Manufactured Homes Industry Works

To Reverse Negative Perceptions

KAREN OTT MAYER | The Daily News

Every once in a while, someone needs to set the record straight, and it appears the time has come for the manufactured housing industry.

Hurricane Katrina stirred much controversy over housing. The August 2005 storm also sparked debates about design and the fear of endless trailer parks. But almost two years have passed, and manufactured housing sales are still strong in North Mississippi and Tennessee.

"It's the quality of the product at an affordable price," said Jerry Bell, general manager of Freedom Homes. "People may still have the impression that these homes are like older models, but they're not."

Not trash, but treasure

A retail sales center in Como, Miss., Freedom Homes is part of Clayton Homes, the largest manufacturer and distributor of manufactured housing in the country and a subsidiary of Omaha-based Berkshire Hathaway Inc. Berkshire Hathaway is a Fortune 500 company controlled by business mogul Warren Buffett. The company's core business includes property and casualty insurance.

Manufactured housing models have come a long way since earlier days. With costs hovering at about $38 per square foot versus $78 for a traditional site-built home, buyers represent all walks of life.

"The people I see are those wanting to move out of DeSoto County or Memphis and who realize they could realistically buy a manufactured house and land for around $100,000," said Mark Rotenberry, sales consultant for Freedom Homes. "We're also selling to retirees who want to downsize or who don't want any more debt."

Chris Nicely, vice president of marketing for Freedom Homes, has been with the company 12 years and travels nationally.

"We see first-time home buyers, baby boomers and working families," Nicely said.

With 450 retail stores and about 1,400 independent business owners, Clayton also finances and insures homes. Nicely said the industry isn't as rate sensitive as traditional real estate markets. Instead, sales are affected more by employment numbers.

The company built 125,000 homes throughout the country in 2006, Nicely said, with Tennessee ranking among the top 10 for sales.

"Arkansas, Tennessee and Mississippi are generally strong sales areas," Nicely said.

While rural markets still are strong, Nicely said a new trend has emerged in the last five years, as cities are buying manufactured housing for infill projects.

The truth about quality

While misconceptions might still persist about the industry, the reality is that quality has improved.

"In the past 12 years, the evolution of this product is wonderful," Nicely said. "No longer are there special dimension building products. We use the same materials as builders."

Models include high ceilings, drywall, copper wiring (replacing aluminum) and stronger construction using 2-inch by 6-inch wooden framing. Nicely said there is a continual evolution in design and visual street appeal as roof pitches increase, mirroring more residential styles.

Another advantage is that construction takes at most a month, decreasing time that materials are exposed to weather.

For buyers like Jenny Willard, all of the above made her want to buy. When she considered moving to help her middle-aged parents, she looked into a manufactured home because it was a quick process, was affordable and would allow her to save for land. When she put her house up for sale, she said it sold quickly.

She even grew up in a 1967 model home.

"I said I don't want to move back into another manufactured house, but a friend said I should check them out," Willard said. "There is a total difference. Some models are nicer than a regular house."

Back to basics

Willard chose a Southern Energy model, which has sheetrock, and she both financed and insured her home through Clayton. The entire process took about a month.

"Mark (Rotenberry) was really helpful," Willard said. "I told him that we'd basically have two families living in the home, and he helped with a floor plan. We picked out the colors and that was it."

Nicely said the company always has been more conservative on the lending side than other companies and has been able to withstand the fluctuations in the market to continue to grow.

After Katrina, Clayton was the first to respond to the demand for housing.

"We provided about 4,500 homes total from September (2005) until February 2006," Nicely said. "Our pricing was aggressive so that people could afford homes. For many people, it was their first experience with manufactured housing."

While recent reports of the housing market are less than bright, Bell and his team seem to be heading in another direction and taking consumers with them.

Cool housing market beckons buyers

December 16, 2006
Although it thundered along for most of the year, the local housing market is showing signs of cooling, and the chill could create opportunities for buyers.

According to the Memphis Area Association of Realtors, 1,369 homes were sold in November, down 4.1 percent from 1,427 last year.

Sales volume for November hit $237.4 million, down 2.2 percent from $242.6 million last year. Meanwhile, the number of homes on the market soared 23.1 percent to 10,910, from 8,864 last November.

"For those who might be unsure of current economic conditions, there couldn't be a better time than now to buy a home in the Memphis area," said MAAR president William Mitchell. "With our market's long track record of steady and measured increases in property values, the historically low mortgage rates and the good supply of homes available, buyers have a unique opportunity now invest in their future."

Year to date, sales volume is $3.17 billion, up 10.1 percent from last year. Total sales volume for 2005 was $3.2 billion.

NATIONAL

Merck wins 2nd Vioxx trial in week

Merck & Co. won its second Vioxx trial in less than a week Friday when jurors rejected the claims of a man who blamed the once-popular pain medication for a heart attack in 2001.

The jury of eight women and four men needed only one hour of deliberations to side with the drug manufacturer in the lawsuit filed last year by Gary Albright, 57, of Chelsea, Ala.

A federal court jury in New Orleans ruled for Merck on Wednesday.

Another Vioxx trial continues in Los Angeles, and Merck spokesman Kent Jarrell said six more lawsuits are set for trial between now and June, with the next slated to start in New Jersey Jan. 16.

The company is sticking by its plan of defending each of thousands of claims over Vioxx rather than settling the suits.

VP: Safety complaints led to firing

A former vice president at two Johnson & Johnson subsidiaries claims in a lawsuit he was fired for seeking recalls of numerous faulty products, including the Ortho Evra birth control patch, itself the subject of at least 1,000 product liability suits.

New Brunswick, N.J.-based Johnson & Johnson, one of the world's largest drug and medical product makers, said Friday the former executive was fired for inappropriate conduct.

In his civil complaint, Dr. Joel S. Lippman alleges he was unlawfully terminated May 15, after working for Johnson & Johnson for 15 years, because he repeatedly complained about product safety problems and urged that several products be recalled or not launched.

Lippman declined to be interviewed.

Three top executives will leave AOL

Three senior executives are leaving AOL following a recent shake-up that brought in a veteran NBC executive as the online company's new chief executive, two people familiar with the matter said Friday.

The executives are Joe Redling, who is chairman and chief executive of AOL International, Jim Bankoff, executive vice president for consumer and publisher services, and John Buckley, executive vice president for corporate communications.

The company had no official comment. The people who confirmed the changes spoke on condition of anonymity because they involved personnel matters that have not been announced yet.

Over the past two years, the company has been giving away more of its services to drive traffic to its Web sites and boost online advertising dollars.

In August, AOL accelerated the transition by deciding to give away AOL.com e-mail addresses and software once reserved for paying customers.

Miners vote on contract next week

The United Mine Workers said Friday it has tentatively agreed to a new five-year contract with the Bituminous Coal Operators Association.

About 16,000 union members across the country are scheduled to vote on the tentative pact next Thursday, UMW spokesman Phil Smith said. The agreement would take effect Jan. 1. It covers only workers at unionized subsidiaries of Pittsburgh-based Consol Energy, which make up the only members of the BCOA.

Waning membership in the union and the coal association has eroded the importance of the contract in recent decades. The UMW once had more than 700,000 members and the clout to shut down the industry. But the introduction of mechanized mining equipment and production shifts from Appalachia to western coalfields have cut that figure, and today the union represents perhaps one-third of coal miners.

However, Smith said other coal companies should pay attention to the new agreement. "We hope the ratification vote sends a message to the other companies in terms of what our members are prepared for."

INTERNATIONAL

U.S. gets standard replies from China

U.S. and Chinese officials pledged Friday to work on reducing China's swollen trade surplus, but ended two days of closely watched talks with little progress on currency and other disputes that are straining ties.

U.S. Treasury Secretary Henry Paulson said China would pursue currency flexibility, long-sought by Washington. But he seemingly came away with little more than Beijing's standard statement that it will relax currency controls and enact market-opening reforms at its own pace.

U.S. Federal Reserve Chairman Ben Bernanke, a member of Paulson's high-profile delegation, also urged Beijing to take faster action on its currency. He said a stronger yuan would boost living standards and help ordinary Chinese as well as promoting global economic stability.

The two sides promised to launch discussions on opening China's service industries wider to foreign competition and on cooperating in environmental protection and developing cleaner energy sources.

Japan Tobacco deal aims for W. Europe

Japan Tobacco Inc., the world's third-biggest cigarette company, is buying Britain's Gallaher Group PLC for about $14.7 billion in a deal that gives the maker of Mild Seven cigarettes a bigger stake in the Western European market. The deal would reportedly be the biggest Japanese overseas acquisition.

The move comes as Japan Tobacco, which already is the overseas distributor for Winston, Camel and Salem cigarettes, tries to bolster earnings by expanding outside of Japan, which has seen declining smoking rates. Like many tobacco companies worldwide, Japan Tobacco has also been looking to diversify outside cigarettes.

The deal would take Japan Tobacco into a Western Europe market where it has little presence. Japan Tobacco has operations in Russia, but was rejected last year in a bid for Turkey's state-run Tekel tobacco company.

Tokyo-based JT is offering 1,140 pence for each outstanding share of its British rival, or a total of 7.5 billion pounds.

-- From Staff and Wire Reports

Overall, real estate locally reflects a sturdy economy

By Amos Maki
December 29, 2006

The real estate industry experienced a tale of two years in 2006 with residential chugging along earlier in the year and commercial -- particularly industrial -- picking up steam in the second half of the year.

Although it thundered along for most of the year, the local housing market is showing signs of cooling, which should create opportunities for buyers.

According to the Memphis Area Association of Realtors, 1,369 homes were sold in November, down 4.1 percent from 1,427 last year.

Sales volume for November hit $237.4 million, down 2.2 percent from $242.6 million last year. Meanwhile, the number of homes on the market soared 23.1 percent to 10,910, from 8,864 last November.

"For those who might be unsure of current economic conditions, there couldn't be a better time than now to buy a home in the Memphis area," said MAAR president William Mitchell.

Year to date, sales volume is $3.17 billion, up 10.1 percent from last year. Total sales volume for 2005 was $3.2 billion.

It was a very active year in commercial real estate.

Meanwhile, after a slow start, absorption in the Memphis industrial market, including DeSoto County, has totaled more than 4 million square feet, according to CB Richard Ellis Memphis. The market ended 2005 with 5.4 million square feet of absorption.

"There was about 2 million square feet leased in the last couple months and the momentum is there for 2007," said Jim Mercer, industrial team leader for CBRE Memphis. "The attitude of business is more proactive, there's a lot of investment capital out there and we've got some buildings under construction.

"I think that bodes well for next year," he said. "Memphis is not going to be a home run market, but its going to be a market you can count on."

Nissan North America is launching a 413,000-square-foot parts distribution center in southeast Shelby county, a move that culminated two years of negotiations.

The Japan-based company will take up nearly half of Lauth's 885,000-square-foot Delta Point One building, the Indianapolis-based company's first building in the Memphis market.

Also, Terumo Medical Corp., Imation, Iron Mountain, Jacobson Warehouse Co., and Sharp Electronics all cut major leases this year.

Office developers were in a building mood in 2006, with Boyle Investment Co. and Highwoods properties stepping out with new buildings.

Boyle announced it was launching two, five-story, 155,000-square-foot buildings to finish off Ridgeway Center. Highwoods announced plans to build a seven-story 130,000-square-foot building at its campus at Poplar and Shady Grove.

Tightness in the office market -- particularly in the East and 385 submarkets -- caused landlords to raise rents.

In less than a three-month period, Class A office buildings went from quoting first year rents in the mid-$20 range to a new high of $27-$29 per square foot for the first year of rent.

The overall vacancy rate for the third quarter was 15.2 percent, a three-year low.

"The most exciting thing about the office market is we've been down for years and now we've got solid absorption and decreasing vacancies," said Joe Steffner, president of Grubb & Ellis|Memphis. "That, combined with a strong economy, bodes well for office real estate in 2007."

In 2006, national firms the Staubach Co., Grubb & Ellis and Marcus & Millichap entered the Memphis market.

Looking ahead to 2007, Class B office space will see a lot of activity.

On the retail side, several major projects were announced in 2006.

Poag & McEwen Lifestyle Centers, the Memphis-based development group that has become nationally recognized for creating "lifestyle centers" like the Shops at Saddle Creek, is moving forward with plans to turn the 10-acre Highland Street Church of Christ site near the University of Memphis into a $45 million mixed-use project offering a range of living, dining and shopping options.

Look for other moves by Poag & McEwen in 2007, including the announcement of tenants at the Highland site.

Weingarten Realty Investors is moving forward with plans for a $100 million retail center at Poplar and Interstate 240.

Weingarten plans to raze the 26-acre Ridgeway Trace apartment complex in East Memphis and launch a project with nearly 400,000 square feet of retail and restaurant space. Company officials said the project should be open in late 2008 or early 2009.

Kimbrell: Preparing for growth vital to life

By Ed Kimbrell

Ask any great coach about winning and you'll hear the word momentum before the answer is completed. So, too, is momentum the key to economic growth and prosperity.

The entire Middle Tennessee region seems to show attitudes toward the future I cannot recall seeing until now. At this season of the year, especially, it seems that our time to take the positive forces at play and use them wisely and prudently.

Channel 8 re-ran a documentary this week on downtown Nashville that was not only interesting history (can you imagine telling a teenager the entire area around the Capitol was a slum?) but the awareness of leaders old and new that the idea of a living, breathing, 24-hours-a-day downtown is now emerging, a long hoped-for revival.

From downtown lofts to high-rise condos to a $450 million civic center, with plans already being discussed to use the existing one, the vital mixture of housing, good restaurants, sports (new baseball stadium will work), and entertainment means the end of the old Nashville.

When I came to Nashville and Murfreesboro 35 years ago, they seemed to be so far behind all of the other places I had lived and worked. Nashville seemed a bit seedy around the edges and the downtown was in decline. Ah, those wonderful (?) suburbs were being built while 100 Oaks said you can buy everything you need (everything) under one giant steel tent.

Murfreesboro was quaint. One could even stretch a bit and call it a village. The university was beginning to stretch out, under the controversial leadership of then-President Mel Scarlett, as his vision forced it into new areas, new degrees and expansion.

Franklin was quaint, a toy town. Still wants to be a village (with lots, and lots of money).

Today, these three counties are in the midst of their greatest days. (I will always love a line in one of the fun murder-mysteries of Nick and Nora Charles where a guest cries out how he missed the "good old days" to which Nick observes that "these are the good old days."

Franklin-Cool Springs and the coming of Nissan headquarters means Williamson County must continue its excellent record of planning and expansion of services, especially in schools.

So too, Murfreesboro, now a regional hub of commerce and education, must continue to provide services which match Williamson County, as they do now.

While there isn't the wealth generation in Rutherford to match Williamson County (one of the richest counties in the nation), it provides a fine quality of life. Rutherford, with its location, the largest undergraduate university in the state, and its national ranking in growth, is on a great roll.

Take three announcements: 110 new stores and shops in one complex; a new ultra-modern, state-of-the-art hospital, and the completion of the Medical Center parkway, and it becomes clear.

Murfreesboro, however, must address one part of what must be, with all of the good news comes a cautionary note: transportation and planning. Critics of the city worry about the independence of the city from developers, and they can make a strong case for concern. The city must build permanent lungs: tracts of open space, parks and greenery.

It must realize it is not a country town. A park system is vital. It is also vital to plant trees, greenery, and quiet gathering places. The land must be bought now.

I remember when one of the City Council members chastised then-member Mary Huhta as wanting to make Murfreesboro a Germantown. (Germantown is a beautiful, planned suburb of Memphis, with signage laws.) Business is what matters, he shouted, not signage rules. Well, that is a lost battle. Our main commercial roads are a surreal Chinese dragon on steroids.

But, there are cosmetic ways to improve them and ensure that all new such construction matches the excellent new parkway in design and greenery.

Murfreesboro must be commended for buying buses. It is a decision filled with foresight. The entire city is sprawling outward and buses will help many people go to and from work. It's understandable the city didn't buy electric buses, which are environmental wonders, because they cost about twice what a fossil-fuel bus does. But, hopefully, the city will in the future.

Williamson is wisely buying and integrating parks into its designs. Davidson needs to rethink mass transit. The buses are too large and ponderous and research on new ways to move large groups of people in and out of the core should be done now. I love trolleys. How about it, Mayor Purcell?

Predicting the future is a fool's game. But, at this point in time, it's not too far a reach, as Eddie Cantor exclaimed after starring in the first talking movie, "The Jazz Singer," to say "You ain't seen nothin' yet!"

Washington developer bringing condos to Midtown

Memphis Business Journal - October 3, 2006
by John Scruggs
Staff Writer

Condo conversions are on the rise in Memphis and a Tacoma, Wash., developer is making a big entrance into the market, buying up aging apartment properties in Midtown for renovation and eventual sale.

The Gintz Group's first Memphis offering is The Villas at Chickasaw, formerly Central Terrace townhomes at 2681 Central.

Gintz purchased the property for $2 million and is converting it into The Villas at Chickasaw, a 32-unit condominium complex with new interiors and amenities.

In addition to The Villas project, Gintz Group purchased Woodmont Towers on North Parkway in September for $10 million.

Ron Gintz says tenants have been notified of the project and condo conversions will begin with the top floors, so the project will be completed in phases.

