OK, the quick Montage box score: 33 units have closed including Unit 514 ($258 / SF) on Monday, leading to a 8.5% occupancy ratio. At least 34 cancellations have been recorded. That leaves about half the units originally under contract still AWOL. The sales office has moved from the rental location on 2nd Street to one of the townhomes, but their web site hasn’t been updated to reflect the move. In fact, the Montage has been pretty sloppy keeping their site current lately.
You guys love to talk about the Montage! The original Montage post racked up 237 comments, more than double the count of any other post in the blog’s history, and earned me the pet name of "Comment Whore" from Diane. But in order to discuss the condo’s everyone cares about and what the future may hold, we need to first take a look at the condo’s NOBODY cares about, the Belvedere. And maybe a quick side trip to the GSR, 280 Island, 100 Arlington, and 1200 Riverside.
I’m not sure how many units the Belvedere is supposed to top out at, or how many were actually completed, but the project sold 80 units. The vast majority of sales were to friends and family of the project, and only 1 of the sold units listed 450 N. Arlington as their mailing address. 20 units are listed on the Assessor’s Foreclosure list already (which is always a few weeks late) and I’ve seen scores of other units on the foreclosure track. My guess is that at least 90% of the closed units are in the process of going back to the bank. Belvedere isn’t even trying to sell units anymore, but they are leasing them.
REO units are starting to make their way back onto the MLS, and the asking prices give a hint of how the banks are valuing downtown Reno condos. Unit 302 originally sold for $250,000, $436 / SF, and is currently listed at $69,900, $130 / SF. Unit 516 originally sold for $275,000, $501 / SF, and is listed at $68,000, $124 / SF. Units 507 and 514 originally sold for between $200,000 and $250,000, and are currently listed for $63,000, $115 / SF.
4 units bought by the master developer went REO Monday. Units 1012, 1002, and 1015 each sold for $256,000, $466 / SF, and 912 for $248,000. The price the bank paid at a Trustee’s Sale is a pretty good indication of where they are going to list the units. PFF (Pomona Financial) took back these units for $46,500 each, $85 / SF. (As an aside, PFF is the also the construction lender on the project. This sale to the master developer took place after liens started piling up on the Belvedere. This sale, as well as another 4-pack sale that is also in default, just don’t pass the smell test.)
Over at the GSR, a Chinese investment group purchased a block of 11 REO units on 23 June 2009, and they are starting to hit the MLS. Unit 1780 was originally $249,423, $616 / SF, was purchase for $56,132, and is currently listed for $39,900, $99 / SF. 1770 was originally $292,658, $574 / SF, was purchased for $56,881, and is listed for $48,000, $94 / SF. Unit 1714/15 was originally $630,000, $500 / SF, was purchased for $141,454, and is listed at $85,000, $67 / SF. There are several other REO and short sale listings at the GSR for under $30,000, about $74 / SF. If you are interested here are the CCRs for the GSR. HOA dues are in the $.80-90 /SF/month range.
The are units going through foreclosure at the Palladio, 100 Arlington, 280 Island and 1200 Riverside. 1200 Riverside unit 1225 is the only REO listing I’m sure about. The 1304 SF unit sold in July 2006 for $267,000, $205 / SF, and is listed for $147,758, $113 / SF.
Which circles us back to the Montage. Corus Bank is the current lender / owner of the project, and they are in dire straights. The dead pool has an FDIC takeover this weekend to give them an extra day to digest the complexity of the situation. In any case, the unsold inventory at the Montage are about to become REOs, whether another institution swallows Corus whole or if the assets are parceled out. To date, the average unit has sold for about $280 / SF or about $280,000 per unit, about a 30% discount from their original contract prices of about $400 / SF . That is fairly in line with the asking prices from the January price sheet after the project went back to Corus, though asking prices may have come down a bit since then.
The GSR, though a different sort of property, shows that prices CAN decline to 15% of the original sale prices in an REO situation. The Belvedere, though not as prestigious as the Montage, shows that highrise condo units CAN decline to 30% (or to less than 20% if the newest 4 REOs list where I think they will) of their original sale prices in an REO situation. The big money question is how will the Montage units be priced when they return to the Market as REOs? $125 / SF or $125,000 per unit on average with $425 per month HOAs is my best guess.
