Who is going to buy all the Condos, (Part II)

[kermit]

On 11/21/2016 at 11:00 PM, ricky_davis_fan_21 said:

Atlanta Is trying its luck at a 72 floor 900+ ft  condo tower. I wish them the best of luck.

Bell ringing....

(indicating the bubble is about to burst)

Edited November 24, 2016 by kermit

[Matthew.Brendan]

Looks great, I hope it gets built

[edmundblackadder1999]

There's been an enormous condo boom in NY which was actually helped by the recession.  Thousands of new units were bought by foreign buyers who sought safe haven to park their money.

Scores of towers between 700 and 1,560' tall have been built or are now under construction, and more are planned.

Edited November 24, 2016 by edmundblackadder1999

[Guest]

2 hours ago, edmundblackadder1999 said:

There's been an enormous condo boom in NY which was actually helped by the recession.  Thousands of new units were bought by foreign buyers who sought safe haven to park their money.

Scores of towers between 700 and 1,560' tall have been built or are now under construction, and more are planned.

And there was an article stating that 20% of the worlds billionaires would have to purchase a unit for the buildings to even break even. The nyc condo market is histories biggest bubble 

[edmundblackadder1999]

Not really.  You don't have to be a billionaire to buy these apartments.  There's been a slowdown in the hyper expensive rage of condos costing $8-$10k per square foot, but Witkoff nonetheless still plans a new super-tall tower at 36 CPS in that price range, in addition to the supertalls in that price range currently rising at 217 W 57th, 111 W 57th, 15 Hudson Yards, 35 Hudson Yards, 220 Central Park South, etc.  The hyper-expensive (ie, $8k-$10k/sf) supertalls at One57 and 432 Park have largely sold out, and the penthouse at 220 CPS sold for $250 million!   That one apartment costs more than the cost to develop an entire tower in Charlotte and most other cities.

Anyway, there's still massive demand for units priced at $2,500 per square foot and tons of projects are still proceeding in that segment including supertalls at 125 Greenwich, 45 Broad, 80 South St, 262 Fifth Ave., etc., let alone scores of towers in the 600'-800' height range.  Further, there are thousands of units in buildings of 400' and less by the High-Line, etc.

Also, this segment will really boom once Dodd-Frank is repealed and Wall St takes off.

Edited November 25, 2016 by edmundblackadder1999

[Guest]

http://www.charlotteobserver.com/news/business/article205187079.html

Nearly 10 years to the date since this thread was created. Maybe its time to change the topic to "who will rent all the apartments." I've been seeing some pretty severe softening, and I think theres a couple projects that just aren't going to do well. 

I predict the following will have tough times leasing

1. Savoy Stonewall (formerly Montage)
2. Camden Towns
3. Bainbridge SouthEnd
4. Alexan Highland Mill
5. Music Factory apartment will get literally 0 leases. 
6. Marsh Properties Sedgefield
7. Pollack Shores on Tremont

Projects that won't happen at all this cycle:

1. Brooklyn Village any phases.
2. Legacy Union phase 3-4. I think we will see another office tower plus a hotel. but I don't expect any movement along Mint. 
3. Levine Apartments
4. A number of apartment projects along Rampart/Hawkins/Dunavant that haven't formally been announced yet.

Projects that will happen only because the developers stubbornness and/or perhaps prowess , but will likely struggle.

1. Lennar
2. 401 S. Graham
3. Northwood Ravin Polk Building

Edited March 15, 2018 by Guest

[KJHburg]

I do believe the Camden townhomes will rent just as they are so unusual and with double garages.  Developers will have to give away either more or lower rents to fill them the others.  I agree Levine, Brooklyn and Legacy apartments wont start anytime soon.   Lennar has the wherewithall to build and withstand any longer leasing up period.   As for Cadence at the Music factory I noticed some occupied apartments or they could have been staged to look that way LOL

[michaelef]

I agree that new development will slow down as more of these buildings become available. The leasing offices are going to have a lot of competition, but Charlotte will continue to grow and I think most developments will be fine. The real shift will be to see if more people want to go from renting to owning. That's why I believe it is important some developers start looking at that. A majority of people want to be near the city center and in walkable neighborhoods, have access to transit. Even a lot of baby boomers are moving back to the cities because they are reaching retirement and want less to do with all the upkeep of owning a house.  I live in Novel Noda, and quite a few of my neighbors are in their mid-forties or older. So I think that attraction of living in an urban setting will help these apartments out. Also, Cadence Music Factory already has residents living in it.  That's just my two cents. 

[J-Rob]

I am going to take a flyer and disagree with everyone about Levine.  He already has concrete pillars in the ground surrounding the parking garage (doesn't he?), and at some point I would expect there to be public and political pressure to get moving.  I agree about everything else, and could totally be wrong about Levine, but I am going take a guess and say it starts moving in late Q3 or early Q4.

[Guest]

21 minutes ago, J-Rob said:

I am going to take a flyer and disagree with everyone about Levine.  He already has concrete pillars in the ground surrounding the parking garage (doesn't he?), and at some point I would expect there to be public and political pressure to get moving.  I agree about everything else, and could totally be wrong about Levine, but I am going take a guess and say it starts moving in late Q3 or early Q4.

