[MarkDaMan]

Portland New Condo Purchase Incentives

Needles to say, new construction projects continue to struggle. With occupancy rates in the teens (%) at some projects, developers are gradually starting to get creative,…well, some of them. Here’s a look at some of the incentives for new construction condos in Portland’s city center:

Encore

Of the 177 units at HOYT’s latest development at the northern edge of the Pearl District only 15 have sold so far. The certificate of completion was issued recently and new homeowners began moving into the Encore on February 13th. Prices had dropped by 12 per cent three months ago. The developer will entertain all “reasonable” offers, but appears content to stick it out.

Current incentive: $5000 towards closing costs or updates/appliances.

937

Fractal Geometry in the Pearl is home to 114 units on 16 floors. So far 27 have sold. Here’s what’s available. To help move things along the developer has secured a 3.875% interest rate on a 30-year fixed for qualifying buyers. Not bad, saves you about 15k-20k over a 3-5 year holding period (vs. a rate of 5.25% )

Waterfront Pearl

Waterfront Pearl, Portland, ORGood news for the Waterfront Pearl. The developer’s loan has been restructured and the construction lien that Hoffman Construction placed on the development back in ‘08 has been removed! This should create some room for the developer to address pricing which has been static - and not exactly competitive - over the last 6 months.

John Ross

Prudential’s agreement to extend the construction loan at the John Ross presumably included some pretty clear guidelines to get those remaining 80 units sold. As a result, pricing - the best of all incentives - has been adjusted significantly. On average units are now priced at a 20% discount over previous price points - some as much as 30%. Here are a couple of examples:

-635 SF, was 268k, now 219k (-18%)
-1206 SF, was 549k, now 389k (-29%)
-1833 SF, was 999k, now 769k (-23%)

And here’s the current price sheet for the John Ross Condos.

Block 90

block90 condos, Portland, ORSituated on 13th and Flanders, this industrial conversion features 11 luxury condominiums equipped with high ceilings, hardwood floors, clerestory windows, and some of the best noise insulation we’ve seen lately. So far only two units have sold. Pricing remains firm, however, the developer is actively addressing some of the potential long-term cost issues and has secured a 10-year construction defect policy with a max. coverage of $1 million per incident ($2 million aggregate).

For most would-be buyers these incentives don’t go far enough. There’s more to be had, but getting there requires a firm understanding of who controls the development and how the decision process is influenced.

http://agent503.com/2009/03/17/portland-new-condo-purchase-incentives/

[MarkDaMan]

Retailers in Portland’s West End have high hopes
Rising buildings in Central Business District may help retail area continue to develop
Daily Journal of Commerce
POSTED: 04:00 AM PDT Monday, March 23, 2009
BY NATHALIE WEINSTEIN

When Celeste Sipes and her business partner Gina Johnson started looking for retail space for their boutique Radish Underground, they were immediately drawn to Portland’s West End, an up-and-coming retail area bounded on the north and south by Burnside and Alder streets, and on the east and west by 13th and 10th avenues.

“We chose space based on neighborhood density numbers and things like hotel density,” Sipes said. “Downtown, by far, has the largest density numbers. I liked the feel of the area and the proximity to the Ace (Hotel), Powell’s Books and other hotels.”

Originally hoping for space in the Mekka Building on the corner of Southwest Washington Street and 10th Avenue, Sipes and Johnson soon learned that they weren’t the only ones paying attention to this small chunk of downtown known as the West End. During the leasing process, three of the storefronts in the Mekka Building were leased by other boutiques, according to Sipes.

Not wanting to stray far from what was beginning to look like a miniature fashion district, Radish Underground opened shop in October 2008 in a former storage space on the ground floor of the Pittock Block, which faces the Mekka Building along 10th Avenue.

