Downtown Condo Flipping

[ATLBrain]

Weeeelll... since I'm the resident Atlantan on this forum, I'll try this one. However, I'm so far removed from the prices of the new condos going up around here (or anywhere else). Also, I'll add more later when I have a bit more time.

First, I'd say that a DT (atl) to DT (nsh) comparison isn't a direct comparison. True, there are condos in our DT, and there are several going up, but I'd say that DT (nsh) compares more to our midtown (north of the traditional DT boundaries and south of Buckhead b/c that is where the "gravitational pull" is for urban living at this time. For the sake of convenience, I'll include the GaTech/Techwood area and Atlantic Station areas too. As such, I'd say there's a comparability in prices.

Next, I'd say the "next ring" out for Atl is the Lenox/Bhead area (up to Brookhaven) as so much has gone up in that area in the last 10-15 years. I'd say that the prices up there are (on a whole) much more expensive than anything that NSH has going right now in its midtown. From what I've heard, Terrazzo may be closer to those sq.ft. (and possibly the W).

Also, I'm getting the sense that the midtown projects are closing in on a saturation point while the areas north of there are not close to that point. I'll try to get more later.

I live in Druid Hills. I've been meaning to do a ride up around Bhead this winter with the kids, but I've been too lazy to get out of my neighborhood.

[Jeeper12]

Weeeelll... since I'm the resident Atlantan on this forum, I'll try this one. However, I'm so far removed from the prices of the new condos going up around here (or anywhere else). Also, I'll add more later when I have a bit more time.

First, I'd say that a DT (atl) to DT (nsh) comparison isn't a direct comparison. True, there are condos in our DT, and there are several going up, but I'd say that DT (nsh) compares more to our midtown (north of the traditional DT boundaries and south of Buckhead b/c that is where the "gravitational pull" is for urban living at this time. For the sake of convenience, I'll include the GaTech/Techwood area and Atlantic Station areas too. As such, I'd say there's a comparability in prices.

[c00624]

I say that Spire's midtown Atlanta location beats the Viridian on Church Street by a wide margin, today anyway. That area of Atlanta is currently what I think many hope downtown Nashville will be like after several years of more residential development activity and the high quality retail, restaurants and urban nightlife that generally follows. Take a look at some of the neighborhood photos on spiremidtown.com. The Spire is also walking distance to Piedmont Park. Imagine if you could leave the Viridian and walk a few blocks to Percy Warner Park.

I'm very excited about how things are progressing in Nashville but I'm not dilusional. Our downtown has some interesting character and great potential but it also has a lot of heavy tourist traffic that I think repels many locals and the upscale retailers, grocers and restauranteurs that seek local patronage. Add to that, uncertainty about the ballpark, the Predators, a new convention center (which I see as a setback to getting locals back downtown), and how sobro in general is going to play out....I think it will take a lot longer than most people seem to think to get to the point of having the kind of office, retail, restaurant and residential cohesion that you currently have around Spire.

[producer2]

I thought the broad appeal of living downtown was the close proximity to sports facilities, restaraunts, museums, etc. All the things that are also tourist driven. I am not sure you can have one without the other.

[c00624]

I thought the broad appeal of living downtown was the close proximity to sports facilities, restaraunts, museums, etc. All the things that are also tourist driven. I am not sure you can have one without the other.

[Jeeper12]

I agree that that is a part of the appeal and that the two can co-exist. My point was just that the emphasis needs to be on making residential-friendly neighborhoods. To me, a lot of the restaurants/bars/shops that are currently downtown (especially on Broadway/2nd ave.) are there for tourists (not that they appeal exclusively to tourists but are geared toward them). I would like to see further development be designed to appeal to residents.

[cheeriokid61]

There's a starbucks!

[producer2]

Depends on your definition of decent. Parco Cafe in Printers Alley is terrific, Merchants, The Palm are good places and close by. Then you have 417, Joe's Crab Shack, Past Perfect, an on and on. As far as neighborhoods go I think you are already seeing several defined areas downtown taking shape. The Gulch is becoming quite the place for the younger set with great restaraunts and lots of new residential on the horizon. Church is already defined and I think will become a bit more "mature" with Signature coming on line and Sobro will be a great ecelctic mix with Encore and Rolling Mill Hill. Once these places start actually being inhabited the restaraunts will come. In fact certain locations like the Bennie Dillon are holding out for a restaraunt/bar in the available space on street level. Once the Homewood suites opens up this will be even more viable. Patience, it will happen:)

