Downtown Raleigh Condos

[Jones_]

And of course the buildings available are gradually selling out.....I would guess only Hue and 111 Seaboard have substantial numbers available for sale right now. West, 222 and Bloomsbury all needed 50% reserved before groundbreaking, Hudson and Dawson are virtually sold out RBC is 100% reserved, Palladium was down to 2 or 3......WRAL.....I read it, but this is about what I expect from them.

[Captain Awesome]

"It's too early to say the slight decrease we saw in the fourth quarter had to do with national economic issues versus (the fact that) people don't really buy that many houses or condos during the wintertime,"

[sax184]

During the broadcast version of this story, the tone of the newscasters was reminiscent of a eulogy for the downtown housing market rather than an objective report on slow winter condo sales. I really don't understand why the local media is so hellbent on declaring the death of downtown even before its rebirth other than it appeals to their North Raleigh, suburban and rural audience members.

[dwntwnraleigh]

I just posted this to the WRAL comments page:

This story is wildly inaccurate. The perceived slow down in sales in the 4th quarter is based upon a lack of product to sell. This is a function of the timing of new product deliveries, not market preferences. The way to do this analysis with validity is to base it upon resale activity by quarter, length of stay on the market, and relative appreciation.

Additonally, the comment regarding seasonal interference is spurious. This can be evidenced by looking forward to 4th quarter 2008, where 426 units at 222 Glenwood, The West, and RBC Plaza will be delivered. Of these units, 85% are under contract (not just reserved). Again, the activity is a function of the timing of product delivery, not market preferences.

With regards to some of the comments made here about safety - Downtown Raleigh is the safest police district in the city. Look it up. The misperceptions about safety in downtown are a hangover of the anti-urbanist paradigm that dominated the 1960's - mid 1990's.

[DwnTwnRaleighGuy]

I just posted this to the WRAL comments page:

This story is wildly inaccurate. The perceived slow down in sales in the 4th quarter is based upon a lack of product to sell. This is a function of the timing of new product deliveries, not market preferences. The way to do this analysis with validity is to base it upon resale activity by quarter, length of stay on the market, and relative appreciation.

Additonally, the comment regarding seasonal interference is spurious. This can be evidenced by looking forward to 4th quarter 2008, where 426 units at 222 Glenwood, The West, and RBC Plaza will be delivered. Of these units, 85% are under contract (not just reserved). Again, the activity is a function of the timing of product delivery, not market preferences.

With regards to some of the comments made here about safety - Downtown Raleigh is the safest police district in the city. Look it up. The misperceptions about safety in downtown are a hangover of the anti-urbanist paradigm that dominated the 1960's - mid 1990's.

[cophead567]

Yes, well said dwntwnraleigh.

God, I always get sucked into reading the comments and those ignorant comments always frustrate me. They call downtown a ghost town at night....but their suburban neighborhood is partying and lively at night????? Crime and parking are the biggest reasons people dislike downtown, but that is truly an ignorant statement. You correctly pointed out that downtown is one of the safer areas in Raleigh, there is evidence to prove that! (and with some time I'm sure i can dig it up, if not already stated on this forum) Decks sit empty while people drive around in circles complaining about parking!

And to keep this on topic, OF COURSE sales are slowing if the supply is close to maxing out, i completely agree. That is bad research work on WRAL's part. There are more condo projects in the pipeline that have not yet announced sales info. I think once blount street commons starts rolling out units for sale, the trend will spike back up again.

Simple stuff to notice here.

[Rascal]

I guess they didn't bother to mention that, since the housing market as a whole went south, new condo projects are still being proposed and none are being put on hold b/c of market conditions. The only one that arguably was impacted was Tucker switching to rentals.

I've heard other people, not just news articles, saying that too many condos are being built downtown. I think it's just hard for a lot of people to imagine the downtown-condo lifestyle. If they don't want it, they don't see why anyone else would.

[Jones_]

^Relative to the total number of people moving to the area its still a small number of people moving downtown. I know we are all happy to see the new projects coming along but I think there is really alot more untapped potential as this region grows....now its time to improve the product offerings....I know several people who won't pull the trigger because they want something a little more interesting than the West/222/Paramount style that dominates, but that has already been talked up quite a bit....

[RaleighRob]

I guess they didn't bother to mention that, since the housing market as a whole went south, new condo projects are still being proposed and none are being put on hold b/c of market conditions. The only one that arguably was impacted was Tucker switching to rentals.

