Canal Station units held back?

Today I got this note from a reader,

I don’t know if you heard but Canal station has stopped selling units. It has about 30 units left and the developer decided to hold
them unit January 08. Apparently they were selling so well and fast that they thought why not keep them and sell them for a lot more later.

About Matt

Matt , Urbnlivn's publisher, has a love for lofts with industrial features and new construction condos that is only eclipsed by his passion for outdoor sports and urban living. Phrases such as “polished concrete” and “exposed brick” are music to his ears. You can also find Matt on Twitter or skiing.

  • http://www.mikeindustries.com/blog/ Mike D.

    I’m no expert but that doesn’t seem to make a ton of sense. The only time you’d ever hold back units midstream would be if they *weren’t* selling well and you thought the market would be considerably hotter in X number of months.

    If a complex is selling extremely well, you simply *raise the asking price* of the remaining units. That way, you continue to lock in your profits before market conditions can change unexpectedly and everyone who has already bought a unit is all the happier they got in at a lower price.

    I’m not an agent so I could be missing something obvious here, but this just doesn’t make a ton of sense.

  • http://www.mikeindustries.com/blog/ Mike D.

    I’m no expert but that doesn’t seem to make a ton of sense. The only time you’d ever hold back units midstream would be if they *weren’t* selling well and you thought the market would be considerably hotter in X number of months.

    If a complex is selling extremely well, you simply *raise the asking price* of the remaining units. That way, you continue to lock in your profits before market conditions can change unexpectedly and everyone who has already bought a unit is all the happier they got in at a lower price.

    I’m not an agent so I could be missing something obvious here, but this just doesn’t make a ton of sense.

  • http://www.thehighpointblog.com Robert

    I actually called about Canal Station a while back and this corroborates what the sales agent told me then. I asked her why they might do something like that and she said that it was because in two years they would be able to sell them for quite a bit more than what they think they could sell them for now.

  • http://www.thehighpointblog.com Robert

    I actually called about Canal Station a while back and this corroborates what the sales agent told me then. I asked her why they might do something like that and she said that it was because in two years they would be able to sell them for quite a bit more than what they think they could sell them for now.

  • joe

    That is the most Ridiculous thing Ive ever heard…with that logic why would any developer ever sell?

    My bet is the Canal Station is hurting.

  • joe

    That is the most Ridiculous thing I’ve ever heard…with that logic why would any developer ever sell?

    My bet is the Canal Station is hurting.

  • http://www.mikeindustries.com/blog/ Mike D.

    Robert: Again I offer my admission of ignorance on both this particular situation and situations like it, but I’d need someone to explain to me how this makes sense before I actually believe it. I definitely believe that sales agents could be trying to create the appearance of scarcity and demand, but I simply don’t see how *actual* scarcity and demand would lead to the holding back of units for a good eight months. Time is money, and inventory in Ballard has been increasing tremendously with at least four huge buildings going up lately.

    You said the sales agent told you they’d be able to sell them for a lot more in two years, and of course that’s true in any steady real estate market, but to what end? Why not hold them back 10 years?

    Again, I do believe that if they are holding them back, it’s to increase profit. I just don’t believe that it’s current demand which is causing that.

  • http://www.mikeindustries.com/blog/ Mike D.

    Robert: Again I offer my admission of ignorance on both this particular situation and situations like it, but I’d need someone to explain to me how this makes sense before I actually believe it. I definitely believe that sales agents could be trying to create the appearance of scarcity and demand, but I simply don’t see how *actual* scarcity and demand would lead to the holding back of units for a good eight months. Time is money, and inventory in Ballard has been increasing tremendously with at least four huge buildings going up lately.

    You said the sales agent told you they’d be able to sell them for a lot more in two years, and of course that’s true in any steady real estate market, but to what end? Why not hold them back 10 years?

    Again, I do believe that if they are holding them back, it’s to increase profit. I just don’t believe that it’s current demand which is causing that.