[Jeeper12]

Depends on your definition of decent. Parco Cafe in Printers Alley is terrific, Merchants, The Palm are good places and close by. Then you have 417, Joe's Crab Shack, Past Perfect, an on and on. As far as neighborhoods go I think you are already seeing several defined areas downtown taking shape. The Gulch is becoming quite the place for the younger set with great restaraunts and lots of new residential on the horizon. Church is already defined and I think will become a bit more "mature" with Signature coming on line and Sobro will be a great ecelctic mix with Encore and Rolling Mill Hill. Once these places start actually being inhabited the restaraunts will come. In fact certain locations like the Bennie Dillon are holding out for a restaraunt/bar in the available space on street level. Once the Homewood suites opens up this will be even more viable. Patience, it will happen:)

[producer2]

Only those who want to pay that kind of price need apply. I own 2 units in different buildings (Bennie Dillon and Encore) and paid no where near that much. Signature is a different product and the Gulch is well below that $$$ mark. Viridian will ease back in line soon, it's February and very few people buy this time of year and even fewer buy when the price is a bit out of line, but everyone is hoping for that big fish, can't blame 'em for trying. What do you consider a fair price per square foot downtown?

[Jeeper12]

Only those who want to pay that kind of price need apply. I own 2 units in different buildings (Bennie Dillon and Encore) and paid no where near that much. Signature is a different product and the Gulch is well below that $$$ mark. Viridian will ease back in line soon, it's February and very few people buy this time of year and even fewer buy when the price is a bit out of line, but everyone is hoping for that big fish, can't blame 'em for trying. What do you consider a fair price per square foot downtown?

[producer2]

I think you are right on with your assessment. Although it is currently unannounced I am told that Novare owns some property in the Gulch and will build there next. I think corridors more so than developers will set the pricing in Nashville. Terrazzo I am afraid is in the wrong location for it's price point.

[ATLBrain]

Indeed, patience is needed. However, I just think the patient pioneers taking the risk on how things will play out (and for how long) shouldn't have to pay $385/sf, or even $325/sf for being willing to commit so early. To my earlier Spire/Viridian points above, I think the Viridian "neighborhood" is in its infancy and subject to more risk compared to the area of midtown around Spire. What is available to Viridian and Spire owners this weekend (right after I close and pay my premium) ? Also, I consider relying on the gulch for downtown to be like midtown atlanta relying on Buckhead. It's certainly an amenity but not one you can access with your feet.

I'm looking forward to getting some feedback from ATLBrain and some others familiar with both areas.

[Jeeper12]

As of today the number of Viridian units listed for sale is now up to 65, with an average asking price of $381/sf. That's down a couple of bucks on the price but I'm still a bit puzzled why all these sellers are still so proud. After 3-4 months on the market I would have expected the sellers to get more aggressive.

[producer2]

They must be getting enough prospective leads to keep the faith. I think all the positive press, the opening of the market, etc. is keeping them going....

[Jeeper12]

Shifted from Velocity thread....

Producer, as of 4/9 there were 73 active listings averaging $378/sf compared with 61 units available on 2/26 averaging 382/sf. You seem to have a bead on the market for these and other units. How much do you think those sellers would have to drop their prices to completely sell out of all those units in a month ? I assume that given the downtown demand figures you have referenced you believe (as I do) that there is clearly immediate demand for these units at a fair price. If you owned all 73 and were charged with selling them all in 30 days at the highest possible price how would you price them ?

[Jeeper12]

Shifted from Velocity thread....

Producer, as of 4/9 there were 73 active listings averaging $378/sf compared with 61 units available on 2/26 averaging 382/sf. You seem to have a bead on the market for these and other units. How much do you think those sellers would have to drop their prices to completely sell out of all those units in a month ? I assume that given the downtown demand figures you have referenced you believe (as I do) that there is clearly immediate demand for these units at a fair price. If you owned all 73 and were charged with selling them all in 30 days at the highest possible price how would you price them ?

