A tribute to urban duress

The Beasley

Pass it on.  This is the tagline for a new campaign from MAC Marketing Solutions, the creator of Onni’s condo liquidation sale.  This time, MAC’s working magic for Amacon’s Beasley project in Yaletown.  Some of you might remember The Beasley as the “tribute to urban excellence” that never got off the ground.

At a news conference today, condo marketer Cameron McNeill said most units will see price drops of $100,000 to $250,000.  But in a twist, the rollbacks are retroactive.  Early purchasers, not just new ones, get the benefit of the reductions.

The marketer says the rollback is all about passing on the savings of lower construction costs.  I say hogwash.  The name of the game is profit.  Nobody passes on savings unless they have to. The price reduction is not altruistic, it’s a function of the market.  At higher prices, these condos can’t sell.

The most interesting dimension of the promo is the rollback for the original buyers.  It’s proof of the fragility of pre-sales.  The developer probably realizes many of the early pre-sale buyers can’t/won’t complete on the original prices.  My guess is the developer’s calculated it makes more sense to slash prices across the board than risk the time and expense of litigation.

Let us step back and think about what this means.  Nobody “gives away” profits.  To reduce prices on signed contracts tells you those contracts aren’t secure.   It’s a developer’s nightmare.  What’s the value of pre-sales if buyers can’t close?  This is an industry-wide problem and Amacon is the first to face the music.  The precedent is set for retroactive discounts.

This is a warning sign of trouble to come.  As I’ve said before, the one to watch is Woodward’s.  The clock is ticking.

24 Responses to “A tribute to urban duress”

  1. tragicspin Says:

    CH , I think you’ve hit the nail on the head pointing out that you think many pre sale buyers ” CAN’T/WON’T” complete thier contracts. The fact remains that the majority of the late bubbe project pre sales were not purchased by prospective owner occupiers but specuvestors/flippers who never dreamed they might have to complete.

    These flippers have no abilty to complete as bona fide financial risks. Many of these people were simple people who were hairdressers,waiters and the like caught up in the Vanouver boom-hype. Many of these prospective TRUMPS were multi unit serial purchasers and couldn’t qualify for financing under any circumstance and still can’t even with the retroactive price reductions. Many of these TRUMP wannabes don’t know that Donald Trump never made his own money but is in fact an inheritance case who along with his brother inherited his first ” 700,000,000 dollars, yes no typo, Donald inherited seven hundred million dollars with which to start his “empire”.

    There are still going to be just as many pre sale contract flops and the developers know it. Perhaps thier lawyers have advised them to make a public attempt at mitigation so they don’t look the the bad guy when standing before the judge. Definatley watch the collapse of the majority of the Woodwards contracts to bail, as it exemplifies the bubble-hype madness in all it’s now infamous glory.

  2. greg Says:

    You may be onto something with this litigation angle. In order to litigate, the developers would have to delay winding up the corporate entity that provided the umbrella for the development – thereby allowing them to sue people – but also leaving the developer open to counter-suits, as the legal entity has not been wound up. I’m thinking just like they might want to sue non-completing buyers, there might be any number of trades or other suppliers who will be suing these developers. Not to mention that suing soon to be bankrupt property speculators may not be that lucrative – in particular when its impossible to know which pre-sale purchasers “got nothin'” to grab.

    Sounds like a nice tidy way to move on and get out of the condo market while the getting is good.

  3. blueskies Says:

    so basically everything that
    Onni, Amacon and Pinnacle
    have touched has turned to sh!t…….

  4. vancityguy Says:

    Oh if only I were a lawyer.

    That’s the best way to make dough in the Vancouver condo market in 2009 and beyond.

    Pre-sale what? Litigate! What downturn?

  5. Strataman Says:

    “My guess is the developer’s calculated it makes more sense to slash prices across the board than risk the time and expense of litigation.”
    CH I think you have hit in right on the head. They are not succeeding at some other sites I know of as the pre-sales buyers are filing bankruptcy. Smart move on their part. Get out with your skin! 🙂

  6. Rob Bennie Says:

    Buyers in this project have won the lottery!!!