He only has political pressure to develop his parking garage. He doesn't HAVE to build anything else

 

[Sigma]

I think there will be some struggle early in the marketing process as apartment product delivers, however I think they will (mostly) be fine.  Home price growth over the last three years is averaging 8.42% annually (2/2015 - $96psf to 2/2018 - $119psf). Wage growth has been in the mid-3% range over the same period.  Add in the likelihood of interest rates going up and this compounds the expense of owning and lowers people's purchasing power dramatically. People are going to get priced out of houses they typically should afford very quickly, thus forcing more renters. 

 

[J-Rob]

1 hour ago, ricky_davis_fan_21 said:

He only has political pressure to develop his parking garage. He doesn't HAVE to build anything else

I wasn't referring to the public money component for the garage as much as I was referring to the fact that an unsightly project, with concrete and rebar pillars sticking out of the ground in the central business district, might be enough for politicians to persuade/pressure him.  I do get what you are saying though.  He certainly doesn't have to finish it.

Edited March 15, 2018 by J-Rob

[deleted]

3 hours ago, ricky_davis_fan_21 said:

http://www.charlotteobserver.com/news/business/article205187079.html

Nearly 10 years to the date since this thread was created. Maybe its time to change the topic to "who will rent all the apartments." I've been seeing some pretty severe softening, and I think theres a couple projects that just aren't going to do well. 

I predict the following will have tough times leasing

1. Savoy Stonewall (formerly Montage)
2. Camden Towns
3. Bainbridge SouthEnd
4. Alexan Highland Mill
5. Music Factory apartment will get literally 0 leases. 
6. Marsh Properties Sedgefield
7. Pollack Shores on Tremont

Projects that won't happen at all this cycle:

1. Brooklyn Village any phases.
2. Legacy Union phase 3-4. I think we will see another office tower plus a hotel. but I don't expect any movement along Mint. 
3. Levine Apartments
4. A number of apartment projects along Rampart/Hawkins/Dunavant that haven't formally been announced yet.

Projects that will happen only because the developers stubbornness and/or perhaps prowess , but will likely struggle.

1. Lennar
2. 401 S. Graham
3. Northwood Ravin Polk Building

[ES Charlotte]

4 hours ago, ricky_davis_fan_21 said:

http://www.charlotteobserver.com/news/business/article205187079.html

Nearly 10 years to the date since this thread was created. Maybe its time to change the topic to "who will rent all the apartments." I've been seeing some pretty severe softening, and I think theres a couple projects that just aren't going to do well. 

I predict the following will have tough times leasing

1. Savoy Stonewall (formerly Montage)
2. Camden Towns
3. Bainbridge SouthEnd
4. Alexan Highland Mill
5. Music Factory apartment will get literally 0 leases. 
6. Marsh Properties Sedgefield
7. Pollack Shores on Tremont

Projects that won't happen at all this cycle:

1. Brooklyn Village any phases.
2. Legacy Union phase 3-4. I think we will see another office tower plus a hotel. but I don't expect any movement along Mint. 
3. Levine Apartments
4. A number of apartment projects along Rampart/Hawkins/Dunavant that haven't formally been announced yet.

Projects that will happen only because the developers stubbornness and/or perhaps prowess , but will likely struggle.

1. Lennar
2. 401 S. Graham
3. Northwood Ravin Polk Building

Until somebody has the cajones and market ability to build condos uptown. Don't see it happening anytime soon. We need all apartments we can get if we want residents to continue to move uptown.... Also wouldn't mind it pushing down pricing.

 As for surrounding neighborhoods 

[kermit]

I am honestly confused about the absence of condo projects uptown. Based on what appears to be insatiable demand for townhouses in the inner rings I would really think well designed condos uptown would get snapped up quickly.

Am I wrong about demand?  Are condos still not financable?

I don't work in the industry but I  get the sense that RE finance is painfully slow to adapt to changing market conditions (and its a problem)

[KJHburg]

^^^^ Condos are very difficult to finance now and without a lot of presales they can't get construction financing. Also NC laws permit HOAs to sue for defects for the first 5-8 years I can't remember which and that has lessen interest in building them.  Thirdly construction costs are out of site for high rises and the price per square to sell them would be sky high.  You do see boutique condo projects mainly in Myers Park with just a few  units.    Before any will be built I think you will see some apartment to condo conversions.   Thus wait for conversions and prices have only recovered from the 2008/2009 bust just in the last 2 years old so.  

Another problem is you have to build them all at the same time and that is a problem whereas with townhomes you can build as demand warrants.  That fact makes it riskier.  Look for conversions first then maybe just maybe you will see a new midrise tower.  

Edited March 15, 2018 by KJHburg

[Vitamin_N]

Continuing the "who will rent all the apartments" theme: "New luxury apartments offering massive deals as Charlotte apartment market hits turning point"

Quote

 

Overall apartment demand remains strong, and apartment communities at lower price points or that are slightly older do not appear to be offering discounts as aggressively.

