Signature Tower

[Rural King]

You guys are holding on to this thing like Memphis holds on to Elvis. Let it go, it's dead...

This type of overt retaliation post for perceived infractions in another forum is completely unacceptable and its a sure way to get banned.

Please continue this thread as normal.

[elguapo731]

He would have to begin digging by March since that is what is stated for the latest possible setback in the contracts that have been signed by buyers.

[nashvylle]

i have complete faith that we will have broken ground by march

[Flowers]

^ yes, we are all clear on that.

[dxartist]

Unless Tony can come up with the $5 million needed to start excavating, you will not see a shovel on the lot. Since the contracts state that the excavation needs to start by march as mentioned on an earlier post, it's coming down to crunch time (as I see it). Between the $5 million excavation cost and minimun units needed to be sold before construction loan, I'd say he's cutting it close.

by the way, what happens to the signed contracts if the ground isn't broken by March? As in, what options do these buyers have? Don't know the particulars, but I'm guessing opt out option.

[Plasticman]

Unless Tony can come up with the $5 million needed to start excavating, you will not see a shovel on the lot. Since the contracts state that the excavation needs to start by march as mentioned on an earlier post, it's coming down to crunch time (as I see it). Between the $5 million excavation cost and minimun units needed to be sold before construction loan, I'd say he's cutting it close.

by the way, what happens to the signed contracts if the ground isn't broken by March? As in, what options do these buyers have? Don't know the particulars, but I'm guessing opt out option.

March isnt' far away but you can look for the fed to cut interest by at least half a point very soon. The economist I saw on TV last week stated that the housing slump will begin to improve after the interest cuts but will not dramatically rebound until late next year. Still he was very optomistic that house sales will begin to rise very soon. IMO by March there will be some improvement, that a hole will be in the ground, and that since construction is "officially" underway with a hole that on the fence buyers will jump aboard. Plus TG will no doubt make some sales between now and then.

One thing to note is that the market for the upper floors isn't aimed at your average home buyer. The million plus units are aimed at upper end people. I have a local developer friend who builds homes of many sizes. His lower end homes aren't beging sold but his high end custom built mansions haven't been affected by the slump. I would venture this phenomena will also transfer to Signature Tower.

[ATLBrain]

I don't see the target market for this product as being shaped much by market fluctuations. Let's face it, there's still a huge demographic of baby boomers who are looking for a downtown lifestyle, but these prices are astronomical. Bottom line (IMO of course) is that there is simply not enough local demand for this at these Gold Coast prices. As far as I can tell also, there has been no national or regional marketing push either. I just don't see this one happening.

EDIT/Clarification: As I reread this post, I want to make it clear that I'm distinguishing between the mass of baby boomers (whose demand for this is more "elastic" to the economy), and the ultra-wealthy who are being targeted for this product.

[Plasticman]

I don't see the target market for this product as being shaped much by market fluctuations. Let's face it, there's still a huge demographic of baby boomers who are looking for a downtown lifestyle, but these prices are astronomical. Bottom line (IMO of course) is that there is simply not enough local demand for this at these Gold Coast prices. As far as I can tell also, there has been no national or regional marketing push either. I just don't see this one happening.

EDIT/Clarification: As I reread this post, I want to make it clear that I'm distinguishing between the mass of baby boomers (whose demand for this is more "elastic" to the economy), and the ultra-wealthy who are being targeted for this product.

From my best count there are about 43 units at or over a million dollars. With several top dollar ones being sold already including the top floor unit at 5 million, I would say he is on his way but I do agree he needs a national push. Don't count him out yet.

[Flowers]

I don't see the target market for this product as being shaped much by market fluctuations. Let's face it, there's still a huge demographic of baby boomers who are looking for a downtown lifestyle, but these prices are astronomical. Bottom line (IMO of course) is that there is simply not enough local demand for this at these Gold Coast prices. As far as I can tell also, there has been no national or regional marketing push either. I just don't see this one happening.

EDIT/Clarification: As I reread this post, I want to make it clear that I'm distinguishing between the mass of baby boomers (whose demand for this is more "elastic" to the economy), and the ultra-wealthy who are being targeted for this product.

i think you are dead on with your assessment. let's face it, even to boomers, 300-350 bucks a foot is a big ticket for a home, particulary a unit of decent size. expecting these folks to pay a big premium over those prices in nashville seems like a reach to me at this point. and that shouldn't be taken as a slight to anybody living here. it's simply a reflection of where we are in terms of absorbing large expensive high rises in this market.

everyone has been focusing on how unprecedented the design and height of the building is but what i think is more remarkable is the gap between what has been successfully absorbed and what tony is trying to do. have we even sold more than 2 or 3 $1 million plus condos in all of downtown yet ? ever ?