Now, five months later, Radish Underground and other neophyte West End retailers such as Covet, Narcisse and Frances May are looking skyward, where two large mixed-use projects are currently under construction between Burnside and Washington streets on 12th Avenue. The success of these projects, according to the shop owners, would give the West End a much needed boost in foot traffic and higher visibility to attract new potential lessees.

Boutique owner Athena Frazier, for one, is eager to see new faces in the neighborhood.

“I can’t wait for those buildings to be filled with employed people,” said the owner of Covet in the Mekka Building. “I think these developments will bring new life to the area.”

Currently being built by Hoffman Construction, the Gerding Edlen-developed 12W building at Southwest Washington Street and 12th Avenue will be 22 stories high with 17 floors of housing, four floors of office space, and ground floor retail. Up the street at 13th and Burnside, Yorke & Curtis will begin construction on the Weave Building in August. Designed and co-developed by Skylab Architecture, the Weave will be a 10-story, mixed-use building containing office space and ground-floor retail. The Weave is scheduled to complete in 2010, and 12W could be finished as soon as May.

“The more retail there is in the area, the better,” says Heidi Goldsmith, a co-owner, with Dawn Bush, of Narcisse in the Mekka Building. “Once it’s more of a shopping destination, business will pick up. People don’t want to drive across town just to visit one shop.”

Goldsmith was influenced to open shop in the Mekka Building in October 2008 because of its owner, developer Richard Singer. He is best known as the mastermind behind the development of the Northwest 23rd Avenue neighborhood. Last year, he purchased the Mekka Building and the neighboring 415 Building, which has not yet been redeveloped.

“I was really excited about the landlord,” said Goldsmith. “I liked him because he thinks about what he puts next to one another. I think there’s an effort happening to connect the area.”

However, with the national economy in tumult and retailers closing every week around the city, the question remains: If they build it, will more retailers come?

“We’re feeling bullish on that area,” says Jon Kellogg, a realtor at Commercial Realty Advisors NW who is managing leasing for 12W and the Weave Building. “There’s strong activity in the retail and restaurant spaces. We are in discussion with retailers for the Weave and the Gerding Edlen project is on schedule.”

Kellogg was the broker for the Mekka Building, where Frances May, Covet and Narcisse have leased space.

“That’s a nice little nucleus that has been established,” said Kellogg. “This area is ripe for new ideas and concepts. The bridge over Burnside is being strengthened. There is more traffic coming back and forth between the Pearl and the West End.”

Foot traffic alone, however, is not enough to guarantee the success of a retail store in today’s market, according to Sipes.

“I think this is an era of creative retail,” Sipes said. “When the economy was good, you could just throw your doors open. Now you have to work at it. We do shows and events to draw people in and are establishing relationships with local artists. I don’t think we could survive on foot traffic alone.”

To that end, the shops have been working together to promote one another, as well as promoting the West End as the next Portland shopping destination. Frazier of Covet and Pamela Baker-Miller, owner of boutique Frances May, worked together to create a walking map of the West End that shows the locations of shopping, dining and lodging attractions in the area.

“There’s power in numbers,” said Frazier. “We can only benefit by helping each other. It’s a new neighborhood and a new business. Every day I try to be positive and inventive.”

http://www.djcoregon.com/articleDetail.htm/2009/03/23/Retailers-in-Portlands-West-End-have-high-hopes-Rising-buildings-in-Central-Business-District-may-he

[MarkDaMan]

^This article has some good stuff but it irritates me. I would argue the West End commercial district extends all the way to the North Park Blocks. That would include the PAW tower, Director Park area, as well as the Galleria. Or at least that is what Vera had in mind originally when she spoke of the West End redevelopment.

The only thing breaking up the congruent district from the North Park Blocks to the Brewery Blocks is that large empty parking lot right in the middle of everything, and the other half block parking lots.