So there, now I’ve really stepped in it! What do you think? At what price would you buy into the Montage lifestyle?
UPDATE: DowntownMakeoverDude responded early this morning, explaining his involvement with the Montage. For some reason, the comment went into "moderation", and I don’t have the power to retrieve it from there. So here is the comment from the Dude:
So now you think I am a freaking shill for the Montage? Jesus, I guess if you like something these days, you are a shill for it.
Fine, let me recap this, again. This isn’t the first time I have been asked this specific question on this blog.
During all of the Montage’s construction, I simply took photos of the progress and had a nice relationship with L3 Development and the staff, not unlike any other open dialog I had with other developers in town doing projects, and not unlike Diane going and taking construction progress pics of the Palladio when she did on this blog. He offered me tours, construction tours, etc, BUT I WAS NOT PAID FOR ANY OF THIS. In fact I had to beg them to let me in the building (developers never get the concept of free PR). I did it out of my own interest, just like Wingfield Towers, Riverwalk Towers, Townhomes at Holcomb Place, and every other development I took photos of/talked with the developers. This was the focus of my blog at the time, duh?
L3 Development appreciated and was impressed with the coverage I gave him simply out of my own interest, so Fernando approached the design firm I work for to redesign his web site, and we did.
That’s it. And I mentioned that on my own blog at least twice (See older news, http://www.downtownmakeover.com/oldernews.asp posting of 9/6/08 and 8/24/08) waaay back when the new site was launched, and even once on this blog. I am proud of my work and wanted folks to check it out. I never worked directly for the Montage and was never on their payroll.
We spent 3 months redesigning their site in mid-2008, and then didn’t do any further work for them. When Corus acquired the Montage, myself and the marketing / PR team were “let go” quite quickly and unexpectedly. Is that enough disclosure for you? Are you happy now that you know my whole life story?
At this point they haven’t even called me to change the address on their web site to reflect their new sales office. I had to find out they completed a new rowhouse model by dropping by The Montage last week on my own accord because I wanted to check out the pool deck furniture, no one even bothered to tell me. I was a little hurt by that, considering how much free coverage I gave them. I have received zero communication from the remaining Montage staff since the ‘grand opening party’.
I am not a SHILL for the Montage, just like I am not a Shill for downtown, and I resent that term.
Anyone who thinks I am a shill or spy or anything of the sort for the Montage, or anyone else for that matter, can take a hike.
Do you really think I would post stuff like this http://www.downtownmakeover.com/08-2-09-Corus-Bank.asp on a regular basis if I were a shill for the Montage?, L3 Development or Corus? Give me a break. In fact I was the first blog/news organization in town that broke the story that Corus put their Montage loan into a non-accural category, was the first to report Corus was acquiring the Montage, and I was the first to report Corus’ continuing problems, long before RGJ, Renorealtyblog, and others, and I even posted about the montagebuyer.wordpress.com website (on 3/20/09, older news page on my site), giving a warning to the Montage they “had better keep their contract holders happy because there is power in numbers.”
I like the project, I liked it before I designed their site, and I liked while I redesigned their site, and I still like it after Corus gave me the boot. I was never, ever paid by the Montage or anyone else to talk about their projects on my site. THAT is a shill, I suggest you look up the definition and stop insulting me.
Sep 6, 8:48 AM
Reno Ignoramus
Re the GSR:
Unit 1780 originally sold for $249,423. Purchased as an REO for $56,132.
Now listed for $39,900.
Unit 1770 originally sold for $292,658. Purchased as an REO for $56,881.
Now listed for $48,000.
Unit 1714/15 originally sold for $630,000. Purchased as an REO for $141,454.
Now listed at $85,000.
Umm, ok. I’m just an ignormaus, but can somebody explain this business model to me? The idea is to buy up a block of REO condo units, and then sell each one of them off at a loss?
Martin
Do not forget the Riverwalk trainwreck. You will recall the Riverwlak auction where the 1500 sq. ft. unit sold to the highest bidder for $70,000. Or $47 a sq. ft. And the builder had to honor the bid because it was a no-reserve auction, at least with respect to that unit.