[ChiefJoJo]

Another rather gloomy article on downtown condos.

New news: 630 North St scaled back from 42 to 32 condos & Site One has contingency plans for apartments in one tower if the market remains uncertain.

[RaleighRob]

^ That sucks about North Street...as well as the article mentioning the Seaboard and Glen on Peace projects on Hold.

As for Site One, that's not really a bad thing....the goal for downtown boosters is to get more people living in downtown. Whether they're owning a condo or renting an apartment really makes no difference. (I personally argue that apartments are easier to fill up faster, and the demand for them is way higher than for buying high-end condos.)

[ncwebguy]

I don't see how a market that has more units under construction now than the *entire previously existing market* is "sour". Quotes like "this has been my busiest Jan-Feb ever" suggest quite the opposite. The number of condo sales is down because the Paramount, the Hudson, the Quorum Center, set the bar high in 2006 vs. 2007, and Palladium Plaza was the only building to open in 07.

It is like the N&O is trying to sour the market even as West, 222, Hue, etc. open. Will they have a "2008 sees record condo sales" article at the end of the year? Probably not. The classified ads for houses has a big weekend section... I would hate to see advertising dictating the editorial side of the paper, but I wouldn't be surprised either.

The market is sour on *bad* condo projects -- Boylan Flats looked odd/out of place. One eleven had a stupid name, next to no marketing (a sign on Peace Street isn't going to cut it), and the location (overlooking a gas station) is too "ahead of the curve. It sounds like York Properties were betting on the flippers putting enough cash down to get construction started and let momentum do the heavy lifting of getting owners. It seems like York Properties only got into the condo project because everyone else was, not because they knew what they were doing. Selling the land at the Glen at Peace doesn't mean the project is off, just in someone else's hands.

Also, I don't see what is "bad" about condo projects becoming apartment projects.

They increase the number of beds in the CBD, which gets more retail and support services coming into the area. As long as collected rents are more than debt payment + operating expenses, apartment buildings provide revenue. And they could be converted into condos quicker than designing/constructing a new tower.

What is the "condo" market like for the rest of the city? Why are they (and the townhouse market) not mentioned? Especially in how the townhouse market is/will be slaughtered when montly payments on interest-only mortages increase.

[Jones_]

This to me is the same as the Starbucks vs. Helios argument....generic vs original applies to how people are willing to live too. If you own a North Face fleece you probably like 222 and West and hang at Starbucks. That market has been well served. If you bought shoes at Firefly, you probably liked Hudson (or Cameron Court but I digress...) and prefer Helios. The line isn't that clear of course, but I am willing to bet that if you had a light rail going to RTP and Titanium Lofts (Denver CO) sitting where say Mechanics and Farmers bank is....it would sell out in a flash. Those folks really want to live downtown as a lifestyle, not because its close to a bar and has a nice parking deck for their Passat and Tahoe like say 222 or Paramount. Again being very general, but your average Clearscapes employee is very different than your average insurance salesman and project developers need to realize that. 630 North does not say condo neighborhood and an urban living enthusiest will not be impressed with that location. 111 Seaboard is just a very poor site. Glen on Peace looks too suburban with the cabana porches. In summary our product is generally too generic or too high end or just way off the mark in some way. Raleighs ticket to a prosperous is not Opie but rather the LED display Plensa offered us....high tech, market to those people.....strip the condos down some......large opening windows on corner units, fewer rooms and more open walless space, concrete counters, blonde wood flooring and shelving and stainless outlet covers/appliances/shelving, visible structural steel or structural brick with exposed electrical conduit, polished concrete floors, kitchen shelves instead of overhead cabinets, pocket bathroom doors, exposed HVAC, innovative storage spaces......

[ChiefJoJo]

The market is sour on *bad* condo projects -- Boylan Flats looked odd/out of place. One eleven had a stupid name, next to no marketing (a sign on Peace Street isn't going to cut it), and the location (overlooking a gas station) is too "ahead of the curve. It sounds like York Properties were betting on the flippers putting enough cash down to get construction started and let momentum do the heavy lifting of getting owners. It seems like York Properties only got into the condo project because everyone else was, not because they knew what they were doing. Selling the land at the Glen at Peace doesn't mean the project is off, just in someone else's hands.

Also, I don't see what is "bad" about condo projects becoming apartment projects.

