Tuesday, April 20, 2010

Unsold condos in Old City building to be auctioned

"In the beginning, the six-story, 10-unit condo project at 257-59 N. Second St. was to be called Blu, for the color of its exterior panels.

Architect Jay Tackett was hired by 257-59 Development L.L.C., and "they even built a scale model of it and had pictures of what the units would look like," said Realtor/mortgage broker Fred Glick, the original listing agent.

But completing the project was a hurdle the developer - hamstrung, observers say, by a general contractor who went out of business midstream - couldn't clear.

"People needed to see the finished product," Glick said. "The problem is that it was finished at the wrong time in the wrong area. If it were Rittenhouse or Fitler Square, it would have sold."

At 1 p.m. May 15, the nine unsold units at what is known today as Cu257 will be auctioned at the Hilton Philadelphia Airport Hotel. The minimum bid for the two penthouses, once listed at $1.2 million each, will be $200,000. The minimum bid for the seven remaining units, with list prices ranging from $698,400 to $871,255, will be $95,000.

The seller is 257 Olde City L.L.C. of Wilmington, a subsidiary of the lender, Wilmington Saving Fund Society, designated to complete and sell the building after it was returned to the bank rather than go through foreclosure and sheriff's sale.

According to Bob Dann, vice president of Max Spann Real Estate & Auction Co. in Clifton, N.J., the properties will be sold through "bidder's choice." In each round, the winning bidder chooses his favorite property from the remaining inventory.

The first penthouse and the first three condos are guaranteed to be sold at the minimum or higher, with subsequent units subject to the seller's confirmation, Dann said.

Property previews begin Tuesday, from 4 to 6 p.m. Beforehand, prospective bidders must sign up for a property-information package at www.maxspann.com.

Real estate auctions like this one are becoming more commonplace. Spann conducted one for Westrum Development Co. in June 2008, selling 11 townhouses at Hilltop at Falls Ridge in East Falls.

In June of last year, Accelerated Marketing Partners of Boston auctioned 40 units at the Murano at 21st and Market Streets; the company will do the same April 29 with 36 units at The Phoenix, at 1600-18 Arch St.

The auctions' intent was to reduce unsold inventory to financially manageable levels. A by-product for Hilltop and the Murano: Units not on the block were sold afterward to unsuccessful bidders.

Auctions can help create interest in the real estate market as a whole, though agents and brokers disagree whether last summer's Murano event achieved that for Center City.

Sometimes, a viable marketing plan works as well.

Richard Oller, who acquired 50 residential and three commercial units at the Aria on Locust Street near Broad at a November sheriff's sale, closed on 16 units after the deed was filed Dec. 31 and has 10 under agreement - more than half his remaining inventory.

"We set our prices 'at market' when we acquired the property" - an average 30 percent discount from the original list - "without reducing prices at all," Oller said.

Price was just one of Cu257's problems.

"Why didn't it sell? Price, economy, and location. What a product mix!" said real estate broker/developer Allan Domb.

The median sale price for condos in Old City was $344,950 in the first quarter of 2010, according to Trend Multiple Listing Service. Half sold for more, half for less.

Cynthia Kehl wants the part of Cu257 she says rests on her roof at 142 Vine St. removed before the auction, or to be compensated for the damage she says has been done to the south wall of her 18th-century rowhouse.

Kehl, who has hired a lawyer, said at least three of her neighbors also have issues with the building.

When asked about those issues, the auction house's Dann replied that the bank says they have been addressed.

A certificate of occupancy has not yet been issued for Cu257, normal when final inspections are under way, said Maura Kennedy, a spokeswoman for Mayor Nutter's office. She added the Department of Licenses and Inspections expects that to be taken care of soon.

Blu's name became Cu257 after the developer, in return for permission to build a 5,900-square-foot roof deck, agreed to change the exterior facade panels from blue to red. Cu is the periodic-table symbol for copper.

The new owner brought in Philadelphia developer David Grasso, of Grasso Holdings, to finish and market Cu257.

"There was a great deal of work that needed to be done because the property had been sitting fallow for some time," Grasso said. "We spent considerable time working on the exterior to ensure that the building was watertight. It was a tough job."

His firm marketed the units and had what he described as "significant interest from prospective buyers" until the lender decided on the auction, Grasso said.

Realtor Mark Wade of Prudential Fox & Roach, who handles Center City condos, said the auction offered the chance for a good deal.

"At the price point where some of these units may eventually sell, it is hard to highlight any negatives . . . in terms of locale, views, or the fact that the property had problems selling when first offered to the general public," Wade said.

"It is not too amazing what a drastic reduction in sale price can overcome."

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.