Prior to a couple of weeks ago, the last time I visited Escala was early 2009 so I was curious to see how the project has come along now that people are starting to move in and all the construction equipment is nowhere to be seen. Here are some thoughts from my most recent visit earlier this month.
The lobby is the grandest that I've ever seen in Seattle, perhaps even including the residential sections of the hotel/condo combos. It competes easily with some of the five star hotels like Four Seasons. The long stairway leading up the Club Cielo was accented with gorgeous Koa wood. The owner's lounge was beautifully designed and filled with handmade furniture, carpets, and curtains. This fine accoutrement was put together by the oh so fancy folks at Masins in case you want to deck your halls with the same.
I toured the spa, exercise room, cozy wine cave, lounge, and restaurants. Say what you will about Escala's prices (which I agree are overdue for reconciliation with the current market conditions), but the totality and quality of the amenities are truly impressive (even to someone who tours condos daily). Unfortunately, I wasn't allowed to take any pictures but the building will be available for public tours during the months of February-March (Luxe Life Tour) so you can see for yourself that this ain't your typical Seattle condo.
The sales center has released 143 homes and sold 78 of them (under contract but most are not yet closed). Closings just started recently with a few homeowners already moved in. In fact, one owner valiantly put out some Christmas lights on his balcony which looks a bit like an astronaut planting a flag on the moon since most of the other over 260 units are pitch black at night.
I asked the sales manager, Chris Stiebler, a few questions about Escala and below are his responses. I think you'll appreciate the detail and candor of his answers. While he obviously wanted to present a strong case for the project, you'll find he was also more forthcoming and specific than one might from the sales manager of a not yet fully sold condo project.
1. How are sales going at Escala? How many have sold?
Both traffic and sales have picked up nicely now that we have our product to showcase! You likely noticed our lack of advertising for the last 18 months as we focused on building the tower and conserving our resources (while riding out the recession). Prior to the slow down we had achieved 72 sales of the 143 homes that were released and since returning to market we’ve made 6 new sales in the last 45 days. The developer has always scheduled releases for Escala so not all of the homes are on the marketplace at this time. We intend to release more homes in the future as the market demands dictate. Our favorable capital structure allows us to release some of the inventory at a time when we believe there will be little supply available.
2. What do you say to people who like Escala but are worried about you dropping pricing the day after closing or the building turning into an apartment?
That is a valid concern given the price reductions, discounts, auctions, etc. that other developers have done in the recent past. Fortunately Escala is the last building to deliver within this real estate cycle, so we have had the distinct advantage to sit back and let the dust settle. Sure you can reduce pricing and continue to do so until the market starts to turn more favorable but I do not believe that to be a viable strategy. We wanted to revisit the value proposition all at once and when we were ready to sell with finished product. This is all affected by the competitive landscape, recent appraisals and of course, buyer demand. Our first concern is to our recent (and pending) homeowners and working through evaluations as appraisals come in, which is a process.
We are fully aware of the market trends and Escala has not been immune to the economy. We will make modifications to the home values as required but realize that any price reductions will be offered to our current home owners first! These closings and current appraisals help set the market for the building going forward. And as far as turning into Escala into apartments -that has never even been discussed. We are fortunate to have a significant amount of equity in the development and what would be considered a long term construction note so we do not have the financial burdens of other developments that have been forced to generate revenue. Besides we’ve already started some early closings to accommodate eager buyers (most closings won’t occur until early 2010).
3. When are you going to adjust your pricing?
I imagine all price adjustments would be completed by the 1st quarter of 2010. We are currently working with our pending home owners to confirm their purchase at Escala and reestablish the value proposition where warranted given appraisals, etc. We are also working with new homebuyers and based on recent sales, we feel that we are finding the market for Escala.
4. Does Club Cielo still have a mandatory $250/month spending requirement?
No we do not. That was implemented in the beginning; we always knew that as we drew closer to completion that the budgets would be reevaluated and the spending minimum may not be necessary. We have had our HOA dues reviewed by several third parties and we are confident that the amenities can be operated as envisioned by HOA dues alone without any need for minimum spends or supplemental revenues.
5. Who do you consider your closest competition?
Well, if you’re asking me for my opinion I would say single family residences in the surrounding suburbs. Consider that we designed Escala to be the ultimate “downsize” community with the features, elegance and comforts of a larger custom home. None of the other in-city condominiums offer these unique attributes such as large, private terraces; elevator vestibule entrances; expansive interiors; and of course, Club Cielo. But I know you are asking “in the public’s opinion” and so I would suggest Fifteen Twenty-One Second Avenue, the Four Seasons Private Residences and perhaps Olive 8 given some of their hotel amenities. But buyers all agree that each building is distinctively different and unique in its own right. Granted there are some similarities too but in general each project has it’s own relationship to the marketplace – you really can’t treat these condos like a commodity because there are not the same.
6. What is your favorite floor plan?
I would have to say that my favorite floor plan is a C home. It is a two bedroom / two bathroom, 1,600 sq ft home and features an additional 173 sqft. private terrace. Most people that walk into Escala will ask about the homes they see on the corners with the large decks; they are referring to the C home. We can offer these homes starting in the low $700k's, which is a tremendous value.
7. Anything else you want SCR readers to know about Escala?'
Just that Escala is a very unique vision and given the credit crisis, its likely to be the last of its kind for many years to come. We’ve been fortunate to have the financial structuring to ride out the recession and to have inventory available over the coming years (that’s why we’re phasing the releases). Personally, I feel the best values will be had in the next six months and then we’ll see the true market values form at this building and at others in our marketplace. Provided we all find the market, the larger issue will soon become rising interest rates and selection.
Escala Hard Hat Tour
Escala Update February 2007
Escala priority presale event
Escala: Cristalla's biggest competition?
Great stuff. Agree Chris didn’t try to spin too much. Will be interesting to see how much the prices will be adjusted. My only gripe is the denial of pictures. That seems counter productive since I’m a potential buyer and would have appreciated some 3rd party pics.
Their PR department is planning a huge unveiling of the Club and homes for the Luxe Life Tour so they wanted the exclusive release of the pictures.
one of the smaller units that closed in november was under six hundred dollars a square foot. i wonder how the Escala buyers who paid nearly twice that are feeling right now? i heard a large group of them has retained an attorney.
