the oh-so-storied 740 Park Avenue. That might just be the most "uptown" of uptown addresses. Miles from Hubert Street.

way out of my league
If she puts that coop on sale, she will compete with another duplex at 740 Park Avenue, "6,700 sq ft" offered at $26mm. (Hers just might be twice as big.)

As long as I am here, I will point out that the maintenance for that duplex is rather modest, at $1.38/ft. ($9,274/mo, but the apartment is 6,700 sq ft.) How do they keep this full-full-full service building going at such a paltry maintenance? The flip tax has to help: 3% of the sale price, paid by seller. That is $780,000, if this duplex sold at the ask. That would pay for a lot of white gloves.

© Sandy Mattingly 2010

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415 Greenwich Street loft closes up 1% from original price (2005), 22% off 2008 ask

was there a Peter Principle for new developments heading into The Peak?
As with many new development lofts marketed in pre-construction and pre-Peak days, the Manhattan loft #6F at 415 Greenwich Street, Tribeca Summit, has a complicated listing history, with many significant events having occurred ‘behind the curtain’ and not visible to the naked eye (even to the inter-firm data-base).

This Manhattan loft had been marketed from October 2005 (per our data-base), instead of a year later as reflected in StreetEasy (you will see that the first appearance on StreetEasy is "already in contract"). Given that it just closed at $3.35mm, the difference is significant: up barely 1% from the original ask of October 2005 but down 4% off the StreetEasy first price of October 2006. Sometime after that "already in contract" contract failed, this loft showed up again in StreetEasy (but not in our data-base!?) as back on the market and in contract on April 14, 2008 (pretty much exactly The Peak) asking $4.29mm. At which point it disappears from StreetEasy and from our data-base until it closed on July 30 at that $3.35mm. Got that? Let’s unpack….

Intentionally or otherwise, new development owners make it hard to track what is ‘for sale’ at any given point (I have a strong opinion, but yours may be different), this loft being an excellent example. It is hard to comp in a building in which the ‘available’ inventory on a visit to the sales office is different from what is available (and at what price) in even industry data-bases.

exuberance, rational and other
One way to look at the (essentially flat) first offering price for this Manhattan loft in 2005 and the clearing price five years later is the developer was right. After all, they ‘correctly’ predicted the closing price from the get go!

Another way to look at the original asking price is that it was the base line from which the developer attempted to learn from actual signed and closed contracts to squeeze as much money as possible from these lofts, and that the developer kept raising prices to a point at which the loft could not sell. Sort of a Peter Principle for asking prices. Genius! (Not.)

In this case, the public asking prices generated at least two contracts, though neither closed. That April 14, 2008 contract off the then-asking price of $4.29mm must have been very distracting for the developer, as it prevented the developer form finding a contract with a qualified buyer who was actually ready and able to buy for another two+ years.

In the meantime, stuff happened, as recounted by Curbed on May 14:

The luxury condo conversion’s developer mutiny happened back in February, when the original sponsors were replaced by KBS Capital Advisors. The building actually hadn’t been having that hard a time when it came to sales, with over 50 percent of the units sold before the turmoil. But the money problems led to what the new team at the top called a "stop and go" sales pattern because of the previous sponsors’ "unwillingness to adjust prices to reflect current market levels." Cue adjustment!

In the case of #6F, there was no visible Price Chop and I have no way to determine what the whisper price was for this loft. Net, net, they accepted 22% less than the last published asking price, comfortably within the range of discounts I discussed for a slew of June closings I noted the last time I was in this building, talking about the haircuts a developer would take to sell out (July 15,

more developer haircuts, as 415 Greenwich lofts cut to close

), generating

a Price Chopper link from Curbed

(

thx

again, Sara!).

a logical link to a Curbed post

As I noted in my recent On Vacation (mea culpa) blog post, August 17,

among the things that conflict with blogging …

, I had made some quick notes for future posts even while traveling (drinking, sightseeing, drinking, walking, drinking) in California this week. The #6F closing was one such note. Happily enough, it gibes nicely with a Curbed post from yesterday about another developer-at-the-barber, in that case a reverse trajectory than #6F at the Tribeca Summit. As

noted there yesterday

, Penthouse 1 at 60 Beach Street just closed at 8% off the last asking price, but 32% off the original (

pre

-Peak) asking price.

So goes the linking feedback loop between Manhattan Loft Guy and Curbed. Back to the pool in Thousand Oaks CA, while (another) beer chills. Cocktails at five….

© Sandy Mattingly 2010

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among the things that conflict with blogging …

(that you might not think would)

  • Vacation trips to stay with friends in California

Somehow I figured that I would be able to grab an hour or more most days to do a Quick & Interesting Manhattan Loft Guy Post, but since we arrived in San Francisco on Friday I have only had time for one Not So Quick (but interesting??) Post, as well as collecting info for 2 future posts.

I may not be in a position to do better until we return to New York over the weekend, but there’s always a chance….

Yes, of course, (in retrospect) I should have just posted a Gone Fishin’ note, then posted as a bonus if I got the chance. Oh well. If there’s WiFi on the Amtrak Starlight Express tomorrow (all day from Oakland to Simi Valley) I can probably convert some of that saved information into a Quick & Interesting Post.