  • Maggie

    I keep hearing that Canal Station is doing well, so this surprises me. I think Mike is right- why hold them back when if they could truly sell out and keep your earnest money NOW through 08?

    On a side note, I am really shocked that not a single person on this blog has even mentioned the cluster that is Noma. What the hell is going on with that project? It was supposed to be finished last September… and it’s still covered!

  • Maggie

    I keep hearing that Canal Station is doing well, so this surprises me. I think Mike is right- why hold them back when if they could truly sell out and keep your earnest money NOW through 08?

    On a side note, I am really shocked that not a single person on this blog has even mentioned the cluster that is Noma. What the hell is going on with that project? It was supposed to be finished last September… and it’s still covered!

  • Peckham

    “On a side note, I am really shocked that not a single person on this blog has even mentioned the cluster that is Noma.”

    Or the Blomain on Aurora, or the Lumen, or Hjarta, or… What is the sales status and progress on the various projects in Seattle that represent increasing inventory and lagging sales?

  • Peckham

    “On a side note, I am really shocked that not a single person on this blog has even mentioned the cluster that is Noma.”

    Or the Blomain on Aurora, or the Lumen, or Hjarta, or… What is the sales status and progress on the various projects in Seattle that represent increasing inventory and lagging sales?

  • r

    - Canal Station is almost sold out. Phase I sold out very quickly and Phase II was 50% sold on opening day. They only have 30 units left….they are far from struggling.

    – Noma is over 80% sold. they only have 2 bedrooms available.

    This strategy is probably used by both hot and poor selling condo developments. A lot of hot selling condos hold back units: Olive 8, Bellevue Towers, Washington Square. They end up getting quite a bit more for the units they hold back. Poor selling developments may use this strategy also in hopes that things may turn around in the future.

  • r

    - Canal Station is almost sold out. Phase I sold out very quickly and Phase II was 50% sold on opening day. They only have 30 units left….they are far from struggling.

    – Noma is over 80% sold. they only have 2 bedrooms available.

    This strategy is probably used by both hot and poor selling condo developments. A lot of hot selling condos hold back units: Olive 8, Bellevue Towers, Washington Square. They end up getting quite a bit more for the units they hold back. Poor selling developments may use this strategy also in hopes that things may turn around in the future.

  • r

    Dan – Which new construction projects in Seattle are you referring to? The bottom line is that garbage developments are not going to sell.

  • r

    Dan – Which new construction projects in Seattle are you referring to? The bottom line is that garbage developments are not going to sell.

  • Cameron

    The only logical reason I can think of for a developer to hold back is for them to behave a bit like a flipper. Wait for some demand to build up and then put a unit or two on. Also, if a building is going to close 1-2 units a week, by dragging that out the developer can get a steady income stream that may increase if prices go up.

    However, it can also be that with so much supply on the market a developer chooses to bolster prices by cutting back on that same supply.

  • Cameron

    The only logical reason I can think of for a developer to hold back is for them to behave a bit like a flipper. Wait for some demand to build up and then put a unit or two on. Also, if a building is going to close 1-2 units a week, by dragging that out the developer can get a steady income stream that may increase if prices go up.

    However, it can also be that with so much supply on the market a developer chooses to bolster prices by cutting back on that same supply.

  • jo

    LOL @ Dan

  • jo

    LOL @ Dan

  • chris

    I’ve been wondering about the financing as well. Every mortgage broker/lender I speak with tells me construction financing for condos is virtually nil now in seattle, yet we continue to see starts. Vulcan is Vulcan, but what about the others?

  • chris

    I’ve been wondering about the financing as well. Every mortgage broker/lender I speak with tells me construction financing for condos is virtually nil now in seattle, yet we continue to see starts. Vulcan is Vulcan, but what about the others?

  • richard

    A smaller project at 9090 Ravenna was listed on the MLS over a year ago, then delisted. The building sat empty. Now, the units are for sale at 25% more than the initial asking prices. 100+ DOM and none have sold.

