170 Fifth Avenue loft sales are confusing

sound + fury = what? (nothing??)
In this episode, Manhattan Loft Guy chews on a sale price that just bothers him, and concocts a scenario to account for the odd transaction.

For a small building (12 units) and a short history (converted to condo in 1999), the Manhattan loft building 170 Fifth Avenue has had an awful lot of activity in the last five years, with two lofts changing hands in 2009. You’d think (I thought) that with so much data the valuation trends would be clear. You’d be (I was) wrong about that.

I will get to the data below, but loyal Manhattan Loft Guy readers may remember that I visited this building on August 13, 2009, to try to make some sense of the then-recent sale of the 5th floor in light of closed loft sales here from 2007 and 2005 and a contemporaneous failed marketing campaign in 2009, 170 Fifth Avenue closes AT 2007 (maybe).  The on-the-one-hand-on-the-other-hand theme in that post is proof that I did not make a lot of sense out of all those data points, but that post was one of a series comparing 2009 sales to 2005 and other prior sales. As I intro’ed and linked then:

There have been a series of Manhattan Loft Guy posts of late comparing 2009 clearing prices to 2005, or other prior sales. (This July 29 post canvassed quite a few, attack of the Killer Comp (when 2005 pricing does not help), and I have added several since then.) Generally speaking, 2009 has not done very well in this competition, so I was a little surprised to see a recent sale in which 2009 may have held its own against 2007.

(Remember that: I was surprised at the time that the July 2009 sale price held up so well, compared to 2007.)

cue the head-scratches
There’s been a more recent sale in the building that has had me scratching my head ever since I came across it in the course of (finally) bringing my Master List of Manhattan Loft Closings up to date about a month ago (February 16, master list of Manhattan loft closings is up to date!). Let’s get to the data, then we can all scratch heads together:

Oct 30, 2009 #6 $3,247,500
July 21, 2009 #5 $2,945,000
Feb 6, 2007 #3 $2,972,500
Sept 8, 2005 #7 $3,200,000
March 14, 2005 #3 $2,800,000
Feb 1, 2005 #2 $2,725,000

comps should be comparable, shouldn’t they?

Remember that all lofts in this building were built out new in 1999 as a "luxury" condo conversion (how many 12 unit buildings have even a part-time concierge, or two elevators??) and that all are floor-through lofts; meaning that they all started with a high level of finishes and the same footprint of "2,736 sq ft". Recall also that the 7th floor sold in 2005 at $3.2mm but did not sell from October 2008 to May 2009, despite having been offered at $3.195mm for the last nearly 100 days of that effort.

Not to tax your memory unduly, but you should also keep in mind that the 5th floor sold in July in such a refined condition that the broker-babble was not only extensive but almost giddy ("featured in numerous design magazines and books" will give you the idea).

So how could the 6th floor loft sell — without being publicly marketed — at a 10% premium three months after the 5th floor??

Damned if I know.

This sale is one of those noted by StreetEasy as "[n]o listing associated with this closing", so there are no pictures, no floor plan, and no prose by which to assess how it compares to the other beautiful lofts in the building. Having scratched around the Property Shark and the Department of Buildings website in an attempt to get some info, I see no work permits for a 6th floor renovation. (Interesting that the new owners of the 5th floor filed renovation plans soon after closing, though I cannot tell from any documents in the DoB’s Virtual Job Folder how extensive a job they did.)

I have to believe that the 6th floor was in pretty much the same condition it had been in when the October seller bought it (for $1,434,000!) in February 2000. If it is in that ten year old original condition, it probably does not compare well to that magazine-featured loft on the 5th floor.

arm’s length or within the tribe?
Prior to October 2009, the only clearing price that really stood out over the last five years was the $3.23mm paid for the 7th floor in March 2005, yet The Market was unreceptive to a resale of that loft in that pricey neighborhood for the 8 months before May 2009. As of October 2009, the most recent sale at 170 Fifth Avenue was the July sale of the "featured in numerous design magazines and books" 5th floor at $2.945mm, a trade essentially even to the last prior sale before that one (the 3rd floor in February 2007). You will recall that I was surprised by that.

Let’s be blunt: The data show that the October 2009 buyers overpaid for the 6th floor.

Comp theories aside, those buyers could certainly have gotten the 7th floor for less than they paid for the 6th floor, as the 7th floor was publicly offered for sale at $3.195mm from February into May 2009. Chances are, the 7th floor sellers were willing to negotiate off that asking price, and a further 10% final discount would have brought a (hypothetical) deal for #7 into the $2.9mm range around where the last two neighboring lofts traded.

Unless the 6th floor is really really really unique, the opportunity to buy the 7th floor at $3.195mm or less should cap the price that a rational buyer would pay for the 6th floor in a rational market.

So the Department of Redundancy Department asks again: why did these people overpay?

the Oscar for Scenario Spinning goes to …
I have a theory. My theory is based on some facts and considerable speculation. On one side, the facts are that these buyers are very well-heeled, very well-connected political lobbyists in Washington DC (the story in the Washington Post about the White House release of 6 months of visitor logs says "the powerful husband-and-wife lobbying duo, have met with top White House officials numerous times. [He] made at least four trips; [she] visited three times"). On the other side, the seller is a very high-powered and well-compensated law firm partner (he made the NY Times when he recently changed firms) who personally maxed out his campaign contributions to Hillary Clinton ($2,300), yet also gave $1,000 to the Obama and Edwards campaigns; he earlier contributed $1,000 to Wesley Clark and $2,000 to the DNC in 2004.

To connect the dots, if these people didn’t know each other personally, I’d bet that they have good friends or close political connections in common. So I think that someone told the seller that the buyers were interested in having a Manhattan base, and maybe they complained that they had no time to do open houses or otherwise visit apartments. (Maybe they even complained about Manhattan real estate agents, or the relative lack of transparency in our market; but I digress….)

Probably the seller said something like I’d let you have mine but you’d have to make it worth my while. Maybe the buyers said something like your place is just perfect and we’d save so much time and energy not having to search, so we’ll give you 10% over the last sale. (That number would be $3,239,500, btw.) Then (maybe, maybe) the seller said deal! but if you want to keep the [something or other] I could let you have it for another $8,000.

That is how (my imagination tells me) The Movers and Shakers make deals! It also accounts for the peculiar (not very round number) trading price of $3,247,500, but that’s because I cheated over that last $8,000.

Now that I have walked through this very logical solution to a very illogical sales price conundrum, I wouldn’t be surprised if the seller hosted a political fund-raiser in his beautiful 6th floor loft that the buyers attended. Maybe they fell in love with it then….

If someone has a better theory (or even some facts) I’d love to hear it.

yes, that building
You may not know this building by name (the Sohmer Piano Building) or by its address, but you know this building if you have ever looked south at the Flatiron Building from a few blocks away, as this is the building at the far corner of Fifth Avenue at 22 Street with the gold dome (copula?). Very distinctive. Iconic in its own way.

a happy building
And now the new neighbors are very welcome, having brought the gift of an inflated comp to each of them. The gift that keeps on giving, indeed!


© Sandy Mattingly 2010



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