Apartments up, condos down; but 'special projects' do well

The condominium market's loss is the apartment market's gain, according to surveys of multifamily housing developers by the National Association of Home Builders.

Builder confidence in the condo market dropped dramatically in the second quarter of this year, while confidence in the apartment market hit record highs.

NAHB Chief Economist David Seiders says there is "clearly an oversupply" of unsold condo units, while vacancy rates for apartment buildings are dropping and rents are increasing.

"It looks pretty solid for the rental market for the foreseeable future," says Leonard Wood, director of Wood Partners, a Marietta, Ga.-based multifamily housing developer.

The conversion of apartments to condominiums when the condo market was hot helped increase the demand for new apartments, he notes.

Now some projects that had been planned as condos are being switched to apartments. But these are "marginal projects" in poor locations, says Bruce Menin, president of Crescent Heights, a New York City-based developer of high-rise condominiums.

"Special projects on special streets in American cities are not going to get replicated," he says, and will still do well.

But some projects may get harder to do as condo prices soften, he says. This means local governments should moderate their demands for low-income units in new condo projects, he says. That's "a good public policy goal," he says, but requirements that are too onerous could keep projects from getting off the ground. This ultimately would reduce housing supply, and make housing more expensive in tight markets, even for moderate-income residents, he says.

Wood says local governments should "be more careful" about adding costs to multifamily housing projects through impact fees and building codes.

Condo Boom in Downtown Memphis

March 30, 2006, 12:26 PM

MEMPHIS - For just the second time in 22 years the Memphis Area Home Builders Association is holding the Vesta Home Show downtown. The reason? The sudden boom in the condo market in the south end. Development that shows no signs of slowing down.

The Memphis Area Home Builders Association says there are $250 million dollars worth of condo projects going up downtown and that is expected to double in the next couple of years. The units at the various developments are selling anywhere from $110,000 to a million. The Home Builder's Association says developers are just meeting the demand of baby boomers scaling back and young professionals who want to live downtown.

"I tell you a lot have sold out. A lot are still for sale. There are about 60-70,000 people who work in downtown," said Dalene Wilson, of the Memphis Area Home Builders Association.

"I've never seen anything like it. There are 80 million of us out there at the age where our kids have left the nest," said Gary Garland.

Gary Garland has already put a down payment on two condos in "The Horizon," a 16 story high rise that will soon be going up along Riverside Drive. As general manager of the project, he's also selling the units. A model inside the sales office is giving buyers a chance to see what the condos will look like once they are finished, but he says the view and location are selling the units.

"We are a little over 50 percent pre-sold in the first phase. We just started before the holidays. Around Thanksgiving," said Garland.

There is also lots of new development in the north end of town. If you would like to look inside some of the new condos you can attend the Vesta Home Show. It beings April 15th.

New condos fuel Downtown

Growth catches attention of developers seeking to cash in on housing demand

By Mark Watson
Contact
April 16, 2005

Atlanta-based Beazer Homes is building a $49 million, 204-unit condo and town home complex Downtown on the site of a former cold-storage warehouse at Georgia and Florida.

Dubbed The State at South End, the project includes two 48-unit condo buildings, standing five stories tall, surrounded by 108 town homes, standing three and four stories tall. It will sit on five acres.

"The Memphis Downtown market has had such a high sales rate, more than anywhere else in the Memphis area, and the city has done a great job of redeveloping the Downtown area," said Pete Canalia, president of Beazer's Memphis Division. "It's just a place where young and old alike want to be living right now."

It's second in value and number of units only to the Riverside Towers project among condo and town home projects in the planning stages on the Center City Commission's Web site.

The Bryan Co. and The Garland Co. envision the $90 million Riverside Towers as two 16-story towers providing 290 condos in all, accompanied by 60 town homes.

Chandler Reports shows the number of sales in Downtown's 38103 Zip Code increased by 14.6 percent, to 425 units in 2004. The average price increased 7.3 percent to $231,875.

Chandler Reports does not release condo sales for a specific Zip Code, but citywide the average condo sales prices increased by 5.8 percent to $112,579.

The condos will range in size from 800 to 1,400 square feet, and the town homes will range in size from 1,200 to 1,800 square feet. The condos will range from $125,000 to about $250,000, Canalia said, and the town homes will range from $180,000 to about $290,000.

Beazer hopes to break ground around May 15, start preselling in August and deliver the first units in October or November. Construction should end in late 2007.

Bloodgood Sharp Buster, a Chicago-based architectural firm, is designing the project.

"Tennessee is going to turn into a boulevard, once you pass Georgia," Canalia said. "What we've tried to do here . . . is to have a community feel."