If the Montage ever goes to an auction, a real auction, it will be an equivalent trainwreck. Those places will sell at prices that will make Fernando Leal’s original pricing look like the distorted creation of a deluded mind.
Grand Wazoo
Mike, another Hall of Fame post. Fantastic, u = da man.
MarkPort
Maybe they could turn the Montage into a casino.
Call it the GoldenPhoenixFlamingoHiltonSaharaReno.
You know, a tribute to the days when downtown Reno used to be interesting.
bondstevenbond
One major risk driving down the price of condos like the Montage is the concern that the most buyers fail to materialize and the remaining few are stuck with the entire HOA burden. So the question that i am asking myself is why should i buy at any price until the building is at least have sold? And even if I wanted to buy, why would the bank want to lend against that asset? Are reputable banks like Wells Fargo even lending to such buyers? Are Fannie and Freddie even guaranteeing such loans anymore? i’m guessing the only reason someone would want to buy these is if they are CERTAIN they can rent out the units with SiGNIFICANT positive cash flow.
PatentGuy
bondsteven – exactly right.
Even if it is free, do you have to pay for the entire building’s HOA fees (on the other hand, you could be president and entire board of HOA yourself, and vote that monthly assessments are $2).
But seriously, Mike (aka “comment whore”), do the lenders make good on the HOA assessments until new owners are in place?
DowntownMakeoverDude
I don’t understand how GSR can have HOA dues, isn’t the resort’s responsibility to maintain the property? So you are baiscally paying for partial maintenance of the property for visitors?
I saw a recent news story saying how profitable GSR was lately…is that just a fluff story so JP Morgan can unload it?
Corus Bank continues to seize properties from Developers nationwide. For example it just forclosed on a $130 million loan for a luxury space in Rancho Palos Verdes. It just acquired two major condo projects in Florida from developers much like the Montage was acquired. I know there’s two groups of partners looking to buy up Corus’ assets, one on the east coast and one on the west coast, and bids are due tomorrow…do you think a private equity firm will bid on Corus’ assets or will it go straight to the FDIC? What happens at the Montage then? Are those contract holders in limbo suddenly released? Or does it go into endless litigation?
I read somewhere that HOA’s at the Montage were paid by the lender for up to either six months or a year or something like that? Maybe that’s why the property still looks extravagant…but what happens after that time is up?
I know a lot of you like to trash the Montage, but I think the building turned out amazing, and I’d like to see it full of people one way or another.
CommercialLender
Mike,
“$.80-90 /SF/month range” – is this a typo? That’s $800 per 1,000 sqft unit per month, surely not??!! If so, stick a fork in this pig, it’s done. Over say $150/mo/unit would be unpalatable enough. Clarify.
I have asked the same HOA-dues-for-anyone-left-standing question regarding Somersett, where I used to own. Say 50% are built, of these 50% are sold, of those only 80% are current (making up, but you get my drift), then what HOA dues would naturally apply to those who actually own there? (BTW, vacant lots = $37.50/mo, improved but not sold = $75/u/mo, CO’d and/or sold = $150/u/mo.) They say $150/u/mo per each lot to any prospective buyer, but in reality, unless they cut serioursly the amenities or expenses like cutting landscaping, plowing, maintenance, maybe golf and pool, then ‘ain’t no way’ the long term HOA dues are $150/u/mo, and ain’t no way I’m buying there again. Anyone?
Corus – another fork to stick in it. How they’ve survived this long might actually be a great MBA Finance study in years to come on Delaying The Inevitable Until A Sale Can Be Consummated, 101. Why I did not short them: A Prophetic Moran and His Money are Soon Departed, 401.
I wish I could tell what’s going on in my world, but can’t. Let’s say anyone who made a bet circa 2005-2007+ is taking a bath. Creditor anyone of a CRE mortage concern???
billddrummer
I’d buy into the Montage at $125/s.f., and $5/s.f. apportioned HOA burden.
Now, no one would lend me the money to buy because my credit stinks. But if anyone pays more than that (and doesn’t cap their HOA exposure) they are suffering from a koolaid hangover of epic proportions.
