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When the auction ended at 5 p.m. on Sunday at the Sheraton New York Hotel, the remaining hopeful bidders for one of 54 Solaria condos on the block seemed variously dispirited or stubborn despite discounts that averaged 45 percent off the listing prices.
But their mood hardly could have matched that of the condominium’s developer, Joseph Korff of ARC Development, or of the auctioneers, Real Estate Disposition (REDC). By the anticlimactic close after nearly three and three-quarter hours, even the typically frantic hand gestures and shouts of the auctioneer’s floor personnel had waned to wan facial expressions.
Although people connected with REDC put a happy face on the results, noting how rare it was for a building to sell as many as 54 condos in a matter of hours, rather than years, “at prices within 5-10 percent of retail,” everyone on the sell side had to be disappointed. Here’s why: The asking prices of all 54 units, which averaged 1,500-2,000 square feet and as much as 3,000 square feet, ranged from $660,000 to $4.35 million. By my new calculations (see previous post with caveats), list prices of those units totaled $71,905,000, with 45 apartments were more than $1 million.
When the hammer went down for the last time, the total bid was $39,900,000–55 percent of the list price and, therefore, a 45 percent discount. The average price per square foot was a mere $440, and only four units went for $1 million or more.
As they were led from the auction room, successful bidders were beaming, embracing and kissing. But they didn’t focus on a phrase the auctioneer uttered throughout the session: “Subject to seller confirmation.”
I don’t know and may never find out how many of the apartments finally obtained the developer’s assent, but he’s in a bind: Now that the market has spoken, literally, either he hangs on to his unrealistic hopes and takes his losses later or absorbs those losses now.
What if, instead of whatever it may have cost him to auction the properties, he simply had reduced the prices long ago or even now?
More than his bank account are at stake. As everyone knows, numerous developments are in serious trouble following the collapse of Lehman Brothers, and their owners have to be scrutinizing Solaria’s auction with more than passing interest.
Moreover, REDC also has quite a bit a stake. If the auction is considered successful, there will be lots and lots more business for the company in the New York area. It also must have wanted to recoup its marketing expenses (at least one full-page ad in the Wall Street Journal, plus the retention of not one, but two, public relations firms, including the estimable Howard Rubenstein) that must have exceeded half a million dollars.
I suppose by REDC’s measure, the auction was a success. I do wonder what Mr. Korff and what you, Dear Readers, think as well.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022