Valuing Architecture as Art

The Recent Sale of the Manola Apartments by Architect Rudolph Schindler defies the use of Standard Appraisal Techniques

by John C. Carlson

The terraced property at 1807 Edgecliffe Drive in L.A.’s Silver Lake neighborhood isn’t just any apartment complex. Designed by legendary architect Rudolf Schindler with broad windows and double-height ceilings, the 16-unit Manola Court apartments is a unique artists’ community set within hillside gardens, its living spaces connected by walkways. Built in 1926 for Romanian-born artist Herman Sachs, best known in Southern California as the creator of the mural at the entry of Bullock’s Wilshire, the compound not only included Sachs’ personal residence and studio but was an artistic commune of sorts, evolving over time and occupying three adjacent lots until it resembled a European hill town. Yet, it is also a prime example of modernist architecture.

Time, however, had not been kind to the property when it went on the market this year for $2.5 million. The buildings needed substantial improvements, and the aging interiors cried out for restoration. But given the scale of the property and increasing popularity of the area, Manola Court was still likely to find a buyer quickly despite its disrepair and faded glory. But how do you put a price on a property like this—a piece of real estate that could be considered an eyesore to one person and a treasure to another? One buyer’s teardown is another’s restoration-worthy classic. “Trophy properties” like these are not only prone to creating controversy, but they completely defy the use of Standard Appraisal Techniques.

Most appraisers are lost when it comes to the valuation of architect-designed properties. In trying to apply standard valuation methods that will be acceptable to their lender clients, appraisers often miss the mark. Using comparables within “1-mile of the property” that “sold in the last year”–typical lender valuation measures–is wholly inadequate for evaluating this kind of real estate. The experienced buyer of a trophy architectural property is drawn to the “art” aspect of it along with the real estate value. But what the “art” is worth is especially difficult to measure.

Because I specialize in the valuation of architect-designed properties, I was retained by the Trust that owned the Manola Court Apartments to complete an appraisal on their behalf. Generally, I begin any valuation with researching the “Provenance” of the property, whether it is residential, or an apartment building like this. If one looks up the word “provenance.” the definition primarily pertains to art work, antiques or collectibles. Not real estate. However, I would argue that an architect-designed property is a “work of art”— which defies normal valuation methodologies. [In addition, it is possible to distinguish two meanings for provenance: first, as a concept, it denotes the source of derivation of an object, in this case an architectural property, and second, more concretely, it is used to refer to a”record” of such a derivation.]

Analyzing the provenance or pedigree of a property involves researching the name of the architect and determining the architect’s prominence, along with researching the prior ownership of the property and determining if any of the prior owners were notable with regard to the history of the building and/or the area in which the property is located. The degree of provenance has an impact upon its value as well. To measure this, I have defined three different “levels” of provenance—e.g., whether the original owner was important to the area or whether a name architect was involved even though the house may not be historically significant, whether it is historically and architecturally significant and warrants a premium based on those factors [visit my Website at: www.jccrea.com for a more detailed explanation].

Even after all of the above is evaluated, measuring the value of an architect-designed property is still tricky. The most important consideration in any valuation of this type of property is checking comparable sales in order to measure whether buyers are paying a premium, and if so, what is that premium. In general, appraisers have difficulty in measuring this premium because either they have not bothered to give the provenance any thought or because even if they have, properties of this sort are very scarce to find since few sell in a given year. In addition, current lender requirements often do not allow the time necessary for residential appraisers to complete a proper analysis like this.

The same procedures are used in measuring any premium from world-class architecture as are used in measuring the “contributory value” of any amenity. Take a pool, for instance. The appraiser who wants to measure the contributory value of a pool first finds several sales of similar properties with pools and then locates several sales without pools. The difference in the value between the two indicates the contributory value of the pool in that particular neighborhood. But if recent sales in the immediate or nearby area where an architectural property is located are not available, most appraisers just give up and report that there was no way to measure a premium. However, I would argue that there are ways to measure the Provenance of a property, they just take time. In addition, appraisers must not limit themselves to a tight geographical area to approximate an answer and so a comparable sale does not have to be so close to the architect designed property being appraised.

