Downtown loft demand strong

Low inventory, large families continue to drive sales and stabilize prices

Apr.April 28, 2008 05:11 PM

While segments of the real estate market are showing signs of softening, the Downtown loft market appears to be holding its own.

Real estate experts say the market for lofts below 14th Street continues to remain strong and that the limited, albeit rising, inventory of loft apartments is attracting Uptown transplants and keeping prices stable.

Ariel Cohen, executive vice president at Prudential Douglas Elliman, sold a number of the 382 units at 15 Broad Street, the Philippe Starck building, which four years ago was converted to lofts from the former JPMorgan Chase headquarters site.

Cohen purchased a 2,000-square-foot loft in the building himself, paying $800 a square foot. That space today would cost around $1,100 a square foot, he said.

According to the appraisal firm Miller Samuel, which released a first-quarter market report last month in conjunction with Elliman, the median price of a Manhattan loft dropped to $1.6 million, down 1.8 percent, between the last quarter of 2007 and the first quarter of 2008.

However, all other price indicators in
the loft market were up. The average price per square foot of a Manhattan loft increased to $1,246 in the first quarter, up 2.6 percent from the same time last year. And the average loft sales price increased to $2.2 million, up 7.8 percent from this time last year.

While the report is not specific to Downtown, nearly 300 of the 494 lofts tracked, or about 60 percent, are located there. So the statistics speak more to the Downtown market than they do to any other neighborhood of Manhattan.

Loft inventory rose 5.1 percent, but the length of time it took to sell a loft remained virtually unchanged, the report noted.

Brokers said the price increases are tied to the fact that lofts tend to be more expensive, and the high end has fared better than other sectors of the real estate market.

Many developers working on loft
conversions Downtown have tried to lure buyers with classic details like large rooms, high ceilings, hardwood floors and open floor plans.

“I think prices have gone up because people purchasing lofts want larger spaces in specific neighborhoods and because their inventory is low,” said Cliff Finn, director of on-site marketing at Citi Habitats.

At the Machinery Exchange, a new loft condo at 136 Baxter Street, where Soho, Little Italy and Chinatown converge, developer Max Protetch and architect Mark Dubois restored many of the original details of the prewar building.

The average price per square foot at the condominium — which originally served as a police horse stable and later a warehouse for machinery equipment — is about $1,500. As of last month, eight of the 14 loft units in the building, which was finished last September, had sold.

The six unsold units include a 1,300-square-foot, one-bedroom loft, listed at $1.6 million, and a penthouse with over 2,500 square feet of space priced at $4.5 million.

Michael Chapman, executive vice president of Stribling Marketing Associates, which is handling the building’s sales, said one buyer at the Machinery Exchange combined two loft units to create a three-bedroom, four-bath residence. “It’s a sign of the family-minded luxury buyer moving Downtown,” he said.

Brokers agreed that the changing demographics of Downtown have helped to keep the loft market robust. It’s no longer an office community that empties at night.

“Families are getting larger; parents need bigger homes; hence the luxury loft market is incredibly active,” said Danny Davis, senior vice president at Citi Habitats.

Meanwhile, at Loft 25 at 425 West 25th Street in Chelsea, which is partly under construction, 50 of the 79 lofts have sold. And an additional 16 (including four penthouses) were put on the market last month. Prices range from $850,000 to $3.5 million. Interior designer Antony Todd has purchased there as well as the Chinese artist Ai Wei Wei, whose work has been shown at the Guggenheim and who is now creating pavilions for the Olympics.

Still, brokers said the days of frenzied buying in the loft market are over, in the same way they are in the rest of the market.

“Today’s buyer is more selective and tends to window shop,” said Julie Friedman, executive vice president at Bellmarc Realty.

Because buyers are more cautious, sellers have had to adjust their pricing and willingness to negotiate. “If an apartment is overpriced, it will languish on the market,” said Davis. “But if it is priced appropriately, it will get offers quickly and, in many cases, go over asking price.”

The shaken economy is steering some potential buyers to rent for the next year or two. At 95 Wall Street, an office tower recently converted into 507 loft-style rental apartments, rents are around $80 per square foot. The asking rent on a 500-square-foot studio is around $3,300.

Finn, the director for onsite marketing there, said 15 apartments rented within the first week of the official opening.

“People are willing to pay more to live Downtown, and building owners are stepping up their game,” he said.

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