I find it odd that ppl who bought an asset an a mutually agreed price hire attorneys when the value of the asset goes down. Do they hire attorneys when the value goes up?
it seems like Escala already started discounting if you take a look at the prices of the units that closed.
i would buy at Escala now the prices are coming down except for one thing – i just cannot stand the interior decor. its way too fussy and over the top. the display center was bad enough but the photo’s of the lobby and the club that i’ve seen sealed the deal for me.
i can see how masins furniture would fit in perfectly since it matches the fussy ‘faux antique’ style of Escala. its probably fine for others but personally i just couldn’t put up with walking through that lobby every day and so i will keep looking.
that home that closed in November under six hundred per sqft was one of the first buyers. And look at the contract price v closed price- like the post said they are reducing the contract prices of the existing buyers first, prior to closing. Seems logical to me, make your current buyers happy first then if they pass on the savings keep their $$ and go to market with the new price!
Nice post Wendy. I’m anxious to see the activity after the 1st of the year.
I think you missed the true story during your, “Tour.” Don’t be fooled by Escala’s, “Smoke and Mirrors.”
The “real” story is that over 25 Escala buyers have formally rescinded their contracts with the Escala since the POS was changed. Hardly any of the original buyers want to stay.
All the current 7 sales have been cash deals. Loans are not possible because of the time-share agreement the developer has placed in the POS.
The developer, Midbey wants to position the Escala as a great value, but we that have been there from the start (Before Chris Stiebler even knew what that the Escala was) just want out.
I am willing to walk away from my hefty 5% down. It will be up to our lawyers to settle this for the current buyers, but it will be a battle.
We buyers are up against a developer who will not work with us, so hopefully you will all publicly hear about this as the story unfolds.
The things mentioned above were carefully not revealed during this “Interview” between Wendy and Chris Stiebler.
Are you saying that the Developer has not offered you a discounted price? I find that hard to believe for two reasons: first, it just makes common sense like the post stated and second, when my wife and I toured there in December they made it clear that the current contract holders are being offered best pricing. The recent sales validate that claim; cash or not doesn’t matter, lower price is a lower price.
I understand those from the “beginning”, as you put it, want out because they contracted before the market tanked. That is exactly why we are looking to buy right now, I want to take advantage of your failure to perform. Sorry but it’s true. I have a colleague who received a great deal at 1521 because the buyer could not get financing. One man’s lose is another man’s gain.
And like the “realist” pointed out earlier would you have hired an attorney if the value went up?? Would the developer? I take it from your post that you are NOT able to get financing and want your money back (no fault of the devlpr) lol. What is your Escala home number, maybe I just found my good deal?
I am sure you think I am just complaining?
I wish the developer actually did communicate with us buyers through all of this, but there has been NO CONTACT at all…Only silence! I have NEVER been offered a reduced price.
I will restate it in clearer terms to you and repeat what I said earlier. No one can get a normal type of loan because of the “Time-shares.” NO BANK will finance. Any “DEALS” are only if they are 100% Cash…no financing at all.
Do you really want time shares in your condo building?
I would just be VERY CAREFUL when dealing with the Escala. If you can buy without a loan: ALL CASH, then you would get a deal. Things are changing there so often, so make sure you really know what the final product is going to be.
I don’t trust the developer at all!
[First time blogger] The previous author should not speak for everyone. I will be closing next week on my Escala purchase; I have been under contract since mid ’07; I am NOT using the developer’s preferred lender because of interest rate; my bank in San Francisco had no problems approving the deal; Time Share clause was not an issue if read/understood properly; appraisal came in above the NEW reduced purchase price from the developer.
I am very happy with my purchase and pleased with how the building turned out. My purchase will be public record after next week to dispel any rumors.
Good luck, you’ll need it there!
Good thing you’re not bitter or anything.
the fact you can’t close there may be good luck for all! lol.
I’m still concerned about Escala’s ability to stay the course given lack of sales. Midby’s financier (Fremont) went bankrupt in 2008 just prior to the meltdown, and the company that bought the three year old Escala loan (CapitalSource) now has a $6b portfolio of high risk commercial condo developments. At some point they have to start weeding out the weaker projects…
The building is doomed. Wendy, let’s be honest here and stop trying so hard to paint such a rosey picture of an obviously horrid building, okay? The bottom line is the following:
1. Escala has been approaching the market to sell these overly tacky units at tomorrow’s prices. So far in three years, they have had less than 15% of the building under reservation they could ultimately move to a Purchase and Sale Agreement. With that in mind, do you honestly believe they’re going to sell the remaining homes in the nation’s 2nd worst economy in our history? But for substantially lowering prices, their situation is only going to worsen.
2. If there are indeed time shares in the building, then it is true that NO BANK would provide a loan in this economy to a potential full-time home owner in a building less than 50% sold and occupied. As stated before by other bloggers, the Escala’s aggregate of sales so far have been 100% cash.
3. If you honestly believe the Escala is Seattle’s grandest lobby, then I have to seriously doubt your understanding of what exactly Seattlites are seeking in a condo (aren’t you the expert?)
4. Please – stop trying to “sell” people all the time. I rarely see true objectivity on your site. Its much too transparent. Your credibility is at stake, and I’m sure you’re too smart for that.
@MD: As always, I do appreciate your point of view. I guess you and I have different perspectives on lobby designs and range of amenities for Escala. That doesn’t necessarily mean one of us is being dishonest. I do respect your opinion but stand by mine as well.
Blogs need to get a Facebook “like” button.
To Escala’s Real Story: I apologize if you feel there has been a lack in communication; it just may be that (given your legal issue) I have not been able to contact you. Please feel free to contact me directly and I will do my best to address your concerns.
To the SCR reader: I believe any questions or concerns are valid, given the current market conditions. I am always available to discuss them and provide any information that will help your buying decision. Escala may or may not be the right fit for your new condo purchase and there is nothing wrong in exploring it in greater detail. Understand that pre-sales, while desired, was not our ultimate goal; knowing that there would be a shortage in inventory in coming months and delivering a home that would offer the Seattle buyer something unique was the goal. I believe we have done that and again, I would encourage anyone that has questions about Escala to stop in or call me directly.
