500 bidders but just 21 contracts for Solaria

Attendance was high at the Solaria auction in Manhattan. Photo by Karsten Moran

By Aliza Appelbaum

More than 500 potential buyers showed up at Manhattan’s Sheraton Hotel and Towers on Sunday for a chance to bid on super-luxury apartments in the troubled Solaria development. Opening bids in many cases were set at less than half of the developer’s original asking price.

Though there were bids on all the apartments, 26 of the winning bids were below the reserve line, according to data analyzed by The Press and compiled by a real estate agent who attended the auction. If a bid is below the reserve line, the developer has the right to reject the bid and look for an alternate buyer.

“We expect to sell the building out over the next month in our post-auction effort,” said Robert Friedman, chairman of Real Estate Disposition, LLC (REDC), the firm handling the auction, in a press release. The company called the auction a success despite getting only 21 contracts for 54 vacant apartments, and getting far less for many of the units than what the developer originally thought the apartments were worth.

“Based on REDC’s past experience, prices increase post-auction day,” said a spokesman for Arc Development, the developer that built the Solaria, located on West 237th Street. “The auction generated great interest. Close to 3,900 people visited the building in less than four weeks. Close to 1,800 pre-registered [for the auction]. Contracts have been taken and bids continue to be made after the auction.”

New homeowners seemed pleased with their purchases. After successfully bidding on a condo, they were escorted out of the auction room to grins, handshakes and calls of congratulations.

“Certainly they are beautiful homes,” said Michele Christon, a Queens resident who purchased a two-bedroom, two-bathroom apartment with a riverfront- facing balcony.

The original price for her apartment was $1.1 million, and the bidding started at $499,000. She got the place for $790,000.

“It wasn’t a bargain, but I thought I got a good price and it worked for me,” said Ms. Christon. She said her favorite feature was “a beautiful view of the Hudson.”

Many of the apartments that sold had final prices closer to the opening bids than what Ms. Christon walked away with. One penthouse, with four bedrooms, four and a half bathrooms and a terrace, sold for $1,699,000, its starting bid. The original asking price was $3.8 million.

Another apartment, a three-bedroom, three-and-a-half-bathroom apartment with a balcony, sold for $860,000, up from a starting bid of $649,000, but significantly less than the original asking price of $1.4 million.

The condos sold for an average of 42 percent of the list price, according to the auction data. All winning bids are contingent on getting final approval from the seller.

The auction raised $17 million for the developer, the REDC press release stated. Building the Solaria cost Arc $56 million, and the developer has been spending a considerable amount to maintain the building every month with no help from the 54 vacant apartments that would normally be contributing large sums for common charges.

“The purpose of this process is price discovery,” Joe Korff, the founder of Arc Development, told the Press in October. Mr. Korff was not available for an interview after the auction. “We’ll let the market speak.”

The message was received loud and clear by some brokers in the local area.

“I thought the starting prices were still high for the area,” said Lorraine Coyle, a real estate agent in Riverdale who attended the auction. “Some went even higher than I expected in bidding.”

Ms. Coyle said she attended the auction with a client who ultimately chose not to bid on the properties he had been interested in because the bidding went too high.

“Those apartments were overpriced to begin with,” Ms. Coyle said. “Maybe if the developer had lowered the prices and then tried to sell them again he would have sold more apartments.”

Indeed, agents at other developments in Riverdale had been observing the Solaria’s prohibitively high prices for years.

“It is disappointing to see that during the last three years, the Solaria turned down higher offers from brokers and their qualified buyers than what the auction generated on Sunday,” said Vasco Da Silva, executive vice president of Exclusive Properties Sotheby’s International Realty in Riverdale. The firm represents three recent developments in Riverdale, including the Riverstone at 3220 Arlington Ave.

Other auction attendees worried the reverse — that the newly lowered prices would devalue their own properties.

“This sale scares people who own properties in the area because it undermines the value of their properties,” said Ralph Cohen, a Riverdale resident who attended the auction with his daughter and son-in-law.

They did not bid on an apartment, Mr. Cohen said, because prices were still too high.

“Having a vacant building is bad for everyone in the neighborhood,” Ms. Coyle said. “It doesn’t look good. If I was the developer, I would be happy.”

This is part of the November 26, 2009 online edition of The Riverdale Press.

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