Rent also continues to climb — hitting $1,142 in March, according to Real Data. The vacancy rate across the entire city is around 7 percent, much lower than the Uptown area. The average rent Uptown has been falling over the past year and a half.

The apartment communities offering discounts tend to have a few things in common:

• They were built in the past year.
• They’re in markets with a lot of construction activity.
• They charge high prices — generally about $1,200 a month for a studio and $2,000 for a two-bedroom unit.

It’s just simply harder to find people who can afford to live there.

 

 

[HighRiseHillbilly]

13 hours ago, Vitamin_N said:

Continuing the "who will rent all the apartments" theme: "New luxury apartments offering massive deals as Charlotte apartment market hits turning point"

 

I wasn't good at economics in school, but I cannot see how filling buildings at a lower price point now (then gradually raising the rent over time) is a worse option than making no money from having several units remain empty.

I'm sure it makes sense to many others, but not to me...

One month free & a toy isn't as good a deal to me as not spending that extra $200 a month by living elsewhere. 

[jwntim]

11 hours ago, HighRiseHillbilly said:

I wasn't good at economics in school, but I cannot see how filling buildings at a lower price point now (then gradually raising the rent over time) is a worse option than making no money from having several units remain empty.

I'm sure it makes sense to many others, but not to me...

One month free & a toy isn't as good a deal to me as not spending that extra $200 a month by living elsewhere. 

It has to do with selling the apartment complex. Most developers are not long term owners of the real estate (so they dont want to raise rent because as you say it takes time). They develop the project, lease it up and then sell it. In order to maximize value when they sell, they want to lease up each unit for the highest price so they can convince the next buyer that more people will lease units at that high price too. So if you can lease up 80% of the units at $2000 or 90% of the units at $1800 (so the total cash flow is slightly greater in the 90%  scenario) the short term holders will choose 80% at the higher rent as the 20% that is vacant is still "worth" more if the next buyer believes that they can lease those units out. So effectively you have to balance the two. There are times when rental rates are increasing that buyers will pay more for a vacant unit than a leased one (at below market rates). If that seems counter intuitive then you dont have a bunch of others people's money you need to invest in order clip some fees off it  

 

Edited April 20, 2018 by jwntim

[HighRiseHillbilly]

35 minutes ago, jwntim said:

It has to do with selling the apartment complex. Most developers are not long term owners of the real estate (so they dont want to raise rent because as you say it takes time). They develop the project, lease it up and then sell it. In order to maximize value when they sell, they want to lease up each unit for the highest price so they can convince the next buyer that more people will lease units at that high price too. So if you can lease up 80% of the units at $2000 or 90% of the units at $1800 (so the total cash flow is slightly greater in the 90%  scenario) the short term holders will choose 80% at the higher rent as the 20% that is vacant is still "worth" more if the next buyer believes that they can lease those units out. So effectively you have to balance the two. There are times when rental rates are increasing that buyers will pay more for a vacant unit than a leased one (at below market rates). If that seems counter intuitive then you dont have a bunch of others people's money you need to invest in order clip some fees off it  

 

Dude.... Seriously. Thank you.  That was an excellent explanation. I never knew that, but I completely understand now.

[KJHburg]

who says they are not building condos?  These are actually UNDER construction in Cornelius  which is surprising since I have not seen anything about them anywhere.  Maybe I just missed it.  They look very nice unfortunately not on the Lake but close.  Thanks for my Luxury Home Charlotte magazine or I would have not heard anything about them.  Next time I am up there I will take some photos.  Starting in the low $800s. 

http://www.watermarklakenorman.com/

[deleted]

2 hours ago, KJHburg said:

who says they are not building condos?  These are actually UNDER construction in Cornelius  which is surprising since I have not seen anything about them anywhere.  Maybe I just missed it.  They look very nice unfortunately not on the Lake but close.  Thanks for my Luxury Home Charlotte magazine or I would have not heard anything about them.  Next time I am up there I will take some photos.  Starting in the low $800s. 

http://www.watermarklakenorman.com/

Not at all bad for that location.

[tozmervo]

4 hours ago, KJHburg said:

who says they are not building condos?  These are actually UNDER construction in Cornelius  which is surprising since I have not seen anything about them anywhere.  Maybe I just missed it.  They look very nice unfortunately not on the Lake but close.  Thanks for my Luxury Home Charlotte magazine or I would have not heard anything about them.  Next time I am up there I will take some photos.  Starting in the low $800s. 

http://www.watermarklakenorman.com/

And "Hello Sailor" would be your neighborhood bar.

[HighRiseHillbilly]

11 hours ago, KJHburg said:

who says they are not building condos?  These are actually UNDER construction in Cornelius  which is surprising since I have not seen anything about them anywhere.  Maybe I just missed it.  They look very nice unfortunately not on the Lake but close.  Thanks for my Luxury Home Charlotte magazine or I would have not heard anything about them.  Next time I am up there I will take some photos.  Starting in the low $800s. 

http://www.watermarklakenorman.com/

Those are pretty nice. Very Spanish without trying too hard.

[videtur quam contuor]

I was at Hello Sailor three weeks ago and saw the high landscaping wall, 20+ feet or so high along Henderson, and wondered what the project was.