The Gintz Group also bought The Continental apartment building at Central and Lamar and plans to convert the property to condos after closing it in February 2007.

With the grand opening of The Villas at Chickasaw, the Gintz Group is starting what looks to be a serious commitment to redevelopment in Memphis and specifically for Midtown condo properties.

Prices in the gated Villas community range from $140,000 to $180,000 and association fees will be around $125 per month.

The condos range from 1,450 to 1,600 square feet.

The units are two and three bedrooms and all have two and one-half bathrooms. Renovations include bamboo flooring, granite countertops, stainless steel kitchen appliances, new bathrooms and smoothed ceilings.

Erik Robbins, a partner with Gintz on the project, says the property was a natural target for the conversion.

"The townhouse layout of the complex doesn't have an apartment feel to it," Robbins says. "There's no one living above or below you either."

But the location was the primary factor, he says, with the University of Memphis campus, Midtown and Cooper-Young all nearby.

"The central location was ideal for us, coming into Memphis and a new market," he says.

Gintz is acting as general contractor on the project and Robbins says that allows them to have hands on quality control and cut costs for resale of the units and on the development side.

The Gintz Group has multiple projects in Phoenix and the Seattle area.

Robbins says the condo boom in Downtown Memphis wasn't something the group had an interest in.

"We didn't want to compete with other developers who have a lot of experience in their local markets," he says. "We try to find projects that are good prospects for redevelopment that will benefit the community.

The interior renovations at the Villas are matched by a revamped pool and common area in the courtyard.

Real estate broker Debbie Bronson, of Bronson-Griffin Realty, says the response to the Villas at Chickasaw has been outstanding.

She says two tenants, who were renters in the complex, are purchasing units.

"We've heard nothing but positive feedback from everyone who has seen the renovations to the property," Bronson says.

Aging apartment communities in Midtown are attracting the attention of other developers.

Across Midtown on Madison Avenue, Gary Coscarart has converted an apartment building into The Carolinas Condos and with 15 of the 18 units sold, Henry Heidelberger, of Woodyard Realty, says the project has been a success.

"A lot of our buyers are people who have looked Downtown," he says. "For them to find something for $140,000 to $145,000 in Midtown, it's a great deal in comparison to Downtown prices."

Heidelberger says The Carolinas Condos, at an average size of 1,200 square feet, are selling at average for $140,000.

Home sales set Sept. record

But increases slip, more 'for sale' signs sprout
By Amos Maki

October 17, 2006
The Memphis housing market continues to buck national trends as local home sales hit a record for September.
However, there are signs of the local market slowing as sales and sales volume posted smaller increases than in previous months, and a larger supply of homes on the market has some analysts worried about a drop in prices.

According to the Memphis Area Association of Realtors, 1,522 homes were sold in September, up from 1,516 last year.
Although the increase is small, it is still the highest number of sales ever recorded for the month of September.

Sales volume for September hit $263.6 million, up from $260.6 million over the same period last year.

For the year, sales volume hit $2.3 billion, up 17.4 percent from $2.7 billion over the same period last year. Total sales volume for 2005 was $3.2 billion.

There was also a spike in the number of homes on the market. In September, MAAR recorded 11,178 home listings, up 22.6 percent from 9,121 last year.

"Buyers have plenty of homes to choose from, " said MAAR president William Mitchell. "Those factors make the time right to find that perfect home, and sellers need to respond with homes that have move-in readiness and are priced to be competitive in the given market."

MAAR recorded 10,962 home listings in August, up 18.9 percent from 9,217 in August 2005.

With more homes on the market and the possibility of falling prices, now is a good time to consider buying, said Jennifer Burda, general manager of Chandler Reports.

"It is more of a buyer's market," she said.

According to Chandler Reports, 7,176 homes were sold in Shelby County in the third quarter, up from 7,175 over the same period last year.

Cordova's 38016 Zip Code led the way, with 503 homes selling over the three-month period ending Sept. 30. The 38018 Zip Code, which also includes Cordova, posted 426 sales.

The fast-growing Lakeland/Arlington Zip Code of 38002 recorded 445 home sales, an 11.3 percent jump over the same period last year.

Collierville's 38017 Zip Code recorded 428 sales.

"Collierville used to be where all the growth was going, but it shifted gears to Northeast Shelby County," Burda said.

Nationally, home sales are bottoming out with lower home prices attracting buyers across many parts of the country, according to the National Association of Realtors.

Prices of new houses will fall this year for the first time since 1991, and existing homes will have the smallest gain ever, NAR said.

The median price for a new home will probably dip 0.2 percent to $240,500, the first decline since a drop of 2.4 percent 15 years ago, NAR said. The price for previously owned homes will probably rise 1.6 percent to $223,000, the smallest gain on record, NAR said.

The inventory of new and existing homes for sale ballooned to record levels as the five-year housing boom slowed. The large supply of properties is forcing sellers to accept lower offers.

Total sales for 2006 are expected to drop 8.9 percent to 6.45 million. However, 2006 will still be the third-strongest year on record, following 2004 and 2005.

"Many potential home buyers who have been taking a wait-and-see attitude or taking their time and being methodical in the search process are being enticed by lower home prices," said David Lereah, chief economist for NAR.

"Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year."

-- Amos Maki:

Kenlan plans development in Oxford square

Three-story buildings will include condos, retail and office space
By Amos Maki
Contact
September 30, 2006
Memphis-based Kenlan Development LLC is building a landmark $15 million mixed-use development in Oxford.

The company is building the 80-acre "square" piece of the 580-acre Oxford Commons development at Highway 7 and Sisk Avenue.

"The square piece is significant because it's the only true mixed-use development besides the historic square," said Lance Forsdick, managing member of Kenlan Development. "It's a safe, clean, comfortable environment where people can live, work and play all in the same place."

Condominiums, retail and office space will be part of the mix at the square, located next to the recently opened American Screenworks movie theater.

A 25- to 30-room boutique hotel is also planned.

The project -- designed by Memphis-based Looney Ricks Kiss, the local firm that has created highly touted project designs for Downtown and Midtown as well as cities nationwide -- will consist of four three-story buildings. Two buildings will be residential and the other two commercial.

Construction is scheduled to start in December.

Each residential building will have 23 condominium units ranging in size from 1,269 square feet to 1,562 square feet.

The condos will have porches and balconies that overlook the new square.

The commercial buildings will total 46,000 square feet of retail, restaurant and office space.

The ground floor spaces in the commercial buildings are slated for restaurant and retail tenants, including upscale restaurants, a coffee shop, an ice cream store and an upscale men's and women's clothing and accessory shops.

The top two floors of the commercial buildings are designed as Class A office space.

The project will have more than 360 parking spaces for the four buildings, including 92 gated spaces for the condo owners.

Mayor Richard Howorth said Oxford -- which has seen a good deal of interest from developers -- is perfect for projects like Kenlan's, which aims to enhance the city's historic character.

"I think it's a project that has tremendous potential," he said. "Oxford is a small town and its recent success owes much to its original small town characteristics.

"I think duplicating the existing model in other areas is attractive. I'm excited about what their mission is and I hope they are successful."

Marchbanks Realty out of Oxford is marketing the residential pieces. TRI Realty of Tupelo is handling the commercial space.

The square development is just a small piece of a much more ambitious project.

Kenlan is planning a 300,000-square-foot department store-anchored retail center featuring a traditional "town center." There is also about 400 acres available for a mix of housing.

--------------------

The Square at Oxford Commons

Kenlan Development LLC is building a $15 million mixed-use project in Oxford.

The company is developing the 80-acre "square" piece of the 580-acre Oxford Commons development at Highway 7 and Sisk Avenue in Oxford.

It will contain a mix of condos, retail and office.

Web site: oxfordmscommons.com

$400M residential project to break ground in Tunica

Memphis Business Journal - 1:46 PM CDT Thursday

Landworks Communities, through a partnership with Highland Capital Real Estate Advisors, has purchased a 721-acre tract of land at Old Highway 61 and Casino Strip Boulevard (Highway 304) in Tunica with plans to turn it into a residential development with hundreds of homes.

The project, which is called Indian Creek, is scheduled to break ground in early 2007 and is estimated to cost $400 million.

The master plan calls for 18 acres of park land, professionally planned and maintained landscaping, recreational amenities, and waterway and lake systems covering 55 acres. The land has been rezoned and has received all approvals from Tunica County. The development will include 18 acres of park land and other amenities covering 55 acres.

Frank Aldridge, a spokesman for Landworks, said the project will be completed in 5-7 years and will include more than 900 homes, 400 multi-family units and over 35 acres of retail and commercial development.

With a population of less than 10,000 people, but an economy that sees over 12 million people come to town every year, Indian Creek is what the city needs, said Lyn Arnold, president of the Tunica Chamber of Commerce.

"This development will offer an outstanding lifestyle and amenities usually found in much larger areas," Arnold said. "This development also meets our goals of establishing high quality neighborhoods and providing a variety of housing."

28-story housing complex to rise near Uptown Square

By Amos Maki
Contact
July 13, 2006
St. Mary's Catholic Church is poised to sell part of its Downtown property to developers who plan to launch an $85 million, 28-story luxury housing complex on the site.

Developers Brian Thomson of Boston and Geoffrey LePlastrier of California have an option to buy the land for an undisclosed amount from the Catholic Diocese of Memphis.

The land -- about half a city block -- is adjacent to St. Mary's, which is at North Third and Market near the Memphis Cook Convention Center and Downtown Marriott.

The skyline-altering high rise would be the largest built Downtown since the 23-story Morgan Keegan tower in 1985. The tallest building Downtown is 100 N. Main at 37 stories.

The high-rise would include 200 housing units, and an additional low-rise building will include 40 units, according to a plan submitted to the Memphis and Shelby County Office of Planning and Development.

"We've invested a lot of time and money in this," Thomson said. "Our intention is for this to be a world-class, sustainable project that redefines the north end of Memphis."

Money raised from the land sale would be split between the Diocese and St. Mary's and could be invested in improvements to the church.

Bill Herbers, Diocese director of facilities and risk management, would not comment on possible church improvements.

However, the site plan specifies a "family life center," including a multi-purpose gymnasium, a music and performing arts center and a school library and resource center.

Plans for the residential development include 12,570 square feet of retail and 2,087 square feet of restaurant space on the ground floor. The project will have a total of 370,905 square feet of residential space.

"We were very impressed with (the developers') ideas and with them," Herbers said. "I think it could be wonderful for Downtown Memphis."

Developers expect the project will generate more than 300 jobs during two-plus years of construction and that sales tax on building material alone could generate nearly $3 million. They estimate that property tax revenues from the 240 units could mean $2 million a year to the city and county.

The developers, who work mainly in Boston and California, said they hope the upscale project will attract doctors and researchers from St. Jude Children's Research Hospital, which is in the midst of a $1 billion expansion.

The site is across the street from Uptown Square, the community that was formerly the Lauderdale Courts public housing complex.

Developers also want to attract Catholic buyers and affluent empty nesters looking for an urban lifestyle. Amenities will include a health club and swimming pool on the roof of the low-rise building. There will be a common room and terrace on the 27th floor of the 28-story tower.

On-site retail and entertainment will be "limited to those completely compatible with the Church's mission."

The project will also be environmentally friendly. Building materials will conform with the Green Building council's recommendations for sustainability. Waste streams and storm water will be reused for on-site irrigation.

Downtown officials said it is no surprise that developers are interested in the land.

"From a development perspective, it's another vote of confidence in near-North Memphis," said Jeff Sanford, president of the Center City Commission. "With St. Jude's expansion, the Uptown project and residential growth on Mud Island, I think development in this project area is inevitable."

Rising Interest Rates Could Force More Homebuyers to Use Government Assistance

ANDY MEEK | The Daily News

It says something about the usefulness of a housing assistance program offered by the Shelby County Department of Housing when one of its most recent beneficiaries is an employee of another housing department - the City of Memphis'.

Robert Brimhall, a planning analyst for the city's housing agency, moved with his wife into a new home a little more than a year ago thanks to help from Shelby County's Down Payment Assistance Program. The DPA program was set up to help middle-income homebuyers like him cover a portion of their down payment and closing costs.

As Brimhall remembers it, he and his wife ended up paying close to $500 out of pocket. Without the aid, their tab would have been closer to $3,000.

"Just from working here with the city and knowing how these sorts of programs work, it was kind of one of those word-of-mouth things," said Brimhall, whose job requires him to process statistics, GIS requests and other queries for the city housing agency.

Another kind of tsunami

Jim Vazquez, deputy administrator of the county housing department, sees the Brimhalls as the crest of a wave that could soon splash with a vengeance onto the housing market's closely watched shores. With interest rates swinging upward, he said, the evidence points to a subtle shifting of the real estate climate from a seller's to a buyer's market.

And given the sheer number of programs out there that offer help for cash-strapped homebuyers, housing analysts like Vazquez believe the number of people who depend on programs like Shelby County's could soon get large enough to fill every square foot of a suburban McMansion.

"We basically have two down payment assistance programs that are slightly different," Vazquez said. "One is the American Dream Down Payment Initiative, and the other is the county's Down Payment Assistance Program."

Here's how they work: Under the ADDI program, Shelby County funnels federal Housing and Urban Development (HUD) funds to first-time, low-income homebuyers. The DPA program is designed to help people with moderate-level incomes cover part of their down payment and closing costs.

The ADDI program offers a five-year forgivable grant, while the DPA money comes in the form of a low-interest loan. The maximum amount of assistance through DPA is $3,500. Under the ADDI program, the county can pay up to 75 percent of the down payment costs, up to $10,000, or 6 percent of the sales price - whichever is larger.

Hoops and red tape

But several steps have to be met, of course, before county officials simply hand over a check.

"Under the DPA program, basically what the homeowner has to do is go to a mortgage company and qualify with the mortgage company," said Israel Henry, finance manager for the county housing department. "Once they qualify and acquire the property, then the mortgage company will submit to us an application on their behalf.

"Once they submit that to us, we'll take a look at it to make sure it meets all of our program guidelines. And when that's done we submit an approval form to the mortgage company and go through the process of writing a check."

Homebuyers who use the DPA program also are required to go through a one-day counseling class, which new homeowner Delisha Moore said was indispensable to learning about the rigmarole associated with buying a home.

"I learned so much about the process going through the class," she said. "I loved the customer service and the whole idea of the program, because it actually got me into a beautiful home."

Instead of looking at help available through the office where Robert worked, the Brimhalls turned to the county's DPA program because Brimhall said their income knocked them out of the city's eligibility range.

"Basically, you went to a housing class that was an all-day class, they gave me a certificate, and with that certificate, I was able to get the down payment assistance," Brimhall said.

Catch-22

Low interest rates and a much-publicized housing boom aside, county officials admit a curiosity about the fact that fewer people than expected have applied for each program. The county's DPA program, which is almost three years old, so far has helped about 30 homebuyers pay part of their closing costs.

County officials are still waiting for someone to qualify for the ADDI program, which is a little more than a year old. Therein is the Catch-22 of housing assistance aid targeting low-income homebuyers: Credit problems have disqualified most of the 90 or so applicants who've applied so far, Vazquez said.

To actually get a check in hand through either funding arrangement, the steps are slight variants of each other. Under ADDI, a homebuyer must contact the county housing department and complete an ADDI application form. After eligibility has been determined, the buyer gets a commitment letter.

That's taken to a mortgage lender, who sends county housing officials a letter describing the value of a home for which the buyer pre-qualifies and the estimated closing costs. The county then responds with a letter committing ADDI funds for a percentage of the closing costs. At closing, a check is issued to the lender.

"We got off to a slow start with the DPA too, but we tweaked some things here and there - the income guidelines and such - because we have more flexibility with that program," Henry said.

Connecting Buyers and Sellers

Downtown Condo Connection attempts to make condominium market more transparent to everyone

ANDREW ASHBY | The Daily News

A local Realtor is looking to tap into the rising Downtown condominium market by providing an information center for potential buyers in the 38103 ZIP code.

Kendall Haney, owner of Kendall Haney Realty Group at 612 S. Cooper St., early this month opened the Downtown Condo Connection at 408 S. Front St. as a resource for potential buyers who might be confused by the sheer variety and availability of the area's condos.

In April 2006, 33 condos were sold in 38103, according to real estate information service Chandler Reports, www.chandlerreports.com. The average sale price was $188,301 and the average square footage was 1,161. In the first three months of 2006, 79 condos were sold in 38103.

The number of sales shows a steady rise from April 2005, when 10 condos were sold in 38103, with an average sales price of $179,530 and an average square footage of 1,383. In the first three months of 2005, 22 condos were sold in the same ZIP code.

Needles in a haystack

Many different real estate companies represent various Downtown condos, so it can be difficult for buyers or the Realtors representing them to get a feel for the entire market, which consists of more than 500 units spread across 43 buildings. Add in the 20 planned condo buildings and the 13 currently under construction, and it can be challenging to find the right unit.

"It's so hard to find out who's got them listed, where to go and where they're located," Haney said. "It's difficult for us as a Realtor, so it's definitely difficult for a buyer with no Realtor."

The Downtown Condo Connection actually is a converted condo in the Paperworks Building. It has a kitchen, restrooms and office space for three agents and an office manager.

The office contains information about every condo in the Downtown market, from a $59,900 unit in the Claridge House on North Main Street to a $613,000 model at the Shrine Building on Monroe Avenue.

