Anecdotally I’ve been told that they need sales approaching $700 per square foot, similar to San Francisco valuations to make this deal pencil out.  This will get interesting. -Derek

The future of SNK Realty Group’s Arpeggio, a highly anticipated condo building in downtown Berkeley, is beginning to look uncertain.

A website still pitches the project to prospective buyers, but the sales office sits unmanned. Construction on the 143-unit building at 2055 Center St., started in 2008, has yet to wrap up, and recent progress appears slow.

It is unclear what SNK, based in Dallas, plans to do with the $81 million project, but closing the sales office has led to speculation. Calls to SNK were not returned.

In the meantime, prospective investors are lining up to buy the property or the $65 million construction loan, which is held by U.S. Bank.

“There is a lot of discretionary capital out there that could buy it and stabilize it,” said Todd Vitzthum, a broker with CB Richard Ellis, who specializes in multi-family properties. “It’s a high profile property in the Bay Area that many groups would be interested in buying.”

Property records do not indicate the project is in default. U.S. Bank took possession of the note in September after it bought the assets of Pacific National Bank, the original lender on the Arpeggio that was seized by the Federal Deposit Insurance Corp. In January, two mechanic’s liens were filed for the property including one for $43,601.35 from Idaho Pacific Lumber Co. Inc. and one for $39,765 from Paradigm Concrete & Construction Inc. The latter lien was waived Feb. 14.

The nine-story Arpeggio was one of several residential projects that kicked off a building boom in Berkeley a few years ago after the city increased its density and height limits.

Other projects such as Hudson McDonald’s New Californian at 1885 University Ave. and Essex Property Trust’s Fourth and U, near the intersection of University Avenue and Interstate 80, are already completed and leasing up.

The Arpeggio aimed its for-sale units at empty-nesters, college faculty and professionals who wanted to live downtown.

Prices for the units were listed ranging from $425,000 to $764,000 for one- and two-bedrooms. The building will also house 5,000 square feet of retail and 10,000 square feet promised to the Berkeley Repertory Theater.

Many developers who broke ground on condo projects from 2006 to 2008 are finding those buildings underwater now, said Chris Foley, principal of Polaris Group, a condo marketing and research firm. Construction prices were higher then, and now sale prices have taken a dive.

“It’s hard to make a deal like that work,” Foley said.

via Big Berkeley condo project appears stalled | San Francisco Business Times.