  • richard

    A smaller project at 9090 Ravenna was listed on the MLS over a year ago, then delisted. The building sat empty. Now, the units are for sale at 25% more than the initial asking prices. 100+ DOM and none have sold.

  • Maggie

    My apologies for not phrasing my question appropriately with regards to Noma. I’m not curious about the status of units sold there as much as I am with the builder and why the building itself has been so damned delayed. Regardless of how well sales are going, (I have two friends who have purchased there) they are so far behind on construction, and are so poor in communicating these delays to these buyers, it’s a wonder we aren’t seeing anyone blogging about it. I’m curious as to whether anyone has heard anything about the actual builder and the actual construction and why they are having so many issues.

  • Maggie

    My apologies for not phrasing my question appropriately with regards to Noma. I’m not curious about the status of units sold there as much as I am with the builder and why the building itself has been so damned delayed. Regardless of how well sales are going, (I have two friends who have purchased there) they are so far behind on construction, and are so poor in communicating these delays to these buyers, it’s a wonder we aren’t seeing anyone blogging about it. I’m curious as to whether anyone has heard anything about the actual builder and the actual construction and why they are having so many issues.

  • richard

    It seems counterintuitive that a “construction” company would hold units in inventory whilst they appreciate. Most companies want to get the current project sold so they can move onto the next. Why, if they wanted to hold vacant inventory would they not transfer it to a holding company so they could at least get it off their books?

    It’s not like the money and equipment they have tied up in vacant units isn’t costing them anything.

  • richard

    It seems counterintuitive that a “construction” company would hold units in inventory whilst they appreciate. Most companies want to get the current project sold so they can move onto the next. Why, if they wanted to hold vacant inventory would they not transfer it to a holding company so they could at least get it off their books?

    It’s not like the money and equipment they have tied up in vacant units isn’t costing them anything.

  • PhilW

    There is a difference between pre-selling and actually closing. I see holding back units as a bad sign at this point in the market cycle. Too many units are in the works right now.

    Also, during the late 90’s in CA, it was almost impossible to get anything but an investment loan, for buying units in a building that was more than 33% rentals. Made it really hard to sell in those buildings.

  • PhilW

    There is a difference between pre-selling and actually closing. I see holding back units as a bad sign at this point in the market cycle. Too many units are in the works right now.

    Also, during the late 90’s in CA, it was almost impossible to get anything but an investment loan, for buying units in a building that was more than 33% rentals. Made it really hard to sell in those buildings.

  • http://twitter.com/mattgoyer mattgoyer

    I hear Domaine has been held back as well. Can anyone confirm?

  • http://blog.mattgoyer.com Matt

    I hear Domaine has been held back as well. Can anyone confirm?

  • Bill

    Our company sells Canal Station on behalf of the developer, and the story you heard is true, i.e. the 30 or so remaining units are developer holds.

  • Bill

    Our company sells Canal Station on behalf of the developer, and the story you heard is true, i.e. the 30 or so remaining units are developer holds.

  • http://www.mikeindustries.com/blog/ Mike D.

    … which still doesn’t answer why.

  • http://www.mikeindustries.com/blog/ Mike D.

    … which still doesn’t answer why.

  • peckhammer

    “Our company sells Canal Station on behalf of the developer, and the story you heard is true, i.e. the 30 or so remaining units are developer holds.”

    Developer holds = weak market.

    Anyone buying a condo now better be buying for love cuz this is a until death do you part arranged marriage…

  • peckhammer

    “Our company sells Canal Station on behalf of the developer, and the story you heard is true, i.e. the 30 or so remaining units are developer holds.”

    Developer holds = weak market.