Just don’t be surprised if it doesn’t work out.
 

© Sandy Mattingly 2010

 

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tales of one loft building / the inefficient market at 718 Broadway, circa 2006, weaker market, 2010

2006 echoes
The Manhattan loft #10D at 718 Broadway sold for $1.06mm on July 20, "1,180 sq ft" of "true chic", this "completely renovated" loft is the "ultimate in sophistication". At a single bedroom and single bath with windows only on one side, it is not the ultimate in flexibility, but the concrete kitchen countertops and bathroom add to the ‘drama’. But I am intrigued by the price history, as it last sold on September 20, 2006 at $1.21mm. (That is a "no listing associated with this closing" on Streeteasy, but the inter-firm data-base shows this was sold as a "stunning designer renovation with meticulous attention to detail".)

late night television alert
That 12% slippage in market value in four years from $1,025/ft to $898/ft is interesting enough for Manhattan Loft Guy, as the 2006 sale was about two years pre-Peak. But wait … there’s more!

That July 20 closing at $898/ft for a stunning renovation loft on a high floor compares rather unfavorably to another loft that closed in the building that day: loft #4C is said to be "1,310 sq ft" and was marketed very explicitly: "OPEN blank canvas for the new owner to design a spectacular Loft residence". But that one cleared for $975k, or $744/ft. Not a lot of spread there  ($154/ft) between #10D and #4C for a renovation of #4C comparable to #10D, I would think.

If anything, I would expect that the discount for buying a gut-and-build loft would be greater than the likely cost of renovation, for several factors: the purchase requires significantly more cash (you should not expect to finance any of the renovation cost); fewer people seem willing to buy a gut-and-build loft in this market (one reason the market is more thin for a gut-and-build loft); and the time lag between closing and move-in date requires either temporary quarters (for a buyer who must sell another space first) or carrying two residences (for the buyer who has been renting, or the buyer flush enough to afford it).

inefficiency, personified
So this pair of same-building, same-day sales is an intriguing suggestion that The Market Is Not Efficient. But long-time Manhattan Loft Guy readers have heard that before. Really long-time Manhattan Loft Guy readers might remember that point as having been made about this very building way back on November 9, 2006 in more rich data and ‘comps’ / 718 Broadway sales history. In that post I looked at 4 then-recent sales at 718 Broadway. For present purposes, here is the money quote:

Buyers with easy access to each of these contemporaneous listings in the same building – listings that were different in size, level of finishes and (possibly) light or views – established the market price for these units. Those marketing conditions were as close to an efficient loft market as you could expect in Manhattan.
 
So one “identical” unit (at least an identical floor plan) sold for 205 [oops! that should be $305k] more than another two floors below and another four floors below that had also been renovated – evidently in a bidding war.

In that post, I also cited

my then-recent comparing lofts and lofts ain’t so easy

post (of November 6, 2006) in which I discussed three lofts that were then for sale at 718 Broadway (back when I did such things), with this

lede

:

I saw three lofts on the same building on Sunday, two of which are a little different from each other; the third was so different to the two as to be INcomparable in many ways. Which lead me to thinking about how much easier it is to compare units in an apartment building than units in a loft building.

future post material
The sale of #4C in pretty primitive condition reminds me of a theme I need to return to one day in a post: what can happen in a small building (this one is not so small, at  40 units, but still …) when there is a generational shift. It is pretty likely that the #4C seller was an original shareholder (circa 1980, when the building was converted to a coop), and I wonder how many ‘pioneers’ are still left in the building.

The grist for a future post is the dynamic between newer shareholders who ‘paid a fortune’ for their lofts and long-time shareholders who (a) did not pay a fortune (by current standards, at least) and (b) might prefer more amenities and nicer common spaces. If the pioneers prefer (a) not to pay for upgrades and/or (b) actually prefer a more gritty sense of public space, conflict can ensue. But continuiing or extending upon that thought will have to await another day.

past post material
This building is now officially a MLG fave, with the history of 2006 posts cited above providing fodder for today’s post. But The Google reminds me that I have also hit this building in a post about an "interesting" marketing campaign by a creative For Sale By Owner of unit #6B last year. (February 12, 2009, 99 cent pricing on eBay leads to $400/ft under-pricing by FSBO loft seller in Noho.) In the teeth of the Manhattan real estate nuclear winter, that owner tried to mimic an eBay bidding experience for his loft by starting at (what looked like) a dramatically under-market price. Curbed had a bit more of the back story, when linking to my post.

As I recall from email correspondence with this guy later that Spring, (a) the campaign did not work and (b) he took it off the market because whatever life change that had been in the offing to take them out of Manhattan had turned out not to happen, either. So they ended up staying.

Based on the July 20 sales of #10D and #4C, one could argue that the very local market for 718 Broadway lofts has not improved since 2006. On the other hand, one can argue from the zigzag of sales here, that this building is a Bermuda triangle for efficient market theorists.

I am going to stop now, for fear of launching another digression if I stay at the keyboard.

© Sandy Mattingly 2010

 

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