You can also find properties that were located at a distance from the property that’s being appraised and measure whether they sold at a premium within their market area. For instance, if an architecturally significant property in one area sold for $2 million and a more “typical” property nearby sold for $1.5 million, the architectural property sold for a 25% premium over the non-architectural property. When you can assemble several sales like this and obtain several premium indicators, this can be applied to the property you are appraising. This kind of analysis requires a larger number of comparables to develop a range in premiums – it is much better than just giving up.

So, how did I do in the valuation of Schindler’s hillside apartment complex? Despite all my experience and the thoughtful methodologies I have developed, I appraised the Manola Apartments for less than 2 million on an “as-is” basis. (I cannot divulge my actual appraised value). Appraising the building on an “as-is” basis means that I took into consideration the costs for the for the substantial work the buildings required, which is correct appraisal methodology. Yet the property was more in demand than anyone expected and sold 6-months after my appraisal for $2.9 million. There were 14 bids on the property many of which were over asking price which proves the architectural value of the property. I am delighted that it sold for a higher price because I now have a prime example of the premium for which a non-standard architect-designed trophy property would sell to add to my database of comparable sales. After all, why shouldn’t architecture sell like art?

Editor’s Note: Two Wrongs to Wright

When I was in grade school, growing up in Pasadena, California one of my teachers told us the story of the destruction of the Royal Library of Alexandria in Egypt, one of the largest and most significant libraries of the ancient world. It was beyond my comprehension, even as a child, that any civilization would deliberately burn down such a valuable center of cultural knowledge – it was not just the building itself, but, even more tragic, a minimum of 40,000 scrolls (some scholars say 400,000) documenting the religion, philosophy, life and history of the ancient world were lost forever.

That was the first time I had any sense of the power that stupidity, ignorance and cupidity can have in destroying the cultural and historic fabric of our collective identity. But it wasn’t the last. In our own lifetime, we have been witness to the destruction of the Buddhas of Bamiyan — ancient Buddhist sculptures demolished by the Taliban in Afghanistan in 2001. More recently, there has been rampant destruction of historic cities, sites, buildings and artifacts in the Middle East – the city of Nimrud, Palmyra’s ancient temple of Baalshamin (a UNESCO World Heritage Site), a colossal Assyrian gateway lion sculpture from the 8th century B.C.

However, this kind of malice is not just the work of crazed zealots in some far-off land. In recent decades in Southern California, we have seen the demolition of iconic architectural landmarks such as Irving Gill’s Dodge House in Los Angeles, Rudolph Schindler’s Wolfe House on Catalina Island, Richard Neutra’s Maslon House in Rancho Mirage. We have also witnessed the raiding of vintage furnishings and fixtures from historic homes. Most famously, in 1985, Texas rancher Barton English bought the Blacker House, a 1907 California Craftsman masterpiece by Greene and Greene in Pasadena, and subsequently had it stripped of 48 original Arts & Crafts fixtures, as well as some of the original leaded art glass doors, windows and transom panels. They were sold off for more than he paid for the house (which had cost him one million dollars, while some of the lamps sold for $250,000 apiece). This incident became known as the “rape of the Blacker House.” To make matters even more devastating, Barton sold the house in 1988 for $1.2 million, never even having lived in it.

Thanks to the efforts of Pasadena Heritage executive director Claire Bogaard, the incident attracted national attention. And the City of Pasadena passed the so-called Blacker Ordinance making it illegal to dismantle or destroy original artifacts in any of the Greene and Greene houses in the City.

While this law still stands, the lesson it represents has not been learned elsewhere. A current case in point: When Frank Lloyd Wright’s Storer House – one of four textile-block houses built by the legendary architect in the Los Angeles area between 1922 and 1924 — was for sale, the owners insisted on excluding the original light fixtures. Even after asking the highest price ever for a Frank Lloyd Wright house, the sellers insisted on treating the light fixtures as separate from the house. The buyer was offered the lamps for $85,000.00 apiece. Even though he could afford them, he was not willing to succumb to such extortion. Did the seller relent? At publishing time, some of these lamps are set for auction (this is all the more disturbing because one of the sellers was on the Board of Trustees of both the National Trust for Historic Preservation, and the Frank Lloyd Wright Building Conservancy).

