Developer Sees Promise in Downtown Minneapolis Condo Market

Developer Jim Stanton on his renewed interest in the Downtown Minneapolis condo market, from Finance and Commerce:

Stanton estimated that there are about 300 new condos in various projects currently for sale across downtown Minneapolis — not counting units up for resale — a sign to him that it’s about time to build.

“We are out of bread and butter stuff, by that I mean stuff up to $375,000,” Stanton said of condo units remaining for sale in his other projects...

We've heard similar bottom calling sentiments from most major players in the downtown Minneapolis condo market - for sale inventory under $300-400K is dwindling, very few new projects are coming to market, etc. etc.

And, believe it or not, based on the reports we've recently reviewed, appraisers are seeing a good bit of price stability - mostly in the North Loop and Mill District - in the sub $300k price band.

There's more:

“We got rid of all the DITs [developers in training]. If they didn’t wake up themselves, the bankers told them that they were out of business. So I’m kind of optimistic,” Stanton said.

We can't disagree with his optimism entirely.  However, like the developers who've been forced out by tighter lending standards, the "bread-and-butter" buyer for the sub $375K stuff - typically long on credit, good income, but short on cash - may find a very different financing environment by the time these units make it to market.

That's because condo financing, already signifcantly tighter than in the height of the boom, is setting up to be the next shoe to drop, and we expect lending standards for condos to be get much tougher in 2009. 

Tighter standards, should they materialize, will undercut demand for any new projects.  We could be wrong on this, but consider yourselves warned.

09/09/08 at 01:16 PM Permalink | Comments (1) | TrackBack (0)
Filed Under: Condos & New Developments, Downtown, Minneapolis

North Loop Condo Pipeline Drying Up

Finance and Commerce reports on the status of Downtown Minneapolis' North Loop Condo Pipeline (Pipeline = industry-speak for planned and in-process projects):

The new, under-construction Twins stadium has been touted as a catalyst for new development. But so far, new development has been slow to take off in North Loop.

The previous wave of residential condo development has largely ground to a halt. And amid the bumpy economy, there isn’t much fresh development in the current pipeline around the ballpark, slated to open in the spring of 2010.

From the perspective of a developer, this not only bad news, but a sign of the times. It is simply too costly, too risky, or both, to launch any new projects right now.

And after the onset of the credit crunch last summer, just as for individual homeowners, financing new projects got tough:

right after late August [or] Labor Day, it was literally like a switch had been flipped and that market evaporated,” Minn said.

lenders making loans backed by commercial mortgage-backed securities (CMBS) loans drove much of commercial real estate financing in recent years, until the credit crunch hit last fall.

For the individual homeowners - mostly condo dwellers - in North Loop, this can be taken as a positive sign.  Though there is still some inventory overhang from completed projects with unsold units, and financing a condo has gotten markedly tougher, new supply will soon be limited to re-sales only, and should provide some pricing support and enhance their prospects for appreciation, even if a few years away.

05/28/08 at 10:07 AM Permalink | Comments (4) | TrackBack (0)
Filed Under: Condos & New Developments, Downtown, Minneapolis

Reports from the Field: Putting the 'Sex' in Sexton

We compiled the image above from this Sexton Property Listing, based on an anonymous tip:

So after reading the Strib article [on the Sexton] I went to the MLS to look at the history.

Turns out there is an active listing from one of the original owners that was foreclosed...I noticed in the details mention of “adult entertainment room”...indeed, the unit includes a lower level decked out in mirrors, couches and poles – a real business opportunity! Yikes!

Word to the wise: If you are going to install a sex room in your condo, be aware that a simple search of property tax records, or in this case a record of Sherrif's Foreclosures makes it easy to establish your identity as a known pervert. Not that we looked it up or anything.

And also:  This property is currently listed for $109,900.00 (reduced from $159,900.) Last recorded sales price?  $620,000.00.

That is a horse-choking $510,000.00+ loss for homecomings financial.

Bounty: Any agent who can come up with pictures of the AER (a feature that just begs for its own acronym) we'll run your next 3 open houses as posts, or get you some other similar publicity, right here on Behind The Mortgage.

04/29/08 at 03:12 PM Permalink | Comments (3) | TrackBack (0)
Filed Under: Condos & New Developments, Downtown, Foreclosures, Sexton, Twin Cities

The Mess at Sexton: More Details

Front and center in the business section today is a massive version of the photo above, via Star Tribune.

