Memphis Market Not Immune to Economic Swings

ANDY MEEK | The Daily News

Development partners Dick Willingham and Randy Sprouse would probably tell you it's disingenuous to suggest the Memphis real estate market is entirely protected from nationwide industry swings.

In mid-August, for example, condominium units in the six-story Park Terrace property across from Overton Park were scheduled to go on the auction block. Sprouse and Willingham had poured $2.6 million into renovating the roughly 40-year-old former apartment building and converting the units to condos.

They tapped Memphis-based Roebuck Auctions to drum up interest by auctioning some of the units. A minimum of nine were supposed to be sold during the auction - though only three ultimately found buyers that day.

Then, about two weeks before the Aug. 18 sale, is when broad uncertainty began to take hold in the housing market and credit-almost overnight - became more difficult to come by.

As it stands now for the Park Terrace developers, any such concerns over that turn of events apparently has amounted to only a temporary bump in the road. About half of the project's 35 units are spoken for, and the development team already is chalking up their effort as a success.

Always a next time

Even so, the project remains an example of how large-scale tremors in the economy of late have reverberated far and wide, knocking developments such as Park Terrace off balance - even if only momentarily.

"When the auction day came, people were sitting on their hands going, 'Well, I'm not sure if the sky's falling,'" said Atlanta-based Willingham. "Now that people's fears have subsided somewhat, they're saying, 'You know, maybe it wasn't as big of a disaster as we first thought, so let's go ahead and get in while the getting's good.'"

Recent events appear to support that sentiment, at least as it's applied strictly to the Park Terrace project.

Buyers who may have stayed on the sidelines initially are stepping up, perhaps lured by the prospect of owning a luxury condo in the heart of Midtown, the vista of a large urban park beckoning across the street. Those people who have reportedly expressed interest in snapping up units include Dick Hackett, former mayor of Memphis.

Jody Hopkins, vice president of administration and finance for Roebuck Auctions, said an estimated 700 people showed up for the project's open house.

That's not to say the development partners wouldn't perhaps take a different tack next time around.

"In my business, we are essentially creating the product, so as a developer I perhaps have a little more vision than the ultimate consumer," Willingham said. "We'd definitely be interested in doing something else here. We like the Memphis market, but it took us a little while to understand it, to be honest with you.

"Next time around," he continued, "I probably wouldn't jump the gun from a marketing perspective; I probably would wait a little longer to introduce it to the market until such time as we have a true finished product and people have the opportunity to touch and feel what they're actually buying, as opposed to a more visionary discussion."

Getting creative

Hobson Co. Realtors is listing the property, at 2195 Poplar Ave. Its current appraisal is $1.7 million, according to real estate information company Chandler Reports, www.chandlerreports.com.

The idea of auctioning the condo units, proceeds of which benefited The Children's Museum of Memphis, was conceived as an untraditional way of both capturing attention and kick-starting the sales process.

"When you think about a new development, and if you were to think of yourself as a potential buyer of one of those units, you may be a bit reticent of going in and being the first guy and living by yourself," Hopkins said. "So in essence what the auction was going to do was generate the excitement, interest and, for lack of a better word, accelerate the process.

"And even if you didn't sell all 35 units right from the get-go or if it took you an extended period of time - and of course, in this buyers' market things are slow, no doubt about it - you've at least jump-started things."