My direct line is 206.816.6305
“Understand that pre-sales, while desired, was not our ultimate goal; knowing that there would be a shortage in inventory in coming months and delivering a home that would offer the Seattle buyer something unique was the goal. I believe we have done that…”
If you’re suggesting we’re at or going to be at a shortage in condos anytime in the near future, then yes, you’re spinning the customer too. Get real. It is clear there will not be any kind of shortage (except for perhaps a couple two or three years from now). Also, of course having a building sold prior to completion is the goal – why would anyone in his/her right mind want to continue to have to sell their units after a building is completed, given the massive carrying costs?
I especially like how you do not DIRECTLY address the overall concern the market has with the Escala. Clearly, there has been much discussion with an underlying tone of “the Escala is going to fail or have to lower prices or have to change up what it is offering the market.” How about addressing that to start, instead of spinning people’s wheels to force hand them into contacting you directly for a private or one-on-one discussion where nobody else is invited? What a way to control the sales process! Yeah!
…and so, your suggestion to what a solution would be is ______________?
I believe he did address it in his Q&A with Wendy MD! They are making a price adjustment and some current buyers have confirmed it. Give them a break Mr Negative! The guy can’t be more open than that “it may or may not be the right fit”. Let’s see what the pricing looks like after. Just Curious, have you ever spoken to them in person or just shoot from behind the blind?
it’s confusing to tour the escala sales center in the fall and review the pricing, then find out they are selling similar units a month later at 30% less per square foot than they just showed me.
it’s not like escala’s pricing trend should be upwards given the market, so what is the explanation? do they just assume i am dumb enough just to pay 30% over market without comparing prices to other closed sales?
sounds like you answered your own question! They obviously trended down and reduced from when you were there for those who did contract. Good by me, i’ll take a reduction if there is one to be had.
I don’t view choosing not to be blind to the spin and constant b.s. to be the same as being negative. And, yes, I have visited this sales center (very recently, in fact) only to be told they “may” be able to negotiate a deal, but inventory was currently “tight.” We all know that simply is not true.
Justin Bowers, perhaps you should read what my string states. The solution is right there – “but for lowering prices….”
Justin Bowers, and FYI, the onus is not on me to provide the “solution” as you say. The onus is on the Developer and Marketers to begin being honest with the situation and the customers to whom they’re selling. That is all we’re asking for here. Why would you feel I should provide the solution? I’m just asking for honesty.
MD-“And, yes, I have visited this sales center (very recently, in fact) only to be told they “may” be able to negotiate a deal, but inventory was currently “tight.” We all know that simply is not true.”
Q&A-“The developer has always scheduled releases for Escala so not all of the homes are on the marketplace at this time. We intend to release more homes in the future as the market demands dictate.”
MD-“The solution is right there – “but for lowering prices….”
Q&A-“I imagine all price adjustments would be completed by the 1st quarter of 2010.”
and what don’t you get exactly?
We stopped by this weekend and I agree with you Wendy; the amenities, lobby, homes, even the parking garage are very well done. We are not originally from Seattle and travel quit a bit so it may be appealing more to something we find desirable. I like that it’s not for everyone and may be one big reason for us, ultimately, purchasing there.
I practiced law for 30 years and see no problem with their timeshare clause, which may be going away anyway from what I gather. Escala’s POS is posted on their website. Rentals are limited to 20%, which is much less than most of the buildings we have looked at downtown. How those homes are rented must meet specific guidelines set forth by the HOA (screening, etc). I think an owner would be hard pressed to get a timeshare approved. I would have concern if the building allowed a gross number of rentals; how some of these HOA’s allowed that to happen to their buildings is beyond me.
1521 Second Avenue and Four Seasons only allow 10% rentals, and those buildings have even far fewer units than Escala.
I agree Escala’s amenities are a cut above. I also like the location. As for Mr. MD, I think he’s projecting.
1521 was all priced out of our range and the Four Seasons is a hotel!!! You are seriously using that as an example when you had a hard time with a timeshare clause?!
I was referring to buildings that I found to have a high number of rentals (Cristalla, 2200, 5th & Madison) with a $$/sqft closer to that of the new price I am getting at Escala.
I was in it from the start, but I am glad I got out of it.
It is going to be empty a longtime and who knows what Midbey will eventually do.
Tim S, you have no idea what you’re talking about. The Four Seasons is a Hotel underneath with a PRIVATE RESIDENTS component to it above with a separate entrance and staff, not co-mingled with the hotel throughout the structure – that is completely different from a Time Share concept at Escala where there is no private entry to separate the two, and the time shares would be co-mingled with the residents.
Also, as an FYI, Cristalla does not allow up to 20% rentals as you’re trying to imply. I have the friggin’ Public Offering Statement. So, for you to say “[Escala] rentals are limited to 20%, which is much less than most of the buildings we have looked at downtown,” is simply a false statement. When you compare the caliber of building the Escala is TRYING to project at the price per square foot they are trying to warrant, you MUST compare their 20% clause to other buildings that are similarly priced (or even lower in some cases). You’ll realize most within this caliber only allow 10% rentals. Clearly, the Escala allowing up to 20% is conveying to the market, “please come buy me and rent me out, because we have no idea what’s going to happen if we can’t unload these babies!” Also, that 20% clause cheapens the buildings appeal to anyone who is truly wanting to be a home owner.
what appeals to me may not appeal to you, and i am just fine with that. I am not “implying” any false statements and I clearly know what the four seasons is and I never said it was co-mingled. It is a great property for what it is as are most buildings downtown. You have an agenda that comes through in your post in negative fashion.
I am buying a condo downtown in the next 60 days, I like the Escala more than any building I have seen, I read the POS and the timeshare clause is not a concern of mine…pricing was and they are addressing that.
You are entitled to your opinions and we can agree to disagree.
Also, no agenda here. I just don’t like the building at all. And, after only having four sales per King County Tax records since November 5th of 2009, I think most the rest of the market would agree with me. 🙂
They are addressing the pricing issue, like you and I and the entire marketplace suggested!! How do I know? Cause we were in there last week and got the story straight from the horse’s mouth! I saw the old price and we discussed new pricing. Once they finalize with current contract holders they will start closings again I am sure. If the price on the homes we are considering is where we feel it should be then we will buy also. So reserve your judgement for now! And you cannot understand how you come across negative?!
Tim, and prior to the release of the new homes’ pricing at Escala, what exactly in way of percentage decrease would make it attractive enough to make it “busy” as you say? I’m interested to know what you think it will take to get buyers in the door at the Escala. You can lower the price, but you can’t make it un-ugly.