[bvpcvm]

WTF?????

http://djcoregon.com/news/2010/03/12/lending-changes-hit-struggling-condo-market/

Lending changes hit struggling condo market


POSTED: Friday, March 12, 2010 at 04:41 PM PT

BY: Melody Finnemore (http://djcoregon.com/news/author/melody.finnemore)
Tags: Atwater Place (http://djcoregon.com/news/tag/atwater-place/), condo market (http://djcoregon.com/news/tag/condo-market/), FHA (http://djcoregon.com/news/tag/fha/), John Ross (http://djcoregon.com/news/tag/john-ross/), Trillium Hollow (http://djcoregon.com/news/tag/trillium-hollow/)

http://djcoregon.com/files/2010/03/0315_big_real_estate_stacy_cooper_condos-300x210.jpg (http://djcoregon.com/files/2010/03/0315_big_real_estate_stacy_cooper_condos.jpg)

Stacy Cooper, principal broker with Portland Condos, says changes in lending policies have made some properties virtually unsellable. (Dan Carter/DJC)

Unit No. 100, a completely suitable space at the Trillium Hollow condominiums in Northwest Portland, is up for grabs. Unfortunately, it seems to be completely unsellable, according to Stacy Cooper, principal broker with Portland Condos.
“I have had five buyers interested in writing on this property, and have run the loan package through 10 lenders. Only one is willing to loan, and they will require 40 percent down,” she said. “This was not the case three years ago when my sellers bought the property. It has appraised above the list price, but even fire-sale pricing won’t get this property sold.”

Cooper’s experience is shared by many Portland condo brokers in the wake of the Federal Housing Administration’s new lending requirements for such properties. The new guidelines are dealing a stiff blow to a sector that already is struggling because of the housing market collapse.

As of Oct. 1, 2009, condo developments must meet a stringent new set of guidelines in order to obtain financing through the FHA. The new approval process, part of the Housing and Economic Recovery Act of 2008, is intended to better insure mortgages and slow the rate of defaults.

However, the new guidelines also are slowing sales in an already sluggish market, said Tom Anderson, president and principal broker for The Excell Group.

“About a third of people use FHA loans, so you’re taking that equation out of the condo market,” he said. “There is still demand for condos, but a conventional loan requires a greater down payment and higher credit scores, so fewer people qualify. They want to buy, but they’re going to have to wait.”
Anderson’s listings include the Atwater Place condo tower in the South Waterfront District. Lenders took over Atwater Place and the nearby John Ross condos because of slow sales, and then held an auction for Atwater Place units last September to generate interest from buyers. A similar auction for the John Ross condos is scheduled for April 11. The new FHA guidelines undermine those efforts, Anderson said.

“There’s a lot of pent-up demand for these buildings, but they are just sitting there empty,” he said.

Along with loan requirements for buyers, the FHA guidelines include several new regulations for developers and investors as well. Among them, developers seeking FHA financing can no longer build within 1,000 feet of a highway, freeway or “heavily traveled road;” within 3,000 feet of a railroad; within a mile of an airport; or within 5 miles of a military airfield. Projects also may not be built on designated wetlands or within flood zones.

In addition, the FHA will not finance projects on property with an unobstructed view. Under the guidelines, condo sites can no longer be within 3,000 feet of a dump or a landfill, on a Superfund site, or on property with “hazards or adverse conditions,” such as high groundwater levels, unstable soils or earth fill.
“I understand that the spirit of the rule is to get infill in more pristine areas, but (under these guidelines) the whole South Waterfront would not have happened,” Anderson said.

FHA’s new guidelines also require projects to be at least 50 percent pre-sold before the agency will provide financing. That means there must be an executed sales agreement and evidence that a lender is willing to make the loan.
“This pre-sale thing is making a lot of buildings sit empty because they can be 30 or 40 percent occupied, but they can’t get FHA financing. So I think the Realtors would like them to lower that number,” he said.

Other requirements stipulate that projects must be deemed as primarily residential real estate; no more than 25 percent of a property’s total floor area can be used for commercial purposes; no more than 10 percent of a property’s units can be owned by one investor; no more than 15 percent of a property’s total units can be 30 days or more past due on condo association fees; and at least 50 percent of a property’s units must be owner-occupied or sold to owners who intend to occupy them.