Catherine
The leasing office manager at the Belvedere says there are 176 units, but the assessor shows 180 (80 sold and 100 still owned by the developer). Did you know the Belvedere got a $30 million dollar “notice of sale” filed on it recently? One agent I talked to said the sell on those will happen in October.
That is going to be a mess if the Montage turns in to one big REO project.
Mike McGonagle
HOA may be the wrong term for the fees at GSR, but it is the same idea. 405 SF unit = $368.49 per month, $.96. 510 SF Unit = $438.20 per month, $.86. 1260 SF unit = $947.73, $.75. there is something called a Unit Maintenance Agreement fee called out in the CCRs, which may be additional.
Belvedere looks like about $.37/month HOA. Montage, Palladio and Riverwalk are about $.42/month. I did a calc at one point that at full occupancy, the Montage HOA would be funded by about $2,000,000 annually. Montage contract holders received a communication that Corus/MMC was going to pre-fund the HOA for a 6 month or year period, but I know of no confirmation this occurred.
Do banks keep current with HOA dues on their REO properties? Judging from the HOA liens filed on the banks, compliance looks spotty at best.
John Newell
I did some research on the GSR yesterday because an out of state relative was interested since the prices have fallen so low. Although I could find few details about GSR until I asked Mike, who was kind enough to give me some great information, I did read quite a bit about Las Vegas properties with similar hotel room condo schemes. HOA dues (which is what they are called, though it does seem to be a misnomer) in Las Vegas are running between $.55/ sq foot to $1.20/sq foot, and that fee is typically in addition to a maintenance fee (around $200); a “transient fee,” which appears to be an extra fee tacked on to unit owners who do not live in them full time ($100+); a hotel reserve ($100-$200), which is somewhat a mystery to me unless it is a type of security for the common areas, and mandatory insurance. My understanding is that a typical Vegas hotel condo has $800 to $2000 of fees due each month, and from what I can tell, GSR falls in the middle of that range.
Additionally, the CCR for GSR provides that the unit owner is responsible for replacing furnishings if damaged, non-functional, worn, or outdated. By the terms of the CCR, if the LCD flat screen in the unit ceases to function, then the unit owner is on the hook, not the hotel. Furthermore, if TV goes out while a hotel guest is in the room, the hotel can replace it and bill the unit owner. And perhaps most troubling for someone considering owning one of these properties long term, if the hotel decides to remodel, the unit owner is responsible for the cost of maintaining the unit’s furnishings in keeping with the hotel’s standards, meaning the unit owner will pay for the remodel of his/her unit. Please note that not all of these conditions apply to units that are not hotel room condos, i.e. are not managed and rented out by the hotel.
SkrapGuy
John Newell, if your relative buys a “condotel” unit at the GSR, he is among the Greatest Fools still apparently in existence. Buy a hotel room that you cannot manage, that you have to pay open ended exhorbitant fees on, and that you have no control over. The whole ‘condotel’ idea was a creation of the bubble, when Fools believed that anything related to real estate would appreciate at 10% a year for decades to come, and that “you can’t ever lose money investing in real estate.”
Seattleman
I actually looked at some of those GSR units when they first went up for sale. I passed. The only thing that was memorable about the whole deal was the good looking babes they had selling them.
DowntownMakeoverDude
Let’s not forget that you can only stay in the GSR units 28 days out of the year…that’s it. They aren’t even fully ‘yours.’
John Newell
SkrapGuy,
I agree. Even if someone could pay for the unit outright at $30k (which is what he was thinking), the open ended fees and upkeep costs are problematic, to say the least. From what I can tell, “condotels” would not be a good deal even if they were giving them away.
DownButNot Out
Mike, it’s nice to go back to the grand slam, that perfect game, the ‘Comment Whore’. Things should be coming to a head shortly, (pun intended) and we’ll finally view the last chapter to this project, which when filled will add 500-700 people to the downtown core.
To answer your question, I’d gladly pay 125K-175K, depending on the unit, and I’m willing to bet there are enough people that feel the same way to fill the building. If so, this would take care of the HOA dilemma.
DMD – I think anyone that has seen the construction or toured the completed facility has to realize it’s a quality project. And once filled it will hopefully kickstart more downtown rejuvenation.
