Monday, July 09, 2007

Condos after Dark: The Loraine

The Loraine, once Madison's most prestigious hotel and a hangout for state legislators and other luminaries, has been a Madison fixture just a block from the Capitol since 1924. From the history page on its website:
The Loraine was originally conceived in 1922 by Milwaukee hotelier Walter Schroeder as a 250 room hotel. Architect Herbert Tullgren designed the Tudor Revival structure and construction was completed by June, 1924. Hotel Loraine (named after a niece of Mr. Schroeder who died during the course of construction) was so popular that a 100 room addition was completed one year later in 1925.

Hotel Loraine was the largest and arguably the most prestigious hotel in Madison. At an initial cost of $1,100,000, Hotel Loraine was the most expensive commercial building in Madison. Its prominent location on the site of Henry Proudfit's home provided a seamless link between the affairs of Wisconsin's government at the State Capitol and the academia at the University of Wisconsin.
Among Hotel Loraine's guests during its glory years were Ethel Barrymore, Gloria Swanson, Mae West, Harry Truman, and John F. Kennedy. It was declared a historic landmark due to its history, location and architectural significance.

In 2004, the conversion of The Loraine to luxury condos was completed, giving it a head-start on the current downtown condo building boom -- and its example also helped jump-start that boom. With its early start, it has a considerably higher sell-through rate than most of the other recent condo developments in Madison. According to the update on the local condo market in Sunday's Wisconsin State Journal, nearly 79 percent of The Loraine's 84 units have been sold, much better than most (the units that remain unsold include many of the more expensive luxury penthouses).

The article also reports that developers who once planned on a two-to-three-year turnaround for condo projects now expect something more like six to eight years. The slow market is also seeing some developers offer leases with options buy, with some of the rent applied to a downpayment in the event of purchase.

NOTE: As noted by Dr. Diablo in the Comments, the quotes in the WSJ article are more positive than the data seems to suggest. In fact, the real story is in the chart that illustrates sales in nine Madison-area condos, only three of which are more than 50 percent sold. Click here for 372kb PDF.


Dr Diablo said...

I don't know why I bothered to google and read the article, since it said exactly what I thought it would say. According to realtors and developers, this is a fine time to buy, with prices and interest rates both low. Already the market is starting to perk. The savvy purchaser will swoop down and snatch a condo now before the next wave of Boomers gobbles up existing supply.

It's too bad that newspapers now make all their money selling space to advertisers instead of newspapers to the public. Beholden to their revenue sources, "news" articles are increasingly puff pieces. The Journal did not quote a single authority who took a dim view of the condo market and advised prospects to sit tight.

I liked the quote from the Frautschi developer guy who said he feels personally offended when a potential buyer lowballs him. I guess trying to take advantage is the prerogative of vendors. Don't consumers realize that the U.S. economy would collapse if buyers started outwitting sellers?

I do envy you, MadMan, living in the very midst of these screaming bargains. You can pluck the condo of your choice like a ripe apple from a low branch. Pretty soon your photos of MONDO CONDO will be taken from the inside looking out.

Myself, I might be inclined to wait until prices turn up rather than trying to pick a bottom in the condo market. Meanwhile, I'll stay here in the trailer park, especially since I expect prices here to soar when home prices fall another 20%.

Madison Guy said...

Dr. Diablo, Thanks for the Googling, which let me know the WSJ finally put the piece up on their website. The sales guys, not surprisingly, did indeed sound like sales guys. I've added links to the article and the chart that tells the real story -- which is how empty most of the condos are that are filling in our skyline. Which, of course, is especially visible after dark.

George Hesselberg said...

"Beholden to their revenue sources, "news" articles are increasingly puff pieces."
That statement is inaccurate, bush-league, cheap and, naturally, anonymous.