[Source: Jahna Berry, Arizona Republic] — Financial woes at a luxury downtown high-rise could hurt property values at similar central and downtown Phoenix condominium complexes. Last week, the lender for the Summit at Copper Square took the first step toward foreclosing on 74 unsold units in the multicolored tower near Chase Field.
Scottsdale’s Stearns Bank Arizona issued a notice of trustee sale, which says the units will be sold to the highest bidder on Oct. 14. While a notice of trustee sale doesn’t always end in foreclosure, it’s a signal that the developer is having financial problems. If the bank does foreclose on the units, those unsold condos in the 165-unit building will be sold at a discount, said Diane Drain, a Phoenix attorney. She likened foreclosures to a “black mold” that lowers property values within the building. And, “if you have several condo developments around it, and they are all in hot water, the black mold seeps out more and more and more,” she said.
The Summit at Copper Square opened near Chase Field in 2007. The condominium complex at Jackson and Fourth streets hit hard times after the Valley real-estate market tanked. The developer has struggled to make debt payments because it has been able to sell only 91 units. The Federal Deposit Insurance Corporation shut down the developer’s bank. And he credit crisis has made it difficult for W Developments LLC to restructure its debt with its new lender, Stearns Bank Arizona. The notice of trustee sale says the loan principal is for $44 million.
Developer David Wallach said that loans for the project totaled about $64 million. The developer paid $40 million and as of last year, they owed about $28 million, including interest. Wallach said that his firm is working to avoid foreclosure. “Smart developers look at all options,” he said.
The Summit’s immediate financial problems will probably not impact the fortunes of downtown Phoenix or Wallach’s plans to help build a proposed Jackson Street Entertainment District, a cluster of restaurants, nightclubs and music venues, he said. [Note: Read the full article at Downtown Phoenix high-rise’s woes may hurt other area condos]
[Source: Jan Buchholz, Phoenix Business Journal] — The Summit at Copper Square condominium project across from Chase Field in downtown Phoenix is scheduled for an Oct. 14 foreclosure sale. A notice of trustee sale on the 23-story luxury project was filed July 10 at the Maricopa County Recorder’s office by the public trustee, Fidelity National Title Insurance Co., according to information from Ion Data, a Mesa research firm.
The project was built by W Developments LLC. The Chicago-based firm’s principal, David Wallach, was planning to build another high-rise downtown and was partnering with pro sports investor Dale Jensen and others to develop the Jackson Street Entertainment District when the housing markets collapsed. The Phoenix Business Journal was unable to reach Wallach for comment about the pending foreclosure sale and his plans in Phoenix.
David Newcombe, a broker with Russ Lyon Sotheby’s International Realty who specializes in urban luxury condo sales, said news of the foreclosure was unexpected. “You know, I’m really surprised at that,” Newcombe said. [Note: Read the full article at Summit at Copper Square in downtown Phoenix hit with foreclosure notice]
[Source: Jahna Berry, Arizona Republic] — When the first condo owners moved into The Summit at Copper Square, Phoenix leaders hailed the luxury high-rise because it would bring residents who live, work and shop in the heart of the city. But two years later, the 22-story complex near Chase Field has millions of dollars in unpaid bills, from late utility payments to construction costs. The developer, W Developments LLC, said the project’s bank debt could lead to future problems, but downplayed other expenses. Meanwhile, residents, who paid anywhere from $300,000 to more than $1 million, are worried about their investments.
The Summit is the latest sign that the once-overheated housing market has put a strain on some upscale projects. At Landmark Towers on Central Avenue, owners say they are paying for costly tower repairs, but have lost perks such as valet parking. A few miles away, Orpheum Lofts owners filed a lawsuit over a permanent parking dispute.
David Wallach, principal of W Developments, characterizes The Summit’s legal and financial problems as “challenges” that can be overcome. And the firm still plans to help build a downtown entertainment district and to develop property near the Orpheum Theatre, he said. “The fact that we have challenges and continue to meet those challenges is . . . a true statement,” Wallach said. “That doesn’t mean that we are having financial problems,” he added, calling The Summit “successful.”