@ The MD
I am probably joined by others that read your comments, you seem to have some strange chip on your shoulder about shoving your opinion down everyone’s throat. We agree to some extent, the market needs to correct. You must have gotten really burned by some real estate transaction to make you come across as toxic as you appear. Wendy, and most everyone else here is simply trying to discuss issues with Condo’s in Seattle. Take a look, no one else seems to come across as angry, pushy, and toxic…So do us all a favor, take a deep breath, I am sure people like you (somewhere), and get your ego stroked someplace else!
LOL I seriously haven’t been burned in real estate at all. In fact, I’ve done extremely well with my investments BECAUSE I follow my own “toxic” path. I suppose you do have a point that I can come off as negative (which is a reason I hate writing as it doesn’t reflect tone in one’s thought patterns). On the flip side, I often find a “Polly Anna” approach to many of the agents in Seattle, specifically – never wanting to speak of anything that may potentially placate to a downturn. As stated, I lose respect for people that don’t want to show the entire picture, and I guess that comes through. I’ll do a better job of correcting this, moving forward. Perhaps a “Yeah! Numbers are UP!” statement (without any discussion as to the why the numbers are up, such as several auctions contributing) is what you would prefer? On second thought, I’ll continue to be my own person, thank you!
Aparently “I work at American Title” doesn’t understand the meaning of what a blog is about. It is about reviewing several viewpoints – not just the good stuff.
There’s a difference btwn expressing opinions and ad hominem attacks. MD someone who disagrees with you doesn’t mean they’re dishonest. You can’t go through life demonizing everbody who thinks Escala is an attractive product.
MD it doesn’t take an FBI profiler to know that you DO NOT OWN a condo downtown and if you do live downtown it is in a rental in Belltown! Please do not try to debate it because you can’t/won’t prove it anyway. Here, I will do it for you MD – “blah, blah, blah, neg, neg, blah”.
The inflated prices did not weather the storm, sales came to a stand still, prices adjusted or are adjusting, and sales are slowly returning…enough said! Leave the doomsday routine for places that have REAL issues (Florida, Nevada, California, and so on). Everything you b*@#h about as being the problem is changing and yet you still b*@#h
This is getting crazy. I’m not going to defend the fact that I do indeed own condos in downtown as a personal residence and investment property alike. Seriously, you need to get that head of your’s in check (sounds like you have a bad temper or something? geesh.) I don’t bitch – I put a reality check on the Polly Anna attitude so often portrayed on this blog, specifically.
For example, the market is not “returning” as you put it. The market has bottomed, yes. Your choice of words – “returning” – is what is concerning. “Returning” would imply to readers that our market will be valued in the relatively near future what it was just 24 months ago. When, in fact (not “bitching”) it we will not see those values until well over 5 years from now. As an “FYI” for you, differences of opinion and expressing them do not equate to “bitching.” Now, you can call that “negative” and I don’t think being honest about a situation it is negative at all. I believe it is a word called “truth.” Sounds to me like you’d rather put your head in the sand and believe something that simply in’t true or rooted in fact.
I’d be happy to meet with you in person so you can see I’m really not a bad guy at all. And it would allow you an opportunity to tour my condo should you choose. You’d probably realize quite quickly just how wrong you are (and on so many levels) 🙂 No really, I am truly extending you that invitation. Let me know.
As for the “Meeting” it might be almost like a Sex In The City episode? My sense of humor?
Seriously, it seems like too many of this condo site’s bloggers seem to be Realtors trying to “Brown-nose” a certain developer & sales team with accolades!
Maybe MD is one of those guys who’s a nice guy but turns in to a mean spirited troll when he touches the keyboard. I know people like that, it’s like they have internet tourettes syndrome.
Also, anyone who agrees to an in-person meeting with a dude who just stirred up a sh**storm on the web is asking to show up on Dateline.
On the bright side, MD finally admitted the market has bottomed. Took him about 6 months but better late than never.
Therapist, go ahead and resort to your name calling. Also, I’m admitting the bottom of the market is NOW vs. six months ago because it is NOW – not six months ago (hence my point I’ve been making in this string as so many of you want to think we hit bottom months ago when we did not). Do any of you read? If so, I would suggest reading independent publications, such as Moody’s, The Economist, Money Magazine, Forbes. They’ll explain it to you. Seattle is actually poised for a 0.50% price decline in 2010, but that is pretty much the bottom now.
If you or anyone else fear you would be showing up on Dateline, then you’re paranoid. It certainly does demonstrate, however, that you don’t stand behind your statement. After all, you haven’t done anything illegal, right? RIGHT? lol
Beef Stew, you’re absolutely correct, and I couldn’t agree with you more. Also, Its AWESOME to see so many new names in only a handful of days blogging on this site – all writing to scold me. Amazing, eh? 🙂
I think MD should start his own blog. As much I think think he’s got a screw loose, I find his comments highly entertaining. Maybe a URL like http://www.ImNotOneOfThosePolyannaLyingBloodsucking
Hey, I think that’s a GREAT idea! I’ll look into it 🙂
Thank you for all on the comments. We went and looked at the building today in person and we thought it was amazing. The concern that I have is the lack of sales and the potential “back outs” of the 75 buyers. What would happen if sales are slow and they need to put the project on the auction block like the other Lake Union condo projects? I was not told of the $250/mon min spending at the club but it looks like it’s not the case now. Will it be the case in the future? I have never heard of the time share thing either, 20% means 73 days per year that each unit can be rented out as time share? If the club idea fails, would they rent out the space to a local restaurant? The private elavators (for B floor plan) is totally private, it would not be a problem if you worry about having new neighbors every week/month. The sales person that we talked to today told us that Escala is planning on bringing in a new sales/marketing team and they are offering a price adjustment to the current buyers (who have not closed yet). During that time, they will not sell anything for a month. After the month long close down, they will update and release new pricing for all the available units. We are going to wait and see the prices and availability. As far as the no lender is willing to lend money, it that true? A friend of mine told me his lender would not lend him money because of the less than 50% occupacy but again he is currently renting and have no 20% downpayment. We do and we will ask around to see if that’s the case. The sales person also told us that Escala has its own financing, does anybody know about that and is there any down side (i.e. high interest rate)? Out of all the different condo projects that we have seen, Escala is by far the best for us in terms of amentities and style. That area is also much better than 1st and 2nd Ave (i.e. 1521 project). Thank you for all your previous and future comments and facts, they will help us making our condo purchase decision within the next few months.
