A housing market buzz
A decision to auction 40 units at the Murano is stimulating interest in Center City.
There are about 2,000 new and existing condominiums for sale in Philadelphia's downtown market, but the ones getting the most attention are at the Murano - the glass-wrapped, 43-story building at 21st and Market Streets.
In a housing market that is hardly sizzling, Murano's developer has an idea: Auction 40 of the unsold units for prices that could be 50 percent below the original list prices.
Of course, the developer, Thomas Properties Group Inc., also has an issue: It has sold 112 units and has 12 others under agreement, but 178 units haven't moved since the building opened in mid-2008. It will be 40 of those that will be auctioned on June 27.
Buyers who have been waiting for prices to drop substantially since the region's market peaked in August 2007 smell a deal. The number of people inquiring about the auction is "in the hundreds," according to the company hired as auctioneer, Accelerated Marketing Partners.
Center City real estate agents and brokers fielded equally large numbers of inquiries.
Coldwell Banker Preferred general manager David Krieger says he has shopped the auction news around to his firm's client base.
"There seems to be a buzz about the auction," Krieger said. "Most people feel like it's a very good deal. A number of people have asked for more information" or a tour of the property.
Other agents in Center City reported similar frenzies of interest.
Realtors are hoping the Murano attention-grabber will bring some life to the market. Moving the city's for-sale inventory - whether condos or single-families - has been tough, even with some signs that first-time buyers are at least out looking. The estimate of 2,000 or so condos for sale comes from Trend Multiple Listing Service, Board of Revision of Taxes data, and the developers themselves.
There are some encouraging signs: Toll Bros. has broken ground on its 220-townhouse second phase of development at Naval Square, and the 1706 Rittenhouse and 10 Rittenhouse condo projects continue to rise.
But other notable projects have hit the skids.
Lenders continue to chip away at the assets of CREI, the developer of several proposed or half-built condo projects. Its Northern Life development at 820-24 N. Third St. will go in a sheriff's sale in July.
Another residential project, this one proposed by developer-lawyer Louis J. Orocofsky at 113-125 Church St., is on the block July 7 for more than $23 million owed.
Orocofsky was owner of record of a site at Fifth and Walnut Streets that was supposed to be a 23-story condo project. That was sold at sheriff's sale in May.
The auction is bringing an enthusiasm for the Murano that wasn't always evident when Center City agents toured it with clients as the high-rise was being completed.
"The buyers I brought in there over the last couple of years all chose something else," said Jeff Block, an agent for Prudential Fox & Roach. "I don't think there was anything in particular [about the Murano]. I guess one of the reasons was location - not really Rittenhouse Square or within one or two blocks - and this was for buyers who said Rittenhouse was important."
The proximity to upscale Trader Joe's is considered a plus, but the vacant commercial space across the street, as well as the lack of ground-floor retail in the Murano, were buyer turnoffs, some agents said.
But those realities seemed to matter less to the potential customers touring the building these days in the run-up to the auction. Murano residents interviewed last week reported that hallways were filled with visitors last weekend and at lunch time during the week.
A few condo owners were not happy with the auction.
Irina Beyder and her husband, Yefim, who paid $415,000 for a one-bedroom unit on the 14th floor in December 2008, said they had been assured by a Murano sales agent that the building was 60 percent presold.
"They wanted us to spend $45,000 on a parking space, but we thought it was too expensive and passed on it," said Irina, of Englishtown, N.J., who rents out the unit but bought it with plans to live there at some point.
"Now, they're including a space free when you buy a unit at the auction," she said. "We paid full price. Where's our free parking space?"
Unlike Beyder, other owners contacted were unwilling to speak on the record.
Jon Orens, who, with his brothers, developed the condos 2200 Arch Street and has no connection with the Murano, said a resident he knows "thinks that all things considered, it's the best option right now, not only for the developer but for the residents and investors."
Jon Gollinger is the president of Accelerated Marketing Partners, and he was the one who broke the news to the current homeowners at a June 2 meeting. The first reaction was shock, then "almost universal agitation and discomfort," according to Gollinger.
"Most people came out the other side recognizing that the market sets the value, and they'd be better off with the building full," Gollinger said.
This is a reserve-price auction, Gollinger said, which means that minimum bid is established for each unit. Those published reserve prices are, on average, 50 percent of the developer's original list price.
"Say the reserve price of the unit was $249,000," he said. "If the only bid was for $247,000, we wouldn't sell it. If the only bid was $249,000, it would sell for $249,000."
Obviously, neither Gollinger nor Thomas Properties expects each condo to sell for the minimum bid.
"We hope people will bid higher," Gollinger said. Whatever those final sale prices are, they will likely determine "what the consumers will say about value for the entire market."
Irina Beyder isn't buying it.
"We recently sold another property, a condo in Florida, for an $80,000 loss," the Philadelphia native said. "You expect that in Florida, but not in Philadelphia."
Contact real estate writer Alan J. Heavens at 215-854-2472 or firstname.lastname@example.org.