This past Sunday was an extremely fruitful one, despite not consuming even a single beer at Molly MacPherson’s. The complex I visited last that day was the Madison, which is located near the Nascar museum. I went to the Madison to see the units and in particular, the finishes. I have to say I was very impressed. The units were large in size, and the prices were substantially below Vue prices. If my unit is built anything like the model I visited, I would be a very proud and happy owner. And I fully expect my unit will be. My primary objective of visiting the Madison, which was to see nice finishes to compare with the Vue on Thursday, was accomplished in short order.
In every place I went, including the Madison, I brought up the subject of the Vue. Actually, at the Madison, they brought it up because their sales pitch was…”we had no pre-sales, other places were 60% pre-sold, so we were able to price our units at the current market.” This of course led me to ask about the Vue, and the salesperson, who was very open and forthcoming, basically said the same thing everyone I talked to this weekend said: “I hope the Vue succeeds.” We even have a comment to yesterday’s post from an “Avenue Aficianado” who said the same thing (by the way, I want to thank Ken publicly for his detailed and well-articulated comment!). So the next thing I learned on this trip this weekend that virtually everyone is in the Vue’s corner. Everybody wins if the Vue succeeds.
Now, let’s discuss the prices as compared to the Vue. Yes, the Madison’s units were priced substantially lower. You get a top quality product, lots of living space, at a “bargain” as compared to what they were going to sell for in their original business plan. The Developer planned to sell the units for X, but once the market changed after well into the construction phase they now recognize they can’t get X, so they are charging a lot less than X. When all 26 units are sold and you add up the total revenue from their reduced selling prices, they are going to lose millions and millions of dollars. So this was another key learning for me: the Madison is a wonderful complex with bargain prices as to what they would have been a few years ago, but is a big money loser for the Developer. And more importantly, it is of no value to me, because it doesn’t have anywhere near the things I want when I move Uptown.
I’ll elaborate on this and address this question–is the Madison a good comp for the Vue? To me, not even close. Why? it’s location first and foremost. For me, it isn’t anywhere near where I want to be. Plus, I want all the Vue amenities, a larger population, the cache of the Vue, a multitude of reasons that I could list why the Vue is of more value to me.
This comes back to the theme stated in earlier posts: the Vue has no comp in Charlotte. It is one-of-a-kind. Yes, it had pre-sales, and if it didn’t have those pre-sales it would not have been built. We all said we would buy a unit and agreed upon a price, so the Vue went ahead and constructed the building. On Thursday, it will be unveiled. I can’t wait.
The value of the Vue…what the units are actually worth…we have been speculating all this time that they are not worth what we paid because of the downturn in the economy. But the truth is, we don’t actually know yet what the true value is. The value will be determined when buyers (both pre-sales and non-pre-sales) see it and react to the prices. If the product is spectacular, and if buyers agree that there is no other comp (read as no other supply) in Charlotte, then by golly, maybe the units will sell at their published prices and we won’t be paying more than they are actually worth. The value in the end is what people will pay for it. I wouldn’t pay what people are paying at the Madison, the Avenue, and other places, because for me, it doesn’t have what I want. The Vue does. If there are enough people that feel the same way, we will all be in excellent shape.
So the final key learning for me, (and I know it will to seem to many like an exercise in wishful or even delusional thinking), is let’s not underestimate the value that the Vue brings to the table, and just assume the units aren’t worth what we paid because of the economic downturn. Yes, many units in Uptown have lost value, but some have lost a lot more value than others. Whose to say that the Vue has lost any at all? It has no comp. It is one-of-a-kind, and there will be no other building like it for years and years. Supply and demand. Yes, there is tons of supply in Uptown, but no supply like the Vue. If the quality is there, and if there is sufficient demand with limited supply, the prices will hold, the units will sell, and MCL and the buyers will win. And so, quite frankly, according to everyone I have spoken to, will Uptown Charlotte.
Let’s continue to root, like seemingly everyone involved in Charlotte real estate is, for the Vue to prevail and sell out all their units over the next couple of years. Let’s not lose hope, even though I would be the first to say when reading the headlines that it is hard not to!
Ironically, in my mail Monday morning I got a Groupon offer for half-off Pub Fare at Molly MacPherson’s. Now, I could look at this 2 ways. I could say my timing continues to @#$@! Or, I could see it as an opportunity to go have that beer I missed this weekend! I am going to look at it as an opportunity, and I feel the same way about the Unveiling of the Vue.
See you Thursday!