Rowan Lofts Ready to Show Off New Tech for February Auction
Eric Richardson
[Flickr]
Caltech professor Dr. Charles Plott demonstrates the Intellimarket auction system to media on Friday.
DOWNTOWN LOS ANGELES — When the Rowan Lofts holds its 79-unit auction on February 8th, it'll be a far-cry from the fast-talking affair typically associated with the bidding process. Instead of fast-paced raises, a new simultaneous auction format will offer buyers a chance to survey offers across the board and weigh price points on multiple units.
The 206-unit Rowan is a high-profile conversion located in the Historic Core. The auction, scheduled for February 8, is a attempt to satisfy lenders by getting half the units into contract.
On Friday, the project invited media in to get a preview of the auction technology provided by Intelligent Market Systems. Company co-founder Bill Stevenson (who is also a partner in developer Downtown Properties) explained that the idea for a simultaneous auction system came out of the frustration that he saw buyers experience in real-estate auctions. A bidder might like two or three different units, but because each were auctioned in order, would be unable to choose between them. "No matter what sequence we put the homes in, bidders had a big problem," Stevenson said.
Stevenson partnered with Caltech professor Dr. Charles Plott to form the auction company, building off Plott's studies in the area. In 1995, an early version of the Intellimarket system was used to auction off $7.7 billion in airwaves for the FCC.
The big difference in the Intellimarket system is that all items for auction operate on a single clock. Any bid adds time to the entire auction, allowing buyers time to consider further bids. As the price on one unit rises, a buyer might switch his attention to another with a better value proposition.
Stevenson expects that buyers will make full use of this ability on the Rowan sale, coming into auction day with several units they are interested in. "I think there will be virtually no bidders who don't have multiple options," he said.
The Rowan auction will be the most units the Intellimarket system has been used to sell off. The firm expects the Sunday auction to take approximately two and a half hours.
The project comes to auction after experiencing a steep decline in presales, something Stevenson attributed to both market conditions and delays in getting the building ready for sale. Where the Rowan once had 120 presales, that number has now dropped to approximately 30. To successfully auction most of the 79 units up for bid, the developer hopes to get at least 150 bidders pre-qualified.
The auction will take place on Sunday, February 8, at the Rowan Lofts. Minimum bids start at $195,000. Those interested in bidding can visit the project's sales center at 460 S. Spring or visit the auction website.
Karin Liljegren on January 12, 2009, at 09:30AM – #1
I love the auction idea. It should get them to 51% so they can open. Pick like 10 units and the max prices you'd pay for each. It could offer a lot of amazing bargains, or there will be some competitive bidding to bring up the prices. Let's make this building a successful condo! It's a great building.
Ankur on January 12, 2009, at 12:34PM – #2
All the units do not come with parking.
Can you imagine how hard it will be in 5-10 years to sell a unit with no parking in LA?
Not to mention, the prices were relased in 06, and these new prices are only a 20% drop or so. Not realistic at all.
Bert Green on January 12, 2009, at 12:48PM – #3
The approximate sq foot rate of the auction starting prices is $400 a square foot. That's above current market price. I wish them luck, but can't imagine many people will buy in this economic climate.
BTW, there is parking, but it costs extra and is off site.
Ankur on January 12, 2009, at 03:04PM – #4
Ditto Bert.
Also, I was told by their staff that they were approved for Mills Act Status, but a lot was done to the lower levels of the building, including replacement of windows and tacking on of balconies on the 2nd floor.
Seems a lil sketchy to me. Any insight there guys?
Eric Richardson (@blogdowntown) on January 12, 2009, at 03:08PM – #5
This is just me speculating, but the faces of the building directly on Spring and on 5th are likely the ones historic status would be most concerned with. I don't see Mills Act caring about those inset changes. For instance, Roosevelt Lofts made serious changes to the light well areas of the buiding (going modern) and got Mills Act.
David on January 12, 2009, at 03:18PM – #6
I'm doing a Mills Act contract on a building right now and adding stuff is doable, especially since a lot of these buildings have had extensive changes since they were first built. Mills Act contracts are recorded against the property so if you don't believe the staff that the building has it (and the property tax breaks that go along with it), you can get confirmation by asking for a copy of the recorded contract.
Ankur on January 12, 2009, at 03:35PM – #7
Gotcha Dave. Quick question - You will only be able to figure out the "true" Mills act % deduction 3-4 months after the 1st group of people move into a property.
Any truth to that?
dogolaca on January 12, 2009, at 09:16PM – #8
@Bert Green
Which buildings are selling at significantly less than $400/sf ?
henry on January 12, 2009, at 10:23PM – #9
The prices here are actually just under 400/sq ft. A few comparables are going for sig less than 400 sq/ft (eg forclosures at the bad barry shy buidlings), but most are still asking mush more, esp the better buildings - south group, roosevelt, eastern c, etc. I think that this is a big enough discount at a nice enough building to move these units. Prices wont get much cheaper than this for a building like this.
Anon on January 12, 2009, at 10:53PM – #10
Let that place burn...I hope the auction fails miserably...
Eric Richardson (@blogdowntown) on January 12, 2009, at 11:26PM – #11
The Rowan actually had a small fire just a little over three years ago:
http://blogdowntown.com/2005/12/2095-now-thats-good-journalism
It seems like every construction project has a small fire at some point. The Roosevelt had several.
Bert Green on January 13, 2009, at 02:39AM – #12
"Which buildings are selling at significantly less than $400/sf ?"
None. There are few to no sales anywhere right now. Asking prices and market value are not lined up. Asking prices are higher than the market will bear, which is why there is no sales activity (made worse by the credit crunch).
No developer can afford to sell below a certain threshold, which seems right now to be at about $400 a sq foot. This is why so many places are going rental. They would rather not lose money by selling below that level.
So the only way to get anything at what should be the actual market value today is to get a short sale or a foreclosure. And that's not a good selection of units, for obvious reasons.
Russell Brown on January 13, 2009, at 08:16AM – #13
I do think Barker Block has (had?) units in the mid to high $300 per square foot. Especially the larger units have a lesser price per square foot. A good part of the unit price includes costs.
Not uncommon though that larger units can have location, view or other upgraded amenities.
Sincee kitchen, bathrooms and amenities add the most cost, a smaller unit often has higher per square foot cost. Just adding an additional 800 square foot bedroom and closet to a well equipped studio has relatively less costs that adding another bathroom or larger gourmet kitchen with European appliances.
Phil on January 13, 2009, at 11:56AM – #14
...anyone seen the HIGH HOAs for the Rowan?! Are buyers considering that in with their bids?
cc on February 05, 2009, at 09:40PM – #15
I stopped by last weekend to look at the place. The layout is fairly decent but the HOA + parking is simply out of this world. HOA is $670 and leased parking is $150 per space; this totals to over $1000 for two parking spaces. Even though there might be some Mills Act benefits on the property, the amount is not known and I don't think you can offset the high HOAs.
With $1000+ HOA, that is equivalent to $200k more expensive than single family homes. I wish them luck but I think Brockman offered a better deal. They gave you two deeded parking and a storage unit. Too bad that they turned rental now.