Mid-Med Lofts Fail, Now going office

[wolverine]

I would have expected more success from this despite the bad market for condos. Looks like they are setting themselves up for failure again with office space. Good luck with that. How about going rental?

http://crainsdetroit.com/apps/pbcs.dll/art...-space-next-try

[tapezord]

A very serious question to the forum, it seems to me that there is a fear to develop rental units. Why is this?!

[wolverine]

Probably because it has no immediate return?

[hudkina]

I know. If you're only earning $700 per unit and there are 20 units you're only making $168,000 a year. It would take 20 years to earn the same amount of money that it would have taken if you had sold all of the units as condos. ($3.4 million over 20 years or $3.4 million over a year.)

[wolverine]

Well, if office doesn't work they should do both rental and condo (if at least there is some interest).

My friend's apartment building in Chicago is half and half. Some people wanted to own their own place and what was left went rental. When the tenant leaves, it goes on the market as a condo. If it doesn't sell, it stays rental.

[tracer1138]

I guess the difference lies in In-and-out developers who "invest in the city" but really just make a big splash and a lot of quick cash versus those who really invest in the city and who are willing to stick around for the long hall. I wonder if the returns on a lengthy investment as such are higher. If that's the case, it seems to be symptomatic of our culture these days (in my opinion) that we're not as keen on investing for the long term. Maybe I'm overgerneralizing.

[mendelman]

($3.4 million over 20 years or $3.4 million over a year.)

[hudkina]

I was using a simple analogy, but you are right. Though, the point is that developers are looking to make the money over a shorter period of time. Get in, get out, and make a buttload of money in the process.