goodfella
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Everything posted by goodfella
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Guys (and gals), It is possible (and I heard true) that the work they are doing on the north retaining wall has to do with the fact that they screwed up the foundation of north trust back when they were excavating. Whether they build or not, they still have to shore up the bank's foundation. I still think this is dead in the water. Credit, lenders aside - either a product is the product for the market, positioned correctly and at the right price or it will tank. I think this just tanked.
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Houstonfella - I have seen the progress made at Mosaic. That doesn't mean they are selling units though. The project was financed as an apt. project and not a condo project and thus they did not need any pre-sales to start construction. I believe that Mosaic will be exactly what it is financed to be when finished - apartments. In the previous twelve months, their have only been 700 condo sales in the city in ALL buildings - including the older resales and the new launches. Why someone thinks they can sell 400 in two years is beyond me, esp. in such a transitional neighborhood. but that is only my cheap $.02 Look maybe you are right about 2727 - but, I'd make a fair wager right now that building is not more than 50% sold when they finish construction unless they drastically reduce their prices. That is if they actually start building. I study this market quite a bit and I am just saying that I would be surprised to find out they have that many sales right now. As to the comment made by Niche - a construction crane is about $20K/month. It accomplishes what ads do not - which is what is happening here - giving the perception that construction is moving forward and that it is ok to buy. I have met many developers who push dirt etc. when there is speculation that the project is going to fold.
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Another one bites the dust....
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I am just curious why everyone assumes that just b/c a crane goes up that a project is actually real? It would not be uneard of for a developer who is losing the confidence of his buying public to try and regain that confidence by pushing dirt or erecting a crane. Until I see substantial foundation work being done, i.e. piers being drilled and poured, I still have serious doubts about whether this project is real. I'm not saying it isn't a nice project. The architects did a really nice job. I just think that their prices are absurdly high for this market, and knowing a little bit about condominium development, even if they do make it out of the ground I see serious issues down the road for them. The absorption rate for units at that price in this city is ridiculously low and, if they do commence construction I'd wager that half of the building will be empty when they finish. They are also about to have serious competition in the high-end, ultra-luxury market with Turnberry coming in. That is a company who has tremendous experience in that sector of the market, really knows how to run a sales and marketing program and will be averaging less psf than 2727. The only condo project that is getting under construction currently is Cosmopolitan, who have sold out more than 65 of 75 units and recently added three floors to the building. There is talk of another project starting sales in three months in the Highland Village area and Randall Davis is about to launch one just up the street from 2727 in Rice Village. BTW - Comparing Houston to NY is really not the way it works. Houston sells for what Houston sells for and NYC sells for what that market can bear.
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I understand montebello is not a Randall Davis project. I can rent a 1000 SF apartment for $1000 - 1300/month - and even less in some decent neighborhoods. The cost of owning a 1000 sf place in mosaic (with 20%) down is closer to $2,500/month. Listen, you could be right, but I spend a lot of time studying this market, and I would not want to be invested in this project. Almeda is still transitional at best. Their prices (300+/SF) are absurdly high for that neghborhood. They are not anchored by either high-end residential, or high end retail - which are the keys to success in this condo market here in Houston. I agree it has a chance to be succesful - but I think it is at least a decade early.
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skies, I'd wager a nice dinner that they don't sell 60 units in the first year of marketing that project (unless they sell huge blocks to out-of-town investors). I think Houston-dev is probably right - and Randall Davis' floor plans have gotten smaller and smaller, averaging about 1700 SF at Cosmo. Still larger than Mosaic, but nowhere near the average at his older projects or montbello.
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Most realtors don't put up a sold sign until all the contigencies are removed from the contract (i.e. the option period has lapsed and loan approval is in place). Most of the sold signs only get put up once the house is closed and the new owner allows them to leave it there for a few weeks. But the vast majority of the time, a realtor will not put up that sign unless it is a done deal - or they risk losing too many good potential customers.
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Generally, what you want to ask is whether those contracts are hard earnest money deposits and have been put in title. Also, it helps to know whether the contracts have specific performance (which means that the buyer is legally obliged to actually close on the unit). These are "sold" units, or as sold s you can be before actually closing. It may seem shady, but ultimately the developer suffers the most when his 50% sold becomes 15% sold when he converts to contracts and loses the confidence of the general public. That is why many experienced developers advertise "80% reserved" and only advertise "sold" once they get into title.
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23 floors it is. Plus, the penthouse owner on the top floor gets a private roof terrace above his unit on the 24th floor with a private glass recreation room/lounge. The mechanical tower extends up another 2 stories about from the looks of the model.
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They are just finishing their pre-sales and have sold 75% of the building in preconstruction and had to add three floors as it sold so quickly.
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TNJ, He is advertising reservations as "sold". Because this is his first building, I think he is overestimating the conversion rate from reservation to contract. Even with small, non-refundable reservations ($3K-10K) only 60-70% of your buyers move forward. With refundable res. (which he has) typically only about 30-40% of your buyers actually get into into title. You are absolutely right. The biggest problem is that your buyers wait nd wait and begin to lose confidence in the project, the timing of it and the ability of the developer to deliver.
