What will happen to all those empty condos?

Earlier this year, I wrote about the ambitious development firm Schnitzer West, which started constructing several massive residential buildings and office towers at the worst time in the real-estate market:

At Gallery in Belltown, which began presale in October 2006, deposits have been put down on fewer than half of the 233 condos, and King County tax records online show that buyers have closed on only 22 of those condos—less than 10 percent. Brix Condos on Capitol Hill, which has 141 units, also started preselling in fall 2006; so far, according to a sales representative, fewer than half have sold. And at the Equinox on Eastlake Avenue, a sales representative says people have signed contracts for fewer than 30 percent of the 204 condos in the building, which is still under construction. Meanwhile, Schnitzer's Bravern, which is under the crane in Bellevue, has contracts on fewer than one-third of its 450 condos.

Schnitzer West basically had three options: They could sit on the empty condos and wait for the market to bounce back (all the while hemorrhaging money), they could convert the condos into apartments (renting them at prices far lower than a monthly mortgage), or they could just auction them at a price so low they fly out the door (while losing profit potential in large chunks).

As Slog tipper Claire notes and others have reported, Schnitzer is in auctioning off its condos at Brix in Capitol Hill and Gallery in Belltown, starting bids on some units at 62 percent of listed price. For instance, a $485,000 unit is starting at $185,000 on Sunday, Sept. 27 at 1:00 p.m in the Grand Hyatt.

Liquidating condo stock through auctions is still fairly new 'round these parts. But since last winter, condo developers have been auctioning their units, usually selling for about 80 percent of their listed price, left and right. But it's interesting that Schnitzer—which is owned by the extremely wealthy Schnitzer family in Oregon, which also owns Schnitzer Steel—can't hang on until the market improves.