Accompanied by an article with more detail on the ongoing saga down at the Sexton, where only 36 of 123 units are occupied, and the entire project is a messy tapestry of fraud, foreclosure, and lawsuits.

"[The Sexton] doesn't come up in conversations very often, but when it does, the comment usually is something like 'That place is really a mess,'" Melchior said.

We'd expect to see some indictments for some of the principal actors soon, and one wonders whether the Sexton Building will be given similar treatment as the TJ Waconia, and is being set up for city administration/ownership/receivorship.
Sexton Building: That Place is a Mess [Strib]

04/28/08 at 03:50 PM Permalink | Comments (2) | TrackBack (0)
Filed Under: Condos & New Developments, Downtown, Foreclosures, Fraud, Minneapolis

Rumor Mill: Loop Calhoun Project in Foreclosure?

Updated 3/14 8.30a: To include comments offered by representative of the Loop Calhoun.

From more than one reliable source, we have it that the Loop Calhoun condo project is in Foreclosure.  The foreclosing construction lender is M & I Bank, allegedly defaulting party is Mathwig Development.

Again, this is to be filed in the semi-substantiated rumor mill - anyone with more details feel free to share in the comments.

Now, just because a condo project is in foreclosure does not mean it is dead - in many cases the lender simply takes over the development, and continues to market the properties - In for a dime, in for a dollar as they say.  Sometimes a bank starts by replacing the sales team and other key players, but there are dozens of ways this can play out, and we don't have nearly enough information to make any representations as to exactly how this will unfold. See update below.

Now, in some cases, projects in foreclosure might represent an opportunity to get a better deal on a purchase - whether that is true here is another matter entirely. Again, see update below.

UPDATE 3/14 8:30 AM: Late yesterday, we were contacted by a representative of the Loop Calhoun Project who offered up some details.  Though they declined to be named or quoted, but we can confirm that they are closely affiliated with the project at a very high level. So here's the scoop:

• That the Loop Calhoun is in Foreclosure, and that event occured last Friday.
• The foreclosure itself was characterized as an administrative action to expedite the clearing of disputed mechanics liens on the project resulting from the ouster of the original General Contractor.
• That it is business as usual at the Loop - no changes to management, the sales team, etc. are in the works.
• The bank is happy, they are happy, and it is business-as-usual down there, and sales are relatively strong. In other words, if you are a vulture, don't plan on having Loop Calhoun as a carcass to pick on - they aren't conceding dollar one on price.

Feel free to share any details in the comments or via email, but be careful - these are peoples businesses and livelihoods we are talking about, so any comments that smack of axe-grinding, piling on, etc. won't be tolerated, but if you have verifiable information to share, please do so.

03/12/08 at 05:24 PM Permalink | Comments (8) | TrackBack (0)
Filed Under: Condos & New Developments, Foreclosures

New Construction Auction: Builders to Auction off Hundreds of New Homes

And speaking of New Construction. On the 26th of January, roughly 200 newly built homes will be placed on the auction block at the Minneapolis Convention Center [PiPress]

A quick perusal of the homes offered can give you somes clues about where new construction is struggling the most - many of the properties are out in the (relative) sticks: Otsego, Montrose, Shakopee, St. Michael, Monticello, Hudson, WI, all are represented.

Also, most properties have a reserve price set (which we consider a fake auction) but more than a few are absolute, highest bidder wins auctions, so bring your checkbook.

Here's a link to the list (scroll down a bit.) We got sucked in and wasted 30 minutes.

01/09/08 at 01:12 PM Permalink | Comments (1) | TrackBack (0)
Filed Under: Condos & New Developments, For Sale, New Construction, Real Estate Negotiation, Twin Cities

The Nicollet Update, Reader Mail: If You Build it, Will They Come?

hat tip to Ben Ganje @ Your Urban Life for the image. Click for larger. Inspired by this Image, if you don't get the reference.

A reader, who has reserved a unit at the Nicollet, inquires:

"I really enjoy your website.  Could you please do an update or send me an e-mail personally regarding the current status of The Nicollet.

Do people generally get their reservation/deposit money back if a project and purchase agreement is cancelled by the developer, or should I be getting ready to contact a lawyer for assistance?  I would certainly hold my purchase agreement if I had confidence that something (whether residential or mixed use) was going to get built there, but my doubts are increasing.  What would be the best way to proceed at this point in time, in your opinion, hold tight or attempt to withdraw?"

It will be 45 stories high, with underground parking for 300 cars, 22,000 sf of retail space, 16,500 sf of banquet space, a 20,000 sf health club and spa, 437,000 sf of office space, a 260 room hotel and 177,000 sf of condos....

