Downtown Raleigh condo units to be auctioned

The developer behind West, a 17-story condominium project in downtown Raleigh, has decided to auction 36 of the units in an effort to move inventory.

The decision is the latest sign of just how soft the market for downtown condos has become.

Since opening in 2008, West has sold 80 of its 170 units.

The 36 being auctioned off are all one- and two-bedroom units. Starting bids for the units will range from $95,000 to $260,000.

That's significantly lower than the units' list prices, which have one-bedrooms starting at $224,000 and two-bedrooms at $300,000.

"This is a once-in-a-lifetime opportunity to get a great price on a great property," said Gregg Sandreuter, whose Cary firm Hamilton Merritt developed West in the Glenwood South entertainment district.

The lender on the project, Wells Fargo, has not foreclosed on West, and Sandreuter said the auction was not mandated by the bank.

"We are in full compliance with our loan," he said.

West's original deed of trust shows about $45 million in debt on the property. The project's current loan balance is significantly lower now because all the proceeds from the 80 units that have sold has gone to pay down debt, Sandreuter said.

West condo owners were informed about the auction this week. Many will likely view the auction with trepidation, since rock bottom prices would hurt their own units' resale value.

Through the first eight months of this year, 156 condos sold inside Raleigh's Beltline, according to Triangle Multiple Listing Services. That's 10 percent fewer than sold during the same period last year.

West has averaged about two sales a month so far this year.

Slow sales have already doomed one downtown condo project.

Earlier this year, Hue, a 208-unit building at Dawson and Hargett streets, was taken over by the lender without a single unit having sold. The building has since been bought and converted into rental apartments.

Sandreuter said his group is committed to selling all 36 units up for auction as long as the minimum bids are met. Buyers will be allowed to purchase only one unit, a rule that will keep large investors from making a bulk purchase.

But West clearly hopes the auction will attract bidders from across the country. An advertisement for the auction appeared in Friday's edition of the Wall Street Journal.