Tacoma Luxury Condo Project Headed for Foreclosure

Regular readers may recall this post from last October: Construction Defaults Over 10%, Tacoma Condos Empty.

Tacoma News Tribune: Downtown condo sales at a crawl

How’s the market for condominiums in downtown Tacoma?

“What market?” says Judy Mayfield, head of sales for The Esplanade, the 162-unit project on the Foss Waterway, now nearing completion.

After two years of extolling the virtues of the nine-story luxury project, Mayfield and her staff have yet to close a deal on a single unit.

Translation: “We were really counting on suckering 162 flippers into buying luxury condos in Tacoma on the false hopes that they could sell them for a profit in the perma-hot housing market. Now that the market has cooled and everyone realizes that nobody wants to actually live in luxury condos in Tacoma, we’re screwed!”

Apparently they were even more screwed than we might have guessed. Here’s a story from yesterday’s Tacoma News Tribune: $80 million Esplanade project faces foreclosure

An $80 million Tacoma waterfront condominium project, caught in the financial whirlpools of the recession, faces foreclosure by late August unless the developer can find new sources of funding.

The Esplanade, a nine-story condominium on the west side of the near-downtown Thea Foss Waterway, has until Aug. 21 to escape from the imminent foreclosure, said sources close to the project who were not authorized to speak publicly.

Just 10 of the 162 housing units in the building at 1515 Dock St. have been sold, and none of the retail spaces on Dock Street or facing the waterfront walkway has been leased.

According to the Notice of Trustee sale filed with Pierce County (pdf), the developer (Thea Foss Holdings, LLC) has outstanding obligations of $48,532,793.62 on the project. If I’m reading the document correctly, it looks like their financing required them to pay in full on February 1st. Apparently they thought they would have sold enough units by then to cover their costs. Obviously after having sold just just six percent of the units in over two years, they came up a little bit short.

(John Gillie, Tacoma News Tribune, 06.24.2009)

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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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

15 comments:

  1. 1

    SOUNDS LIKE SOME NICE APARTMENTS TO GRAB UP IN 2010 OR 2011

    Let’s guess on the potential deflated rental costs, $1200 for a luxury built two bedroom with a view, by then?

    By then, the owner, the bank, will chalk it up as a lesson learned; albeit, by then, the original bank will have gone under and now its another completely different bank with another name?

  2. 2
    EconE says:

    Luxury condos in Tacoma is a bit of an oxymoron.

  3. 3
    Kary L. Krismer says:

    RE: EconE @ 2 – LOL. Actually, I’m not sure if the old mansions would be considered “luxury” but there are some really nice houses in Tacoma built around 1900 or so. But to get to them you have to dodge pot holes. That city’s streets are really a mess.

  4. 4
    joe dirt says:

    Lesson learned, softwarengineer? Taxpayers will pay for this insane bubble project as the banks runs to barack for tarp money.

  5. 5
    Acerun says:

    It must be because of the tighten federal lending rules for condos or the code of conduct for appraisals.

  6. 6
    EconE says:

    RE:Kary L. Krismer @ 3

    Definitely. Homes built in the early 20th c. can be very gracious. There are some very nice brick homes down there from what I’ve seen.

    RE: Acerun @ 4

    Or maybe…just maybe…it could be that the bubble popped, and the condos really were never worth close to what they were asking.

  7. 7
    ARDELL says:

    EconE – My first thought was oxymoron. You beat me to it :)

  8. 8
    Eric Arrr says:

    Waitaminit — $80 million? Like, US dollars? For 163 units? In Tacoma?

    That’s $493k per unit just to build the place!

    And it looks like a freaking office building!

    Who was the contractor on that joint? They must’ve made a killing

  9. 9
    Ray Pepper says:

    RE: Kary L. Krismer @ 3

    Kary, where specifically are you talking about pot holes in Tacoma? I live in North Tacoma and have not seen any in years? The “really nice” turn of the century homes never have pot holes. Please educate me specifically so I can go check tomorrow. I believe you are talking without thinking.

    I used to live in Lynnwood, Phinney Ridge, Bitterlake, Bellevue, Kirkland, Renton, and Seahurst. To raise a family there is no better community then the Proctor District of North Tacoma. I suggest you come on out and we will go “look for pot holes” together.

    Ardell and Econe I have toured the Esplanade on the Thea Foss waterway. Yes, way too expensive for the times we are in however, none of you probably know the desirability of what has happened to that area. Between all the new restaurants, shops, glass museum, and Uof W Campus if you actually came out to look at it you just may change your tune as you seek out Kary’s potholes.

  10. 10
    Kary L. Krismer says:

    RE: Ray Pepper @ 9 – You’re kidding, right?

    http://www.king5.com/localnews/stories/NW_062309WAB-tacoma-potholes-SW.1c5318fb.html

    I’ve noticed the problem in several parts of the city, but I don’t know the names of the areas all that well. In some parts of town it’s like the pot hole repairs are on top of other pot hole repairs, such that there’s no real road left–just patches. There was one street intersecting K Street where they actually repaired it two years ago, but they just did the middle, and when I was driving over it last week it was obviously a poor repair job (sort of wavy). But there are other unrepaired roads in that same area. There are also a bunch on the right side of Hwy 16 as you’re heading toward the Narrows right after you get off of I-5, and I think some others over in the Hilltop area.

  11. 11
    Ray Pepper says:

    WOW, Kary. I guess I stand corrected….Tacoma being called”pot hole city” . I will look for them now daily. I know first hand I never see any in Proctor or downtown near the condos in question.

    I will report back. Knowing me tomorrow I will nail one and throw my CRV out of alignment………

  12. 12
    EconE says:

    RE: Ray Pepper @ 9

    Ray, if they were worth anything NEAR what they’re asking, sales wouldn’t be so dismal down there. It only takes half a brain to figure that out.

    Restaurants and shops don’t mean squat.

    Tacoma is like Long Beach, CA. Take that for what you will.

    Overpriced. Way overpriced. Kinda like that housebarge listing that is going on a year with only a paltry 30k drop from 560k. ;^)

  13. 13
    Ray Pepper says:

    House barge???…LOL you mean MLS # 28136912. Over priced? The seller doesn’t think so. What you dont see is this…… “Limited Service” Selling agent to work directly with seller. Please contact seller with all offers and showings. All info provided by seller and not verified by listing Broker.”

    Don’t shoot the messenger!

    BTW I agree ..Tacoma has a long way to drop still. Less then 7 years ago many of the homes in the 98403,98406, and 98407 were 80k-120k. They are all over 200k now.

  14. 14
    Tacoma Troll says:

    RE: Ray Pepper @ 13

    I agree Ray. Tacoma has a looooooong way to go. Look at the properties in Old Town (98403). Several million dollar prices homes. In Tacoma!!! Are they crazy? over 200 days in market for some with no price drop.

  15. 15

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