    Anyone buying a condo now better be buying for love cuz this is a until death do you part arranged marriage…

  • Jamie

    In regards to the questions Maggie had asked about Noma, I had heard about several bumps in the road that Noma encountered. First off they ordered their windows and I don’t know if it was a fault on Noma’s builders or the window company but they were ordered in the wrong color. They sent the windows back and reordered. The second time the windows came they were the wrong size. So instead of sending them back and doing it all over they just resized the window frames on the building to match the actual windows. Well that takes changing the permits. Then after all of that the copper wiring had been installed throughout the building and then was stolen overnight and that had to be completely re-done. Also the cement strike didn’t help Noma’s dates either. Many bumps along the road for Noma. Right now they are looking at the top floor people moving in Mid-May.

  • Jamie

    In regards to the questions Maggie had asked about Noma, I had heard about several bumps in the road that Noma encountered. First off they ordered their windows and I don’t know if it was a fault on Noma’s builders or the window company but they were ordered in the wrong color. They sent the windows back and reordered. The second time the windows came they were the wrong size. So instead of sending them back and doing it all over they just resized the window frames on the building to match the actual windows. Well that takes changing the permits. Then after all of that the copper wiring had been installed throughout the building and then was stolen overnight and that had to be completely re-done. Also the cement strike didn’t help Noma’s dates either. Many bumps along the road for Noma. Right now they are looking at the top floor people moving in Mid-May.

  • Maggie

    Thanks, Jamie. That’s exactly what I had heard as well- but only after probing around. The only parts of that Noma revealed to the buyers are the windows and cement strike, which I still find odd since the cement was already poured when the strike started. They’ve been giving buyers a close date, then waiting until the week before to announce a delay they’ve obviously been aware of for months- the copper theft was kept on the hush hush from the buyers, leaked out only at February meeting. I guess my question is, why are these construction projects allowed to string their buyers along with vague details? The lack of communication is stunning.

  • Maggie

    Thanks, Jamie. That’s exactly what I had heard as well- but only after probing around. The only parts of that Noma revealed to the buyers are the windows and cement strike, which I still find odd since the cement was already poured when the strike started. They’ve been giving buyers a close date, then waiting until the week before to announce a delay they’ve obviously been aware of for months- the copper theft was kept on the hush hush from the buyers, leaked out only at February meeting. I guess my question is, why are these construction projects allowed to string their buyers along with vague details? The lack of communication is stunning.

  • Jamie

    Maggie, there has been a lot of miscommunication on the part of Noma or the builders not telling the staff the truth on the dates. (I think it is the builder’s fault personally.) But it is coming back to bite them. Since the dates are so far out from the original closing dates many buyers are getting pushed back even further and they are telling Noma “No thanks” and getting their earnest money back. They were all sold out of 1 beds for a while and now I see 2 are available there. I could see more of this happening as Noma tells more and more buyers that their dates are geting pushed out even further. People are just fed up, understandably. However, I believe they resold one of the newly available 1 beds for a lot more than they originally sold it for. So it might not be too terrible for the developer but I wouldn’t want to be a Noma sales agent right now!

  • Jamie

    Maggie, there has been a lot of miscommunication on the part of Noma or the builders not telling the staff the truth on the dates. (I think it is the builder’s fault personally.) But it is coming back to bite them. Since the dates are so far out from the original closing dates many buyers are getting pushed back even further and they are telling Noma “No thanks” and getting their earnest money back. They were all sold out of 1 beds for a while and now I see 2 are available there. I could see more of this happening as Noma tells more and more buyers that their dates are geting pushed out even further. People are just fed up, understandably. However, I believe they resold one of the newly available 1 beds for a lot more than they originally sold it for. So it might not be too terrible for the developer but I wouldn’t want to be a Noma sales agent right now!

  • Carrie

    Does anyone know about the Ballard Condominiums? They were built in 2000 I think? Good building to buy into if available or am I better off trying to buy into some of the newer units that are coming on the market.

  • Carrie

    Does anyone know about the Ballard Condominiums? They were built in 2000 I think? Good building to buy into if available or am I better off trying to buy into some of the newer units that are coming on the market.