I think you are making excellent progress here. And i especially like the little smiley faces you have been putting on your responses. Nice work 😉
May be this will help your decision
Escala had two closings last week that were financed, AND not with their preferred lender. So those who said “no lender will loan on that building with Time share clause” were wrong or “less than 50%” were wrong. Keep in mind, NOT all lenders can loan on Escala and it is limited to those that will portfolio the loan. My bank out of NYC will, but my guy at BofA would not.
You are correct, we were told the same thing that they will be resetting prices; we did not hear anything about shutting down till then. Probably not a bad idea. I know that current buyers will be given the new prices first. Will they lose a lot of them? My guess is yes because most of them were speculators. The very people that MD should focus his anger towards! They bought every where they could while the music was playing…whoops, music stopped!?!?
I practiced law for over 30 years and you need to understand the time share clause because it is not a big deal; here’s why: only 20% of the building can be rented at any time. So if you own a home and less than 20% are rented you can rent yours but it has to meet certain guidelines, like: your tenant must meet HOA approved background checks. A time-share tenant is not named or known (the company is) to meet that guideline so the HOA will not approve the home to be rented for that use. So why was the time share clause put in? Good question: under the time share clause you CAN do interval exchange. I do that now with my condo in Hawaii. I exchange 3 months there with my buddy from college for 3 months at his place in Aspen. The HOA knows who the exchange is with and approves it. We do it that way for tax reasons (separate topic all together). Bottom line, if the HOA doesn’t want it they can vote to have it removed.
I hope this helped answer some of your questions. And MD…this is what a blog is for!
If the Escala was a man, he would have a hairy chest, wear gold medallions, too much cologne and a most likely drive a Corvette.
If it were a woman, she would be the kind of woman that the above man would find attractive.
CLEAR HEELS BABY!!!
C Floor Plan, I just checked the King County tax records, and there are no additional reported sales. Did your sale go through like you said it would? You posted on January 3rd you were closing “next week.” It is now January 19th and there haven’t been any additional sales. Can you explain what happened?
Tim S, I am curious… You stated “Escala had two closings last week that were financed, AND not with their preferred lender. So those who said “no lender will loan on that building with Time share clause” were wrong or “less than 50%” were wrong. Keep in mind, NOT all lenders can loan on Escala and it is limited to those that will portfolio the loan. My bank out of NYC will, but my guy at BofA would not.”
Now, how would you have privy to that kind of information? After all, there are no new recordings per Kin County Tax Records since November 10th, 2009 (I just checked them again, and I can send everyone the link if you’d like). So, tell me, how would YOU know they had two sales last week? More importantly, how would you know they were financed? Please explain 🙂
Keep it up MD – I agree the PollyAnna approach of most condo agents is annoying and you are a good balance to their BS.
And the MD isn’t exactly anonymous. Matt over at urbnlivn.com knows you, right?
Ace, I appreciate the comment. I’m not here to win popularity contests (obviously I’m not LOL). I do blog often at Matt Goyer’s site too. I find the two sites (urbnlivn.com and seattlecondoreview.com) both provide a different style in approach, but both serve a meaningful purpose.
Tim S – you’re incorrect that “most current buyers are speculators.” As a presale buyer from the beginning, I’ve met many of the other buyers. A large group of us met last summer to discuss what were going to do, and no one wanted to close – based on difficult financing, depreciated current homes, and Escala being priced at the top of the market. Of that group no one bought the unit to resell, and rightly so. We all knew prices were high at the time, and additionally the POS has/had a clause where any unit resold at a profit within one year would split the net profit with the developer 50/50. Anyone who signed a contract thinking a 50% cut of the profit from reselling an already expensive unit was drinking some serious “no bubble in Seattle” Kool Aid. We presale buyers are not closing for the reasons stated above, not because we bought to flip.
MD – you do seem to have a vendetta with Escala which kind of undermines your argument since everyone is simply writing you off as a “hater.” Other than your distaste for the building, I tend to agree with your statements. I like Escala, a lot in fact, but think it’s in serious trouble unless deep price cuts are made. Love it or hate it, the failure/success of Escala is a simple matter of price.
Not Buying At Escala, fair enough. I honestly have no vendetta with Escala – I frankly just never thought the building was done in good taste, especially when considering Seattle’s understated slant toward aesthetics. And, I never thought their marketing was done in good taste and they never understood their audience. Its just a matter of personal opinion I suppose.
Taste aside, however, I feel this development is in a lot of trouble (I would say that whether I liked or disliked the project). I do feel if they had done a better job with transparency in the market and delivering an aesthetic that was more in line with “Seattle,” that it may not have been in the kind of situation it is now. I’ll do a better job of not coming off as a “hater” in the future. Thanks for the feedback.
Great comments people. I have also learned that many lenders will not lend because the project is under 50% sold and with pending lawsuits. These two events caused Escala disqualify for a FHA load status (with significant lower rate). Colbalt, which was the prime lender for the project backed out because of the FHA issue. Even if they decided to lower the prices by 20-30%, what would happen to Club Cielo if they don’t have enough buyers that would pay $.80/sq ft per month for HOA? Residences would not be required to pay HOA dues until Jan 2011, will the 30% or less residences have to pay more HOA dues since the building is not full occupied? I heard the sales manager got his Porsche repo’d and the status of the current sales & marketing team is unknown (fired?). We personally love everything about the building, just wish we know we would be okay if we buy into it this year. When do you think we will know the fate of Escala for sure?
The developer pays the dues on the vacant units. (see Olive 8 and their new 2 year loan.) If they run out of money, or stop paying through a loophole (see California) then the bank takes over and the association is in serious trouble.
“Fan of Escala” get your facts straight. They were never denied FHA approval! You cannot be denied if you never applied, which they only did recently. My broker told me they applied last week. FHA takes about a month to process so we’ll see.
And MD to answer your question as to how did I learn about the closings. Simple, when you are an attorney Title companies have no problem providing you with information regarding recent closings like: how many have you closed, cash or finance, was the lender so and so? No great detail, just simple facts that a real estate broker can find out if they called them as well. I didn’t ask type of home, name of buyer, how much, or even who was the lender but rather was this the lender yes or no. I am not going to seriously consider buying a home there and not do my homework skippy!