Giles Rebholz, a mortgage consultant with MetLife Home Loans, said that while these permanent guidelines may not be good news for some, the temporary measures included in the guidelines might actually help stimulate the market.

For example, through the end of this year, the pre-sale requirement has been lowered to 30 percent. “It does do some good things to boost that low down-payment segment of the market,” Rebholz said.

In addition, FHA loans for the new construction of high rises are easier to obtain. The concentration of FHA loans available for new construction and conversions has been raised to 50 percent, and up to 100 percent on existing projects, as long as they meet specific criteria, Rebholz noted.

In the long run, the permanent measures benefit institutions like MetLife Home Loans because, as an FHA-approved lender, they give the institution greater control in the approval process, Rebholz said.

“It has actually gotten easier for some of the larger, national banks to get projects FHA approved, so it’s not all bad news. It just may change who people are working with, and that can be a good thing,” he said.

Under the new guidelines, MetLife can issue an approval within two or three weeks rather than the previous norm of six to eight weeks. The requirements don’t apply to detached condos, so those are much easier to approve. And a one-year wait on applying for loans for condo conversions no longer applies, Rebholz said.

However, others who deal in the market are concerned about the long-term negative impacts. With condos experiencing a 10-percent loss in value in 2008 and a 10.4-percent drop in 2009, Cooper said, the new guidelines may drive those losses even deeper this year.

“If we can’t get the financing back on track, that will continue, and I think, as an industry, we are in serious trouble,” she said.

[zilfondel]

So it would appear that FHA won't provide lending for any condo project in any core major city in the USA. As most have freeways, "major roads," and railroads in them.

It also appears to have gutted about 25% of the city of Portland out of this financial tool, as we happen to have several major roads and railroads going right through the heart.

Wonder if "railroads" also applies to underground freight and/or subways??? Streetcars? That would be too awesome! I don't know much about lending as I'm not in real estate, but it would seem to suck a lot of money out of a funding mechanism for infill development. Rail lines may end up being a liability and need to be torn up again and be replaced by buses. Good-by MAX! :cool:

[Leo]

So it would appear that FHA won't provide lending for any condo project in any core major city in the USA. As most have freeways, "major roads," and railroads in them.

Well, if you want the government to guarantee your debt, you can’t be too surprised if the guarantee comes with some stipulations on their terms ...

It’s difficult to make the case that condo developers in major cities *should* get any government help right now, since most cities already have a glut of unwanted condo units. I don’t really want my tax money being used to subsidize developer profits to put up more buildings that will sit empty. Personally, I’d rather see the government use the condo bust to buy up underutilized real estate for parks and other public spaces.

[NJD]

^ ...and people don't understand that this is one of the major subsidies for suburban growth for the last 75 years... that and the tax deductions, infrastructure grant process, and... oh, never mind. I'm gettin' on my soap box again...

[bvpcvm]

Well, if you want the government to guarantee your debt, you can’t be too surprised if the guarantee comes with some stipulations on their terms ...

It’s difficult to make the case that condo developers in major cities *should* get any government help right now, since most cities already have a glut of unwanted condo units. I don’t really want my tax money being used to subsidize developer profits to put up more buildings that will sit empty. Personally, I’d rather see the government use the condo bust to buy up underutilized real estate for parks and other public spaces.

I see your point about new developments, but doesn't this apply to current condo owners who want to sell as well?

[Leo]

I see your point about new developments, but doesn't this apply to current condo owners who want to sell as well?

I don't think so ... Most of the text highlighted in purple appears to be "new regulations for developers and investors." There are probably new requirements for buyers, too, but that shouldn't be too surprising either because FHA loans were defaulting at very high rates before - (What do you expect, with only 3% down in a declining market?...) They had to change *something* ...