open eastern view is worth $425,000 at Chelsea Mercantile (approx) (at least)

by Sandy MattinglyPosted on Posted in loft neighborhoods chelsea — No Comments ↓
minus the office, plus 12 floors of iconic Manhattan loft

Few downtown Manhattan residential loft conversions have provided as much grist for the Manhattan Loft Guy mill as ‘The Merc’ aka Chelsea Mercantile aka 252 Seventh Avenue. It is, in my judgment, the building that ‘made’ the immediate micro-nabe a destination for ‘uptown’ buyers around the turn of the century, and it is a huge building (for a loft), generating opportunities to comp within the building on things like light and view. The Google will help you determine exactly how many times I’ve taken readers there in nine years, but it’s a lot! We return today because the month-old sale of the “1,652 sq ft” loft #4U at The Merc is a good jumping off point for discussion of higher floors, greater utility, and a view (even an unremarkable view).

The loft is a bit of a value play in this amenity-filled condominium building, though any ‘value play’ here is relative. The broker babble presents as though the original (nice!) finishes have not been upgraded since 2000; its on a low floor, with ‘views’ of the neighbors across 24th Street; there’s but that single exposure, with six windows spread among the living room and two bedrooms; its got the utility of a third sleeping area, but that’s an internal office (‘study’). Net-net, if there are any bargains at 252 Seventh Avenue, this should be one of them.

pretty basic, nothing special

The Market treated it as though it were a bargain, acting quickly and adding a dash of premium: to market on October 20 at $2.85mm, in contract at $2.9mm by November 17, and closed on January 20. That’s $1,755/ft of ‘bargain’ in the most high-amenity loft condo in the micro-nabe.

meanwhile, on the 16th floor…

Loft #4U directly competed (briefly) with the “1,601 sq ft” loft #16L, which was also babbled as though it has not been improved since 2000 (not that there’s anything wrong with that!). Though nearly the same size, and with similar shape, the upstairs loft lacks that study that #4U has:

again, pretty basic, nothing special (on paper) (and why oh why does Rutenberg make it so hard to find the floor plan??)

These lofts did not sell ‘on paper’, of course. In real life, loft #16L has a significant feature not shared with #4U: “Eastern facing open city views from every room”. (Why oh why don’t the listing photos make this more easily seen?)

The #16L sellers thought the loft and views and light would be more valuable than they turned out to be, but there’s still big gap between these two lofts. Loft #16L came to market at $3.65mm on August 27 and lingered long enough for #4U to join the party, not finding a contract until November 12 at $3.325mm, and closing quickly on December 18. That’s $2,077/ft, or a premium of 18% over #4U on a dollar-per-foot basis, $425,000 in actual dollars.

These are not perfect comps for each other, of course, because #4U’s study makes it suitable for buyers who had to have something more than two bedrooms. (Remember: #4U is a [relative!] bargain here.) I’m not going to appear to be rigorous about the additional value of that extra (interior) room in #4U, but its got to be six figures, if not in the ballpark of the quarter million bucks a simple room size X $1,755/ft yields.

Which is a long way around to getting to the headline: those open eastern views in #16L added significant market value in this building-specific hyper-local market, at least in October and November, compared to no views on the 4th floor. At least $425,000, but more likely at least $525,000, and possibly $700,000. Note that the #16L ‘views’ are simply of open sky; even at this height, there seem to be no brag-worthy icons visible from those windows in this direction.

Three years ago I meandered through a few sales in this building that were quite relevant to the value of ‘iconic’ views in that long-ago market. In my January 20, 2012, privileged Chelsea Mercantile loft clears near $1,700/ft at 252 Seventh Avenue, I featured a 17th floor north view that would ballpark in the same market in which #4U and #16L just sold at about $2,206/ft (using the 30% intervening gain in the overall Manhattan residential real estate market, as summarized in the StreetEasy Manhattan Condo Index, of course).

That’s a smaller premium for an ‘iconic’ north view over the (merely) ‘open’ east view in #16L ($2,2207/ft over $2,077/ft, to save you the scrolling) than I would have guessed, but it ain’t nuthin’. And it is broadly consistent with the July sale of the iconic north views of loft #16G at $2,212/ft (the time adjustment would only be 2% on top of that).

I’m not going to plumb the building stats further on this occasion, but if you have access to the closed sales prices on StreetEasy, knock yourself out! As I said three years ago:

If there is a data geek out there looking for a laboratory to explore the value of views, one could do worse than start at the Chelsea Mercantile at 252 Seventh Avenue. The Merc is an unusually large building for a Manhattan loft conversion with well over 300 units where there is a very active market and a wide variety of views. Low floor units look at buildings across the street or into the courtyard, and even many higher floor units have compromised views.

Next time some Know It All at a cocktail party starts talking about the value of Manhattan views, throw some Chelsea Mercantile data points at her. Dazzle your friends!

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challenging 474 Greenwich Street loft proves a challenging sale, not quite $2 million off

by Sandy MattinglyPosted on Posted in loft neighborhoods tribeca — No Comments ↓
location, decor, layout … let me count the Tribeca loft challenges (and price!)

I won’t say I was proud of it, but my first reaction on seeing the “2,300 sq ft” Manhattan loft #4S at 474 Greenwich Street being offered for sale a million years ago in November 2013 for $4.75mm was to (yes) Laugh Out Loud.  Begging pardon for being rude, but I could see a few things about that loft at that time: it had not sold for two months in 2011 when it was available for $3mm and $2.5mm; and it had not sold for three months 2012 when it was available for $2.175mm. (I’m pretty sure I had seen it with buyers in either 2011 or 2012, either that or the photos had left such an imprint in my Loft Brain that it was as though I had seen it.)

Here’s what I could not see when it came back to market in November 2013 at $4.75mm; any change in the loft other than (perhaps) the removal of some of the walls that made it a rabbit warren in 2012 and 2011. If, in fact, those walls had come down, that exercise demonstrated that (as the broker babble babbles) “the possibilities for this massive space are endless!”. The listing photos are maddeningly difficult to read against the floor plan, but the thrust is simple: this is a loft with classic elements like exposed brick, wide oak plank floors, wood columns, and high beamed ceilings, along with open views and a very large, very elaborately tricked out kitchen. As implied by “endless possibilities” babbling, buyers were invited to consider how to remake the space from the single-bedroom live/work space that it is. That invitation, in particular, induced my rude response to the initial 2013 asking price.

Well, that and the colors and the decor, which strike me as pummeling a buyer into a glaze. The last marketing efforts were only the third in a sequence of presentations that showed this loft interior as extremely busy. If the floor plan really does have this vast great big open space, wouldn’t you expect to see a photo of that volume??

that north wall plumbing / closet bump is the only thing that closes off any part of the larger rectangle (2,067 sq ft??)

