The developers of Star Tower in downtown Orlando, Florida, have filed for Chapter 7 bankruptcy protection.
Last year, due to the downturn in the housing market and lower housing prices, the condominium units in the development were selling for less than $200,000. At one time, units in the project were selling for more than $750,000 each. Now with this Chapter 7 bankruptcy, Star Creations Development will most likely be able to discharge many of the debts that have accrued.
The development, which opened in 2007 at a high point in the real estate market, features condominium homes with floor-to-ceiling glass views and a pool on the rooftop. The spacious two-bedroom units measure a large 1,765 square feet.
When building these condominiums, the developers had hoped that the building’s unique design and appearance would help set it apart from other properties available to potential condominium buyers. However, even with all of the unique aspects of the building, it was still a struggle to sell the units.
To date, nearly 50 percent of the condominium units in the building are still in need of buyers. A real estate firm owned by one of the project developers is currently leasing finished units in the tower at a rate of $2,000 per month.
The founder of a group marketing the building also said that part of the problem with selling the units was due to the fact that banks were late in approving lower prices for the condominiums to keep them competitive with other properties.
That same spokesperson also believes that the bankruptcy is needed to restore stability and to put new life into the property and homeowner association.
In general this recent Chapter 7 bankruptcy filing shows the struggles that many developers are going through due to the current economic situation. And, looking to the future, as the housing market continues to struggle, there is a good chance that more and more projects will fold and other area development groups will also end up filing for bankruptcy.
Source: Orlando Sentinel, “Downtown condo enters bankruptcy,” Mary Shanklin, Sept. 18, 2011