Condo excess has become rental excess in downtown Phoenix. The biggest symbol of “condo mania” downtown is 44 Monroe. 44 Monroe is the tallest condo tower in the state of Arizona and the third largest building in the state. Built too late for boom, it was finished in Fall 2008 and the developer went into bankruptcy in 2009. Wikipedia said before completion.
The building will feature seven floors of above-ground parking and 196 residential units, ranging in size from 780 to 4,800 square feet (450 m2). Residential unit prices range from $480,000 to $3.2 million.
The units didn’t go for anything close to the estimated $480K+. In fact, ST Financial, who purchased the project announced in October that it would sell the units at prices starting below $200K. Not one unit sold, so they are to be rented out instead:
Commercial real-estate analyst Bob Kammrath of Kammrath & Associates in Mesa said ST Residential is following a recent trend in which multifamily properties originally marketed as luxury-condo communities have gone rental.
Condo-to-apartment conversions hinder the ability of existing unit owners to sell their properties, Kammrath said, but could keep the project viable until the downtown housing market recovers.
“I’m sure that’s the hope,” he said. “The problem is, the rental market stinks, too.”
It is interesting to note who owns ST Financial:
Unlike the Resolution Trust Corp., which the federal government formed to dispose of failed lender-owned assets two decades ago following the savings-and-loan crisis, ST Residential involves the FDIC and a group of private-equity firms led by Starwood Capital Group.
Do you get the funny feeling that somehow taxpayers are going to end up on the hook somehow for losses here?
[Hat tip L!]