I don’t see any hint of that huge room, with the east wall of windows, in any of the listing photos. With all the zigging and zagging in the photos, the place looks like it could still be this (circa 2012):

this is what can happen to a loft when you have a carpenter in the family and access to materials at a discount (that, and the need for 1, 2, 3, 4 … 5 offices)

Bottom line: they’re not bragging about anything other than bones, view and kitchen, and they’re selling the “possibilities”, so this is a renovation project for nearly every buyer, of varying scale. That’s one challenge.

Another challenge: the loft sits about as far north as you can get without leaving Tribeca. (The StreetEasy map on the listing page proves this at an almost comical level, at the zoom / scale at which the graphic originally appears.) In proper babbling, that’s “just steps away from some the best restaurants, public transportation, that Tribeca, SoHo and the West Village have to offer”, even without being particularly close to any of them.

The big challenge, of course, was the price. LOL

a long marketing history, thankfully concluded three weeks ago, off just a bit

Let’s do this in one table:

Aug 16, 2011 new to market $3mm
Sept 2 $2.5mm
Oct 17 off the market
May 19, 2012 change firms $2.175mm
Aug 8 off the market
Nov 13, 2013* change firms $4.75mm
April 4, 2014 hiatus
May 19 back on market $3.5mm
Aug 11 $2.995mm
Oct 30 contract
Jan 23, 2015 sold $2.95mm

(*details in the last marketing history that are different from StreetEasy are from the inter-firm data-base)

Even without the scale, this is a fascinating history. The seller seems to a have been unmotivated, with those two stabs at the market in 2011 and 2012. That pricing trend was positive, at least insofar as it reacted to the lack of success. For reference to the overall market (meaning the StreetEasy Condo Index, my preferred proxy for movement in the overall Manhattan residential real estate market), the overall market increased 29% between the time loft #4S left the market while asking $2.5mm and its eventual sale, and 26% between the time it left the market asking $2.175mm and its eventual sale.

One implication is that the loft would have sold at $2.175mm or above, had it simply hung around longer in 2012 for enough buyers to get exposed to it. Another implication is that even the final 2011 price might also have worked (in the sense of “worked” as provoking a bid at the market), if given enough time.

Another implication of this kind of retrospective ‘reasoning’, however, is that such attempts to apply later-determined market values to unsuccessful asking prices are … difficult, if not silly.

Silly is a nice segue into my rude response to this: $4.75mm, which proved its futility over five months. Wouldn’t you like to have been a fly on the wall when the seller agreed to come back to market at $3.5mm without changing firms for a third time? Of course, even that 7-figure drop was still a half-million dollar stretch from the market value, though a step in the right direction. The bottom line of $2.95mm works out to $1,282/ft, not a very Tribeca-like value, even for a low-frills coop (common roof deck and storage move this from no- to -low-frills). But: it sold 38% off the first, fanciful ask. Just kidding?? Nah ….

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Warren Street loft shows why Manhattan “lofts” comp by size, “apartments” by bedrooms

by Sandy MattinglyPosted on Posted in loft neighborhoods tribeca — No Comments ↓
someone used a shoehorn in this Tribeca loft living room

Way back when, in my first year as a professional residential real estate sales person in Manhattan, I accompanied a mentor on a series of buyer appointments. It being way back when, and the mentor being an old school uptown kind of gal with clients focused on the Uppers, all the appointments were of “apartments”. I love her dearly, but the one thing I have retained from that day is that when a client asks a question, answer it directly. On that long ago day of Upper apartments, the client kept asking “how large is this, in square feet?” and my old school pal kept (not) answering “do the bedrooms, kitchen and living room feel big enough for you?”. Even as a rookie, I understood what she was doing, and that she thought she was helping. Her client may also have found her helpful (though he kept asking the question). By then I’d been living in downtown Manhattan lofts for 20+ years, and I had a different sense than my mentor of where the client was coming from (and of the need to directly answer questions).

Lots of very professional Manhattan residential real estate agents have a similar aversion to answering that question, nearly all of them working with “apartment” buyers or sellers. Part of it is an aversion to lawsuits, part due to an unstated acknowledgement that any square footage number given was dubious, but mostly it was that (generally speaking) when comparing (say) 2-bedroom units, apartment layout was more important than size. The reverse is true (generally speaking) for Manhattan lofts. Which is a long way of introducing the recently sold “1,619 sq ft” Tribeca loft #2W at 19-21 Warren Street.

 

why is that 3rd (front) bedroom there?

This footprint is as classic a Long-and-Narrow loft configuration as a Classic Six is … er … a classic apartment configuration on one of the Uppers. Here, you have three windows front and back (only), the plumbing along one long wall in the middle (only), and room in the back for two bedrooms (only).

The sense of volume is enhanced, classically, by the high ceilings (12 feet) and knee-nearly-to-ceiling windows, with a great big room up front where you do the living and the cooking and the eating that measures a loft-y 15×50 feet (less an  inch, allegedly). All that, and exposed pipes.

the front end of the really big room

and the back, with the entry on the far left, back bedrooms under those clerestory windows

If you’ve looked at many loft floor plans, you know that 15 feet is pretty narrow for a Long-and-Narrow. That is the width narrow of the front after you steal a window to shoehorn in that third bedroom. I get why you’d do it (you need three bedrooms, d’oh!) but regret what that wall does to the volume up front. To get back to my original point ….

true lofts have erasable walls

I can’t find the original listing details when this loft sold in 2001, but it appears from the StreetEasy building page (Past Activity tab) that it has been a 3-bedroom in its entire condo life. In contrast, essentially the same footprint on the two floors above is, and has been, in a 2-bedroom layout. Loft #3W squeezes an office toward the back, but leaves the front open:

original #3W layout; now there’s an office opposite the bathrooms

You get a sense of the open space on the 3rd floor from this (crappy) rental listing photo from 2013:

can’t quite peak around the corner to the right, but you get the idea

If you compare the #2W and #3W floor plans, you will see that all the differences are carpentry: back bedroom entries are in slightly different places, with different closet arrays, and then there’s the office (trust me, there is one in #3W now) missing from #2W, and the from bedroom in #2W (still) missing from #3W. That is, despite one being a 2-bedroom+office and one being a 3-bedroom, they would comp as equals (subject to adjustment for condition, blah blah blah, though the kitchens seem to be original).

If you could find an Upper West Side 2-bedroom truly convertible to a 3-bedroom, chances are it would involve conversion of a maid’s room (expanded by shrinking the kitchen?) or adding walls to a dining room or taking a corner of a very large living room (though there are very few prewar living rooms configured so that this would make sense). Hence, a prewar 2-bedroom is a 2-bedroom is a 2-bedroom; the same for a 3-.

