strange relo deal gets seller +14% over 2007 tho loft at 356 Broadway worth -8% less

how facts can mis-inform
If you were following the hyper-local Manhattan loft market at 356 Broadway in east Tribeca, you would have had a very different view of that market toward the end of 2011 than you would now. How different is “very different”? A week ago you would have used as a market-indicative comp a $2.425mm sale 5 months ago of a loft that last sold in June 2007 for $2.145mm. We will have to into the weeds a bit to prove it, but the market value of that loft in 2011 was assuredly not $2.45mm; it was $1.975mm.

Into the weeds we go …. We start the story at the end, with the deed record of the December 14 sale of the “2,158 sq ft” Manhattan penthouse loft #5C at 356 Broadway at that $1.975mm. Looking at the StreetEasy listing history you will note this bizarre sequence:

April 23, 2011 new to market $2.695mm
June 15   $2.595mm
June 22   $2.495mm
July 26   $2.425mm
Aug 5   $2.35mm
Aug 15 sold $2.45mm
Aug 25   $2.2mm
Sept 1 re-listed  
Dec 14 sold $1.975mm

First, note the evidence of a motivated (if uninformed, or over-optimistic) seller: 4 price drops in 15 weeks to start, then another 3 weeks later, for a total cut of 18%. (Apparently, the guy was leavig town.) That is what motivation looks like. That, and a final sale price at yet another discount of 10% off the last ask, 26% below the starting price.

don’t be confused by that intermediate price
The bizarre piece is that August 15 “sale”. The deed record for that “sale” reveals that the June 2006 buyer at $2.145mm conveyed title to a relocation company, which is a step usually followed in short order by a deed conveying the property from the relo firm to a real buyer. But that is not what happened here. After the 2006-buyer-turned-2011-seller walked away with $2.45mm (a healthy gain of 14% in 5 tumultuous years), the relo company held it another 4 months before for selling at $1.975mm.

I have never seen anything like this before, and in a prior life I had direct experience with a very large multi-state employer and its relations with such relo companies. That 2006-buyer-turned-2011-seller had an amazing deal with his relo company, one that I cannot even begin to fathom. The relo company paid the real owner out at that 14% gain, at a ‘value’ that was provably not being offered by the market.

That bag firmly in hand, the relo company continued the exact same marketing campaign (same agent, broker babble, pix and floor plan) until finally selling last month through that deed that was not filed until last week. (The inter-firm data-base has this history as a single listing, without the interruption of that August 15 “sale”.) From my perspective, and that of The Market, loft #5C was worth $1.975mm, a drop in value in 5 years of 8%.

Whatever deal the real seller had with the relo company, the relo company took a $475,000 hit in those 4 months. Again: I have never seen anything like that, which makes me wonder if the real seller was a very big figure in a client very important to the relo firm.

I wonder if anyone in The Market used that $2.45mm sale as a comp; I certainly would have. It is not that anyone lied to The Market, just that (we now know) the August 15 deed did not reflect an arm’s length transaction.

B. I. Z. A. R. R. E.

funky floor plan with no comps
The “2,158 sq ft” loft #5C probably feels very loft-y in the 14’6” x 21’ living room, with its 16’6” ceilings and double windows (the lead photo is pretty spectacular), and much less loft-y in the dining room, kitchen, entry and mezzanine bedrooms, which split that 16’6” of total height, or in the upper den. But the “600 sq ft” private roof deck off that den should make up for a lot.

Normally, I would look at space like #5C and try to figure out a value for the interior, and then try to figure out what the premium for that lovely roof deck was. But that analysis requires a base of interior values in the building, a base that is missing in the case of 356 Broadway. So, if you really were following the hyper-local Manhattan loft market at 356 Broadway, as I started with this post, good luck!

The last two sales (apart from #5C) were of #2C and #2D, both sold in April 2010 with some real challenges. Both were sold with the invitation to bring an architect, but the real challenge is usable space. Despite being adjoining lofts represented by the same agent, one was marketed as having 16 foot ceilings and a mezzanine while the other was said to have 13.5 foot ceilings and a mezzanine more suited to Tolkien’s Shire than Manhattan loft living (“just shy of six feet”). It is hard to comp interior values for the building off these two weird sales, and (still apart from #5C) there have been no other sales in the building since the neighboring #2B sold for $1.42mm in November 2006, claiming “1,700 sq ft” including a mezzanine under those same high ceilings that might be 16 feet, or 13.5 feet, or …?

And that sale is no ore useful for present comping purposes than the #5C sale 7 months later. Again: if you really were following the hyper-local Manhattan loft market at 356 Broadway, good luck!

proper housekeeping is essential to healthy living (and useful data collection)
The first thing I did after noting this sequence of 2011 “sales” of loft #5C was to delete the August 15 “sale” from the Master List of Manhattan Lofts Sold Since November 2008. as a bizarre related party transaction that is not indicative of market value. The next thing I have to do is to change the spreadsheet behind my September 27, is the Manhattan loft market back to (up to) 2007? 61 repeat sales say “probably”, “a bit”, to reflect the dramatically different paired resale result for loft #5C of being down 8% 2007 to 2011 rather than up 18%.

Of course I should not take this personally, but I hate it when I got tricked into using a data point that turned out to be meaningless. Relo companies tend to have difficult relationships with real estate agents; this kind of thing is unusual, but doesn’t help their PR. (Except to the lucky clients who took out $475,000 in value that The Market would not pay. To those rare individuals, relo companies are a miracle.)

© Sandy Mattingly 2012



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