We seem not to learn. In April, Frank Lloyd Wright’s Sturges House, in L.A.’s Brentwood Heights neighborhood, was set for auction but did not sell. Yet, all its important furnishings, including numerous pieces by Wright and John Lautner that were integral to the history of the house, and long-time owners, were auctioned off making it difficult, if not impossible to fully restore the property as the cultural icon it deserves to be. If only the furnishings were auctioned off, after the house was purchased this could easily have been avoided, as the new owner would then at least have had the opportunity to purchase the interior historic fabric.

Going forward, it might be wise for preservationists to take notes from the animal rights activists of PETA and other organizations who have changed the perception of wearing fur as a luxurious, if thoughtless, indulgence in our modern culture. If the National Trust for Historic Preservation and other conservancies were to expose the entrepreneurs, collectors, and auction houses who deal in this type of merchandise, perhaps more of our priceless collective identity could be protected and saved intact for future generations.

That is why I draw your attention to the plight and power of our existing national and international treasures, as showcased in this new issue of architectureforsale.com, Quarterly. It is important to recognize, understand and appreciate the legacy of modern masters such as Elmer Grey, Rudolf Schindler and Bruce Goff who are all featured in these pages. I hope you enjoy learning about them as much as I have presenting them.

81 Cross Ridge Road New Canaan CT 06840

Eliot Noyes, Architect

The Brown House, 1950

Eliot Noyes, Architect

 

Sculptural elements, natural light, direct views and access to the landscape give you an unprecedented experience of this exceptional mid-century modern house. True to Eliot Noyes original vision, the renovations done by builder Dave Prutting and architect Joeb Moore, kept the sophisticated approach to making spaces functional to today’s modern living. Natural material such as wood and stone add warmth while the expansive use of glass defines the proportions of the space.

Extensive landscaping by Reed Hilderbrand for the entire property, has resulted in a breathtaking, peaceful, retreat-like feel site surrounding this luxury mid-century gem with its guest and pool house. Efficiency, simplicity and transparency are key to this iconic home.

3170 Lake Hollywood Drive Los Angeles CA 90068

Gilbert Stanley Underwood, Architect

The Underwood Residence, 1946

Gilbert Stanley Underwood, Architect

 

First offering in 58 years! Acclaimed architect of the Ahwahnee Hotel in Yosemite Valley Gilbert Stanley Underwood’s own home, 1928. For his own family’s residence Underwood enhances architect and planner Franz Herding’s original vision for the upscale Hollywood Knolls as a Mediterranean hillside community by building his house in the popular Spanish Revival style. Built around a fully walled central courtyard with a grassy children’s play yard beyond, the residence exudes a calm dignity and appropriateness to its location. Here, the charm and romance of the style is enhanced by an exposed wooden window header set into the front façade, a rear wood ceilinged verandah, a wood burning fireplace, unpainted wooden doors, and fine detailing with wide plank floors, wrought Iron, and period fixtures.

75 Upland Road Kentfield CA 94904

Jack Hillmer, Architect

Modern Bay Area Style, 1958

Jack Hillmer, Architect

 

75 Upland was designed by the late architect Jack Hillmer who was one of the founders of ‘Bay Area Style’. With his years as an aeronautic engineer, his homes feature cantilevered decks and weight baring structure that show as a piece of art. In this home the bearing structure is a fireplace. Hillmer only designed 10 homes in his career but is followed by many art and architecture enthusiasts. His homes have been featured in the both San Francisco and Dallas Museum of Modern Art.

 

Read more: http://architectureforsale.com/address/1129

1436 92nd Avenue NE, Seattle, WA 98004

Rex Hohlbein, Architect

The Hinoki House, 2007

Rex Hohlbein, Architect

 

Winner of the American Institute of Architects (AIA) Seattle Merit Award, this truly special home offers the rare opportunity to own a residential piece of art in the heart of Clyde Hill. Designed by acclaimed Seattle architect, Rex Hohlbein, with interiors by Doug Rasar, exquisite landscape that optimizes privacy and the lake, city and mountain views, this in-town sanctuary is a seamless mix of form and function; blurring the lines between indoors and out, common and private spaces. 5 years in the planning and construction, this meticulously crafted home spares no attention to detail from its extensive built-in, mahogany cabinetry to the expansive disappearing window-walls. This contemporary masterpiece is as timeless as the ledge stone, fine woods, blackened steel, concrete and glass from which it is built. With easy style and grace, the spaces are as perfect for entertaining as for everyday living. Just blocks from downtown Bellevue, Lake Washington beaches, and minutes from all that the Seattle area has to offer.

