Newspaper Story Our client, Kennedy Wilson Auction Group was featured in a news story about an upcoming auction in Portland Oregon
John Ross heads to auction
Sunday’s outcome may impact sales at nearby condo projects
Portland Business Journal – by Wendy Culverwell Business Journal staff writer
Bargain hunters will descend on downtown Portland this weekend for a shot at deeply discounted units in the John Ross condominiums. Fifty of the glitzy South Waterfront tower’s 79 unsold residences will be auctioned at prices starting at $110,000.
The high-profile auction is the second involving a condominium tower at the South Waterfront in less than a year. Scheduled to coincide with the April 30 deadline to receive a popular federal homebuyer tax credit, the John Ross auction comes as the number of new condominiums for sale in downtown Portland continues to decline.
Only 17 percent — or 548 of the 3,137 units constructed in 21 new or remodeled buildings since 2006 — remain unsold, according to CB Richard Ellis, a commercial real estate brokerage.
“It’s not that bad in terms of the overall count,” said Kirk Taylor, a multifamily broker with CBRE who tracks new development.
Never-occupied units account for about one-quarter of the overall market, which continues to struggle with an imbalance between supply and demand. There were more than 2,000 active condominium listings in February, according to the Regional Multiple Listing Service. At the current sales pace, it would take more than 20 months to clear out the inventory.
Sales declined slightly over the winter, but a recent spike in prices suggests a revival of interest in costlier new units. The median condo price in February was $212,500, nearly 22 percent higher than October’s $174,500 level, according to RMLS figures.
Market watchers see the John Ross auction as an opportunity to clear out inventory and to establish a new price level for the South Waterfront. Indirectly, what happens at Sunday’s auction will impact future sales and prices at other unsold units around town.
Pre-auction interest is high, said Rhett Winchell, president of Kennedy Wilson Auction Group, the Beverly Hills, Calif., firm running the John Ross auction. The auction is timed to allow buyers to take advantage of the federal homebuyer tax credit, worth up to $8,000 for buyers who sign sales contracts by April 30.
The auction also will attract investors such as Prince Thekkumpuram, a software engineer, and his wife, Delphine. The Beaverton couple toured the building with their broker Monday in search of a unit they could lease to tenants, “provided we can get it at a good price,” Delphine said.
The building has few restrictions to prevent buyers from renting to tenants rather than occupying their units.
The John Ross auction comes seven months after a similar auction involving Atwater Place, a 212-unit South Waterfront tower. All the units placed on the auction block sold. At last count, Atwater Place had 61 unsold units, or 29 percent of the total building.
Pre-auction, John Ross has about 79 units unsold, or 26 percent of the 303-unit building. Lender Prudential Real Estate took control of the condo tower more than a year ago and ordered the auction after a previous round of price cuts failed to sell out the building.
Prudential holds a $32 million note on the building, which originally was built by Gerding Edlen Development Co. as a signature residential project in the $2 billion South Waterfront development.
Condo auctions remain a rarity in Portland. Every other high-profile project has experienced slow sales since the recession hit, but most haven’t faced lender-led auctions like the one at John Ross.
The 114-unit 937 opened in the Pearl District in 2008. It is about half sold out and its original developer, W & K Development, is still marketing the property.
Similarly, the 177-unit Encore, a mid-scale Pearl District project, has sold just 13 units but is actively marketed by Hoyt Street Properties. With 93 percent of its units unsold, the Encore is the slowest-selling building in Portland but remains in good standing with its lender, Wells Fargo Bank.
“We have the financial ability to keep the loan current,” said developer Joe Weston.
Debbie Thomas, owner of Debbie Thomas Real Estate, represents the Westerly, an upscale Northwest Portland project by developer Jack Onder. The 104-unit project has 27 unsold units.
Thomas said that as badly as the condominium market has struggled, it could have been much worse. Ladd Tower, the Wyatt, Waterfront Pearl, Cyan|PDX and The Ardea all began as condominiums and ended up as apartments.
Collectively, that removed 1,445 new, mostly luxury units from the listings.
“We are not overbuilt at all. We are very, very lucky,” she said.
firstname.lastname@example.org | 503-219-3415