Esplanade Developers to Auction Units

by Liz Flaisig, The Times Union,

Jacksonville, FL (April 22, 2008) - Auctioning newly built homes during a real estate downturn isn't a new trend.

In the 1980s and 1990s, selling property before a room full of bidders offered buyers low prices, developers some cash flow and gave the market a chance to regain stability. While that is sometimes still the case, an Atlanta-based developer's upcoming auction of luxury condominiums in Jacksonville illustrates a new twist on the old trend.

Next month, 38 of the 50 remaining units at the Esplanade at Town Center will be auctioned.

The community sits adjacent to St. Johns Town Center, an open-air mall with 1.1 million square feet of retailers and restaurants including Louis Vuitton and Maggiano's Little Italy.

The location is Jacksonville's example of "new urbanism," where shopping, restaurants, offices and homes converge for a walkable community.

The Esplanade's developer, Wood Partners LLC, has paid off its lender and equity partner.

It has also addressed mold problems discovered last August in some units by doing additional waterproofing work, offering to pay for dehumidifiers and having every unit certified mold-free by a third-party inspector.

So instead of holding on to the remaining condominiums until the market recovers, the developer has turned to a marketing company's plan to auction what's left of its 258 one-, two- and three-bedroom condominiums. A one-bedroom at the Esplanade in fall of 2006 sold for $194,300, according to Duval County Property Appraiser records.

Bidding at the auction next month will begin at $95,000.

"We're in the development business, so it's probably in our best interest to move on," said Charles Barrus, development director for Wood Partners. And, Barrus said, it's in the best interest of those who already own homes at Esplanade.
"They should be able to have the association in their control and not have to compete with the developer if they do want to sell." Barrus called the decision to auction one the company "struggled with a little bit," but said his company took the advice of Accelerated Marketing Partners, the Boston-based company that will conduct the Esplanade auction on May 17 at the Embassy Suites Jacksonville-Baymeadows.

Last month, Accelerated Marketing auctioned off units at Solaire at the Plaza, Wood Partners' luxury high-rise condominiums in Orlando. Thirty condominiums sold in 90 minutes, bringing in $10 million.

That property and the Esplanade represent what Accelerated Marketing Co-Founder Jon Gollinger called a chance for "buyers to establish the price they wish to pay." Gollinger's company deals in high-end property auctions, where the sale isn't associated with a liquidation.

Accelerated Marketing suggests its buyer-focused auctions to developers because it offers them a chance to pass on savings to consumers, Gollinger said.

Buyers who are "end-users," not investors, can tour the development beforehand and attend a practice auction the night before the real one. Minimum bids are established and developers or their representatives aren't allowed to bid. At the end of the auction, Gollinger said the developer exits the community and the market can begin to stabilize. "In the '90s when we did this, we created equilibrium," said Gollinger. "This says people aren't waiting anymore. We're going to cause a floor to be established."

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