Whatso
RI,
It seem Chinese investment group make mistake. Think market drop over too early. Now lose money 11 times. Perhaps think ok to lose money on each unit because make up in volume.
Lynne
I’m not one who is much enamored with the propsect of living in an apartment in downtown Reno, miles from the nearest grocery store, in a building surrounded by decaying bars, tee shirt stores, and pawn shops. I walked back to my car from an Aces game the other night, and it’s still pretty scary downtown at night. I understand not everybody feels this way. But it seems to me that this has to be part of any consideration of buying at the Montage, even at greatly reduced prices.
big baby
who are we kidding here??
Downtown is a freaking JUNKHOLE! Anybody who considers downtown Reno “desirable” is a dumb*** IMO
bob c
$0.41/sf @ montage is in line with other high
rises accross the country. Unlike real estate;
these fees never go down.
And fallen leaf condos in galena are getting
slammed because they carry a high tax base
due to sale at the highth of the bubble.
Heating/AC costs should be considered also
(smaller home)
Give me a montage unit sized unit in the
galena forest built in 1995.
DownButNot Out
Lynne,
It’s not for everyone. You see decaying bars, I see some vibrant night clubs, wine bars, casino life and small bistros.
As your driving (presumably) your car home from the Aces game, I’d be home already. Walking to concerts in the park, good dining, and an occasion Bighorns game appeals to me.I would also have faith that as time goes on the downtown will get more more cleaned up. It has to start somewhere though.
Even so, it works for me as it is, but I can understand why it doesn’t for everyone.
DowntownMakeoverDude
I love downtown Reno, and I am far from a dumbass. I drive less than 10 miles a week, and have all the amenities I need (including a grocery store) within a short walk or bike ride. I have endless entertainment downtown year round, what do you have, a neighborhood pub? I don’t mind the homesless or ‘scary’ people, I have lived in downtown environments my entire life including NYC, I think I can handle Reno. The real freaks live in the suburbs. Do some crime research.
The people who follow my site and who either live downtown or frequent downtown aren’t dumbasses either. There are a lot of people interested in living downtown, just not at the current asking prices. How do I know? In just one month on my web site according to Google Analytics, I had 140 click to my site from Google using the search keyword ‘Montage Reno Prices’.
So while all you have is your opinion, I actually have factual search data to back up my point that while YOU may consider downtown Reno a junkhole, that’s not everyone’s opinion. And while we’re on the topic of google stats, 130 clicked to my site from google using the term ‘Palladio Reno’ in just one month. And that’s just to my web site, which doesn’t include the hits to the Montage’s and Palladio’s actual web site, who both rank above me in google.
So don’t kid yourself, it’s fine if you don’t like downtown Reno, but I have web stats that prove there is ongoing interest in these properties, as well as downtown in general.
bob c
i like it too………..if it had reasonable
hoa fees and dues $.41 is the starting point;
i could envision close to 1K/month in near future
(2br/2ba unit)
Downtownjunkie
Does anyone realize what the Montage has already done for downtown? The fact that we don’t have a rotting casino anymore makes me happy.
I lived at the Palladio and LOVED IT for all the reasons mentioned by the downtown dude and Downbutnotout guy. Would buy a Montage in a second at $125-$150/SF.
big baby
haha that would explain why downtown reno has been in a slow decline since the 1970’s!
“I have endless entertainment downtown year round, what do you have, a neighborhood pub?”
actually I have a car and don’t mind driving! furthermore when it comes to amenities I have spanish springs town center in my backyard..
bestbuy, world market, costco, bed bath n beyond, johnny carinos, petsmart, walgreens, homedepot, genghis grill, see’s candies, chili’s, round table pizza, BofA, walmart, Kohls, post office, office max, pita pit, Qdoba, sports authority, game stop, Gnc, taco bell, sonic, LnL hawaiian BBQ, quizno’s, Red Robin, Ihop, At&t, KFC,old navy, dry cleaners, tapioca express, scolaris, michaels, and the list goes on..
ALL NEW that I can WALK to!
