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.