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.