The Cosmopolitan… If you were my client I would say “WAIT”!
Cosmopolitan on the Park
Since my last post on The Cosmopolitan, my tune on the project has changed dramatically! Why is this?
Several things actually. First and foremost is pricing!!! This project is almost like a tale of two cities. You have the city of $600 a square foot and then the city of insane pricing of $700 to 1199 a square foot!
When I wrote my first post on this project it was directly after the Cosmopolitan had their grand opening. After the first week and a half they had 32 sales, which is pretty typical with the euphoria of any new project. As of Monday morning of this week….they are at just 33 sales!
Let me start with my main issue and that is their pricing… It is higher than the new building Insignia in Seattle! Seattle’s condo prices have always been higher than Portland’s and I know that condo market very well up there. The first tower of this dual tower project is only 60% sold after a year and a half of marketing. This is a building that offers stunning Elliot Bay views. Speaking to my fellow www.Condo10.com friend and condo specialist Jim Stroupe of the Stroupe Group, he said the downtown condo market in Seattle is being driven by Amazon (a downtown headquartered company) that will be bringing in over 50,000 jobs to the downtown area. My point here? Isignia has not been a huge sellout ( only 60% of tower 1), even with the awesome amenities being offered (see tour below) and the downtown job force. In addition, many of the sales at Insignia have been Chinese investors, something we don’t have a lot of in Portland.
The Cosmopolitans pricing up to about the sixteen floors for two bedroom units is very high in my opinion, but above the sixteenth floor it just gets ridiculous! When Insignia, which I believe will be a superior building, is selling for $700 to $800 a sq. ft and The Cosmopolitan jumps to over $800 a square foot for the NE 19th floor unit, something is wrong! On the SE corner units the pricing is at $1,507,000 for unit #2015. This is $850 a sq. foot! And it quickly jumps to over 900 a sq. ft. Pricing from the 19th floor jumps $88,000 per floor! Crazy!
For comparison sake, if you go back a year and a half and look at Portland’s best, most expensive condo sales, you only have 2 condos that sold in the $800 a sq. ft. range and one of those was the penthouse at 937 which was $805 sq. ft. The penthouse PH3 at The Metropolitan sold for $690 sq. ft.! Most of the top 20 sales were in the $500 to $700 range…and these are some of the best units in some of the best buildings like The Metropolitan, The Casey, 937 and The Henry!
My second issue with this project is the marketing of the project itself. I believe it has been very thrown together and not very well thought out. The developers have not been overly agent friendly (they are paying buyers agents 1% less than Insignia is paying the agents in Seattle) They have not presented this project in the most professional manner. They currently do not even have a website up and running that shows buyers what they are getting for their overpriced units. Going back to Insignia (who has hired the Mark Company to do their marketing) they show buyers in many ways what they are getting, from aerial views from each floor to a video like tour http://www.insigniabybosa.com/#/tour . These are things that should be done before you start selling a multi million dollar project! I would be much more inclined to drop down $1,500,000 if I could get a visualization like this instead of just a few samples in a showroom. Once again Hoyt has chosen to use their in house sales force. In addition, they are forcing buyers to get pre-approved with an individual at Wells Fargo… who, as I understand, happens to be married to the Sales manager at The Cosmopolitan… no conflict of interest here?
What am I doing with my clients? If they are looking at units in the $500 to $600 a sq. ft. range I think that is marginally ok to make a purchase because if the market runs up, they will eventually be at market price…a risk though. Anything that is above $700 a sq. ft… I will be telling them to wait or I will find a unit at The Metropolitan,937, The Casey or one of the other very nice buildings in town. Here is a thought. Instead of paying $1,950,000 for a 1773 sq. ft. non -penthouse unit at the Cosmopolitan, you could spend $1,700,000 for a penthouse at the Waterfront Pearl that has great water views and night city light views and 3300 sq. ft.! One more thing to add here. The developer is asking $3,757,000 and $3,883,000 for the 2 penthouses with amazing 28th floor views. If you remember a while back, the penthouse at The Westerly that was priced $1,000,000 less, had the most spectacular views in the city (4 mountain and city view) and it didn’t sell at that price!
Bottom line….In my opinion, this building is way overpriced and I will be telling my clients…and others to wait. They will have to bring their prices way down! For those who have already put down earnest money, I feel bad because there are no escape clauses in the Hoyt Street in-house contracts that allow for them to bail if the developer reduces prices. I especially feel for those 6 buyers out of 33 who paid $800 to $1000 a sq. ft. With any luck if the developer does reduce prices maybe, just maybe if they have a heart, will reduce your prices as well!
For me personally, this is a tough situation because I believe with correct pricing I could easily sell $10,000,000 to $15,000,000 of this project and it would put me in a nice situation when the project closes in mid 2016. Instead, I would rather protect my clients best interest! I believe that if buyers held tough, over time the developer MUST reduce the prices to something in the realm of Portland condo pricing!
Brad Golik is a condominium specialist in Portland and has sold condos in both Portland and Seattle.
You can find him at http://www.LuxuryCondosofPortland.com