[smeagolsfree]

Here is a nice little article from the Tennessean today about the condo flipping at the Virdian.

http://www.tennessean.com/apps/pbcs.dll/ar.../704290418/1003

[Richard Lawson]

Here is a nice little article from the Tennessean today about the condo flipping at the Virdian.

http://www.tennessean.com/apps/pbcs.dll/ar.../704290418/1003

[ATLBrain]

Good points, Richard. I wonder about the same things mentioned in that article. It makes me wonder just how informed the writer is on the topic. Not trying to be snide, but I did better than 20% in the stock market (actually closer to 30%) since last July. I'm not a huge risk taker either. As such, I already unloaded with gains, and it didn't cost me 6% to sell either. I realize that there are different strokes, but the carrying costs of real-estate are (potentially) so big that I can't understand why people often don't consider them in their decisions to flip property. I believe it's one of the highest forms of speculation in the investment arena.

[Jeeper12]

Story is a bit thin. I'm not sure how lenders could be looking at the overexhuberance of buyers who were hoping to pull in a double gain on their gain really in a matter of months and make some kind of decision on whether to lend a developer money.

I do think it's funny that the writer quotes two guys, one very critical of downtown, who have been selling midtown units so its to their benefit if downtown has some trouble.

[Richard Lawson]

I think it was a good article. With flip sale prices ranging from $280/sf to $420/sf it's virtually impossible for banks, developers and appraisers to get a handle on where things will stabilize, and when, as they underwrite large new projects. Should the average expectation be $370/sf or $290/sf ? As Rolling Mill Hill, Rythm, SBER, Bristol and others try to make sense of the next big project this confusion is extremely unsettling. Contrary to what you may think there is a lot of lender and developer consternation about how many of the currently "sold" units at Encore, Icon, Adelicia and Bristol West End were bought for occupancy. If the V resale average ends up being $370/sf (this summer not in 2008) they are probably ok, but if it ends up being closer to $300/sf they're all likely to die a slow painful death, financially, that is. Because land and building cost now require an average sale price of well above $350/sf for these new large projects. Given the increase number of listings and steady decrease in both listing and sale prices I expect the balance of power to continue tilting in favor of buyers at the V. And given the apparent lack of liquidity starting to develop I think you're going to start seeing more low ball purchase offers getting accepted by the most desperate of the folks wanting to get out of the V quickly.

Also, I don't think it's really fair to suggest that Marty Heflin was being disenginous with his comments about downtown just because he happens to be finishing up a small project in midtown. Marty is respected by his peers and has always been a straight shooter with the media and with his students at Owen (Vanderbilt). You might also be suprised to know that he is a partner in the Stahlman Building and more recently closed on a large tract of land with Bert Mathews on Korean War Veterans Blvd. catty corner to the new Hampton Inn. They have tentative plans to do some kind of significant mixed use (office/residential) project when the time is right. Not exactly someone you'd expect to be critical of downtown residential. Maybe he actually has a point worth listening to ? Given those circumstances and the tendency for Tony, Richard Courtney and others to stick to "10,000 people want to move downtown so ignore any other negative news" scripts, I found Marty's candor refreshing. Much more so than Tony's answer anyway, which basically ignored the negative trend beginning to show up in the numbers.

[Jeeper12]

Here's an AP story that headlined on Yahoo news a few minutes ago. What a coincidence.

http://news.yahoo.com/s/ap/20070430/ap_on_...HDcX.7QT9kDW7oF

The markets mentioned are clearly more overbuilt than Nashville but since we're so much smaller it also won't take nearly as much overbuilding for us to start seeing similar problems. More importantly, since I think the objective is not to repeat creating the mess here that occurred elsewhere it seems to me that we all ought to be looking for the danger signs in an effort to learn from the mistakes made in the bigger markets. Flippers take note.

[Richard Lawson]

Here's an AP story that headlined on Yahoo news a few minutes ago. What a coincidence.

http://news.yahoo.com/s/ap/20070430/ap_on_...HDcX.7QT9kDW7oF

The markets mentioned are clearly more overbuilt than Nashville but since we're so much smaller it also won't take nearly as much overbuilding for us to start seeing similar problems. More importantly, since I think the objective is not to repeat creating the mess here that occurred elsewhere it seems to me that we all ought to be looking for the danger signs in an effort to learn from the mistakes made in the bigger markets. Flippers take note.

[smeagolsfree]

I think most flippers don't have a clue what they are doing. They trying catching the wave without paying attention to fundamentals. There are some who really get lucky but they think they can replicate it and end up getting burned. The smart ones search out undervalued areas and find something that requires a little work that adds value but within reason.

Downtown is a little like buying the suburbs -- tough for good appreciation when more can be built, although it takes longer to build. That shooting tonight downtown certainly won't help matters either.