Another Center City condo auction

By Alan J. Heavens

Inquirer Real Estate Writer

For the second time in less than a year, units at a major Center City condominium building will be offered at auction.

Thirty-six condos at the Phoenix, 1600-18 Arch St., are set to go on the block April 29: 18 one-bedroom/one-bath units; 16 units with one bedroom plus den and 1 1/2 or two baths, and two two-bedroom-plus-den/two-bath units.

Minimum reserve prices will range from $185,000 to $415,000. Some of the condos are unfinished, but will be completed for closing.

In June, 42 units were sold at auction at the Murano, the bluish glass-and-steel high-rise at 21st and Market Streets. Of those, 35 went to closing.

At the Murano, Jon Gollinger, president of Accelerated Marketing Partners of Boston, ran the show. He will at the Phoenix auction, too.

"I've grown to love this city," said Gollinger, who was scheduled to meet with the building's 119 condo owners Wednesday night before news of the auction became public Thursday.

The auction will take place at 7 p.m. April 29 at the Westin Philadelphia, 99 S. 17th St. Gollinger said the date was "deliberately chosen" to take advantage of the federal tax credits, which require that agreements of sale be executed by April 30.

Daniel J. Keating 3d, president and CEO of the Keating Organization, which owns the Phoenix, "didn't want to take any chances" of missing out on the tax credits, Gollinger said. Keating was traveling on the West Coast and was not available for comment.

Buyers who are eligible for a tax credit - up to $8,000 for qualified first-time buyers or up to $6,500 for repeat buyers who have not purchased a primary residence in less than five years - must close on the sales by June 30.

The minimum reserve bids are 47 percent to 39 percent below the last asking prices for the units, Gollinger said, adding that he expected the Phoenix auction to set a "pricing floor" for the units, just as the Murano's did.

After the Murano auction, 43 more units were sold there (41 went to settlement). Some observers think the hype spilled over into the rest of the Center City condo market, at least for awhile.

"The auction at the Murano condominiums changed prices within the building - not only in the eyes of potential buyers, but also from an appraiser's point of view," said Mark Wade, an associate broker with Prudential Fox & Roach. "I believe that latter effect has really cemented values at that address for a while to come."

Prudential Fox & Roach agent Jeff Block disagreed, saying that rather than change the market, "I feel the Murano auction-sale prices reflected what the market had become, and it was the event that enabled people to finally see that 2000-2007 was gone," pricewise.

Said condo developer/Realtor Allan Domb: "I think the auction helped the lender get paid down. It did not spur the market or change the situation."

Recent data for the eight-county region compiled by economist Kevin Gillen of Econsult Corp. shows a net price decline of just 7 percent since the end of the mid-decade real estate boom.

There are 267 units at the Phoenix, a 20-story, Georgian Revival-style structure built in 1925. For more than 70 years, it was headquarters of the venerable Insurance Co. of North America.

The building, a National Historic Landmark, was acquired by the Keating Organization in 2002 and converted first to rental apartments and ground-floor retail and office space at a cost of $73 million.

Along with a host of other local and out-of-town developers, Keating took advantage of 10-year tax abatements that resulted in construction of almost 13,000 residential units in Philadelphia starting in 1997.

Although residential developers initially focused on rentals, they began shifting gears almost exclusively to condo construction and conversion as young professionals and empty-nesters from the suburbs began saturating the market looking to buy.

In 2006, Keating began converting rental units at the Phoenix to condos as the leases expired - a process that continues today, Gollinger said.

After the regional real estate market peaked in the fourth quarter of 2007, condo sales in Center City began to slow. Many condos have been doing temporary duty as rentals until the housing market revs up again, catering, local experts say, to prospective buyers uncertain about housing values.

Still, since Oct. 31, 18 condo units at The Phoenix have gone to settlement - the last one a week ago, according to Trend Multiple Listing Service.

Sale prices ranged from $185,000 to $600,000, MLS figures show. Twenty-two units are currently listed for sale on the MLS.

The Phoenix auction could have the effect of boosting sales elsewhere.

"I don't think it will have any impact except perhaps to increase traffic at condo properties throughout the city," said Richard Oller, noting that his building, the Aria, at 1419 Locust St., continues to sell well.

"With or without an auction," Oller said, "the market will dictate price."

Contact real estate writer Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.