Lumen Condo Results Roundup

The Lumen Condos auction was held today. 19 units were being advertised, but only 16 were auctioned off. Coverage of the event is plentiful, so rather than rehashing, I’m just going to provide a few links:

Final bids averaged around 40% over the starting bids, but about 40% under the previous listing price.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

7 comments:

  1. 1
    Mojo says:

    Thanks for posting, Tim. Seems like the asking price in the Eastlake neighborhood (where I live) has been floating around $350 for previously owned condos to $450 for new construction. This is a steep discount…I wonder if any of the Eastlake condominiums that are less than 30% sold (Ruby, Equinox) will ever go to auction?

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  2. 2
    Mark says:

    I went to the auction, as an educational experience and potentially as a bidder – I did have max bids established for a few units which accounted for the higher-than-average dues (even if you adjust for cable, internet, cooking gas and hot water), comps, etc. I was most interested in a 3rd floor corner unit 2/1, T303. My max was $355K, but it went for $415K.

    The first unit auction – the smallest – was driven on emotion and excitement and the “winner” overpaid (but was ecstatic – good thing he didn’t stick around). F235 was interesting – went for $290K despite a current resale at $250K for the same unit next door, F237.

    They were also offering 2nd parking spaces for $19K, non-negotiable. If I “won” T303 or another 2BR, I probably would have bought a space, though my own model valued one at $15K.

    I spent a lot of time reviewing the public offering statement – and saw some items of concern in the admin and maintenance of the building. Delinquent dues (11% of residents + all the developer units), elevator and boiler maintenance well beyond projections, $424K/yr for property mgmt firm + concierge + prof fees (attorneys, etc). The prop mgmt firm even passed along late fees for not paying their Visa bill on time. The dues structure discriminated against the larger units, especially those that had less efficient use of space, and courtyards were included in the sf totals. It seems that some of the consumption items in dues should be based in part on a bedroom and bath count. I really think the developer crimped the larger unit prices with the existing dues allocation, which looks to be set in stone due to super-majority vote requirements, etc.

    For instance, M216 (one of the three 2/1.5 townhouses that went for relatively low $/sf – in part limited by nice city, Space Needle, EMP views that disappear when the Gates Foundation is completed) would have the owner paying $550/mo for property mgmt firm + concierge + prof fees (out of $816/mo total dues). One could buy a fixer-upper Seattle house for $400k and do a lot of renovations for $550/mo.

    There appeared to be a lot of investors there, with perhaps 1/2 or more of the units appearing to go to them. Looking at the rental comps in Lumen, it really escapes me how they can expect to not be very cash flow negative for a long while when dues are accounted. The only way to close it would be to pay cash, and suffer through a low return on it for years.

    Personally, I had to think as a primary residence situation (I currently rent in Snoh County, to be close to work), but approach it with an investor mindset to take emotion out of it. As much as I’d love to live in that area, I just couldn’t get the numbers to work. But I learned lot in the process, so we’ll see if any other projects go on the block.

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  3. 3
    Esol Esek says:

    As someone who lives downtown, the results of this were way overpriced. Lumen is a frightening building on top of a lousy overpriced QFC that pretends its Metro Market or Whole Foods, but is really an Albertsons at twice the price.
    Being next to the Opera, and Seattle Center is a great amenity, and I suppose being near the Gates Foundation will be a selling point, but otherwise, you are talking major traffic constantly, which means grit on ALL sides of the building, and you get none of the advantages of living near the downtown office or shopping core, although you can bike in, but walking is farther than cap hill. For me, if you’re going to go Queen Anne, you can find far better deals in smaller manageable buildings on quiet streets instead of this corrugated steel garbage can. People did not do their footwork.

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  4. 4
    Mark says:

    Good points. The Mercer traffic was noisy on the south side of the building (the 2/1.5 townhouses), another minus. I thought the noise on the NE corner, top floor was fine, however.

    As for pricing, in looking at comps I am still amazed at the $/sf – a majority of listings well above Lumen. Perhaps the Lumen auction results will be a reality check for some. My personal bid limit added about 10% additional downside for QA as a whole – still risky to be sure.

    Maybe I need to move downtown and rent for awhile before I commit to a condo. And I’ll take a closer look as Capitol Hill.

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  5. 5
    deejayoh says:

    I have to agree with the sentiment about the architecture of this building. I went to the sales center for Lumen pre-construction, and as a model – the building looked like it was going to be really cool. However, in reality – it looks like cheap soviet-bloc housing slapped on top of a grocery store. And for this they were charging premium pricing. Plus IIRC the HOA is about 20% higher per square foot than other buildings.

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  6. 6
    Amir says:

    I think it’s a cool building in a good location but agree that the auction results were overpriced, except MAYBE for that 2/1.5 that went for $355k, though its dues would probably be around $800 a month – equal to my starting rent in my current building (better location but no amenities and less than half the size) three years ago. Lumen’s only three blocks from McDonald’s though, that could be a great money-saver!

    Mark @2 – I saw that $250k unit on the MLS too and wondered about it, the seller dropped it from $330k a week before the auction which I think was strange timing.

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  7. 7

    Mark, Thanks for sharing your well-crafted insights, analysis and perspective on your experience at the Lumen Auction. We re-posted for our readers on our blog (and linked back to Seattle Bubble). You did a great job of demonstrating the value of approaching Real Estate deals without an emotional investment. Thanks for sharing your thoughts.

    RE: Mark @ 2 -

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