Each of these prewar archetypes was optimized for what it was: either a 2- or a 3-. So they would not be comped against one another, without major (and unnatural) adjustments. Not so, lofts #2W and #3W at 19-21 Warren Street. Lofts comp on the basis of footprints; apartments on where the (classic, ordained by Candela) walls are in the floor plan.

those walls add nothing to the $1,692/ft

Chances are, the sellers were mildly surprised at how well loft #2W did in The Market: for sale on September 15 at $2.6mm, in contract within 7 weeks at $2.739mm (5% above ask), and closed on December 9. I don’t think it was the floorpan (as opposed to the footprint) and I doubt it was the level of finishes (most stuff looks as it has for years; maybe the appliances were updated to [current] “state of the art”??). Probably had something to do with the (158 sq ft?) balcony off the master bedroom.

We have no easy way to adjust the dollar-per-foot value for that outdoor space, as there have been no comparable sales in the building in almost 8 years, apart from a penthouse with two terraces, and #2W in 2010. (See that StreetEasy Past Activity tab for details.)

Let’s end with simply noting how different some “outdoor space” is from other “outdoor space”. That balcony is, no doubt, a nice place to enjoy a morning coffee, an evening wine, or to cook dinner. If you carry stuff through the loft and your bedroom. But it is a second floor rear balcony, facing the rear of the buildings (and bars!) on Murray Street. Nothing at all like the front and back nearly-square terraces in that penthouse at the top of the building. And nothing like the million dollar piece of rooftop at the loft I hit in my February 10, let’s play Value The Terrace at 53 N. Moore Street, as penthouse loft sells!!.

We’ll leave the riffing for another day, but just note that the #2W balcony probably adds at the low end of outdoor value, maybe 25% of the value of the interior, or less. We’ll call #2W at an adjusted $1,652/ft and call it a day. Not bad for a no-frills condo in non-prime Tribeca.

 

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Tribeca loft sells up 45% in 19 months … a superstorm effect?

by Sandy MattinglyPosted on Posted in loft neighborhoods tribeca — No Comments ↓
hard to find another explanation for such a beyond-market result …

When I get confused, I write. Not to end the confusion necessarily, but to seek peace. The sale four weeks ago of the “2,325 sq ft” Manhattan loft #2A at 161 Hudson Street for $4.4mm confuses me, so you might want to refresh your afternoon coffee before continuing. It’s fascinating that a second floor no-view loft at the edge of the Holland Tunnel spillways got $1,892/ft, but that’s not confusing. It’s curious when owners hide columns in lofts, but hardly confusing. And it’s downright weird the way some folks decorate a powder room, but (again) not confusing.

Here’s what confuses me (YMMV): that the recent sellers bought this loft in July 2013, did a “meticulous renovation”, then put the thing up for sale 15 months later (how long after the renovation wrapped?). Oh, and the fact that they sold at $4.4mm what they paid $3.025mm for the right to renovate. And the right to resell. Which they did, and did, generating a 45% increase in value over the same period the overall Manhattan residential real estate market was up 16%. Let’s ballpark the value of loft #2A at the end of the year without the renovation at a conventional market gain, or about $3.5mm, leaving $900,000 worth of confusion for me.

Of course some of that ‘extra’ gain is from a renovation that The Market loved. Follow me into confusion, as we play Guess The Cost Of The Renovation….

 comparing Before v. After through babble + pix has its limits

I saw the loft with clients before it sold in July 2013. There was noting ‘wrong’ with it, just not for them as there is not much light, and no view to speak of. View claims aside, that version of the broker babble seemed fair enough, including some brag-worthy things with my emphasis:

11″ ceilings, has a huge open kitchen with black granite countertop, cherry wood cabinetry and top of the line appliances. … There is central air and heating system with a built in humidifier. … Brazilian walnut floors throughout and Northern reflective light coming in from the super large windows looking onto Laight Street with a pleasant city view. You will see the large size Master bedroom with ensuite bathroom of honed marble and double sinks.

We found all the office usage distracting (the red column especially), but nothing that couldn’t be edited out.

The loft actually sold pretty quickly then, only seven weeks to contract, though they took their sweet time closing. As hinted in the headline, this loft came to market two weeks after The Superstorm That Had No Name In New York (because tropical storms don’t have names, dammit, and the former unfortunately named hurricane downgraded itself while battering New Jersey). And it sold a tiny bit above the ask:

Nov 10, 2012   new to market $2.995mm
Dec 28 contract
July 3, 2013 sold $3.025mm

The After loft sounds a lot like the Before version:

meticulously renovated throughout. … open chef’s kitchen equipped with vented Viking range, Subzero refrigerator, Marvel wine chiller, and white granite dining bar. The master suite has a sumptuous bathroom and generous walk-in closet, and all three bathrooms have been exquisitely crafted by California Faucets. Design details include 5 Brazilian walnut floors, a large laundry room with Electrolux washer/dryer, three honed original concrete pillars, several custom closets throughout, and central air conditioning

The After floor plan greatly resembles the Before version, with the principal change being changing the access to the washer dryer from the kitchen to the large entry closet:

no major changes in layout

Frankly, the changes seem to be more a matter of aesthetic upgrades than of dramatic improvements, but perhaps that is because I didn’t see After in real life. Which kitchen do you prefer?

nothing wrong with this kitchen, with black (granite) and red (including cherry) + top appliances

more muted (more sophisticated?) palette, with cabinets on the left instead of washer-dryer entry; appliances look the same

In other words, my impression was that the kitchen didn’t have to be redone in order to present as a lovely loft. Maybe the real money in the meticulous renovation went into the 2 and a half baths, none of which are pictured as Before but all of which are pictured in After.

I can’t decide if this (new?) powder room provokes more of a gasp than a smile

Net-net, the July-2013-buyers-turned-January-2015-sellers moved some closet walls and changed … er … meticulously renovated the kitchen and baths. Did they plan this as a fix-and-flip, or did their lives change between July 2013 and October 2014? Hard to believe someone would count on generating a positive return on the scale that they got, for whatever investment they made in that meticulous renovation, so much of which is invisible to the naked eye reviewing photos.

If this were an obviously gut renovation, I could see a renovation budget that could eat up much of the $900,000 in ‘extra’ gain from July 2013 to January 2015, but I don’t read the babble, floor plans, and photos that way. At all. Couple of hundred thousand for redoing the skin of all the plumbing rooms? Granted, that’s where money goes to die, but still … hard to see this as even $300,000.

Hence, my (continued) confusion. What made The Market value this (cosmetic set of?) change at such a premium over the fairly recent sale of (much) the same loft??

metaphysics can be more dismal than economics

One of the conundrums that involve same-loft paired sales that seem to involve an outlier result is that you can never be sure which of the paired sales is ‘off’ (assuming you are convinced that one is, of course). With loft #2A, the observed gain is too darn big, which cries out for explanation. In each case, the loft was professionally exposed to The Market by sellers who (I have to assume) did not have to sell; more confusingly, each time the loft sold above ask.