98 Bell Canyon Road Bell Canyon CA 91307

afs-1127-cliff-may-social

Cliff May, native Californian & a self-taught builder of genius, built his entire career on the premise that houses here should all but compel us outdoors into the sunshine every day. Here is May’s model home for Bell Canyon, one of his last master-planned horse communities. This meticulously renovated property is in May’s “Atomic Ranch” Modern style on a grand scale. The long, low lines of the one-story structure are penetrated by a glorious open porte cochere, dividing auto court, 3-car garages, workshop & two horse stalls from the residence proper. The flat 4/5+ acre lot affords a separate central recreation area with both covered & open patios and a pool, sheltered by bedroom and public wings to either side of a classic May-style skylit, gabled living room. Secure & gated, the unincorporated community’s HOA dues also maintain May’s original Community & Equestrian Centers.

3580 Multiview Drive, Los Angeles CA 90068

The Kallis-Sharlin Residence

First offering: City of Los Angeles Cultural Historic Monument #380, The Kallis-Sharlin Residence, 1946, by architect Rudolph Schindler, with later additions by Josef Van der Kar, and L.A. Twelve architect Leroy Miller, F.A.I A.

Art and Music have always flourished in this dynamic space originally designed for artist Mischa Kallis as a residence and art studio. In 1960 Kallis sold the property directly to his cousin Jacqueline and her husband William Sharlin. Jacqueline was a noted concert pianist who had actually performed at Carnegie Hall.

 

Read More by clicking on the image!

490 La Loma Road, Pasadena CA 91105

Theodore Pletsch, Architect

The Crowell Residence, 1967The Crowell Residence

The Crowell Residence, 1967, by architect Theodore Pletsch in collaboration with owner/decorator Jean Crowell. Eleven years after its completion, an article in the Los Angeles Times Home Magazine celebrated the timelessness of the property, attributing this quality to Crowell’s design sense acquired while living abroad. Structures on-site exude a rare hybrid of the modern & the classical, combining an old-world sense of color & material with a contemporary sensibility. Three sets of massive glass doors open to the formal garden & Greco-Roman swimming pool, which was originally part of a sprawling Orange Grove estate by the venerable architecture firm Bennett & Haskell. The main residence incorporates a double-height living room, formal dining room, 2 bedrooms, 3 baths, a laundry & an attached 2-car garage. The entry passage draws the visitor into the back yard where the guesthouse – with its open plan living area, kitchen, bedroom & bath – anchors the vista across the pool.

1221 North Lake Way

BELFORD SHOUMATE

Historic Modernist Home Ocean to Lake

Belford Shoumate Architect Modernist Home

1221 North Lake Way was built in 1937 and designed by Belford Shoumate, one of the most popular Modernist architects on the island of Palm Beach. Designed as a 6,000 sq. ft. “Nautical Mansion,” the “Fore and Aft House” was featured in the 1939 World’s Fair as one of the House of Tomorrow. That fair’s lasting influence on American Architecture, and its fascination with industrial design and speed, can be seen in this unique property.

The southern elevation at 1221 has concrete porthole columns that repeat along the windowed curtain wall and the upper decks feature steamship railings. The Aft (eastern elevation) has a 2-car Y shaped garage with 3 exits. The Fore (west) features the pool overlooking the Intracoastal view and dock. The house sits on 65 feet of Intracoastal frontage, offering stunning views and amazing sunsets as well as a deep-water dock. The nautical-like design has the effect of a boat, sitting on the lot overlooking the Intracoastal. Equally important, the Fore and Aft House is the only Lakefront house in Palm Beach with its own deeded oceanfront cabana down the block.

Most of the original details remain, including some custom furnishings. The Fore and Aft House was designed with 5 bedrooms with exterior doors to enter and exit the exterior decks, not unlike steamships of the day. Many of the original bathroom details remain, and any missing elements could be easily found and restored.