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Real estate news and analysis from The Wall Street Journal June 26, 2012, 1:37 PM

Vail Begins to Slalom Out of Its Luxury Condo Glut Article

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By Kris Hudson

About Developments The Developments blog features exclusive news, analysis and commentary on residential and commercial real estate from The Wall Street Journal’s real estate bureau. Send tips, comments and questions to developmentsblog@wsj.com.

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A view of the Ritz-Carlton Residences and its pool area in Vail, Colo.

Last season’s snowfall was abysmal in Vail, but the skiing hotbed at least has reason for optimism about its real estate: Sales of multimillion-dollar condominiums have picked up.

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In recent years, Vail had gotten a bit too far over its ski tips as three luxury hotel projects were built and opened in late 2010 with dozens of pricey condos to sell: a Ritz-Carlton Residences, a Four Seasons and the locally developed Solaris mixed-use project. The trouble was that high-end buyers became scarce during the recession and after.

By mid-2011, Vail’s new projects were skidding on icy patches. But roughly a year later, at least two of the properties have gained some sales momentum, as seen during tours of the properties on Saturday by members of the National Association of Real Estate Editors, including The Wall Street Journal.

By last summer, the Ritz, developed by Vail Resorts Inc., had sold only 26 of its 71 condos and cut prices by 20%. The Ritz has sold an additional 11 condos in the past year.

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Also as of last summer, the Solaris, developed by Vail’s Peter Noble, was holding its prices steady and had sold only 20 of its 79 units. Since then, the Solaris has sold another dozen.

The Four Seasons has not seen the same level of sales activity. As of last year, it had

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sold just one of its 16 residences and cut prices by 25%. In addition, it had sold only 31 of its 228 fractional units. (A fractional, similar to a timeshare, allows the buyer access to the unit for several weeks a year.)

Since then, the Four Seasons, still held by Barclays Capital after a 2009 foreclosure, has sold only one more condo and a few more fractional units. The Four Seasons also has 121 hotel rooms.

Kris Hudson/The Wall Street Journal

The Four Seasons Vail

A representative of the Four Seasons Vail said in a statement that the project, with only 16 residences in all, is under less pressure than its peers with dozens of unsold residences to lower prices and reduce inventory. Barclays thus is taking a “long view” of Vail real-estate values by holding prices steady and waiting for the right buyers of the residences and fractionals.

Developers of the Ritz and the Solaris attribute their additional sales in part to the benefit of having another year of marketing in the books and to an improved financing market for buyers. The Solaris also added more retailers in its commercial space, adding to its appeal for residents. At the Ritz, owner Vail Resorts entices buyers by offering two lifetime ski passes to Vail mountain as well as free ski lessons or rounds of golf for each residence purchased.

Overall, the revival in sales at the Ritz and Solaris reflect the resurgence in Vail’s Eagle County.

Home sales in Eagle County rose to $124.5 million in April, the latest data available, up 24% from April 2011, according to Denver-based Land Title Guarantee Co. Eagle County’s average sales price was $923,039 in April, up from the 2011 average of $857,858. Still, that’s less than the county’s recent annual high of nearly $1.4 million in 2008, according to Land Title Guarantee.

“We are up from last year,” said Alex Iskenderian, chief operating officer at Vail Resorts Development, the Ritz’s developer, speaking about the Vail real-estate market in general. “Two thousand twelve is better than ’11, and ’11 was better than ’10. We’re coming back, but we’re not back to 2007 levels.”

At the Solaris, buyers are shown condos with flashy amenities such as Sub-Zero freezers, Toto dual-flush toilets and radiant-floor heating throughout. “We still have plenty of inventory available,” said Craig Cohn, director of sales at the Solaris. “But we’ve had pretty good absorption” of late.

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Prices at the Ritz range from $2.2 million for a two-bedroom, three-bathroom unit to $8.9 million for a five-bedroom, six-bathroom unit. At the Solaris, the range is $1.9 million to $19.2 million. At the Four Seasons, it’s $2.7 million to nearly $14 million.

A fourth Vail project a bit older than the other three is claiming progress in sales after a rocky start. A fractional-residence project now called the Sebastian opened in Vail in 2007 as the Vail Plaza Club. However, it struggled early to sell units, went into bankruptcy, was bought out of bankruptcy by Mexican investors in 2009 and renamed the Sebastian in 2010.

So far, the Sebastian has sold 65 of its 190 fractional “memberships,” most of those since 2010. The memberships, which provide buyers four weeks of access to the Sebastian’s residences each year, cost 225,000.

Barclays Capital, Four Seasons, Ritz-Carlton, Solaris, Vail Resorts Inc. « Previous Real Estate News: China in Talks With U.S. Home Builder

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