I take it as given that the observed market gain is a major outlier, and that the renovation (no matter how meticulous) accounts for only a small part of the observed gain. I am confounded that these facts are facts: $3.025mm purchase + renovation + 18 months = $4.4mm sale. (Not to get too nerdy on ya, but some of that is the relatively long time it took the loft to sell in 2013, six months instead of two or three, but that’s another logical element of too-small magnitude.)

small data sets can lead to conclusions of dubious validity

I see some hints in the other lofts sold in this small (24-unit) condo loft building that bracket the first sale in the pair that confounds me. Treat this more as thinking out loud than the path to The Answer….

The last similar loft to see in the building was the smaller at “2,117 sq ft” loft #7C, only 2-bedroom+den but with views, and a brag-worthy set of finishes. It went quickly at full ask of $3.6mm, closing in July 2014. Adjusting only for time in a comparison of #7C and #2A before renovation, the July 2013 purchase at $3.025mm bumps to about $3.5mm, as the StreetEasy Condo Index was up 17% in that 12 month period. On a price per foot basis that’s a time-adjusted #2A at $1,505/ft and actual #7C at $1,700/ft, not such a huge spread, one that could (conceivably) be bridged by the views … but I doubt it. And #2A is three real bedrooms.

Ignore #3A as a private sale, then gaze on the last sale before #2A in 2013: the “2,314 sq ft” #2B sold for $3.7mm on April 24, 2013. Same floor in the same building, also 3 bedrooms, but probably better dressed … still: $675,000 higher than #2A. Or, $1,599/ft in April, just before #2A went for $1,301/ft in July (the StreetEasy Condo Index was up 5% in those three months). hmmm …. I don’t see $300/ft in difference in finishes, though #2B is clearly nicer.

One more, then I’ll stop. The “2,317 sq ft” loft #5B sold 16 months before #2A, going for $3.325mm in April 2012. That one might have been nicer than #2A and benefitted from views at that height (and was “sun-drenched”). Adjusting that one forward in time to match #2A in July 2013, #5B bumps up to about $3.65mm (the Index was up 10% in between).

I don’t see $625,000 in value in the finishes, light and views at #5B over #2A. The Market did. hmmmm….

These are only a few data points, each requiring some adjustments. Adjusting anything introduces error, and serial adjustments, well, you know. But each of these data point in the same direction: that #2A when purchased in July 2013 was under-valued compared to itself (later) and three other units in the building (earlier, and later).

There may be no “why”. But I have to wonder if it had anything to do with That Anonymous Superstorm Too Easily Given The Name Of The Actual Hurricane That Spawned It. More precisely, to those sellers over-estimating the impact the storm (and powerless aftermath) would have on Tribeca values. Maybe they were in a very thin market at that time, and The Market didn’t give them enough buyer interest to correct a too-low ask, except by the $30,000 ‘premium’ they got. Maybe they just wanted to ‘get out’. Dunno.

Obviously, I’m confused about this. If you know something, comments are below….

 

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let’s play Value The Terrace at 53 N. Moore Street, as penthouse loft sells!!

by Sandy MattinglyPosted on Posted in loft neighborhoods tribeca — 2 Comments ↓
one of my favorite Manhattan real estate games … and a grand spectator sport

Everyone has an opinion about the premium that outdoor space adds to a given property, but the nice thing about dealing as retrospectively as I do by tracking the sales of downtown Manhattan lofts between $500,000 and $5 million is that I start with the answer, and then back out the math. A wonderful opportunity for backwards math popped up when I updated my Master List of such loft sales to include the recently filed deed record reflecting the sale for $3.925mm of the “1,282 sq ft” Manhattan penthouse loft #6B at 53 N. Moore Street (The NorthMoore, alas) on December 30. It looks a bit nicer than the loft immediately below that sold for $2.23mm 14 months earlier, but the key variable is the “630 sq ft” terrace up that spiral stair.

Chances are, if you’ve read only a few Manhattan Loft Guy posts, you’ve seen me talk about The Miller’s rubrics for valuing outdoor space. My first such reference was my May 6, 2010, riffing with The Miller on the value of Manhattan terraces, decks + balconies, which has the basic principles and variables. The Executive Summary is to start from the generalization that outdoor space is worth from 25% to 50% of the value of interior space (on a price-per-foot basis) to which it is attached, and that there are various factors that might lead an appraiser to value a specific bit of outdoor space outside the general range.

I don’t know that outdoor space for downtown Manhattan lofts are generally more valuable than for Manhattan “apartments”, but I’ve seen a great many specific cases of loft terraces that greatly exceed projected Miller values, even making the sort of adjustments you could expect The Miller to make. Regular readers of Manhattan Loft Guy have seen many such examples. The Miller’s difficulty as an appraiser is dealing with projected value; my huge advantage is that I start with the market value established by a willing seller and ailing buyer, neither acting under compulsion.

I suspect that an appraiser would not look to the #5B sale as a comp for #6B because it was too long ago for bank valuation purposes. For lofts especially, I respectfully disagree, and agree with Urban Digs that the best comp will often be in the same building, even if it requires an adjustment for time. (Apparently, Noah’s recent web upgrades have voided very old links to his blog, or perhaps this was a business decision, but if you know his work you understand my reference.) With that important proviso about using The Miller’s method, let’s establish a ballpark value for the interior space at 53 N. Moore Street, then figure out (in delightful retrospect!) how much the terrace contributed to the recently established market value. In other words,

let’s riff!!

There’s one more factor to make explicit before getting to (what look like) hard numbers: even in retrospect, I always frame this analysis as “ball parking”, for reasons that should become apparent. As noted, loft #5B sold 14 months before the upstairs penthouse, for $2.23mm on October 1, 2013. It was presented to the market as a lovely loft in a prime location with a full complement of amenities, but not one with a recent or no-detail-spared renovation.

faces South … over North Moore Street and down to the World Trade Center. Plenty of sunshine … the custom Roman shades. … smartly designed and finished with comfort and convenience in mind.

The spacious open kitchen has all stainless steel appliances and granite topped maple cabinetry. Both bedrooms are roomy and tranquil and the baths are fitted with creamy limestone and ceramic tile. There is generous storage space throughout, central heat and air conditioning, and a washer/dryer.

The penthouse was represented as having a much different level of finishes, inside and (of course) out:

an architectural gem. No details have been spared as it was built with the richest materials and custom finishes throughout. … oak flooring and cabinetry throughout, surround sound system in every room, 3-zoned central air, top of the line appliances, wine cooler, washer/dryer, radiant heated bathroom flooring, custom shades, and ample storage throughout.

… 630 square foot private roof terrace offers beautiful southern views of the Freedom Tower and is fenced for privacy with cedar wood. … censored lighting, surround sound speakers, and automatic irrigation system.