While several owners in the 165-unit building praised Wallach for giving them frank updates about the building, some worry about the future. Condo owner David Moskowitz hopes he still is able to sell his two-bedroom unit for $350,000 through a short sale. “I was so jazzed about this building,” said Moskowitz, who bought his unit last year for $650,000 as an investment property. Moskowitz said he would lose thousands of dollars. But real-estate agent Vince Zerilli said he was “very happy” with the penthouse he bought in 2008. [Note: To read the full article, click here.]
[Source: Jahna Berry, Arizona Republic, March 3, 2009] — When light-rail construction scared off scores of shoppers, many struggling downtown merchants considered the $1.4 billion line more of a curse than a blessing. Light rail began running in December, and what a difference a few months has made. Last week, several downtown business owners lobbied a transit agency to make sure that their shops would sit near a future light-rail route. Metro appeared before an influential downtown business group to talk about plans for a light-rail span that would link West Phoenix, the state Capitol, and downtown in 2019.
Metro is weighing several possible routes on the west end of downtown Phoenix. One option would put tracks on Jackson Street. Another alternative would use Washington and Jefferson streets, Metro officials told the Downtown Phoenix Partnership.
- Dale Jensen and David Wallach, two of the businessmen behind the proposed Jackson Street Entertainment District pushed for the Jackson Street option. The city wants an entertainment district, and a Jackson Street light-rail route makes sense, Wallach said.
- Bill Smith, who owns four downtown restaurants, including Stoudemire’s Downtown, argued for the Washington-Jefferson option. All of his downtown restaurants sit near the Washington-Jefferson corridor. “I have to disagree with my brother, Dale Jensen,” Smith said.
The banter was playful, but the stakes are high. Metro recently announced that initial daily light-rail ridership was nearly 20 percent higher than expected. About 30,000 boardings — one-way trips — are made each day. If a business is located near the future light-rail line, those trains could bring thousands of potential customers. [Note: To read the full article, click here.]
[Source: “Developer, Orpheum residents trade ire,” Jahna Berry, Arizona Republic] — The residents at an upscale downtown Phoenix loft project were booted from the building’s parking lot this weekend, days after some condo owners accused the parking lot’s owner of “wrongdoing” in court papers. On Friday, signs appeared in the Orpheum Lofts that said “due to an insurance issue” residents could no longer park in the next-door parking lot. On Monday, any remaining cars were towed, residents said.
This week, several residents at 144 W. Adams St. scrambled to find a new home for their cars. Noah Lewkowitz usually takes a bus to his job at a Tempe architecture firm, but is driving to work this week because he has no place to park. “It was nice to have my car right below my window where I can see it,” said Lewkowitz who rents a one-bedroom apartment. Residents will have to pay $40 to $80 a month to park in nearby garages, he said.
It’s the latest flashpoint in a long-simmering parking dispute at the Orpheum Lofts, where condo owners have paid anywhere from about $150,000 to nearly $1 million for their homes. Buyers purchased units in the refurbished Art Deco building and parking was included, residents say. The lofts’ developer, however, sold the lot to W Developments. W plans to build [Omega] condos on the parking-lot property but has allowed owners to park for free on the lot for a year and a half, said the company’s principal, David Wallach [also the developer of The Summit at Copper Square]. When the condos are built, each owner may have to pay more than $30,000 for a space in the high-rise’s parking garage. [Note: To read the full article, click here.]
[Source: Jahna Berry and Matt Dempsey, Arizona Republic] — The once-sizzling market for high-rise downtown Phoenix condos has cooled. Phoenix leaders have touted condo dwellers as a crucial part of downtown’s resurgence, saying residents would help sustain nearby shops and their foot traffic would inject the neighborhood with 24-7 vitality. Now, plans to attract those condo dwellers have questions marks.
Although downtown Phoenix real estate has fared better than housing on the suburban fringe, developers say condo sales have slowed to a trickle. Among the signs of a slowdown.
- CityScape, a $900 million mixed-use development, added apartments to the development and pushed back plans for condos to later phases of the project.
- Some planned condo projects have become apartments, including Jet, a proposed 36-story development, and Alta Phoenix, a 375-unit project under construction.
- Nearly 30 of 165 condos at the Summit at Copper Square are unsold. At 44 Monroe, 130 are sold and 66 are for sale.
Countywide, condos sales are down 37 percent compared with the market peak in 2005, when more than 19,000 condos were sold. [Note: To read the full article, click here.]