Did I forget about the casino they are building out here in the next 12-18 months? or a short drive to The Nugget.
what about the new eagle canyon shopping center being built as well? Or the new regional sports facility?
oh yea Reno is only a 15 min drive as well..
big baby
almost forgot!
I also have the sparks legends at the Marina that is a SHORT SHORT drive..
scheels, Saks 5th ave, converse, nike, addidas, harry n davids, sports bar n grill (can’t remember the name), La coste, bcbg maxima (wife loves it), movie theatre, banana republic,
Fudruckers, Jazz (louisiana style kitchen), Olive garden (love the breadsticks), Cadillac Ranch (bar n grill),
but wait.. there’s more!
michael Kors, skechers, vans, Gap, Kenneth Cole, Tommy hilfiger, Volcom, Game stop, guess, Samsonite, Jones new york, Kasper, Bose, and the list ALSO goes on..
big baby
maybe you should be the one doing the research?
Reno has a MUCH higher crime rate than Sparks..
so you fail again.
Reno Ignoramus
There must be at least 1000 comments that have been posted on this blog over the past 3 years about the condition of downtown Reno. Everything, pro and con, has been said. Ad nauseum in fact. Maybe we can just let that topic be?
I think Mike intended a discussion about the Montage and what would be a fair price to buy there. A few folks have responded and I find that interesting. About 2 years ago, in the midst of yet another discussion about downtown Reno, I said that I never thought the concept of people living in downtown condos was a flawed concept. I said I thought the concept of people living in downtown condos selling at $450 a sq. ft. was flawed. I agree with the others who have said that price these Montage units in the $125K-$175K range, and I think they will sell. Probably not for me, since my wife’s closet is the size of a small Montage unit…..:(
But at that price level, I think there is serious demand.
jogging
Any idea on what downtown Reno’s unemployment rate is?
DownButNot Out
DMD – that’s our version of our own color analyst. Kind of a cross between Howard Cossell and Howard Stern.
DowntownMakeoverDude
Sounds like your world is comprised of malls, chain restaurants, and over-valued stucco housing. I obviously don’t shop as much as you because all the features you mentioned were chain stores or chain restaurants. Don’t get me wrong, Legends is a really really nice mall. The best in the valley, but I am talking entertainment, not shopping at Target and Volcom. How close is the nearest movie theater? How about the nearest club with quality live music? Nearest whitewater park? Outdoor Amphitheater? Events Center with quality headliners? Nearest theater with Broadway plays and philharmonic? Do you have events like the Great Reno Balloon Race, Nada Dada, Art Town, Whitewater Festival, Blues and Brews Fest, an ice rink in the winter, a farmers market, concert halls, ultra lounges, a Roller Derby team, beer crawls, wine walks, Christmas festivals that shut down a whole street (Cal Ave) all within WALKING DISTANCE? Do you have cultural festivals like the Celtic Festival downtown and St. Patrick’s Day on Wells Ave? Where’s the nearest Triple-A stadium? (of which the Aces averaged 6,500 people per game this season). Do you have movies on the lawn at UNR and dozens of other fun University-based events? Have a planetarium out there in Spanish Springs? How about enough art galleries clustered together to make for great ‘art walks?’ And that’s just within walking distance of me.
Most Sparks and Spanish Springs residents oppose the casino you mention being built out there…of course if you LIKE hanging out in smoke-filled casinos, that’s your thing.
I’m happy you like driving…to each his own I guess…it’s obvious we both lead completely different lifestyles.
I’ve lived here 15 years now, and downtown is used more now by locals than any other time since I’ve been here. Yes, much of downtown has HUGE issues, and yes, parts of it are scary…but name a downtown in this country in a city over 250,000 that DOESN’T have scary streets you wouldn’t walk on at night? It’s part of downtown living. Anyway, every part of this city, including your neighborhood, has issues right now. I invite you to look at a forclosure map of YOUR neighborhood, and then a foreclosure map of my neighborhood…oh wait, what’s this, just a few foreclosures within a half-mile of me, and one big giant red blotch marking Spanish Springs! Interesting….
DowntownMakeoverDude
That’s a great point RenoIgnoramous. Sorry for my rant above but you know how I get when people call my neighborhood a junkhole.