Pictures are better than words, right?

this kitchen is nicer (at least, more expensive) than …

… this one, though it is hard to say by what degree (and it is possible that the #5B babble failed to specify the charms)

Same thing, different plumbing room:

this bath is likely much nicer than the one not pictured in #5B (which had “creamy limestone and ceramic tile”)

I haven’t seen either of these lofts In Real Life (ball parking!), but you could generously say the difference in value between finishes in the two lofts is $250,000, as they are not large lofts (“1,282 sq ft”).

The time adjustment is easy, though (ball parking!). Like Noah Rosenblatt, I would ball park by using the StreetEasy Condo Index of paired resales of Manhattan condos. From October 2013 to November 2014 (the last month indexed), the Index was up 12%. So … if #5B had #6B’s finishes when it sold for $2.35mm it would have been worth about (ball park!) $2.6mm … and if (in that condition) it had sold when #6B sold (well, the month before) it would have been worth about $2.9mm. In dollar-per-foot terms, we just ballparked the interior value of the interior space of a loft in the same condition as #6B at about the time that #6B sold as about $2,262/ft.

yes, Virginia, that is a million dollar terrace!

The subhead won’t ruin the suspense for the impatient among you, who didn’t wait for the dollar-per-foot aside and scrolled up to the top from the middle of the last paragraph to compare $2.9mm to $3.925mm … yup: a million bucks. I am pretty comfortable with this ball parking at this point as providing a realistic estimate of the value of the #6B interior. Now let’s see what that premise does when we riff with The Miller about that terrace ….

The math is (remains) easy: “630 sq ft” at $1.025mm equals $1,627/ft. (Do you see why I finished the paragraph above the subhead with that calculation?) More simple math: the dollar-per-foot of the terrace was 72% of the value of the interior. Thus, an outlier from The Miller’s general principle of 25% to 50%.

Considerations that could impact the general approach (see my May 6, 2010 disquisition) include

  • proportion (the terrace is just about exactly half the size of the interior, avoiding any discount The Miller might apply above that threshold),
  • access (the terrace is not accessible at the same level as the interior, requiring a trip up the stairs; a possible low-adjustment factor),
  • the terrace provides a better view than that available from the interior (a potential high-adjustment),
  • the terrace is already very nicely fitted out (again, a potential high-adjustment),
  • privacy is a mix, as there are no other buildings looming over the terrace, but two other penthouse neighbors have similarly private space up there and there is also rooftop space available to condo residents (those fences separate the #6B terrace from these folks, but the experience of music and cooking smells will hardly be exclusive)

Net-net, I would ballpark these considerations as being neutral, with the biggest factor (to me) being that access. First, I find it difficult to reconcile “spiral stair” with luxury. Second, if you’ve ever tried to carry drinks and food up a spiral stair you know it is not the easiest way to get stuff from one level to another. Third, at the small scale of the interior, taking any space from the interior for the footprint for any stairway is not a plus factor. But YMMV

Fact is, The Market thought the terrace was worth 72% of the interior on a dollar-per-foot basis if the ball parking involving #5B as a comp is valid. I think it is valid, close enough. That tells me (again) what I told the apocryphal Virginia in that subhead: this terrace added seven figures in value to the loft.

My working assumption is that this is a scarcity play: some buyers really really really want outdoor space and are willing to (over)pay for it, if necessary. Enough such buyers to set this market for this loft. I’m not going to run that hypothesis through the data because that involves stretching a small data set with still more ball parking, and this post is getting long in the tooth word. But someone just paid almost $4mm to live in a rather small 2-bedroom loft. Even in Tribeca, that’s not chump change.

Have to close, so let’s do it on high note:

what a million bucks looks like, to some (at least, to one)

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“true artist’s loft” still exists at 19 Greene Street, but not for long

by Sandy MattinglyPosted on Posted in loft neighborhoods soho — No Comments ↓
 there’s a sad majesty to these listing photos in Soho

For a loft snob, or for any who truly appreciates classic Manhattan lofts, seeing listing photos for a “true artist loft in Soho” might be like what an animal rights activist feels on seeing the “before” photos of a magnificent beast from a (shooting) safari: you just know this is going to end with the loss of something rare, something with a dignity that is all too fleeting in the modern age. As the broker babble for the “1,700 sq ft” Manhattan loft #2F at 19 Greene Street leads after that “true artist loft in Soho” headline:

Yes. It still exists.

(Or did, when the loft sold a month ago.) The babble has a nice coda, but precious few buyers could be expected to take the second opportunity rather than the first:

This is a rare opportunity to transform or preserve.

The new owners paid $2.385mm (a $135,000 premium over the ask) for the privilege of choosing Transformation or Preservation. Odds of Preservation are something less than 0.01%, I’d think.

Here’s an old lion of a loft, staggered by age, but graced:

the artist has a certain fondness for bold reds

Nothing quite says very old loft the way that varying heights along one kitchen wall do:

looks like 4 ascending levels L to R (did I mention RED??)

The babbling is pretty half-hearted about the preservation option, as there are no details other than ceiling height (15 ft) and brick (exposure, of course). Can’t be sure from the photos what the floor is (concrete?? it’s pretty polished) but those columns! They have to be cast iron, with all that detailing (flutes, finials, oh my!!).

raise your hand if you are a Manhattan loft snob with an “I Swoon For Columns” bumper sticker

The coolest thing about those columns? They imply that there is a beam above them, now masked by that oh-so-60s dropped ceiling. Imagine if the beam has character of the same level as the columns. (Swoon.)

a market that shatters records in its sleep

This is a small building at the bottom of Soho, with 7 units according to our listings system. (I think there are now only 6, as the guy who owned the rear loft on the 4th floor bought #4F in a private transaction in December 2011 for $1.8mm.) That unique seller probably drove a hard bargain with that unique buyer, as the prior sale in the building was the “meticulously renovated” and “1,700 sq ft” loft #3R in October 2009 also at $1.8mm, as The Market was coming out of The Thaw.

Before that, the “1,700 sq ft” loft #4R sold for $2.85mm in October 2007, leading into the quarter formerly known as The Peak. That one might not have been a meticulous renovation, but it boasted a “new top of the line kitchen and bath”, and a balcony. That’s quite a dollar spread between #4R leading into The Peak and #3R as the post-Lehman market stabilized. While there’s only a small dollar spread between #4R way back in October 2007 and #2F now, the spread favors the much more primitive #2F, which also lacks that balcony.

That’s quite a rude way to set a new building record. And $1,403/ft is a pretty penny (so to speak) for a loft that needs a total renovation, has little or no light, in a no-frills condop, on a not very charming (and rather heavily trafficked) block in lower Soho.

Majesty has its price. Even if The Market values it more for the create-your-dream-loft opportunity than for the majesty.

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architects trash O’Neill Building loft in Chelsea, in order to make it beautiful, of course

by Sandy MattinglyPosted on Posted in loft neighborhoods chelsea — No Comments ↓
for the due diligence files of 655 Sixth Avenue loft buyers (caveat emptor!)