trying to build a chicago/nyc/sf/miami scale building in a relatively small market with no history may seem dreamy to some but there are many who think that this is simply foolhearty and unlikey to get much lift from buyers, investors or bankers because buyers, investors and financiers of large scale projects like this want to see a solid track record of luxury urban condos being bought, i.e. lots of good comps, before they commit their respective fortunes to such an endeavor.

looking back 12-24 months on this thread i noticed there were many reasonable questions posed about this project's viability long before it was apparent he would open to flat sales, lose his contractor, and fail to secure financing after almost a year. if all this wasn't bad enough then he gets hit with the credit tsunami. ironically, i don't think the credit mess impacted his real buyers much but it certainly changed the world for him in terms of construction financing. it also crimps any investor appetite to buy units on spec since the world for these mortgage loans is now very different, particularly 2nd home jumbos.

i wish him the best of luck but i can't help but wonder whether he's pushing ahead because he feels like he has to or because he really think that all of the above is just yet another unfortunate setback to his plans.

[Lady Celeste]

I have a few thoughts about the Signature Tower and it's marketing.....

First, I have been following its "progress" since its marketing began. My husband and I were one of the first one's on the reservation list. I actually like the concept.

Second, I will add that its marketing is not as strong as I would hope. I'm not marketing guru but I will say that as a Realtor in the same target market as the Signature tower, car give-aways rarely work. There were several high-end developers here in Atlanta who tried that gimmick. High-end purchasers tend to be very educated...gimmicks do not fool them. The main objection to the car give-away that I heard from my buyers was:

"Why would I want their Mercedes? I have my own. It's like financing a depreciating asset for 30 years. I would much rather they (the builder) drop the price of the unit by the cost of the car as opposed to having the auto."

Lease or not, the gimmick was not enough to sway my buyers. One development was giving away Infinitis and the other was giving away Mercedes Benzes. Month later, the MB developer decided to end that program and switch to finishing the basements to exact specifications of the buyer. They now saw an appreciation benefit to the purchase. One of the no's to the MB special closed in October.

Now the Signature Tower does not have basements to finish but whatever "special" incentive they give to potential buyers, it has to be something that will appreciate. A lottery winner might fall for the gimmick but old money or industrious money will not.

As far as who to market to, national is not the only key. The Signature Marketing Team must also market international. I know that there will be objections to international developers but they can be an integral part to the puzzle. Yes national high end homeowners are out there but why limit your market. I have yet to see a Signature advertisement in the Robb Report. Perhaps they could do some type of partnership with your local Christie's affiliate.

If I was on Tony's marketing team, I would also try to come up with a marketing scheme for the district that the Signature Tower will be located in. If it does not have a name, assign one and market the heck out of it. Also, try to land some high-end but usable amenities to the area. A Whole Foods and drycleaners (with delivery options) within walking distance would be great. Also fine dining options in addition to any that may go into the tower itself would be beneficial. Also, if it has not already been accomplished, I would add hotel amenities to the residents. Total concierge service in this price range is a must.

My last point will be interest rates. High-end buyers are not as affected by interest rates as mid to low end buyers. Someone purchasing a $5 million dollar home will buy if the rate is 7.675% or 4.675%. After a certain threshold, rarely do these buyers go to a broker for an 80-20 loan. There was one neighborhood in the Mount Paran District of Buckhead that was priced from $1.9 million. The neighborhood sold out quickly and not one of the buyers had a traditional loan. Many sold home in New York or California and used the equity to purchase here. One moved here from Austria.

Several buyers simply transferred collateral. For example...said buyer goes to builder and ask builder to build said buyer a $3.2 million, 14,590 square ft, French Provincial, Brick and Stone, 7 bedroom, 9.5 bath home on a finished basement. Builder irons out logistics and starts to build home. During this time, buyer promises $3.2 million dollar in collateral...usually stocks or investments to builder. At the end of construction, transfer is completed. If the value of collateral falls then the buyer makes up the difference. Sometimes this is with a conventional loan. The balance may be sayyyyy, $700,000. This could be because of change in value of collateral, cost overrun or changes to house plans. The buyer may put down 20% of that and finance $560,000.

Said buyer is not really concerned with the interest rate because they will either write off part of the mortgage as a tax write off (primary residence) orrrrrrr they will pay the remaining amount off in six to twelve months.

Now I am only fully familiar with the Atlanta market but a high-end buyer is a high-end buyer regardless of location. I apologize for writing such a lengthy response.

[ATLBrain]

Thanks, that confirms what I suspected. The collateral transfers are interesting too, not that I have those kinds of investments. I am however looking into upgrading my basement into a media room.