DCC agents have created a book with floor plans, photos and information on condos that are for sale, as well as many that have yet to be built.

To narrow down what potential customers might want, Haney said agents ask questions about what the customers are looking for, from covered parking to river views.

"Then we can pinpoint certain buildings that will fit your needs," Haney said.

A piece of the pie

After discerning what buyers want, DCC agents call the condos' in-house real estate agents and set up a time to show the property.

It's a free service for buyers because sellers pay the commission. It's also good for the agents because it brings traffic to their offices.

"Every Realtor we've talked to has been happy to see us," Haney said. "It's a win-win because we can help them sell their condominiums."

Since DCC opened at the beginning of the month, the office has been getting two to three visitors a day just from the signage outside.

Principal broker Sue Tines said the company's e-mail list has been popular with visitors. After getting e-mail addresses from potential customers, Realtors can send them information based on their criteria, such as square footage or the number of bedrooms and bathrooms they'd like to have.

"That's less invasive on them, to do it that way," Tines said.

Tines has been in the Memphis real estate business 31 years and helped train Haney more than 20 years ago. She said all the in-house agents she deals with at the condos have been receptive since they can't leave and show buyers different properties around the Downtown area. The DCC Realtors can bring buyers to various properties, splitting the commission with the condos' real estate agents. Total commission for agents usually is 6 percent, with 3 percent going to the DCC agents and the other 3 percent going to the selling agents.

"They're glad for you to show the properties," Tines said. "They would rather have a piece of the pie then none at all."

Diversity of services

In addition to helping potential buyers find a condo, DCC also offers in-house mortgage lending. And the company is taking advantage of what Downtown has to offer. The company recently bought six trolley passes to take clients around various properties.

"It helps these condos that are on the trolley line," Tines said. "It helps people to understand how you can get around Downtown with it."

DCC affiliate broker Theresa Mynatt came back to Memphis after working in the Salt Lake City real estate market for five years. She said she thinks an event like the Vesta Home Show, which was held in the South Main Arts District in March, brought more attention to the growing Downtown real estate market.

"When I left, none of this was going on," Mynatt said. "I had heard rumors about people moving into the South End, but driving around it was like a ghost town full of nothing."

Young sees people moving back into cities as a nationwide trend.

"They want to get back into the city, away from the upkeep of a big home and the commuting," she said.

As an example of how the Downtown condo market has matured, Tines brings up the Claridge House, at which 400 hotel rooms were converted into 155 condos in 1985.

"The market was not ready then and they rented many of them out," she said. "Now, the market is ready and they have sold over 50 percent of their stock - just like you've seen the boom happen in Collierville, the boom happen in DeSoto County or the boom happen in Fayette County. Well, the boom is happening in Downtown Memphis right now."

Housing slowing in most regions, Fed says

By Rex Nutting, MarketWatch
Last Update: 4:05 PM ET Apr 26, 2006

WASHINGTON (MarketWatch) -- Home sales and construction are slowing in most regions of the nation, according to anecdotal accounts reported by the 12 Federal Reserve banks on Wednesday in the Beige Book.
"Most districts report cooling and moderation in their residential real estate markets," the Beige Book said. "In general, year-on-year price appreciation seems to be lower than in quarters past, with [Fed banks in] San Francisco, Cleveland, Kansas City, Richmond, New York, and Boston all reporting more modest price growth in residential sales." See full story on the Beige Book.
The Dallas region was an exception, reporting "particularly strong residential sales." The Dallas district encompasses Texas, southern New Mexico and northern Louisiana.
Inventories of unsold homes were said to be growing in the Kansas City, Minneapolis, Chicago, Atlanta, New York and Boston regions.
Almost all districts reported declining demand for residential mortgages. Read the full report from the Fed.
The Beige Book included information collected before April 17. In a separate report, the Commerce Department said sales of new homes jumped 13.8% in March. See full story.
Here's a look at housing in each region of the nation, according to the Beige Book:
Boston
The bank's contacts in the industry "uniformly cite a continued slowing" in sales. Inventories are climbing, and prices are leveling off. The slowdown in price appreciation was seen as a positive sign. "The general expectation is for prices to remain steady and for the sales pace to be slower than in recent years past," the Boston Fed said.
New York
The housing market was "mixed but generally softer," the New York Fed said. Prices of new homes had leveled off, but builders had not yet slashed prices. Inventories of unsold existing homes rose sharply to a seven-month supply. The Manhattan market for condos and coops was "mixed." Prices were flat from the previous quarter and the inventory of apartments on the market was up 60% from a year ago.
Philadelphia
The demand for residential mortgages slowed, the Philadelphia Fed said.
Cleveland
While builders reported sales strengthened from weakness earlier this year, sales are down compared with last year. "Accordingly, prices are rising less rapidly, with many builders more willing to discount," the Cleveland Fed said.
Richmond
Realtors reported "generally slower home sales and more moderate price growth," the Richmond Fed said. Buyers were taking time to shop around. High-priced homes were staying on the market longer. "It's clearly a buyers' market now and buyers can negotiate better prices," a contact in Washington said.
Atlanta
Home sales softened in some parts of the district and fell in Florida from record levels. "Despite this, single-family construction remained strong as builders worked to fill the backlog of orders made last year," the Atlanta Fed said. Condo sales in Florida weakened.
Chicago
"Construction and real estate activity was mixed by both location and market segment," the Chicago Fed said. Sales softened in Illinois, Indiana and Michigan, but sales "recovered some" in Wisconsin. Construction of new homes was slowing. Inventories were rising.
St. Louis
Home sales were mixed, the St. Louis Fed said. Sales were stronger in Memphis and St. Louis, but were down in Little Rock. Home building slowed in most areas.
Minneapolis
"Residential real estate softened," the Minneapolis Fed said. Building permits were down 10% in the Twin Cities. Plans were recently announced for a major new developing in Sioux Falls, S.D.
Kansas City
"Residential construction declined somewhat," the Kansas City Fed said. Builders expected further declines, although building is strong in some areas. Home price appreciation remained modest. Inventories were rising. Realtors expect sales to be little changed in coming months.
Dallas
"Construction and real estate activity accelerated, boosted by vigorous homebuilding and mounting commercial construction," the Dallas Fed said. "Residential markets remained strong." New home sales were at record levels in the first quarter. Contacts are confident the real estate market in the district will be unaffected by a national slowdown. Increased buying by investors was reported.
San Francisco
"Residential construction, sales activity, and price appreciation slowed slightly in most areas," the San Francisco Fed said. Residential markets were active, but moderating. Higher inventories and slower price appreciation "suggested significant cooling in most areas." Utah and parts of the Pacific Northwest were exceptions. "Mortgage lending, particularly in subprime categories, fell somewhat from very high levels."

Tapping the Hispanic Market

Insurance agent tailors new businesses to growing population

Recent Lead Stories Recent Lead Stories
ANDY MEEK | The Daily News

Lauda Martin Davis has seen the puzzled looks before. When she sees them directed at Hispanics in Memphis who are struggling to accomplish mundane tasks, she thinks of her Hispanic father, a man who never quite overcame his own language barrier.

"He had the thickest Spanish accent you've ever heard in your life, and I saw how much trouble he had because of it," said Davis, vice president of Servicios Bilingual Services.

It's a memory that puts her current job in perspective.

From behind the counter in a small Hickory Hill office, Davis and a handful of other Spanish-speaking employees do what few business people in Memphis can: offer basic services to Hispanics in the hope that people like her father don't have to be met with blank stares when they need help.

Following the demographics

The place where Davis works actually is three businesses in one. A grand opening for the entire thing will be held Monday.

SBS - Davis' division - offers a mix of services to Hispanics, including help with bookkeeping, translation and getting a driver's license. It shares space with a U.S. Post Office branch that was set up to handle Spanish-speaking customers.

Occupying most of the building at 3546 Hickory Hill is a Nationwide Insurance agency. It, too, deals especially with a Hispanic clientele.

All the divisions are under the umbrella of Larry E. Crum & Associates. Crum is the Nationwide Insurance agent who jumped at the chance to serve a demographic that's leading a seismic shift in the area's population statistics.

One estimate has put the Memphis area's Hispanic population between 260,000 and 300,000 people, which does not include undocumented residents. The most recent census figures put Shelby County's general population at slightly more than 900,000.

"The people, they're just like we are," said Crum, who owns nine Nationwide agencies in the Memphis area. "They want the same things we want: good jobs, good homes, good schools for their kids, and they pay their bills.

"It's just another culture is all, and we've learned how to deal in that culture because it seemed like another way to solidify our relationship with the community."

Cashing in

The three new businesses share space in a well-established, 17,000-square-foot strip center that's owned by Boyle Trust and Investment Co. and not far from the hustle and bustle of the Winchester Road corridor. It's less than half a mile from the Hickory Ridge Mall at 6075 Winchester Road.

Crum said customers from all over Memphis and DeSoto County already have flocked to his agency since it opened around the first of the year. Many of them might notice at least one thing that's not typical for businesses in the area: employees at Crum's agency don't lock the door whenever a customer comes in.

Hickory Hill is popularly known as a stretch of Memphis where the housing market is sluggish, the foreclosure rate is high, crime is up and businesses aren't exactly flocking for new opportunities.

The area's bad reputation aside, Crum's insurance agency has had a presence in Hickory Hill for about three years, and he said he likes it just fine.

"We don't have bulletproof glass," Crum said, noting a feature other businesses in the area have. "And we're open until six at night, which is an hour past when most businesses are open."

"You know, I was concerned when we went to Hickory Hill. But we're in a strip center that's pretty safe, and we haven't had any incidents of any kind. Hickory Hill has been okay with us."

Cultural enclave

Ivette Monzon, assistant for Hispanic affairs to Shelby County Mayor A C Wharton Jr., said the Hickory Hill community is home to a large Hispanic presence.

"Many businesses around there are closing, so I think (Crum's office) is a good idea," said Monzon, a Costa Rica native who has lived in the Memphis area for almost 30 years.

Davis, whose background is in accounting, is overseeing both the postal and bilingual services divisions of Crum's new enterprise.

"A lot of people here don't understand the ordinary things about living here," she said. "Typical things to you just aren't understood by them."

Some of those needs include writing business plans, basic birth certificate translation and aid with taxes. Davis has dreamed of working in her current job in some form or another since she saw her father struggle through life in America.

"I saw how much trouble he had, so I've always had the concept that I was going to do something like this," she said.

Monday's grand opening ceremony will be attended by officials from Nationwide's corporate office, the U.S. Postal Service and some influential Hispanic personalities, Crum said. As of mid-week, he was still in the process of confirming who would be able to show up.

If the office becomes successful over time, Crum said it could become a prototype for Nationwide agencies across the country.

All of the nine offices he owns reflect his desire to reach out to Spanish-speaking citizens and make sure people like Davis' father have somewhere to go for help.

"We put a bilingual person in our Olive Branch office, we put another bilingual person in our West Memphis office, and we just opened, on the first of January, a Hispanic insurance agency in Nashville," Crum said. "So we just recognize the diverse community is a good market."

New Homes Sales Fall in Jan.

5 percent decline shows softening in housing; Memphis market remains strong

By Martin Crutsinger
Associated Press
February 28, 2006

WASHINGTON -- The backlog of unsold new homes reached a record level last month, as sales slipped despite the warmest January in more than 100 years.

The Commerce Department reported Monday that sales of new single-family homes dropped by 5 percent to a seasonally adjusted annual rate of 1.233 million units last month.

That was the slowest pace since January 2005 and left the number of unsold homes at a record high of 528,000.

Analysts viewed the new data as further evidence that the nation's red-hot housing market, which hit record sales levels for five straight years, has definitely started to cool.

"The decline in new home sales in January makes it clear that there is some real softening in the housing market," said Joel Naroff, chief economist at Naroff Economic Advisors.

While the national market may be softening, a year-over-year comparison of local home sales indicates the housing market has not slowed down in the Memphis area, according to the Memphis Area Association of Realtors.

MAAR said 1,153 home sales were reported in January 2006, compared with 937 homes sold in January 2005, an increase of 23.1 percent over last year.

With the average sales price of a home increasing 14.3 percent from $150,400 in 2005 to $171,900 in 2006, total sales volume reflects a 40.4 percent increase over a year ago.

"With long-term interest rates still very low, the Memphis area is a highly desirable housing market," said MAAR president William Mitchell.

The national 5 percent decline was bigger than expected, dashing hopes that the milder-than-normal January would help to bolster demand. The warm weather had pushed up the level of construction starts last month by 14.5 percent, the fastest rate in three decades.

But the new report showed that with sales lagging, the increase in building activity left a total of 528,000 new homes still for sale at the end of the month, a nine-year high.

Even with the softening in sales, prices were up in January with the median price climbing to $238,100, up 4 percent from December, but below the all-time high of $243,900 set in October.

For the past few years, home prices have been surging at double-digit rates, gains that analysts said will likely slow now that sales are softening and inventories of unsold-homes are rising.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, predicted "real downward pressure on prices over the next few months."

David Seiders, chief economist at the National Association of Home Builders, said surveys showed that the number of builders who are throwing in various amenities for free in order to move homes has risen to 41 percent.

Seiders predicted that home price gains, which were running around 12 percent last year, will slow to about 6 percent this year.

He said a lot of this year's change will reflect less speculative investor activity and more sales spurred by people desiring to live in the homes. "Hopefully, that is all that is developing here," Seiders said.

Some economists are worried that with the inventory of unsold homes rising, there could be significant downward pressure on home prices, triggering a chain-reaction similar to the bursting of the stock market bubble in 2000, a development that contributed to the 2001 recession.

But new Federal Reserve Chairman Ben Bernanke told Congress earlier this month that for now he was looking for a moderate slowdown in the housing industry, not a crash.

The 5 percent January drop in sales followed a revised 3.8 percent increase in December and was the biggest setback since a 7 percent drop in November.

The biggest decline in sales was a 14.9 percent decrease in the Northeast, which followed an even bigger 23 percent plunge in sales in December. Sales in the Midwest were down 10.8 percent after having risen by 21.2 percent in December.

In the South, sales fell by 10.3 percent in January, following a 1.2 percent gain in December.

Bucking the national trend, sales in the West posted an 11.3 percent increase in January after a 6.3 percent gain in December.

Mortgage rates have been rising gradually with the 30-year mortgage now at 6.26 percent, according to the latest Freddie Mac survey. Many analysts believe 30-year mortgages will rise to between 6.5 percent and 7 percent by the end of this year.

They think that increase will be enough to trim sales of both new and existing homes and slow the double-digit gains in prices seen in recent years. The National Association of Realtors reported this month that a record 72 metropolitan areas saw double-digit gains in home prices in the final three months of 2005 compared with price levels at the end of 2004.

Vesta Home Show chooses Downtown for April event

By Amos Maki
February 9, 2006

As if Downtown needed any more confirmation of its energetic revitalization, the Vesta Home Show has tapped the South Main/South End area for its two-weeklong event in April.

An official announcement and groundbreaking ceremony for the event will be held Feb. 27 at 5050 Peabody Place, future site of the event's exclusive presenter, M&F Bank.

Organizers expect as many as 25,000 people to attend the event, scheduled for April 15- 30.

"What an honor this is," said Jeff Sanford, president of the Center City Commission. "To have the prestigious Vesta Home Show pick Downtown for one of its showcase events is proof positive that the Downtown housing market has come of age."

It is the first time Vesta has held its show Downtown since 1993, when Harbor Town hosted the event.

And it's the first time the 22-year-old show has been held within the Memphis city limits since 1997.

Downtown's sizzling residential growth compelled the Memphis Area Home Builders Association to hold the event there this year.

"The 38103 is one of the fastest growing Zip Codes in Shelby County and we wanted to make sure home builders have a presence in Downtown," said Dalene Wilson, director of special events for the Home Builders' Association. "There's a lot of buzz about it and we really want to reintroduce Memphians, many of them lifelong Memphians, to Downtown."

The demand for Downtown living is a bright spot in what are often dreary population and economic development numbers for the city.

According to a 2004 study commissioned by the CCC, the "high growth areas" of the Central Business Improvement District -- which includes Mud Island, Downtown Core and South Main District neighborhoods -- recorded a 10.3 percent average annual population growth 2000-2004, compared with the city's annual growth rate of 1 percent.

The entire CBID, which includes the Medical District, has a population of 25,142, and that number is projected to increase to 31,000 by 2009 and 38,000 by 2014.

The South End neighborhood covers a 30-acre area near the South Bluffs development and overlaps with portions of the South Main Historic District.

At least 13 developers are either building projects or have projects in the pipeline in the neighborhood.

Although $285 million in construction is planned or under way, that total is expected to reach $500 million during the next five to seven years.

The area is a blur of activity, with large earth movers, heavy construction vehicles, cranes and dozens of workers hammering, sawing and nailing away all day.

Some developers will be working overtime to get their products or models finished and ready for viewing.

"We're putting together our model very quickly for the show," said Scott Andrews of the Nashoba Group, which is partnering with AJW Partners to convert the former Piggly Wiggly headquarters on Front Street into the Nettleton, a 34-unit luxury condo development. "We're very excited and I think this says Downtown is a thriving market."

