It was either a raving success or a necessary success, depending upon whether you were an auction buyer or you were ACG Equities, the seller.
23 condos sold at varying discounts during the auction, 2 more sold in the minutes following the final gavel bang. When the dust settled, ACG Equities met their pre-auction goal to sell 25 condos – 19 to new owner occupants and 6 to investors. The benchmark of selling 25 condos was not a number pulled from thin air, it was the number of condos required to be sold in order to meet the project’s conditional FHA approval. The Federal Housing Administration requires at least 30% of 129 condos in the project to be either sold or under contract in order to qualify for the program.
Condos Sold at the Auction
5th & Main Condo Auction Blow by Blow
The auction was held at the downtown Nashville Sheraton Hotel on Saturday at 1:00pm. Bidders began to arrive as early as an hour prior to auction time and numbered nearly 100 by the time of the auction. The very first condo auctioned was a primo 755 square foot 1 bedroom unit complete with panoramic views of the Nashville skyline. The bidding was fast, furious and frantic. When the gavel dropped, the first condo sold after more than 15 bids for $145,000 or $192.05 per square foot. It would be the highest price per square foot achieved all day.
The next 11 condos auctioned were all 1 bedroom units with views that varied between the Nashville skyline and the lush courtyard in the center of the property. With the sale of each successive condo the number of bidders began to fade and prices followed suit, falling from a high of $192.05 per foot to a low of $126.95 per foot. Sensing the momentum in the room, the auctioneers moved on to the premier 2 bedroom condos in the building, but the bidding was guarded. The next 9 sales oscillated between $116.16 and $147.88 per foot with 4 of the condos selling at the minimum bid price.
Once again, the auctioneers sensed the room deflating and moved on to auction the townhouses. At this point, 21 condos have sold and ACG Equities is very close to completing their goal of selling 25 units. If they did not have to sell 25 condos in order to meet their FHA conditional approval for financing purposes, they probably would have stopped the auction by now. Alas, they needed 4 more sales and thus the show must go on. Not long after the auctioneer began to auction the first townhome, it was clear this was going to be an uphill battle. Bidding was non-existent until an investor stepped in with the only bid, the minimum bid, and snapped up two half price townhouses back to back.
The auctioneers quickly jumped back to auction additional condos, but it was too late, the momentum was gone, Harry Potter had lost his magic wand and no bidders surfaced for the final 5 condos.
Recommendations for Buyers Moving Forward
It would appear as though there is a small window for new buyers to purchase Fifth & Main condos at auction prices. If the aftermath of the Terrazzo auction 2 years ago is any lesson, prices will begin a slow, methodical rise as this development sells out over the next 12 to 18 months. Now that 5th & Main buyers will have the ability to utilize FHA backed mortgages, I can confidently say these condos are a solid buy.
My sense is that East Nashville will regain critical momentum over the next several years, culminating in a probable resale window of 5-8 years from today for maximum profitability. There are several boutique developments in the planning stages along Main Street and Woodland Street that will greatly affect area values. Several are mixed use in nature.
I am more than happy to assist new buyers in determining which remaining condos are the best short and long term investments. I also have a more in-depth analysis that I will gladly share with my clients.
Please call or text 615-945-7123 or email 5&M@granthammond.com for information
Players Involved in the Auction and Grades
Chicago based ACG Equities, who acquired 5th & Main in late February 2011 retained Boston based, IMPACT Real Estate Solutions to create a comprehensive sales, marketing and auction strategy. Hudgins Auctions and Realty was retained to call the auction itself.
The marketing for the 5th & Main auction seemed to be omnipresent. Every time I turned around I saw another billboard or newspaper ad or Internet pay per click or something that pointed me back to the sale. The campaign assembled by IMPACT Real Estate Solutions was like a summer cold I could not shake. My final grade is an A.
The auctioneers on the day of sale looked the part, but aside from the lead auctioneer, I was not overly impressed. A few gave me that “I’ll be auctioning off farm equipment tomorrow” vibe instead of the “I’ll be auctioning off mansions and estate properties tomorrow” vibe. Somehow I wanted all of them to be as credible as the lead auctioneer. My final grade is a B.
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