Long-time readers of Manhattan Loft Guy know that I am a sucker for before-and-after photos; otherwise I have to wait for a loft having been sold twice, with good photos and floor plans depicting a given loft both before and after renovation. So a grateful tip of the MLG hat to Curbed for having linked on Friday to a New York Magazine Design Hunting feature, “Tour a Masterfully Redesigned Ladies’ Mile Apartment“, which led me on a click-fest to track down the featured loft.

Anyone who knows the building will need no text to recognize this as the O’Neill Building at 655 Sixth Avenue, with the curved seating area being in one of the turreted corners on the front of the building.

not many curved windows along the Ladies Mile (that’s Bed Bath & Beyond in the last window frame)

The NY Mag slideshow has some wonderfully (and possibly unintentionally) snarky comments about the “before” status of this loft from the architect who fixed it. From Slide #1:

“it was conversion architecture — a closed-in kitchen, inexpensively executed historic details.”

Don’t get splattered by this one from Slide #4:

“The original engineered-wood floor appeared stable but wasn’t, so we replaced it with a solid-wood floor”

In other words, if you’re a potential buyer in this “luxury” condo (circa 2006 new development luxury, but still), you might want to know that some hot shot architect thinks the conversion was “inexpensively executed” and that the floor was (ouch) not stable. You do hate to see that, and that.

the After looks swell

Kitchen now is completely different:

from closed to open, with hanging shelves and custom screens (that new vertical with the gas line is just to the left of the column)

The main open room is nowhere near as large as it appears in this photo:

that black chair at the corner of the rug is, in real life, not too far from the (new) bedroom wall you can’t see to the left

We’re told that the space went from two bedrooms to three, but lack a floor plan. There’s one “After” on the architect’s website, but you have to scroll down, click “+all”, then scroll again.

For “Before” pictures we have to do some digging. The architect told NY Magazine that the clients bought in 2013, but that can’t be right. No 2-bedrooms sold in the building in that year. (StreetEasy building page, Past Activity tab here.) It’s amazing how often owners and others get that sort of datum wrong.

The “Before” loft is almost certainly the “2,376 sq ft” loft #3F, which sold for $2.48mm in October 2011. Compare the floor plan on the architect’s site to the one on the 2011 listing: plumbing rooms are in the same places, kitchen was closed, and the two bedrooms taking 5 windows on Sixth Avenue are now three bedrooms using the same 5 windows. The old “Limelight” church steeple is visible in the #3F photos (see #2) and seems to be at the right height. (The 4th floor seems too high to get that Limelight view, and that corner unit on the floor above [#4E, as it happens] has been rented out since being purchased in 2007; the second floor is too low, as is evident from the 4th losing photo from #2E on the Sixth Avenue frontage.)

You’d never know from the #3F 2011 broker babble that the condo conversion was “inexpensively executed” or (mere) “conversion architecture”. (Ha!)

13ft ceilings, cast iron columns and wide plank walnut floors. Entertain in the state of the art Chefs kitchen featuring, Custom cabinets, Viking Appliances and a Bosch Washer-Dryer. A unique large circular Living Room ideal for entertaining. Both bedrooms feature ample custom closets and en suite bathrooms with extra deep soaking tubs. The master bathroom features a walk-in shower and double sinks.

Or that the “wide plank walnut floors” were engineered, and unstable. (Ha ha!)

we’ve been here before (right here)

I hit loft #3F way back on November 17, 2011, when the original purchasers from the sponsor in 2007 got their clock cleaned (O’Neill loft at 655 Sixth Avenue resells at 21% loss over 2007), apparently by the folks who just finished the renovation. I remember that loft to this day, including that oddly closed kitchen, the difficulties posed by the layout, and the windows. My buyers were underwhelmed in early 2011:

I remember that we thought the foor plan was surprisingly small. That is an odd reaction to “2,376 sq ft” that has only two bedrooms, especially one with such high ceilings (“13 ft”), but the space (to us) feels smaller.

I think that is due, in part, to the most interesting feature of the loft, that large curved corner that is, in real life, difficult to use. Certainly, that shape makes it hard to add a third bedroom without a radical re-do (probably requiring moving the kitchen, or swinging its axis). An unusual problem to have in a “2,376 sq ft” corner loft with 14 windows.

Funny that we did not consider compressing two bedrooms into three, but that’s what the architects did, in a pretty simple way. Instead of using the 5 windows and about 33 feet along Sixth Avenue for two bedrooms, they fit three into the same width. (Why didn’t I think of that?) None of the new bedrooms is large, but they are three.

Also funny: there is no mention of the quality of the windows in NY Magazine or on the architect website. As noted in that 2011 blog post, the windows bled sound, and are situated where all the buses and trucks up Sixth Avenue all day and night are running directly at this curve. My buyers and I did not particularly dislike the finishes or the floor, but we definitely thought the windows were due for an upgrade. It seems that the 2011 buyers and their architects did not think that a problem. (Or, if they did, it didn’t get notice in the press.)

Unless there windows were replaced and no one thought to mention it to NY Magazine, the owners-since-2011 were not as bothered by the bus and truck assault up Sixth Avenue as I and my buyers guessed that any resident would be. Manifestly, they had enough money to do that upgrade, if that was a priority. Different strokes, different folks….

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price discovery can be hard, even for pros, as at 738 Broadway

by Sandy MattinglyPosted on Posted in loft neighborhoods noho — No Comments ↓
marked down from $6 million!

The “2,396 sq ft” Manhattan loft on the 2nd floor at 738 Broadway (the Broadway McKenna Building) in the most NYU-ish stretch of Noho that sold for $3.85mm at Christmas started life as a $6mm listing. Of course it made a few stops on the journey from $6mm to $3.85mm, which proves that the sellers seriously misapprehended The Market. What is most interesting (to me) is that, if any sellers can be said to have the greatest motivation and resources to correctly suss out how a listing will do, those sellers are developers, and the money folks who love (and lend to) them.

You know all that press you’ve been reading about the new condo development craze, with the new stuff flying off the shelves because [low inventory]? It is not a universally enforceable law of nature, apparently. There’s still that other law of nature: correctly priced lofts sell quickly and (even in a Seller’s Market) lofts that are priced too high will linger:

Jan 14, 2014 new to market $6mm
Feb 12 $5.25mm
May 27 change firms $4.995mm
Sept 9 hiatus
Oct 3 back on market $3.995mm
Nov 5 contract
Dec 23 sold $3.85mm

That’s nine months of active marketing, four asking prices, and (my favorite counting stat) a sale 36% off the original asking price. That’s not supposed to happen to (well advised) civilians, yet it happened to this professional seller.

