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A Sabine Condos Auction?

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UPDATE 01/05/2010: The Sabine auction has been confirmed.

UPDATE 02/28/2010: The Sabine auction results!


[youtube = http://www.youtube.com/watch?v=YBi6pVJR7m0]

This should be interesting…

In a conversation with a credible source I learned that CWS, the developer of the Sabine condos in downtown Austin, is on an almost certain trajectory to place the remaining units at the Sabine condos up for auction.

Information is a little spotty, but 20-25 undetermined units could be auctioned off in mid-October, just in time for buyers to qualify for the $8,000 first-time home buyers tax credit. The remaining units would be sold in the open market.

In February, a group of owners filed a lawsuit against the Sabine HOA, controlled by CWS, which has prevented any units from being sold since then.

This would be the second downtown Austin auction, the first being Brazos Place.

Updates will soon be forthcoming. 🙂

-Jude

p.s. As a current resident/owner, and former listing agent for the Sabine, I have a personal interest in this story. Investors and buyers desiring original pricing, unit availability, and insights into the building and specific units to pursue/avoid should contact me directly – judegalligan [@] gmail.com

What Will Replace American Youth Works?

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Thanks to a tip from Michael and then confirmed yesterday when I saw the doors and windows boarded up, Downtown Austin Blog has learned that American Youth Works has moved out of its warehouse loft space on E 4th.

The building is owned by Austin Charter Schools Inc.  I haven’t read anything suggesting that AYW was preparing for a move, so this wasn’t on my radar.   Please leave any info you have in the comments.

Downtown Austin Federal Courthouse Groundbreaking On September 2nd

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According the Statesman, the proposed Federal Courthouse at 5th @ San Antonio begins construction in less than two weeks.  Months ago $116MM of American Recovery and Reinvestment Act funds were allocated to the courthouse and, though seemingly moot, there continues to be strong opinions against the design and location.  I’m looking forward to its completion.  The new workforce occupying the courthouse will bring more economic activity to the retail shops within walking distance.

-Jude

Perspectives On The Warehouse District – Part 1

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Downtown Austin is largely defined by its districts, unique destinations bound by similar geography and form.  As it exists today the Warehouse District has significance as a cool place to visit, but it’s debatable if it has historic significance.  Capital view corridors, which place height restrictions throughout the much of downtown, are conspicuously absent over the Warehouse District and the low-slung properties are worth a fortune.  This brings up the discussion of should the Warehouse District be protected by landmarking the buildings.

ROMA has come up with an interesting solution. Property owners inside the Warehouse District are incentivized to sell their surplus density/air rights.  This would allow property owners to capture the value of their building’s entitlements without changing the streetscape. City Council is scheduled to vote on this solution, as part of a larger density bonus program, on August 20th.

Two of downtown Austin’s most active and respected stakeholders, Roger Cauvin and Michael McGill, have divergent opinions on what they would like to see happen.  They have graciously agreed to share their perspectives which I will publish in two parts.

From Roger Cauvin:

“While the Warehouse District is currently a great asset for downtown, I believe it can be an even greater asset if the city facilitates, and doesn’t obstruct, its densification.

Some of the sentiment for preserving the character and height of the Warehouse District stems from a reflexive resistance to change. In almost every mature neighborhood in Austin, long-time residents develop a fondness for the existing character of their neighborhood and fear that changes will disturb what they value about it. And new developments with sprawling parking lots and unimaginative designs lend credence to these fears. Nevertheless, these citizens give little consideration to the possibility that change can lead to neighborhoods that are more walkable, more vibrant, and more charming over time.

Downtown has usually been the exception to this rule. Downtown residents have generally embraced height and density. But downtown is not immune to resistance to change. As someone who grew fond of entertainment in the Warehouse District in the 1990s and has lived a block away for more than seven years, I myself fear the unknown – what will happen to it if it densifies?

Fortunately, observing the reflexive resistance to change in other neighborhoods has given me perspective. I know that I must put aside my fear of the unknown and realize that increased height and density in the Warehouse District will likely make it and the rest of downtown even more vibrant and even more walkable than it currently is. A greater concentration of residents and workers in the Warehouse District will increase the demand for, and viability of, pedestrian-oriented retail all over downtown. It’s important to recognize that the charm of the Warehouse District comes not just from its modest height, but its pedestrian orientation.

Former Mayor Wynn had a vision of 25,000 residents living downtown. He saw that radically increasing the number of downtown residents would yield many benefits to the core and to Austin as a whole. The Warehouse District is one of the few areas of downtown unencumbered by Capitol View Corridors. Restricting its height and densification would severely impact the potential for increasing the number of residents downtown to realize Mayor Wynn’s vision. Erecting barriers in an effort to preserve the height of the Warehouse District not only comes dangerously close to the NIMBY mindset pervasive in other neighborhoods; it also undermines the larger downtown vision that many of us share.”

Bel Air Auction Latest – Did The Auction Work?

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This past Sunday the Bel Air auction was hosted at the Hilton hotel.  I was out of town, unfortunately, and was not able to record the winning bids. Keye reported 300+ attendees.  All of the units had a winning bidder.

After Brazos Place, the Bel Air auction was the second high profile condo auction in Austin.  There was some speculation in my office that the undisclosed reserve would be roughly 2/3 of the original price.  My sources indicate that most of the winning bids were in the ballpark of 60% of the original list price, but these were all won “Sold Subject To Confirmation.”

Here is the shocker:  Of the 25 units that were auctioned at the Bel Air condos, only two of the winning bids were accepted! The Seller/bank was still negotiating hours after the auction and many of the units  may have added 5-10% on top of the winning bid [and on top of the 4% buyers premium] in order to meet the reserve minimum.

The auction rules clearly state that the Seller was allowed to set a reserve:

“All homes have an unpublished reserve price (Unpublished Reserve Price) which means that the seller has established an unpublished minimum selling price. The Starting Bid is not the reserve price. In order to become the winning bidder of a home, a bidder must have the highest bid and meet or exceed the unpublished reserve price. The highest bid is subject to acceptance by the seller (see ‘Subject to Confirmation’ section below). With respect to a high bid less than the seller’s reserve, the high bid and resulting purchase agreement/offer are subject to the seller’s acceptance, counter-offer or rejection during the auction, in the contract room, and/or within 3 days following the auction.”

The rules go on to state…

“With respect to a winning bid that is not immediately accepted by the seller, the auctioneer will inform the winning bidder that acceptance of their winning bid is ‘Sold Subject to Confirmation.’  The winning bidder acknowledges and agrees that winning bidder’s purchase/offer is subject to and contingent upon the seller approving the resulting purchase/offer, acceptance, counter-offer or rejection during the auction, in the contract room and/or within 3 days following the auction.”

Over the next couple of days we will see how the dust settles.  Because it was behind closed doors we don’t know how many of the auctioned units actually went under contract nor where the final negotiated price ended up for those units.  I wouldn’t be surprised if someone from the DAB readership was in attendance.  If so, please share your experience in the comments! 🙂

If we can confirm the final negotiated prices, then it appears we can expect the average clearing price at Bel Air condos to be in line with what I’ve been suggesting: a  25-35% discount is the magic number for a developer to quickly unload condos in bulk, in either the open market or the auction market.

When the undisclosed reserve is set too far above what the market is expecting it can ruin the effectiveness of the auction.  It’s situations like this that I suggest bidders bring a Realtor they trust – per the rules of the auction it cost bidders nothing – and they can help with strategy, understanding the project’s history, and negotiating when unexpected scenarios like this occur.

-Jude