Wells Fargo Bank has hired a commercial real estate broker to sell about 300 residential lots in two distressed Twin Cities area developments, the latest sign of tough times for area home builders.
The properties include a large portion of Martin Farms, a master-planned community in Otsego, and all of Tullamore, a housing development planned for Lakeville. Eden Prairie-based Insignia Development was the lead developer of both projects.
The Martin Farms property includes 150 vacant developed lots and 108 acres of residential land. The asking price is $10.2 million, according to a news release by the Twin Cities office of CB Richard Ellis, which is marketing the property.
That's substantially lower than the original $75,000 to $110,000 asking prices for the lots, according to Charlie J. Pfeffer, a sales associate at Pfeffer Co. Inc., a Maple Grove land broker.
"That's a pretty big bite," Pfeffer said of the sizable acreage being put up for sale. He estimated that the property represents five to seven years of inventory for residential lots in the Otsego area.
Conceived in 2003, Martin Farms was of the most ambitious new housing projects in Wright County, with plans for up to 350 houses. The project's investors spent $34 million on the land and infrastructure improvements.
Wells Fargo provided stagecoach rides at the project's grand opening marketing event. On May 1, the lender took back the project as part of a workout agreement.
Only 50 of the lots at Martin Farms now have houses, and 10 of those are vacant.
"This was a horse that was conceived when the market was going nowhere but up," said Jeff Schoenwetter, a manager of Insignia and an investor in both Martin Farms and Tullamore. "I have no regrets about how the decision was made. I only regret that we did it."
The Tullamore property consists of about 80 acres zoned for residential development and currently platted for 149 single-family lots. The property is being marketed at $5.75 million, down about 25 percent from its original purchase price of $7.7 million, Schoenwetter said.
The Tullamore project was approved by Lakeville in 2005, not long before the housing market began its precipitous decline. The property is still little more than a cornfield.
Residential construction in the metro area continues to suffer from the downturn in the housing market. So far this year, permits are down about 50 percent from 2007, according to the Builders Association of the Twin Cities.
"I've never seen a market decline this abrupt," Schoenwetter said. "At the time these projects were conceived ... they looked like relatively intelligent business decisions."
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