Of course I don’t know a thing about the financing, but it is reasonable to assume that neither the developer nor any lenders (if there were lenders) were happy to sell an asset they thought was worth $6mm at a 36% discount. Indeed, if this turned out to be a profitable venture for the developer, there must have been an awful lot of profit built into the original pro forma.

no rookies here

While the seller is an eponymous LLC (“The Broadway McKenna Building, LLC”), the notice address in the deed when this building was bought (way back in 2005, for $8.2mm) indicates this is a boutique project of a well-known developer, “Chetrit Group, LLC”. Indeed, the project is commonly referred to as a Joseph Chetrit project; The Real Deal article when sales launched a year ago, here, the Daily News about the technology and finishes last February, here. In other words, folks who have the greatest motivation and resources to correctly suss out how a listing will do.

Of course I have no inside information about the project, but this has the look of a labor of love for a developer. Note the gap between the purchase of the building and first marketing: February 24, 2005 to January 14, 2014. That’s a long time to have parked the $8.2mm purchase, and a very long time to figure out what to do with a 4-story building. And note the finishes, some decidedly not loft-y.

Of course they went ultra deluxe, with more marble than you see in most lofts, that curiously babbled fireplace (“focal point centers around a stunning floor to ceiling gas fireplace clad in white Calcutta marble accentuated by custom LED cove lighting above”; a focal point that centers??), and a master bath with a curiously “overflowing” tub that is described in a bit more detail in that Daily News puff piece above.

Almost outshining the fireplace is the master bath. It’s lined in the same Calcutta marble and features a TV hidden behind the mirror and an “overflow” tub. The water pours out of the ceiling, fills the tub and then goes over the sides into the drain.

(That has to be more impressive in real life than in prose.) The overall feel is more New Condo than classic loft, at least to this loft snob.

dropped ceilings, and even that huge fireplace will have trouble warming up this cold space

The layout is total classic loft, a Long-and-Narrow with (of course) plumbing in the middle, two bedrooms splitting the rear wall, windows only front and back, and (as laid out) no place to put even an interior third bedroom.

“2,396 sq ft” with 12 foot ceilings implies great volume, but this is forever a 2-bedroom space, period

And those back bedrooms epitomize one classic feature of a classic Long-and-Narrow loft: there’s no view and little light back there, as you infer from the sheers with which the loft bedrooms are staged. (Listing pix #5 and #6; you can find them easily enough.)

The 2005-era pitch was easy enough to back out: at a time when a huge number of new developments were being penciled out, designed, then actually built, 738 Broadway would be one of the few in Noho, and the only one along Broadway. (Gwathmey Siegel’s “Astor Place” aka “Sculpture For Living” was about to be finished, breaking new ground [so to speak] in luxury condominium developments just up and around the corner from 738 Broadway.)

I have to wonder what the hell was going on from 2005 until 2014…

that sound you hear? the accountants weeping

And if each loft here will see a similar discount ….

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Cooper Square loft triples in value, disappointing owner

by Sandy MattinglyPosted on Posted in loft neighborhoods noho — No Comments ↓
is it the exposure, Mars?

The anonymous folk who just sold the “2,571 sq ft” Manhattan loft #4A at 62 Cooper Square (Carl Fischer Building) for $4.6mm didn’t quite triple their money, as they had purchased at $1.553mm, but close enough. The overall Manhattan residential real estate sales market has not quite doubled in the time (190%, as measured by the StreetEasy Manhattan Condo Index), but here’s how I know the anonymous folk were disappointed: they came to market at $6mm. In skating terms, they went for the quadruple salchow but had to settle for the triple, outperforming the overall market, so it is hard to sympathize too much.

In table form the history looks like this:

Aug 9, 2001 purchase $1.553mm
Jan 9, 2014 new to market $6mm
April 24 $5.5mm
May 17 $5.25mm
June 5 change firms (not agents)
June 26 $5mm
Nov 3 contract
Dec 23 sold $4.6mm

The layout has some quirks, but if you stand near the windows you do get that “enchanting” view of the trees and Cooper Square (including of The Cooper Union). Best not to go barefoot when taking in the view (or doing anything else in the loft), as the concrete floors are unforgiving. But I suspect the layout was a bigger limitation in marketing than the hard floor:

the angles can be challenging

There’s a surprising lack of (usable) volume in these “2,571 sq ft”, with the possibility of a third bedroom just to the north of the two above (as suggested by the proposed alternative floor plan), but that bedroom would get dramatically less space than the good-sized second, and it would not only take two windows from the living room, but would ruin the from-the-door sense of space on entry. No, this is a two-bedroom-plus-office-alcove, ideally.

Seem people are religiously opposed to layouts that require you to walk through the dining area, but this one is not quite so bad, with the dining table a bit to the left and the kitchen quite a bit to the left. Still, this is not an ideal layout, though the payoff is that 70 foot wall of windows with those “enchanting” views.

I know you don’t feel too badly for these folks (neighbors don’t, either)

Yeah, they wanted $6mm ($2,334/ft) and various other numbers higher than the $4.6mm ($1,789/ft) they got. They must have had a pretty good idea when they dropped the ask to $5mm at the end of June that they weren’t going to get even that. June is when the neighbors downstairs went into contract at something less than $1,737/ft.

Those neighbors owned the “2,751 sq ft” loft #2T (at #52 Cooper Square, but part of the same condo), with what looks like the same level of finishes as in loft #4A but an arguably better layout, and some outdoor space. (You can argue with me, but all you have is that the #2T layout requires you to walk past the kitchen (those religious folks will hate that), while I have a second exposure and a much better [and more spacious] bedroom layout.) If you value that second floor terrace at only 25% of the value of the interior (using The Miller’s rubric, as the patio is not accessible from the public area of the loft and is in a bit of a mid-block canyon), the adjusted value for beautiful interior space in this building contemporaneous to the marketing of #4A was only about $1,556/ft. (If you want to make an upward adjustment for #4A over #2T due to the higher floor, I’d argue with you about the layout [again]; let’s call that a wash.)

Loft #2T overlapped with #4A, but only for the 19 days in June that it took to get into contract off the ask of $4.995mm. I’d be shocked if anyone who was interested in #2T did not also consider #4A. They are similar in size and utility, with each posing some challenges to go from the optimized 2-bedroom+office to add a third bedroom. They are in the same condo (hence, the same amenities) but not in the same building, with #4A in the 12-story tower that is incised as the Carl Fischer Building, with #2T in one of the two 4-story buildings that were combined with #62 to make the new condo around the turn of the century.

Loft #2T might have lower ceilings (though they appear still classically loft-y and “high”), with different flooring (hardwood, rather than the unforgiving concrete in the more industrial #4A), dropped ceilings instead of barrel vaults, and windows that derive character from the arches rather than from the metal used in the tower. Loft #4A was babbled with “gorgeous architect-designed detailing”, but these details have not been detailed in prose and are not evident in the photos.

As I said, the finishes look comparable between the two lofts. Maybe #4A has a slightly better view (two floors up, and because it is farther north, closer to The Cooper Union), but #2T has that patio (and a fireplace).

