Awhile back, I wrote to Cristian Michaels, the buyer of the 164 auctioned condos at the Vue Orlando, asking him if he could share with our readers his insights on the current situation we are facing here at the Vue Charlotte. Cristian was gracious enough to take the time to write the note below. I can’t overemphasize the importance of his insights, and how much credibility I lend to them. It’s no secret that my personal views tend to wander the spectrum from optimistic to pessimistic, and lately have been very pessimistic. But I am only one person, and my opinion isn’t worth any more than anyone else’s. I think that Cristian’s is. I think if he could be backed up now with some good news from MCL, I and maybe other readers would move right back into the optimistic column.
One of the things that has really struck me over the life of this blog is the willingness of people to contribute that otherwise really have no vested interest in doing so. Whether it is the brokers, the appraisers, the community of readers, the pre-sales buyers, the lawyers; I want to call all of you out and thank you for the help provided thus far.
This note from Cristian certainly adds balance to the “Deja VUE” posts I have done and this is the second time Cristian has delivered valuable content to this blog. His first contribution can be found here.
Thank you Cristian and I hope this makes everyone feel better about the building that MCL has constructed and why this very well may not be “Deja VUE All Over Again.” It should also be another reminder that the Developer (MCL) is not currently connected with the team that developed the VUE Orlando. But that doesn’t mean they didn’t learn a lot before the 2 Developments split. Here’s the note!
I appreciate you reaching out to me and inviting me to add my opinion. I feel for your position and the many others that are debating what to do at this time. I feel its important for you to understand that although we are bearing the same name, there are several major differences between our projects;
1.) Timing, as you know the Vue Orlando delivered right as the market of 2007 began to crest and we had nominal deposits. It was quite easy in that market to believe that we were in for a minor market adjustment and even though buyers might be slightly upside down for a bit. It was far more advantageous to close and consider it an investment, which with time would return a profit. What Orlando saw was such an exaggerated inflation of values due to speculation, nobody in this market anticipated a 40%-50% correction in the coming 24 months. The Orlando market has already begun to stabilize with major towers going full-scale lease up, similar to the one in your market called Catalyst. This is the best thing for a saturated market, remove excess inventory and over-supply, to stabilize prices. Most often developers and banks have to develop long-term hold strategies, meaning that these lease units wont re-emerge back into the market in a 6 month time frame but rather a 4-7 year time frame when the values dictate their conversion back to condos.
2.) Quality, the Development/Sales teams worked closely together to figure out what were challenges in Orlando and quickly incorporated it into the design on the Charlotte tower. When we toured the property we were quite impressed with the improvements. The size of your lobby for example, is half of the entire ground floor, with better design, this could have accommodated more commercial lease/sales space that would have been covering the heating/cooling costs and upkeep. Our lobby is a great show piece, but a very expensive one at that to maintain. The build out of your kitchens is far superior, with modern cabinetry that fits the design of the building. Most of Orlando has traditional full maple overlay doors with traditional pulls and we sometimes have buyers purchase homes here and then gut the kitchens. For our market the Vue Orlando still offers the most luxury, but for someone who is familiar with both projects, Vue Charlotte realized what didn’t work in Orlando. Your Washer/Dryers, slight floor plan adjustments, etc. We have carpeted elevator cabs, which we have just come in and tiled with designer tile, but again your building has Travertine. Your resident lounge is much more suitable than ours as far as decor and size. I think you get the point.
3.) Buyer profile, Orlando is very much an entertainment/tourism based economy, and more recently, we have seen a surge in medical, commerce, education, etc. Charlotte I think you will agree has a much deeper economic employment base and your purchases were buying with far less speculation. I know the demand for second homes in Orlando is significant, but is that the same in Charlotte? Also another factor to consider in Orlando is the significant urban sprawl, it is most definitely a commuter city and urban living is still a tough sell with a grocery store that just opened last year a movie theatre that struggles. Charlotte’s downtown seemed much more robust with a great deal more to offer urban dwellers.
Our team which purchased the Vue has been searching for months for similar type residential assets to purchase and I will tell you that the deals are not out there. The days of a Vue Orlando sale will likely never be seen again. I have underwritten nearly 45 towers in the past 60-90 days. A major factor for me when underwriting the outcome of a sell out is taking into account the original selling price and the new release price, because a huge spread will often create an increase in foreclosure/short sale activity. Keep in mind most times lenders do not want to own these towers. Especially when there are multiple lenders fighting over the proceeds. Vue Orlando was auctioned, which is by far the worst way to liquidate an asset and recover the most capital. In Orlando, Eastdil listed an inferior property called Paramount on Lake Eola, it sold conventionally for $55 Million. As much as I know you feel there will be no short-term solution, the buyers that were planning on living in their new homes at Vue Charlotte should really evaluate whether their hold time will work with a realistic market recovery. You would be doing yourself a significant injustice if you took a cookie cutter approach and labeled Orlando Vue and Charlotte Vue the same. I hope this helps, also keep in mind that if the senior debt on Vue Charlotte forecloses on the property, this will be well beyond MCL claiming deposits in default of contract for damages, so there is no way to credit deposits towards a future purchase from a new owner. We have had multiple buyers contact us wanting us to credit their deposit to a purchase here in Orlando, but we are not MCL, therefore it’s not an option. I hope this gives some balance and insight and let me know if I can help in any other way. Charlotte seemed from a trained professionals perspective to be a more stable market, even lenders view it that way with a lower down payment requirement. Florida requires 20-25% down, hope this helps.
Cristian Michaels, P.A., REALTOR
Condo Developer, LLC
Director of Premier Property Group
Feedback? Please comment or write to Vuebuyer10@yahoo.com. We are taking the weekend off. See you Monday!