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Escala Tops Off

April 7th, 2009 · Comments · By Matt

It was an already shortened work day due to a dentist appointment and sailing so I couldn’t make the Escala topping off ceremony. Plus, I’m afraid of heights. I would have freaked out up there.

Fortunately they forwarded some pictures.

507974479 qu3Br S Escala Tops Off

507975740 GvHzk S Escala Tops Off

507977098 Nv7AD S Escala Tops Off

The Stroupe Group did make it and posted a brief write-up.

At this point I worry that Escala is going to run into the same problem as Olive 8, that is many people who bought pre-sale are going to be unable to close for one reason or another.

Updated: Seattle PI article on the top-off, Topping off of condo tower marks end of high-rise boom

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  • Mark W
    I don't disagree with the doomed sentiments. But presumably the developers can see the writing on the wall. Not knowing much about how these operations are structured, I have a "just curious" question.

    If some project is obviously doomed, why wouldn't the developer just stop the work and walk away rather than keep pouring money into the construction work. We've already got a gaping hole in downtown Seattle. Why not a partially finished highrise?
  • Josh
    It boils down to the development structure. If the lender withdrew they would just cap the project and walk away. Since the developer probibly does not have a lot of equity at stake it makes sense for them to keep working.

    The developer is probibly working on a combination of fee basis, small equity stake and some sort of promote on the back end. The Equity partner (REEF) and the lender have the most to loose.

    I suspect it does not make a lot of sense for the lender to stop funding. Once the asset is complete if they have to foreclose they can at least auction it...but a half finished building is a not useable. And REEF's investment managers have probibly already been fired so....whats the dif in loosing a couple more $MM.
  • Jeff
    Escala was far enough along that it's cheaper to cap the building and let it sit that it would be to abandon work and then come back and inspect and clean up what nature does in the meantime. Lincoln Square was just getting started when it was put on hold.
  • The MD
    Doomed. Period. Eh, Sam? Would you agree? You know it's true. C'mon, just be honest with everyone already... Could you at least do that?
  • ssilvy
    I am afraid you may be right, Matt. Between the "can't close" and the "won't close" (because they've rethought their buying goals or because living in that kind of place has become so unfashionable so quickly), the developer may have to dance around quite a bit, or dance all the way to court.

    I remember this project made national news for being the largest single multi-fam development loan ever issued - it was loaned by Fremont (now defunct). They didn't get a package of loans, just the one. Wonder how that's going for whoever holds the note now?
  • CameronRex
    Jeff - how trustworthy is that rumor mill? Its an interesting idea but I wonder how easy it would be to sell units if as part of the deal you can't move in until 'most' of the units are sold.

    I think this building might avoid some problems of Olive 8 if the interiors justify the pricing. That certainly is not the case at Olive 8.

    A problem this building DOES have is the plans already on the books for a twin tower condo right to the east which effectively could make 1/2 Escala's units hard to sell until plans are firmed up. Who wants to risk a Cosmopolitan-like problem in a much more expensive building.
  • Jeff
    Cameron - conversely, if you let the 1/3 sold units move in, and the rest sit vacant for six more months, then you run into that issue that's starting to plague Miami developments: The association can no longer cover overhead and has to start shutting down services, which further degrades value.

    For clarity's sake, the source of the majority of rumors are the construction workers who park in garages around the project. They tend to chatter with the attendants and valets quite a bit. For what it's worth, though, I did notice a big delivery of appliances a couple weeks back.
  • CameronRex
    Jeff - I see your point. Thanks for the explanation. Also, I'd find the construction workers a reasonable source. Will be interesting

    Justin, I think those towers are just on hold but who knows. And I cold easily see it being a decade. Personally the closest I would get to the east side of Escala would be a corner unit.
  • From "the rumor mill" I've heard those twin towers (Heron & Pagoda) are canceled. Also, it's likely that there won't be any new condo projects breaking ground for a couple more years. So, if anything were to get built there it would be in another decade or so considering the time also needed to go through the permitting/planning process. Granted, any buyer considering that side should still take the time to investigate thoroughly.
  • Jeff
    I work down the street, and the rumor mill was circulating stories that the developers were going to cap the building and let it sit vacant until most of the units are sold, and that could take a couple of years.

    I know real estate professionals don't want to hear it, but it's going to be some time before inventory lines up with demand. Thanks to the financial meltdown, there's simply not enough retiring boomers who can afford these.
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