On a utility scale for 2-bedroom+office lofts, The Market preferred #2T at $4.78mm over #4A at $4.6mm, though on a dollar-per-foot basis The Market preferred #4A at $1,789/ft to #2T at $1,556/ft adjusted (or less, if you value that patio at more than 25% of the interior). There’s an interesting discussion there….

Net-net, I’d argue that by getting $1,789/ft the anonymous #4A sellers out-performed the hyper-local market by 10% or more. No one feels badly for them.

 

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most patient sellers in the world sell 15 Broad Street loft after 3 years

by Sandy MattinglyPosted on Posted in loft neighborhoods fidi — No Comments ↓
one boat, in a rising tide…

The “1,420 sq ft” Manhattan loft #2904 at 15 Broad Street (Downtown by Starck) that sold for $1.51mm on September 18 had been first offered for sale in December 2011 at $1.5mm and was always available over the next 32 months that it took to get into contract, but for a hiatus of two months in 2012 and one month in 2013, employing only four asking prices over that entire time. I don’t think I have ever seen another loft that took so long to sell and that stayed with the same listing agent. You know what they say about a rising tide’s effect on all boats? The rising tide of the overall Manhattan residential real estate market took nearly four years to get this baby sold at $10,000 more than its first (long ago!) offering:

Dec 14, 2011 new to market $1.5mm
Aug 14, 2012 hiatus
Oct 11 back on market $1.575mm
Sept 9, 2013 hiatus
Oct 5 back on market $1.65mm
Feb 12, 2014 $1.6mm
July 28 contract
Sept 18 sold $1.51mm

That’s two price increases, 10 and 22 months after coming to market, and a single price drop, four months after that second increase, yielding a sale within 6% of the last ask and just pennies (er … that 10 grand) over the first ask. (By way of context, the overall Manhattan presidential real estate market, as measured by the StreetEasy Manhattan Condo Index tracking sales of the same condo, was up 27% from the time loft #2904 came to market until it went into contract.)  And, as noted, using a single agent through the entire 32 month period. I guess they were all on the same page throughout.

When you hear it said that “some sellers don’t have to sell”, these are the folks they are talking about. If they had to sell, they’d have dropped the price to meet the market in 2012. Or in 2013. Instead of raising the price each time after a hiatus.

 let’s play … Guess The Math!

These recent sellers paid $1,308,895 when they bought the place from the sponsor in August 2006. They appear to have been investors, as the loft was rented in October 2006, in August 2007, and again in August 2012, per the Corcoran losing system. I suspect that last lease extended at least into 2013, if not 2014. We’ll play with the cash flow possibilities below, but the top line numbers are not inspiring:

$1,308,895 purchase
$1,510,000 sale
$210,105 gross

($90,600) commission (if 6%)
($27,557) NYS and NYC transfer taxes on sale
($13,089) NYC ‘mansion tax’ on purchase
$78,859 before considering other expenses, cash flow

On the other hand, they had very little skin in the game. If you can see the detail on this Property Shark record, you will see that they took out a mortgage of … (wait for it) … $1,278,000 when they purchased. Backing out the NYS and NYC transfer fees that were part of the original deed recorded price, you will see that their original “purchase price” (before transfer fees) was $1,285,436, so their mortgage was for … (wait for it) … 99.4% of the “purchase price”. The lender was Allied Irish Bank, which was the preferred lender to the famous group of Irish carpenters (and their countrymen) who were buying up Manhattan new development condos in those heady days. Seeing a first mortgage at 99.4% is a harbinger of things to come, as Allied Irish Bank failed and was rescued by a receiver appointed by (and financed by, as I recall) the government of the Irish Republic. But I digress….

Having put down the princely sum of $30,895, these Irish-surnamed investors don’t look to have made any money on this operation. Their monthly nut got up to $1,402/mo for taxes and common charges, plus whatever they paid for that $1,278,000 mortgage. I can’t see the mortgage itself, but even at 4% that mortgage cost them $ $6,100/mo (if a 30 year mortgage); if at 3% (an amazing rate for an investor), they are still well below even on a cash flow basis, at $5,388/mo for the mortgage, then the $1,402/mo for taxes and common charges.

The rent they received bounced around, as I can see they got $5,000/mo starting in October 2006, $5,500/mo starting in August 2007, and (only!) $5,000/mo starting in August 2011. Let’s assume (like the Allied Irish Bank, perhaps) that the unit would never be empty, with an uninterrupted cash flow (humor me) and the ridiculous mortgage rate of 3%; the monthly math shows them writing checks for around $1,700/mo in the worst months (when the rent was $5,000/mo) and $1,200/mo when the rent was $5,500/mo.

If continuously rented (again: humor me), they wrote checks for the first two months (until it rented) of nearly $6,800/mo, then for eight months at about $1,700/mo, then for $1,200/mo for 48 months, and finally again for $1,700/mo for the last 37 months. That’s a lot of checks!

$13,600 = the first two months, vacant
$76,500 = 45 months at $1,700
$57,600 = 48 months at $1,200
$167,700

Of course, we know that the unit was vacant for some period before the July 2014 contract, as the broker babble notes “now vacant and easy to view”, but I can’t tell in our system when that text was changed. And, of course, we don’t know whether the rent increased after August 2012. Nor have I seen the actual mortgage terms. But this is mere quibbling. It would take a mortgage at 1% to be close to a break-even month on a cash basis when the rent was $5,500/mo. And we know there were a lot of months when rent was only $5,000/mo, and an unknown number of months when the rent was $0.

No wonder Anglo Irish Bank went under. Though it is still a marvel that these sellers were as patient as they were.

The Market treated them fairly

At $1,063/ft for a 1-bedroom plus home office with north light but no view worth bragging about, the #2904 investors did not do materially worse than any of their neighbors. The other sales in the time they were on the market that were notably higher on a dollar-per-foot basis were the much larger #3120, with “breathtaking water and city views from every room” at $1,295/ft 10 days before #2904 finally sold; the “2,210 sq ft” #910 in July at $1,328/ft (apparently because if its corner layout and sunny views, including the NYSE); the “1,779” sq ft #3404 also in July at $1,268/ft; and a bare hand-full of others that you can find if you have the patience to scroll down the Past Activity tab of the StreetEasy building page. (Where you will also find a great many neighbors that sold for less than the $1,063/ft that #2904 eventually got, including many under $1,000/ft.)

Not a good building for investors, it seems. At least, not yet.

I had a seller client in another new development of this vintage who was not nearly as patient as these folks, in that he really did have to sell. As an investor who was writing checks every month to cover his nut (I wish I could remember his mortgage terms through … [wait for it] … Anglo Irish Bank, but he didn’t get a 1% loan) he got tired of check-writing and sold into a trough in his hyper-local market. He could have waited (and kept writing) and in two more years he’d have made some dough, but he got out when he could, and stopped bleeding.

These folks had a longer appetite (and greater resources?) for bleeding. But they didn’t do well. At all.

 

 

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