The Vesta event could also introduce many Mid-Southerners to "New Urbanism," the concept of integrating housing, offices, shops, entertainment, schools, parks and civic facilities in pedestrian-friendly developments.

Southland Development, which owns about 17 acres in the neighborhood, asked Looney Ricks Kiss to create a New Urbanism master plan for the area.

Jenny Wallace, marketing specialist for Beazer Homes, which is building a $49 million, 204-unit condo and townhome complex called State Place at South End, said the additional attention to the South End and South Main neighborhoods will ripple out to other parts of Downtown.

"Its a win-win for everybody," she said. "Everybody in the Downtown community will benefit from this."

More info:

Vesta Home Show

April's Vesta Home Show will take place in and around the South End neighborhood, where $285 million in projects are currently planned or under construction.

There are at least 13 developers with projects planned or under way in the general area.

For more information on the Vesta Home Show, please call 756-4500

Copyright 2006, commercialappeal.com - Memphis, TN. All Rights Reserved.

Memphis among least risky for home owners

Memphis is one of the top five least risky areas to own a home, according to the PMI U.S. Market Risk Index.

PMI Mortgage Insurance Co. released its data Tuesday, showing Memphis as the second least risky market in the nation's 50 largest housing markets, following only Pittsburgh. Indianapolis, Cincinnati and Nashville round out the top five.

Memphis scored 57, or a 5.7 percent chance of housing price decline, on the index, compared San Diego, the nation's highest risk market, which scored a 588, or a 58.8 percent chance of price declines.

The national average index score is 261.

PMI Mortgage, a subsidiary of The PMI Group Inc. (NYSE: PMI), publishes the market risk index quarterly. The index measures geographic house-price risk by predicting the probability of a regional decline in home prices over the next two years.

The index is based on the House Price Index from the Office of Federal Housing Enterprise Oversight, labor market statistics from the Bureau of Labor Statistics and the PMI affordability index, which uses local median household income, home price appreciation and the price of a conventional mortgage.

Apartment Market Finally Sees Pickup

Real Estate & Development

TRACY ADAMS | The Daily News

For the first time in the past few years, the Memphis multifamily housing market is gaining strength, and all signs point to growth in the year to come.

"The last couple of years have been very challenging for our business due to the fact that the pricing of single-family or for-sale housing alternatives has been very tempting for our residents," said Mark Fogelman, president of Memphis-based Fogelman Management Group. "In many cases, (renters) were able to buy a home for a lower monthly payment than actually renting an apartment. We lost a lot of residents over the last couple of years.

"But things are turning around. Quarter by quarter, the year has been picking up in growth."

Fogelman Management Group manages 41 multifamily properties totaling 16,000 units in 10 states, including 5,800 units in the Memphis market.

Positive numbers. The overall numbers for the Memphis multifamily market have been positive in the first three quarters of 2005, with increasing occupancy rates, rental rate gains and absorption that has outpaced the delivery of new units, according to a third quarter report by commercial real estate services firm CB Richard Ellis.

The report showed significant occupancy increases of 1.4 percent and 3.4 percent for 1980s construction and new construction, respectively. The largest increase among all categories was in Downtown Memphis, where new construction showed a 5.1 percent occupancy increase.

New construction in Downtown had the area's highest occupancy rate, at 97.3 percent. It was followed by Raleigh/Bartlett and Cordova/Germantown, which saw new construction occupancy rates of 95.8 percent and 94.9 percent, respectively.

Older construction in the Raleigh/Bartlett and Cordova/Germantown markets also showed positive numbers for the third quarter. Both areas saw an occupancy increase of 1.9 percent.

Higher absorption. Absorption in the third quarter more than doubled third quarter 2004 figures, with 1,156 units absorbed. The number of units absorbed was affected in part by Hurricane Katrina evacuees who needing immediate housing, Fogelman said.

"Unfortunately, Hurricane Katrina evacuees have contributed positively to our industry," he said. "Our company manages about 5,800 units locally, and we have leased to about 90 families that were fleeing Hurricane Katrina. Of that 90, about 50 remain with us today."

CB Richard Ellis predicted that many Katrina evacuees will stay in the Memphis area on a long-term basis, said Blake Pera, vice president of CB Richard Ellis' Memphis Multifamily Division.

"I do sense that those residents are longer term than displaced residents in Houston, Texas, and some other markets," Pera said. "From what we are hearing in the market, I think these people are continuing to stay."

Overall absorption through the third quarter was 1,156 units, which includes 257 1980s-built units and 1,206 new construction units, according to the report. New construction absorption was attributed to increased occupancy in the category and the delivery of 803 new units.

"The 1980s and new properties are doing really well," Pera said. "It is an encouraging sign that our market is turning the corner."

Rents finally increasing. Rental rates increased by about 1.5 percent in the third quarter, according to CB Richard Ellis. The data showed that the average market-wide rent was $658, compared with $651 at year-end 2004.

"2005 has been the first year in five years that we have had some pricing momentum behind us where we can rent a unit to a new resident at a higher rate than we rented to the previous resident," Fogelman said. "We're looking for that to continue in the coming year."

The East Winchester submarket experienced the largest rental rate gain among old construction properties, with a 3.7 percent increase, Pera said. In DeSoto County, where researchers found the highest rental increases among 1980s-built properties, rates increased by about 10.3 percent.

The growth experienced in the Memphis multifamily market could mean increased rental rates in 2006, Fogelman said.

"Over the last several years, a two-months-free rent giveaway has been very common in the market," he said. "We had higher occupancies, but the rental rates on a net effect basis were not positive.

"The city is experiencing improved job growth, there has been a lack of new apartment construction and interest rates are creeping higher, which all favor our industry. Our big focus is not going to be on occupancy in the coming year, but on pushing rental rates higher."

Continued growth. Fogelman also predicted the growth trend established this year will continue in the current quarter and into 2006.

"New construction, job growth, price of for-sale housing - these three factors are all starting to line up very nicely for us because we are at record lows for new apartment construction, jobs are improving and hopefully interest rates are improving, as well," he said. "We are bullish on the apartment market for 2006."

Pera agreed.

"I think we will continue to see an uptick in occupancy in the next several quarters," he said. "I would expect similar levels, with continued occupancy in the A and B properties in the mid 90s or better in 2006."

Local Realtors Expect Strong Sales to Continue

It comes as no surprise to Walter Molony that after five consecutive years of record-topping home sales nationwide, a slowdown is predicted for 2006.

"You can't keep setting records every year," said Molony, a spokesman for the National Association of Realtors.

Unprecedented boom. For the last five years, the housing market has been booming nationwide. It reached its peak in 2005. While NAR predicts a slowdown in 2006, Molony said he expects sales to remain strong.

Nationally, existing home sales are slated to rise 4.7 percent to $7.1 million in 2005. Next year, a decline of about 3.7 percent to $6.84 million is expected. Likewise, new home sales are projected to increase 7 percent to $1.29 million in 2005, then drop 4.8 percent to $1.23 million in 2006.

Even with the decline in both markets, 2006 is forecast to be the second best year in the real estate market, falling only behind 2005.

Memphis market. Local real estate professional William Mitchell said he doesn't believe the drop will be as significant in the Memphis area as it could be in certain hotspots - California, parts of Florida, Las Vegas and New York, to name a few.

"We're optimistic about the local real estate market," said Mitchell, president-elect of the Memphis Area Association of Realtors. "Memphis is more of a consistent market for real estate. We don't experience the high highs or the low lows."

Kirkpatrick said despite growing demand and rising asking prices for new homes and Downtown condominiums, Memphis is still an under-priced market compared to other markets.

Factoring variables. Molony said various micro-economic issues were used in predicting the 2006 market. Aside from examining historic housing trends and demand, other factors include economic growth, inflation, income, unemployment, consumer confidence and, most notably, interest rates.

"We are seeing inventory levels picking up and we're projecting a slow but modest rise in mortgage interest rates," he said.

Crye-Leike Realtor Angie Kirkpatrick agreed.

"Interest rates have been creeping up each year, making it harder to sell," she said.

Other disruptions such as recessions, natural disasters and tax increases also result in slower home sales.

Molony said the market has been affected by minor changes that have escalated, noting that national media outlets have featured stories predicting the bursting or crashing of the housing market based on what he called "junk economics."

Though numbers will reflect a slight decrease, he said, the market should remain at peak levels.

Existing versus new. For 2006, Mitchell anticipates a 2 percent to 3 percent increase in home sales.

"In the Memphis and Shelby County area, new home sales are up 7 to 8 percent, and existing home sales were up 4 to 5 percent in terms of the increase above this time last year," he said.

Kirkpatrick noted that 2005 has been her best year.

She said the majority of her buyers have purchased existing homes, adding that buyers have higher expectations and are becoming more selective in the types of existing homes they are purchasing.

"Years ago, people didn't want to live in Midtown if they had children," she said. "They factored in schools. Now you see people buying homes in Midtown and also Downtown. They are looking for homes with updated kitchens and bathrooms and central heat and air.

"Condos are doing very, very well, as well as zero lots. Today, people want homes that don't require much maintenance. When you have both homeowners working, they don't have time."

Existing homes account for about 85 percent of the national market. Molony said new home construction activity is expected to slow next year, but remain at historically high levels.

Balancing the market. In 2004, the average list price for an existing home in Memphis was $136,005. In 2005, the list price to date has increased to $142,862.

Molony said the predicted sales slowdown on the national level in 2006 should improve housing inventory levels, slow down price increases and level the playing field among buyers and sellers.

"We're returning to a balanced market," he said. "We've had more buyers than sellers in the market. It's been favoring sellers, which is why home prices have been rising at historically high rates."

This imbalance in supply and demand is one factor behind sharp price increases nationwide, Molony added.

"Nationally, we are looking at about a 12.7 percent rise in prices this year," Molony said. "If we were in a normal market right now, you would be seeing home prices increase 4.5 to 5 percent."

Next year, Molony said, NAR predicts a 6.1 percent rise in home prices.

Job Growth, Trade and Hurricanes Drive Commercial Real Estate, Says NAR

12/14/2005 10:31:00 AM

To: National and Business Desks

WASHINGTON, Dec. 14 /U.S. Newswire/ -- The impact of hurricanes is affecting many local commercial real estate markets, but job creation and increased trade are shaping the overall market, according to the National Association of Realtors(r) (NAR) COMMERCIAL REAL ESTATE SPOTLIGHT.

David Lereah, NAR's chief economist, said it takes time for commercial real estate to respond to changes in the overall economy. "There is a well known lag effect in commercial real estate, with a strong rise in jobs over the last two years currently bearing fruit in terms of higher demand for commercial space, especially in the office sector," he said. "In addition, increases in trade are benefiting industrial properties such as warehouse and distribution facilities."

NAR President Thomas M. Stevens from Vienna, Va., explained other factors at play in commercial real estate sectors. "People displaced by hurricanes are having a large impact on the apartment market across many areas of the South," said Stevens, senior vice president of NRT Inc. "Consumer spending is sustaining retail real estate, but that sector is seeing relatively modest growth and conditions vary widely."

Condo conversion accounted for a big increase in multi-family transactions this year. "The overall flow of capital into commercial real estate is at an unprecedented level, with multifamily transactions accounting for about a third of the total," he said.

Through the first nine months of 2005, a record of $188 billion in investment grade real estate traded hands, not counting transactions valued at less than $5 million. "These figures demonstrate the value of commercial real estate as part of a diversified investment strategy," Stevens said.

The NAR forecast for four major commercial sectors includes analysis of third-quarter data in 57 metro areas tracked. The sectors include the office, industrial, retail, and multifamily markets, plus some additional information for the hospitality sector. The metro data were provided by Torto Wheaton Research and Real Capital Analytics.

In the office sector there is sustained improvement, driven by approximately 580,000 new office jobs created over the last two years. Vacancy rates are projected to drop to 13.0 percent in the fourth quarter and to 11.0 percent by the end of 2006, compared with 15.4 percent in 2004. Office rents are seen to rise 4.0 percent for 2005 and another 5.5 percent in 2006; they were essentially flat in 2004 with a 0.4 percent gain.

Areas with the lowest office vacancies currently include Ventura County, Calif.; Orange County, Calif.; West Palm Beach, Fla.; New York City; and Fort Lauderdale, Fla., all with vacancy rates of 8.1 percent or less.

Net absorption of office space in the 57 markets tracked, which includes the leasing of new space coming on the market as well as space in existing properties, is expected to be 84.4 million square feet in 2005 and 78.3 million in 2006. This compares with 77.7 million square feet absorbed in 2004 and only 20.0 million in 2003.

The Washington area led the nation in total office space absorption in 2005, followed by New York, Phoenix, Los Angeles and Dallas.

The industrial sector also is experiencing a decline in vacancy rates – forecast at 9.5 percent in the fourth quarter and 8.4 percent a year from now. In 2004, industrial vacancies stood at 10.9 percent. Industrial rents are likely to grow 2.1 percent for 2005 and 3.4 percent in 2006, following a decline of 0.6 percent in 2004.

Trade patterns continue to benefit industrial property, but congestion in Southern California is diverting some traffic from China through the Panama Canal in order to reach Eastern markets. The areas with the lowest industrial vacancies are West Palm Beach, Fla.; Los Angeles; Riverside, Calif.; Long Island, N.Y.; and Las Vegas; all with vacancy rates of 6.1 percent or less.

Net absorption of industrial space in the 57 markets tracked should be 251.3 million square feet in 2005, and 216.1 million in 2006, up strongly from 176.5 million square feet absorbed in 2004 and a very modest 16.5 million in 2003.

In the retail sector, the vacancy rate is expected to ease to 7.2 percent in the fourth quarter and 6.9 percent a year from now, down from 7.5 percent in 2004. Rent growth is seen at 3.8 percent in 2005 and 3.6 percent in 2006, up from 3.3 percent in 2004.

Retail markets expected to have the lowest vacancies – forecast through 2007 -- include Las Vegas; Oakland, Calif.; San Jose, Calif.; Ventura County, Calif.; and San Francisco.

Net absorption of retail space in the 57 markets tracked is projected to be 56.2 million square feet in 2005 and 31.6 million in 2006, compared with 27.1 million in 2004.

The apartment rental market -- multifamily housing -- should see vacancy rates at 5.3 percent in the fourth quarter and 4.8 percent by the end of 2006, down from 6.2 percent in 2004. Average rent is likely to rise 2.8 percent in 2005 and 5.6 percent in 2006, up from a 1.5 percent increase in 2004.

Areas with the lowest apartment vacancies are Fort Lauderdale, West Palm Beach, Miami, Orlando and Los Angeles, all with vacancy rates of 2.7 percent or less. Houston and Atlanta area vacancies plummeted due to demand by hurricane evacuees, and will lead the nation in absorption of units during 2005.

Multifamily net absorption is forecast at 316,000 units in 57 metro areas tracked in 2005, and 264,000 in 2006, compared with 264,300 absorbed in 2004 and a modest 159,400 units 2003.

After Houston and Atlanta, the strongest multifamily absorption this year is expected in Chicago, Dallas and Boston.

Purchases of multifamily property rose 90 percent in 2005 -- much of the rise is attributable to conversion of apartments into condos, with 150,000 units converted in the first 10 months of 2005. Converters dominate investment activity in every region except the Southwest, where private local buyers are most active, but conversion is expected to subside in 2006.

A fifth commercial sector, hospitality, is experiencing temporarily inflated occupancy levels that result from demand by hurricane evacuees. Hotels and motels in cities near impacted regions are seeing the greatest demand, but Houston, Dallas-Fort Worth, Atlanta, San Antonio and Memphis also are experiencing higher occupancies as a result.

Hospitality markets projected to have tightening room availability in 2006 include Los Angeles; New York; Phoenix; Portland, Ore.; and San Diego.

The COMMERCIAL REAL ESTATE SPOTLIGHT is published by the NAR Research Division for the Realtors(r) Commercial Alliance (RCA). The RCA, formed by NAR in 1999, serves the needs of the commercial market and the commercial constituency within NAR, including commercial members; commercial committees, subcommittees and forums; commercial real estate boards and structures; and NAR affiliate organizations. These organizations include the CCIM Institute, the Institute of Real Estate Management, the Realtors(r) Land Institute, the Society of Industrial and Office Realtors(r), and the Counselors of Real Estate. The RCA also provides commercial products and services.

Memphis has protection against housing bubble

Modest growth in sector bodes well for city
By Carolyne Park and Christopher Sheffield
Memphis Business Journal
Updated: 7:00 p.m. ET Nov. 27, 2005

The future of the U.S. housing industry is being debated at all levels around the country -- from business to banking, and media to academia.

At the heart of the debate is whether or not the "bubble" of inflating home prices will burst, causing a sudden widespread drop in home values. It's a scenario causing anxiety among homeowners, investors and prospective home buyers, who fear owning a home may not be as safe an investment as it once was.

It is an issue especially hot in thriving metropolitan cities and coastal areas where home prices have skyrocketed in recent years in response to seemingly insatiable demand, spurred in large part by second-home buyers and investors hoping for big returns.

While there are some warning signs in select parts of the country, most agree that the Memphis housing market is immune from danger.

"There is no bubble," says Sue Stinson-Turner, president of the Memphis Area Association of Realtors (MAAR), who has been in the industry 27 years.