Right now the project and the preliminary concept design work product are in the hands of the real estate department and their brokers and agents to market the idea to tenants for the office space, a franchise for the hotel and buyers for the condomuniums.

10/22/07 at 12:35 PM Permalink | Comments (1) | TrackBack (0)
Filed Under: Condos & New Developments, Downtown, Industry News, Minneapolis, Reader Mail, Twin Cities

Lawyer Up! W Minneapolis Condos Receive Cease and Desist Letter From Starwood Hotels & Resorts

Way back in the spring of 2006, we ran a contest around these parts to name a condo project in Minneapolis' Whittier Neighborhood.  Maybe you remember.

The winning entry was the W, or WMinneapolis (the W for the Whittier neighborhood - get it?)  Anyway, turns out that Starwood Hotels and Resorts has now delivered a cease and desist letter to the owner/developers defending this "W" trademark.  Quoting from the letter, of which we have a copy:

...Plainly, you are attempting to capitalize on the fame and reputation of the Starwood W properties to mislead potential buyers into believing that WC is associated with Starwood, and that you will have the same superior quality and attention to detail that consumers have come to expect from Starwood's W Properties...

The letter goes on to accuse W Minneapolis of cybersquatting the wminneapolis.com domain, and demands that all W references anywhere be eliminated and/or destroyed.

Not that we know thing one about trademark law, but given that there is a darn good record of how the property was actually named, which in no way involved piggybacking on Starwoods "fame and reputation" we think they have a reason to fight this.

There's also an Irony Angle.  Starwood is involved in Ralph Burnet's (Chairman of Coldwell Banker Burnet realty) plan to convert the landmark Foshay tower into the "W Foshay" Hotel.  The agent marketing the condos, Derrik Dyka, is employed by Coldwell Banker Burnet.

But the best part? It's all Jason Derusha's fault, since he was the one who submited the winning entry.  We still have the email.

10/16/07 at 01:38 PM Permalink | Comments (3) | TrackBack (0)
Filed Under: Breaking News, Condos & New Developments, Industry News, Minneapolis, Name That Condo

Tipster: Mozaic Condo Project Dead

An astute tipster, who prefers to remain anonymous, dropped this in our inbox this morning:

Based on information from someone who works at BKV Group, the architect for the ill conceived Mozaic project, the developer has pulled the plug on this project, leaving architect with a large unpaid bill for design services.

Regular readers will remember our previous coverage of this project  - Mozaic Condos Circling the Drain - so this tip should probably serve as confirmation that Mozaic is finally dead.  Of course, with the architect getting stiffed, one does wonder where the buyers who had reserved units stand.  Did they get their earnest money back yet?  Maybe these guys can weigh in?

10/16/07 at 08:40 AM Permalink | Comments (2) | TrackBack (0)
Filed Under: Breaking News, Condos & New Developments, Industry News, Reader Mail, Uptown

Mozaic Condo: Circling the Drain?

From a reader, regarding that much anticipated high-end Uptown Development Mozaic.  You remember...the floors aren't floors, but sick-making new-agey names like "Fire" "Water" "Space" and our personal favorite, "Aura":

We were one of the first buyers at Mozaic and while strong supporters initially, our confidence and enthusiasm have waned in the 11 months since we forked over a huge deposit while absolutely nothing has happened. The process has been awful- no official updates from the developers since last fall, and repeated weak excuses when we contact them. Ground breaking has been delayed so many times we lose count- Nov., Dec, then Jan, then April, then late July, then pending Uptown Art Fair, then pending buss lines being rerouted. Since Clark Gassen's other two projects, Lumen on Lake and Edgewater have stalled (I read on a blog posting that Lumen actually has had negative sales and is still below 50% presold), I would guess this project will die. The last ones I expect to hear it from are the developers, they are doing all they can to keep it alive, when it has clearly redlined some time ago.

Pretty damning stuff.  Many of the high end "boutique" projects are struggling like this, with aspiring owners left in the lurch.  One does wish these developers would be more forthright with their plans.  Our advice, get some answers from the developer, or get the deposit back.  Any other info or tips can go right here.

Our tipsters will be chronicling the Mozaic's dramatic arc on their blog, here:
Our Mozaic Blog [ourmozaicblog.com]

07/30/07 at 12:55 PM Permalink | Comments (0) | TrackBack (0)
Filed Under: Breaking News, Condos & New Developments, Minneapolis, Uptown