I'd go as far as saying that Mr. Giarratana should market even more on a national and/or internation scale than in Atlanta b/c we are a major market. People are going to think of Atlanta first, but Nashville needs to make a bit more noise to tout its advantages to people who wouldn't be inclined to think of Tennessee.

[ATLBrain]

That would include the riverfront and (????) future improvements, the symphony, (yes) retail if there's any to speak of, bars, sommet, offices, bicentennial park, etc.... and of course, lower taxes in Tennessee. I know for a fact, that wealthy people do respond to taxes. A partner in our firm who relocated from Atlanta to Nashville "saved" $20,000 in taxes.

[Nashville_maestro]

Halfway through December. Still no groundbreaking... Will it happen? I dont think they he would start a groundbreaking this close to christmas.

Oh atlbrian! I was in atlanta yesterday actually (for a funeral... that part wasnt much fun). We were driving up 400 north (just before the toll booth) through Buckhead and my friend called it "a city of cranes". The buckhead area looks about like that too. Really amazing sight. I think I counted around 10 or 11 in the buckhead area alone (including the 2 REALLY tall buildings that I dont know the name). Congrats to Atlanta! Buckhead is turning into a 2nd downtown. Crazy! Things are really coming along! I didnt see much activity in the real downtown though.

Of course none of the projects down there was quite a Signature tower. Come on Tony! Get it done! I'm rooting for ya!

[111wall]

Today's edition of the CITY PAPER included a large color print image ad of the Signature Tower draped in a red bow. The theme was along the line.... "for someone who has been very good this year"...

Can this type of holiday season advertising really be effective in selling high-end condos to the readers of the CITY PAPER, or other publications? ... .or is it an attempt by Giarratana Development to show continued commitment to the project to an increasingly skeptical community?

Halfway through December. Still no groundbreaking... Will it happen? I dont think they he would start a groundbreaking this close to christmas.

Oh atlbrian! I was in atlanta yesterday actually (for a funeral... that part wasnt much fun). We were driving up 400 north (just before the toll booth) through Buckhead and my friend called it "a city of cranes". The buckhead area looks about like that too. Really amazing sight. I think I counted around 10 or 11 in the buckhead area alone (including the 2 REALLY tall buildings that I dont know the name). Congrats to Atlanta! Buckhead is turning into a 2nd downtown. Crazy! Things are really coming along! I didnt see much activity in the real downtown though.

Of course none of the projects down there was quite a Signature tower. Come on Tony! Get it done! I'm rooting for ya!

[FromParkAveToTN]

I subscribe to Architectural Digest, my favorite magazine, and have seen a few Signature Tower ads in there.

[nashvylle]

Tonight at a family christmas party i talked with someone whose company designed Signature Tower and he told me that he has learned that the market for Signature Tower is getting much better. Hopefully he is right.

[monsoon]

......

Can this type of holiday season advertising really be effective in selling high-end condos to the readers of the CITY PAPER, or other publications? ... .or is it an attempt by Giarratana Development to show continued commitment to the project to an increasingly skeptical community?

My guess is, probably not as far as selling. It might work for something like a Mercedes Benz, but not a piece of real estate. But it would be effective in showing there is activity on a project that isn't getting much airplay otherwise.

However, IMO it is a reason that many of the topics surrounding this tower that have been discussed here will never show up in an article in that paper.... well, not until it's known there won't be anymore adverts coming from that source.

I think 2008 is going to be a very unsettled year for real estate in general if not for anything else, the United States is going to be pre-occupied with electing a new federal government, including a new President and this means there won't be any serious attempts to change what has happened to the financial markets.

[Flowers]

the sig was footnoted in a wsj article today on the nashville office market. tony was quoted as saying he still only has about 100 sales and is now forecasting a summer 08 start. its hard to see how things can drag on for years but they are so i guess they can.

[producer2]

they drug on for quite some time with WES and it is in the start up phase finally.

[Flowers]

^ that seems to be a matter of opinion. alex has clearly assumed the risk of digging a big hole but he still appears to be without financing, a major tenant, or any significant presales. i'm not saying he won't get his moon and stars to line up one day but i just don't think wes has all of a sudden become the "done deal" project standard in nashville. this could change the minute he introduces us to his construction lender and confirms he's met all their preconditions for funding but unless i missed a pr release or article i don't think he's done this.

[producer2]

^ that seems to be a matter of opinion. alex has clearly assumed the risk of digging a big hole but he still appears to be without financing, a major tenant, or any significant presales. i'm not saying he won't get his moon and stars to line up one day but i just don't think wes has all of a sudden become the "done deal" project standard in nashville. this could change the minute he introduces us to his construction lender and confirms he's met all their preconditions for funding but unless i missed a pr release or article i don't think he's done this.

