Timing it right: Residences at Ritz Carlton looks to sell unsold inventory

The way Craig Spencer sees it, the timing to sell the remaining condominiums at the Residences at Ritz Carlton couldn’t be better.

Thanks to a dwindling supply of new condos for sale in Center City and a nascent return of the condo market, Spencer is in prime position to seize upon the situation and finally sell the remaining 85 units that have lingered on the market since the project was conceived nearly a decade ago. At least, that’s how he sees it.

“We’ve sold $180 million in condos and that exceeds every building in the history of Philadelphia,” Spencer said in a recent interview.

One of the reasons the building still has unsold inventory compared to its competition can be blamed on the sheer size of the project, Spencer said. With 270 condos, it’s much bigger than 10 Rittenhouse Square, which has 135 condos, and 1706 Rittenhouse Square, which had 31 condos.

The Residences at Ritz Carlton was a $285 million project and construction began in 2006. Work was completed in 2009 during the depths of the recession.

Spencer considers 80 percent of the remaining condos some of the project’s best. As he tells it, he planned it that way and the property is just coming into a situation he and his partner set in motion during the downturn when condo sales came to a grinding halt.

“We made the decision to double down and this is the game plan we came up with,” Spencer said.

Back in 2009, Spencer and his partner, Gencom Group of Miami, Fla., bought back as much debt on the building as they could including a chunk from Lehman Brothers. In all, $150 million of the project’s debt was bought and at “substantial discounts,” he said.

Next up was ensuring the transformation of what is now Dilworth Park was well-funded so it would get completed, Spencer said. The addition of a new public gathering spot across the street from the condo development could only enhance the tower and create an amenity for residents just outside the tower’s front door. To that end, Spencer’s company made a substantial donation toward the reconstruction of the plaza.

Then a strategy was put forward to sell the least expensive inventory while the recovery was underway and save the best units for when the market finally went on the upswing. The condo market is making a come back with developers seeking to construct new product while supply has diminished and demand increasing.

Spencer’s plan so far seems to be working. Sales are brisk and prices are on the rise, he said. The average sale has been about $780 a square foot and three sales have come in at $1,000 a square foot.

“We had the guts to double down,” said Spencer, who also gives credit to demographic shifts that make urban living more desirable and a city that has gained some added luster. “Philadelphia also made us look really smart,” he said.

With interest in condos gaining traction, would Spencer do another condo project? “No,” he said.

Source: Philadelphia Business Journal