Oh, “fan of escala”, again do a little more checking; whether you have 5, 50, or 150 homeowners living in a building doesn’t determine the HOA. Each person pays for their own space the set $$/sqft. The builder, equity partners, etc pay for each on sold home every month. When there is not a lot of homeowners in a building the monthly expense bill for the building is less than the developer paying the HOA for the unsold homes; so the developer doesn’t turn the HOA over to the homeowners yet. So those living there, live free of an HOA bill till it’s turned over. I didn’t pay an HOA bill for 8 months after we moved into our last condo. As it sits right now, those that moved into Escala in December will probably not see an HOA bill till 2011! oh happy days.
Tim S, you are mistaken on two points:
1. No new recordings are in Escala as of November, 2009 per King County Tax records.
2. Just because a developer doesn’t turn the HOA over to the homeowners does not equate to existing homeowners not having to pay HOAs. A good example of this would be 1521 2nd Avenue and Four Seasons. The developers have not turned over the developments to the homeowners as neither are yet 75% sold. However, all homeowners are having to pay their full HOAs as agreed per the Purchase and Sale Agreement.
Escala didn’t apply for FHA because there were only ever a few units that came in below the FHA maximum loan limit of $567,500 (in King County). If Tim S is correct that they’ve recently applied, that’s probably an indication that substantial price cuts are coming soon. Maybe they’re on the right track.
Fan of Escala – the dues were always a separate entity from the minimum club spending, which it appears at this point has been eliminated. You do raise a valid question – what happens to the club when you have a handful of residents in a space designed to accommodate a hundred? One of the main selling points of Escala is the amenities, so they’ll have to keep the club going. You can’t sell units without an active club space here. But the carry costs on this behemoth have to be astronomical, so I’d guess they’re going to be motivated to start filling some units soon.
Tim S – as far as owners not paying HODs until 2011, I’d guess it’ll be more like 2013. The association doesn’t take control (which includes paying the dues) until 70% of the units are sold. With 270 units, that means 189 must be sold. 7 closed already, only 182 to go. At an optimistic pace of 1 sale per week that’ll take 3.5 years. FYI, the estimated operating budget of the building (per the POS) is $4.2 million per year.
MD – just saw your post about 1521 and 4 Season owners already paying dues. How do you know this? I was under the impression it was state law that the developer pays the dues until a project is 70% sold.
How dare you!!! I am NOT going to get into all this mess and most of the time find it humorous but that post about the Sales Manager having his Porsche repo’d is a very mean rumor to start and you should be ashamed of yourself! I personally met the Doctor from Swedish that bought his Porsche and the reason he was selling it is was solely to accommodate his dog…a Porsche is not that suitable to haul a big dog around in.
You, so called ‘fan of escala’, are pathetic.
you start paying dues (pro-rated) at the time of closing, not to mention 2 month’s worth of “working capital”, which is the bonus of buying new.
It’s all in the Declaration. Please read it before posting mis-information.
If you want to be cynical, then reference something from the Property Report (the last section of the POS).
thanks, and stay classy.
It is not state law that a developer pays EVERYONE’s dues until a project is 70% sold. It is a matter of the POS and the bylaws agreed upon prior to purchase.
you are referring to the reserves NOT the dues. Stay classy while getting the facts straight!
Layman math: if the monthly op cost is $1M and the cost of paying all unsold homes’ HOAs is $1.5M then the developer would rather cover the monthly op costs…when the monthly op cost becomes greater than the unsold homes’ HOAs (because more people means the bills go up) then you turn the HOA over to the homeowners! The POS gives estimations not exacts; there is not a set figure of 65%, 70%, 75%, etc.
Where I praticed law your license entitled you to practice real estate law as well; some of you may want to learn the in’s and out’s of r.e.101 before you post again.
Tim S, I would agree you should learn the ins and outs of r.e. 101 before YOU post again. You stated the following:
“The builder, equity partners, etc pay for each on sold home every month. When there is not a lot of homeowners in a building the monthly expense bill for the building is less than the developer paying the HOA for the unsold homes; so the developer doesn’t turn the HOA over to the homeowners yet. So those living there, live free of an HOA bill till it’s turned over. ”
Actually, this is not true at all. The HOA does not have to be handed over to the homeowners from the developer prior to homeowners being assessed their full monthly HOA dues. You’re confusing the amount of units sold within a building so the HOA will be turned over to the homeowners vs. dues having to be paid. The two are unrelated.
Uh, the Declaration does give an exact figure for turnover of controlling interest in the HOA, Tim. It’s 75%; see section 7.4.
Oh well, what kind of attorney would qualify a statement with “my broker told me so”…
40lover is correct – I just checked Section 7.4 of the declaration which states (paraphrasing here): the declarant shall call a special meeting of the association for the purpose of electing the board of directors no later than 60 days after the declarant shall have closed sale of 75% of the units.
And I withdraw my comment above regarding collection of HODs, I was misinformed on this matter. I did some searching in the POS and found section 9.5 of the declaration: Monthly assessments begin accruing for all units upon closing of the sale of the first unit by the declarant: provided that the declarant may delay commencement of assessments and pay all actual expenses of operation.
40L I asked our broker to give me an update on the FHA matter, that was all I was referring to. And you are all correct on the declarations and how they read. We will have to disagree on how it will play out and the changes that are going to occur to the POS.
As it stands right now we have decided to hold off on buying there until the summer. We need to see how the next few months are handled and what resolutions are reached on items we identified as deal killers. Escala is still, in my humble opinion, our first choice in Seattle for sure.
Another angle on HOA dues in high risk buildings has been happening in Miami and New York for a while. If there are a lot of foreclosures or the developer/bank walks away from the building, then there is a cascade effect on the finances of the building, and any and all of the remaining homeowners end up paying for the HOA fee’s for the entire building. The money for building upkeep has to come from somewhere, and it’s not like most buildings have a large capital reserve.
We own a nice condo similar to Escala in DT San Francisco and have suffered like the rest of the economy. We were looking to relocate to Seattle and found the condo prices at Escala laughable. Somebody should counsel the develpers and tell them to wake up. The prices are not close to realistic, which is why I will wait until Feb to see price adjustments.
I do not know much about Seattle, but who in there right mind would pay what Escala is asking???
I’m glad somebody in Seattle realizes the pricing is laughable!