All you say is valid, but there are going to be some really p**sed of people with city services if they have taken all this time to relocate, fix, and increase water and electric service for this project and it does not pan out. Also it is a pretty expensive hole to dig as a bluff. But I am no expert so I guess time will tell.....

[dxartist]

the sig was footnoted in a wsj article today on the nashville office market. tony was quoted as saying he still only has about 100 sales and is now forecasting a summer 08 start. its hard to see how things can drag on for years but they are so i guess they can.

Actually, it's not hard to see. Mortgage crunch, a bad economy, no construction loan due to not enough sales, no new general contractor as of yet, and questionable marketing executions don't exactly help. In Charlotte, the Park Condos dragged on for years. Something like five or six, Monsoon, dubone or any another long time UPer can give you a more exact time. The Park had its own set of problems and we ripped it up and down to no end at one point, but it came back from the dead and it's getting completed.

Tony obviously has a different animal ie much bigger project with more units to sell with all other outside factors. Only 100? I thought he had 120+ last count with more on the way. As far as the summer 08 start forecast, did it specify the starting excavation of the lot or starting of the tower?

[hotshoe]

Summer 08, that could be and should be the final straw, making this thing a 2011 delivery, go ahead and change the signs at 5th and Church!

That might need to be 2012. A friend of mine in Nashville's Brassfield & Gorrie office who has seen the construction drawings told me they think it will take 4 years to build it as designed. He said this was one of the reasons they declined to price the project. The developer waqs apparently wanting them to do it in 3.

[Flowers]

Actually, it's not hard to see. Mortgage crunch, a bad economy, no construction loan due to not enough sales, no new general contractor as of yet, and questionable marketing executions don't exactly help. In Charlotte, the Park Condos dragged on for years. Something like five or six, Monsoon, dubone or any another long time UPer can give you a more exact time. The Park had its own set of problems and we ripped it up and down to no end at one point, but it came back from the dead and it's getting completed.

Tony obviously has a different animal ie much bigger project with more units to sell with all other outside factors. Only 100? I thought he had 120+ last count with more on the way....

i think the biggest problem with this project is that after almost 2 years of visibility and marketing only civic cheerleaders and skyscraper geeks seem to want it built. "no construction loan due to not enough sales" really wouldn't be as problematic if it were clear that there would be financing available with sufficient sales. this doesn't appear to be the case and one has to wonder how many of the +/-100 "sales" tony claims to have would/will erode if/when the ultimate lender requires deposits larger than just 5%. as with palmer's wes project i think skeptics would be mostly silenced with the introduction of a qualified lender and some indication of what has to be done in order to get them to loan the dough. the silence on this issue for the last year or so has been deafening.

EDIT: before anyone reminds me that the developers owe us no information until they are ready i would just note that it is more typical in the markets i have followed for the developers to be immediately forthcoming with this kind of info the second it is available. they know that it staves off skepticism and gives buyers, tenants and the media more confidence that things will eventually be a go. this, of course, leads to momentum which any big project needs loads of to get off the ground.

as to the other projects in charlotte you mentioned i'm curious as to whether there appeared to be reasonable evidence in charlotte that there was a market (number of units proposed at a given price point) for them by the time they finally started. i'm not very familiar with charlotte but from what i've heard there have been several condo projects at different price levels completed and absorbed there in the last few years. bankers and equity partners love seasoned comps and i just don't have any idea what tony or alex could or would point to in Nashville when asked these tough questions by the people with the dough.

[atlrvr]

The Park in Charlotte was originally the first planned downtown condo tower, and second in the city over 20 stories....the only precurser, The Arlington, failed miserably. With the condo boom starting in 2004/2005, it enjoyed the rising exposure of other projects, and was re-announced following the instant sellout of a 100 unit highrish (Courtside), though didn't get firm financing until 2 other projects (a Novare project and another 28 story building) were out of the ground. Further, the developer never missed an opportunity over the 6 year period between announcement to commencement to make a press release for every trivial detail, including several "false starts" on getting construction financing.

The big difference between the projects though is The Park was built ontop of an existing parking deck designed to carry the load of a tower. The developer owned the parking deck "clear" and it was a revenue producing property. Therefore, the developer had little risk in holding the property indefinetely, with the only costs in marketing (which consisted of a faded mural on the side of the deck for about 3 years).

That all made that project much easier to "wait out" than Siggy, which I assume the meager parking doesn't even pay the property taxes, much less interest (I'm assuming a Mezz. loan instead of cash) on the land.