  7. Happy Renter in North Van Says:

    There’s an old saying…

    “Make virtue out of necessity…” I think that should be AMACON and MAC Realty Marketing Bull SH*T’s corporate tag line…

  8. pomonke Says:

    so why didn’t Ritz Carlton Vancouver pass on the savings by reducing its outrageous price again ?

  9. SurreyJoe Says:

    Another condo dump to be announced shortly. http://www.MacBulk.com says 3 developers will be liquidating 4 projects in Burnaby, Coquiltlam, Surrey and Abbotsford. Details to come but sounds like something similar to the Onni liquidation.

  10. JimTan Says:

    This is a great time to buy!!!! Savings are incredible!!! This is like winning the lottery.

  11. womp Says:

    I’m not 100% sure on this, but I believe there is a two-year window after a legal entity has wound up in BC that people can still go after it. It’s probably a lot more difficult, but I think the people behind the umbrella would still be legally required to appear.

  12. dingus Says:

    womp, go after what? The defunct company will have no assets. There’s no point in reviving a defunct company and suing. It’s like digging up a grave of someone you don’t like just so you can punch the body in the face.

  13. jesse Says:

    The Onni marketing campaign was a one trick pony. They have had to up the ante with this marketing campaign and including existing buyers was a necessity to keep up interest especially since not including existing buyers is extremely negative PR. Who knows what the next gimmick will be.

    It’s all good; it definitely makes for a great spectator sport. I buy three.

  14. jojo Says:

    The prices are not bad, considering they are cheaper than a lot of overly-optimistic sellers with used condos. Low $500/sf for brand new product, not bad at all. I’m still not buying though because the 3 year wait is too long, prices are still falling!

  15. Paul Says:

    It’s $611/sf down from $815/sf avg at launch.

    Comparable re-sale in the area ranges from low $500s to mid $600s.

  16. VHB Says:

    “I buy three”

    But what about your spouse, Jesse? Doesn’t he/she want three as well?

  17. julia Says:

    NOBODY gives THAT much money back unless they HAVE to… the rumour on the street is that the contracts are “no longer legally binding” for a number of reasons (re: disclosure statement) therefore the developer is desperate to retain the existing purchasers – and now HAS to give that money back to sweeten the deal for them to stick around.

  18. Tony Danza Says:

    “I buy three”

    BOOM BOOM BOOM!!!

  19. DG Says:

    @Dingus: Bankruptcy isn’t a get out of jail free card for the Directors. It’s perfectly possible to sue the Directors of a bankrupt company personally, particularly if they did things such as gave preferential treatment to certain creditors when they knew the business was no longer a going concern. In turn, however, the Directors themselves can declare personal bankruptcy, which is where the trail really does run cold.

  20. dingus Says:

    DG: in theory, maybe, but directors liability to third parties suffering financial loss as a result of their company’s failed business venture is a long shot. There duty of loyalty is to the company, not to the company’s creditors or clients. If the directors have behaved reasonably in the best interests of the company, and the company goes tits up, that’s pretty much the end of it. And in the case of purchasers, there’s such a looong line of creditors in priority, that any fraudulent preferences higher up the chain wouldn’t change the outcome for them anyway. And in this environment — what are the damages, again?

  21. jojo Says:

    We need a viral video of “I buy 3” in the lines of “All your base are belong to us”. It should capture the sinking condo market nicely!

  22. CJ Says:

    It’s too funny that this place is actually called The Beasley. Just what does it take to dicredit the city planning department? If this plus the Olypic Village plus the whole catastrophe doesn’t do it, what would?

    “Passing the savings on to you …” ROFLMAO.

  23. coal harbor Says:

    Ahhh…sweet karma. I was evicted from the Homer apartments to make way for the supposed Beasley. Amacon and the city of Vancouver planning department are deservedly cursed for their vicious treatment of the former residents of that now empty and rotting heritage building.

  24. Crabman Says:

    “Pass it on”?! More like: “Pass on it”!

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