VOL. 121 | NO. 43 | Tuesday, February 21, 2006
Real Estate & Development
Downtown Development Spawns Condos Big and Small
By Andrew Ashby
ROOM WITH A VIEW: Lauren Peek is the on-site property manager at The Waterford, a 100-unit condominium complex at 200 Wagner Place. Here she shows one of the views residents are able to enjoy at the 24-year-old property. -- Photograph By Andrew Ashby
Is bigger better? While the Downtown condominium market appears to be moving in that direction, the little guy isn't down for the count.
When the Center City Commission updated its Downtown Condo Report in late January, it listed 14 condo projects under construction, with a total of 532 units.
And it suggested even more work will be done in the future, with 14 condo projects totaling 816 units listed as "new upcoming condos." The largest of the upcoming condos is The Horizon at 717 Riverside Drive, which will have 350 units.
Developers have completed conversions of six buildings to condominiums, adding 394 condos to the Downtown area, the report said. The conversion of three more buildings totaling 343 units is under way now. The buildings currently being converted are: River Tower, 115 units at 655 Riverside Drive; Shrine Building, 75 units at 66 Monroe Ave.; and The Lofts, 115 units at 505 Tennessee St.
According to the report, Downtown has 33 completed condo projects totaling 561 units. Many of these existing buildings have a relatively small number of units - ranging from 2 to 37. The exception is Waterford Plaza, a 100-unit development built in 1982.
One of the companies that is building large condo developments is a fairly new to that type of market. Atlanta-based Beazer Homes is one of the largest single-family home builders in the country. Beazer Homes' 204-unit State Place currently under construction at 75 Georgia St. is one of the company's first forays into the condo market.
"I think there's a market for both (large and small condominium developments). The market has proven that. There are plenty of people who want to live in the big high-rise that has a doorman and other amenities, and then there are other folks who would prefer a smaller development and be able to know all their neighbors."
- Terry Kerr
As Downtown living becomes more popular, developers are tackling higher-density condo projects, said Andy Kitsinger, the Center City Commission's director of planning and development.
"Some of the larger housing developers are just getting into the condo market. Single-family residential developers or commercial developers are looking to get a mix in their portfolio," Kitsinger said.
Local developers are also getting into the large-condo act. Gene Carlisle, owner of 90 local Wendy's franchises, is working to develop the 27-story One Beale, which will have 160 units.
But the One Beale project won't be a condo-only development. In the mixed-use building, condo owners will share space with a premium hotel that has yet to be announced.
"So you will have all the hotel amenities that you can share - the pools, the workout rooms, the saunas and the restaurants," Kitsinger said. "As a condo owner, you have access to all those amenities."
All the trimmings
Condo owners at the 24-year-old Waterford Plaza enjoy similar luxuries: two swimming pools, two whirlpools, a workout room, a steam room, a sauna, a racquetball court and tennis courts.
While those features are nice, their upkeep provides more work, said Lauren Peek, on-site property manager at Waterford Plaza.
"The second biggest challenge would be trying to keep 200-plus residents happy at the same time," Peek said. "You have to treat each one as an individual, and it could take a day to take care of them and it could take months, depending on what the problem (is)."
And according to Tony Bologna, owner of Bologna Consultants, another challenge facing developers of high-quantity condo projects is securing financing.
"The bigger the project, the more the financial institutions are going to want to see presales before they'll commit to financing," Bologna said.
Where paths intersect
While Downtown condo buildings look to be getting bigger and bigger, it hasn't dissuaded the smaller developments. In fact, 12 of the 14 projects the report categorized as "new upcoming condos" have fewer than 50 units.
Developers Terry Kerr and Ray Porter teamed up to build Machine Shop Condos, a 14-unit building at 465 South Main St. This is their first foray into the Downtown condo market.
Last year, Kerr renovated 37 single-family houses plus an eight-unit apartment building. Porter has been buying and renovating affordable multi-family houses for almost 20 years.
The pair already has pre-sold half of the Machine Shop condos - and ground hasn't been broken yet.
A matter of preference
However, smaller condo developments often bring their own set of challenges.
"Some of the smaller condo developers have less property value in their portfolios, so their net worth is less," Kitsinger said. "Their track record is a little shorter, which can make it more difficult to get financing."
Even though a greater number of large condo projects are being built Downtown than ever before, smaller developments seem to have their own niche.
"I think there's a market for both," Kerr said. "The market has proven that. There are plenty of people who want to live in the big high-rise that has a doorman and other amenities, and then there are other folks who would prefer a smaller development and be able to know all their neighbors."