After the Murano, The Phoenix, and CU 257, who is next in line?
Step right up, Ladies and Gentlemen, and see the might tumble. Large
chucks of unsold, high-rise,
new construction condos
are flying out the door in Center City Philadelphia via auction.
Although all will claim that market forces drove them towards the
auctioneer, can they really blame the market as the sole culprit of a
spate of auctions in Center City Philly?
The driving force behind almost any liquidation of unsold condominium
inventory is purely financial pressure. Like from a bank. Or perhaps
reverse pressure from a developer onto a lender to ease some debt.
Either incarnation is usually highlighted by a low owner-occupancy ratio
in a condo building, and one that perhaps has been on the market for an
extended period of time. A lack of sales is brutal, as the resulting
holding costs incurred by a developer is a killer. And it just keeps
getting worse for a number of buildings here in Center City. Maybe "deep
pockets" will stave off the auctioneers, but eventually, these units
will have to have a major price shift, in order to once again garner
attention from the buying public. Time alone isn't going to cure a lot
of these wounds, as time eats away at a tax abatement, and scratches and
dents become more common in buildings which have turned into glorified
rentals.
There are indeed segments of the
Philadelphia high rise condominium market with a supply that is
simply overabundant. Simultaneously, there are pockets where supply is
limited, and seller continue to drive the market- like west of Broad St.
in the spring for condos under $275,000 are almost non-existent. But a
fair number of condominium buildings in Center City may ripe for an
auction. I saw more than one developer/owner of a large Center City
condominium building at the Phoenix auction, and they were not at the
auction for the heck of it. They were there to learn and observe how an
auction might benefit their position.
By scouring the MLS for newer, unsold condominiums here in Center City,
one can easily come to the conclusion that the success of the auctions
at the Murano, Phoenix, and CU257 may indeed rub off onto a few other
buildings here in town. More information on such buildings can be found
by doing a Google search for say "Philadelphia
condos".