Can the Downtown housing market absorb 350 units in the Riverside Towers project and 204 in The State project?

"You have to remember that for all intents and purposes, there was no condo available Downtown two years ago," said CCC president Jeff Sanford. "We still have a way to go until supply exceeds demand."

A recent market study commissioned by the CCC showed the Downtown population increasing to 38,000 by 2014.

The area has a population of about 25,000 now.

Downtown's population is growing at a 4.3 percent annual rate, compared to 1.1 percent for the rest of Memphis.

But three Downtown "high-growth areas" -- Mud Island, the South Main District and Downtown Core -- are growing at a 10.3 percent clip.

Memphis developers Jack Belz and Henry Turley had originally envisioned a Downtown that was open 24 hours, and these projects contribute to that vision.

"I say the more, the merrier," Belz said.

Historic district gets seven-story condo project

By Amos Maki
Memphis Business Journal
Updated: 7:00 p.m. ET March 27, 2005

Developer Phil Woodard is set to make another imprint in the South Main Historic District with a new seven-story, 26-unit condominium project on Tennessee Street.

The one-story brick warehouse that now sits at 456 Tennessee will be torn down to make way for an innovative, $6 million steel and glass structure designed by Archimania.

"If you're going to build something, you might as well make it fun," Woodard says of the project, which should begin construction next year and take about a year to complete.

The seven-story structure is set back from the street to give the project a little breathing room, says Archimania principal Todd Walker. Three levels of the project will extend westward closer to the street.

"We've set back the seven-story structure to give it some relief on Tennessee Street, so you don't have this tall, seven-story building that goes up vertically right next to the street," Walker says. "We think it's simple yet cutting edge."

The first level will offer 4,000-6,000 square feet of office and commercial space. Above that, the next two levels, which jut out from the taller structure and the first level space, will be five condos with a spot on the third level that Walker says would be ideal for a roof court.

"The second level creates a shadow line so it shades some of that because we know we have this beating western sun," Walker says.

Each unit has a balcony that in some way provides views of Downtown while limiting the amount of light and heat the sometimes relentless Memphis sun can pump into a space. The top three floors all have river views and the top floor will have two units that will sell for around $470,000, Woodard says.

On the south side of the building, a steel mesh facade will extend out about five feet from the rest of the building.

"That creates some areas for balconies and it acts as a shading device," Walker says. "It's essentially like pulling a sheer curtain over the building which softens the light that comes through."

Walker says they are considering using a terra cotta-colored steel to help tie the new project to the area's historic past as a warehousing district.

"What we're trying to do is pick up on what that whole area was about so we don't lose the identity of that part of town," Walker says. "We're trying to bring some of that identity back."

Besides its innovative design, the structure will stand out because of its height. At seven stories, the new building will be one of the tallest in the area, which is made up of mostly one- to five-story buildings.

The condo project is located just behind Woodard's Archimania-designed home that is under construction on the South Bluffs.

"I wanted to control what happens behind me," Woodard says with a laugh.

Woodard and Archimania have developed a working relationship over the past eight years, including Woodard's home, the G.E. Five condominium development and a new design for Kirby Wines and Liquors on Quince Road, which Woodard owns.

"Phil is really trying to do a good job dealing with new and progressive architecture in Downtown Memphis," Walker says. "He should really be commended for that because I think it brings new life to the city.

"What he can do with that is influence the kind of architecture on Tennessee Street and it's nice to see more progressive development," he says. "Phil is really passionate about modern architecture and he likes doing something that is not cookie cutter. Some people say they don't like cookie cutter, but they do it. For him, it's more about originality and enjoying what he does and having pride in what he does than just making the dollars."

Woodard says he wanted a unique design that projects more of a commercial feel to the building.

"Everything (Downtown) was warehouse, government or whatever," he says. "Now, we've got housing down here but we can make the buildings look more commercial and with a little jazz. That's why I chose (Archimania.)"

The new building is another milestone in Woodard's development of the South Main District, where he owns 12 commercial and retail spaces and is developing 20 more condo units with partner Hank Cowles in a $3.5 million project behind the Blue Monkey on South Main. He also developed 21 condo units in the St. Martin building on G.E. Patterson.

"It already is Phil's little neighborhood," says Chris Garland of Garland Co. Real Estate, who has worked with Woodard on a number of projects. "He was a pioneer in the beginning of the development down there. He went down there when everybody else thought he was crazy and bought the little places."

Tracie Gaia, also with Garland Co. Real Estate, admires Woodard's style and commitment to innovative designs.

"Phil build places as if he were going to live in them," she says. "He wants people to go in and say 'wow.' You definitely wouldn't see his stuff in the suburbs."