After pricing the properties in 2006 at $1,080 per square foot — a $700 per square foot base price plus the 40% premium — the Four Season Residences aimed high.
And at first it seemed like a sure thing; buyers purchased almost half of the Denver highrise condo properties. Then, the bottom dropped out of the market.
"We sold 48 homes of the 102 on that basis and that was enough to get to our pre-sales target for construction financing," said Chris Norton, CEO of FingerPrint Strategies, which did the marketing for the Four Seasons. "Of course the world wasn't aware of our brilliant plan and decided to have a hissy fit during this whole time period."
The result was that the market never actually reached $700 per square foot (even with the spectacular view, see left), and actually dropped to $350 to $400. The Four Seasons lost the majority of its pre-sales when the original buyers decided not to close and chose to walk away from their deposits.
"The terms of our construction loan were such that we couldn't bring our prices down, so we were sitting at over $700 per square foot over the market. Living at a Four Seasons is an amazing experience but it was pretty hard to make an argument that it was worth a 300% premium!" Norton said.
So in January of this year, Norton said it was "time to face reality, which so many projects across North America still haven't done."
Norton said the average price per square foot for condos over $750,000 in Denver was just $345 per square foot in 2011. Norton and his team really believed the Four Seasons could sell, so they made they decision to go for the 40% premium again. This put them at about $550 per square foot.
"This was a big price drop from the original pricing but we just had to accept that the world had changed and that it was time to look forward rather than back," he said.
It turns out they made the right call. They've sold 57 homes in the first six months of this year for over $70 million in value. They are over 70% sold and expect to be sold out by the end of the year.
"To put some context around this, beyond the Four Seasons the total value of sales for condos over $750K in the city in 2012 is just $26 million," Norton said. "We have a 270% market share."
As Norton says, that is "quite the turnaround story!"
Norton said that while it's pretty fascinating they essentially cut the price of these ultra-luxurious condos in half, the real story is that they have done double the selling work.
"We effectively have sold this building twice. The first time in the pre-crash days and now again in today's reality, so it is a fantastic case study of how the industry has to move forward these days," he said. "The first time around it was exactly to who you expect. We had events and the parking lot would be full of Bentleys and Ferraris. This time around the buyers are very different."
Norton and his team had research that told them that the Bentley and Ferrari buyers had completely left the market unless an extraordinary deal was available, but that buyers who valued things like design, uniqueness and authenticity were still around, so they built a campaign around those values and marketed to the second group instead.
"It takes a far more individualistic approach and many things that we used to do simply do not work with this type of person," he said. "In fact, we had to throw out the manual of what used to work and start from scratch."