[Jones_]

Jojo, I know a tenant in Odd Fellows and he says that is still the word around the building a few years down the road. We really need a good conversion project in downtown proper...Cotton Mill and Caraleigh Mills are great but I have to say I still sort of chafe at not being in downtown proper (you know, but others maybe not... i live in Caraleigh Mills)

[beeks]

i live in Caraleigh Mills)

[Jones_]

Jones133,

I am considering a purchase in Caraleigh Mills. Is it possible that I ask you a few questions about your knowledge and experience from living there? The messageboard wouldn't let me private message you...

Thanks.

[ncwebguy]

I know brick faces are a costly corner easily cut by using other materials, but how much is saved here in the Triangle, with Sanford so close? In cities far away from brick suppliers, I can see the costs going up quickly, but wonder what percentage a brick building vs. glass vs. stucco would be, all other things being equal.

Condos on Martin Street (Martin Place?) and Park Deveraux were a bargain by today's standards. This may have been due to the low demand for downtown residences, and the Asian markets were not as resource hungry as they are now, but is the cost that much more? Or are devlopers not worried since it is hard to meet demand for product priced less than $200/sq ft.?

Devlopers *can* get out of apartment buildings easily by selling them to real estate trusts and/or managment companies. Some apartment developers keep them and hire managment companies, but most build, sell, and move on. I think the same could be done for downtown apartment buildings. Years later, real estate trusts can then sell the building to someone else or convert them to condos.

Apartments aren't good or bad in and of themselves -- it depends on the manager and/or ownership. A poorly maintained building will lose quality tenants, potential tenants go elsewhere, rents go down to attract new tenants, more corners are cut to justify the lower rents, etc. Having blocks of nothing but apartments is not ideal, but a good mix of apartments and condos would bring more residents downtown -- some who can't afford to own, some who don't want a 30 year mortgage.

[Jones_]

TBJ on condo financing. The newest news is that The Raleigh (aka Reynolds) is being delayed yet again.

[ChiefJoJo]

^ Thanks for posting that... a good look at where we are and why some projects have moved forward, while others have not:

Hue is a joint venture among CityView, Trammell Crow Residential and York Properties. The team secured $36 million in financing from real estate investment trust IStar Financial in August, according to Wake County records. That was before the credit crunch storm began raging.

The saying time is money has even more meaning these days. The difference between construction and more delays can be simply a speedy site plan and express permit review. I think Hue may have positioned themselves very nicely by getting in before the storm hit the financial markets. By the time it is built in 2009, I would guess the lending situation will improve and they will be selling out most of their condos. The real estate market here has always been fundamentally strong, so this is really just a bump in the road.

[JeffC]

Little dips in the market like the one we are having now serve the very necessary purpose of weeding out the amateurs and chumps (aka, the Reynolds) as well as the over-extended (remember old time Raleigh developer and namesake of the chapel building at Meredith Seby Jones, whose development company Davidson and Jones nearly folded in the 1990 recession? See here to refresh your memory). How familiar does this quote from the linked article sound? (just substitute "2000s" for "1980s")

When the headlong rush to develop commercial properties in the booming 1980s came to a crashing halt, the carnage was extreme. Many developers disappeared permanently into bankruptcy court, while others limped back to Texas or Florida.

[ncwebguy]

The N&O has run yet another "downtown condo market's sky is falling" story in today's paper. It is starting to sound like a broken record, and drags up the usual poster children of badly planned projects -- Boylan Flats and 630 North. And mentions (again) that only 117 units sold last year while neglecting to point out that only that many new units came on the market.

And of course sales at Hue, 222, West at North, and even 111 Seaboard were ignored since they don't support the "Condo projects fall flat" defeatist headline.

Also, the Downtown Raleigh Home Tour website has been updated with this year's date -- May 17th from 11-5, corresponding with Artsplosure. No map, etc. yet, though hopefully that will change over the next month.

[Jones_]

Contrary to some folks on the board, I always thought Boylan Avenue was a bad place for condos....I think rows and rows of nice brownstone style townhomes would work best in the area. Boylan Flats needed to be in the warehouse district and 630 North on Hillsborough St area as a possible new headquarters for the NC Bar.

[yoga]

Triangle Business Journal article on the housing climate in Raleigh:

http://triangle.bizjournals.com/triangle/s...14/story14.html

[ChiefJoJo]

Interesting article on gas prices and housing. They mentioned Hue got a few more reservations recently. I've got to think gas prices staying high will favor another condo revival once the mortgage situation settles down. I'm not certain about this, but I was told by a financial planner that you can't get the lowest available interest rate without putting down 10% and that's with excellent credit.