Condo market warms up with little competition
Owner to begin marketing this month
Sacramento Business Journal - June 1, 2007, Mark Anderson
The first new mid-rise condominiums in downtown Sacramento go on sale this month, testing the local market for condo hotels. It's likely to be a short test. There are only 30 condos, and half of them already have been reserved for buyers. The Penthouses at Capitol Park occupies the 13th, 14th and 15th floors of the new Residence Inn at 15th and L streets.
Construction is almost done on the hotel, expected to open early this month, and the first condos should be delivered in July, said Georgina Valencia, the broker representing the seller.
Investor Warren Lortie of Newport Beach bought the condos as part of the complicated financing deal for the hotel. Lortie -- who built Warren Lortie Associates Inc. and then retired -- wouldn't say what he paid, but he did disclose what he's asking: Units start in the $500,000s, while the largest condo with the best view is priced around $900,000.
"I think it could have been tough to sell them with all the other competition that was supposed to be opening in downtown Sacramento, but with the other projects not happening, it should be easier," he said. "I don't give the other projects much of a chance of resurrection anytime soon."
When the Residence Inn was proposed back in 2004, it was one of at least three downtown projects that combined a hotel with condos. One project, at 12th and J streets, never materialized. The Towers project on Capitol Mall at 3rd Street was to have a 250-room InterContinental Hotel along with 760 condos, but escalating costs and financing woes forced a construction halt in January.
The Residence Inn was supposed to be completed late last year, which would have been better market timing, Lortie said. "It's no secret that it has gotten tougher to sell real estate now," he said. "Lenders are getting tougher, and people are wary of the whole housing market."
Still, Lortie said he's not concerned about finding buyers given the location. "It is right in the middle of the hubbub," he said. "It's kind of a New York thing to have a flat on the top of a hotel.
You feel like you are in New York. 
It is a great urban view."
There are 10 different plans, with the condos overlooking Capitol Park commanding top prices. All the condos, which range from 750 to 1,350 square feet, have 12-foot-high windows from floor to ceiling. Parking is in a garage next door. The one- and two-bedroom condos have a separate entrance and elevator from the hotel, but residents would be able to order room service and use other hotel amenities.
The 30 condos have generated more than 200 inquiries, and Valencia said she's shown the spaces a handful of times. She's discouraging people from taking a tour until the construction is completed. "As soon as we get some of them done, we will start showing what we are offering," she said. Of the 15 units that have been reserved, all of them would be at least a second home for the buyers.
"In general, it's a tough time for condos, but the buyer pool those kinds of condos appeal to is not affected by the subprime fallout or the difficulty in getting financing. This is not a first-time buyer product," said Bruce Slaton, a real estate agent and president of SacramentoCondos.com.
"After all the hoopla about (developer John) Saca's Towers project and the Aura Condos, there are people who want to live downtown."
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Even if the Towers and Aura Condos do not get built as planned..maybe their greatest legacy will be that they got people to finally take downtown Sacramento serious as a place to live? Also their possible demise "might" be a blessing in disguise in that they will move buyers who want to live downtown into some of the other smaller projects already uc/built. The goal right now is building synergy downtown in any form. Skyscraper condos will come to Sacramento but as they say-Rome was not built in a day.
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