One Extra Foot of Ceiling Height. What is that worth?
Twelve Inches. That’s all. It may seem like a little thing. But it turns out that it can be more valuable than slightly better views.
This past month, HRT team member Jonathan “Yoni” Goldstein and I closed on a sale at 10 West End Avenue, a condominium between 60th and 61st Streets on the Upper West Side of Manhattan. Built in 2007, it was among the very first new condos that popped up at that time. Over the next fifteen years, every last parcel between 58th and 72nd has been filled in. Waterline Square, One West End, and other projects popped up in the interim, creating almost a new neighborhood that is near private and public schools, Riverside Park, and compelling local options for restaurants, activities and the like. It’s almost like the center of the Upper West Side shifted down and to the left a little bit.
We set out to sell a unit on the 24th floor in this building for a client who had completed construction on a house in the suburbs. They were ready to stop being landlords, and finally let go of owning a piece of Manhattan.
We Had a Test Case To Find Out
When we launched, we were competing against another property, with the same exact layout, five floors up. You could argue that the views were slightly better. And, while the finishes were identical- what the developer had delivered to every owner in the building- the 29th floor unit was owner-occupied, while ours had a tenant. As you can imagine, no tenant treats an apartment as well as an owner.
So the table was set to see how we fared against our upstairs neighbor. We ended up getting more, and they less. Why?
First, Let’s Talk About the Sales Price- and see who bid.
The first possibility- We had an investor from Israel bidding on both our unit AND the higher-floor unit. Were they bidding the same level? Were they just trying to get the best deal? It seemed that, in the end, they cared more about the absolute price than anyone else. Ultimately, they weren’t our buyers.
The next buyers were from China. Again, they were throwing the same low offer- over 15% below asking price- to us and to the other unit. It was too low, and wasn’t going anywhere. A painfully slow negotiation ended with a good-enough price that our sellers were okay selling to them.
But It’s Never Too Late To Bid.
However, someone else came in at last minute and won the day. We had not felt overly confident about our negotiations, and decided to reduce the price slightly, from $2.32mm to $2.275mm to see what other interest we might drum up. It turns out that we found another buyer who decided to step up a little higher, just a few days after we had accepted the bid of the Chinese buyers. Our second deal made it across the finish line.
We Knew The Ceiling Height Was Worth Something Extra.
Construction in buildings often means that “transfer floors” or other specific issues create differences in ceiling heights on different floors. While the structure of a building generally doesn’t mean much to a buyer, developers take ceiling height into consideration, because they know it makes a difference in the feeling of an apartment. We had seen how ceiling height affected pricing in these new condominiums over time; sometimes there can be $100,000-200,000 difference if the jump in ceiling height in enough.
Originally, there was always a price difference between the two units at 10 West End. Usually, there is a slight increase on a per-floor basis in the “schedule A” pricing of a condo. In this case, you could probably assume about $10-15,000 per floor. Once factoring in that add-on for the five extra floors, then the ceiling height difference would be baked in. Here, the original difference was less than $20,000. 24A sold for $1.628mm, and 29A sold for $1.61mm. The ceiling height, then, was overcoming being five floors down.
You could argue that 29A had slightly better views, but when there’s only a small difference- as there was here- the original pricing difference based on floor level doesn’t usually hold up. Were the ceiling heights identical, any difference in sale price in 2022 would have only been based on apartment condition. That, and the skill of the agent- and the urgency level of buyer or seller.
But the Ceiling Heights Were Different
And that ended up being the difference. 29A sold $2.175mm – and we sold for $2.235mm. A difference of $60,000. Most of that extra came from the ceilings being higher- by exactly one foot. Perhaps our skill in negotiating made some difference, given the condition of the unit was not as pristine as the other. But I give credit where it’s due. So, all things being equal, we can see that a foot of ceiling height has some serious value.
What Are The Intangibles About Ceiling Height?
There are plenty of Post-war buildings in Manhattan (those built after WWII) that have lower ceilings. Many building in the 1960s through the 1980s have depressing 8′ ceilings. Developers maximized the number of floors, and often created soul-crushing boxes in which to live. So it would make sense that Prewar ceiling height plays a role in any difference between the values of Pre- and Post-war buildings. Location of course seems to pay a bigger role- and most older buildings occupy the best locations. When in older buildings, where most ceilings are over nine feet, and some rise to 9’6″ or higher, you have to believe that the unstated preference is an important factor, wherever the buildings are. Somewhere along the road we forgot that we like really high ceilings. But we seem to be remembering it.
To learn more about how to find a home you love, or to dive more deeply in the values of properties you might love, be in touch! -S