PORTLAND, Ore. -- Oversaturated and not enough people to absorb the inventory. That's the case for Portland's condo and luxury apartment market.
The latest to find default is the 2121 Belmont project on the city's east side. Despite high occupancy, it could face foreclosure.
" We've actually loved living here," said renter Alex Hickman. He and his roommate Spencer just signed a six month lease. "The quality is much higher," he said.
When the floor fell out of the condo market, the 2121 project was finished with condo grade amenities including wood floors, upgraded kitchens and more. The original asking prices for units were $220,000 to $500,000. But, now as apartments, despite an occupancy rate just over 95 percent, 2121 isn't profitable.
"We don't have the demographics to support the luxury condo market that big," said Gary Winker, who follows the condo and apartment market in Portland for Colliers International.
Winkler says Portlander's will not pay the high rents developers need to make up the difference between apartment rents and condo mortgages.
"Once the renters came in they had to add concessions, a month free, a month and a half free, free parking. Those things..all take away from income," Winkler said.
Owners of 2121 Belmont are now in default owing $28.1 million.
This is not the first condo development in the Rose City to change plans in mid stream. The Wyatt in the Pearl District went to apartments after condo sales didn't materialize..
The same for the Ladd on Southwest Broadway. OPUS northwest saw the market change just in time.
"The approach of pre-sell a significant portion so that you've truly acknowledge the market is there and you've mitigated some degree of risk" said Tom Parsons, Vice President and General Manager of OPUS Northwest.
Risk so far is not paying off for the Atwater and the John Ross condo projects in south waterfront. The market and a lack of amenities there are not helping sales. Both projects are now in the hands of lenders. A fate facing 2121 Belmont if the bank doesn't get paid. So far not a concern for Alex Hickman.
"We've been assured by the management it shouldn't effect our lease, so we're not worried" he said.
If 2121 Belmont owners can't pay the bank, the 123-unit building will be sold at auction in June.