Scottsdale-based developer Geoffrey Edmunds usually flies from Arizona into John Wayne Airport one day a week to oversee construction of the condominium towers he’s building in Irvine with partner Opus West Corp. of Phoenix.
But on one trip this month, he didn’t spend his time looking over the progress of the 105 condos at 3000 The Plaza, the third and final high-rise his Geoffrey H. Edmunds & Associates Inc. is building with the Irvine office of Opus at the corner of Jamboree Road and Campus Drive.
Instead, Edmunds spent his time trying to sell just one of the condos.
After some hands-on negotiations with a potential buyer, he ended up closing a sale of a single condo at the 15-story building. The buyer was from Singapore and was looking for a second home,and planned to pay cash for condo.
“I negotiate some of the deals myself. Sometimes it helps for the builder to be there,” Edmunds said.
As is the case with more traditional single-family homebuilders,not to mention the nearly 15,000 Orange County homeowners who have their homes on the market,sales are a scarce commodity for the county’s crop of condo developers these days.
There are five towers in Irvine and Santa Ana under construction, totaling about 700 condos. Less than a quarter of those condos,which sell for $600,000 to nearly $2 million for penthouses,reportedly have been sold.
Sales for those condos have run from about $490 per square foot to $840 per square foot, according to data from the Costa Mesa office of Hanley Wood LLC. Reported sales figures for those projects actually have fallen since mid-summer, a result of increased cancellations.
One developer,Nexus Cos. of Santa Ana,late last year opted to halt sales altogether for Skyline at MacArthur Place, the pair of 25-story towers it is building in its hometown, to wait for the buyers to come back to the market.
A renewed sales push from Nexus is expected to begin later this year.
Sales on Hold
At Irvine’s Central Park West development, Canada’s Intergulf Development Group and Lennar Corp. of Miami have had limited success with sales at their two-tower Astoria project. Sales at the rest of the 40-acre development’s low- and mid-rise homes were put on hiatus until the market improves.
Slow sales locally also have indefinitely postponed a number of other big tower projects, including those on the books in Anaheim’s Platinum Triangle and Costa Mesa’s arts district. A few towers proposed in Irvine around John Wayne Airport have been canceled altogether.
Several dozen towers still are on the drawing board across the county. But it’s anyone’s guess as to when developers might consider breaking ground next.
Edmunds said a confident builder in a good location,such as those developers planning projects within walking distance of the arts district around South Coast Plaza,might want to consider building with the anticipation of opening their projects around 2010 or 2011. By then the market should be ready to handle the additional high-rises, he said.
“I think 2008 is going to be a fairly difficult year,” he said. “It’s a soft marketplace. 2009 will start to get better, and we’ll start to get rid of (excess homes). By 2010, I think we’ll be getting back to a normal marketplace.”
Edmunds and Opus saw quick sales for their first two towers at the Plaza-Irvine development, with all but a handful of the 202 homes there selling, at an average of $1.1 million.
The third tower being built, 3000 The Plaza, has seen a slower pace of sales. After a few cancellations in the past six months, the 105-unit building,which will have a rooftop pool,now is about 40% sold. Before the credit crunch descended on the financial markets last summer, Edmunds said he was hoping that the building would be about 85% sold out by the time construction was done at the end of 2008. Now, he’s expecting the tower to be about two-thirds sold.
Buyers are afraid that if they buy a home today, prices will drop and they’ll have overpaid, Edmunds said. While some single-family homebuilders have begun offering buyers price-protection in the case of that scenario, he hasn’t done so for the condo towers.
“I’ve always said that the first buyers should be the ones who get the best deal, not the last buyers,” he said.
The amount of unsold tower condos in OC has a long way to go before reaching the oversupply seen in other once-hot markets that no longer are attracting heavy interest from speculative investors.
In San Diego, almost 6,000 tower condos were built in the past five years. Another 6,000 are expected to be finished by the end of 2009.
Around Las Vegas, there have been close to 100 luxury condo projects planned, which, if built, would add nearly 70,000 homes.
And in Miami, close to another 12,000 condos are expected to be added to an already overcrowded market this year, which saw some 8,000 condos finished last year.
That hasn’t stopped speculation from swirling around the few projects now going up locally.
Among towers currently under construction, the tallest project going forward also has the most questions raised about its future.
Nexus is close to topping out its construction of Skyline at MacArthur Place, the $350 million condo project it’s building at MacArthur Boulevard and the Costa Mesa (55) Freeway.
The project stands to be the tallest condos in the John Wayne Airport area. Construction for the project had been expected to be completed by the end of the year. About 45 of the project’s 350 homes had been sold as of last September, before the company announced it was halting sales until this month.