A recent report by the National Association of Realtors, Home Price Analysis for Memphis, supports arguments that Memphis, like many cities and towns across the country, is safe from a major market downturn. Key points of the report are that average home prices here have risen steadily rather than rapidly, the Memphis market maintains a healthy balance between supply and demand, and area homebuyers tend to buy what they can afford.

William Mitchell, vice president broker/manager with Crye-Leike, Inc., and MAAR's 2006 president-elect, says buying a home in the Memphis area is still a good deal. The market has a wide selection of homes at a full range of prices to meet the needs of almost any buyer. And with an average home price 30% below the national average at $142,400, homes here are affordable.

"If anything we are an under-valued market," Mitchell says.

Historically, developers have been conservative, and home prices in the Memphis area have increased steadily, rising 2% from 2003-2004, and 16% over the last three years. Like elsewhere in the country, the local housing market has seen a boon from 45-year-low interest rates in recent years. With lower monthly costs, those low rates meant more people could buy homes that couldn't afford them before.

Now those rates are starting to go up again. John Gnuschke, director of the Sparks Bureau of Business and Economic Research at the University of Memphis, says it is the rising interest rates that will have the most impact on the Memphis housing market. It is the first-time homebuyers with marginal incomes that will be affected the most. Instead of buying that first home, many of those people will have to remain renters.

But NAR expects demand for new homes here to remain strong as the local job market continues to grow, with 8,100 payroll job additions over the last 12 months, and another 10,000 predicted over the next 24 months. The association also predicts mortgage rates will hover around 7% by the end of 2006.

Charles Ricketts, vice president at Pulaski Mortgage, says Memphis' biggest protection from a housing bubble burst is its solid and consistent employer base. FedEx, with its 30,000 employees, and a large government sector, means wages are steady and moderate and thus housing prices are, too.

Ricketts says he has seen a slow down in mortgage activity in 2005 from previous years. Last year, Pulaski's Memphis operations finished with $217.7 million in mortgage volume. The company was budgeting for a 25%-30% drop for 2005, but Ricketts says it is no longer expected to be that significant.

Pulaski, which has been operating in the market since 1976, finished 2004 ranked sixth in loan volume, according to information from the Home Mortgage Disclosure Act report. First Tennessee Home Loans came out on top with $1.10 billion for 2004, less than a percent higher than 2005. Of the top 25 mortgage lenders in the Memphis Metropolitan Statistical Area, those that stayed on the list from the previous year still saw their loan volume drop, in some cases significantly from 2003 to 2004, and most expect to see a continued drop in 2005.

Millington-based Patriot Bank, which had total volume in 2004 of $89.2 million, held on to its 14 place ranking from 2003 despite a drop of $13 million in loan volume.

Of the top 25 mortgage lenders, Patriot Bank would rank as one of the smaller players. Patriot vice president Keith Barger says Patriot has a keen interest in what happens in the home financing market.

"As a small community bank, we tie a lot of our efforts into residential real estate," he says.

Patriot wants to be a major player in the local mortgage market.

Barger says his bank may actually see a 10%-15% increase in mortgage volume for 2005 over 2004. Much of that will come from the bank's lending in Tipton County and east Shelby County around Collierville.

Mitchell, of Crye-Leike, says higher rates may mean homes don't sell as quickly, but the demand will remain.

"I remember the days when we thought if it would just get down to 12%, we'd sell a lot of houses," he says.

Rapidly rising construction costs are another factor expected to affect the local housing market.

"It kind of puts a floor on how much housing prices can fall. In that sense, it provides some degree of protection," Gnuschke says.

For the future, NAR predicts Memphis' housing market will continue to benefit from baby boomers buying second homes, often as investments for retirement. The local market may also increase as a retirement destination for those seeking reasonable living costs.

"I think we're going to see a slow down," Gnuschke says. "I don't think the housing bubble will bust, I think it will deflate."

Infill homes developed with tact may fare best

By Amos Maki
Contact
November 11, 2005

Developers Eddie Kircher and Marc Belz wanted to build 12 new homes in an upscale neighborhood on White Station just north of Walnut Grove.

But the neighbors -- which included Belz Enterprises chairman and chief executive Jack Belz, former Hohenberg Bros. Co. president Rudi E. Scheidt and prominent Memphis attorney Ted Winestone -- weren't impressed with parts of the project.

So Kircher and Belz, principals of Kircher-Belz Builders LLC, worked with the neighbors to create a development nearly everybody could agree on.

They reduced the number of homes on the 2.7-acre site from 12 to nine and made sure no windows from the proposed new homes overlooked the neighbors' backyards. They also promised to keep intact a hedge that circles the property.

"At first, most neighbors don't want it," Kircher said. "But we show them what

we are going to do and how we are going to protect their privacy, and we try to work with them."

Encouraged by government officials who see infill projects as much-needed revenue generators and with the profits that can be generated by placing multiple new homes on small lots, more and more developers are looking inside the loop.

Building permits for new homes in an area that extends from Midtown to the western edge of Germantown nearly doubled between 2002 and last year.

In all, the number of permits issued for new homes in an area that stretches from near Interstate 40-Midtown to the western edge of Germantown grew from 104 in 2002 to 192 last year.

According to Chandler Reports, 156 permits for new single-family homes have been issued in the same area through the first nine months of 2005.

As infill developments have become more popular, developers and homeowners often find themselves engaged in the delicate art of negotiation.

Some of the negotiations don't go as smoothly as the ones Kircher and Belz were involved in.

Developer Angelo Lagonia and homebuilder Ron Sklar recently withdrew a proposal from the City Council for one of two planned developments on North Graham.

Lagonia also agreed to postpone the second development's appearance before the Memphis and Shelby County Land Use Control Board until Dec. 8, and reduced the number of planned homes from 11 to nine.

Lagonia is a member of the LUCB and has recused himself from voting on the Graham projects.

Concerned about density, property values and loss of green space, residents of the area banded together to fight the proposed developments.

Lots on this stretch of North Graham, between Summer and Macon, are characterized by mature oak and pine trees, huge yards and generous setbacks from the streets.

Nearly every home along this stretch of Graham has a handmade sign decrying the proposed developments, which would have placed 22 zero-lot-line homes where once there were only two homes.

"This feels like the plagues of Egypt, only it's poorly planned infills," said Charlotte Fineberg-Buchner, who lives in the neighborhood.

Neighbors said communication between the developer and residents was almost nonexistent.

"It really did not start off on a very good foot," said Carolyn Head, who lives next door to one of the sites. "When we did meet, (Lagonia) flat out told us it had to be 11 lots or none. The one time we did get together, it was very adversarial."

Lagonia and Sklar declined to comment.

Veteran developer Doug Dickens, vice president of special residential projects for Boyle Investment Co., said communication is the key for homeowners and developers.

"When I was young, I thought everybody should love what I was doing," said Dickens, who worked on his own or with various partners to develop more than 30 high-profile planned developments throughout Memphis. "But then I realized that everybody has a real concern for change.

"So as much communication as possible as early as possible, including taking neighbors to the site to show them what you are going to do, is important," he said.

Dickens, who helped create the planned development ordinance in 1979, said he often encountered resistance to his plans. But as time passed, resistance to infill projects became less pronounced.

"As time has gone by and these types of developments have matured and values have gone up around them, people are starting to embrace them more," he said.

Government officials have certainly embraced infills.

They favor the developments because it means the city and county do not have to invest in costly new infrastructure and because the projects generate significant new tax revenue.

"They're making use of existing infrastructure -- roads, firehouses, police stations and schools," said Mary Baker, deputy director of Memphis and Shelby County Office of Planning and Development.

"They're also very high-value, so the tax revenue from them is a plus."

For instance, developers who are building an infill project on Park Avenue paid $500,000 for a house and the property it sits on.

Based on projected starting price of $675,000, the seven homes at the Park Audubon Planned Development should generate at least $85,000 a year in city and county taxes -- more than nine times the revenue from the previous home.

Extra income to help fill the city's depleted coffers is just fine with Fineberg-Buchner, just as long as it isn't generated in her neighborhood.

"We have been investing in Memphis and Shelby County for a long time," she said. "We simply don't want to be abused by poor development that degrades our area and sets a precedent for future degradation of a lovely area."

The Lofts at South Bluffs transform area

Former industrial site now a vibrant residential utopia

By Donna McCraw and Mike Parker
Special to Midtown & Downtown Appeal
October 23, 2005

For those new to Memphis, it's hard to believe the land that is now South Bluffs, on the south end of Downtown, was once the shipping hub of the city. The rail lines that still enter the area once served as the primary transportation method of goods arriving to and departing from Memphis.

The building which is now the Lofts at South Bluffs, 505 Tennessee, was once the distribution center for Orgill Brothers -- a wholesale supplies company.

Built in 1909, the north side of the six-story brick warehouse was planned as the first phase of a complex of buildings that would take over the south end of Tennessee Street.

Existing rail lines already served the entire area, and elevated docks on the sides of the warehouse provided easy wagon access. It was designed with massive brick walls, heavy wood columns, and beams with cast iron connections to support substantial loads.

Arched brick openings and tall double hung windows provided light and air on three sides, while large wooden sliding dock doors on the ground floor allowed for moving the hardware inventories into the building, and a single large freight elevator moved them from floor to floor.

Wooden carts, currently used in common areas as benches, ran on what was essentially a conveyor belt system. These carts transported materials from what is now the Tennessee garage into the Orgill building.

The structure was state of the art for its time, with a full sprinkler system and water tower supply; fire-resistant floor construction; galvanized metal windows at the north wall (adjacent to the Tennessee Brewery); seismic wall tie bracing at the corners; and wood floors that sloped to the exterior wall, allowing for rain water to escape when the windows were left open for ventilation.

The second phase of construction took place in 1917.

This radical, four-story addition abutted the south side of the original structure. It is made of reinforced concrete, supported by round concrete columns with flared tops and board formed slabs spanning between. Its exposed concrete frame contains brick infill panels and bands of hopper type windows to allow for maximum ventilation during humid Memphis summers.

This addition contained a new concrete and clay tile stair tower, freight elevator, a spiral package chute (spanning all four stories), and a full basement that housed a coal fired boiler plant.

In approximately 1947, a steel and concrete connecting bridge was erected that linked the Orgill Brothers Building with the warehouse to the east (now a parking garage).

An overhead chain type conveyer moved items between the buildings, as well as a vehicle ramp, which allowed for easy freight transfer over Tennessee Street. A rail spur entered the building, allowing for easy loading and unloading of goods.

Orgill vacated the building in 1954. It remained virtually empty and unused for 44 years, until it was purchased in 1998 by developer (and Downtowner in every sense of the word) Henry Turley, with plans for a conversion into loft-style apartments.

Partnering with the Downtown architecture firm Hnedak Bobo Group, local designer Suzanne Newman and Patton & Taylor Construction, Turley undertook the task of bringing the historic structure up to modern code -- transforming it into one of the most sought-out, geographically desirable apartment buildings in the burgeoning Downtown core of Memphis.

The Lofts's first resident took up home in December 2000. Over the past five years, the building has enjoyed above-average occupancy rates and positive resident feedback.

Last month, Turley announced the building would be offered as condominiums. Residents have responded favorably, and will soon be joining the ranks of homeowners.

As part of its conversion to resident-owned, the building is undergoing fairly extensive renovations including the relocation of its fitness facility to a prime penthouse unit overlooking the Mississippi River; an expansion of the roof deck with increased seating and a wet bar/kitchen area for entertaining; repainting of all interior halls and carpeting of floors; the installation of original local artwork in hallways; and the addition of new light fixtures throughout.

Residents are thrilled to see so many positive changes occurring during the early phases of conversion.

Looking back, it's hard to imagine that a massive old building that once housed wholesale supplies in an industrial part of town would become Downtown's premier loft living experience, or that the tract overlooking the river would be home to multi-million dollar homes owned by the likes of Cybil Shepard, Pat Halloran and our own Henry Turley -- but that's part of the charm of our great city!

The Lofts will host a party on Nov. 5 starting at 7 p.m. with all proceeds going to the Memphis Arts Council. Tickets are $25 and include live music, food, drinks and a great selection of art and artfully designed lofts.

This event serves as the official unveiling of The Lofts' "Henry Award" units, spotlighting Memphis designers Rachael Turri, Jenny Yeates, Amelia Carkuff and Graham Reese.

Donna McCraw and Mike Parker are born and raised Memphians and the two sales agents on site at the Lofts at South Bluffs.

Hurricane evacuee shelters face deadline

Sep 27, 2005, 06:58 PM

With new Hurricane evacuees lining up every morning at the Red Cross's Midtown Memphis headquarters, some still end up at local shelters.

"There's so many people coming in," said New Orleans evacuee Lawrence Galloway. "It's kind of hard to accommodate everybody, serve everybody with the volume of people coming in but they're doing their best."

They are tasked with finding food, places to live, and jobs for more than 9,500 families who've turned to the Mid-South Red Cross, after those families' were homes flooded by Hurricanes Katrina and Rita.

Now, President Bush wants all evacuees out of shelters by October 15th.

"I think that's a very realistic goal," said William Hildebrandt at the American Red Cross. "It's something that we've been working on over the last several weeks."

The Red Cross reports 109 evacuees are still living at the Dunn Elementary School shelter. Galloway isn't convinced the deadline can be met.

"I don't think that's a realistic goal because it's only a few weeks away," he said. "We got a lot of people in this Dunn Street shelter as I speak now, and we constantly having people coming in."

But the signs outside church run shelters like Bellevue Baptist tell a more hopeful story, saying donations are no longer needed.

"We've been very fortunate," said Rev. Scotty Shows at Belleview, "to have a lot of folks step up, offer jobs and housing. Our folks have responded well."

Now, there just a handful of evacuees where there once were hundreds. Church officials say they expect to close the shelter by Friday.

As for the Dunn Avenue Shelter, Red Cross officials said Tuesday evacuees still there after the President's deadline won't be thrown out on the street, saying help will be there as long as necessary.

Housing market 11% below norm

By The Commercial Appeal
August 19, 2005

Are you feeling undervalued? Like you're missing out on the real estate boom?

According to the economics department of National City Corp., Memphis's housing market is one of the most undervalued in the United States.

NCC officials said the Memphis metro area was 11 percent below the norm.

The study finds Santa Barbara, Calif., to be the country's most overheated market at 69 percent above the norm, while College Station, Texas, is ranked the most undervalued at 19 percent below the norm.

For the study, price-to-income ratios are statistically explained by household population density, mortgage interest rates, relative income levels and characteristics unique to each metro area.

Renasant to move in

Renasant Bank executives and commercial lenders will move into the bank's new digs in East Memphis on Monday.

About 18 people will help occupy the 12,000 square feet the bank has on two floors at 5240 Poplar, about twice the space it had in its Germantown nest. A branch -- the bank's third in Shelby County -- will open there by Thursday, said Frank Cianciola, president and chief executive officer.

Renasant isn't giving up on its birthplace in Germantown -- about 15 employees, headed by Don Russell, executive vice president, will stay in Germantown.

With its acquisition last year by The Peoples Holding Co., of Tupelo, since renamed Renasant Corp., the Germantown-Memphis bank also had DeSoto County offices to manage, so the move gives it a more central location. The bank has a branch in Cordova and is building one in Collierville.

Sovereign in top 500

Sovereign Wealth Management of Memphis didn't grow as fast last year as in 2003, but the company still ranked among Bloomberg Wealth Manager magazine's top 500 wealth managers.

Sovereign stood at No. 121, based on the average amount of money managed for each client -- about $2.1 million. Last year, the firm was No. 94.

With $180 million under management, a 20 percent increase from 2003, Sovereign's growth didn't match the 216.4 percent that made it the fastest growing wealth management firm in the nation in 2003.

Today's numbers

One-third of business users blame Microsoft for the recent worm outbreak.

Thirty-five percent of respondents to an informal Web survey of customers by security company Sophos said the software maker was at fault for the recent rash of worms spawned by variants of Zotob. The results, released on Thursday, show 45 percent place the blame squarely on the virus writers, while 20 percent laid blame on their systems administrators for not patching systems fast enough.

Housing boom goes global; bust fears loom

By JON E. HILSENRATH and PATRICK BARTA, The Wall Street Journal via AP
July 10, 2005

It was a familiar story from Golden Land Property Development PLC. With its 35-story Sky Villas condominiums nearly sold out, it unveiled plans for an even more lavish project. The Infinity features a replica of Rome's Spanish Steps, a spa in a restored historic mansion and faux-Venetian canals. Some 90 percent of the units in the new development sold out in less than three months, even though some units were priced at more than $1 million.

The project isn't in a steaming-hot U.S. real-estate market like Las Vegas or Miami. It is in Bangkok, where home prices are soaring, bank mortgage lending is climbing and developers are adding thousands of glitzy units.

It is a remarkable turnaround for a city whose property market went belly up in 1997, and it points to an important facet of this housing boom: It is global and, in some places, more dramatic than in even the most frenzied U.S. markets.

Over the past three years, measures of housing values are up 48 percent in France, 33 percent in Brazil and they have nearly doubled in South Africa, according to data gathered from these markets from sources like the Bank for International Settlements, Economy.com and The Wall Street Journal. In just the past year, prices have risen 19 percent in Hong Kong and 48 percent in Bulgaria. In China, Australia, the United Kingdom and Spain, they have also boomed, though they are now showing signs of slowing in some places.