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Kinkaid, They may be experienced, but in my opinion they have grossly overestimated the depths of the Houston condo market. Remember that every project that flopped had one thing in common - too many units. The succesful developers here build small, small buildings - Randall Davis always builds 65-85 units. Montebello is about 100 units. In 2005, only about 500 condo units sold in all of Houston, including new and old buildings. It would take them 7 - 10 years to sell 400 given that type of absorption. And the location doesn't compare to Cosmo, Montebello or 22 Kirby. It really is still a bit ghetto.
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Yes, Mosaic is going up - but only because they are seeking financing for the project as a rental property, not a condo property. They expected 20 sales/month and in the first few months they were open they only got 4 or 5 sales. Not encouraging for a project that is 400 units.
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Holiday/Days/Heaven On Earth Inn At 801 St. Joseph Pkwy.
goodfella replied to MontroseNeighborhoodCafe's topic in Downtown
Think seller financing. That may be where the confusion is. -
Musicman - LOL. Thanks for introducing some reality to the discussion.
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These units have been "pending sale" for months. It doesn't tell us whether these are refindable reservations or if they are hard earnest money contracts. Listen, they have a nice product - I wish them the best - it raises the bar for everyone - I am just a bit skeptical of the project being a success at those prices.
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The total number of condo units sold here in 2005 was aroundabouts 500. That included new construction (such as Montebello which closed out in 05) and every single old building on the market. Anyone with a bit of experience in condos can sit down and get a gross estimate on the absorption rate for such a large project. The problem with developers from out of town, all too often, is that they feel they are smarter and more sophisticated, and therefore will beat the market. The truly smart condo developers here (Randall Davis, Borlenghi) never try to beat the market - they just cater to it. Just my opinion - but I have done this for quite a while and my experience is that numbers don't lie.
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Hey all. A few comments with my paltry two cents: I too heard that 2727 was 40+% reserved, but in my experience, fully-refundable reservations don't mean diddly and so I am skeptical regarding what will happen when they try to execute those as contracts and get them into title. 2. Woods partners is a great group who, unfortunately has seriously overestimated the depth of the houston market. Anyone planning on building that many condo units in this city, and in such a location is clearly misinformed by someone as to the viability of their project. 3. I have seen some of the plans for Parklane, and if they do what they say they may do, it is very groovy indeed. They are looking to hire one of the hippest, most talked about interior designers in Texas and looking at some serious updating of the lobby, pool deck, hallways and units.
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Yes. Also, Uptown Houston (uptown-houston.com) is working in a very smart way on the continued development of the uptown corridor. Between their agreements with the city and TX DOT, there are significant imporvements to infrastructure and an ongoing effort to develop and brand uptown as the mixed use center of houston. Look at fast facts at http://www.uptown-houston.com/info/uptownFacts.html I wish that the downtown district was as proactive, or that they had such substantial support behind them.
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I agree. As a matter of fact, cosmopolitan would more than likely be a failure in DT of today, as would any project at that price point in DT. Galleria, Uptown has become the virtual dt of this city. It has the offices, as well as the density of high end retail that define dowtown areas in most cities. Also, it seems that most of the succesful high-rise projects in Houston have another thing in common. They are all anchored by high end residential neighborhoods, which is where you get your downsizers from. Montebello, Cosmo and Villa d'este all have tanglewood and memorial. Gotham and Renoir have river oaks etc. Downtown does not have a high-end adjacent neighborhood.
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why not in downtown? what do you mean?
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St Germain and Commerce are both listed, but very often agents at these properties will not list the entire inventory - they'll just put a portion in that is representative of everything they have. I think the problem with downtown is a chicken-egg problem. They want people to pay a real premium to be downtown, when in reality it is a transitional neighborhood. They need to up the pop. by incentivizing people to move down there and they need to seriously incentivize retailers to go down there by giving away a year or two on a five yr. lease so that there are the basic services (dry cleaners, grocery etc.) available to residents. Retail doesn't want to move down b/c there is not enough people. people don't want to move down b/c there is no good retail, and besides why should I pay that much moeny to live there when it is a ghost town. People who are developing down there should look at some case studies like SOHO, Williamsburg or Dumbo in NYC to see how these developed - what elements were crucial for their redevelopment and start thinking about how to get those elements and market them effectively. Sales figures for 2005 are available on MLS. Will sales pick up - I think so, will these other projects move forward, I don't know I guess. I am a skeptic when it comes to downtown. I do agree that they can reduce the number of units by combining some, but it is still a lot of SF to sell.
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Some reservations always fall out. So 100% reservations usually amount to about 70% sales - which still isn't bad for pre-construction. Plus, the developer will keep taking reservations (over-reserve) while he converts to contracts.
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I have some experience with condo conversions. I think whoever buys to convert to condos will most likely have a long hard sell. There were only 100 sales in downtown all year in 2005 and of those, nearly 25% were under 100k. There are currently over 125 units listed on the market downtown, this doesn't include units not listed on the mls at buildings such as St. Germain and Commerce. If you add the Houston House, you will have 400 more units which brings it to over 500 units for an area that is only absorbing about 75 units a year over 100K. That is a min. of a five year absorption, but most likely it will take them longer to sell out unless their prices are very very low. Just my opinion though.
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I heard they are tearing down the JCI on March 15th, so get you last chili-cheese dogs in while you can. They are now 100% reserved - a record for Houston and will start converting to contracts in Mid March.