I think it will just take the right price to sell at the Montage…one thing no one has referenced on here are the different unit types. Are you saying you would buy a tower unit for $125-$175,000? Now, what about the loft units, which have 16 foot ceilings, or the Pool Terrace Townhomes which are three floors tall and gargantuan in size, or the rowhouse units that are two floors high? I think the rowhouse units could be converted to live work units, with the street-level being retail/commercial. I think the Pool Terrace units could be converted to timeshares, since they all front the pool deck directly and have more of a ‘resort’ feel to them.
And the retail spaces in the Montage? Anyone know how much the Montage is asking for them? Or if they are even looking for retail tenants at this point?
FutureRenoHomebuyer
Nothing elicits comments like talk of downtown condos. That tells me that if prices ever get reasonable, it’d be a good investment.
Too bad the corrupt, incompetent companies running these buildings can’t get their acts together and profit from the obvious demand, even in this environment.
I guess it all comes down to price. To borrow from something I read the other day, falling prices are the solution to housing’s woes, not the problem.
Lurch
To each his own, I guess, but the description of Spanish Springs retail and dining options sounds just like North Platte, Nebraska.
DownButNotOut
FRH ‘Too bad the corrupt, incompetent companies running these buildings can’t get their acts together and profit from the obvious demand, even in this environment’
I have to take issue with that, at least in the case of the Montage development. As one of the harshest critics here and on the Montage Blog, never has that statement shown to be true. In fact, if the condos do sell in the 125K to 175K, it will be about 1/2 of what the building cost to develop on a per unit basis.
If these go for sale in that range, one thing’s for sure, you’ll never see another downtown building like this built for a long, long time.
Frisco
What the hell was Fernando Leal thinking, Down?
That he could come to Reno and sell $450 sq. ft. condos just like in downtown Chicago?
He built a place that was NEVER going to work in Reno. Leal mistook Sierra Street for Michigan Avenue and built a place that was financially doomed from the beginning.
Leal thought the bubble would go on and on. Turns out he was wrong about that too.
Noze4thenwz
Good link dated 9/3 about Corus and their Carribean Miami Beach project — or what use to be their project
http://www.bizjournals.com/southflorida/stories/2009/08/31/daily66.html
Perry
I like the Montage but prefer the more traditional layouts at the Palladio. Something I noticed at Parktower I also noticed at the Montage. The floors of the building seem to slope upwards from the center towards the outer walls. When I walked the hallways at the Montage, daylight could be seen coming under the doorways. When you swing the door open the sweep brushes the floor towards the end of the door. If they adjusted so you couldn’t see daylight you couldn’t get the doors open. While the floors concern me it’s the potential for noise that concerns me more. It’s hard to tell because the building is empty for the most part but fully occupied, would you hear people talking in their units because of the poor fitting doors? My other issue with the floors is the Pergo type flooring can’t lay truly flat and as a result creeks in some locations.
I do like the idea of downtown living and I think downtown Reno has something to offer. However, (please don’t bash me for this) there are just too many homeless downtown. I understand homelessness, alcoholism, mental illness etc. I just don’t think I could deal with it on a daily basis.
Raymond
Frisco is spot on. The notion of selling 1250 sq. ft. condos in downtown Reno for $600,000 was folly and was doomed from the outset.
Even with the nothing down, no-doc, interest only, liar loans that emobodied the bubble, these prices were delusional.
The Montage borders a run down bar to the east, another run down bar to the south, a 1950s era motel to the west, and the Kings Inn to the north. Not Central Park.
DownButNot Out
Frisco – I couldn’t agree with you more. I was taking offense to the word ‘corrupt’ in the statement. Replace it with delusional and I’d agree.
The fact is we’re damn lucky he was delusional, or we’d all be looking a high rise blight that would make the Kings Inn look like it just needed paint.
370 units built for $180M averages out to $486K per unit. There’s some spliff like the Penthouses and the retail, but plainly no one is going to build something like this in Reno for a long, long time.
Frisco
Yep, Down. When people get to buy (at auction or otherwise) in this building for $125/sq.ft. they will be getting a good product. (Although I find Perry’s comment about the slope of the floors quite interesting).As for the $180 million, well, that was funny money to begin with and most of it will go up in smoke as part of the trillions of dollars in funny money that has been vaporized by the bursting of the buuble all over the world.
