Condo units in downtown Winston-Salem up on block

A real-estate developer plans to auction off the unsold units in a downtown condominium project slowed by a tough economy.

Suggested opening bids will begin at $65,500, but eight of the condos in the West End Village at Fourth and Broad streets will be sold at the highest bid, without a minimum reserve. The one- and three-story condos were previously listed between $218,500 and $266,100.

The opening price is about a quarter of the original asking price, but the developer says that the auction is not a sign of desperation.

Fifty-two of the 69 condos -- more than three-quarters -- have been sold since Centro CityWorks started developing West End Village at Fourth and Broad streets through West End Ventures LLC three years ago. David Furman of Centro, which is based in Charlotte, and Tom Fowler of Winston-Salem are business partners in the venture.

"During the last 12 months, we have had over 250 prospects express interest in the remaining units, many visiting over and over but unwilling to pull the trigger because there has been no sense of urgency," Furman said. "We intend to send a clear message that there is a sense of urgency, there is a definitive date when the best bargains that you have been waiting for are here and now."

Selling the remaining 17 residential units, along with one remaining commercial space, has become a sticking point that's holding back future phases for the project, Furman said, which led to the idea for the auction.

The first phases -- "4th and Broad" and "The Towns" -- are complete but the third phase has been delayed.

Chartwell Auctions will conduct the auction at noon March 28 at the Embassy Suites Hotel on North Cherry Street in downtown Winston-Salem.

This could be one of the first auctions of its kind in Winston-Salem.

Jason Dolph, the manager of the Chartwell Auctions Charlotte office, said that Chartwell does all kinds of residential and commercial auctions throughout the country but he doesn't think there has been one like this in Winston-Salem in recent memory.

"In some markets, there's such an influx of this type of product," he said. "It doesn't seem to be the case in Winston-Salem, but folks are looking for other viable methods to sell real estate."

Demand seems to be the problem in the real-estate market, said Michael Clapp of Michael S. Clapp and Associates, a real-estate appraiser and consultant in Winston-Salem. Uncertainty on the part of prospective homeowners about their jobs, and fear about where the economy is headed within the next year to two years, and perhaps an oversupply of product are keeping sales down.

"I think people have backed off, trying to see what in the world is going to happen, not only with the economy overall, but their individual job situations as well," Clapp said.

The Downtown Winston-Salem Partnership estimates that there are 1,759 housing units -- either existing or in varying stages of development -- in the downtown area, including condos, apartments and single-family homes. Of these units, about 1,094 are built, 338 are under construction and 327 are proposed.

Jason Thiel, the president of the Downtown Winston-Salem Partnership, does not see demand as a problem. He said that a lot of people want to buy but cannot do so until they sell their existing suburban homes.

"Downtown is a byproduct of the overall market," Thiel said. "When the overall market starts to move again, I think the downtown market will move again."

Furman said that it's a good time for buyers to take advantage of what he sees as a temporary downturn.

Eight condos between 1,041 and 1,191 square feet are available in the Fourth and Broad building. Cafe Prada is at street level in the building, and the developer plans to auction off 1,360 square feet of commercial space next to it. "I could see a dry cleaner being successful there with the number of residents, or a UPS store," Dolph said.

The Towns, a three-building section of West End Village, has nine available townhome-style condos between 1,324 and 1,394 square feet. Furman did not give a timeline, but he expects construction to start on the third phase of West End Village after the economy improves.

Any of the unsold units will remain on the market.

Several condo owners said they believe that the auction will be a plus for West End Village but were concerned that some of the units would sell for much less than their condos.

Scott Rhodes and Paul McLaughlin are condo owners in The Towns.

Rhodes said he is worried that an auction would affect the value of his condo and others in the market, but he would like to see the units occupied.

"I don't think that having empty ones is any better," he said. "Even if they sell them for a lot under, at least they're sold."

McLaughlin agreed that the auction would probably attract more residents, but said that he and his wife, Susan, did not have the option to negotiate a price when they bought their condo, and expect the auction prices to be much less than what they paid for theirs 1½ years ago.

"We're concerned about the short-term impact on the value on the property," he said. "We don't know how the real-estate market is going to play out."

McLaughlin is also concerned that the auction could produce more renters than owner occupants.

"We need to have people living here full time," he said.

Furman said that protecting the investments of existing residents is important and that West End Ventures held a meeting recently to deal with any concerns they may have about the auction.

"My feeling is that there will be some deals at this auction," he said. "People will probably pay less than the people who live there now, but the property values of that community will be much more enhanced as the project is full, is stable and there are lights on in every unit."

■ Fran Daniel can be reached at 727-7366 or at fdaniel@wsjournal.com.

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