Americans are searching out castles in Umbria. Londoners are gobbling up beachfront property on the shores of Bulgaria. Europeans are finding dream homes on the Indian Ocean near Durban. And in Bangkok, eight years after the city's property market collapsed, Golden Land is seeking buyers from abroad with a sales pitch that promises "an environment so opulent, only in your dreams could it be imagined."

"There is a tremendous amount of money floating around looking to invest," says Liakat S. Dhanji, the Nairobi-born chief executive of Golden Land.

Low interest rates are the obvious engine of this global boom. But there are many other factors at play, including the intensifying flow of capital around the world, aggressive lending by banks here and abroad and a frantic search by investors, large and small, for returns that beat stocks and bonds. The question being asked by economists now is whether the links in the international financial system that helped create a housing boom from Bangkok to Boston could also create a global bust.

If home prices were to fall broadly, it would test the financial system, since banks and investors around the globe have been gobbling up mortgages and real estate at increasing rates. It could also undermine the ability of individuals to spend, since so much wealth is now tied up in homes.

Economists often say real estate, which can't easily be traded like a stock or oil, is driven by local factors — like the availability of land in an area or regional employment trends.

"The housing market in the United States is quite heterogeneous, and it does not have the capacity to move excesses easily from one area to another," Fed Chairman Alan Greenspan told Congress last week. "Instead, we have a collection of only loosely connected local markets."

But a growing body of economic research challenges that theory. While local factors do play a critical role in shaping real estate values — prices have risen more in Miami than Memphis, Tennessee, and they have fallen in Germany and Japan — economists are beginning to concede that global factors can play just as important a role. Researchers first recognized the global pattern in commercial real-estate markets after the office booms and busts that marked the 1970s and 1980s. Now they are seeing it in residential housing, too.

In a study written last year, Marco Terrones, an International Monetary Fund economist, found 40 percent of house price movements around the world were driven by factors that translate across borders, like interest rates and economic growth. "Just as the upswing in house prices has been mostly a global phenomenon," Terrones argued, "it is likely that any downturn would also be highly synchronized, with corresponding implications for global economic activity."

Prices are showing signs of slowing or even falling in some places. In Australia, for instance, home prices rose about 60 percent during 2002 and 2003. But they have edged lower since. In the United Kingdom, the Netherlands and South Korea, they also have lost some momentum. In many other parts of the world, regulators are working hard to cool housing fever. Real estate brokers in China, for instance, have seen signs of a sales slowdown since Chinese authorities imposed a 5.5 percent tax on properties that are flipped within two years of purchase.

Most economists still believe a housing slowdown, if it actually comes, would be absorbed by the global economy without much disruption to overall growth rates. Indeed, it is possible the globalization of this boom helps to spread out the risk associated with it. But some economists aren't so sure.

"I'm worried about a world recession when this thing finally unravels," says Robert Shiller, a Yale University professor and author of the book "Irrational Exuberance."

Shiller's own university is an example of how globalization touches a uniquely local asset like real estate. Managers of Yale's $13 billion endowment are increasingly looking outside the United States and outside of traditional stock and bond investments to diversify the school's portfolio.

In November, Dean Takahashi, senior director in Yale's investment office, rang the opening bell on the stock exchange in Bucharest. Then he told local reporters the university would be increasing its $20 million of investments in Romania, including some real estate projects. "We see enormous potential" for foreign investment in residential real estate projects, says Siminel Andrei, head of NCH Advisors Inc., the administrator of the Romanian unit of New Century Holdings, which manages some investments for Yale outside the United States.

It isn't just the free flow of capital that has globalized the boom. It is also the free flow of people. Doug Platt, a 41-year-old New York executive, counts on outsiders to flock to Italy. He and a group of friends and business associates are negotiating for the purchase of a 12th-century castle in Umbria for just over $5 million. Platt and his partners plan to carve the castle into 20 units and sell them to Londoners looking to hop over to Italy on discount airlines. He says he will keep one of the units for himself, because he and his Italian wife travel to the region frequently.

"If you are investing in Italy right now, one thing you will hear a lot is that the Italian economy stinks," he says. "But it doesn't really matter to us what is happening in the Italian economy. It's much more important to us what is happening 1,000 miles away in Britain."

The rise of an affluent, mobile class around the world should reassure him. Last year, there were 8.3 million people worldwide with $1 million or more in financial assets at the end of 2004, up from 7 million in 2000, according to research by Merrill Lynch and Capgemini.

While individuals and institutional investors spread bets on real estate, banks are directing more credit to home buyers. In the 12 nations that use the euro, mortgage lending has increased at an 8 percent annual rate since the end of 2000, according to Bank for International Settlements data. That is faster than the 5 percent rate of increase for corporate loans. Mortgage lending has grown at an 11 percent rate in the United States and a 6 percent rate in Japan, while business lending has contracted in both countries. In the United Kingdom, mortgage lending was up at a 20 percent rate while business lending was up at an 8 percent rate.

Some reports suggest banks also have become willing to take more chances lending. An April survey of loan officers by the European Central Bank, for instance, found European banks eased lending standards for housing loans during the past four quarters. Citing increased competition from other banks, they reduced margins on mortgages and slightly eased "loan to value" ratio requirements. Surveys of loan officers in places like Poland and Hungary turn up similar results.

"Lenders and investors have to be careful that they exercise proper risk management. If they don't, they're going to get burned," says William Rhodes, senior vice chairman of Citigroup. Rhodes says banks are better managed and better capitalized today than they were in the 1980s and 1990s, when he was helping to navigate debt crises in development countries. But he is still becoming concerned about a housing bubble.

The disparity between mortgage lending and business lending points to an undercurrent beneath the housing boom. Roughly five years after the 1990s tech bubble burst, business investment is still relatively modest around the world. In the United States, for instance, business investment in plant and equipment was 10.4 percent of gross domestic product in 2004, below its average of 11.5 percent of the 1980s and 1990s. In Germany, it was a little more than 11 percent of GDP, down sharply from 15 percent in the 1990s. GDP is a nation's total output of goods and services.

"Even in fast-growing Asia, most countries have not yet returned to the investment rates of the late '80s and early '90s, much less the frothy levels of the mid-'90s," says Kenneth Rogoff, a Harvard University economist and former chief economist at the International Monetary Fund.

The slow recovery of business investment, after the boom of the late 1990s, contributes to what Ben Bernanke, a Fed governor who has been nominated to serve as chairman of President Bush's Council of Economic Advisers, calls a "global savings glut," a flood of financial assets looking elsewhere for a home. That is helping to hold down interest rates and push up housing values.

Other factors contribute to the global savings glut. The boom in oil prices has resulted in huge trade surpluses among oil-producing nations, many of which are recycling their newfound wealth back into the world economy by purchasing bonds and sometimes real estate. Moreover, central banks have maintained relatively loose monetary policies in the wake of the 2001 recession and the uncertain recoveries that followed, adding liquidity to the financial system.

As a result, bond yields aren't just low in the United States. They are below 5 percent in Germany, France, Japan, the United Kingdom and Canada. That makes homes more affordable for individuals by reducing monthly mortgage payments. It also drives investors into real estate because the returns they can earn on bonds are so minuscule.

Equities have been a hair-raising alternative. The Dow Jones world stock index is down 1 percent so far this year, up 11 percent in the past 12 months and down 12 percent over the past five years.

"I see it on the face of people. They don't know what to do with the money," says Gary Garrabrant, who manages Equity International Properties Ltd., the international portfolio of Sam Zell, the real estate investor who made his fortune scooping up distressed properties in the United States. Garrabrant has been investing in homebuilders in Mexico and Brazil.

In Thailand, Bangkok Bank, Thailand's largest bank, is offering mortgages fixed for the first three years at a 5.25 percent rate, not much more than the rate on a five-year adjustable-rate mortgage in the United States. The result: Mortgage lending in Thailand is up more than 20 percent annually, after contracting sharply in the late 1990s.

A property boom in Thailand would have seemed unthinkable a few years ago. Thai banks were reluctant to lend and the number of developers dropped to fewer than 100 from as many as 4,000 during the 1990s boom. Between 1997 and late 2002, there were no major condominium projects launched in Thailand and government officials had to press the country's state-owned banks to extend more credit.

Now, there are some 14,000 condominiums in development in a city whose stock of existing units is less than 100,000. The number of single-family homes under construction shot up by nearly 80 percent over the past two years. Some analysts have started to worry that units in the city's most popular districts are being sold to speculators, who intend to resell them quickly for a profit. Average condo prices in Bangkok's high-end Sukhumvit expatriate district rose 34 percent in 2003, followed by an 18 percent gain in 2004.

Fearful of a 1990s repeat, Thailand's central bank has introduced rules that require banks to cap loans for large houses at 70 percent of the property's value and forced lenders to register major projects with the central bank. Regulators also began speaking publicly of a possible housing bubble. As a result, many analysts predict the country will avert another wrenching bust.

Golden Land Property nearly went belly up during the latest downturn. It was rescued by Dhanji, a Canadian citizen who worked as a real estate consultant in Hong Kong. Tapping into foreign investors like Morgan Stanley and financier George Soros, he says he raised $100 million and recapitalized the company.

Today, Golden Land has about 2,500 homes in the works or recently completed in Bangkok suburbs and 600 residential units planned or recently completed in the central business district. Its crown jewel is the downtown Infinity project. Condominiums will include Jacuzzi tubs with 270-degree views of the city. The company says it has raised prices 12 times since launching the project in mid-March due to high demand. Some 30 percent of the units are going to foreigners, many of whom see Thailand's luxury developments as a better value than pricey units in places like Shanghai, London or New York.

"There may be a (housing) bubble in the U.S. or Britain," says Gilbert N. Wong, an American executive whose company manufactures household appliances in Asia, but "there's no bubble here." He believes Bangkok is inexpensive relative to Tokyo or Hong Kong and he thinks incomes are rising, so sooner or later these will be in demand. Wong is shelling out more than $2 million for two Golden Land units; one is for himself and the other he might use for his children.

Rising rates or a change in sentiment by global real estate buyers are two main threats to the housing boom. In Bangkok, there aren't many signs of it happening yet.

"I think the U.S. is at the top of the cycle," says Dhanji. But Asian real estate, which only began recovering in the past few years, he says "is just beginning."

Location, affordability, jobs fueling area growth

Article published Jul 6, 2005

By ERIN EDGEMON
La Vergne is one of the fastest-growing cities in the state thanks to its proximity to metro Nashville and Interstate 24, affordable housing and job growth, said a local builder.
With a 7.6 percent growth rate from 2003-04, La Vergne ranks fifth in the state of Tennessee for overall population growth, according to population estimates recently released by the U.S. Census Bureau. La Vergne's population in 2003 was 23,053. The population grew by 1,758 residents to 24,811 in 2004.

"La Vergne has the most affordable new construction closest to downtown Nashville," said Mark Thomason, a partner in Greenvale Homes, a home construction and development company based in Murfreesboro. "La Vergne is the most affordable place to get in the Rutherford County School System."

Thomason said the bulk of his company's growth has been in the La Vergne market. The company's sales are up 11 percent this year from the first six months of last year. Greenvale plans to close on 350 homes this year, an increase of 59 homes over last year.

Based on raw population numbers, all of the major cities in Rutherford County — Murfreesboro, La Vergne and Smyrna — are in the top eight for growth out of the 349 incorporated cities in the state, said David Penn, director of the Business and Economic Research Center at MTSU.

In terms of sheer numbers, Murfreesboro saw the largest population growth in the state, he said. Murfreesboro grew from 78,049 residents from July1, 2003 to 81,511 as of July 1, 2004, an increase of 3,462 residents.

Based on percentages, Murfreesboro ranked 18th in the state for population growth at 4.4 percent, Penn said.

Murfreesboro Mayor Tommy Bragg said, "Low taxes, great location, educational access and livability make Murfreesboro and Rutherford County a very attractive location, and so much of the migration from other areas has been due to job growth, which is good not only for new residents but for existing residents."

Still, the mayor said the city is concerned about its growing numbers. For the past three years the city has put in place demanding restrictions and standards on residential and commercial developments, Bragg said.

"I think our growth is sustainable," the mayor said. "The city works very hard to provide the services required for quality growth," including the planning and construction of roadways, rehabilitating water and sewer lines and ensuring the local electric departments can handle additional growth.

Smyrna's population increased from 30,691 in 2003 to 31,925 in 2004, according to the U.S. Census Bureau, which is an increase of 1,234 residents or 4.0 percent.

Al Shannon, of Smyrna, drives through his hometown and La Vergne every day to get to his job in Nashville.

"I know it is crowded, that is about it," he said of growth in both cities.

Shannon, who works at Dell Computers, said even backroads in La Vergne are congested because of large housing developments and small, two-lane roads.

Mark Tucker, Smyrna finance director, said while he sees growth as a good thing for the town, staying ahead of the curve can be a challenge. The town is trying to keep up with growth by adding additional road widening projects to the town's budget every year. Smyrna also is adding three new police officer positions to the budget this year.

La Vergne Police Sgt. Gerry Howse, who lives in Smyrna, said both Smyrna and La Vergne are attractive cities because of low property taxes, industrial jobs and the rural setting that is still present just outside of the city limits.

Growth in the city of La Vergne means city officials will have "to work harder and faster to put infrastructure in place sooner rather than later," said La Vergne Alderman Jerry Gann, adding that the city's new water treatment plant is up and running and the city has many road widening plans on the way.

Despite added infrastructure, Gann admitted La Vergne will continue to have congested streets and other growing pains.

"I would much rather have a little more congested traffic than have no jobs and the things that you don't have if you have no employment," he said.

Howse, who has worked in La Vergne for 10 years, said growth in the city is hard to keep up with. "Our car volume has increased," he said, and the police department receives more calls.

"I think, you know, you have these people who want to keep that small-town mentality," Howse said, "but it is not a small town anymore."

The population growth in Rutherford County means nothing to Denise Decker, who moved to the county a year and a half ago from Columbus, Ohio. Decker, who moved to La Vergne a week ago from Murfreesboro, said the congested roads in the city are nothing compared to the heavy traffic in Ohio.

But Decker likes living in La Vergne because of its low rent prices and proximity to her job, she said.

Samantha Russell, who moved to La Vergne from Mesa, Ariz. in March, also said the population growth and related traffic do not impact her because she is used to living in a much larger city. She said it is fairly easy to get around La Vergne compared to Mesa, which has a population of more than 426,000.

From what she has observed so far, Russell, who plans to start graduate school at Tennessee State University in the fall, said La Vergne has plenty of room for additional growth.

Penn noted that Murfreesboro's population growth rate is less than half of the city's job growth rate.

According to the U.S. Department of Labor, Murfreesboro's job growth for the third quarter of 2004 was 9.2 percent.

"It suggests that the population growth rate may increase, being pulled up by the job growth rate," Penn said. "I think it is possible that the population growth may accelerate from where we are now."

Penn said no job growth percentages exist for La Vergne and Smyrna, but he expects rates in those cities to be as high or higher than Murfreesboro's.

In addition to job growth, cities in Rutherford County continue to be attractive to families because of the climate and the high quality of life, including access to cultural and recreational activities and a good school system, Penn said.

Estimates from federal income tax statistics show that roughly a third of newcomers into Rutherford County come from Nashville-Davidson County, another third move from another county in the state and the remaining newcomers move from out of state, he said.

Davidson County residents, drawn to Rutherford County because of low housing costs, often maintain their jobs in the northern county, Penn said.

The fastest-growing city in the state was Spring Hill, located in Williamson and Maury counties, with a 17.9 percent population growth, Penn said. He contributes the growth to the Saturn automobile manufacturing plant located in the town and to a growing number of families deciding to move outside of population centers like Franklin and Murfreesboro.

MHA to redevelop 600 housing units at Dixie Homes

By Amos Maki
Memphis Business Journal
Updated: 8:00 p.m. ET July 3, 2005

Memphis Housing Authority plans to redevelop the massive Dixie Homes public housing project on Poplar, another step in the city's march to revitalize some of its most blighted neighborhoods and obsolete public housing developments.

Robert Lipscomb, director of Housing and Community Development and MHA, says he will apply for a $20 million Hope VI grant that would turn the housing project into a mixed-income neighborhood similar to Uptown. And even if the city isn't awarded the grant, Lipscomb says Dixie Homes needs to be redeveloped.

The move to renovate the 600-unit, 46-acre site is being made in conjunction with Le Bonheur Children's Medical Center's $235 million expansion, which includes tearing down the Memphis Mental Health Institute and erecting a new bed tower on the site at the corner of Poplar and Manassas.

Built in 1938, Dixie Homes is currently home to 475 families. If the city is awarded the funding, the new mixed-income development would be home to 375-425 units, including a mix of market rate, affordable and public housing.

"This is a neighborhood improvement project that includes Le Bonheur," Lipscomb says. "We want to rebuild the neighborhood and create a real mixed-income neighborhood around that whole medical community. Everybody is working together on this."

The Le Bonheur expansion and other private money -- approaching $2 billion by some estimates -- pouring into the Medical District could significantly improve the city's chances for getting one of the six grants that will be issued by the federal Department of Housing and Urban Development.

Since the city began applying for the funds, it has tied the public housing improvements to massive private sector projects.

"When you look at what is going on in the Medical District and Le Bonheur, that is a lot of leverage," says Marty Boscacy, deputy executive director of MHA.