DowntownMakeoverDude
Actually Down it was a $200,000,000 million loan for the Montage. I know the Belvedere’s construction loan was around $36,000,000. And they hardly did anything to the former Sundowner (no balconies, tiny fitness center, reused pool from original hotel). The Palladio’s ORIGINAL construction loan (before costs started going over budget) was $28.55 million from Merril Lynch, and that was when the building was 90% complete. The final loan was was for $50,000,000. That building was built from scratch.
Why are there huge differences in these loans? If the Palladio was built for $50,000,000, why couldn’t Belvedere do more with their $36,000,000? Or am I reading this/interpreting this totally wrong? I understand the Montage is a much larger building, but it wasn’t built from scratch. To compare, the Silver Legacy in 1994 cost $350,000,000 to construct.
Big baby
” name a downtown in this country in a city over 250,000 that DOESN’T have scary streets you wouldn’t walk on at night?”
I can name QUITE A FEW! Would you like the long or short list?
beer crawls,Celtic Festival ? You are joking right? These festivals are completely BUDGET beyond belief!
“a farmers market?” Last I checked sparks has a huge farmers market in victorian square.
“of course if you LIKE hanging out in smoke-filled casinos, that’s your thing”
Actually that would be Downtown Reno’s Forte!
IE: gold nugget, Cal neva, circus circus, eldorado,
Now those are some REAL SH*THOLES!
Big baby
Downtown Reno is OLD and DECAYED looking!
Higher unemployment that sparks
Higher Crime Rate than sparks
my personal favorites. Beverly’s, pawn shops, and BUSTED up GHETTO motels.. EVERYWHERE!!!
Riley
There is another issue with respect to the future of the Montage and that is the availability of mortgage money. FNMA has a requirement that a condo bilding must be at least 50% sold before it will take the mortgage. I suspect that the only source of mortgage money for Montage buyers has been Corus bank, which has been essentially loaning money to buyers to pay off itself. Once Corus goes down, this is going to be not a small issue. Buyers trying to buy a condo in a well established and fully occupied development are finding condo purchase money hard to come by. It will far more difficult at the Montage.
DowntownMakeoverDude
Hi Riley you are correct, in fact it’s not a ‘small’ issue right now for the Montage it’s a huge issue. The building doesn’t qualify for Fanny Mae or FHA loans, and Corus has been offering strictly 30 year fixed loans, meaning one actually has to have credit, and a down payment, to qualify…..I think this is one of the reasons so many contracts are in limbo. I was told once that there are folks in that group who want to buy, but cannot qualify. No ARMs or junk loans, or even 100% financing, gotta have a down payment…so I agree with you, it makes things tough there.
Grand Wazoo
“Corus has been offering strictly 30 year fixed loans, meaning one actually has to have credit, and a down payment, to qualify”
What a sad commentary on the current real estate market. You actually have to have good credit and a down payment now to purchase a home!
Shocking, simply shocking. A full-on outrage.
I suppose the Montage developers never factored this stunning financial development into their spreadsheets either.
bob c
Whether this be short lived or not….there
has been some ‘action’ in the mid to higher
end market
the ‘fire sale’ prices (at least temporarily)
seem firmer and asking prices are higher—kind
of tracing the stock market (disaster has been
taken off the table)
but reno has a higher glut of higher priced homes versus higher paying jobs, so this ‘floor’ may
not even exist there or just be a short lived ‘feel good’ period
what say you on the 350-550K market?
SkrapGuy
Spot on Wazoo. The whole downtown condo thing was pure and simple a creation of the bubble frenzy. Not just here in Reno but in a lot of other cities as well. Until the bubble came along, Reno got by just fine with Park Towers and Arlington Towers providing all the supply that was needed for downtown condos. Then the cheap money and crap loans came along and all of a sudden Reno needed the Riverwalk, the Belvedere, the Palladio and the Montage to meet the “demand”.
Like a lot of others things about the bubble, the “demand” was phony. It never existed. And even after the Montage prices come down to something sensible, it is still going to take years to fill that place up.