Escala is a beautiful property, but not in concert with the economy.
I think your analysis is right on mark. However, I do not think we have hit bottom yet.
Keep up the unbias analysis…
Man, this gotta be the longest thread in SCR’s history, yet it is surprisingly quiet given the fresh rumors of the bank taking over the project… 🙂
new sales team is in.
chris stiebler is out? maybe thats why he sold the porsche?
MD- I have enjoyed your opinions. A little negative, but helps balance the “its always a great time to buy!” attitude of realtors.
I spoke with Erik Mehr, new sales manager. His team is in as the onsite team, the switch was supposed to take place months ago; pre-sales team’s contracts expired in August and onsite team was actually hired on December 1st. The timing: now they can reset pricing, fix the issues with the amenities, have the model homes completed, and current contract holders addressed when they come back to market end of February for LUX tour.
My only question…WTF took so long?
What are the issues w/ the amenities?
Here is an article on James Stroupe’s website. although I have never used him as my realtor, he appears to be a reliable guy. He also appeared at the Escala many times, so this all may be very true!
“Everything is Changing at ESCALA
January 22, 2010 by Stroupe Group
We got wind of some big news happening over at ESCALA. To begin with, the sales center is currently closed for an approximate 3 weeks. A new direction to take place is being discussed behind closed doors during that time.
Since all the statements below are still being considered and negotiated, there are no specifics in stone at this time. However, the statements following are all the things that are being discussed. Currently, everything is on the table.
First off, The Home Owner Dues (HOA) appear to be high and they are looking at ways to reduce them. One way to address that would be to reevaluate the relationship between the Club Cielo and the condominium units. There is a strong chance the club use will be separated from the condominiums. We do not know details on how this will affect the owners use, or what the additional charge might be for use the club. If this is the direction taken, it would give owners the option to participate in the club rather than the current structure that assumes membership. This should be a savings for those who do not wish to be a member. If this is indeed the direction that is taken, the question is how much of the club (if any) will be available to the owners without an additional fee. According to our sources, ESCALA is very sensitive on making this work for buyers. Therefore we would be surprised if the amenities were to not be included–such as the gym. There are a lot of options for the team to discuss. We think this will be very important to watch for before any decisions are made on moving forward.
The prices will be also be addressed. Out of respect of the current buyers, we will not know what kind of price reductions will be determined until after that process is completed. We expect to see a big marketing splash in February with new pricing that better represents the current economy.
Also, exciting news from behind the scenes is that the entire sales team is new. John L. Scott agent Erik Mehr from Team Builders will be taking over sales. Erik is not only a personal friend, but has a great reputation for moving inventory quickly. The marketing team will be headed by Bob Rennie from the very impressive Rennie Marketing. We are very excited to see what this team comes up with.
In regards to financing, there is wording in the original Public Offering Statement (POS) that the owners have the ability to use a unit as a time share. This caused difficulties in obtaining financing. This is being removed from the POS. We’ve yet to hear anything about any preferred lenders or what limitations will be in regards to investment purchases.
Another thing that is in conversation is what the current buyer options are. Earnest and upgrade money are being discussed.
Stay tuned to see what happens in three weeks. We will be on top of this along the way and will be posting news as we get it. If you want to be automatically updated on news about the ESCALA, please subscribe to our RSS feed. For past information on the project review our past articles.”
Jim Stroupe is a contract holder at Escala and he has been trying to get out of it
I hope he is correct!
Thanks for the info!
I received a call from Erik Mehr confirming most of the above. Obviously many things are still being discussed over the next couple of weeks. But yes, they’re completely re-evaluating the project – from the club, the dues, the pricing, down to the marketing. I’m glad to see the developer getting realistic about the market rather than trying to spin it. What this means for those of us under contract that won’t be closing remains to be seen.
Its too late for me to change my plans. I am not purchasing at the Escala. I have already “Formally” rescinded my contract. If the old sales team was at all approachable and willing to discuss buyer’s concerns, and make price changes, I would still be buying.
Its too little, too late!
Looks like Midby Group is finally waking up to reality (or their bank is twisting their arm).
If Escala cut prices more than 20%, it will have a major impact on the downtown condo market.
To Escala Survivor – you formally rescinded, what was the outcome? Did you get any of your earnest money back? I don’t think “it” (their actions) is too little since we don’t know what “it” is yet, and it’s not really too late since the building just opened. I actually think they’re taking action pretty quickly.
Ace – I don’t really see them cutting prices more than 20%. If they cut those $600,000 1 bedrooms 20% to $479,000 they suddenly become pretty attractive. And if an $800,000 2 bed/2 bath becomes $639,000, I think they’re going to be strong competition with resales at Cristalla, Cosmo, 2200, etc. If you do like this building (and plenty of people do), a 20% price cut is going to sell a lot of units. Just my opinion.
I am with the group of 20 buyers that formally rescinded their contracts. Whenever the POS changes a buyer who is in contract can rescind within a 7 or 10 day period.
We are all going to court unless they opt to give us our funds back since “They” changed the POS and we no longer want to purchase what the building has become.
I am sure the POS will be changing again and at that time others can “Formally” rescind too, so it will be interesting to see how the Escala handles this.
When I said “Too little, too late, ” I meant that I repeatedly went to the sales office and tried to engage them into talking about the reality of the current housing market. I told them I was willing to walk away from the Escala…no response at all, but spins on how great things will be.
I have walked away and am very happily living in a nearby downtown condo building that I bought a great price.
I would like my earnest monies back and legally I am entitled to it since I rescinded when the POS changed.
We will see?
Interesting news. I was about to buy at Enso but will wait to see the new pricing at Escala, which has a much better location.
you will be waiting a long time. I will make you a side bet you never see your earnest money again.
The law is on the rescinder’s side, but that may not mean much when dealing with the Escala?
It all just depends on what the new changes to the POS are. Depending on how “material” they are (such as removing the Club from the homeowners’ control and making it a separate entity) they may have no choice but to capitulate. We’ll know in a couple of weeks.
The real “Victims” in this scenario are the suckers that just bought (all cash) and closed on their Escala condos. Prices may be much lower than they paid and the building is turning into a different monster than they thought when they closed.
They have no legal standing, since they are no homeowners.
agree, the location is pretty sweet. esp if you like tom douglas restaurants and work downtown.