If the bid is successful, the Dixie Homes renovation would be another in a series of community revitalization projects using Hope VI funds that are stretched across the city.

In 2004, MHA received more than $22.5 million in Hope VI Grant funds as a part of a $75 million plan to turn the former Lamar Terrace housing development at Lamar and I-240 into University Place, a public-private housing development that will have at least 391 units, including rentals, subsidized rentals for senior citizens and new homes. University Place is located just south of the Medical District and the burgeoning Biotech zone.

In 2000, MHA won $35 million in Hope VI funds to revitalize public housing developments in Uptown, the $151 million urban renewal project that covers 100 city blocks on the north end of Downtown. There, nearby St. Jude Children's Research Hospital is in the midst of a $1 billion expansion.

In 1995, MHA was awarded a $47.2 million Hope VI grant for the redevelopment of the 842-unit LeMoyne Gardens public housing development near LeMoyne-Owen College.

"It will be much like College Park and Uptown where you really rebuild a neighborhood and create a mixed-income neighborhood around that medical community," Lipscomb says.

St. Louis-based McCormack, Baron & Salazar, the developer for University Place and a national leader in Hope VI development projects, is contracted to redevelop Dixie Homes and has formed a partnership with Memphis-based Community Capital, a real estate and municipal financing firm that worked on financing plans for University Place and portions of Uptown. Urban Design Associates of Pittsburgh and Looney Ricks Kiss of Memphis are part of the design team.

The competition between cities for Hope VI grants is always stiff, but it is reaching a new level this year because only six grants will be handed out. President George W. Bush has proposed eliminating the grants, which cities say are vital for redeveloping blighted urban areas, in the 2006 budget.

Begun in 1993, the Hope VI program has distributed about $5 billion in grants to redevelop failed public housing developments into mixed-use, mixed-income neighborhoods.

A central premise of the Hope VI program is that high concentrations of unemployed, poor families create many of the social ills that plague the developments.

Besides building new structures to replace the blighted ones and reconnect them to the surrounding neighborhood, the Hope VI program also aims rebuild lives through self-sufficiency programs. To continue living in a Hope VI community, residents must sign a self-reliance agreement that requires them to participate in case management and meet certain employment and educational benchmarks.

But the Bush administration will face stiff resistance to eliminating the plan in the halls of Congress, where many members view the program as a savior.

"By planning to cut Hope VI, the administration is seeking to eliminate a $5 billion program that has helped revitalize our nation's urban areas," says Rep. Harold Ford, the Memphis Democrat who is running for the Senate seat being vacated by Majority Leader Bill Frist, a Republican. "And the impact of Hope VI goes beyond just brick and mortar. By giving people a home and facilitating resident training and job creation initiatives, Hope VI grants help transform people's lives. They are vital to help change depressed areas into safe, secure and sustainable communities."

The Hope VI program has fans on both sides of the aisle, including Sen. Rick Santorum, R-Pa., usually a staunch ally of the administration. Earlier this month he helped secure a $17 million grant for Philadelphia, saying he is "opposed to any kind of elimination" of the program.

But the Hope VI grant, if awarded, wouldn't cover all aspects of the proposed redevelopment. Lipscomb says he will have to raise funds locally to take care of the social services aspect of the program and demolition of the buildings because, unlike in the past, the grant money cannot be used for those components.

Job training is part of the program and residents of the new development could be trained to work in a variety of Medical District-related jobs.

"Once the physical barriers come down, then you see economic barriers come down," says Tom Currell, vice president of McCormack, Baron & Salazar. "All of the Medical District has been very supportive and is looking at strategies to help find employment opportunities for people in the neighborhoods, to get job skills training and find employment in the Medical District because in that complex of facilities there are all kinds of jobs available."

Currell says the plan calls for increased green space, park space and a more pedestrian friendly environment.

Although some cities have fared better than others in using the grant funds, there is ample evidence to suggest the program is working.

The Urban Land Institute says in a 2002 report that the Hope VI program "is the single most significant new federal housing initiative of the last decade," reporting that the program produced "dramatic results in some of America's worst neighborhoods."

According to a report from the Housing Research Foundation, per capita income in Hope VI neighborhoods rose an average of 71%, while unemployment rates dipped 11%. And 11% of households receive public assistance, down from an average of 39% in 1989, according to the report.

Beth Flanagan, director of the Central Biomedical District, says projects like University Place and the proposed Dixie Homes redevelopment are crucial for continued development in the area.

"It is important to all the stakeholders in the Medical District and Robert (Lipscomb) has a done a wonderful job bringing together public and private stakeholders," she says.

Interest-only loans grow in popularity amid housing boom

By Rob Robertson
Memphis Business Journal
Updated: 8:00 p.m. ET June 19, 2005

As property values across the country continue to rise, more home buyers have begun taking advantage of interest-only mortgages, an increasingly popular loan that rewards buyers with initially lower monthly payments but also carries risks should housing prices suddenly drop.

Interest-only mortgages are attractive because they don't require payments toward the loan principal for a set period of time, typically 3 to 7 years, which lowers the cost of entry substantially because buyers are qualified on the lower interest-only payments. The mortgages are often included with adjustable rates.

The concept is not a new one. Interest-only loans have been around since the 1920s, but they were usually aimed at wealthy investors who were expected to use the principal portion of their payments for other investments.

Today, the product has become a useful vehicle for homebuyers of more modest means to be able to purchase nicer homes, even in markets where property values are extraordinarily high.

"They have really just taken off in the last year or two," says Bob Goethe, CEO of Memphis-based Regions Mortgage. "Three years ago we didn't even get calls about these loans."

The trend toward interest-only mortgages has been well under way in places like California, Florida, Arizona, Texas and states along the Atlantic Coast, where property values have increased the most in recent years.

In the Mid-South, where home values have been rising but at a much more moderate pace, the popularity of interest-only mortgages has been less pronounced. Curiosity about the loans, however, has been rising, say local lenders.

Ralph McNeely, manager of First Horizon's retail mortgage operation in Germantown, says interest-only loans are still something of a niche product here.

"Interest-only mortgages are much more popular in areas where property values are increasing rapidly," McNeely says. "Here, where housing appreciation is moderate, interest-only loans are more of a product for sophisticated borrowers, but a lot of people have at least been asking about them.

"It's a useful tool, but it's not for everyone."

McNeely says interest-only loans make up about 20% of First Horizon's mortgage business in Memphis, but that percentage is probably much higher in other areas, particularly the coasts.

Still, industry experts worry that the growing popularity of interest-only mortgages may further elevate already soaring housing prices, creating the specter of a crash that could cripple the economy.

In its most recent economic commentary, the Mortgage Bankers Association called the current behavior of the housing market "a gathering cloud on the economic horizon" and blamed the rapid rise in housing prices in part on the availability of products like interest-only mortgages that entice people to purchase more home than they can afford.

Goethe has observed the shift in the way people think about buying homes, as houses and their surrounding real estate are more often being treated as assets in investment portfolios rather than just places to live.

"People want to maximize the kind of house they can buy because they see real estate as a good investment," he says. "We're now seeing a substantial increase in customer interest in (interest-only) loans. In 2001-2004 we had historically low interest rates and people everywhere were refinancing. That wave has passed and now people are cashing in on real estate as the values keep going up."

A sharp downward turn in property values could saddle many borrowers who used interest-only, adjustable-rate mortgages with increasing monthly payments to finance homes worth steadily less. Such a worst-case scenario could result in the same kind of massive foreclosures that crippled the savings-and-loan industry in the late 1980s.

To prevent this, mortgage lenders must remain prudent in the face of rising competition created by the ample availability of mortgage credit, Goethe says.

"We're watching things very closely," he says. "When we make loans we look very carefully at the credit worthiness of a borrower to make sure that borrowers can afford the payments in future."

Indeed, home prices have risen considerably faster than workers' incomes, according to the MBA, which cited data from the Office of Federal Housing Enterprise Oversight. During the past five years, average home prices increased at an annual rate of 8.4% while weekly earnings in the non-farm business sector increased only 2.7%.

In the past year the gap has gotten wider, the MBA observes, as home prices have increased more than 11% compared to a 2.3% rise in average weekly earnings.

Most people think there is a higher probability of rates going up than going down, Goethe says.

"1-3 years ARMs are going to adjust up at some point and the question is can a borrower afford it when that happens," he says. "We'd be doing a disservice if we didn't take that into consideration."

Most experts agree that the likelihood of a catastrophic drop in property values is remote; a more likely scenario involves a gradual decline in the rate of growth as long-term interest rates increase.

In any event, McNeely says the Mid-South is in a better position to weather any sudden downturns in the real estate market because of its historically steady property values.

"We'd be better off here than in other regions," he says. "If property values decreased it would be a detriment and people must consider that possibility, but our area has always been stable. There haven't been many booms or busts here (relative to other regions), and I think it will stay that way."

South End generates $285M in new projects

Amos Maki

When Terry Lynch and his partners started buying property four years ago in the area of Downtown known as the South End, other developers had already passed on the area. But Lynch, president of The Southland Cos., saw promise where others saw nothing but peril.

With $285 million worth of development in the construction and planning phases, the South End neighborhood Lynch and his wife, Robyn, along with partners Karl and Gail Schledwitz, set out to develop is ready to blossom with almost 1,300 new residential units. Once a relatively forgotten part of the city's Downtown populated mostly by industry, the South End is now being transformed into a "pedestrian friendly neighborhood" with multiple products at multiple price points.

One new project, called the Art House Apartments at South End, will add 302 rental units to the Downtown market. The $30 million project, located at Florida and East Carolina, will have a series of courtyards inside the development that will feature works from local artists and have a five-level parking facility. The complex will be equipped with wireless Internet access, a swimming pool and live-work spaces for residents.

"This will be a space for the younger people who respect and like the art community and it will ripple through the whole neighborhood," Lynch says.

An Atlanta-based company is under contract to build the complex. The units are expected to rent for $700-$800 a month.

The conversion of the Hoover Building on Georgia, home to Dabney Hoover Supply Co., Inc., will add 42 new condos to Downtown in 2007.

Over the next few months, construction on City Commons Too at South End, a development featuring 11 townhouses starting at around $350,000, should start. City Commons Too is right next to City Commons, the development by Chamberlain, McCreery and Rice that will add 44 condos to Downtown.

Other area projects long in the works are starting to come to fruition and many have pedestrian friendly elements.

Construction on Carolina Lofts at South End, a $12 million Faxon & Gillis development featuring 12 townhomes and 60 condos, has begun.

The Rooftops at South End, a $5.5 million Southland Capital Partners project featuring 12 townhomes, is nearing completion. Six of the units feature additional living spaces called "granny flats" that come equipped with full kitchens and baths. The units with the granny flats will sell for $471,000 and city codes allow the extra space to be rented out. The remaining six units without the flats will sell for $371,000. All 12 units have rooftop decks that offer stunning views of the Memphis skyline, from FedExForum to the Hernando DeSoto bridge.

"We've found that the younger people like the energy of the skyline," Lynch says.

At Georgia and Riverside Drive, Jason Crews is adding two floors to the old Memphis Imports Building. The $16 million project will have 66 condos, covered parking, a workout area and a common gathering place. Tom Davis at Henry Turley Realtors is selling the units, which range from $166,500-$430,000.

Davis is also handling the sales for City House Cosmopolitan Lofts, which is still under construction and includes almost 5,000 square feet of retail space on the ground floor. To date, 28 of the 36 condos in the $12 million project have been pre-sold. Architectural CustomWorks is the developer.

"We wanted to open the ground floor of the building out to the street and thought retail was the best way to do that," says Berry Jones, principal of Architectural CustomWorks. "A relationship to the street and maintaining a good connection to the street keeps the project exciting."

Most of the projects on Southland's property have been in the works for years, but it took time for company officials to find developers committed to their ideas of new urbanism and to clear government hurdles.

Southland Development Partners, a division of The Southland Cos., spent about $4 million buying 15 acres of property and improving some infrastructure in the area. The company asked Looney Ricks Kiss to develop a conceptual master plan for a 30-acre area in the South End. Southland Development Partners has implemented architectural and design guidelines for developers to follow.

Jeff Sanford, president of the Center City Commission, says that while many thought the area was ripe for residential development, few had the courage to pour money into land assemblage.

"I have to give Terry and Karl a lot of credit," Sanford says. "Not only did they step up and purchase property, but they very wisely invested in a sophisticated plan to create a new, attractive, high-density urban neighborhood."

Southland Development serves as the master developers for the site and all the projects are required to follow its "new urbanism" guidelines: Maximum density and pedestrian friendly spaces.

"We're not just selling land down there," Lynch says. "We're selling a concept they're buying into."

While the new urbanism phrase may be a recent addition to developers' lexicons, the principles behind it aren't that new at all.

"New urbanism is a catch-phrase everybody is latching onto, but it really is good, common sense planning," says Tony Bologna, president of Bologna Consultants, an architectural and consulting firm. "The whole idea is a smart way to live.

"It's progress in the best sense of the word," says Bologna, who practices the new urbanism ideals he preaches. His office on Mud Island is in walking distance from his home, a grocery store, barber shop and dry cleaners.

Lynch and his partners don't want suburban-style developments popping up in their end of Downtown, and they seek out developers with expertise in urban development.

"In Downtown, most of your local developers and builders who have come Downtown have not been exposed to new urbanism principles," Lynch says. "A lot of times they are still building a suburban style interior product. On most of the major projects within our master plan, I've gone out of town to get people with an urban strategy."

That's why Southland Development brought in Atlanta-based Beazer Homes to build State Place at South End, a $49 million townhouse and condo development. Construction on the project, which will eventually have 108 townhomes and 96 condo units in a 5-acre gated community, should begin this week.

The guidelines set up by Southland Development will contribute to high residential density. There will be about 40 units per acre in the area, compared to about 14 units per acre in Harbor Town.

To bring the South End neighborhood and its residents closer to the river, Lynch will spend $200,000 to connect Channel 3 Drive to Kansas Street. Currently, residents of the area who want to visit Martyrs Park must brave traffic on Riverside Drive to get there.

Demand for new homes inside I-240 loop a boon for city

By Tom Charlier
Contact
May 15, 2005

There was nothing wrong with the remodeled brick rancher that sprawled across a shaded lot at 4576 Park, but John Gallina and Rob Hansom tore it down anyway.

Salvaging the bricks and windows, their crews dismantled the 60-year-old home so quickly this spring that by the time tulips sprouted in the yard all that remained was the driveway and mailbox.

In its place, Gallina and Hansom began constructing a gated community with seven homes, each to be priced well above the $500,000 they paid for the original house and 2.4-acre lot. And if similar projects in the area are any guide, they won't have any trouble selling them.

"You don't find any of these things sitting around empty," said Don Berge, president of MarketGraphics of Memphis, which tracks the local real estate market. "All those projects like that are so successful."

For all the gloomy talk these days about residents wanting to flee Memphis, the demand is soaring for so-called infill projects like the one being built by Gallina and Hansom.

Building permits for new homes in an area stretching from Midtown to the western edge of Germantown nearly doubled between 2002 and last year. It's an indication that many people are willing to pay a premium for new homes built in older parts of the city.

Aside from their popularity among home buyers, the infill developments are something of a salve both for Memphis's frail tax base and Shelby County's swelling debt.

In contrast to suburban subdivisions -- which require heavy government investment for new roads, utilities and schools -- infill projects are built in areas where the infrastructure exists.

What's more, they tend to boost the property values, and hence tax yield, of the lots on which they're built. Based on projected starting price of $675,000, the seven homes at the Park Audubon Planned Development being built by Gallina and Hansom should generate a total of at least $85,000 a year in city and county taxes -- more than nine times the revenue from the previous home.

The projects, with their higher densities, sometimes create conflicts with neighbors. But because they're a potential antidote to suburban sprawl, infill developments conform with the "smart growth" agenda pursued by county Mayor A C Wharton.

For several years most of the infill activity has been centered in East Memphis, where new homes have been sold at rates of about 25 per year, according to MarketGraphics.

But in recent months more projects have risen in other sections of the city, including Midtown, where sizable developments are under way off Barksdale and at the former main library site at Peabody and McLean.

In all, the number of permits issued for new homes in an area stretching from near I-40 Midtown to the western edge of Germantown grew from 104 in 2002 to 192 last year. Barely four months into 2005, 73 have been issued.

The infill successes have helped pave the way for more ambitious projects to redevelop the city's core.

Memphis officials are promoting Uptown, a mixed-income, mixed-use community north of Downtown that will contain 1,200 homes and apartments. Hundreds of other units will be built at developments planned on the sites of razed public housing projects.

In a March report, MarketGraphics tallied more than 100 housing starts in the Downtown area in the previous 12 months.

"We're attracting a lot of new people," said Robert Lipscomb, the city's director of Housing and Community Development.

Residents are drawn to infill developments for a variety of reasons, industry officials and home buyers said. Much of it has to do with location.

"A lot of people want to live inside the I-240 loop," Berge said.

Among them are Diana and Joe Teagarden. Last year they moved a few blocks from a larger, nearly century-old home in Central Gardens into one of the first homes completed in the development at Peabody and McLean.

"We wanted to stay in this area," Diana Teagarden said.

"We wanted something scaled-down and new."

