With inventory hovering around record lows, we've started to observe more sales of combined apartments. Combined apartments (i.e. connecting two or more adjacent apartments) tend to have inferior layouts than their equivalent-sized counterparts that were originally designed by the building architect. We are seeing more "combo" sales now and are also performing more hallway appraisals as of late (where apartment owners acquire the end of a hallway to enhance the layout of combined apartments).
The data for this is arguably "light" since I am only looking at units that I assumed combined in the past based on the label, i.e. "15A/B", "71/72", "9FG," etc. Some combined apartments are renamed after they are combined i.e. "7AB" becomes "7A," but that naming convention should occur consistently over time. It's also reasonable to infer that with more sales of "combos" occurring per the chart above, more apartments are being combined, consistent with our firm's experience.
When we perform a "combo" appraisals for banks, underwriters expect us to include "combo" comps to support the market value. Often they have awkward layouts with inefficient use of space, multiple kitchens, too many bathrooms, etc. Think about the combination of two adjacent one-bedroom condos built in the 1980s. I've never seen a resulting layout that works because there is no interior hallway.
This is yet another way to demonstrate how tight supply is impacting consumer choices. Less desirable attributes become less of an issue when supply is tight and demand is high.
· Matrix [matrix.millersamuel.com]
· Three Cents Worth archive [Curbed]