They have no legal standing, since they are “NOW” homeowners.
standing by to see what happens with Escala…in the meantime we went and looked at Olive 8, other than those units with bad views (looked right at the Qwest office building), all units are designed well with efficiency. Anybody who considered buying Escala looked at Olive 8? Why would anyone buy a brand new Porsche if you have a big dog? That comment from “former” Escala employee was humorous. I hope the new sales team will clean things up and start moving some units.
After trying to talk with the Escala sales team, and leaving very frustrated. I finally did look at other buildings, and I purchased a home at Olive 8.
The finishes are high quality and the whole condo works well for me with my lifestyle. I do use the amenities of the Hyatt too, but its possible to live there and forget you are attached to the hotel since there are separate entrances when needed.
I am not a Realtor, but if you have not seen Olive 8, its worth the look. The prices have been drastically reduced and NO HOA dues until the building is 70% sold.
I do not think I will purchase at the Escala, no matter what the new sales team spins!
I’ve looked at Olive 8, Escala and Enso. Olive 8 is nice but units are on the small side, and they haven’t sold a lot (<50 homes?). The new Escala pricing may offer more bang for the buck as Olive 8 prices are only 5% down from what they showed me in 2007. Enso is probably the safe bet financially with Vulcan. My nightmare scenario is buying too early then getting burned when a building goes to auction like Gallery.
I am also waiting to see new Escala pricing before making a decision - there is no rush as all of these buildings will still be on sale in 2011 and beyond.
If you look around the MLS it is scary to see how far underwater some condos are. Anyone who bought at new developments like 5th and Madison or Mosler Lofts is screwed right now – most of those units are losing 10-20% on resale. Gallery buyers got screwed even worse – north of 30%. That’s why it makes no sense to rush into the market until prices settle. That hasn’t happened yet at Escala and Olive 8.
he didn’t buy the porsche…he was selling it! if you are selling two cars to become a one car household the porsche would be the one to go if you have a dog dillweed.
Seattle, I too went and looked at Olive 8 a couple weeks ago and liked the unit layout and quality. I am going to go look at the amenities and see how high up do I need to go to get an unobstructed view of the water. There are too many units that have no good view. I saw that Olive 8 just got a 2 years extention on their construction loan. Does anybody know what that means? When I was at the sales office, it didn’t seem like it’s anywhere near 70% sold so I guess the HOA due issue is not immediate. The old Escala crew said that Olive 8’s quality is not as good and their initial low HOA dues will surely go up. Anybody know if that’s true or is that just a scare tatic? Any issues with getting financing for Olive 8? Thanks.
really? other than a developer completely changing the final product from that which was agreed upon; do you have any explains when the earnest money has been returned? I think you will be hard pressed to find even 1 without “material changes” being made.
sorry “examples”, not “explains”
they are not removing the club from the homeowners control, just the contrary. they have closed the club TILL the HOA is turned over and it is up to the homeowners to elect what to do. The HOA can hire columbia hospitality or someone else. They are putting the cart back behind the horse.
the developer is already in talks with them to refund a portion of the purchase price to equal that of the drop in prices. The only “sucker” as you put it is ‘you’ for speculating.
“Puget Sound Business Journal is reporting that Escala’s lender has filed for bankruptcy.”
You are obviously an Escala buyer! Aren’t you happy you bought when you did 🙂
We are getting our earnest monies back while you are stuck in a downward spiral of a hellish developer’s nightmare!
Wake up and read the papers!
Rumors abound today that Escala’s new pricing is out (and is 25-30% lower… under $500 a foot.) Can anyone confirm?
I was called by the new sales team and my condo has dropped about 25 – 30% from the original contract price. My main concern is the Club Ceilo including the gym and all the common space is just going to sit there and the new HOA will have to figure out what to do with it.The new sales team is going to unload all these condos and you can only guess at the investment condos (renting their units out) and other bargain hunter riff-raff.
I have lived in many condos and getting HOA to agree to anything is VERY difficult. Example: 2200 Westlake HOA could not agree to have a 24 hr concierge. There was arguing, crying, and screaming, it was so bad I sold my condo. Its a mess there now!
I still might buy at Olive 8? At least there are many amenities (if I choose to use them) offered through the Hyatt hotel. At least I will know what I am buying.
SBR, are you saying the new sales team will sell the remaining condos 25-30% less than their previous list prices? I have heard they are also going to lower the HOA dues by excluding the club and gym from the HOA monthly dues?? Are you saying that most people who will buy Escala will be the investing type who will rent out their condos (like time share)? I have been looking at 2200 Westlake and Olive 8. I am split between the two but Olive 8 seems pretty attractive. However, I didn’t know the gym and pool are not including in the monthly HOA dues, it cost $50 per person per month. I am a little worry about they will eventually build highrise condos (30-40 stories tall) at Lake Union. You prob can’t even see the sky at the 2200 Westlake development. Plus traffic will be terrible for the next 2/3 years while they fix Mercer Street. Anybody got more insights/advises?
I am planning to buy at Olive 8. From what I know from my drop-ins to visit, the Hyatt Hotel manages and maintains the spa, gym, and pool. It always look immaculately clean and well-stocked with water and towels. The area is much better too. South Lake Union has along way to go to become developed.
I know the 2200 Westlake condos are a problem since the HOA cannot agree to do anything worthwhile to help the development. I have friends that own there that would like to sell, but cannot. If you pursue 2200, then look closely at the resale certificate’s minutes of the board meetings and you will see what is truly going on there.
As far as the Escala, I am not sold even with the lower prices.
I finally got my Earnest Money back from the Escala 🙂
It was a long tedious journey full of deceit on the part of the Escala. Only if the old sales team and the developer was up front with ALL the original buyers, we probably would all be living there.
If you’re planning to buy there the scary thing is the “Pay as you use” Club! Wait until the developer turns everything over to the HOA and then those homeowners will have a “Reality Check.” I agree with SBR’s comment (from 2/17 & 2/23) above, the Club is the “Pink Elephant in the room.” All the new sales team and developer are doing is to mask the upcoming HUGE debt by lowering the HOA dues and creating this “Pay as you use” Club which is not going to work in the long run.
I may buy in Olive 8 since the Hyatt has a 30 year contract with the building and that is securing that investment. Plus it has great amenities and a trust worthy sales team and developer!
I agree with Sir Speed. They are seriously “raping the baby” on this complex.