For Bobby Mack and his family, who moved into a new home in a gated development near Walnut Grove and Highland two years ago, seclusion was a main attraction.

"It's peaceful and quiet, and it stays clean," Mack said.

East Memphis remains especially popular, with infill homes often priced at more than $500,000. Builders say their customers, typically retired empty-nesters, want to live near the restaurants, grocery stores and shopping centers found in the city. They also tend to travel a lot and are looking for security and smaller, low-maintenance lots.

"They enjoy being able to lock up their house and turn on the automatic sprinkler" and leave, said Drew Renshaw, who is building four of the 14 homes in Boxwood Green, a gated infill development off Poplar in which homes will start at about $825,000.

If infill projects have a drawback, it's their potential impact on neighbors, who often object to the density of homes. At Park Audubon, for instance, Gallina and Hansom agreed to scale back from 10 to seven homes after neighbors complained.

City Council member Brent Taylor said the council's main challenge in deciding whether to approve projects is to strike a balance between neighbors' concerns and the overall benefits to Memphis.

Developers say the infill projects show that for all its problems -- everything from soaring taxes and political scandals to crime and poor schools -- Memphis retains some appeal.

"You hear so much negative talk about Memphis -- the political structure and so on," Hansom said. "What's amazing is the interest and recognition from people looking to get back in to the location, the lifestyle (of the city). ... I think it's almost a hidden movement."

Copyright 2005, commercialappeal.com - Memphis, TN.

Memphis seen as an example of success

By Julie Goodman
jgoodman@clarionledger.com

MEMPHIS — Memphis has seen burgeoning residential development in its downtown, spurred initially by the reopening of the Peabody Hotel 24 years ago.

Developers say they descended on the city because of its riverfront property and, eventually, the Autozone Park, home to the minor league Redbirds baseball team, with its inexpensive tickets and family-oriented charm.

They used funky urban styles to lure in the 20- and 30-something crowd, future CEOs who eventually might want to move their businesses to the city. Other homes cater to a different demographic, featuring a classic Southern rivertown theme with porches and clapboard siding.

Here, residents can take in everything from pulled pork to the Rock 'N' Soul Museum, which explains how rural families of yore played music on a diddly bow. It is a far cry from Jackson, Miss., which offers no waterfront or sultry guitar music to pour into the streets at night, although the night life is what city officials are working toward on Farish Street.

Developers, architects and planners mostly from around Tennessee gathered here this week for the "Uptown Downtown and Around Town Memphis" seminar, presented by The Seaside Institute and Looney Ricks Kiss Architects.

Participants discussed what works and what doesn't work for city development. A successful decision could be something as simple as raising a first-floor dwelling several feet to give a resident an elevated view that is not just an eyeful of a sidewalk, they said.

Organizers pointed to areas of Memphis that were once boarded up, rife with urban blight, and have since turned into hotspots for construction and renovation. Warehouses have been converted to loft apartments, decades-old housing projects were torn down for mixed-income dwellings, and a railroad yard was converted into townhouses and apartments.

Downtown streets are studded with portable toilets, with men toiling away on rooftops amid mounds of dirt and construction machinery.

The high-growth sector of downtown Memphis experiences 10.3 percent annual growth, while the city as a whole only experiences 1 percent, said Jeff Sanford, president of the Center City Commission, a public-private partnership charged with downtown redevelopment.

Developers have catered to a range of target markets, investing in everything from sprawling homes overlooking the ballpark to 450-square-foot lofts.

"If someone walked through with a ring through their nose, we had something for them," said Brent Little, a developer who worked on the Echelon at The Ballpark Apartments, $36 million worth of luxury rental property with 9-foot ceilings, gourmet kitchens and granite countertops.

The apartments have a 93 percent occupancy rate.

Paige Close, an architect with the Memphis-based Looney Ricks Kiss firm, a principle designer of the Echelon apartments, also worked on a project that involved converting the top four floors of the historic YMCA into loft apartments, featuring exposed concrete and interior brick facades.

While the downtown area did not fare well in traditional market indicators such as job, population and employee income growth, Close said, it did show a tendency toward higher rents and occupancy rates, and that was enough for developers.

Over the years, the development has helped bring Memphis out of a precipitous decline, brought on in part by massive white flight after the assassination of the Dr. Martin Luther King Jr. in 1968.

The ballpark, for instance, drew suburban families to downtown, ones who never considered the attraction of the area before.

"There is something about baseball and that beautiful green field, the electric atmosphere and the lights and everything, that just make it spectacular," Close said.

"The other thing we felt like it created was this cohesion between black and white ... It's become this almost civic space where we've reconnected as a community — suburban, urban, white, black, every different socio-economic category out there is part of that audience."

Sanford said there is now $2.5 billion of new construction and renovation under way in downtown Memphis which, by some estimates, still is just about 30 percent of what needs to be done.

Development breeds development, he said. "We're sort of victims of our own success in that regard."

Pinch District Staying Alive

Apr 23, 2005, 10:52 PM

We've told you about Pinch District merchants feeling "the pinch" before. They sit in the shadow of the now, mostly quiet, Pyramid. "Since the FedEx Forum's been here, it's been pretty hard," says Precious Cargo owner Gary Gilles.

But things could soon be picking up thanks to places like Uptown Memphis. This residential development just north of "the pinch" is one popular place. There was a crowd clamoring for new lots Saturday morning. Girish Patel was one of them. "We came here a week ago, looked around many places, and we come here and instantly fell in love with the place," says Patel.

Some believe new residents will translate into new revenue for the surrounding area. "An event at The Pyramid every now and then is one thing, but a thousand new families living within walking distance of your restaurant is another matter all together," says marketing manager Alexandra Mobley.

In addition to the Uptown development, new apartments were recently completed at the corner of Front and Auction. And luxury condos will soon go up right next door. "Downtown is booming," says Memphis Councilman Myron Lowery. "This area is experiencing the fastest growth of any part of the city," he adds. Lowery is confident merchants won't be the only ones benefiting from the boom. There could also be a pay-off for the beleaguered Pyramid. "Because of the growth in the downtown area, this could again be one of the anchors for the downtown area," says Lowery.

Only time will tell if things are truly on the right track.

The Pyramid's immediate future includes the Art of the Motorcycle exhibit. It's part of the "wonders" series. Last month Shelby County Commissioners voted to have the county attorney file a lawsuit against HOOPS and the Memphis Grizzlies over the Pyramid's future.Commissioner John Willingham claims the Grizzlies want to keep the Pyramid shuttered.

Tax increase could hit Shelby County residents hard

Mar 16, 2005, 9:16 AM
The next several months could bring a city tax hike, a county tax hike, and then, on top of that, you'll be getting your house reappraised, which could mean you're paying even more. In some neighborhoods. It's just too much to bear.

"Every day there's something in the paper about raising the taxes, raising the taxes," said Mattie Morgan, who has lived in the same South Memphis neighborhood - the same house since 1932.

She's seen Memphis change and she's seen politicians come and go, but these days-- she says--life here has become downright unaffordable. And talk of tax hikes in Memphis and Shelby County has all of her Elliston Heights neighbors nervous. Maurice Martin's family has lived here since the 60's.

"When we first moved here... It wasn't anything over here. Sidewalk wasn't here. The street was a red gravel road," said Martin.

This year Shelby County reappraised his home by $6,000. That means he'll have to pay more in taxes. Last week, Memphis Mayor Willie Herenton proposed a $.54 cent increase in the tax rate. Shelby County Mayor A C Wharton has indicated the County may add an extra $.24 cents to that. Martin - who works full time - says he worries about his neighborhood, where most of his neighbors are elderly and on fixed incomes. But he also worries about steep cuts in services that might accompany tax hikes.

"I know there's a lot of problems with the city as far as picking up trash and stuff like that. And we don't need more problems. If you start cutting out that there then you're making more problems for the city," said Martin. Meanwhile, Mattie Morgan is watching and worrying.

"Well, I'm about too old to vote... Let alone paying some more taxes. And i'm not working. And I really ain't able to pay no more. Look like I'm going to have a hard time," said Morgan.

Shelby County Mayor A C Wharton is fighting to minimize the property tax increase in the county. He was in Nashville today lobbying for a real estate transfer tax, but so far he's been having trouble drumming up support.

High-rise condo: Goodwyn gets new life

Jane Aldinger

Adding to the ever-growing residential development in Downtown Memphis, Capital Development LLC partners Henry Grosvenor and J. Hollingsworth are redeveloping the former Goodwyn Institute building into condos and apartments.

But the $9 million redevelopment project will offer the market something it hasn't seen before, turning the 18-story building into a total of 26 upscale units, eight full-floor condos and 18 apartments.

The building, at 127 Madison, is about 65,000 square feet, and its floor sizes are small for a high-rise, measuring about 3,000 square feet per floor. The 3,000-square-foot condominiums will be located on the top eight floors, and floors 2-10 each will be split into two 1,300-square-foot apartments.
Grosvenor says they are still putting together cost estimates for the high-end condos, but he says the prices will reflect the project.

"They will be the nicest condominiums that have been built in Memphis," he says. "We're trying to bring the Park Avenue New York concept to Memphis."

Grosvenor and Hollingsworth have hired Bluff City Realty, a residential brokerage focused solely on Downtown, to market the condominiums. Amelia Carkuff Interiors will do the interior design work, and Barnett Naylor has been hired as the project's contractor.

The developers have been granted historic tax credits for the redevelopment, which dictate that they must rent the 18 apartment units for a minimum of five years. Grosvenor says after that five-year requirement, there's a good chance they will sell those units as condos also.

The units will have hardwood floors, granite-countered kitchens, vanities and ceramic tile in the bathrooms, and the condos will not have common areas since elevators will open into the homes of condo owners.

Many of Downtown's traditional apartment buildings have been converted into condominiums, including the Claridge House and the Shrine Building. Grosvenor doesn't predict an absorption problem because the project is only adding 18 units to the market.

"We really feel there's a market because we've lost all of the apartment buildings," he says. "There are really not any apartments for rent in the core of Downtown."

Ron Kastner, CB Richard Ellis Memphis vice president and Bluff City Realty investor, says Goodwyn is the kind of project Bluff City was founded for.

"It's an acid test for what we were thinking," he says. "This is where we have the expertise in this local market to have the specialty contacts to fill these buildings. That's what we saw coming, and that's why we started this."

Jennifer Murff, head of Bluff City, says the units should sell quickly because the building is providing something yet to come online Downtown with its upscale amenities and adjacent parking. Kastner says Goodwyn is the kind of project they like to see because it is one of the few true examples of core neighborhood development in a boutique style.

Grosvenor and Hollingsworth developed Number 10 Main, an upscale apartment building that will feature a lot of the same amenities as Goodwyn, only Goodwyn will be "taken up a notch," Grosvenor says. Goodwyn will feature a first-floor lounge area equipped with a catering kitchen, fireplace, bar and big screen television.

Goodwyn, like Number 10, will also have a roof-top deck with grills, patio furniture, planters and a Jacuzzi. Grosvenor says the rooftop has been the No. 1 feature in renting Number 10 units and they plan to continue that concept.

Hollingsworth has also founded a management company, Ambassador Management, that will handle Goodwyn and Number 10.

The Goodwyn redevelopment is ready to go -- the developers have their financing aligned and have 90% completed plans.

"We're on a very fast track at this point," Grosvenor says.

Demolition work on the adjacent Piccadilly building will begin next week, and interior demolition is currently under way. They expect demolition will be complete in three months, with a 10-12 month construction phase, hoping to lease units by spring 2006.

Partners Hollingsworth and Grosvenor, who have worked together on a number of multi-family projects in the community, purchased the building in 1999 as part of the parking garage development, but have waited to develop it because of cost issues.

"We've always wanted to do this building, but even three years ago, we couldn't get the prices or the rents," Grosvenor says. "With all that's happening in Downtown and especially what's happening in this neighborhood, it makes sense now. It works."

Goodwyn is located next door to other historic structures, the Piccadilly building and the Federal Bakery building. The Piccadilly building's facade is all that remains of the structure, and Grosvenor will be tearing that down and renovating the four-story Federal Bakery building as its own live/work condominium, with 700 square feet per floor.

The developers built the parking garage which backs up to 127 Madison, and with the space from the Piccadilly property, they will add a motorcourt and courtyard off of Madison, modeled after Peabody Place's Hampton Inn concept.

The only building entrance will be off the courtyard, and a private parking ramp will be built exclusively for Goodwyn occupants. There will also be an entrance to the building from the fourth floor of the parking garage.

Located at the corner of Madison and Second, Goodwyn was built in 1908 by Central Bank and Trust, the parent bank of First Tennessee, as a headquarters facility. Designed by Memphis architect George Mahan, it was the tallest building in the city until 1924 when the Lincoln-American tower was built.

Built in the Beaux Arts style, Central Bank built the tower with $240,000 in capital and $100,000 in surplus. Judith Johnson, former executive director of Memphis Heritage, currently does preservation consulting work in addition to her role as a real estate agent with Crye-Leike Midtown.

Grosvenor and Hollingsworth hired Johnson to help them research the property's history, and Johnson says she has enjoyed watching the continued revitalization of Downtown buildings.

"I just have found it very exciting to watch Downtown go from being mostly abandoned, deteriorating buildings and now they're really almost fixing up every building Downtown," she says.

Developments like Goodwyn are challenging projects because of historic sensitivity and Downtown congestion, and developers like Grosvenor and Hollingsworth are widely revered for their dedication to Downtown.

"You don't have to do this kind of stuff -- there's a lot easier ways to make a buck," Kastner says.

But Grosvenor insists nothing is more satisfying than walking into Number 10, where he lives, and remembering what it was before he and Hollingsworth transformed it.

"It doesn't even compare," he says.

Pinch District condos bolster Downtown living

By Amos Maki
Memphis Business Journal
Updated: 7:00 p.m. ET Jan. 16, 2005

Betting on the success of Uptown to spur interest in living in the north end of Downtown, a group of developers is set to build a condominium project in the heart of the Pinch District.

Barnett Naylor Construction Services Group will build Harbor Lights, a $5 million, 24-unit condominium development, at the corner of Front Street and North Parkway, directly across the street from the Pyramid arena.

The developers expect to break ground on the project in March and be open a year later. The condos will range in size from 1,200-1,700 square feet and cost $200,000-$350,000.

Tammy Morgan of Naylor Construction is high on the area, citing St. Jude Children's Research Hospital's expansion and the continued emergence of Uptown. The company has offices on Front Street in the Pinch.

"This is where we're concentrating some of our efforts," Morgan says. "St. Jude is here and is a big player in this part of town. They are going through an expansion and all those doctors and researchers will need a place to live."

St. Jude is in the process of a $1 billion, five-year expansion that is doubling the size of the original campus.

"By putting in a residential unit like this, we hope it kicks off more development," Morgan says. "I think when we break ground on this people who have been waiting on the edge will jump in."

The Pinch District has been drawing the attention of developers recently.

Bluff City Group LLC is nearing completion of a 20,000-square-foot retail and residential project located at the corner of Auction and Front streets. The $2 million Turning Pointe development is the company's first venture, and it will feature 8,000 square feet of retail space on the first floor and 12,000 square feet of residential space on the second and third floors.

The Memphis chapter of Bridges USA, a national youth services organization designed to help high school students become future leaders, built a $9.5 million complex in Downtown just north of St. Jude.

In Uptown, work on The Metropolitan, a 114-unit apartment complex of 19 buildings covering six acres, is nearing completion. The complex is made up of one-, two- and three-bedroom apartments, which will lease for $562 a month, $674 a month and $775 a month, respectively. The apartments range from 750-1,400 square feet in size.

"Outside of Harbor Town and the South Bluffs, it's the first set of garden style apartments Downtown," says The Metropolitan property manager Jim Kilboy. "It's something brand new for Downtown."

So far, Kilboy has leased seven of the Uptown Partnership apartments. The Uptown Partnership is a collaborative effort between Henry Turley Co. and Belz Enterprises.

"I'm leasing them as fast as I can get them," he says. "As soon as the contractors turn them over, we fill them up."

The Metropolitan is the last of three leasing components of Uptown to come online. The other two, Uptown Square and Greenlaw Place, are completed and leasing.

In another sign of the continued resurgence of Downtown, a new project is under way that could finalize the redevelopment of the area around AutoZone Park.

At 287 Madison, Mike Todd of Monroe Associates LLC, is renovating the three-story structure for a possible condominium development.

Nestled between the 385-unit Echelon at The Ballpark apartment complex that opened in 2001 and directly across the street from the Downtown School, the 44,000-square-foot building was the last remaining piece of the redevelopment puzzle around AutoZone Park.

Todd says construction will be done in phases, starting with a 29-space underground parking garage and $150,000 in facade improvements, including restoring 18 original windows on the second and third floors and placing an awning out front.

"It will have a nice impact as you come down (Madison) and into Downtown," Todd says. "It is very well located and it offers a lot of flexibility in design."

Todd is counting on the aesthetic improvements to make the building more attractive to future developers, although he says he could move forward with a condominium project of his own.

"We'll see what type of bump in interest we get from creating this facade," he says. "I think it is going to be high. If I end up being the final developer, condos will probably be the most feasible."

Memphis Blogs

Memphis doesn't have a lot of information out there about the housing market, so to start out, I thought I'd list a source of blogs in the area.

http://blog.gomemphis.com/

Test Entry

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