There's a little more complexity to it I suppose, as pre-sales deposits can be taken after the completion of schematic design, but a further level of design is required for construction docs needed to get a bid from the contractor. Some developers would prefer to wait for a bid before deciding unit plans that might change should further value engineering need to occur. Short story, presales might need to wait a few more months for the construction contract and subsequential construction loan closing.
you may aready know this, just laying it out for the board.
For a project like this, the general contractor is typically hired on a negotiated basis (based on qualifications, approach, business terms, chemistry, etc.) during concept or schematic design, or at least design development. A good general can greatly improve the accuracy of the cost estimate and provide a lot of input during design.
...the national (lack of)financing for condo projects will have ramifications here. The bottom hasn't been found yet in our economy. I'm not expecting a turn around for another 18 mos. at the earliest. If it hasn't started/has funding, and it is housing, it won't probably start. Just my .02
That land sale was at something like 2,000 psf. They are not going to flip it for that much. The much better option would be to sit on it for years rather than having to recognize the loss on land now, which would be significant. In the mean time, the market could improve, the MC's management keeps their bonuses (often predicated on gains and losses) and hey, the might switch jobs and wash their hands of the whole thing. Just speculating of course, but I've seen this mentality in mezz lenders on "pier" loans going nowhere
Bellevueboss - I usually like your posts but in this case I semi-disagree. They aggressively acquired 5 parcels and had full schematics...etc. They sunk enough money to make me think they were pretty serious. However, I do note that we may have different perspectives on "serious" and that is totally understandable.
Flo - The sale for $2,000 psf was possibly to a third party. It really is not clear but selling 12,000 Sqft at $30 Million was ridiculous. If you factor out that transaction the purchase price is closer to $900 sqft for the land...the upper end of reasonable. I do agree however, that if teasing the market does not work it may be time to clamp down an hold for a couple years.
On a different note - I am still not a huge fan of condo's so close to the city core. I know I should be more open minded about it but just don't like the feel it gives a neighborhood (I sound like a 50 year old in the suburbs). I really struggle with the projects that are popping up in the Doc2 area. end rant.
I'm no financier, but the sale price might include the design documents and in-progress MUP.
I am a huge fan of condos so close to the core. I want to concentrate jobs, but I also want huge density of residents. Perhaps the balance should be 90/10 commercial in the absolute core and 60/40 housing at locations like 5th & Stewart. That's for ambiance, to supply a huge wave of pedestrian commuters, and to support the CBD's stores and institutions. Hotels too.
Since I started taking the bus through the business core, I had no idea how much pedestrian traffic there is during rush hour. I'm impressed. I'm also pleased to see how many people take the train (Sound Transit). I pass by King Station just as the 7:45 arrives from the south. Hundreds of passengers every morning. And THOSE all become pedestrians somewhere in the city!
Flo - just to clarify third party means unrelated. I was saying in my original post that the sale might be to third party or might be to a related party . If the sale was to an affiliate entity (usually transferred via quit claim deed) it is not legitimate to assume they need to hurdle that $2000 sqft mark. If it is a third party sale, well, the price was insane....
Basically, the sale of the 12,000 sqft parcel confuses me. It was sold it to another NY company but the OM I received indicates that the entire half block (38,880 sqft) is for sale. Leading me to believe it is related. Mhays is correct they are selling all the schematics and such with the land currently pushing a hotel only development. I don't have all the details since I did not return the confidentiality agreement to get the entire package....just the teaser and highlights...hence I can talk about it.
I really don't understand the purpose of the sale. The buyer may have to work with two sellers but again there is only mention of Multi Capital not the other party. I have been following these parcels since the monorail and the prices baffles me. There is no apparent tax benefit, they could be playing games with returns (but I doubt it). I wish I knew more.
It only really crossed my radar because there is a lot of land up for sale at the moment and I am working through a few pricing models.
I am not sure I am being very articulate and apologize. If I did not have to work I could focus more on this….
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