Philadelphia Condo Auctions

After the Murano, The Phoenix, and CU 257, who is next in line?

Step right up, Ladies and Gentlemen, and see the might tumble. Large chucks of unsold, high-rise, new construction condos are flying out the door in Center City Philadelphia via auction. Although all will claim that market forces drove them towards the auctioneer, can they really blame the market as the sole culprit of a spate of auctions in Center City Philly?

The driving force behind almost any liquidation of unsold condominium inventory is purely financial pressure. Like from a bank. Or perhaps reverse pressure from a developer onto a lender to ease some debt. Either incarnation is usually highlighted by a low owner-occupancy ratio in a condo building, and one that perhaps has been on the market for an extended period of time. A lack of sales is brutal, as the resulting holding costs incurred by a developer is a killer. And it just keeps getting worse for a number of buildings here in Center City. Maybe "deep pockets" will stave off the auctioneers, but eventually, these units will have to have a major price shift, in order to once again garner attention from the buying public. Time alone isn't going to cure a lot of these wounds, as time eats away at a tax abatement, and scratches and dents become more common in buildings which have turned into glorified rentals.

There are indeed segments of the Philadelphia high rise condominium market with a supply that is simply overabundant. Simultaneously, there are pockets where supply is limited, and seller continue to drive the market- like west of Broad St. in the spring for condos under $275,000 are almost non-existent. But a fair number of condominium buildings in Center City may ripe for an auction. I saw more than one developer/owner of a large Center City condominium building at the Phoenix auction, and they were not at the auction for the heck of it. They were there to learn and observe how an auction might benefit their position.

By scouring the MLS for newer, unsold condominiums here in Center City, one can easily come to the conclusion that the success of the auctions at the Murano, Phoenix, and CU257 may indeed rub off onto a few other buildings here in town. More information on such buildings can be found by doing a Google search for say "Philadelphia condos".


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